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                                    FORM 10-K
                         ------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
     (Mark One)

          [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934
               FOR THE FISCAL YEAR ENDED

                                DECEMBER 31, 1998

                                       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 333-31009

                          COMCAST CELLULAR CORPORATION
             (Exact name of registrant as specified in its charter)


           DELAWARE                                       23-2687447
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)  

1201 Market Street, Wilmington, Delaware                   19801
(Address of principal executive offices)                 (Zip Code)

       Registrant's telephone number, including area code: (302) 594-8700
                        --------------------------------
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE
                        ---------------------------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                      NONE

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

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 ___
                           --------------------------

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

As of December 31, 1998, there were 100 shares of Common Stock outstanding.

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

The Registrant  meets the conditions set forth in General  Instructions  I(1)(a)
and (b) of Form  10-K  and is  therefore  filing  this  form  with  the  reduced
disclosure format.

                           --------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE
                           --------------------------

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<PAGE>
                          COMCAST CELLULAR CORPORATION
                          1998 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I

Item 1    Business............................................................1
Item 2    Properties..........................................................8
Item 3    Legal Proceedings...................................................8
Item 4    Submission of Matters to a Vote of Security Holders.................8

                                     PART II

Item 5    Market for the Registrant's Common Equity and
              Related Stockholder Matters.....................................9
Item 6    Selected Financial Data.............................................9
Item 7    Management's Discussion and Analysis of
              Financial Condition and Results of Operations..................10
Item 8    Financial Statements and Supplementary Data........................13
Item 9    Changes in and Disagreements with
              Accountants on Accounting and Financial Disclosure.............26

                                    PART III

Item 10   Directors and Executive Officers of the Registrant.................26
Item 11   Executive Compensation.............................................26
Item 12   Security Ownership of Certain Beneficial
              Owners and Management..........................................26
Item 13   Certain Relationships and Related Transactions.....................26

                                     PART IV

Item 14   Exhibits, Financial Statement Schedules and Reports
              on Form 8-K....................................................27
SIGNATURES...................................................................28

     This Annual  Report on Form 10-K is for the year ending  December 31, 1998,
at the time of filing with the Securities and Exchange Commission,  modifies and
supersedes  all prior  documents  filed pursuant to Sections 13, 14 and 15(d) of
the  Securities  Exchange Act of 1934 for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration  Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.

     This Annual Report on Form 10-K contains  forward  looking  statements made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995.  Readers are cautioned that such forward looking  statements
involve  risks and  uncertainties  which  could  significantly  affect  expected
results  in the  future  from  those  expressed  in  any  such  forward  looking
statements  made by, or on behalf of the  Company.  Certain  factors  that could
cause actual  results to differ  materially  include,  without  limitation,  the
effects of  legislative  and  regulatory  changes;  the  potential for increased
competition;  technological  changes; the need to generate substantial growth in
the subscriber base by successfully launching,  marketing and providing services
in  identified  markets;  pricing  pressures  which could affect  demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor,  equipment  and  capital  costs;  the pending  sale of the  Company  (see
"General  Developments  of Business"  included in Item 1); future  acquisitions,
strategic   partnerships  and   divestitures;   general  business  and  economic
conditions; and other risks detailed from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission.

<PAGE>
                                     PART I

ITEM 1    BUSINESS

     Comcast  Cellular  Corporation  (the "Company") is an indirect wholly owned
subsidiary  of Comcast  Corporation  ("Comcast")  and is a holding  company that
conducts  all of its  operations  through its wholly owned  subsidiary,  Comcast
Cellular Communications, Inc. ("CCCI") and CCCI's subsidiaries.

     The Company provides cellular telephone communications services pursuant to
licenses  granted by the Federal  Communications  Commission  ("FCC") in markets
with an aggregate  population  ("Pops") of more than 8.1 million,  including the
area in and around the City of Philadelphia, Pennsylvania, the State of Delaware
and a significant portion of the State of New Jersey.

     The  Company  is a  Delaware  corporation  organized  in  1992  and has its
principal executive offices at 1201 Market Street, Wilmington,  Delaware, 19801,
(302) 594-8700.

                        GENERAL DEVELOPMENTS OF BUSINESS

     In January 1999, Comcast agreed to sell the Company to SBC  Communications,
Inc. for approximately  $400 million in cash and the assumption of approximately
$1.3 billion of the Company's debt. Comcast expects to complete this sale in the
third  quarter of 1999 pending  receipt of all  necessary  regulatory  and other
approvals.

                      DESCRIPTION OF THE COMPANY'S BUSINESS

     Company's Systems
     The Company is engaged in the  development,  management  and  operation  of
cellular telephone  communications  systems in various service areas pursuant to
licenses granted by the FCC.

     The table below sets forth summary information  regarding the ownership and
total Pops, in the markets  served by the Company's  systems by service area, as
of December 31, 1998 (in thousands):

Market                                            Ownership         Pops (1)

Consolidated Systems 
Philadelphia, PA                                    100.0%          4,886.8
New Brunswick, NJ                                   100.0%            708.6
Wilmington, DE                                      100.0%            626.4
Long Branch, NJ                                     100.0%            597.9
Ocean County, NJ                                    100.0%            494.0
Atlantic City, NJ                                    97.4%            326.8
Trenton, NJ                                          87.2%            289.0
Vineland, NJ                                         94.6%            133.5
Aurora-Elgin, IL                                     83.4%             39.7
Joliet, IL                                           85.3%             30.5
                                                                    -------

Consolidated Pops                                                   8,133.2
                                                                    =======

Managed System
Delaware 1 RSA                                       50.0%            131.0
                                                                    -------
Total Pops                                                          8,264.2
                                                                    =======
---------------
(1)  Source: 1999 Rand McNally Commercial Atlas & Marketing Guide.
<PAGE>
     The following  table sets forth the  aggregate  number of  subscribers  and
penetration in the Company's consolidated systems as of December 31 (subscribers
in thousands):

                                         1998    1997     1996     1995     1994
                                         ----    ----     ----     ----     ----
Subscribers..........................     829      783     762      665      501
Penetration..........................   10.2%    9.5%     9.3%     8.5%     6.8%

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

     The Company  also holds  twelve  10-MHz  personal  communications  services
("PCS") licenses which cover the Philadelphia,  PA Metropolitan Trading Area and
Allentown,  PA Basic Trading Area.  Such licenses were acquired in November 1997
from Comcast at Comcast's historical cost of $18.9 million.

     Revenue Sources
     The Company provides services to its cellular telephone subscribers similar
to those provided by conventional  landline telephone systems,  including custom
calling  features such as call  forwarding,  call waiting,  conference  calling,
directory assistance and voice mail. The Company is responsible for the quality,
pricing and packaging of cellular  telephone  service for each of the systems it
owns or controls.  The Company  charges its  customers  for service  activation,
monthly access,  per-minute  airtime and custom calling features,  and generally
offers a variety  of  pricing  options,  most of which  combine a fixed  monthly
access fee and per-minute charges.  The Company pays the local telephone service
company  directly for  interconnection  of its cellular  networks with the local
wireline telephone network.

     The Company  offers  products  and  services  to increase  the value to the
customer  of the  basic  wireless  telephony  service  and to  increase  airtime
revenues.  Such products include paging services,  enhanced directory assistance
and concierge services, voice activated dialing, enhanced voice mail and prepaid
calling.  The  deployment of digital  technology  (see  "Technology  and Capital
Improvements")  has  allowed the Company to offer  additional  services  such as
caller identification,  short messaging, message waiting indicators and enhanced
call  privacy  through  encryption.   In  addition,   the  Company  offers  data
transmission over its existing cellular network, which allows the rapid transfer
of data to and from personal  computers,  personal digital  assistants and other
devices.

     The Company currently markets its services under the Comcast  Metrophone(R)
brand name in the Philadelphia,  PA metropolitan  statistical area and under the
Comcast  CELLULARONE(R)  brand  name in its  other  markets  in New  Jersey  and
Delaware.  The Company  markets  its  products  and  services  through  multiple
distribution channels throughout its contiguous markets.  These channels include
direct   channels,   such  as  its  direct  sales  force,   retail   stores  and
telemarketing,  and indirect channels,  such as national and local retailers and
automotive  dealers.  The Company's  long-term emphasis is on the development of
its  direct  distribution  channels,  particularly  its own retail  outlets  and
telemarketing,  as a means to reduce the cost to acquire subscribers and improve
the quality of new  subscribers.  The Company  operates 53 retail outlets in its
markets and anticipates building additional retail outlets, as well as upgrading
its existing retail outlets in the future.

     The Company sells cellular telephone equipment to its customers in order to
encourage use of its  services.  The  Company's  practice,  as is typical in the
industry,  is to sell  telephones  at or below cost in response  to  competitive
pressures.

     Technology and Capital Improvements
     Each of the Company's service areas is divided into segments referred to as
"cells"  equipped  with  a  receiver,   signaling   equipment  and  a  low-power
transmitter.  The use of low-power transmitters and the placement of cells close
to one another permits re-use of frequencies,  thus substantially increasing the
volume of calls capable of being handled  simultaneously over the number handled
by prior  generation  systems.  Each cell has a coverage area generally  ranging
from one to more than 100 square miles. A cellular telephone system includes one
or more  computerized  central  switching  facilities  known as mobile switching
centers ("MSC") which control the automatic transfer of calls,  coordinate calls
to and from cellular  telephones and connect calls to the local exchange carrier
("LEC") or to an  interexchange  carrier.  An MSC also  records  information  on
system usage and subscriber statistics.

