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 September 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>         <C>     

A Delaware Corporation                                           IRS Employer No. 84-0926774

                                          188 Inverness Drive West, Englewood, Colorado 80112

                                                     Telephone Number 303-858-3000
</TABLE>

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 October 31, 1998, was 606,903,541 shares.


                                                        MediaOne Group, Inc.
                                                               Form 10-Q
                                                           TABLE OF CONTENTS

Item                                                                Page
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<S>        <C>    <C>       <C>    
                                       PART I - FINANCIAL INFORMATION

1.         MediaOne Group, Inc. Financial Information

                  Consolidated Statements of Operations -
                            Three and Nine Months Ended 
                            September 30, 1998 and 1997              3

                  Consolidated Balance Sheets -
                             September 30, 1998 and 
                             December 31, 1997                       5

                  Consolidated Statements of Cash Flows -
                             Nine Months Ended September 30, 
                             1998 and 1997                           7

                   Notes to Consolidated Financial Statements        8

2.         MediaOne Group, Inc. Management's Discussion and Analysis of
                 Financial Condition and Results of Operations      21

                 Consolidated Results of Operations                 23

                 Liquidity and Capital Resources                    34

                 Risk Management                                    39

                 Selected Proportionate Results of Operations       45

3.         MediaOne Group, Inc. Quantitative and Qualitative 
                 Disclosures About Market Risk                      48

                                        PART II - OTHER INFORMATION

1.         Legal Proceedings                                        49

6.         Exhibits and Reports on Form 8-K                         49

</TABLE>

Form 10-Q - Part I

MediaOne Group, Inc.
Consolidated Statements of Operations  (Unaudited)
<TABLE>
<CAPTION>
<S>                                                         <C>           <C>          <C>          <C>   

----------------------------------------------------------- -------------------------- --------------------------
                                                               Three Months Ended          Nine Months Ended
                                                                  September 30,              September 30,
                                                            -------------------------- --------------------------
Dollars in millions                                             1998         1997         1998          1997
----------------------------------------------------------- ------------- ------------ ------------ -------------

Sales and other revenues:
   Cable and broadband                                              $620         $590       $1,857        $1,735
   Wireless communications                                             -          373          361         1,071
   Corporate and other                                                 6           11           21            69
                                                            ------------- ------------ ------------ -------------
      Total sales and other revenues                                 626          974        2,239         2,875

Operating expenses:
   Cost of sales and other revenues                                  225          314          783           945
   Selling, general and admin. expenses                              208          338          710           928
   Depreciation and amortization                                     288          295          894           879
                                                            ------------- ------------ ------------ -------------
      Total operating expenses                                       721          947        2,387         2,752
                                                            ------------- ------------ ------------ -------------

Income (loss) from operations                                       (95)           27        (148)           123

Interest expense                                                    (86)        (178)        (379)         (518)
Equity losses in unconsolidated ventures                            (68)        (177)        (273)         (495)
Gain on sale of domestic wireless investment                           -            -        3,869             -
Gains on sales of investments                                          3           13           42           108
Guaranteed minority interest expense                                (11)         (22)         (53)          (66)
Other income (expense) - net                                          13          (5)           86          (16)
                                                            ------------- ------------ ------------ -------------

Income (loss) from continuing operations before income
   taxes                                                           (244)        (342)        3,144         (864)
(Provision) benefit for income taxes                                  60          116      (1,376)           267
                                                            ------------- ------------ ------------ -------------
Income (loss) from continuing operations                           (184)        (226)        1,768         (597)

Income from discontinued operations - net
   of income taxes (Note 11):
     Results of operations                                             -          420          747         1,256
     Gain on Separation                                                -            -       24,461             -
                                                            ------------- ------------ ------------ -------------
Income (loss) before extraordinary item                            (184)          194       26,976           659
Extraordinary item:
    Early extinguishment of debt, net of tax                           -          (3)        (333)             -
                                                            ============= ============ ============ =============
NET INCOME (LOSS)                                                 $(184)         $191      $26,643          $659
                                                            ============= ============ ============ =============

Dividends on preferred stock                                        (13)         (14)         (39)          (39)
Loss on redemption of Preferred Securities                             -            -         (53)             -
                                                            ------------- ------------ ------------ -------------

EARNINGS (LOSS) AVAILABLE FOR
    COMMON STOCK                                                  $(197)         $177      $26,551          $620
----------------------------------------------------------- ============= ============ ============ =============
</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           Nine Months Ended
                                                                  September 30,                September 30,
                                                           ----------------------------- ---------------------------
In thousands (except per share amounts)                        1998           1997         1998 (1)        1997
---------------------------------------------------------- -------------- -------------- ------------- -------------

MEDIAONE GROUP STOCK  (Note 7)

BASIC EARNINGS (LOSS) PER COMMON SHARE:
   Income (loss) from continuing operations                      $(0.32)        $(0.40)         $2.75       $(1.05)
   Income from discontinued operations (2)                             -           0.14          0.26          0.41
   Gain on Separation                                                  -              -         40.18             -
   Extraordinary item - early extinguishment of debt                   -              -         (0.55)            -
                                                           -------------- -------------- ------------- -------------
Basic earnings (loss) per common share                           $(0.32)        $(0.26)        $42.65       $(0.64)
                                                           ============== ============== ============= =============

BASIC AVERAGE COMMON SHARES OUTSTANDING                         608,793        606,729        608,730      606,568
                                                           ============== ============== ============= =============

DILUTED EARNINGS (LOSS) PER COMMON SHARE:
   Income (loss) from continuing operations                      $(0.32)        $(0.40)         $2.62       $(1.05)
   Income from discontinued operations (2)                             -           0.14          0.24          0.41
   Gain on Separation                                                  -              -         37.42             -
   Extraordinary item - early extinguishment of debt                   -              -        (0.51)             -
                                                           -------------- -------------- ------------- -------------
Diluted earnings (loss) per common share                         $(0.32)        $(0.26)        $39.77       $(0.64)
                                                           ============== ============== ============= =============

DILUTED AVERAGE COMMON SHARES OUTSTANDING                       608,793        606,729        653,751      606,568
---------------------------------------------------------- ============== ============== ============= =============
</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.
 

     See Note 7 - Earnings Per Share - to the Consolidated Financial Statements
     for a discussion of Communications stock earnings per share information.


See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

MediaOne Group, Inc.
Consolidated Balance Sheets
 (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                     <C>                 <C>    

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

ASSETS
                                                                         

Current assets:
    Cash and cash equivalents                                                          $52                $184
    Accounts and notes receivable  - net                                               310                 604
    Inventories and supplies                                                            49                  29
    Deferred tax asset                                                                  80                 102
    Prepaid and other                                                                   99                  48
    Net investment in assets of discontinued operations                                  -               4,367
                                                                        ------------------- -------------------

Total current assets                                                                   590               5,334
Gross property, plant and equipment                                                  4,468               5,571
Accumulated depreciation                                                               873               1,299
                                                                        ------------------- -------------------

Property, plant and equipment - net                                                  3,595               4,272
Investment in Time Warner Entertainment                                              2,447               2,486
Investment in AirTouch Communications                                                5,025                   -
Net investment in international ventures                                               913                 742
Net investment in assets held for sale                                                 436                 419
Intangible assets - net                                                             11,754              12,597
Other assets                                                                           551                 933
                                                                        ------------------- -------------------
Total assets                                                                       $25,311             $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>    
---------------------------------------------------------------------- -------------------- -------------------
                                                                          September 30,        December 31,
Dollars in millions                                                           1998                 1997
---------------------------------------------------------------------- -------------------- -------------------
LIABILITIES AND SHAREOWNERS' EQUITY

Current liabilities:
    Short-term debt                                                                   $567                $735
    Accounts payable                                                                   153                 395
    Employee compensation                                                               76                 109
    Deferred revenues and customer deposits                                             86                 108
    Other                                                                              844                 841
                                                                       -------------------- -------------------
Total current liabilities                                                            1,726               2,188

Long-term debt                                                                       4,637               8,228
Deferred income taxes                                                                4,978               3,276
Deferred credits and other                                                             606                 587

Commitments and contingencies

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                                                                    925                 923
    Common shares                                                                   10,455              10,876
    Retained earnings (deficit)                                                      1,021               (359)
    LESOP guarantee                                                                      -                (46)
    Accumulated other comprehensive income (loss)                                      302                (70)
                                                                       -------------------- -------------------
Total shareowners' equity                                                           12,703              11,324
                                                                       -------------------- -------------------

Total liabilities and shareowners' equity                                          $25,311             $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>    
------------------------------------------------------------------------------------ ------------- ------------
Nine Months Ended September 30,                                                          1998         1997
------------------------------------------------------------------------------------ ------------- ------------

OPERATING ACTIVITIES                                                                       Dollars in millions
   Net income                                                                             $26,643         $659
   Adjustments to net income:
     Discontinued operations                                                                (747)      (1,256)
     Gain on Separation                                                                  (24,461)            -
     Extraordinary loss on debt extinguishment                                                333            -
     Depreciation and amortization                                                            894          879
     Equity losses in unconsolidated ventures                                                 273          495
     Distribution from unconsolidated ventures                                                 42            5
     Gain on sale of domestic wireless investment                                         (3,869)            -
     Gains on sales of investments                                                           (42)        (108)
     Deferred income taxes and amortization of investment tax credits                       1,515        (117)
     Provision for uncollectibles                                                              35           53
  Separation costs paid                                                                     (115)            -
  Changes in operating assets and liabilities:
     Accounts and notes receivable                                                             87        (102)
     Inventories, supplies and other current assets                                          (20)         (11)
     Accounts payable and accrued liabilities                                               (182)           78
  Other - net                                                                                   5           55
                                                                                     ------------- ------------
  Cash provided by operating activities                                                       391          630
                                                                                     ------------- ------------

