<PAGE>
<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT of 1934 for the quarterly period ended June 30, 1998 or

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT of 1934 for the transition period from ________ to _________

Registration Number 333-53553

                             TIME WARNER TELECOM LLC

             (Exact name of registrant as specified in its charter)


        Delaware                                               84-1465464
(State or other jurisdiction of                              (I.R.S. Employer
Incorporation or organization)                            Identification Number)


                              5700 S. Quebec Street
                           Greenwood Village, CO 80111
                                 (303) 566-1000
          (Address, including zip code, and telephone number, including
          area code, of each registrant's principal executive offices)


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  [ ]       No [X]





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                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>                                                                                   <C>
PART I.  FINANCIAL INFORMATION

         Management's Discussion and Analysis of Financial Condition and Results
         of Operations                                                                   1

         Combined Balance Sheets at June 30, 1998 and December 31, 1997                 12

         Combined Statements of Operations for the Three Months and Six Months
         Ended June 30, 1998 and 1997                                                   13

         Combined Statements of Cash Flows for the Six Months Ended
         June 30, 1998 and 1997                                                         14

         Combined Statements of Changes in Members' Equity                              15

         Notes to combined financial statements                                         16

PART II. OTHER INFORMATION                                                              20

         Item 2.  Change in Securities and Uses of Proceeds

         Item 6.  Exhibits and Reports on Form 8-K
</TABLE>





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                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

        Time Warner Telecom LLC is a leading facilities-based competitive local
exchange carrier ("CLEC") in selected metropolitan markets across the United
States, offering a wide range of business telephony services, primarily to
medium- and large-sized business customers.

        The term "Company" refers to Time Warner Telecom LLC, its consolidated
and unconsolidated subsidiaries, including Time Warner Telecom Inc. ("TWT") and
all operations of the Company that were historically conducted by the Members
(as defined herein). The term "Members" refers to Time Warner Inc. and certain
of its subsidiaries (collectively, "TW"), MediaOne Group, Inc. and certain of
its subsidiaries (collectively, "MediaOne"), and Advance/Newhouse Partnership
("Newhouse"). TW and MediaOne, through certain subsidiaries, are partners in
Time Warner Entertainment Company, L.P. ("TWE"). TWE and Newhouse are partners
in Time Warner Entertainment-Advance/Newhouse Partnership ("TWEAN"). The term
"TW Cable" refers collectively to the cable systems owned by subsidiaries and
divisions of TWE, TWEAN and TW.

        The business of the Company was commenced in 1993 by TW Cable and
reflects the combined commercial telecommunication operations under the
ownership or management control of TW Cable. These operations consist of the
commercial telecommunication operations of TW and TWEAN that were each acquired
or formed in 1995, as well as the pre-existing commercial telecommunication
operations of TWE. All intercompany accounts and transactions between the
combined entities have been eliminated.

        The Company was recently formed in connection with a reorganization (the
"Reorganization") of the assets and liabilities of its business, which were
previously owned by subsidiaries and divisions of TWE, TWEAN and TW (together,
the "Parent Companies"). The Reorganization was consummated on July 14, 1998. In
connection with the Reorganization, the assets and liabilities of the Company's
business were contributed to the Company by the Parent Companies and in
connection therewith, TW, MediaOne and Newhouse received 61.95%, 18.88% and
19.17%, respectively, of the limited liability company interests in the Company
(all in the form of Class B limited liability company interests). The Company
accounted for the Reorganization at each of the Members' historical cost basis
of accounting and accordingly, the Reorganization had no effect on the Company's
total members' equity which has been presented on a consistent basis.

        In connection with the Reorganization, the Company's Management
Committee approved an option plan that provides for the granting of options to
purchase Class A limited liability company interests in the Company representing
approximately 10% of the equity in the Company, in the aggregate on a fully
diluted basis. Generally, options issued under such an option plan will become
exercisable over a four-year vesting period and will expire ten years from the
date of the grant. In addition, the purchase price of the Class A limited
liability company interests in the Company covered by each option will not be
less than the fair market value of such interests on the date of grant.

        The majority of the Company's revenues have been derived from the
provision of "private line" and "direct access" telecommunications services.
Because the Company has deployed switches in 16 of its 19 service areas as of
June 30, 1998, management expects that a growing portion of its revenues will be
derived from providing switched services. The Company's customers are
principally telecommunications-intensive business end-users, long distance
carriers ("IXCs"), internet service providers ("ISPs"), wireless communications
companies and governmental entities. Such customers are offered a wide range of
integrated telecommunications products and services, including dedicated
transmission, local switched, data



                                       1





<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)

and video transmission services and Internet services. In addition, the Company
benefits from its strategic relationship with TW Cable both through network
facilities access and cost-sharing. As a result, the Company's networks have
been constructed primarily through the use of fiber capacity licensed from TW
Cable. As of June 30, 1998, the Company operated networks in 19 metropolitan
service areas that spanned 6,309 route miles, contained 248,574 fiber glass
miles and offered service to 2,908 buildings. The Company's 19 service areas
include 18 networks that are wholly owned and one that is owned through a 50%
joint venture and is not consolidated with the Company's financial results. The
Company's consolidated revenues were $55.4 million for the year ended December
31, 1997 and $49.1 million for the six months ended June 30, 1998. As of June
30, 1998, the Parent Companies had invested $555.8 million in the Company.

        The Company's revenues have been derived primarily from end-user to
end-user private line connections and from a variety of services including: (i)
access between IXCs, (ii) access between end-users and IXCs, (iii) collocated
special access, (iv) collocated points of presence ("POP") to local exchange
carriers ("LECs") switched access transport and (v) local switched services.
Since its inception in 1993, the Company has experienced significant growth in
revenues and in the geographic scope of its operations. Management believes an
increasing portion of the Company's future growth will come from the provision
of local switched services as a result of the 16 switches deployed as of June
30, 1998. The Company believes that switched services provide the opportunity
for higher profit margins and better utilization of capital investment than
those expected from transport services. The shift of the revenue growth to
switched services may cause the Company's revenues to become less predictable
since a portion of such services are billed to customers on a usage basis.
Dedicated transport customers are typically billed a flat monthly rate which
produces a less variable stream of revenues for the Company. Furthermore, it is
expected that the growth in the switched service offerings will expand the
Company's customer base by making more services available to customers that are
generally smaller than those who purchase dedicated transport services. These
smaller customers are also expected to be the principal users of the Company's
long distance service, which is in the process of being launched. The Company
expects to experience a higher churn rate for these customers than it has
traditionally experienced with transport services. The Company intends to
minimize this churn for long distance services to smaller customers by offering
such service under minimum one-year contracts.

        The Company plans to expand its revenue base by fully exploiting
available network capacity in its existing markets and by continuing to develop
and selectively tailor new services in competitively-priced packages to meet the
needs of its medium- and large-sized business customers. The Company plans on
selectively entering new markets and intends to have networks under construction
or operational in several additional cities by the end of 1999.