     Each cell's facilities monitor the strength of the signal returned from the
subscriber's  cellular  telephone.  When  the  signal  strength  declines  to  a
predetermined level and the transmission  strength is greater at another cell in
or interconnected  with the system,  the MSC  automatically and  instantaneously
passes  the  mobile   user's  call  in  progress  to  the  other  cell   without
disconnecting the call ("hand off"). Interconnection agreements between

                                      - 2 -
<PAGE>
cellular telephone system operators and various LECs and interexchange  carriers
establish  the manner in which the cellular  telephone  system  integrates  with
other telecom-munications systems.

     As required by the FCC,  all  cellular  telephones  are  designed so that a
cellular telephone may be used wherever cellular service is available within the
United States ("US").  Each cellular  telephone system in the US uses one of two
groups of channels,  termed  "Block A" and "Block B," which the FCC has allotted
for cellular service.  Minor adjustments to cellular  telephones may be required
to enable the subscriber to change from a cellular system on one frequency block
to a cellular system on the other frequency block.

     While  most MSCs  process  information  digitally,  radio  transmission  of
cellular telephone calls historically has been done on an analog basis.  Digital
transmission of cellular  telephone calls offers  advantages,  including  larger
system  capacity and the potential for lower  incremental  costs for  additional
subscribers.  The FCC allows  carriers to provide  digital  service and requires
cellular carriers to provide analog service.

     The Company's  significant  investment in switching and cell site equipment
manufactured by Lucent Technologies, Inc. has enabled it to deploy Time Division
Multiple   Access   ("TDMA")   digital   cellular   technology   throughout  its
Pennsylvania/New Jersey and Delaware network. This technology was implemented at
the beginning of the fourth quarter of 1997.  The deployment of this  technology
permits  the  Company's  subscribers  and  roamers  to use both  analog and TDMA
services  throughout the Company's  coverage area. The Company  believes that it
will have sufficient  capacity to accommodate both continued  subscriber  growth
and growth in subscriber minutes for the foreseeable future.

     Roaming and Interconnection
     Reciprocal agreements among cellular telephone system operators allow their
respective  subscribers  ("roamers")  to place and receive calls in most service
areas throughout the country. Roamers are charged rates which are generally at a
premium to the regular  service rate.  The Company also offers  various  service
plans which allow  customers who roam out of the  Company's  service area to pay
the same rates charged for local service in the Company's  service area,  rather
than passing through higher roaming rates  customarily  charged by many cellular
carriers. This billing practice provides the customer, in effect, with a broader
local service area but results in increased  costs for the Company.  The Company
has  been  reducing  these  costs  through  the  continued  negotiation  of more
favorable  roaming  agreements  with  cellular  service  providers  in  relevant
markets.

     In  recent  years,  cellular  carriers  have  experienced  increased  fraud
associated  with roamer  service,  including  Electronic  Serial Number  ("ESN")
cloning.  The Company and other  carriers have  implemented a number of features
which have  decreased  the  incidents of fraudulent  use of their  systems.  The
Company has implemented authentication and radio frequency ("RF") fingerprinting
technologies  which associate  ESN/mobile  number  combinations  with particular
cellular telephone units. While the sale of digital radio telephones,  which are
authenticatable, is expected to make it more difficult to commit cellular fraud,
the potential for widespread  fraudulent use of the Company's systems by cloning
or any other means could again become a concern.

     Customer Service
     The Company's New Jersey and Delaware  operations,  including customer care
operations, are consolidated with the operations of the Philadelphia market. The
Company's sales and marketing  presence  (including through the Company's direct
sales group and retail  stores) and customer and dealer  support are  maintained
throughout the systems. In addition to overall reductions in operating costs and
increases in operational  efficiencies,  such consolidation permits an increased
emphasis by the Company upon more uniform, efficient and cost effective delivery
of customer service and support.

     The Company  utilizes the  MacroCell(R)  billing and customer care platform
developed and licensed by Convergys Information  Management Group, Inc. Customer
service  representatives are able to access current billing information in order
to respond to customer  inquiries.  To supplement the Company's customer service
operations,  Company telemarketers  contact customers  periodically to determine
their  satisfaction with the Company's service and to identify problems that can
lead to subscriber cancellations.

     Licensing
     The FCC generally grants two licenses to operate cellular telephone systems
in each market.  The other cellular licensee in the Company's  principal markets
is Bell Atlantic Mobile Systems, Inc. ("BAMS"). In addition to BAMS, the Company
competes for wireless  customers  with  affiliates of AT&T  Corporation,  Sprint
Corporation  and  Omnipoint  Communications,  Inc.  ("Omnipoint")  (all of which
operate PCS networks) and

                                      - 3 -
<PAGE>
Nextel Communications,  Inc.  ("Nextel")(which operates Specialized Mobile Radio
("SMR") networks).

     Competition

     In recent  years,  new mobile  telecommunications  service  providers  have
entered  the  market  and  created   additional   competition  in  the  wireless
telecommunications  or commercial mobile radio services ("CMRS") industry.  Many
of these  providers  have access to substantial  capital  resources and operate,
directly or through  affiliates,  large  regional,  national  and  international
wireless  telephone  systems and bring  significant  wireless  experience to the
marketplace.  While there are only two  cellular  providers  licensed in a given
area, new competitors  continue to emerge,  using different  frequencies and new
technologies.   Competition   between  wireless  operators  in  each  market  is
principally on the basis of services and enhancements offered, technical quality
of the  system,  quality  and  responsiveness  of  customer  service,  price and
coverage area.

     The most  prominent  new providers  are the PCS  operators.  The term "PCS"
describes  a variety  of  digital,  wireless  communications  systems  which are
currently best suited for use in densely populated areas.  Broadband PCS service
competes directly with cellular service. In the Company's  Philadelphia  market,
AT&T Wireless  Services,  Inc.,  Omnipoint and PhillieCo,  L.P., an affiliate of
Sprint Spectrum Holdings Company,  L.P., have  authorizations  for broadband PCS
systems.  In March,  1998,  the FCC  adopted  an order that  allows  financially
troubled  entities that won PCS C-Block  licenses at auction to obtain financial
relief from their payment obligations and to return some or all of their C-Block
licenses to the FCC for reauctioning.  The reauction of the returned licenses is
scheduled to begin in March,  1999,  and will place  additional  spectrum in the
hands of potential competitors of the Company.

     Cellular  telephone  systems,  including the Company's  systems,  also face
actual or potential competition from other current and developing  technologies,
including  SMR  systems  operated  by  companies  such as Nextel  which uses its
available SMR spectrum in markets where the Company provides  wireless  service.
In addition to SMR systems, one-way paging or beeper services that feature voice
messaging,  data services and tones are also available in the Company's markets.
These services may provide adequate capacity and sufficient mobile  capabilities
for some potential cellular subscribers,  thus providing additional  competition
to the Company's systems.

     The FCC  requires  cellular  licensees to make their  service  available to
resellers, who typically purchase cellular service from licensees in the form of
blocks of numbers,  then resell the service to the public.  Thus, a reseller may
be both a customer and a competitor  of a licensed  cellular  operator.  Several
years ago the FCC  initiated an  administrative  proceeding  seeking  comment on
whether resellers should be permitted to install separate  switching  facilities
in cellular  systems,  although it  tentatively  concluded  not to require  such
interconnections.  This issue remains pending at the FCC. Presently the FCC does
not require CMRS providers to offer interconnection to other CMRS providers, but
it has stated that it will consider interconnection complaints on a case-by-case
basis and that it may  consider  in the future  whether to impose  more  general
interconnection  obligations  on CMRS  providers.  The  FCC is also  considering
whether  resellers should receive direct  assignments of telephone  numbers from
the  North  American  Numbering  Plan  Administrator.  Additionally,  the FCC is
considering  the  imposition  of an  automatic  roaming  obligation  on all CMRS
providers,   meaning  that,  where  CMRS  systems  are  technically  compatible,
subscribers could get automatic service from a compatible carrier when traveling
outside the home market.

     It is likely  that the FCC will  offer  additional  spectrum  for  wireless
mobile  licenses in the future.  Applicants  also have  received  and others are
seeking FCC authorization to construct and operate global satellite  networks to
provide  domestic  and  international   mobile   communications   services  from
geostationary  and low earth  orbit  satellites.  One such  system,  the Iridium
system,  began  commercial  operations in 1998. In addition,  the Omnibus Budget
Reconciliation Act of 1993 (the "1993 Budget Act") provided, among other things,
for the release of 200 MHz of federal  government  spectrum for  commercial  use
over a fifteen year period. Also, the World Trade Organization agreement,  which
became effective in the US in February 1998, is intended to increase competition
in the provision of telecommunications  services and to reduce barriers to entry
by  telecommunications  firms in foreign and domestic  markets,  and may lead to
greater  foreign  investment  and  participation  in the  CMRS  industry.  These
developments and further technological  advances and regulatory changes may make
available other alternatives to cellular service, thereby introducing additional
sources of competition.

                                      - 4 -
<PAGE>
                           LEGISLATION AND REGULATION

FCC Regulation

     The FCC regulates  many aspects of the licensing,  construction,  operation
and acquisition of wireless telephone systems,  including the Company's cellular
systems,   pursuant  to  the  Communications  Act  of  1934  (as  amended,   the
"Communications Act").