INVESTING ACTIVITIES
   Expenditures for property, plant and equipment                                         (1,157)      (1,072)
   Payment to Continental Cablevision shareowners                                               -      (1,150)
   Investment in international ventures                                                     (157)        (320)
   Investment in domestic ventures                                                           (84)        (173)
  Purchase of miscellaneous assets                                                           (35)         (25)
  Proceeds from sales of investments                                                          201          703
   Cash from net investment in assets held for sale                                            47          242
   Other - net                                                                                 77            1
                                                                                     ------------- ------------
   Cash used for investing activities                                                     (1,108)      (1,794)
                                                                                     ------------- ------------

FINANCING ACTIVITIES
   Net proceeds from (repayments of) short-term debt                                          679      (2,511)
   Proceeds from issuance of long-term debt                                                 1,642        4,124
   Repayments of long-term debt                                                           (5,447)        (377)
   Repayments of Preferred Securities                                                       (582)            -
  Proceeds from issuance of common stock                                                      138           65
   Dividends paid on common stock                                                           (519)        (733)
   Dividends paid on preferred stock                                                         (39)         (36)
   Purchases of treasury stock                                                              (240)         (53)
                                                                                     ------------- ------------
   Cash (used for) provided by financing activities                                       (4,368)          479
                                                                                     ------------- ------------

  Cash provided by discontinued operations                                                  4,953          630
                                                                                     ------------- ------------

CASH AND CASH EQUIVALENTS
   Decrease                                                                                 (132)         (55)
   Beginning balance                                                                          184          121
                                                                                     ============= ============
   Ending balance                                                                             $52          $66
------------------------------------------------------------------------------------ ============= ============
</TABLE>

See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

                                   MediaOne Group, Inc.
                        Notes to Consolidated Financial Statements
                 For the Three and Nine Months Ended September 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.  It is  also  suggested  that  these  Consolidated  Financial
Statements and notes be read in conjunction with the MediaOne Group Consolidated
Financial Statements and notes thereto filed on Form 10-Q dated August 13, 1998.
The  MediaOne  Group  Form  10-Q  filing  includes  the  actual  effects  of the
Separation and the refinancing of the indebtedness issued or guaranteed by Old 
U S WEST, as defined in Note 2 - The Separation.

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").


Form 10-Q - Part I


                                     MediaOne Group, Inc.
                       Notes to Consolidated Financial Statements
                                    (Dollars in millions)
                                         (Unaudited)

NOTE 3:  ACQUISITIONS AND DISPOSITIONS

Telewest  Communications plc. On September 1, 1998, Telewest  Communications plc
("Telewest"),  a cable and  telecommunications  provider in the United  Kingdom,
acquired  General Cable PLC ("General  Cable"),  a cable  provider in the United
Kingdom,  for approximately  $1.1 billion in stock and cash.  Holders of General
Cable received  1.243 new Telewest  shares and 65 pence in cash for each General
Cable  share.  Telewest  raised  the cash for the  acquisition  through a rights
offering to its existing shareholders,  including MediaOne Group. MediaOne Group
purchased 85 million new Telewest  shares at a cost of $131.  As a result of the
General Cable acquisition and taking into account MediaOne Group's participation
in the rights offering,  the Company's  ownership of Telewest  decreased to 21.6
percent from 26.75  percent.  In addition,  MediaOne Group recorded an estimated
gain in equity of $39,  net of  deferred  taxes of $25,  related  to  Telewest's
acquisition of General Cable.

Time Warner Telecom. On July 14, 1998, Time Warner Entertainment  Company,  L.P.
("TWE"), Time Warner Entertainment-Advance/Newhouse  Partnership ("TWE-A/N") and
Time Warner, Inc. ("Time Warner")  contributed the assets and liabilities of the
Time Warner  competitive  local  exchange  business  (the "Time  Warner  Telecom
Business")  into a newly formed entity,  Time Warner Telecom LLC ("TW Telecom").
The Time Warner  Telecom  Business had been  jointly  operated by the parties to
provide  telephony  services to business  customers  in their  respective  cable
markets. TWE and TWE-A/N distributed their ownership interest in TW Telecom on a
pro rata basis to Time Warner, MediaOne Group and Advance/Newhouse. As a result,
MediaOne  Group now holds an 18.85  percent  interest in TW  Telecom.  Since the
investment in TW Telecom  resulted from a distribution by TWE,  MediaOne Group's
investment  balance in TWE was reduced by $48,  the book value of the TW Telecom
investment  attributable  to MediaOne  Group.  The  investment  in TW Telecom is
included in Other Assets in the Consolidated  Balance Sheet, as of September 30,
1998.  The Company uses the cost method of accounting  for its  investment in TW
Telecom.

Form 10-Q - Part I

                                MediaOne Group, Inc.
                     Notes to Consolidated Financial Statements
                               (Dollars in millions)
                                    (Unaudited)

NOTE 4:  INVESTMENT IN AIRTOUCH PREFERRED STOCK

In  conjunction  with the sale of the domestic  wireless  businesses to AirTouch
Communications,  Inc.  ("AirTouch"),  MediaOne Group received shares of AirTouch
preferred  stock.  The AirTouch  preferred  stock is stated at fair value on the
balance sheet,  in accordance with Statement of Financial  Accounting  Standards
("SFAS")  No.  115,  "Accounting  for  Certain  Investments  in Debt and  Equity
Securities." To minimize  MediaOne  Group's exposure to fluctuations in the fair
value of the AirTouch preferred stock, the Company entered into an interest rate
swap  agreement in April 1998. At September 30, 1998, the  Consolidated  Balance
Sheet reflected a payable of $187 related to the interest rate swap agreement.

During  the third  quarter  of 1998,  the  change  in the value of the  AirTouch
preferred  stock  and the  interest  rate  swap  did not  achieve  the  required
correlation  to continue  deferral  accounting.  As of September  30, 1998,  the
AirTouch  preferred  stock had  increased in value by $147 and the interest rate
swap agreement had declined in value by $187. Consequently, in the third quarter
of 1998,  MediaOne  Group  recognized  a net loss of $25 ($40 net of income  tax
benefits  of $15) in  other  income  for the  change  in the  fair  value of the
AirTouch  preferred stock not offset by the fair value of the interest rate swap
agreement in accordance with SFAS No. 80, "Accounting for Futures Contracts."

NOTE 5:  DEBT

Short-term Debt.  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 $3.8 billion
was available at September 30, 1998.

Long-term Debt. In August and September  1998,  MediaOne Group issued 29 million
shares of 6.25  percent  Exchangeable  Notes (the  "Exchangeable  Notes") for an
issuance  price of $58.125 per note, or gross  proceeds of $1.686  billion.  The
notes  mature on August 15,  2001 and are  mandatorily  redeemable  at  MediaOne
Group's option into (i) shares of AirTouch  common stock held by MediaOne Group,
(ii) the cash  equivalent,  or (iii) a combination  of cash and AirTouch  common
stock.  The number of shares of AirTouch  common stock to be exchanged  for each
Exchangeable Note, and/or the cash equivalent,  varies based upon the fair value
of the AirTouch common stock, as follows:

Form 10-Q - Part I

                                               MediaOne Group, Inc.
                                    Notes to Consolidated Financial Statements
                                              (Dollars in millions)
                                                   (Unaudited)

     (a) If the fair value of the AirTouch common stock is greater than or equal
     to $71.75 per share,  each  Exchangeable  Note is  equivalent to .8101 of a
     share of AirTouch common stock;
 
     (b) If the fair value of the AirTouch  common stock is less than $71.75 per
     share but  greater  than  $58.125  per  share,  each  Exchangeable  Note is
     equivalent  to a  fractional  share of AirTouch  common  stock equal to the
     percent of the initial issuance price per Exchangeable Note versus the fair
     value of the AirTouch common stock per share; or
 
     (c) If the fair value of the AirTouch common stock is less than or equal to
     $58.125 per share,  each  Exchangeable  Note is  equivalent to one share of
     AirTouch common stock.
 
The  Exchangeable  Notes are unsecured  obligations of MediaOne  Group,  ranking
equally  in right  of  payment  with  all  other  unsecured  and  unsubordinated
obligations  of MediaOne  Group.  MediaOne Group used the proceeds from the debt
issuance  to  reduce  outstanding  commercial  paper and for  general  corporate
purposes.

The Exchangeable Notes are being accounted for as an indexed debt
instrument since the maturity value of the Exchangeable Notes is
dependent upon the fair value of the underlying AirTouch common
stock.  The Company has, therefore, eliminated the market risk on a
decline in the AirTouch common stock value below $58.125 per share on
29 million of the 53 million shares held by the Company. During the
third quarter of 1998, the maturity value of the Exchangeable Notes
was decreased by $33 to reflect the corresponding reduction in the
fair value of the underlying AirTouch common stock. As the AirTouch
common stock is a cost method investment being accounted for as
"available for sale" securities under SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," changes in the
maturity value of the Exchangeable Notes are being recorded in equity
as unrealized gains or losses.