        Operating expenses consist of costs directly related to the operation
and maintenance of the networks and the provision of the Company's services.
This includes the salaries and related expenses of operations and engineering
personnel as well as costs from the incumbent local exchange carrier ("ILECs")
and other competitors for facility leases and interconnection. These costs have
increased over time as the Company has increased its operations and revenues. It
is expected that these costs will continue to increase, but at a slower rate
than revenue growth.

        Selling, general and administrative expenses consist of salaries and
related costs for employees other than those involved in operations and
engineering. Such expenses also include costs related to non-technical facility,
sales and marketing, regulatory and legal costs. These costs have increased over
time as the Company has increased its operations and revenues. The Company
expects these costs to continue to increase as the Company's revenue growth
continues, but at a slower rate than revenue growth.





                                       2






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                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)



        In the normal course of conducting its businesses, the Company has
various transactions with the Parent Companies, generally on terms resulting
from negotiation between the affected units that, in management's view, result
in reasonable allocations. In connection with the Reorganization, the Company
entered into several contracts with the Parent Companies in respect of certain
of these transactions. The Company's selling, general and administrative
expenses include charges allocated from the Parent Companies for certain general
and administrative expenses, primarily including office rent and overhead
charges for various administrative functions performed by TW Cable. These
charges were required to reflect all costs of doing business and have been based
on various methods, which management believes results in reasonable allocations
of such costs that were necessary to present the Company's operations as if they
had been operated on a stand alone basis. In addition, the Company licenses the
right to use the majority of its fiber optic cable capacity from TW Cable and
reimburses it for facility maintenance and pole rental costs. These costs are
included in the Company's operating expense. Finally, effective July 1, 1997
through July 1998, all of the Company's financing requirements were funded with
loans from the Parent Companies. These loans are subordinated in right of
payment to the Notes described below and bear interest (payable in kind) at an
annual rate equal to The Chase Manhattan Bank's prime lending rate as in effect
from time-to-time, which was 8.5% throughout the period from July 1, 1997
through July 1998 and mature on August 15, 2008. The Company believes that this
rate is comparable to rates which could have been obtained from unrelated third
parties. The Parent Companies do not have any obligation to make additional
equity investments in or loans to the Company. In July 1998, the Company
obtained external financing (see "Financing" Section) which, together with
internally generated funds, is expected to provide sufficient funds for the
Company to expand its business as currently planned, pay interest on the Notes
described below and fund its currently expected losses through the end of 1999.
Thereafter, the Company expects to require additional financing.

        The Company has not historically, and does not currently, generate
positive operating cash flow. However, for the six months ended June 30, 1998,
14 of the Company's 19 service areas generated positive operating cash flow and
the Company, as a whole, expects to begin generating positive operating cash
flow within the next 12 months. The following comparative discussion of the
results of financial condition and results of operations of the Company includes
an analysis of changes in revenues and operating income (loss) before
depreciation and amortization ("EBITDA"). Industry analysts generally consider
EBITDA to be an important measure of comparative operating performance for the
telecommunications industry, and when used in comparison to debt levels or the
coverage of interest expense, as a measure of liquidity. However, EBITDA should
be considered in addition to, not as a substitute for, operating income, net
income, cash flow and other measures of financial performance and liquidity
reported in accordance with generally accepted accounting principles. EBITDA as
defined herein may not be comparable to similarly titled measures reported by
other companies.

        The Company has had and will continue to have significant capital
expenditures. These expenditures pertain to the historical construction and
expansion of the networks and to the future expansion of the existing networks
as well as the construction of new networks.

RESULTS OF OPERATIONS

        The following table sets forth certain consolidated statement of
operations data of the Company, in thousands of dollars and expressed as a
percentage of net revenues for each of the periods presented. This table should
be read in conjunction with the Company's financial statements, including the
notes thereto, appearing elsewhere in this report.


                                       3






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<PAGE>

                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                                                THREE MONTHS ENDED JUNE 30
------------------------------------------------------------------------------------------
                                      1997                      1998
                                    ------------------------------------------------------
                                                  Dollars in Thousands
<S>                                 <C>               <C>       <C>                 <C>  
Statement of Operations Data:
Revenues:
  Dedicated transport services      $  9,839          78.5%     $ 19,240            71.1%
  Switched services                    2,692          21.5         7,807            28.9
                                    --------         -----      --------           -----
     Total revenues                   12,531         100.0        27,047           100.0

Costs and expenses:
  Operating (1)                        9,031          72.1        16,207            59.9
  Selling, general
     and Administrative (1)           12,776         102.0        17,854            66.0
  Depreciation & amortization (1)      9,038          72.1        12,393            45.8
                                    --------         -----      --------           -----
     Total costs & expenses           30,845         246.1        46,454           171.8

Operating loss                       (18,314)       (146.1)      (19,407)          (71.8)

Equity in losses of
    Unconsolidated  affiliates          (761)         (6.1)          (29)           (0.1)
Interest, net (1)                       --              --        (2,699)          (10.0)
                                    --------         -----      --------           -----
Net loss (2)                        ($19,075)       (152.2%)    ($22,135)          (81.8%)
                                    ========        ======      ========           =====  
EBITDA                              ($ 9,276)        (74.0%)    ($ 7,014)          (25.9%)
                                    ========        ======      ========           =====  

<CAPTION>
-----------------------------------------------------------------------------------------------
                                                    SIX MONTHS ENDED JUNE 30
-----------------------------------------------------------------------------------------------
                                      1997                      1998
                                    -----------------------------------------------------------
                                                  Dollars in Thousands
<S>                                 <C>               <C>       <C>                <C>  
Statement of Operations Data:
Revenues:
  Dedicated transport services      $ 18,140          80.0%     $ 35,973           73.3%
  Switched services                    4,544          20.0        13,122           26.7 
                                    --------         -----      --------          ------
     Total revenues                   22,684         100.0        49,095          100.0

Costs and expenses:
  Operating (1)                       17,415          76.8        29,726           60.5
  Selling, general
     and Administrative (1)           24,761         109.2        34,170           69.6
  Depreciation & amortization (1)     17,880          78.8        24,325           49.5
                                    --------         -----      --------           -----
     Total costs & expenses           60,056         264.8        88,221          179.7

Operating loss                       (37,372)       (164.8)      (39,126)         (79.7)

Equity in losses of
    Unconsolidated  affiliates        (1,354)         (6.0)          (87)          (0.2)
Interest, net (1)                         --            --        (4,710)          (9.6)
                                    --------       ------       --------          -----  
Net loss (2)                        ($38,726)      (170.7%)     ($43,923)         (89.5%)
                                    ========       ======       ========          =====  

EBITDA                             ($ 19,492)       (85.9%)     ($14,801)         (30.1%)
                                    ========       ======       ========          =====  
-----------------------------------------------------------------------------------------------
</TABLE>

(1) Includes expenses resulting from transactions with affiliates of $3.8
million and $6.8 million in the three months ended June 30, 1997 and 1998
respectively, and $7.8 million and $12.9 million in the six months ended June
30, 1997 and 1998 respectively.