     Under the Communications Act, no party may transfer control of or assign an
FCC license  without  first  obtaining FCC consent.  FCC rules:  (i) prohibit an
entity  controlling one cellular system in a market from holding any interest in
the  competing  cellular  system in the  market,  (ii)  prohibit  an entity from
holding  non-controlling  interests  in more  than one  cellular  system  in any
market,  if the common ownership  interests  present  anti-competitive  concerns
under FCC policies, and (iii) restrict the amount of CMRS spectrum that a single
entity  may  hold  in any  particular  area  to 45 MHz.  The  FCC  commenced  an
administrative  rulemaking to  re-evaluate  the  continuing  need for the 45 MHz
broadband CMRS spectrum cap, and it may allow for market specific relief even if
it does not modify its general rule.  If the CMRS  spectrum cap is lifted,  both
the Company  and its  competitors  would have the  ability to obtain  additional
wireless licenses,  thereby strengthening their market positions in a particular
market or markets.  Elimination  of the CMRS  spectrum  cap would not  eliminate
antitrust  review  of  industry  mergers  by  the  Department  of  Justice,  and
acquisitions  of CMRS  licenses  may only be  consummated  after  obtaining  FCC
consent to any required transfer of control or assignment application.

     Cellular radio licenses  generally  expire ten years following grant of the
license in the particular market and are renewable for periods of ten years upon
application  to the FCC.  Licenses may be revoked for cause and license  renewal
applications  may be denied if the FCC determines that a renewal would not serve
the public interest.  FCC rules provide that competing renewal  applications for
cellular licenses will be considered in comparative hearings,  and establish the
qualifications  for  competing  applications  and the standards to be applied in
such hearings.  Under current  policies,  the FCC will grant incumbent  cellular
licensees  a "renewal  expectancy"  if the  licensee  has  provided  substantial
service to the public,  substantially  complied  with  applicable  FCC rules and
policies and the  Communications  Act and is otherwise  qualified to hold an FCC
license. The Company's cellular licenses expire from 1999 through 2008.

     The FCC regulates the ability of cellular operators to bundle the provision
of service with  hardware,  the resale of cellular  service by third parties and
the coordination of frequency usage with other cellular licensees.  The FCC also
regulates  the  height and power of base  station  transmitting  facilities  and
signal  emissions in the cellular  system.  Cellular systems also are subject to
Federal  Aviation  Administration  and FCC  regulations  concerning  the siting,
construction,  marking and lighting  and  registration  of cellular  transmitter
towers  and  antennae.  In  addition,  the FCC  also  regulates  the  employment
practices of cellular operators.

     Allegations of harmful  effects from the use of hand-held  cellular  phones
have  caused the  cellular  industry to fund  additional  research to review and
update   previous   studies   concerning   the  safety  of  the   emissions   of
electromagnetic  energy from cellular phones. The FCC also has adopted standards
for limiting  human exposure to RF energy from  cellular/PCS  telecommunications
facilities.  The FCC has determined that these standards preempt state and local
regulation of RF exposure.

     The FCC also  requires  LECs in each market to offer  reasonable  terms and
facilities for the  interconnection of wireless telephone systems in that market
to the LECs'  landline  network.  In August  1996,  the FCC  adopted a  national
regulatory  framework for  implementing the local  competition  provision of the
Telecommunications  Act of  1996  ("1996  Act"),  including  adoption  of  rules
delineating   interconnection   obligations   of  incumbent   LECs,   unbundling
requirements for incumbent LECs,  network  elements,  requirements for access to
local  rights  of  way,  dialing  parity  and  telephone  numbering  and  number
portability,  and  requirements  for resale of and  nondiscriminatory  access to
incumbent LEC services. The FCC established a national regulatory framework that
sets pricing  standards and negotiations and arbitration  guidelines.  These FCC
standards  were upheld in all respects  relevant to the Company's  operations by
the US Supreme  Court on January  25,  1999.  A  subsidiary  of the  Company has
already   renegotiated   its   interconnection   contracts  with  Bell  Atlantic
Corporation  ("Bell  Atlantic").  The  agreements,  covering  Pennsylvania,  New
Jersey,  Delaware  and  Maryland,  provide  for  the  reciprocal  transport  and
termination  of CMRS traffic by Bell  Atlantic and the Company at  substantially
reduced rates.

                                      - 5 -
<PAGE>
     In  its  implementation  of the  1996  Act,  the  FCC  established  federal
universal  service  requirements  that  affect CMRS  operators.  Under the FCC's
rules,  wireless service providers potentially are eligible to receive universal
service  subsidies  for the  first  time;  however,  they also are  required  to
contribute to both federal and state  universal  service funds.  Many states are
also moving forward to develop state universal  service fund programs.  A number
of these state funds require contributions, varying greatly from state to state,
from CMRS carriers.  Multiple  parties have  challenged  various  aspects of the
FCC's universal service order and the cases have been consolidated in the United
States  Court of  Appeals  for the Fifth  Circuit  in New  Orleans.  A  judicial
determination  adverse to the FCC,  as well as any further  modification  to the
FCC's universal  service rules,  could impact the CMRS carrier support  payments
required for federal and state universal service programs.

     Under  the  current  federal  universal  service  program,  CMRS and  other
telecommunications  carriers  contribute to the federal program  supporting high
cost   telephone   service   areas   based   upon  their   reported   interstate
telecommunications  revenues.  The FCC adopted  interim  "safe harbor" rules for
CMRS  carriers  to use to  report  the  allocation  of their  telecommunications
revenues to either federal (interstate) or state (intrastate) jurisdiction.  The
FCC also initiated a rulemaking to determine  whether its interim safe harbor of
15% of  interstate  revenues  generally  reflects  the  experience  of the  CMRS
industry  and  should  be  made  permanent,   or  whether  other  jurisdictional
allocation  methods  should  be  adopted.   Depending  upon  the  jurisdictional
composition of the Company's  telecommunications  revenues, adoption of the safe
harbor reporting  convention could affect the level of the Company's federal and
state universal service contributions.

     The 1996 Act also relieved cellular providers affiliated with Regional Bell
Operating  Companies  ("RBOCs") of their  obligations to provide equal access to
long  distance  carriers.  RBOC-affiliated  carriers  are now  afforded  greater
flexibility in contracting with interexchange carriers for the provision of long
distance services.  Nevertheless,  the FCC retains authority to require all CMRS
operators to provide  unblocked  access  through the use of other  mechanisms if
customers  are being denied access to the  telephone  toll service  providers of
their  choice,  and if such denial is contrary to the public  interest.  The FCC
adopted uniform rules,  which will expire in January 2002,  governing  incumbent
LEC participation in broadband CMRS within each LEC's landline telephone region.
While  the FCC  eliminated  the  requirements  in its  cellular  rules  for full
structural  separation  of the  incumbent  LEC cellular  affiliate  from the LEC
landline  affiliate,  the FCC  adopted  rules  designed  to  address  incentives
incumbent  LECs  may  have  to  engage  in  anti-competitive  practices  against
unaffiliated   CMRS   providers,   such   as   discriminatory   interconnection,
cost-shifting and anti-competitive  pricing. The FCC requires incumbent LECs (i)
to create separate  corporations  for their in-region  broadband CMRS operations
(whether  cellular,  PCS or  other),  and (ii) to apply  existing  FCC  rules on
affiliate  transactions and use of customer  proprietary  network information to
LEC-CMRS  operations.  Additionally,  the order addressed provisions of the 1996
Act that govern incumbent LEC joint marketing of CMRS and landline services,  as
well as LEC obligations to disclose material changes in their networks.

     The FCC has  established  a requirement  that CMRS  providers be capable of
transmitting  calls for 911 assistance from  individuals  using teletext ("TTY")
devices,  primarily  people with speech or hearing  disabilities.  Although  the
obligation  took effect on October 1, 1998, the FCC granted  requests for waiver
of the requirement  from individual  CMRS providers,  including the Company,  to
allow an industry forum time to complete  discussions on technical  solutions to
TTY access to 911  services.  The FCC also has adopted a  requirement  that CMRS
providers be capable of providing certain  capabilities in connection with calls
to public safety officials via 911. These capabilities  include  transmission of
the caller's  telephone number,  the ability to return the call and transmission
of the specific  location of the caller.  The  requirement  to provide  location
information will become effective in 2001,  subject to development by requesting
public agencies of adequate cost recovery mechanisms.

     The FCC requires all CMRS providers,  including the Company, to offer local
number  portability,  a capability  which  permits  subscribers  to change their
service providers without changing their telephone numbers. The FCC has extended
the deadline for CMRS implementation of local number portability of November 24,
2002 to allow for  resolution  of  technical  and  operational  issues  posed by
wireless number portability by industry-wide policy forums and for completion of
initial  build-outs of PCS systems.  This  extension is subject to change if the
FCC concludes that CMRS number  portability is required to enable number pooling
or other mechanisms for conserving  telephone numbers.  The Company is unable to
predict  the  outcome of any  further  FCC review or  modification  of the local
number portability requirement or the ultimate impact of this requirement on the
Company's business and operations.