Form 10-Q - Part I


                                     MediaOne Group, Inc.
                           Notes to Consolidated Financial Statements
                                    (Dollars in millions)
                                        (Unaudited)

NOTE 6:  SHAREOWNERS' EQUITY
<TABLE>
<CAPTION>
<S>                                                 <C>        <C>         <C>         <C>          <C>    

-------------------------------------------------- ----------- ----------- ----------- ------------ -----------------
                                                                                                      Accumulated
                                                                           Retained                      Other
                                                   Preferred   Common      Earnings       LESOP      Comprehensive
                                                     Stock       Shares    (Deficit)    Guarantee    Income (Loss)
-------------------------------------------------- ----------- ----------- ----------- ------------ -----------------
Balance at December 31, 1997                            $ 923    $ 10,876     $ (359)       $ (46)            $ (70)

Net income                                                                    26,643
Distribution of New U S WEST                                        (421)    (24,924)
Issuance of MediaOne Group stock                                      75
Issuance of Communications stock                                      24
Purchase of treasury stock (1)                                      (240)
Common dividends declared ($0.535 per
  Communications share)                                                         (260)
Preferred dividends                                                              (39)
Loss on redemption of Preferred Securities                                       (53)
Market value adjustments for debt and equity
  securities, and Exchangeable Notes, net of
  reclassification adjustments and income taxes                                                                 351
Foreign currency translation, net of income taxes
                                                                                                                 21
Other                                                       2        141          13           46

                                                   =========== =========== =========== ============ =================
Balance at September 30, 1998                           $ 925   $ 10,455     $ 1,021          $ -             $ 302
-------------------------------------------------- =========== =========== =========== ============ =================
</TABLE>

     (1) Includes $31 of Communications  stock share  repurchases made prior to
     the  Separation.  Communications  stock  treasury  shares were  canceled in
     conjunction with the Separation.

     The $141 of  other activity  under Common  Shares includes $41 for tax
     benefits on stock option exercises, a $39 gain related to the acquisition
     of General Cable by Telewest in September 1998, a $39 gain on the exercise
     of a call option on shares of the Company's stock during the second quarter
     of 1998, and miscellaneous activity of $22.
 
     Share Repurchase.  On August 7, 1998,  the Board of Directors of MediaOne
     Group authorized the repurchase of up to 25 million shares of the Company's
     common stock over the next three years, dependent on market and financial
     conditions. During 1998, MediaOne Group purchased and placed into treasury
     approximately 5 million  shares of  MediaOne  Group  stock at an  average
     purchase price of $41.43 per share, or a total cost basis of $209. Of the
     total shares repurchased,  3,568,600 shares of MediaOne Group common stock
     were repurchased during the third quarter of 1998 at an average  purchase
     price of $43.28 per share, or a total cost basis of $154.
Form 10-Q - Part I

                                        MediaOne Group, Inc.
                            Notes to Consolidated Financial Statements
                                       (Dollars in millions)
                                           (Unaudited)

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

------------------------------------------------------- ------------------------------ ------------------------------
                                                        Three Months Ended                  Nine Months Ended 
                                                           September 30,                      September 30,
                                                        ------------------------------ ------------------------------
                                                             1998           1997            1998           1997
------------------------------------------------------- --------------- -------------- --------------- --------------

Net income (loss)                                               $(184)           $191         $26,643           $659

   Other comprehensive income (loss), before tax:
     Foreign currency translation adjustment                       19             (73)             27            (71)
     Unrealized gains (losses) on debt
       and equity securities, and
       Exchangeable Notes                                        (107)            121             583            188
     Reclassification for gains realized in net
       income                                                       -             (29)            (11)           (45)
     Income tax (provision) benefit related to
       items of other comprehensive income                         44              (7)           (227)           (36)
                                                        --------------- -------------- --------------- --------------
   Total other comprehensive income (loss), net of tax            (44)             12             372             36
                                                        =============== ============== =============== ==============
Total comprehensive income (loss)                               $(228)           $203         $27,015           $695
------------------------------------------------------- =============== ============== =============== ==============
</TABLE>

The majority of the  unrealized  gains and losses on debt and equity  securities
during 1998 relate to the Company's investment in AirTouch common stock acquired
on April 6, 1998,  in  connection  with the sale by the Company of its  domestic
wireless  businesses  (the  "AirTouch   Transaction").   In  addition,  for  the
nine-month  period  ended  September  30,  1998,   MediaOne  Group  recorded  an
unrealized  gain of $147 related to its investment in AirTouch  preferred  stock
acquired in the AirTouch Transaction. This unrealized gain was fully offset by a
loss on an interest  rate swap  agreement  which was  designed  to minimize  the
Company's  exposure to fluctuations in the fair value of the AirTouch  preferred
stock as a result of interest rate changes.

Form 10-Q - Part I


                                           MediaOne Group, Inc.
                                 Notes to Consolidated Financial Statements
                                          (Dollars in millions)
                                                (Unaudited)

NOTE 7:  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 dilutive
securities  for the  nine-month  period ended  September 30, 1998  represent the
incremental  weighted  average shares from potential share issuances  associated
with stock options for MediaOne Group stock and  Communications  stock,  and the
assumed  conversion  of the  convertible  Series D Preferred  Stock for MediaOne
Group stock.  The diluted  earnings (loss) and related per share amounts for the
three months ended September 30, 1998 and for the periods in 1997 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.
<TABLE>
<CAPTION>
<S>                                                       <C>           <C>            <C>          <C>   
 
--------------------------------------------------------- ---------------------------- -------------------------
                                                              Three Months Ended          Nine Months Ended
                                                                 September 30,              September 30,
                                                          ---------------------------- -------------------------
                                                              1998           1997          1998         1997
--------------------------------------------------------- ------------- -------------- ------------ ------------

MEDIAONE GROUP STOCK
Income (loss) from continuing operations                        $(184)         $(226)      $ 1,768       $(597)
    Preferred stock dividends                                     (13)           (14)         (39)         (39)
    Loss on redemption of Preferred Securities                       -              -         (53)           -
                                                          ------------- -------------- ------------ ------------
Income (loss) from continuing operations available for
  common shareowners used for basic earnings per share           $(197)         $(240)     $ 1,676       $(636)
  Preferred stock dividends on assumed conversion                    -              -           35           -
                                                          ============= ============== ============ ============
Income (loss) from continuing operations used for
  diluted earnings (loss) per share                             $(197)         $(240)      $ 1,711       $(636)
                                                          ============= ============== ============ ============
Income from discontinued operations
  Results of operations (1)                                     $   -          $  84       $   158       $ 249
                                                          ============= ============== ============ ============
  Gain on Separation                                            $   -          $   -       $ 24,461      $   -
                                                          ============= ============== ============ ============
Extraordinary item - early extinguishment of debt - net
  of tax                                                        $   -          $  (3)      $   (333)     $   -
--------------------------------------------------------- ============= ============== ============ ============
</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>          <C>   

--------------------------------------------------------- ---------------------------- -------------------------
                                                              Three Months Ended          Nine Months Ended
                                                                 September 30,              September 30,
                                                          ---------------------------- -------------------------
                                                              1998          1997          1998         1997
--------------------------------------------------------- ------------- -------------- ------------ ------------
                                                                          (Shares in thousands)
MEDIAONE GROUP STOCK
Weighted average number of shares used for basic
  earnings (loss) per share                                    608,793        606,729      608,730      606,568
Effect of dilutive securities:
   Stock options                                                     -              -        6,312            -
  Series D Preferred Stock                                           -              -       38,709            -
                                                          ============= ============== ============ ============
Weighted average number of shares used for diluted
    earnings (loss) per share                                  608,793        606,729      653,751      606,568
                                                          ============= ============== ============ ============

BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations                                          $(0.32)        $(0.40)       $ 2.75      $(1.05)
                                                          ============= ============== ============ ============
Discontinued operations - results of operations (1)            $    -         $ 0.14        $ 0.26      $ 0.41
                                                          ============= ============== ============ ============
Discontinued operations - gain on Separation                   $    -         $    -        $40.18      $    -
                                                          ============= ============== ============ ============
Extraordinary item - early extinguishment of debt - net
  of tax                                                       $    -         $    -        $(0.55)     $    -
                                                          ============= ============== ============ ============

DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations                                          $(0.32)        $(0.40)       $ 2.62      $(1.05)
                                                          ============= ============== ============ ============
Discontinued operations - results of operations (1)            $    -         $ 0.14        $ 0.24      $ 0.41
                                                          ============= ============== ============ ============
Discontinued operations - gain on Separation                   $    -         $    -        $37.42      $    -
                                                          ============= ============== ============ ============
Extraordinary item - early extinguishment of debt - net
  of tax                                                       $    -         $    -        $(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>          <C>    

----------------------------------------------------------- -------------------------- -------------------------
                                                               Three Months Ended         Nine Months Ended
                                                                  September 30,             September 30,
                                                            -------------------------- -------------------------
                                                             1998 (1)       1997          1998         1997
----------------------------------------------------------- ----------- -------------- ------------ ------------
                                                                           (Shares in thousands)
COMMUNICATIONS STOCK
Income from discontinued operations used for basic and
  diluted earnings per share (2)                             $      -     $    336       $   589     $  1,007
                                                            ============ ============== =========== ============

Weighted average number of shares used for basic earnings
  per share                                                         -      483,218       484,972      482,374
Effect of dilutive securities:
   Stock options                                                    -            -         4,097            -
                                                            ============ ============== =========== ============
Weighted average number of shares used for diluted
    earnings per share                                              -      483,218       489,069      482,374
                                                            ============ ============== =========== ============

BASIC AND DILUTED EARNINGS PER SHARE:
Basic earnings per share from discontinued operations        $      -    $    0.69       $  1.21     $   2.08
                                                            ============ ============== =========== ============
Diluted earnings per share from discontinued operations      $      -    $    0.69       $  1.20     $   2.08
----------------------------------------------------------- ============ ============== =========== ============
</TABLE>

     (1) The Communications  stock was canceled on June 12, 1998, effective with
     the Separation.
     (2)  Represents  the  operations of the  Communications  Group,  which were
     discontinued on June 12, 1998.