(2) The Company is a limited liability company that has operated as a
partnership for tax purposes during the periods presented herein. Accordingly,
the Company is not subject to Federal and state income taxation.

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997

        Revenues. Revenue increased $14.5 million, or 115.8%, to $27.0 million
for the three months ended June 30, 1998, from $12.5 million for the same period
in 1997. Revenues from the provision of dedicated transport services increased
$9.4 million, or 95.5%, to $19.2 million in 1998, from $9.8 million in 1997.
Revenues from dedicated transport service increased 91.1% in those markets in
which dedicated transport services were offered as of June 30, 1997. Switched
service revenue increased $5.1 million, or 190.0%, to $7.8 million in 1998, from
$2.7 million in 1997. Switched service revenue increased 78.6% in those markets
in which switched services were offered as of June 30, 1997. The increase in
revenues from dedicated transport services primarily reflects growth of services
and new products offered in existing markets. The increase in switched services
resulted from the offering of services in new markets and the growth of services
in existing markets. At June 30, 1998 the Company offered dedicated transport
services in 19 metropolitan areas, 16 of which offered switched services, as
compared to offering dedicated transport services in 15 metropolitan areas, 4 of
which offered switched services at June 30, 1997.

        Operating Expenses. Operating expenses increased $7.2 million, or 79.5%,
to $16.2 million for the three months ended June 30, 1998, from $9.0 million for
the same period in 1997. The increase in operating expenses was primarily
attributable to the Company's expansion of its business, principally switched
services, and the ongoing development of existing markets resulting in higher
LEC charges for circuit leases and interconnection, higher technical personnel

                                       4



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<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


costs, and higher data processing costs. As a percentage of revenues, operating
expenses decreased to 59.9% in 1998 from 72.1% for the same period in 1997.

        Selling, General and Administrative. Selling, general and administrative
expenses increased $5.1 million, or 39.7%, to $17.9 million for the three months
ended June 30, 1998, from $12.8 million for the same period in 1997. The
increase in selling, general and administrative expenses was primarily
attributable to higher direct sales costs associated with the increase in
revenues, an increase in consulting expenses relating to local regulatory
matters, implementing new billing and system software, higher property taxes,
and moving costs related to consolidating the corporate office into one
building. As a percentage of revenues, selling, general and administrative
expenses decreased to 66.0% in 1998, from 102.0% for the same period in 1997.

        Depreciation and Amortization Expense. Depreciation and amortization
expense increased $3.4 million, or 37.1%, to $12.4 million for the three months
ended June 30, 1998, from $9.0 million for the same period in 1997. The increase
in depreciation and amortization expense was primarily attributable to higher
capital expenditures related to the ongoing construction and expansion of the
Company's telecommunication networks in both 1997 and 1998. As a percentage of
revenues, depreciation and amortization expenses decreased to 45.8% in 1998,
from 72.1% for the same period in 1997.

        EBITDA. The EBITDA loss for the three months ended June 30, 1998
decreased $2.3 million, or 24.4%, to $7.0 million in 1998, from a loss of $9.3
million for the same period in 1997. This improvement was primarily the result
of increased revenue due to the Company's expansion of local telecommunications
networks in new and existing markets and growth of the Company's customer base,
partially offset by higher operating expenses in support of the larger customer
base, and higher selling, general and administrative expenses required to
support the expansion.

        Interest Expense. Effective July 1, 1997 through July 1998, all of the
Company's financing requirements were funded with loans from the Parent
Companies. Interest expense relating to these loans totaled $2.8 million for the
three months ended June 30, 1998. In July 1998, the Company issued $400 million
of 9 3/4% Senior Notes, due July 15, 2008 (see "Financing" Section).

        Net Loss. Net loss increased $3.1 million, or 16.0%, to $22.1 million
for the three months ended June 30, 1998, from a net loss of $19.1 million for
the same period in 1997. This increase resulted from higher depreciation and
amortization expenses relating to the Company's expansion of telecommunications
networks in new and existing markets, as well as interest expense on the loans
payable to the Parent Companies.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

        Revenues. Revenues increased $26.4 million, or 116.4%, to $49.1 million
for the six months ended June 30, 1998, from $22.7 million for the same period
in 1997. Revenues from the provision of dedicated transport services increased
$17.8 million, or 98.3%, to $36.0 million for the six months ended June 30,
1998, from $18.1 million for the same period in 1997. Revenues from dedicated
transport service increased 94.2% in those markets in which dedicated transport
services were offered as of June 30, 1997. Switched service revenue increased
$8.6 million, or 188.8%, to $13.1 million for the six months ended June 30,
1998, from $4.5 million for the same period in 1997. Switched service revenue
increased 99.2% in those markets in which switched services were offered as of
June 30, 1997. The increase in revenues from dedicated transport services
primarily reflects growth of services and new products offered in existing
markets. The increase in switched services resulted from the offering of
services in new markets and the


                                       5



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                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


growth of services in existing markets. At June 30, 1998 the Company offered
dedicated transport services in 19 metropolitan areas, 16 of which offered
switched services, as compared to offering dedicated transport services in 15
metropolitan areas, 4 of which offered switched services at June 30, 1997.

        Operating Expenses. Operating expenses increased $12.3 million, or
70.7%, to $29.7 million for the six months ended June 30, 1998, from $17.4
million for the same period in 1997. The increase in operating expenses was
primarily attributable to the Company's expansion of its business, principally
switched services, and the ongoing development of existing markets resulting in
higher LEC charges for circuit leases and interconnection, higher technical
personnel costs, and higher data processing costs. As a percentage of revenues,
operating expenses decreased to 60.5% in 1998 from 76.8% for the same period in
1997.

        Selling, General and Administrative. Selling, general and administrative
expenses increased $9.4 million, or 38.0%, to $34.2 million for the six months
ended June 30, 1998, from $24.8 million for the same period in 1997. The
increase in selling, general and administrative expenses was primarily
attributable to higher direct sales costs associated with the increase in
revenues, an increase in consulting expenses relating to local regulatory
matters, implementing new billing and system software, higher property taxes,
and moving costs related to consolidating the corporate office into one
building. As a percentage of revenues, selling, general and administrative
expenses decreased to 69.6% in 1998, from 109.2% for the same period in 1997.

        Depreciation and Amortization Expense. Depreciation and amortization
expense increased $6.4 million, or 36.0%, to $24.3 million for the six months
ended June 30, 1998, from $17.9 million for the same period in 1997. The
increase in depreciation and amortization expense was primarily attributable to
higher capital expenditures related to the ongoing construction and expansion of
the Company's telecommunication networks in both 1997 and 1998. As a percentage
of revenues, depreciation and amortization expenses decreased to 49.5% in 1998,
from 78.8% for the same period in 1997.