                                      - 6 -
<PAGE>
     In addition, state commissions have become increasingly aggressive in their
efforts to conserve numbering  resources.  These efforts may  disproportionately
impact  wireless  service  providers  by imposing  additional  costs or limiting
access to numbering  resources.  Examples of state conservation  methods include
number pooling,  number  rationing and transparent  overlays.  Number pooling is
especially  problematic  for  wireless  providers  because  it is  dependent  on
implementation of number portability  technology.  Recently,  the FCC released a
public  notice  soliciting  comment  on  proposed  number  optimization  methods
discussed in a report prepared by the Resource Optimization Working Group of the
North American Numbering  Council.  Adoption of some of the methods discussed in
the report could have a disproportionate impact on CMRS operators.

     The FCC recently adopted new rules limiting the use of customer proprietary
network  information  ("CPNI") by  telecommunications  carriers,  including  the
Company, in marketing a broad range of telecommunications  and other services to
their customers and the customers of affiliated companies.  The FCC has received
numerous  petitions for  reconsideration of its CPNI rules, the majority of them
from CMRS carriers.  The FCC has stayed portions of its rules that relate to how
carriers identify CPNI that a customer has restricted,  particularly the portion
of the rules that  requires all carriers to develop an  electronic  auditing and
compliance system.  This stay will extend for six months after the date that the
CPNI rules are reconsidered. The Company does not anticipate that the rules will
result in a significant  adverse  impact on its financial  position,  results of
operations or liquidity.

     The  FCC  has  determined  that  the  interstate,  interexchange  (commonly
referred to as long  distance)  offerings of CMRS  providers  are subject to the
interstate,  interexchange  rate  averaging  and  integration  provisions of the
Communications   Act.  Rate  averaging  requires  the  Company  to  average  its
interstate  long distance CMRS rates between high cost and urban areas.  The FCC
has delayed implementation of the rate integration  requirements with respect to
"wide area" rate plans offered by the Company pending further reconsideration of
its rules. The FCC also delayed the requirement that there be CMRS long distance
rate integration among the Company's CMRS affiliates.  On December 31, 1998, the
FCC reaffirmed on reconsideration  that its interexchange rate integration rules
apply to  interexchange  CMRS  services.  The FCC announced it would  initiate a
further  proceeding to determine how integration  requirements  apply to typical
CMRS offerings,  including  "One-Rate" plans.  Until this further  proceeding is
concluded,  the FCC will enforce only CMRS long distance rate integration on the
Company's  services  where an interstate  toll charge is  separately  stated and
billed to CMRS customers. To the extent that the Company offers services subject
to the FCC's rate  integration and averaging  requirements,  these  requirements
generally reduce the Company's pricing  flexibility for its services.  There can
be no  assurance  that  the FCC will  decline  to  impose  rate  integration  or
averaging  requirements  on the  Company or decline  to require  the  Company to
integrate its CMRS long distance rates across its CMRS affiliates.

     In the face of an increase in local siting  disputes,  the FCC initiated an
administrative  rulemaking to consider,  among other  things,  the procedure for
obtaining relief from state and local regulations pertaining to the placement of
facilities,  guidelines governing the types of information that a state or local
government can request to judge  compliance  with FCC emissions  rules,  and the
adoption of a presumption  that  facilities  licensed by the FCC comply with the
FCC's radio frequency emissions guidelines.  In August 1998, the FCC announced a
facilities  siting  agreement  between  state and local  officials  and  several
wireless industry  associations.  This agreement establishes an informal dispute
resolution process that can be used by the Company to resolve disputes affecting
the siting of its wireless facilities.

     The FCC  initiated a notice of inquiry on calling  party pays,  a mechanism
that would allow CMRS  providers to offer  service  plans under which callers to
CMRS  customers  would pay for the calls  that they make.  A calling  party pays
offering would establish a system similar to that used in European countries.

     In April 1998, the FCC initiated an administrative rulemaking proceeding to
determine the obligations of telecommunications  carriers to make their services
accessible to individuals with  disabilities.  The FCC has proposed  regulations
implementing    statutory     requirements     governing     accessibility    of
telecommunications  services  like those  offered by the Company to persons with
disabilities,  and could adopt  proposals  requiring  modifications  to existing
customer  equipment as well as requirements  governing new equipment and carrier
networks.

     The FCC is also  considering  adopting rules to govern customer  billing by
telecommunications services providers such as the Company. The FCC proposed that
more billing detail be provided to consumers,  which could add to the expense of
the billing process as systems are modified to conform to any new  requirements.
Additionally, the FCC is considering whether carriers, 

                                      - 7 -
<PAGE>
such as the  Company,  that decide to pass  through  their  mandatory  universal
service  contributions to their customers,  should be required to provide a full
explanation  of the program and ensure that the carriers that pass through their
contribution  do not over  recover  their  mandatory  contributions  from  their
customers. Adoption of some of the FCC's proposals could increase the complexity
of the Company's  billing  processes and restrict the Company's  ability to bill
customers for services in the most commercially advantageous way.

     The FCC has also  extended the date to June 30, 2000 for wireless  carriers
such  as  the  Company  to  comply   with   existing   requirements   under  the
Communications  Assistance for Law Enforcement Act ("CALEA") and has proposed to
adopt  additional  requirements,  including,  among other things,  a proposal to
require the furnishing of location information when law enforcement  authorities
monitor  telephone  calls under court order.  The adoption of  additional  CALEA
requirements could require additional  expenditures by the Company to ensure its
ability to comply.

State Regulation and Local Approvals

     Except for the State of Illinois, the states in which the Company presently
operates  currently  do not regulate  cellular  telephone  service.  In the 1993
Budget  Act,  Congress  gave  the FCC  the  authority  to  preempt  states  from
regulating rates or entry into CMRS,  including cellular.  The FCC, to date, has
denied all state petitions to regulate the rates charged by CMRS providers.

     The scope of the  allowable  level of state  regulation  of CMRS,  however,
remains  unclear.  The 1993 Budget Act does not  identify  the "other  terms and
conditions" of CMRS service that can be regulated by the states.  Moreover,  the
extent to which states may regulate intrastate LEC-CMRS  interconnection remains
unresolved.  The  resolution  of this issue will  determine  the extent to which
cellular  providers will be subject to state regulation of CMRS  interconnection
to the  LECs.  The  siting  of cells  also  remains  subject  to state and local
jurisdiction   although  petitions  seeking   clarification  of  states'  siting
authority are currently pending at the FCC.

                                    EMPLOYEES

     As of December 31, 1998, the Company had approximately 1,600 employees. The
Company believes that its relationships with its employees are good.

ITEM 2    PROPERTIES

     The principal physical assets of a cellular telephone communications system
include cell sites and central switching equipment. The Company primarily leases
its sites used for its transmission facilities, retail stores and administrative
offices. The physical components of a cellular telephone  communications  system
require  maintenance  and  upgrading to keep pace with  technological  advances.
During 1997,  the  Company's  systems,  including  its cell sites and  switching
equipment were upgraded with TDMA digital  cellular  technology,  permitting its
subscribers  and roamers to use both  analog and TDMA  services  throughout  the
Company's coverage area.

     The Company's  management  believes that  substantially all of its physical
assets are in good operating condition.

ITEM 3    LEGAL PROCEEDINGS

     The Company is subject to claims which arise in the ordinary  course of its
business.  In the opinion of management,  the amount of ultimate  liability with
respect to these  actions will not  materially  affect the  financial  position,
results of operations or liquidity of the Company.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Information for this item is omitted pursuant to SEC General  Instruction I
to Form 10-K.

                                      - 8 -
<PAGE>

                                     PART II

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

Common Stock

Absence of Trading Market
The common stock of the Company is not publicly traded.  Therefore,  there is no
established  public trading market for the common stock, and none is expected to
develop in the foreseeable future.

Holder
All of the shares of common stock of the Company,  $.01 par value,  are owned by
Comcast Cellular Holdings Corporation, a wholly owned subsidiary of Comcast.

Dividends
None.


ITEM 6    SELECTED FINANCIAL DATA

Information  for this item is omitted  pursuant to SEC General  Instruction I to
Form 10-K.



                                     - 9 -

<PAGE>
ITEM 7    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     Information for this item is omitted pursuant to SEC General  Instruction I
to Form 10-K, except as noted below.

Results of Operations

     Summarized   consolidated   financial   information  for  Comcast  Cellular
Corporation  (the  "Company"),  an indirect  wholly owned  subsidiary of Comcast
Corporation  ("Comcast"),  for the years ended  December 31, 1998 and 1997 is as
follows (dollars in millions, "NM" denotes percentage is not meaningful):
<TABLE>
<CAPTION>
                                                            Year Ended
                                                            December 31,                  Increase / (Decrease)
                                                      1998              1997               $                %
<S>                                                   <C>              <C>               <C>             <C> 
Service income, net..............................     $455.2           $444.9             $10.3            2.3%
Operating, selling, general and administrative
     expenses....................................      280.2            274.9               5.3            1.9
                                                      ------           ------
Operating income before depreciation and
     amortization (1)............................      175.0            170.0               5.0            2.9
Depreciation and amortization....................      122.0            109.8              12.2           11.1
                                                      ------           ------
Operating income.................................       53.0             60.2              (7.2)         (12.0)
                                                      ------           ------
Interest expense.................................      111.6            117.8              (6.2)          (5.3)
Investment income................................       (1.5)            (2.7)             (1.2)         (44.4)
Equity in net losses of affiliates...............        0.2              6.6              (6.4)         (97.0)
Other............................................        1.3              1.3
Income tax benefit...............................      (21.5)           (22.9)             (1.4)          (6.1)
Extraordinary items..............................                       (10.7)            (10.7)            NM
                                                      ------           ------
     Net loss....................................     ($37.1)          ($50.6)           ($13.5)        (26.7%)
                                                      ======           ======
<FN>
----------
(1)  Operating income before  depreciation and amortization is commonly referred
     to in the cellular  industry as "operating cash flow."  Operating cash flow
     is a measure  of a  company's  ability  to  generate  cash to  service  its
     obligations, including debt service obligations, and to finance capital and
     other  expenditures.  In part due to the  capital  intensive  nature of the
     cellular   industry  and  the  resulting   significant  level  of  non-cash
     depreciation  and amortization  expense,  operating cash flow is frequently
     used as one of the bases for evaluating cellular  businesses,  although the
     Company's measure of operating cash flow may not be comparable to similarly
     titled measures of other companies. Operating cash flow does not purport to
     represent net income or net cash provided by operating activities, as those
     terms are defined  under  generally  accepted  accounting  principles,  and
     should not be  considered  as an  alternative  to such  measurements  as an
     indicator of the Company's performance.
</FN>
</TABLE>

     Service Income, net
     Service  income  increased by $10.3 million from 1997 to 1998 as subscriber
growth was offset,  in part, by the effects of increased use of promotional  and
free minute plans  offered to  subscribers.  These plans  generally  have higher
access fees and increase the minutes of use per  subscriber  while  lowering the
average rate per minute of use.