NOTE 8:  COMMITMENTS AND CONTINGENCIES

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


Form 10-Q - Part I

                                     MediaOne Group, Inc.
                           Notes to Consolidated Financial Statements
                                     (Dollars in millions)
                                          (Unaudited)

NOTE 9:  SUBSEQUENT EVENTS

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

Investment in Telewest  Communications plc. On November 10, 1998, MediaOne Group
purchased an  additional  175 million  Telewest  shares from  Southwestern  Bell
International  Holdings at a price of $2.25 per share,  or $394. The Company now
holds a 29.9 percent interest in Telewest.

Competitive  Local Exchange  Businesses.  During  November 1998,  MediaOne Group
entered into a definitive  agreement  with Hyperion  Communications  to sell the
Company's  investments in Continental Fiber  Technologies,  Inc. and Alternet of
Virginia,  Inc.,  providers  of business  telephony  services  in  Jacksonville,
Florida and Richmond, Virginia, respectively, for approximately $83. The sale is
expected to close in the first-quarter of 1999.

Preferred Securities.  On October 28, 1998, MediaOne Finance Trust III, a wholly
owned   subsidiary   of   MediaOne   Group,   issued   $500  of   9.04   percent
Company-obligated  mandatorily  redeemable  preferred  securities  of subsidiary
trust holding solely Company-guaranteed debentures (the "Preferred Securities").
Proceeds from the issuance were used to redeem outstanding  commercial paper and
for general corporate purposes.

NOTE 10:  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>   
-------------------------------------------------------------------- ------------------- --------------------
                                                                          September 30,         December 31,
                                                                              1998                 1997
-------------------------------------------------------------------- ------------------- --------------------
ASSETS
Cash and cash equivalents                                                          $ 68                 $ 54
Finance receivables - net                                                           746                  777
Investment in real estate - net of valuation allowance                                -                  156
Bonds, at market value                                                              102                  119
Investment in FSA                                                                   387                  365
Other assets                                                                        224                  197
                                                                     ------------------- --------------------
Total assets                                                                     $1,527               $1,668
                                                                     =================== ====================
LIABILITIES
Debt                                                                               $269                 $372
Deferred income taxes                                                               672                  669
Accounts payable, accrued liabilities and other                                     138                  197
Minority interests                                                                   12                   11
                                                                     ------------------- --------------------
Total liabilities                                                                 1,091                1,249
                                                                     ------------------- --------------------
Net investment in assets held for sale                                             $436                 $419
==================================================================== =================== ====================
</TABLE>

Building sales and operating revenues of the capital assets segment were $77 and
$199  for  the  three-  and  nine-month   periods  ended   September  30,  1998,
respectively,  and  $13 and $91 for the  three-  and  nine-month  periods  ended
September 30, 1997, respectively.

Revenues of MediaOne Financial Services, Inc. ("Financial  Services"),  a member
of the capital  assets  segment,  were $5 and $15 for the three- and  nine-month
periods ended  September 30, 1998,  respectively,  and $5 and $16 for the three-
and  nine-month  periods  ended  September  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>    
--------------------------------------------------------------------- ------------------ -------------------
                                                                          September 30,        December 31,
                                                                              1998                1997
--------------------------------------------------------------------- ------------------ -------------------
Net finance receivables                                                            $742               $ 824
Total assets                                                                      1,025               1,208
Total debt                                                                          218                 363
Total liabilities                                                                   940               1,121
Equity                                                                               85                  87
--------------------------------------------------------------------- ------------------ -------------------
</TABLE>

NOTE 11:  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 MediaOne Group stock for
the Dex Alignment,  as a  discontinuance  of the  businesses  comprising New U S
WEST. The measurement date for discontinued  operations  accounting purposes 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 $114 of  Separation  costs (net of tax  benefits  of $37).  Separation  costs
included cash payments under severance agreements of $45 and financial advisory,
legal,  registration  fee,  printing and mailing  costs.  Separation  costs also
included  a  one-time  payment  to  terminate  the sale of the  Minnesota  cable
systems.

Summarized financial information for the discontinued operations is as follows:
<TABLE>
<CAPTION>
<S>                                                         <C>           <C>            <C>           <C>    
--------------------------------------------------------- -------------------------- ------------------------------
                                                             Three Months Ended            Nine Months Ended
                                                                September 30,                September 30,
                                                          -------------------------- ------------------------------
Summarized Operating Results                                 1998          1997          1998            1997
--------------------------------------------------------- ------------ ------------- -------------- ---------------
Revenues                                                            -        $2,960         $5,454          $8,657

Operating income                                                    -           756          1,412           2,289

Income before income taxes                                          -           674          1,187           2,011
Income tax expense                                                  -         (251)          (440)           (752)
                                                          ------------ ------------- -------------- ---------------
Income before extraordinary item                                    -           423            747           1,259
Extraordinary item - debt extinguishment                            -           (3)              -             (3)
                                                          ============ ============= ============== ===============
Net income of discontinued operations                               -          $420           $747          $1,256
========================================================= ============ ============= ============== ===============
</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 MediaOne 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 $40.18
basic earnings per MediaOne Group share, net of $114 of Separation costs (net of
income 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 income 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 to refinance  substantially  all of the indebtedness
issued or guaranteed by Old U S WEST. MediaOne Group refinanced the indebtedness
through a combination of tender offers,  prepayments,  and consent solicitations
(the "Refinancing").

Proceeds from the issuance of the  Exchangeable Notes in August and September 
1998 were also used to repay 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 Nine Months Ended
     September 30, 1998 Compared with 1997
<TABLE>
<CAPTION>
<S>                              <C>        <C>         <C>      <C>         <C>       <C>         <C>       <C>

-----------------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations:
-----------------------------------------------------------------------------------------------------------------------
                                Three Months Ended                           Nine Months Ended
                                   September 30,            Change             September 30,             Change
                               ---------------------- -------------------- ----------------------- --------------------
                                 1998        1997        $          %        1998        1997         $          %
------------------------------ ---------- ----------- --------- ---------- ---------- ------------ --------- ----------
Income (loss) from
  continuing operations           $(184)      $(226)       $42     (18.6)     $1,768       $(597)    $2,365          -
  Adjustments to reported
    income (loss) from
    continuing operations:
   Domestic wireless
    operations                         -        (33)        33          -       (20)         (86)        66     (76.7)
   Gain on sale of domestic
    wireless investment                -           -         -          -    (2,257)            -   (2,257)          -
   Gains on sales of
    investments                      (2)         (7)         5     (71.4)       (26)         (63)        37     (58.7)
                               ========== =========== ========= ========== ========== ============ ========= ==========
Normalized loss from
  continuing operations           $(186)      $(266)       $80     (30.1)     $(535)       $(746)      $211     (28.3)
============================== ========== =========== ========= ========== ========== ============ ========= ==========

----------------------------------------------------------------------------------------------------------------------
Basic Earnings (Loss) Per Share From Continuing Operations Available for MediaOne Group Common Stock:
----------------------------------------------------------------------------------------------------------------------
                                Three Months Ended                          Nine Months Ended
                                  September 30,             Change            September 30,             Change
                               --------------------- --------------------- --------------------- ---------------------
                                 1998       1997         $          %        1998       1997         $          %
------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) from
  continuing operations
  available for common stock     $(0.32)    $(0.40)      $0.08     (20.0)      $2.75    $(1.05)      $3.80          -
  Adjustments to reported
    earnings (loss) from
    continuing operations:
   Domestic wireless
    operations                         -     (0.05)       0.05          -     (0.03)     (0.14)       0.11     (78.6)
   Gain on sale of domestic
    wireless investment                -          -          -          -     (3.71)          -     (3.71)          -
   Gains on sales of
    investments                        -     (0.01)       0.01          -     (0.04)     (0.10)       0.06     (60.0)
   Loss on redemption of
    Preferred Securities               -          -          -          -       0.09          -       0.09          -
                               ========== ========== ========== ========== ========== ========== ========== ==========
Normalized loss from
  continuing operations
  available for common stock     $(0.32)    $(0.46)      $0.14     (30.4)    $(0.94)    $(1.29)      $0.35     (27.1)
============================== ========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>

During 1998, MediaOne Group experienced a reduction in normalized losses 
from continuing operations due primarily to lower equity losses generated by 
unconsolidated international ventures and decreased interest expense due to 
lower debt levels at MediaOne Group.