        EBITDA. The EBITDA loss for the six months ended June 30, 1998 decreased
$4.7 million, or 24.1%, to $14.8 million in 1998, from a loss of $19.5 million
for the same period in 1997. This improvement was primarily the result of
increased revenue due to the Company's expansion of local telecommunications
networks in new and existing markets and growth of the Company's customer base,
partially offset by higher operating expenses in support of the larger customer
base, and higher selling, general and administrative expenses required to
support the expansion.

        Interest Expense. Effective July 1, 1997 through July 1998 all of the
Company's financing requirements were funded with loans from the Parent
Companies. Interest expense relating to these loans totaled $4.8 million for the
six months ended June 30, 1998. In July 1998, the Company issued $400 million of
9 3/4 Senior Notes, due July 15, 2008, (see "Financing" Section).

        Net Loss. Net loss increased $5.2 million, or 13.4%, to $43.9 million
for the six months ended June 30, 1998, from a net loss of $38.7 million for the
same period in 1997. This increase resulted from higher depreciation and
amortization expenses relating to the Company's expansion of telecommunications
networks in new and existing markets, as well as interest expense on the loans
payable to the Parent Companies.



                                       6



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<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


LIQUIDITY AND CAPITAL RESOURCES

        Cash Flows. For the first six months of 1998, the Company's cash used in
operations decreased to $18.9 million from $36.1 million for the first six
months of 1997. This decrease in cash used in operations of $17.2 million
principally resulted from lower EBITDA losses and working capital requirements
in the first six months of 1998. The Company expects to continue to have
operating cash flow deficiencies for the near future as it develops and expands
its business.

        Cash used in investing activities increased $11.8 million to $53.4
million for the first six months of 1998, as compared to $41.6 million for the
first six months of 1997, as a result of higher capital expenditures.

        For the first six months of 1998, net cash provided by financing
activities reflects the receipt of interest bearing loans from the Parent
Companies amounting to $72.3 million. Prior to July 1, 1997, the Company's cash
flow deficiencies were entirely funded by non-interest bearing capital
contributions from the Parent Companies. For the first six months of 1997, net
capital contributions amounted to $77.7 million. This decrease of $5.3 million
was primarily due to lower cash funding requirements principally due to
operating cash flow associated with the Company's expansion of its customer base
and services in new and existing markets and lower working capital requirements,
partially offset by higher capital expenditure requirements for the first six
months of 1998.

        Net cash provided by financing activities reflects the receipt of
non-interest-bearing capital contributions from the Parent Companies to fund the
Company's cash flow deficiencies through June 30, 1997. Effective July 1, 1997
through July 1998, all of the Company's financing requirements were funded with
interest-bearing loans from the Parent Companies. This indebtedness is
subordinated in right of payment to the Notes, and bears interest (payable in
kind) at an annual rate equal to The Chase Manhattan Bank's prime lending rate
as in effect from time-to-time, which was 8.5% throughout the period July 1,
1997 through July 1998, and matures on August 15, 2008, one month after the
maturity of the Notes.

FINANCING

        Historically, the Company has not maintained cash balances since all the
Company's cash receipts and funding requirements were provided to or from the
Parent Companies. The proceeds from the issuance of senior notes ("Debt
Offering"), cash flow from operations and future financings are expected to fund
the Company's future cash requirements through the end of 1999. The Parent
Companies and the Members are not under any obligation to make any additional
equity investments in or loans to the Company. At a future date, the Company may
negotiate a bank credit facility to provide it with working capital and enhance
its financial flexibility. There can be no assurance that such financing will be
available on terms acceptable to the Company or at all.

        The development of the Company's business and the installation and
expansion of the Company's communications networks, combined with the
development and operation of the Company's network operations center ("NOC"),
have resulted in substantial capital expenditures. These capital expenditures,
as well as the Company's historical operating losses, have resulted in
substantial negative cash flow for the Company since inception in 1993. Funding
of this historical cash flow deficiency has been primarily accomplished through
the receipt of capital contributions from the Parent Companies through June 30,
1997. From July 1, 1997 through July 1998, the deficiency has been funded
through interest bearing loans from the Parent Companies. Thereafter, the
Company expects cash flow deficiencies to be funded with the proceeds from the
Debt Offering and future financing as described above. This indebtedness to the
Parent


                                       7



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<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


Companies is subordinated in right of payment to the Notes and bears interest
(payable in kind) at an annual rate equal to The Chase Manhattan Bank's prime
lending rate as in effect from time-to-time, which was 8.5% throughout the
period from July 1, 1997 through July 1998 and matures on August 15, 2008, one
month after the maturity of the Notes. The net balance of amounts due to the
Parent Companies, including interest accrued thereon, under this funding
arrangement was $152.6 million and $75.5 million as of June 30, 1998 and
December 31, 1997, respectively. The average net capital contributions from the
Parent Companies were $517.8 million for the six months ended June 30, 1997.
Additional paid-in capital balances, which include all capital contributions
from the Parent Companies have remained at $555.8 million since June 30, 1997.

        On July 21, 1998, the Company issued $400 million of 9 3/4% Senior Notes
("Notes") due July 15, 2008. The Notes are unsecured, unsubordinated obligations
of the Company and TWT, who are jointly and severally liable, fully and
unconditionally, with respect to the Notes. Interest on the Notes is payable
semiannually on January 15 and July 15, beginning on January 15, 1999. The net
proceeds of approximately $387.5 million are expected to be used to expand and
develop existing and new networks and for general corporate and working capital
purposes through the end of 1999. The proceeds of the Debt Offering were
immediately invested in short-term investments While the primary use of such
proceeds will be to fund ongoing business operations of the Company's
subsidiaries which own and operate its networks, the Company intends to continue
to evaluate potential acquisitions and joint ventures. The Company has no
definitive agreement with respect to any acquisition or joint venture, although
from time to time it may discuss and assess opportunities with other companies,
including affiliates of the Members, on an ongoing basis.

        The Company expects that its future cash requirements principally will
be for working capital, capital expenditures and to fund its operating losses.
The Company expects that the net proceeds of the Debt Offering, together with
internally generated funds, will provide sufficient funds for the Company to
meet the Company's expected capital and liquidity needs to expand its business
as currently planned, pay interest on the Notes and fund its currently expected
losses through the end of 1999. Thereafter, the Company expects to require
additional financing. However, in the event that the Company's plans or
assumptions change or prove to be inaccurate, or the foregoing sources of funds
prove to be insufficient to fund the Company's growth and operations, or if the
Company consummates acquisitions or joint ventures, the Company may be required
to seek additional capital sooner than currently anticipated. The Company's
revenues and costs are dependent upon factors that are not within the Company's
control, such as regulatory changes, changes in technology and increased
competition. Due to the uncertainty of these and other factors, actual revenues
and costs may vary from expected amounts, possibly to a material degree, and
such variations are likely to affect the level of the Company's future capital
expenditures and expansion plans. Sources of financing may include public or
private debt or equity financing by the Company or its subsidiaries or other
financing arrangements.