     Operating, Selling, General and Administrative Expenses
     The $5.3 million increase in operating, selling, general and administrative
expenses from 1997 to 1998 is primarily attributable to growth in subscribers.

     Comcast, and Comcast Cellular Communications, Inc. ("CCCI"), a wholly owned
subsidiary  of the Company,  were parties to a  management  agreement  (the "Old
Management  Agreement")  pursuant  to which  Comcast  managed the  business  and
operations of CCCI. In May 1997, the Old Management Agreement was terminated and
replaced with a new management agreement (the "New Management  Agreement") which
provides for an annual  management  fee of 1.5% of revenues.  The New Management
Agreement eliminated the prior management fee which was limited to $5.0 million,
subject  to  annual  increases  based  on the  consumer  price  index.  The  New
Management Agreement has a ten year term.  Management fees of $6.8 million and 

                                     -10 -
<PAGE>

$6.4 million were charged to selling, general and administrative expenses during
the years ended December 31, 1998 and 1997,  respectively (on a pro forma basis,
giving  effect to the New  Management  Agreement,  management  fees for the year
ended December 31, 1997 would have been $6.7 million).

     Depreciation and Amortization Expense
     The $12.2 million increase in depreciation  and  amortization  expense from
1997 to 1998 is primarily  attributable  to the effects of capital  expenditures
and losses on asset  disposals  offset,  in part, by a decrease in  amortization
expense as a result of certain  intangible  assets  becoming fully  amortized in
1997.

     Interest Expense
     The  $6.2  million  decrease  in  interest  expense  from  1997  to 1998 is
primarily  due to the  transfer  of AWACS  Garden  State,  Inc.  ("AWACS  Garden
State"),  which was an indirect  subsidiary of the Company (see below),  and the
effects of a decrease in the Company's effective weighted average interest rate.

     In 1992,  AWACS  Garden  State  issued a note (the  "AWACS  Note")  with an
initial  principal  amount of $51.0  million to purchase,  from a subsidiary  of
Comcast,  a 40% limited  partnership  interest in Garden State  Cablevision L.P.
("Garden State Cablevision"). The AWACS Note bears interest at a rate of 11% per
annum. Interest is payable on a quarterly basis to the extent of available cash,
with any unpaid interest added to principal.  Interest expense on the AWACS Note
was $1.4  million and $5.2  million for the years  ended  December  31, 1998 and
1997, respectively.

     Equity in Net Losses of Affiliates
     Under  the  terms  of the  partnership  agreement,  49.5% of  Garden  State
Cablevision's  net (income)  losses were  allocated  to the Company.  During the
years ended  December 31, 1998 and 1997,  the Company  recognized  equity in net
(income) loss of Garden State  Cablevision  of ($0.2)  million and $5.4 million,
respectively.

     Effective April 1, 1998, the Company  distributed its indirect  interest in
AWACS Garden State to a wholly owned subsidiary of Comcast at its net book value
of $41.3 million.

     Extraordinary Items
     Extraordinary  items for the year ended  December 31, 1997 of $10.7 million
consist of unamortized debt acquisition costs and debt  extinguishment  costs of
$16.4  million,  net of  related  tax  benefit  of  $5.7  million,  expensed  in
connection with the  refinancing of the Company's  existing credit facility with
the proceeds from the offering of the Company's $1.0 billion  principal amount 9
1/2% senior notes due 2007 in May 1997 and  borrowings  under the  Company's new
$400.0 million revolving credit facility in November 1997.

     Earnings to Fixed Charges
     For the years ended  December  31, 1998 and 1997,  the  Company's  earnings
before  extraordinary  items,  income  tax  benefit,  equity  in net  losses  of
affiliates  and fixed  charges  (interest  expense) was $53.2  million and $61.6
million,  respectively.  Such amounts  were not adequate to cover the  Company's
fixed  charges  of  $111.6   million  and  $117.8  million  for  these  periods,
respectively.  Fixed charges include  non-cash  interest expense of $1.5 million
and $30.7 million for the years ended December 31, 1998 and 1997,  respectively.
The inadequacy of the Company's earnings to cover fixed charges is primarily due
to substantial  non-cash charges for  depreciation  and amortization  expense of
$122.0  million and $109.8  million during the years ended December 31, 1998 and
1997, respectively.

     The Company  anticipates  that, for the foreseeable  future,  depreciation,
amortization  and interest expense will continue to be significant and will have
a significant  adverse effect on the Company's  ability to realize net earnings.
The  Company  believes  that  its  losses  will  not  significantly  affect  the
performance of its normal business  activities  because of its existing cash and
cash equivalents,  its ability to generate operating income before  depreciation
and amortization and its ability to obtain external financing.

     The Company  believes that its operations  are not  materially  affected by
inflation.

     Year 2000 Issue

     The Year 2000 Issue is the result of computer  programs being written using
two  digits  rather  than four to define  the  applicable  year.  Certain of the
Company's  computer programs that have  date-sensitive  software may recognize a
date  using  "00" as the year 1900  rather  than the year 2000 (the  "Year  2000
Issue").  If this situation  occurs,  the potential  exists for computer  system
failure or miscalculations by computer programs, which could cause disruption of
operations.

     The Company is in the process of evaluating  and  addressing  the impact of
the Year 2000 Issue on its operations to ensure that its information  technology
and business systems recognize calendar Year 2000. The Company is utilizing both
internal and external  resources

                                     - 11 -
<PAGE>

in implementing its Year 2000 program, which consists of the following phases:

     Assessment Phase
     Structured evaluation,  including a detailed inventory outlining the impact
that the Year 2000 Issue may have on current operations.

     Detailed Planning Phase
     Establishment  of  priorities,  development  of specific  action  steps and
allocation  of  resources  to address the issues  identified  in the  Assessment
Phase.

     Conversion Phase
     Implementation  of the necessary  system  modifications  as outlined in the
Detailed Planning Phase.

     Testing Phase
     Verification  that the  modifications  implemented in the Conversion  Phase
will be successful in resolving the Year 2000 Issue so that all inventory  items
will function properly, both individually and on an integrated basis.

     Implementation Phase
     Final roll-out of fully tested components into an operational unit.

     Based  on an  inventory  conducted  in 1997,  the  Company  has  identified
computer systems that will require modification or replacement so that they will
properly utilize dates beyond December 31, 1999. Many of the Company's  critical
systems are new and are already Year 2000 compliant as a result of the Company's
recent  implementation of a fully digital cellular  communications  network.  In
addition,  the Company has initiated  communications with all of its significant
software  suppliers and service bureaus to determine their plans for remediating
the Year 2000 Issue in their software which the Company uses or relies upon.

     As of December 31, 1998, the Company is in the Conversion Phase of its Year
2000  remediation  program and has entered  the  Testing  Phase with  respect to
certain of its key systems.  Through December 31, 1998, the Company has incurred
$0.9 million in connection with its Year 2000 remediation  program.  The Company
estimates that it will incur between  approximately  $2 million to $3 million of
additional  expense  through  December  1999 in  connection  with its Year  2000
remediation  program.  The Company's  estimate to complete the remediation  plan
includes the estimated time  associated  with mitigating the Year 2000 Issue for
third party  software.  However,  there can be no guarantee  that the systems of
other companies on which the Company relies will be converted on a timely basis,
or that a failure  to  convert  by  another  company  would not have a  material
adverse effect on the Company.

     Management of the Company will continue to periodically report the progress
of its Year 2000  remediation  program to the Audit Committee of Comcast's Board
of  Directors.  The Company  plans to complete the Year 2000  mitigation  by the
third  quarter of 1999.  Management  of the  Company  has  investigated  and may
consider  potential  contingency plans in the event that the Company's Year 2000
remediation program is not completed by that date.

     The  costs  of the  project  and the  date on which  the  Company  plans to
complete the Year 2000  modifications and replacements are based on management's
best estimates,  which were derived using assumptions of future events including
the  continued  availability  of resources  and the  reliability  of third party
modification plans. However, there can be no guarantee that these estimates will
be  achieved  and actual  results  could  differ  materially  from those  plans.
Specific factors that may cause such material  differences  include, but are not
limited to, the availability  and cost of personnel with  appropriate  necessary
skills and the  ability to locate and  correct all  relevant  computer  code and
similar uncertainties.