Form 10-Q - Part I

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

Sales and Other Revenues
<TABLE>
<CAPTION>
<S>                          <C>          <C>        <C>       <C>       <C>         <C>         <C>      <C>
-------------------------- ----------------------- ------------------- ---------------------- --------------------
                             Three Months Ended                        Nine Months Ended
                               September 30,             Change            September 30,            Change
                           ----------------------- ------------------- ---------------------- --------------------
                              1998        1997        $         %         1998       1997         $         %
-------------------------- ----------- ----------- --------- --------- ----------- ---------- ---------- ---------
Cable and broadband:
   Domestic                      $614        $584       $30       5.1      $1,840     $1,721      $119       6.9
   International                    6           6         -         -          17         14         3      21.4
                         ----------------------------------------------------------------------------------------
                                  620         590        30       5.1       1,857      1,735       122       7.0

Corporate                           6           8       (2)    (25.0)          20         21       (1)     (4.8)
Other(1)                            -           3       (3)         -           1         48      (47)    (97.9)
                         ----------------------------------------------------------------------------------------

   Current operations             626         601        25       4.2       1,878      1,804        74       4.1
Domestic wireless(2)                -         373     (373)         -         361      1,071     (710)    (66.3)

                         ========================================================================================
Total                            $626        $974    $(348)    (35.7)      $2,239     $2,875    $(636)    (22.1)
=================================================================================================================
</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 for the three- and  nine-month  periods
ended  September  30, 1998,  decreased  primarily as a result of the sale of the
domestic  wireless  businesses  in  1998,  and  the  international   directories
businesses  during  the  second  and  third  quarters  of 1997.  Normalized  for
acquisitions and  dispositions,  total revenues  increased 11.0 percent and 10.5
percent  for the  three-  and  nine-month  periods  ended  September  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                           Nine Months Ended
                               September 30,              Change              September 30,             Change
                           ----------------------- ---------------------- ---------------------- ---------------------
REVENUES                     1998        1997          $          %         1998        1997         $          %
-------------------------- ---------- ------------ ---------- ----------- ---------- ----------- ---------- ----------
Domestic
   Basic Cable                  $429         $388        $41        10.6     $1,276      $1,140       $136       11.9
   Premium                        81           82        (1)       (1.2)        240         245        (5)      (2.0)
   Pay-per-view                   16           12          4        33.3         40          42        (2)      (4.8)
   Advertising                    37           33          4        12.1        108          91         17       18.7
   Equipt. & Install.             46           40          6        15.0        130         113         17       15.0
   Other                         (8)          (3)        (5)           -       (22)         (1)       (21)          -
                           ---------- ------------ ---------- ----------- ---------- ----------- ---------- ----------
      Total core cable           601          552         49         8.9      1,772       1,630        142        8.7
   New Products                   13            3         10           -         34          13         21          -
   PrimeStar                       -           29       (29)           -         34          78       (44)     (56.4)
                           ========== ============ ========== =========== ========== =========== ========== ==========
      Total revenues            $614         $584        $30         5.1     $1,840      $1,721       $119        6.9
========================== ========== ============ ========== =========== ========== =========== ========== ==========
</TABLE>

Domestic cable and broadband revenues increased during the three- and nine-month
periods  ended  September  30,  1998,  due  primarily  to  increased  core cable
revenues,  partially offset by the lack of PrimeStar  direct broadcast  services
("DBS")  revenues  in all but the  first  quarter  of 1998.  Normalized  for the
one-time effects of cable system acquisitions and dispositions,  and a change in
classification of late fee revenues, total domestic cable and broadband revenues
increased 11.6 percent and 10.5 percent during the three- and nine-month periods
in 1998, respectively.

Basic Cable. Basic cable services revenues increased during the three-
and nine-month periods in 1998 due primarily to a 10 percent increase
in revenue per average cable subscriber and increased basic
subscribers. At September 30, 1998, basic cable subscribers were
4,926,000, an increase of 1.3 percent compared with the same period in
1997, normalized for the effects of cable system acquisitions and
dispositions. The increase in revenue per subscriber is the result of
expanded channel offerings, repackaging of services and increased
rates.

Premium.  Premium services revenues decreased during the three- and  nine-month
periods of 1998 due primarily to discounting of premium service packages.

Pay-per-view. Pay-per-view revenues increased during the three-month
period of 1998 due to the airing of a boxing event in September, 1998,
and to modest growth in demand for movies. Pay-per-view revenues
decreased during the nine-month period of 1998 due to higher revenues
on a boxing event aired in June, 1997, versus a boxing event aired in
September, 1998.

Form 10-Q - Part I

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

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

Equipment and Installation. Equipment and installation revenues increased
in 1998 due primarily to subscribers upgrading converter boxes.

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

Core Cable. Core cable revenue per average cable subscriber was $40.73 per
month for the three-month period ended September 30, 1998, an increase of
7.6 percent, compared with $37.84 for the same period in 1997. For the
nine-month period ended September 30, 1998, core cable revenue per average
cable subscriber was $40.05 per month, an increase of 6.8 percent, compared
with $37.50 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 per average cable
subscriber increased 8.8 percent and 7.9 percent for the three- and
nine-month periods of 1998, respectively. Core cable revenue per average
cable subscriber has increased as a result of expanded channel offerings,
repackaging of services and increased rates.

Core cable revenues increased 10.3 percent and 9.4 percent for the three-
and nine-month periods ended September 30, 1998, normalized for the
one-time effects of cable system acquisitions and dispositions, and for the
change in classification of late fee revenues.

New Products. New products revenues increased during 1998 due
primarily to the launch of high speed data ("HSD") Internet access
services in new markets and customer growth, and growth in business
dedicated telephony services.

As of September 30, 1998, MediaOne Group had approximately 55,000 HSD
customers compared with 13,000 HSD customers for the same period in 1997.
The overall penetration rate for HSD Internet access services in markets
launched for more than 18 months ranged from 6 to 8 percent. HSD Internet
access services are available in 11 metro areas in the following states:
California, Florida, Georgia, Illinois, Massachusetts, Michigan, Minnesota,
New Hampshire and Ohio.

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 business telephony services, during 1998 MediaOne Group
began offering residential telephony services to six metro areas within the
states of California, Florida, Georgia, Massachusetts, and Virginia, with
Virginia being launched in October, 1998. As of September 30, 1998,
residential telephony services were available to approximately 256,000
homes. The penetration rate for homes marketed over an eight-week period
averaged from 8 to 9 percent.

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

PrimeStar. Prior to April 1, 1998, MediaOne Group distributed PrimeStar DBS
services to subscribers in its service areas, and as a result, reflected
consolidated operating results with respect to such subscribers. On April
1, 1998, MediaOne Group contributed its interest in PrimeStar Partners,
L.P. ("Old PrimeStar"), as well as its PrimeStar subscribers and certain
related assets to PrimeStar, Inc. ("PrimeStar"). Consequently, subsequent
to April 1, 1998, 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.

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

Other. The decrease in other revenues is due primarily to the sale of
MediaOne Group's wholly owned international directory operations in the
United Kingdom and Poland during June and October 1997, respectively.

Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in millions), continued

Operating Income (Loss)
<TABLE>
<CAPTION>
<S>                         <C>         <C>        <C>        <C>         <C>        <C>         <C>        <C>
-------------------------- ----------------------- ---------------------- ---------------------- ---------------------
                             Three Months Ended                           Nine Months Ended
                               September 30,              Change              September 30,             Change
                           ----------------------- ---------------------- ---------------------- ---------------------
                             1998        1997          $          %         1998        1997         $          %
-------------------------- ---------- ------------ ---------- ----------- ---------- ----------- ---------- ----------

Cable and broadband:
   Domestic                    $(56)        $(15)      $(41)           -     $(114)       $(30)      $(84)          -
   International                 (1)          (2)          1      (50.0)        (5)         (9)          4     (44.4)
                           ---------- ------------ ---------- ----------- ---------- ----------- ---------- ----------
                                (57)         (17)       (40)           -      (119)        (39)       (80)          -

International wireless           (2)          (3)          1      (33.3)        (7)        (12)          5     (41.7)
Corporate (1)                   (36)         (53)         17      (32.1)      (109)       (104)        (5)        4.8
Other                              -          (7)          7           -        (6)        (24)         18     (75.0)
                           ---------- ------------ ---------- ----------- ---------- ----------- ---------- ----------

   Current operations           (95)         (80)       (15)        18.8      (241)       (179)       (62)       34.6
Domestic wireless(2)               -          107      (107)           -         93         302      (209)     (69.2)
                           ========== ============ ========== =========== ========== =========== ========== ==========
Total                          $(95)          $27     $(122)           -     $(148)        $123     $(271)          -
========================== ========== ============ ========== =========== ========== =========== ========== ==========
</TABLE>

     (1)  Primarily  includes  headquarters  expenses  for shared  services  and
          divisional expenses associated with equity investments.
     (2) The domestic wireless businesses were sold effective 4/6/98.

During 1998, MediaOne Group's operating income decreased $122, to a loss of
$95, and $271, to a loss of $148, for the three- and nine-month periods
ended September 30, 1998, respectively, due primarily to the sale of the
domestic wireless businesses in April, 1998.

MediaOne Group's earnings before income taxes, depreciation and
amortization ("EBITDA") for the three-month period ended September 30, 1998
were $193, compared with $322 during the same period in 1997. Excluding the
effect of the domestic wireless operations, EBITDA would have been $169 in
the three-month period ended September 30, 1997. For the nine-month period
ended September 30, 1998, EBITDA was $746, compared with $1,002 during the
same period in 1997. Excluding the effect of the domestic wireless
operations, EBITDA would have been $598 during the nine month period of
1998, compared with $567 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
losses increased during the three- and nine-month periods ended September
30, 1998, due primarily to increased depreciation and amortization expense.
As MediaOne Group continues to upgrade its cable networks, depreciation
expense will continue to increase. 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
these systems while it was held for sale in 1997.

EBITDA for domestic cable and broadband operations during the three- month
period ended September 30, 1998 was $227 compared with $228 for the same
period in 1997. EBITDA remained relatively flat as total revenue increases
of $30, or 5.1 percent, were offset by increased programming costs of $10,
or 7.6 percent, and increased operating, marketing and advertising, and
general and administrative costs of $21, or 9.3 percent. New products
contributed increased revenues of $10 and increased costs of $16 to total
domestic cable and broadband EBITDA during the three month period of 1998.
Normalized for the one-time effects of cable system acquisitions and
dispositions, and for costs incurred in 1998 in connection with the Year
2000 implementation program, domestic cable and broadband EBITDA increased
4.5 percent.