CAPITAL EXPENDITURES

        The facilities-based telecommunications service business is a capital
intensive business. The Company's operations have required and will continue to
require substantial capital investment for: (i) the purchase and installation of
switches, electronics, fiber and other technologies in existing networks and in
additional networks to be constructed in new service areas; and (ii) the
acquisition and expansion of networks currently owned and operated by other
companies. The Company's expected capital expenditures for general corporate and
working capital purposes include (i) expenditures with respect to the Company's
management information system and corporate service support infrastructure and
(ii) operating and administrative expenses with respect to new networks and debt
service. The Company plans to make


                                       8



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


substantial capital investments in connection with the deployment of switches in
all of its existing networks, and plans to construct and develop new networks.
Expansion of the Company's networks will include the geographic expansion of the
Company's existing operations and will consider the development of new markets.
In addition, the Company may acquire existing networks in the future.

        During the first six months of 1998, capital expenditures were $53.4
million, an increase of $11.8 million from the first six months in 1997. This
increase resulted from unusually low capital expenditures for the first six
months of 1997, principally due to the Company's new management team put into
place in January 1997, which required time to formulate the Company's current
business strategy focusing exclusively on business customers. The largest
commitment of capital was related to the installation of transport and switch
related electronics to support the increase in sales activity. Based on
expansion plans comparable to the historical expansion of the Company and the
continuation of the Company's relationship with TW Cable with respect to
additional fiber capacity, the Company estimates it will require approximately
$150 million in each of 1998 and 1999 to fund its capital expenditures.

YEAR 2000

        The Company is currently working to resolve the potential impact of the
Year 2000 on the processing of time-sensitive information by its computerized
information systems. Year 2000 issues may arise if computer programs have been
written using two digits (rather than four) to define the applicable year. In
such case, programs that have time-sensitive logic may recognize a date using
"00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures. The Company utilizes a number of computer
programs across its entire operation. Year 2000 issues could impact the
Company's information systems as well as computer hardware and equipment that is
part of its telephony network such as switches, termination devices and SONET
rings that contain embedded software or "firmware."

        The Company's exposure to potential Year 2000 problems exists in two
general areas: technological operations in the sole control of the Company, and
technological operations dependent in some way on one or more third parties. The
majority of the Company's exposure to potential Year 2000 problems is in the
latter area where the situation is much less within the Company's ability to
predict or control. The Company's business is heavily dependent on third
parties, many of whom are themselves heavily dependent on technology. For
example, like all other telecommunications providers, the Company must
interconnect its networks with other carriers and service providers in order to
provide end-to-end service to customers. The Company cannot control the Year
2000 readiness of those parties but does plan to test its interfaces with them
and to work with these parties to resolve any difficulties. In some cases, the
Company's third party dependence is on vendors of technology who are themselves
working towards solutions to Year 2000 problems, such as suppliers of software
systems for billing, ordering and other key business operations.



                                       9



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


        The Company has developed a Year 2000 action plan to address
identification and assessment of potential Year 2000 issues and remediation.
The Company has completed the first phase of such action plan which involved
making the Company's internal organizations aware of Year 2000 issues and
assigning responsibility internally for the Year 2000 readiness program. The
Company is now in the assessment phase of its plan which involves a review of
significant software and equipment used in the Company's operations and, to the
extent practicable, in the operations of other parties with which it
interconnects its networks, in order to determine if any Year 2000 risks exist
that may be material to the Company as a whole. This process includes an
assessment of Year 2000 risks on an ongoing basis and the identification of
practical remediation measures that could be taken on a timely basis to alter,
validate or replace time-sensitive software and equipment. The Company expects
to complete the assessment phase of its plan by the third quarter of 1998.

        Concurrently with the foregoing assessment work, the Company has already
begun implementing certain remedial measures and intends to complete its
remediation efforts prior to any anticipated material impact on its computerized
information systems or on hardware that is part of its telephony network. In the
normal course of business, the Company is in the process of replacing many of
the computer programs used by key business operations and its financial systems.
The new programs are expected to be in place and operational by the end of 1999.
The specifications for these new systems are all Year 2000 compliant As a
contingency plan, in case the new systems are not fully operational when
planned, the Company plans to remediate certain existing systems so that they
will be Year 2000 ready.

        Costs of addressing potential Year 2000 problems have not been material
to date and, based on preliminary information gathered to date from the Company,
its customers and vendors, are not currently expected to have a material adverse
impact on the Company's financial position, results of operations or cash flows
in future periods. However, if the Company, its customers or vendors are unable
to resolve such processing issues in a timely manner, it could result in a
material financial risk, including loss of revenue, substantial unanticipated
costs and service interruptions. Accordingly, the Company plans to devote the
resources it concludes are appropriate to resolve all significant Year 2000
issues in a timely manner.

CAUTIONS CONCERNING FORWARD LOOKING STATEMENTS

        Certain information included in this report contains forward-looking
statements, including statements regarding the Company's expected financial
position, business and financing plans. These forward-looking statements reflect
the Company's views with respect to future events and financial performance. The
words "believe", "expect", "plans" and "anticipate" and similar expressions
identify forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from such
expectations include the Company's limited history of operations, the Company's
negative cash flow and operating losses, the significant capital requirements
required for the development and expansion of the Company's business, the
Company's substantial leverage and insufficiency of its earnings to cover its
fixed charges, the risks associated with the expansion of the Company's business
and the possible inability of the Company to manage its growth, the dependence
of the Company on its relationship and agreements with TW Cable, risks related
to the Company's expansion into the provision of long distance services, the
Company's dependence upon interconnection with and use of ILEC networks, the
competitive nature of the telecommunications business, the Company's dependence
on its information billing systems, risks related to failure of Year 2000
remediations, the Company's dependence on its significant customers, regulatory
developments and the Company's dependence on governmental and other
authorizations. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates.


                                       10



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)


The Company undertakes no obligations to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.


                                       11



<PAGE>
<PAGE>


                            TIMES WARNER TELECOM LLC
                             COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                June 30,      December 31,
                                                                                  1998             1997
                                                                                -------       ------------
                                                                                      (Unaudited)
                                                                                      (thousands)
<S>                                                                           <C>             <C>
                                ASSETS
Current assets
  Receivables, less allowances of $1,403 and $776 ......................      $  14,741       $   8,882
  Prepaid expenses .....................................................          1,051           1,192
                                                                              ---------       ---------
    Total current assets ...............................................         15,792          10,074

Investments in unconsolidated affiliates ...............................          4,289           4,376

Property, plant and equipment ..........................................        537,334         484,206
Less: accumulated depreciation .........................................        (92,797)        (69,048)
                                                                              ---------       ---------
                                                                                444,537         415,158

Intangible assets, net .................................................          8,176           8,469
                                                                              ---------       ---------

    Total assets .......................................................      $ 472,794       $ 438,077
                                                                              =========       =========

                    LIABILITIES AND MEMBERS' EQUITY
Current liabilities
  Accounts payable .....................................................      $  24,919       $  32,908
  Other current liabilities ............................................         38,824          29,304
                                                                              ---------       ---------
    Total current liabilities ..........................................         63,743          62,212

  Subordinated loans payable to the Parent Companies
    (including $6,315 and $1,544 of accrued interest, respectively).....        152,584          75,475

Members' equity
  Class A interests having an aggregate participation
    percentage of 0% ...................................................             --              --
  Class B interests having an aggregate participation
    percentage of 100% .................................................        555,807         555,807
  Accumulated deficit ..................................................       (299,340)       (255,417)
                                                                              ---------       ---------

    Total members' equity ..............................................        256,467         300,390
                                                                              ---------       ---------

    Total liabilities and members' equity ..............................      $ 472,794       $ 438,077
                                                                              =========       =========
</TABLE>


                            See accompanying notes.