     The Company  believes  that with  modifications  to existing  software  and
conversions to new software,  the Year 2000 Issue can be mitigated.  However, if
such  modifications and conversions are not made, or are not completed within an
adequate time frame, the Year 2000 Issue could have a material adverse impact on
the operations of the Company.

                                     - 12 -

<PAGE>

ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
Comcast Cellular Corporation
Wilmington, Delaware


We have audited the accompanying  consolidated balance sheet of Comcast Cellular
Corporation  (the  "Company")  (an indirect  wholly owned  subsidiary of Comcast
Corporation)  and its  subsidiaries  as of December  31, 1998 and 1997,  and the
related consolidated statements of operations,  stockholder's  deficiency and of
cash flows for each of the three years in the period  ended  December  31, 1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial  position of Comcast Cellular  Corporation and
its  subsidiaries  as of December  31,  1998 and 1997,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.




/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 9, 1999


                                     - 13 -

<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                     December 31,
ASSETS                                                                        1998                 1997

<S>                                                                      <C>                   <C>   
CURRENT ASSETS
   Cash and cash equivalents.............................................   $24,422               $4,692
   Accounts receivable, less allowance for doubtful accounts
     of $4,870 and $6,356................................................    75,302               59,252
   Inventories...........................................................    23,292               14,154
   Other current assets..................................................     4,937                3,147
                                                                         ----------           ----------
       Total current assets..............................................   127,953               81,245
                                                                         ----------           ----------

INVESTMENT IN AFFILIATE..................................................    28,214               28,570
                                                                         ----------           ----------

PROPERTY AND EQUIPMENT...................................................   686,240              595,861
   Accumulated depreciation..............................................  (267,993)            (182,632)
                                                                         ----------           ----------
   Property and equipment, net...........................................   418,247              413,229
                                                                         ----------           ----------

DEFERRED CHARGES AND OTHER............................................... 1,276,531            1,275,861
   Accumulated amortization..............................................  (356,311)            (321,450)
                                                                         ----------           ----------
   Deferred charges and other, net.......................................   920,220              954,411
                                                                         ----------           ----------
                                                                         $1,494,634           $1,477,455
                                                                         ==========           ==========

LIABILITIES AND STOCKHOLDER'S DEFICIENCY

CURRENT LIABILITIES
   Accounts payable and accrued expenses.................................  $116,979             $100,159
   Accrued interest......................................................    16,802               17,388
   Current portion of long-term debt.....................................       461                  430
   Due to affiliates.....................................................    18,508               47,116
                                                                         ----------           ----------
     Total current liabilities...........................................   152,750              165,093
                                                                         ----------           ----------

LONG-TERM DEBT, less current portion..................................... 1,274,159            1,224,511
                                                                         ----------           ----------

INVESTMENT IN AFFILIATE..................................................                         99,014
                                                                         ----------           ----------

DEFERRED INCOME TAXES....................................................   230,046              227,944
                                                                         ----------           ----------

MINORITY INTEREST AND OTHER..............................................     8,073                5,878
                                                                         ----------           ----------

COMMITMENTS AND CONTINGENCIES

MANDATORILY REDEEMABLE PREFERRED STOCK HELD BY AFFILIATE.................   195,059              173,602
                                                                         ----------           ----------

STOCKHOLDER'S DEFICIENCY
   Common stock, $.01 par value - authorized, 1,000 shares;
     issued, 100 shares .................................................
   Additional capital....................................................   537,228              488,301
   Accumulated deficit...................................................  (902,681)            (906,888)
                                                                         ----------           ----------
     Total stockholder's deficiency......................................  (365,453)            (418,587)
                                                                         ----------           ----------
                                                                         $1,494,634           $1,477,455
                                                                         ==========           ==========
</TABLE>

See notes to consolidated financial statements.

                                     - 14 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1998              1997             1996

<S>                                                                     <C>              <C>               <C>     
SERVICE INCOME, net...........................................          $455,199         $444,946          $426,053
                                                                        --------         --------          --------

COSTS AND EXPENSES
   Operating..................................................            37,874           35,525            36,876
   Selling, general and administrative........................           242,375          239,383           235,176
   Depreciation and amortization..............................           122,004          109,820           117,225
                                                                        --------         --------          --------
                                                                         402,253          384,728           389,277
                                                                        --------         --------          --------

OPERATING INCOME..............................................            52,946           60,218            36,776

OTHER (INCOME) EXPENSE
   Interest expense...........................................           111,623          117,756           116,297
   Investment income..........................................            (1,508)          (2,696)           (2,525)
   Equity in net losses of affiliates.........................               185            6,603             6,559
   Litigation settlement......................................                                               21,647
   Other......................................................             1,281            1,359             2,449
                                                                        --------         --------          --------
                                                                         111,581          123,022           144,427
                                                                        --------         --------          --------

LOSS BEFORE INCOME TAX BENEFIT
   AND EXTRAORDINARY ITEMS....................................           (58,635)         (62,804)         (107,651)

INCOME TAX BENEFIT............................................           (21,525)         (22,867)          (38,067)
                                                                        --------         --------          --------

LOSS BEFORE EXTRAORDINARY ITEMS...............................           (37,110)         (39,937)          (69,584)

EXTRAORDINARY ITEMS...........................................                            (10,671)
                                                                        --------         --------          --------

NET LOSS......................................................           (37,110)         (50,608)          (69,584)

PREFERRED DIVIDENDS...........................................           (21,457)         (12,124)
                                                                        --------         --------          --------

NET LOSS FOR COMMON STOCKHOLDER...............................          ($58,567)        ($62,732)         ($69,584)
                                                                        ========         ========          ========
</TABLE>


See notes to consolidated financial statements.

                                     - 15 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                         1998              1997             1996
<S>                                                                     <C>              <C>               <C>      
OPERATING ACTIVITIES
   Net loss...................................................          ($37,110)        ($50,608)         ($69,584)
   Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Extraordinary items......................................                             10,671
     Depreciation and amortization............................           122,004          109,820           117,225
     Non-cash interest expense................................             1,497           30,714            69,400
     Equity in net losses of affiliates.......................               185            6,603             6,559
     Minority interest........................................             1,316            1,157               773
     Deferred management fees.................................                              2,211             5,545
     Deferred income taxes and other..........................           (21,295)         (25,545)          (38,070)
                                                                         -------          -------           -------
                                                                          66,597           85,023            91,848

     Changes in working capital accounts......................           (11,245)          17,223            30,248
                                                                         -------          -------           -------
       Net cash provided by operating activities..............            55,352          102,246           122,096
                                                                         -------          -------           -------

FINANCING ACTIVITIES
   Proceeds from borrowings of long-term debt.................            75,000        1,243,370           166,908
   Repayments of long-term debt...............................           (25,430)      (1,305,180)          (36,500)
   Deferred financing costs...................................              (125)         (28,912)
   Repayments under deferred payment plan.....................                                             (120,177)
   Repayment of long-term due to affiliate....................                                              (35,479)
   Proceeds from issuance of mandatorily redeemable
     preferred stock held by affiliate........................                            161,478
   Net transactions with affiliates...........................             8,346          (21,351)            7,100
                                                                         -------          -------           -------
     Net cash provided by (used in) financing activities......            57,791           49,405           (18,148)
                                                                         -------          -------           -------

INVESTING ACTIVITIES
   Acquisitions, net of cash acquired.........................                            (18,918)          (13,958)
   Capital expenditures.......................................           (91,255)        (130,021)         (116,018)
   Proceeds from sale of equipment and other..................                                                  256
   Purchase of minority interests, license acquisition
     costs and other..........................................            (2,158)          (3,000)          (24,367)
   Distributions from Garden State Cablevision................                                               35,479
                                                                         -------          -------           -------
       Net cash used in investing activities..................           (93,413)        (151,939)         (118,608)
                                                                         -------          -------           -------

INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS................................................            19,730             (288)          (14,660)

CASH AND CASH EQUIVALENTS, beginning of year..................             4,692            4,980            19,640
                                                                         -------          -------           -------

CASH AND CASH EQUIVALENTS, end of year........................           $24,422           $4,692            $4,980
                                                                         =======          =======           =======
</TABLE>

See notes to consolidated financial statements.

                                     - 16 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                           Common          Additional       Accumulated
                                                            Stock            Capital          Deficit            Total

<S>                                                      <C>                <C>            <C>               <C>       
BALANCE, JANUARY 1, 1996............................      $                 $500,425        ($786,696)        ($286,271)
   Net loss.........................................                                          (69,584)          (69,584)
                                                          ---------         --------        ---------         ---------

BALANCE, DECEMBER 31, 1996..........................                         500,425         (856,280)         (355,855)
   Net loss.........................................                                          (50,608)          (50,608)
   Preferred dividends..............................                         (12,124)                           (12,124)
                                                          ---------         --------        ---------         ---------

BALANCE, DECEMBER 31, 1997..........................                         488,301         (906,888)         (418,587)
   Distribution of AWACS Garden State, Inc. to Parent                         70,384           41,317           111,701
   Net loss.........................................                                          (37,110)          (37,110)
   Preferred dividends..............................                         (21,457)                           (21,457)
                                                          ---------         --------        ---------         ---------

BALANCE, DECEMBER 31, 1998..........................      $                 $537,228        ($902,681)        ($365,453)
                                                          =========         ========        =========         =========
</TABLE>


See notes to consolidated financial statements.