For the nine-month period ended September 30, 1998, EBITDA for domestic
cable and broadband operations was $706, an increase of $15, or 2.2
percent, compared with $691 for the same period in 1997. Revenue increases
of $119, or 6.9 percent, exceeded increased programming costs of $41, or
10.5 percent, and increased operating, marketing and advertising, and
general and administrative costs of $63, or 9.8 percent. New products
contributed revenue increases of $21 and increased costs of $33 to total
domestic cable and broadband EBITDA during the period. Normalized for the
one-time effects of cable system acquisitions and dispositions, and for
costs incurred in 1998 in connection with the Year 2000 implementation
program, domestic cable and broadband EBITDA increased 4.1 percent.

Core cable EBITDA was $263 for the three-month period ended September 30,
1998, an increase of $15, or 6.0 percent, compared with $248 for the same
period in 1997. Normalizing for acquisitions and dispositions, core cable
EBITDA increased 6.5 percent. During the nine-month period ended September
30, 1998, core cable EBITDA was $800, an increase of $60, or 8.1 percent,
compared with $740 for the same period in 1997. Normalizing for
acquisitions and dispositions, core cable EBITDA increased 7.7 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 three months of 1998, an increase of
$10, or 7.6 percent, over the same period in 1997. Excluding programming
costs related to PrimeStar services, programming costs increased 16.1
percent. The normalized increase was primarily a result of increased
programming costs per subscriber as a result of rate increases, expanded
channel offerings and growth in subscribers. During the nine-month period
ended September 30, 1998, programming costs were $431, an increase of $41,
or 10.5 percent, over the same period in 1997. Excluding programming costs
related to PrimeStar DBS services, programming costs increased 14.9 percent
during the nine-month period of 1998.

Operating, marketing and advertising, and general and administrative costs
were $246 for the three-month period ended September 30, 1998, an increase
of $21, or 9.3 percent, over the same period in 1997. During the nine-month
period ended September 30, 1998, operating, marketing and advertising, and
general and administrative costs were $703, an increase of $63, or 9.8
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 due to improvements in customer
service, costs incurred to streamline the reporting and billing systems,
costs associated with the deployment of new products, such as high-speed
data and residential telephony, and Year 2000 implementation costs.
Incremental Year 2000 implementation costs were $6 and $7 during the three-
and nine-month periods of 1998, respectively.

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

Corporate. The decrease in corporate operating losses during the
three-month period ended September 30, 1998 is due primarily to a $30
charge in 1997 for management changes and moving costs related to
relocating MediaOne of Delaware, Inc.'s ("MediaOne of Delaware") operations
from Boston to Denver. The decrease was partially offset by increased
corporate costs during 1998. For the nine-month period ended September 30,
1998, operating losses increased due primarily to greater corporate costs,
including costs associated with international activities, partially offset
by the MediaOne of Delaware relocation charge discussed above.

Other. Other reflects operating losses associated with the international
directories operations during 1997 and costs incurred for the development
of internet content services. The international directories operations were
sold during the second and third quarters of 1997.

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                        Nine Months Ended
                                     September 30,            Change           September 30,            Change
                                 ----------------------- ----------------- ---------------------- --------------------
                                    1998        1997        $        %       1998        1997        $          %
-------------------------------- ----------- ----------- -------- -------- ---------- ----------- --------- ----------
Interest expense                      $(86)      $(178)      $92   (51.7)     $(379)      $(518)      $139     (26.8)
Equity losses in
  unconsolidated ventures              (68)       (177)      109   (61.6)      (273)       (495)       222     (44.8)
Gain on sale of domestic
  wireless investment                    -           -         -       -      3,869           -      3,869         -
Gains on sales of investments            3          13       (10)  (76.9)        42         108        (66)    (61.1)
Guaranteed minority interest
  expense                              (11)        (22)       11   (50.0)      (53)         (66)        13     (19.7)
Other income (expense)-net              13          (5)       18       -        86          (16)       102         -
-------------------------------- ----------- ----------- -------- -------- ---------- ----------- --------- ----------
</TABLE>

Interest Expense. Interest expense during the three-month period ended
September 30, 1998, decreased 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 majority of the commercial paper was replaced with the
6.25 percent Exchangeable Notes issued in August and September 1998.
Interest expense for the nine-month period ended September 30, 1998
decreased due to the debt assumption and refinancing described above. 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.

Equity Losses in Unconsolidated Ventures. Equity losses during the three-
and nine-month periods ended September 30, 1998, decreased due
predominantly to decreased losses generated from international ventures and
the absence of losses from the domestic investment in PrimeCo Personal
Communications, L.P. ("PrimeCo") which was transferred to AirTouch on April
6, 1998 pursuant to the AirTouch Transaction. The decrease in international
losses relates to an increase in subscribers and improved operations at
Telewest, rapid subscriber growth experienced by the wireless ventures
located in the United Kingdom, Hungary, the Czech and Slovak Republics, and
Poland, and the absence of losses related to ventures in Malaysia and
Indonesia in the first nine months 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 nine months of 1998, the Indonesian currency declined 48
percent as compared with the U. S. dollar and the Malaysian currency
increased slightly. During the first nine months of 1998, the Company
funded an additional $6 pursuant to the terms of the Indonesian venture
shareholder support agreement. After such fundings and those of the other
partners, the Company's contractual funding commitment is $13 and the
partners' commitments are $26, for which MediaOne Group is contingently
liable.

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

On September 1, 1998, MediaOne Group's interest in Telewest decreased to
21.6 percent. See Note 3 - Acquisitions and Dispositions - to the
Consolidated Financial Statements for a detailed discussion.

On November 10, 1998, MediaOne Group purchased additional shares in
Telewest increasing its ownership interest to 29.9 percent. See "Liquidity
and Capital Resources - Investing" for additional information.

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

Gains on Sales of Investments. During 1998, MediaOne Group sold various
investments resulting in pretax gains of $3 and $42 during the three- and
nine-month periods. During 1997, MediaOne Group sold its shares of Teleport
Communications Group, (acquired in the acquisition of Continental
Cablevision, Inc. ("Continental")), for a pretax gain of $13 during the
third quarter, its shares of Time Warner, (acquired in the acquisition of
Continental), 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.

Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in millions), continued

Guaranteed Minority Interest Expense. Guaranteed minority interest expense
for the three- and nine-month periods ended September 30, 1998 has
decreased compared with similar periods in 1997 due to the cash redemption
on June 12, 1998, of $301 face value of 7.96 percent Preferred Securities
and $237 face value of 8.25 percent Preferred Securities. In October 1998,
MediaOne Group issued $500 face value of 9.04 percent Preferred Securities
which will result in increased guaranteed minority interest expense during
the fourth-quarter of 1998, compared with the second and third quarters of
1998.

Other Income (Expense) - Net. Other income for the three- and nine-month
periods ended September 30, 1998 was favorably impacted by decreased
foreign exchange transaction losses, dividend income earned on the AirTouch
preferred stock and the lack of minority interest expense from the domestic
wireless operations. Such improvements were partially offset by a $40 loss
recognized in the third quarter of 1998 related to an interest rate swap
associated with the AirTouch preferred stock received in the AirTouch
Transaction. See Note 4 - Investment in AirTouch Preferred Stock - to the
Consolidated Financial Statements for a detailed discussion.

In October, the Company entered into a series of transactions which in
effect resulted in a termination of the interest rate swap agreement and
the purchase of a new interest rate option agreement with a $1 billion
notional amount. Of the $1 billion notional amount, $800 of the interest
rate option contract is designated to protect a portion of the AirTouch
preferred stock value from increases in interest rates and qualifies for
deferral accounting. See "Risk Management" section. The remaining $200
notional amount was designated to protect the Company from interest rate
increases on the issuance of $500 of Preferred Securities and did not
qualify for deferral accounting. Accordingly, the $200 notional amount of
the interest rate option was terminated on October 23, 1998, in conjunction
with the issuance of the Preferred Securities.

The Company currently estimates that it will record a net charge of $18
(net of income tax benefits of $12) associated with interest rate contracts
in the fourth-quarter of 1998. The charge includes a net expense of $18
(net of income tax benefits of $11) for the purchase of the interest rate
option and a net loss of $6 (net of income tax benefits of $4) on the
interest rate swap prior to termination, offset by a net gain of $6 (net of
income tax expense of $3) on the portion of the interest rate option
associated with the Preferred Securities issuance.

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 nine months ended
September 30, 1998, decreased $239 to $391 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. Partially offsetting the decrease in
cash provided by operating activities was $158 in increased tax payments
received from the Communications Group and the receipt in 1998 of $42 in
dividends, primarily from Westel 450 and Westel 900, the Company's European
wireless investments in Hungary.

During 1997, the domestic wireless businesses 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, debt
service and the Year 2000 implementation program, 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 $1,157 and $1,072 during
the nine months ended September 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.


Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and
esults of Operations (Dollars in millions), continued

MediaOne Group holds various investments in international and domestic
ventures. For the nine- month period ended September 30, 1998 and 1997, the
Company invested $157 and $320, respectively, in international ventures,
net of a $45 repayment in 1998 from a wireless investment in the United
Kingdom. During 1998, MediaOne Group, as an existing shareholder of
Telewest, participated in a rights offering by investing $131 in Telewest.
Telewest offered the rights in connection with its acquisition of General
Cable in September 1998. The remaining investments made during 1998 were
capital contributions to cable investments in Belgium, Japan, and
Singapore, as well as to wireless ventures in India, Indonesia and the
Slovak Republic. Investments made during 1997 were primarily for an
additional 40 percent interest in Fintelco, S.A., a cable and
telecommunications venture located in Argentina, which was subsequently
sold, as well as capital contributions to a wireless venture in India.
Domestically, MediaOne Group invested $84 and $173 during the nine months
ended September 30, 1998 and 1997, respectively. Of such investments, $64
and $149 represented contributions to PrimeCo during 1998 and 1997,
respectively. The investment in PrimeCo was sold April 6, 1998, in
conjunction with the sale of the wireless businesses to AirTouch.

During 1998, MediaOne Group sold various investments resulting in net
proceeds of $201, 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 $42,
and (d) miscellaneous investments, for net proceeds of $44. During 1997,
MediaOne Group sold international and domestic investments totaling $703,
as follows: (a) shares of Teleport Communications Group, for net proceeds
of $246, (b) shares of Time Warner, for net proceeds of $220, c) Thomson
Directories, the directory operation in the United Kingdom, for net
proceeds of $121, (d) a five percent interest in a French wireless venture,
for net proceeds of $81, and (e) miscellaneous investments, for net
proceeds of $35. In addition, during 1998, MediaOne Group received proceeds
of $71 on the sale of a note receivable and $6 for miscellaneous asset
sales.

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

As of September 30, 1998, the Company owed $187 associated with an
interest rate swap agreement which was entered into to protect the
Company from a decline in the value of the AirTouch preferred stock.
MediaOne Group paid $62 of the liability in October and an additional
$33 in a series of transactions which in effect resulted in a
termination of the interest rate swap agreement and the purchase of a
new interest rate option with a $1 billion notional amount. The
Company paid $17 on October 23, 1998 upon the termination of $200
notional amount of the interest rate option which was designated to
protect the Company from an increase in intrest rates on the issuance
of $500 of Preferred Securities. As of October 31, 1998, the amount
owed by the Company had declined to $79 as a result of the above
payments and an increase in interest rates. The Company intends to
fund the liability in the fourth quarter of 1998 with a portion of the
proceeds generated by the issuance of securities referenced to the
AirTouch preferred stock. The Company expects these proceeds to
fluctuate in an inverse relationship with the option liability. The
Company may alternatively use commercial paper to fund the liability.

Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in millions), continued

On November 10, 1998, MediaOne Group purchased an additional 175 million
Telewest shares from Southwestern Bell International Holdings at a price of
$2.25 per share, or $394. MediaOne Group financed the purchase with
commercial paper.

Financing Activities

Dividends. The Company paid dividends on the Communications stock of $519
through the date of the Separation in 1998, and $733 during the nine-month
period ended September 30, 1997. MediaOne Group no longer pays dividends on
the Communications stock as all Communications stock has been canceled
effective June 12, 1998, as a result of the Separation.

Cash from Discontinued Operations. Cash from discontinued operations was
$4,953 through the date of the Separation and $630 during the nine month
period ended September 30, 1997. 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 September 30, 1998 was $5,204, a decrease of
$3,759 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.

Excluding debt associated with the capital assets segment, MediaOne Group's
percentage of debt to total capital at September 30, 1998 was 28.0 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 September 30, 1998 was 32.6 percent compared with 48.1 percent
at December 31, 1997.

During August and September, 1998, MediaOne Group issued approximately
$1.686 billion of 6.25 percent Exchangeable Notes for net proceeds of
$1.642 billion. See Note 5 - Debt - to the Consolidated Financial
Statements for a detailed discussion.


Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in millions), continued

On June 12, 1998, MediaOne Group tendered $4.9 billion notional amount of
long term debt. Also on June 12, 1998, MediaOne Group tendered for cash
$301 face value of the 7.96 percent Preferred Securities and $237 face
value of the 8.25 percent Preferred Securities. The cash redemption amount
of $5.5 billion for the long term debt and $570 for the Preferred
Securities was financed with floating-rate commercial paper, with a
weighted average interest rate of 5.85 percent.

During the third quarter of 1997, MediaOne Group redeemed its zero coupon
subordinated notes, which had a recorded value of $268 attributable to the
Company. In addition, during the second quarter of 1997, MediaOne of
Delaware redeemed a 10-5/8 percent senior subordinated note with a recorded
value of $110, including a premium of $10. The Company financed the
redemptions with floating-rate commercial paper.

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

Share Repurchase. On August 7, 1998, the Board of Directors of MediaOne
Group authorized the repurchase of up to 25 million shares of the Company's
common stock. See Note 6 - Shareowners' Equity - to the Consolidated
Financial Statements for a detailed discussion.

Other

Debt Guarantees. 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
maintained the MediaOne Group subsidiary as guarantor on its debt,
non-recourse to MediaOne Group. As of September 30, 1998, the debt
guarantee was approximately $990.

Shelf Registrations. Under registration statements filed with the SEC as of
November 4, 1998, the Company is permitted to issue up to approximately
$400 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

Investment in PrimeStar. In the third quarter of 1998, PrimeStar
terminated a proposed merger with American Sky Broadcasting, Inc.
("ASkyB") in response to an anti-trust suit by the United States
Department of Justice. PrimeStar management is in the process of
developing alternative business plans in light of the terminated ASkyB
merger. MediaOne Group will evaluate its investment in PrimeStar upon
finalization of PrimeStar's business plan. Upon completion of this
evaluation, management may conclude that the net realizable value of
its investment in PrimeStar is below its carrying value. Management
expects to conclude its review in the fourth quarter of 1998. As of
September 30, 1998, MediaOne Group held approximately 19.5 million
shares of PrimeStar, with a net book value of $158. MediaOne Group
also guaranteed letters of credit for PrimeStar totaling approximately
$100.

Investments in International Ventures. In the third quarter of 1998, Russia
experienced a political and economic crisis which had a significant
detrimental impact on the business climate. As a result of the crisis, the
Company conducted an evaluation of its investments in Russia which are held
by RTDC, a 66.5 percent owned subsidiary. The Company concluded that the
investments held by RTDC, although impacted by the crisis, were not
impaired at the present time. The future prospects for the Russian economy
are unknown. The Company believes that the political or economic climate of
Russia may decline further and could result in a change in the assessment
of its investments. As of September 30, 1998, the Company had a net
investment in RTDC of $13, a net receivable from the venture of $8, and an
outstanding guarantee of RTDC debt of $17.

The Company owns a 49 percent interest in a venture which provides cellular
telephone service in certain areas of India (the "India Venture"). In the
third quarter of 1998, the India Venture made a partial payment on its
cellular license payment due to the India government and received a
deferment on the unpaid balance until the fourth quarter of 1998. The India
Venture will require cash from external sources to fund it operations in
the fourth quarter. The India Venture is currently in negotiations with
banks regarding interim and long-term financing needs of the business. As
of September 30, 1998, the Company had a net investment in the India
Venture of a negative $62. The Company has recorded losses in excess of its
capital contributions due to outstanding loan guarantees of the India
Venture's debt of approximately $120. The Company also has an outstanding
receivable from the India Venture of $9.

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 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

Interest Rate Risk Management. In the third quarter of 1988, MediaOne Group
issued 29 million shares of Exchangeable Notes for gross proceeds of $1.686
billion and used a portion of the proceeds to redeem outstanding commercial
paper. As of September 30, 1998, the Company had approximately $174 of
commercial paper exposed to changes in interest rates. A hypothetical 10
percent change in the weighted average commercial paper rate would result
in a $1 decrease in the annual reported earnings of the Company.

As of October 31, 1998, MediaOne Group had an $800 notional 5.039
percent interest rate option.  The interest
rate option is designated and effective to protect
$1.0 billion of the $1.5 billion AirTouch preferred stock from a decline in
value associated with an increase in interest rates. As a result, a
hypothetical 25 basis point increase in interest rates from the October 31,
1998 rate of 5.268 percent would have an $18 effect on the combined market
value of the AirTouch preferred stock and the interest rate option. Conversely,
a hypothetical 25 basis point decrease in interest rates would have an $18
effect.

Equity Risk Management. MediaOne Group eliminated its exposure to a
decrease in the market value and limited its participation in an
increase in the market value on 29 million shares of the 53 million
shares of AirTouch common securities owned through the third quarter
issuance of the Exchangeable Notes. See Note 6 - Debt - to the
Consolidated Financial Statements. A hypothetical 10 percent decrease
in the September 30, 1998 AirTouch common stock price of $57.00 per
share would result in a decrease of $338 in the value of the AirTouch
common stock partially offset by a decrease in the liability under the
Exchangeable Notes of $165. Conversely, a hypothetical 10 percent
increase in the September 30, 1998 AirTouch common stock price would
result in an increase of $338 in the value of the AirTouch common
stock partially offset by an increase in the liability under the
Exchangeable Notes of $33.

Commitments and Contingencies

See Note 8 - Commitments and Contingencies - to the Consolidated Financial 
             Statements.


Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in millions), continued

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 July 1, 2000. The Company is
currently reviewing the impact of this ruling.

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

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

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.

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


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

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

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

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.