                                       12



<PAGE>
<PAGE>



                            TIME WARNER TELECOM LLC
                        COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                            Three Months                     Six Months
                                                            Ended June 30,                  Ended June 30,
                                                        -----------------------       ------------------------
                                                          1998           1997           1998           1997
                                                        --------       --------       --------       -------- 
                                                                             (Unaudited)
                                                                             (thousands)
<S>                                                     <C>            <C>            <C>            <C>     
Revenues:
    Dedicated transport services .................      $ 19,240       $  9,839       $ 35,973       $ 18,140
    Switched services ............................         7,807          2,692         13,122          4,544
                                                        --------       --------       --------       -------- 
          Total revenues .........................        27,047         12,531         49,095         22,684
                                                        --------       --------       --------       -------- 

Costs and expenses:
     Operating (a) ...............................        16,207          9,031         29,726         17,415
     Selling, general and administrative (a) .....        17,854         12,776         34,170         24.761
     Depreciation and amortization (a) ...........        12,393          9,038         24,325         17,880
                                                        --------       --------       --------       -------- 
          Total costs and expenses ...............        46,454         30,845         88,221         60,056
                                                        --------       --------       --------       -------- 

Operating loss ...................................       (19,407)       (18,314)       (39,126)       (37,372)

Equity in losses of unconsolidated affiliates ....           (29)          (761)           (87)        (1,354)
Interest expense, net (a)  .......................        (2,699)            --         (4,710)            --
                                                        --------       --------       --------       -------- 

Net loss .........................................      $(22,135)      $(19,075)      $(43,923)      $(38,726)
                                                        ========       ========       ========       ======== 


(a) Includes expenses resulting from transactions
      with affiliates (Note 4):

     Operating expenses ..........................      $    513       $    433       $  1,026       $    866
                                                        ========       ========       ========       ======== 
     Selling, general and administrative .........      $  1,225       $  1,825       $  2,643       $  3,772
                                                        ========       ========       ========       ======== 
     Depreciation and amortization ...............      $  2,260       $  1,534       $  4,453       $  3,159
                                                        ========       ========       ========       ======== 
     Interest expense, net .......................      $  2,763       $   -          $  4,771       $   -
                                                        ========       ========       ========       ======== 
</TABLE>


                            See accompanying notes.

                                       13



<PAGE>
<PAGE>



                            TIME WARNER TELECOM LLC
                        COMBINED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  Six Months Ended
                                                                      June 30,
                                                             -------------------------
                                                               1998            1997
                                                             ---------       ---------
                                                                    (Unaudited)
                                                                    (thousands)
<S>                                                          <C>             <C>       
OPERATIONS
Net loss ..............................................      $ (43,923)      $ (38,726)
Adjustments for noncash and nonoperating items:
Depreciation and amortization .........................         24,325          17,880
Equity in loss of unconsolidated affiliates ...........             87           1,354
Changes in operating assets and liabilities:
     Accounts receivable and other current assets .....         (5,718)         (3,301)
     Accounts payable and other current liabilities....          6,302         (13,149)
     Other balance sheet changes ......................             23            (134)
                                                             ---------       --------- 

Cash used in operations ...............................        (18,904)        (36,076)
                                                             ---------       --------- 

INVESTING ACTIVITIES
Capital expenditures ..................................        (53,434)        (41,593)
                                                             ---------       --------- 

Cash used in investing activities .....................        (53,434)        (41,593)
                                                             ---------       --------- 

FINANCING ACTIVITIES
Proceeds from loans from the Parent Companies .........        114,751           -
Capital contributions from the Parent Companies .......          -              97,633
Repayment of loans from the Parent Companies ..........        (42,413)          -
Distributions to the Parent Companies .................          -             (19,964)
                                                             ---------       --------- 

Cash provided by financing activities .................         72,338          77,669
                                                             ---------       --------- 

INCREASE IN CASH AND EQUIVALENTS ......................          -               -

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ...........          -               -
                                                             ---------       --------- 

CASH AND EQUIVALENTS AT END OF PERIOD .................      $   -           $   -
                                                             =========       ========= 
</TABLE>


                            See accompanying notes.

                                       14



<PAGE>
<PAGE>


                            TIME WARNER TELECOM LLC
                COMBINED STATEMENT OF CHANGES IN MEMBERS' EQUITY

<TABLE>
<CAPTION>
                                                                       Total
                                        Class B     Accumulated       Members'
                                       Interests      Deficit          Equity
                                       ---------     ---------        --------
                                                    (Unaudited)
                                                    (thousands)
<S>                                     <C>            <C>             <C>     
BALANCE AT DECEMBER 31, 1997....        555,807       (255,417)        300,390

Net loss .......................           --          (43,923)        (43,923)
                                       --------      ---------        --------

BALANCE AT JUNE 30, 1998 .......       $555,807      $(299,340)       $256,467
                                       ========      =========        ========
</TABLE>





                            See accompanying notes.

                                       15



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     DESCRIPTION OF BUSINESS

          Time Warner Telecom LLC, a Delaware limited liability company (the
     "Company"), is a facilities-based competitive local telecommunications
     services provider ("CLEC") in selected metropolitan markets across the
     United States, offering a wide range of business telephony services,
     primarily to medium- and large-sized business customers. The business of
     the Company was commenced in 1993 by Time Warner Cable ("TW Cable"), a
     division of Time Warner Entertainment Company, L.P. ("TWE"), and reflects
     the combined commercial telecommunication operations under the ownership or
     management control of TW Cable. These operations consist of the commercial
     telecommunication operations of Time Warner Inc. and certain of its
     subsidiaries ("Time Warner") and the Time Warner Entertainment-Advance/
     Newhouse Partnership ("TWEAN") that were acquired or formed in 1995, as
     well as the pre-existing commercial telecommunication operations of TWE
     (collectively, TWE, TWEAN and Time Warner are referred to herein as the
     "Parent Companies").