                                     - 17 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1.   BUSINESS

     Comcast Cellular  Corporation ("the Company"),  is an indirect wholly owned
     subsidiary of Comcast Corporation ("Comcast") and is a holding company that
     conducts all of its operations through its wholly owned subsidiary, Comcast
     Cellular Communications, Inc. ("CCCI") and CCCI's subsidiaries.

     The Company provides cellular telephone communications services pursuant to
     licenses granted by the Federal Communications Commission in markets with a
     population  of more than 8.1 million,  including the area in and around the
     City of Philadelphia, Pennsylvania, the State of Delaware and a significant
     portion of the State of New Jersey.

     In January 1999, Comcast agreed to sell the Company to SBC  Communications,
     Inc. ("SBC") for  approximately  $400 million in cash and the assumption of
     approximately  $1.3  billion  of the  Company's  debt.  Comcast  expects to
     complete  this sale in the third  quarter  of 1999  pending  receipt of all
     necessary regulatory and other approvals.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and  all  wholly  owned  or  controlled   subsidiaries.   All   significant
     intercompany  accounts and transactions  among  consolidated  entities have
     been eliminated.

     Management's Use of Estimates
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Fair Values
     The estimated fair value amounts  presented in these notes to  consolidated
     financial  statements  have been  determined by the Company using available
     market  information and appropriate  methodologies.  However,  considerable
     judgment is required in  interpreting  market data to develop the estimates
     of  fair  value.  The  estimates   presented  herein  are  not  necessarily
     indicative  of the  amounts  that the  Company  could  realize in a current
     market exchange.  The use of different market assumptions and/or estimation
     methodologies  may have a  material  effect  on the  estimated  fair  value
     amounts.  Such fair  value  estimates  are based on  pertinent  information
     available to management as of December 31, 1998 and 1997, and have not been
     comprehensively  revalued  for  purposes  of these  consolidated  financial
     statements since such dates.

     A  reasonable  estimate  of fair  values  of the due to  affiliates  in the
     Company's  consolidated  balance sheet is not practicable to obtain because
     of the related  party  nature of these items and the lack of quoted  market
     prices.

     Cash Equivalents
     Cash  equivalents  consist  principally  of overnight  investments in money
     market funds with  maturities of three months or less when  purchased.  The
     carrying amounts of the Company's cash equivalents, classified as available
     for sale securities,  approximate their fair values as of December 31, 1998
     and 1997.

     Inventories
     Inventories,  which include products held for sale, materials and supplies,
     are  stated  at the  lower of cost or  market.  Products  held for sale are
     stated at weighted average cost, which approximates market.

     Investments
     Investments  in  entities  in which the Company has the ability to exercise
     significant  influence  over the operating  and  financial  policies of the
     investee  are  accounted  for  under  the  equity  method.   Equity  method
     investments are

                                     - 18 -

<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Continued)


     recorded  at original  cost and  adjusted  periodically  to  recognize  the
     Company's  proportionate share of the investees' net income or losses after
     the  date  of  investment,  additional  contributions  made  and  dividends
     received.  Investments  in  privately  held  companies  are stated at cost,
     adjusted for any known diminution in value.

     Property and Equipment
     Property and equipment are stated at cost.  Depreciation is provided by the
     straight-line method over estimated useful lives as follows:

          Buildings......................................      10-40 years
          Operating facilities...........................       8-12 years
          Other equipment................................        2-8 years

     Improvements  that extend asset lives are  capitalized;  other  repairs and
     maintenance  charges  are  expensed  as  incurred.  The  cost  and  related
     accumulated  depreciation  applicable to assets sold or retired are removed
     from the accounts and the gain or loss on  disposition  is  recognized as a
     component of depreciation expense.

     Deferred Charges and Other
     Deferred  charges  consist  principally of the excess of cost over the fair
     value  of  net  assets  acquired,   license   acquisition  costs  and  debt
     acquisition  costs.  The  excess of cost over the fair  value of net assets
     acquired is being  amortized on a  straight-line  basis over the  estimated
     useful  life  of  up to 40  years.  License  acquisition  costs  are  being
     amortized on a straight-line  basis over the estimated  useful lives of the
     licenses of up to 40 years. Debt acquisition costs are being amortized on a
     straight-line basis over the term of the related debt, ranging from five to
     ten years.

     Valuation of Long-Lived Assets
     The Company  periodically  evaluates the  recoverability  of its long-lived
     assets,  including  property  and  equipment  and  deferred  charges  using
     objective  methodologies.  Such methodologies  include evaluations based on
     the cash flows generated by the underlying assets or other  determinants of
     fair value.

     Revenue Recognition
     Service  income is recognized as service is provided and is recorded net of
     long  distance  and roaming  incollect  charges.  Credit risk is managed by
     disconnecting services to customers who are delinquent.

     Postretirement and Postemployment Benefits
     The estimated costs of retiree benefits and benefits for former or inactive
     employees, after employment but before retirement, are accrued and recorded
     as a charge to operations  during the years the employees provide services.
     The Company's  retiree benefit  obligation is unfunded and all benefits are
     paid by Comcast.

     Income Taxes
     The Company  recognizes  deferred tax assets and  liabilities for temporary
     differences  between the financial reporting basis and the tax basis of the
     Company's  assets and  liabilities  and expected  benefits of utilizing net
     operating  loss  carryforwards.  The impact on deferred taxes of changes in
     tax rates and laws,  if any,  applied to the years during  which  temporary
     differences are expected to be settled,  are reflected in the  consolidated
     financial statements in the period of enactment.

     Derivative Financial Instruments
     The Company uses derivative  financial  instruments,  such as interest rate
     exchange  agreements  ("Swaps") to manage its exposure to  fluctuations  in
     interest  rates.  Swaps are matched with either fixed or variable rate debt
     and  periodic  cash  payments  are  accrued  on a  settlement  basis  as an
     adjustment  to  interest  expense.   Any  premiums  associated  with  these
     instruments are amortized over their term and realized gains or losses as a
     result of the  termination  of the  instruments  are deferred and amortized
     over the remaining term of the underlying debt. Unrealized gains and losses
     as a result of these  instruments are recognized when the underlying hedged
     item is extinguished or otherwise terminated.

                                     - 19 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Continued)


     Those  instruments  that have been  entered  into by the  Company  to hedge
     exposure to interest rate risks are periodically examined by the Company to
     ensure that the instruments are matched with underlying liabilities, reduce
     the Company's  risks relating to interest  rates and,  through market value
     and  sensitivity  analysis,  maintain a high  correlation  to the  interest
     expense or underlying value of the hedged item. For those  instruments that
     do not  meet  the  above  criteria,  variations  in their  fair  value  are
     marked-to-market on a current basis in the Company's consolidated statement
     of operations.

     The Company does not hold or issue any derivative financial instruments for
     trading purposes and is not a party to leveraged  instruments (see Note 4).
     The  credit  risks  associated  with  the  Company's  derivative  financial
     instruments  are  controlled  through the  evaluation and monitoring of the
     creditworthiness of the counterparties. Although the Company may be exposed
     to losses in the event of nonperformance by the counterparties, the Company
     does not expect such losses, if any, to be significant.

     New Accounting Pronouncement
     In June 1998, the Financial  Accounting Standards Board issued Statement of
     Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
     Instruments  and Hedging  Activities."  This statement,  which  establishes
     accounting and reporting  standards for derivatives and hedging activities,
     is effective  for fiscal  years  beginning  after June 15,  1999.  Upon the
     adoption of SFAS No. 133, all  derivatives are required to be recognized in
     the  statement of financial  position as either assets or  liabilities  and
     measured at fair value. The Company is currently  evaluating the impact the
     adoption of SFAS No. 133 will have on its financial position and results of
     operations.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1998.

3.   ACQUISITIONS AND OTHER SIGNIFICANT EVENTS

     PCS License Acquisition
     In  November   1997,   the  Company   acquired   twelve   10-MHz   personal
     communications  services  ("PCS")  licenses  covering the  Philadelphia and
     Allentown,  PA markets from Comcast at Comcast's  historical  cost of $18.9
     million.  The  cost of this  acquisition  was  funded  with  proceeds  from
     borrowings   under  the  Revolving  Credit  Facility  (see  Note  4).  This
     acquisition was accounted for under the purchase method.

     Delaware 1 RSA
     In May 1996, the Company and  Southwestern  Bell Mobile Systems,  through a
     partnership owned 50% by each of them,  purchased the remaining 84% limited
     partnership  interests  of the  Delaware 1 Rural  Statistical  Area ("RSA")
     Limited Partnership,  the licensee of the non-wireline cellular license for
     the Kent and Sussex,  DE RSA (the  "Delaware  1 RSA") for $44.1  million in
     cash, of which the Company's share was $22.1 million. The surviving entity,
     C-SW Cellular  Partnership,  a Delaware general partnership,  now holds the
     cellular  license  for  the  Delaware  1  RSA.  American  Cellular  Network
     Corporation,  an indirect wholly owned  subsidiary of the Company,  manages
     the daily  operations  of the C-SW Cellular  Partnership's  interest in the
     Delaware 1 RSA. The Company's investment of $28.2 million and $28.6 million
     as of December 31, 1998 and 1997, respectively,  is accounted for under the
     equity method and is classified as investment in affiliate in the Company's
     consolidated balance sheet.