Form 10-Q - Part I

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued
<TABLE>
<CAPTION>
<S>                      <C>                                <C>                   <C>                 <C>    

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

Customer Service         Head End Controller                Inability to          Early Phase III     Q2  1999
                         Digital Transmission               provide video,
                         Equipment                          telephony & data
                         Switches                           service
                         Ad Insertion
                         Network Surveillance

Customer Care & Billing  Subscriber Billings                Loss of revenues      Early Phase III     Q3  1999
                         Ad Sales Billings
                         Call Center Operations
                         Data Communications
                         Desktop Computing

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

Employees, Health &      Payroll & Benefit Systems          Loss   of    support  Early Phase III     Q2  1999
  Safety                 Facilities Functions               systems and
                                                            employee disruption
------------------------ ---------------------------------- --------------------- ------------------- ---------------
</TABLE>

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

Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Business continuity teams are being developed for the Year 2000 program
which include business contingency and disaster recovery management. The
contingency plans for high and medium risk inventory items are being
developed as part of the inventory and remediation process and will be in
place by the end of 1998. The contingency plans include trigger dates and
processes for implementation of any contingency plans where necessary.
There can be no assurance that the contingency plans developed by the
Company will eliminate all potential for service interruption.

Costs of Year 2000 Issues

MediaOne Group has incurred approximately $11 of costs to implement its
Year 2000 compliance program through the third quarter of 1998 and
currently expects to incur between $90 to $110 of costs in aggregate, of
which $30 to $40 represent capitalized expenditures. The funding of these
costs will be managed by the Company through its liquidity and capital
resources plan.

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 they continue
to be in the conversion phase of their Year 2000 program as of September
30, 1998. MediaOne Group is planning to continue its audit of TWE and its
progress relative to their Year 2000 program during 1999, 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
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.

All of the key thirteen international ventures in which MediaOne Group has
an investment have completed their initial inventory of systems and related
technologies subject to Year 2000 exposure and activities are underway in
each of the five phases. The current stage of activities varies within each
venture as well as upon the type of component at issue. The ventures have
established remediation strategies for approximately 90 percent of the
inventory items, while having completed remediation on approximately 60
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.

Risks Associated with Year 2000 Issues

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

Failure by MediaOne Group to complete its Year 2000 project in a timely or
complete manner, within its estimate of projected costs, or failure by
third parties, such as financial institutions and related networks,
software providers, local telephone companies, long distance providers,
power providers, etc., to correct their systems, with which MediaOne
Group's systems interconnect, could have a material impact on future
results of operations and financial position. Other factors which might
cause a material difference from management's estimate would include, but
not be limited to, the availability and cost of personnel with appropriate
skills and abilities to locate and correct all relevant computer code and
similar uncertainties, as well as the collateral effects on MediaOne Group
of the Year 2000 problem on the economy in general, or on MediaOne Group's
business partners and customers in particular. However, MediaOne Group
believes that the Year 2000 issue can be mitigated through its planned
repair, replacement, or retirement of the relevant systems and related
technologies, that are within MediaOne Groups reasonable control.

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 $436
and $419 at September 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.

The following results reflect normalizing adjustments for acquisitions,
dispositions, other asset transactions and Year 2000 costs.
<TABLE>
<CAPTION>
<S>                                                             <C>        <C>        <C>         <C>    
------------------------------------------------------------------------------------ ------------------------
                                                                    Normalized               Change
                                                            ------------------------ ------------------------
Nine Months Ended September 30,                                    1998        1997           $            %
----------------------------------------------------------- ------------ ----------- ----------- ------------
Proportionate Revenues
Cable and broadband:
     Domestic (1)                                                $4,098      $3,721        $377         10.1
     International                                                  230         188          42         22.3
                                                            ------------ ----------- ----------- ------------
                                                                  4,328       3,909         419         10.7

International wireless                                              792         524         268         51.1
Corporate                                                            15          12           3         25.0
Other (2)                                                            42          44         (2)        (4.5)
                                                            ============ =========== =========== ============
          Total proportionate revenues                           $5,177      $4,489        $688         15.3
=========================================================== ============ =========== =========== ============

Proportionate EBITDA (3)
Cable and broadband:
     Domestic (1)                                                $1,313      $1,186        $127         10.7
     International                                                   10         (6)          16            -
                                                            ------------ ----------- ----------- ------------
                                                                  1,323       1,180         143         12.1

International wireless                                              137          21         116            -
Corporate                                                          (50)        (60)          10         16.7
Other                                                               (2)        (11)           9         81.8
                                                            ------------ ----------- ----------- ------------
     Total proportionate EBITDA                                  $1,408      $1,130        $278         24.6
=========================================================== ============ =========== =========== ============
</TABLE>

Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions, except subscribers), continued

Selected Proportionate Data, continued
<TABLE>
<CAPTION>
<S>                                                            <C>       <C>         <C>         <C>    
-------------------------------------------------------------------------------------------------------------
                                                                    Normalized                 Change
                                                             -------------------------------------------------
Nine Months Ended September 30,                                    1998        1997      Amount         %
-----------------------------------------------------------  ------------ ----------- ----------- ------------
(in thousands)

Proportionate Subscribers
Cable and broadband:
     Domestic (1)                                                 7,472       7,305         167          2.3
     International                                                  912         875          37          4.2

International wireless                                            1,424         820         604         73.7
                                                            ------------ ----------- ----------- ------------

     Total proportionate subscribers                              9,808       9,000         808          9.0
=========================================================== ============ =========== =========== ============
</TABLE>

     (1) The proportionate results are based on MediaOne Group's 25.51 percent
         pro rata priority and residual equity interests in reported Time Warner
         Entertainment Company L.P.("TWE") results. The reported TWE results are
         prepared in accordance with GAAP and have not been adjusted to report 
         TWE results on a proportionate basis.
     (2) Primarily includes international directories.
     (3) Proportionate EBITDA represents MediaOne Group's equity interest in the
         entities multiplied by the entity's EBITDA. As such, proportionate 
         EBITDA does not represent cash available to the MediaOne Group.

Proportionate Results of Operations - Nine Months Ended September 30, 1998
Compared with 1997

For the first nine months of 1998, normalized for the one-time effects of
acquisitions, dispositions, other asset transactions and Year 2000 costs,
proportionate revenues increased $688, or 15.3 percent, and EBITDA
increased $278, or 24.6 percent.

Cable and Broadband. During the first nine months of 1998, normalized for
the one-time effects of cable system acquisitions and dispositions, and a
change in classification of the domestic cable late fee revenues,
proportionate revenues increased $377, or 10.1 percent. This is a result of
increases in subscribers and revenue per subscriber mainly due to expanded
channel offerings, repackaging of services and increased rates. Normalized
for the one-time effects of cable system acquisitions and dispositions and
Year 2000 costs, proportionate EBITDA increased $127, or 10.7 percent. This
increase is primarily a result of higher revenues, partially offset by
higher programming fees, increased personnel costs related to customer
service initiatives and costs associated with the deployment of high speed
data services. Proportionate EBITDA related to TWE operations increased
19.1 percent. TWE's results benefited from improved cable, programming and
filmed entertainment operations, and gains realized by asset sales.


Form 10-Q - Part I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions, except subscribers), continued

Selected Proportionate Data, continued

During the first nine months of 1998, normalized for asset dispositions and
the suspended proportionate reporting of the Malaysian and Indonesian
ventures in 1998, international cable and broadband proportionate revenues
increased due to customer growth at Telewest. During the same period,
normalized proportionate EBITDA increased due to improved operations at
Telewest, partially offset by an increase in MediaOne Group international
staff costs.

Proportionate international cable subscribers totaled 912,000 at September
30, 1998, a 4.2 percent increase over last year on a comparable basis.
Telewest's cable television subscribers increased 11.1 percent over last
year on a comparable basis.

International Wireless. During the first nine months of 1998, proportionate
revenues and EBITDA for the international wireless operations increased due
to the 73.7 percent increase in the international wireless subscriber base
to 1,424,000, on a comparable basis. The personal communications services
venture in the United Kingdom, One 2 One, and the digital wireless
operations in Hungary, Czech Republic, Slovakia, and Poland contributed
significantly to the increase. One 2 One added 337,000 proportionate
customers, an 83.4 percent increase from a year ago.

Corporate. During the first nine months of 1998, proportionate revenues for
corporate operations increased $3, or 25.0 percent, to $15. EBITDA losses
decreased $10, or 16.7 percent, to $(50) primarily due to a $30 charge in
1997 for management changes and moving costs related to relocating MediaOne
of Delaware's operations from Boston to Denver, partially offset by greater
corporate costs.

Other. Other reflects the results of the international directories
operations located in Brazil and development activities, which includes
development costs for Internet content services. The EBITDA increase of $9
is due primarily to the July 1998 transfer of an Internet content service
operation to domestic cable.

Form 10-Q - Part I
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Reference is made to the information set forth under "Risk Management"
beginning on page 38.

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 6.  Exhibits and Reports on Form 8-K

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

Exhibit
Number

12.            Statement regarding computation of earnings to fixed charges ratio of MediaOne Group, Inc.

99.            Unaudited Pro Forma Condensed Combined Statement of Operations of MediaOne Group, Inc.


(b)  Reports on Form 8-K filed during the Third Quarter of 1998

(i)            Form 8-K report dated July 29, 1998,  regarding a Press Release by MediaOne Group,  Inc. with
               respect to the Company's second quarter earnings.

(ii)           Form 8-K  report  dated  July  30,  1998,  concerning  the  registration  of  Premium  Income
               Exchangeable Securities ("PIES") with the Securities & Exchange Commission.



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

November 13, 1998        MediaOne Group, Inc.
                         Richard A. Post
                         Executive Vice President and
                         Chief Financial Officer
</TABLE>