          To date, the majority of the Company's revenues have been derived from
     the provision of "private line" or "direct access" telecommunications
     services. Because the Company has deployed switches in 16 of its 19
     markets, management expects that a growing portion of the Company's
     revenues will be derived from providing switched services. The Company's
     customers are principally telecommunications-intensive business end-users,
     long distance carriers ("IXCs"), internet service providers ("ISPs"),
     wireless communications companies and governmental entities. Such customers
     are offered a wide range of integrated telecommunications products and
     services, including dedicated transmission, local switched, data and video
     transmission services and Internet services. In addition, the Company
     benefits from its strategic relationship with TW Cable both through access
     rights and cost-sharing. As a result, the Company's networks have been
     constructed primarily through the use of fiber capacity licensed from TW
     Cable.

     BASIS OF PRESENTATION

          The combined financial statements of the Company reflect the "carved
     out" historical financial position, results of operations, cash flows and
     changes in members' equity of the commercial telecommunication operations
     of the Parent Companies as if they had been operating as a separate
     company. The combined statement of operations has been adjusted to
     retroactively reflect an allocation of certain expenses pursuant to the
     final terms of the related agreements, primarily relating to office rent,
     overhead charges for various administrative functions performed by TW Cable
     and certain facility maintenance and pole rental costs. These allocations
     were required to reflect all costs of doing business and have been based on
     various methods (Note 4), which management believes result in reasonable
     allocation of such costs.

          The accompanying financial statements are unaudited but, in the
     opinion of management, contain all the adjustments (consisting of those of
     a normal recurring nature) considered necessary to present fairly the
     financial position and the results of operations and cash flows for the
     periods presented in conformity with generally accepted accounting
     principles applicable to interim periods. The accompanying financial
     statements should be read in conjunction with the audited combined
     financial statements of the Company for the year ended December 31, 1997.


                                       16



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
              NOTES TO COMBINED FINANCIAL STATEMENTS - (continued)
                                   (UNAUDITED)


          During fiscal 1997, the Financial Accounting Standard Board ("FASB")
     issued Statement No. 131, "Disclosures about Segments of an Enterprise and
     Related Information" ("FAS 131"). FAS 131 requires disclosure of financial
     and descriptive information about an entity's reportable operating segments
     under the "management approach" as defined in the statement. The company
     will adopt FAS 131 as of December 31, 1998. The impact of adoption of this
     standard on the Company's financial statements is not expected to be
     material.

          In June 1998, the FASB issued Statement No. 133, "Accounting for
     Derivative Instruments and Hedging Activities" ("FAS 133"), effective for
     years beginning after June 15, 1999, with early application encouraged. The
     new rules establish standards requiring that all derivative financial
     instruments, such as interest rate swap contracts and foreign exchange
     contracts, be recognized and measured at fair market value regardless of
     the purpose or intent for holding them. The Company does not hold any
     derivative financial instruments.

     CASH AND EQUIVALENTS

          The Company has not historically maintained any cash balance since all
     funding of the Company's operating, investing and financing activities were
     provided by the Parent Companies or by subordinated loans payable to the
     Parent Companies (Note 3). This funding consisted of non-interest-bearing
     capital contributions through June 30, 1997 and subordinated loans during
     the period from July 1, 1997 through July 1998. The non-interest-bearing
     capital contributions have been included in paid-in capital. The average
     net capital contributions from the Parent Companies were $517.8 million for
     the six months ended June 30, 1997. The subordinated loans, including
     accrued interest, have been reflected as a long-term liability in the
     accompanying balance sheet.

2.   MEMBER'S EQUITY

          At June 30, 1998, all the assets and liabilities of the Company were
     beneficially owned by Time Warner and MediaOne Group, Inc. ("MediaOne"),
     which, through certain subsidiaries, are partners in TWE. The assets and
     liabilities of the Company were also beneficially owned by the
     Advance/Newhouse Partnership ("A/N") through TWEAN. Time Warner and certain
     of its subsidiaries, MediaOne and certain of its subsidiaries and A/N are
     collectively referred to herein as the "Members".

          In July 1998, the Company completed a reorganization (the
     "Reorganization"), under which the Company's capitalization was authorized
     to include two classes of interests, Class A Interests and Class B
     Interests. In connection with the Reorganization, the Parent Companies
     contributed their respective assets and liabilities of the Company's
     business to the Company and in connection therewith, Time Warner, MediaOne
     and A/N received Class B Interests having an aggregate participation
     percentage of 100%. Following the Reorganization, Time Warner, MediaOne
     and A/N held Class B interests having participation percentages equaling
     61.95%, 18.88% and 19.17%, respectively. Accordingly, the accompanying
     combined financial statements have been adjusted to retroactively reflect
     the authorization of Class A Interests and the authorization and issuance
     of Class B Interests having an aggregate participation percentage of 100%
     for all periods.

          The Class A Interests and Class B Interests are substantially
     identical in all respects, except that the Class A Interests have no voting
     rights, provided, however, that the approval of the holders of a majority
     (in participation percentage) of the Class A Interests, voting as a
     separate class, is required for any amendment to the Company's Limited
     Liability Company Agreement that would have an adverse effect on the rights
     of the holders of such class. The business and affairs of the Company are
     managed by a


                                       17



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
              NOTES TO COMBINED FINANCIAL STATEMENTS - (continued)
                                   (UNAUDITED)


     management committee (the "Management Committee"), except for certain
     matters which require the unanimous vote of the holders of Class B
     Interests. Representatives of the Management Committee are appointed by the
     Members.

          In connection with the Reorganization, the Management Committee
     approved an option plan that provides for the granting of options to
     purchase Class A Interests representing approximately 10% of the equity in
     the Company, in the aggregate on a fully diluted basis. Generally, options
     issued under such option plan will become exercisable over a four-year
     vesting period and expire ten years from the date of the grant. In
     addition, the purchase price of the Class A Interests covered by each
     option will not be less than the fair market value of the Class A Interests
     on the date of the grant.

3.   SUBORDINATED LOANS PAYABLE TO THE PARENT COMPANIES

          Effective July 1, 1997 through July 1998, all of the Company's
     financing requirements began to be funded with subordinated loans from the
     Parent Companies. These loans bear interest (payable in kind) at The Chase
     Manhattan Bank's prime rate which was 8.5% throughout the period from July
     1, 1997 through July 1998 and mature on August 15, 2008. The Parent
     Companies do not have any obligation to make additional equity investments
     in or loans to the Company. Interest expense relating to these loans
     totaled approximately $2.8 million and $4.8 million for the three and six
     months ended, for the six months ended, June 30, 1998, respectively.

4.   RELATED PARTY TRANSACTIONS

          In the normal course of conducting its businesses, the Company has
     various transactions with the Parent Companies, generally on terms
     resulting from negotiation between the affected units that, in management's
     view, results in reasonable allocations.

          The Company's operations, which in certain cases are co-located with
     TW Cable divisions, are allocated a charge for various overhead expenses
     for services provided by TW Cable. These allocations are based on direct
     labor, total expenses, or headcount relative to each division. The Company
     is also allocated rent based on the square footage of space occupied by the
     Company at TW Cable facilities. The aggregate of these charges totaled
     approximately $547,000 and $1.3 million for the three months ended June 30,
     1998 and 1997, respectively, and $1.2 million and $2.5 million for the six
     months ended June 30, 1998 and 1997, respectively.

          The Company participates in the Time Warner Cable Pension Plan (the
     "Pension Plan"), a noncontributory defined benefit pension plan which
     covers approximately 90% of all employees. The remaining 10% of employees
     are participating in a pension plan under the administration of MediaOne,
     their previous employer. The Company also participates in the Time Warner
     Cable Employees Savings Plan (the "Savings Plan"), a defined contribution
     plan. Both the Pension Plan and Savings Plan are administered by a
     committee appointed by the Board of Representatives of TWE and cover
     substantially all employees.

          Benefits under the Pension Plan are determined based on formulas which
     reflect employees' years of service and compensation levels during their
     employment period. Total pension costs relating to the Pension Plan were
     $273,000 and $252,000 for the three months ended June 30, 1998 and 1997,
     respectively, and $644,000 and $578,000 for the six months ended June 30,
     1998 and 1997, respectively. Relating to the MediaOne pension plan, pension
     costs were approximately $185,000 and $150,000 for the three months ended
     June 30, 1998 and 1997, respectively, and $336,000 and $307,000 for the six
     months ended June 30, 1998 and 1997, respectively.


                                       18



<PAGE>
<PAGE>


                             TIME WARNER TELECOM LLC
              NOTES TO COMBINED FINANCIAL STATEMENTS - (continued)
                                   (UNAUDITED)


          The Company's contributions to the Savings Plan can represent up to
     6.67% of the employees' compensation during the plan year. TWE's Board of
     Representatives has the right in any year to set the maximum amount of the
     Company's annual contribution. Defined contribution plan expense was
     $220,000 and $151,000 for the three months ended June 30, 1998 and 1997,
     respectively, and $442,000 and $343,000 for the six months ended June 30,
     1998 and 1997, respectively.

          The Company licenses the right to use the majority of its fiber optic
     cable from TW Cable. The Company paid TW Cable approximately $2.0 million
     and $4.6 million for the three months ended June 30, 1998 and 1997,
     respectively, under this arrangement, and $3.2 million and $10.2 million in
     the six months ended June 30, 1998 and 1997, respectively and such costs
     have been capitalized by the Company. The amortization of these costs and
     fiber previously capitalized in the amount of approximately $2.3 million
     and $1.6 million for the three months ended June 30, 1998 and 1997,
     respectively, and $4.5 million and $3.2 million for the six months ended
     June 30, 1998 and 1997, respectively, has been classified as a component of
     depreciation and amortization in the accompanying combined statement of
     operations. In addition, under this licensing arrangement, the Company
     reimburses TW Cable for facility maintenance and pole rental costs, which
     costs amounted to $513,000 and $433,000 for the three months ended June 30,
     1998 and 1997, respectively, and $1.0 million and $866,000 for the six
     months ended June 30, 1998 and 1997, respectively.

          Effective July 1, 1997 through July 1998, all of the Company's
     financing requirements began to be funded with loans from the Parent
     Companies. Interest expense relating to these loans totaled approximately
     $2.8 million and $4.8 million for the three and six months ended June 30,
     1998, respectively.

5.   COMMITMENTS AND CONTINGENCIES

          Pending legal proceedings are substantially limited to litigation
     incidental to the business of the Company. In the opinion of management,
     the ultimate resolution of these matters will not have a material effect on
     the Company's financial statements.

6.   SUBSEQUENT EVENTS

          On July 21, 1998, the Company issued $400 million of 9 3/4% Senior
     Notes ("Notes") due July 15, 2008. The Notes are unsecured, unsubordinated
     obligations of the Company and Time Warner Telecom Inc., a wholly owned
     subsidiary of the Company, who are jointly and severally liable, fully and
     unconditionally, with respect to the Notes. Interest on the Notes is
     payable semiannually on January 15 and July 15, beginning January 15, 1999.
     The net proceeds of approximately $387.5 million are expected to be used to
     expand and develop existing and new networks and for general corporate and
     working capital purposes over the next two years. The proceeds were
     immediately invested in short-term investments.


                                       19



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                             TIME WARNER TELECOM LLC


OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.

        On July 14, 1998, pursuant to the Reorganization, the Company issued
Class B limited liability company interests, having an aggregate participation
percentage of 100%, to the Members, in a private placement under Section 4(2) of
the Securities Act of 1933.

        On July 16, 1998, the Company's Registration Statement on Form S-1,
Registration No. 333-53553, pursuant to which $400 million of the Company's
9 3/4% Senior Notes due 2008 were registered under the Securities Act of 1933,
was declared effective. The offering commenced on July 16, 1998, and terminated
on July 21, 1998, with the sale of all of the registered securities for an
aggregate offering price of $400 million. The managing underwriters of the
offering were Morgan Stanley Dean Witter and Lehman Brothers. The net proceeds
to the Company from the offering, after deduction of expenses, was approximately
$387.5 million. The aggregate amount of underwriting discounts and commissions
was $11,000,000, and the amount of other expenses incurred in respect of the
offering was approximately $1.5 million.

Item 6. Exhibits and Reports on Form 8-K.

        (a)   Exhibits

        The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as a part of this report and such Exhibit Index is
incorporated herein by reference.

        (b)   Reports on Form 8-K.

        No Current Report on Form 8-K was filed by the Company during the
quarter ended June 30, 1998.


                                       20



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                            TIME WARNER TELECOM LCC


                                    SIGNATURE

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



                         TIME WARNER TELECOM LLC
                               (Registrant)


                         By:  /s/ David J. Rayner
                              -------------------------------
                         Name: David J. Rayner
                         Title:  Senior Vice President - Chief Financial Officer


        Dated:  August 20, 1998




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                            TIME WARNER TELECOM LLC


                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit
Number                          Description of Exhibit

<S>       <C>
2.1        Reorganization Agreement, dated as of July 14, 1998 among Time
           Warner Companies, Inc., MediaOne Group, Inc., Advance/Newhouse Partnership,
           Time Warner Entertainment Company, L.P., and Time Warner
           Entertainment-Advance/Newhouse Partnership

4.1        Indenture, dated as of July 21, 1998 among the Company, Time Warner
           Telecom, Inc. and The Chase Manhattan Bank, as Trustee

10.1       Underwriting Agreement, dated as of July 14, 1998 among the Company, Time
           Warner Telecom Inc. and Morgan Stanley & Co. Incorporated and Lehman
           Brothers Inc.

10.2       Time Warner Telecom LLC 1998 Option Plan as amended as of August 5, 1998

10.3       Capacity License Agreement, dated as of July 1, 1998

10.4       Trade Name License, dated as of July 1, 1998 between the Company, TWT and
           Time Warner Inc.

27         Financial Data Schedule
</TABLE>


                          STATEMENT OF DIFFERENCES
                          ------------------------

The section symbol shall be expressed as ............................. 'SS' 




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