     Litigation Settlement
     The  Company was  involved in various  civil  lawsuits  and  administrative
     proceedings regarding the ownership,  operation and transfer of the license
     for its Atlantic City cellular  system.  In March 1995, the Company entered
     into a Settlement  Agreement (the  "Settlement  Agreement") with respect to
     outstanding civil  litigation.  In June 1996, the Company paid and expensed
     $21.6 million under the Settlement Agreement.

                                     - 20 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Continued)


4.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                             December 31,
                                                       1998             1997
                                                       (dollars in thousands)
<S>                                                <C>               <C>       
     9 1/2% Senior Notes due 2007..............      $998,544          $998,435
     Revolving Credit Facility.................       275,000           225,000
     Other, due through 2001...................         1,076             1,506
                                                   ----------        ----------
                                                    1,274,620         1,224,941
     Less current portion......................           461               430
                                                   ----------        ----------
                                                   $1,274,159        $1,224,511
                                                   ==========        ==========
</TABLE>

     Maturities of long-term  debt  outstanding  as of December 31, 1998 for the
     four years after 1999 are as follows (dollars in thousands):

         2000....................................         $495
         2001....................................          120
         2002....................................
         2003....................................      275,000

     As of December 31, 1998 and 1997, the Company's  effective weighted average
     interest  rate on its  long-term  debt  outstanding  was 8.69%  and  8.88%,
     respectively.

     Senior Notes
     Interest on the Senior Notes is payable in cash  semi-annually on May 1 and
     November 1 of each year.  The Senior Notes are  redeemable,  in whole or in
     part, at the option of the Company,  at any time on or after May 1, 2002 at
     a redemption  price,  initially of 104.75% of the  principal  amount of the
     Senior Notes and  declining  annually to 100% on May 1, 2005,  plus accrued
     and unpaid interest, if any, to the date of redemption.  In addition, prior
     to May 1, 2000, the Company may redeem the Senior Notes at a price equal to
     108.5% of the principal amount,  plus accrued and unpaid interest,  if any,
     to the redemption  date, with the net cash proceeds from one or more Public
     Equity Offerings (as defined);  provided, however, that at least 65% of the
     originally  issued  principal  amount  of the  Senior  Notes  would  remain
     outstanding after giving effect to any such redemption. Upon the occurrence
     of a Change of Control  Triggering  Event (as defined),  each holder of the
     Senior Notes will have the right to require the Company to repurchase  such
     holder's  Senior Notes at 101% of the  principal  amount,  plus accrued and
     unpaid interest, if any, to the repurchase date.

     The Senior Notes are general  unsecured  obligations of the Company ranking
     senior to all  subordinated  Indebtedness  (as  defined) of the Company and
     pari passu in right of payment with all other existing and future unsecured
     unsubordinated  Indebtedness  (as  defined)  and other  liabilities  of the
     Company.  The Senior Notes are  subordinate to all  liabilities,  including
     trade payables, of the Company's subsidiaries.

     The  indenture  for the Senior Notes  imposes  certain  limitations  on the
     ability of the Company and its  Restricted  Subsidiaries  (as  defined) to,
     among other  things,  incur  Indebtedness  (as  defined),  make  Restricted
     Payments  (as  defined),  including  the payment of cash  dividends  on the
     Company's Series A Preferred Stock (see Note 6), effect certain Asset Sales
     (as defined),  enter into certain  transactions  with affiliates,  merge or
     consolidate with any other person or transfer all or  substantially  all of
     their properties and assets.

     Revolving Credit Facility
     The Company  has a credit  agreement  with  certain  banks (the  "Revolving
     Credit Facility"),  which consists of a $300.0 million five and one-quarter
     year  revolving  credit  facility  (the  "Tranche A Facility")  and a $96.5
     million  364-day  revolving  credit  facility  (the  "Tranche B Facility").
     Amounts  outstanding under the Tranche B Facility at the end of the 364-day
     period  are  convertible,   at  the  Company's  option,  into  a  four  and
     one-quarter year term loan.

                                     - 21 -

<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Continued)


     Borrowings  under the  Revolving  Credit  Facility  bear interest at a rate
     equal to, at the option of the  Company,  either (a) the greater of the (i)
     prime rate or (ii) the federal  funds rate plus 1/2% or (b) the  Applicable
     Margin,  as  defined  based on  CCCI's  leverage  ratio,  plus  the  London
     Interbank  Offered Rate.  Initial  borrowings  under the Tranche A Facility
     were used principally to repay existing debt, to pay interest on the Senior
     Notes,  to purchase  twelve  10-MHz PCS licenses from Comcast (see Note 3),
     and to repay previously  deferred  management fees to Comcast (see Note 7).
     The Tranche B Facility will expire in October 1999.

     Borrowings  under the  Revolving  Credit  Facility are senior to the Senior
     Notes. The Revolving Credit Facility contains various covenants,  including
     financial covenants restricting changes in control (or making such an event
     of default) and limiting the payment of dividends,  distributions and loans
     and advances to the Company.

     Extraordinary Items
     Extraordinary  items for the year ended  December 31, 1997 of $10.7 million
     consist of unamortized debt acquisition costs and debt extinguishment costs
     of $16.4 million,  net of related tax benefit of $5.7 million,  expensed in
     connection with the  refinancing of the Company's  existing credit facility
     with the  proceeds  from the  offering of the Senior  Notes in May 1997 and
     borrowings under the Revolving Credit Facility in November 1997.

     Interest Rate Risk Management
     The Company is exposed to market risk including  changes in interest rates.
     To manage the volatility  relating to these  exposures,  the Company enters
     into various derivative  transactions pursuant to the Company's policies in
     areas such as counterparty  exposure and hedging  practices.  Positions are
     monitored using techniques including market value and sensitivity analyses.

     The use of interest rate risk management  instruments,  such as Swaps,  was
     required under the terms of certain of the Company's previously outstanding
     debt  agreements.  The Company's policy is to manage interest costs using a
     mix of fixed and variable  rate debt.  Using Swaps,  the Company  agrees to
     exchange, at specified intervals, the difference between fixed and variable
     interest  amounts  calculated  by  reference  to  an  agreed-upon  notional
     principal amount.

     The following table summarizes the terms of the Company's  existing Swap as
     of  December  31, 1997  (dollars  in  thousands).  The  Company's  Swap was
     terminated in May 1998.

<TABLE>
<CAPTION>
                                              Notional                    Average
                                               Amount      Maturities   Interest Rate
<S>                                           <C>             <C>          <C>  
     As of December 31, 1997
     Variable to Fixed Swap..............     $50,000         1998         5.65%
</TABLE>

     The  notional  amounts of interest  rate  instruments,  as presented in the
     above table, are used to measure interest to be paid or received and do not
     represent the amount of exposure to credit loss. While derivative financial
     instruments  represent an integral part of the Company's interest rate risk
     management  program,  their incremental  effect on interest expense for the
     years ended December 31, 1998, 1997 and 1996 was not significant.

     Estimated Fair Value
     The Company's  long-term  debt had carrying  amounts of $1.275  billion and
     $1.225  billion  and  estimated  fair  values of $1.316  billion and $1.274
     billion as of December 31, 1998 and 1997, respectively.  The estimated fair
     value of the  Company's  publicly  traded  debt is based on  quoted  market
     prices for that debt.  Interest  rates that are currently  available to the
     Company for issuance of debt with similar  terms and  remaining  maturities
     are used to  estimate  fair value for debt issues for which  quoted  market
     prices are not available.

     The  difference  between the carrying value and estimated fair value of the
     Company's  Swap was not  significant  as of December 31, 1997, and has been
     estimated based upon amounts at which such Swap could be settled.

                                     - 22 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Continued)


5.   INVESTMENT IN AND DUE TO AFFILIATES

     In 1992,  AWACS Garden State,  Inc.  ("AWACS Garden  State"),  which was an
     indirect  subsidiary of the Company,  issued a note (the "AWACS Note") with
     an initial principal amount of $51.0 million to purchase, from a subsidiary
     of Comcast, a 40% limited partnership  interest in Garden State Cablevision
     L.P. ("Garden State Cablevision").  The AWACS Note bears interest at a rate
     of 11% per annum. Interest is payable on a quarterly basis to the extent of
     available  cash,  with any unpaid  interest  added to  principal.  Interest
     expense on the AWACS Note was $1.4  million,  $5.2 million and $8.2 million
     for the years ended  December 31, 1998,  1997 and 1996,  respectively.  The
     balance  of the AWACS  Note,  classified  as due to  affiliates,  was $50.4
     million as of December 31, 1997.  As of December  31, 1997,  the  Company's
     investment  in  Garden  State  Cablevision,  classified  as  investment  in
     affiliate, was ($99.0) million.

     Effective April 1, 1998, the Company  distributed its indirect  interest in
     AWACS Garden State to a wholly owned  subsidiary of Comcast at its net book
     value of $41.3 million.

     As of December 31, 1998, due to affiliates consists  principally of amounts
     due to AWACS Garden State in  connection  with tax savings  received by the
     Company  during  prior year periods in which AWACS Garden State joined with
     an indirect  subsidiary of the Company in filing  consolidated  federal tax
     returns.

6.   MANDATORILY REDEEMABLE PREFERRED STOCK

     During  1997,  the  Company  authorized  10,000  shares  of $.01 par  value
     preferred  stock and designated  5,200 of such shares as Series A Preferred
     Stock. In May 1997, the Company issued  1,614.775 shares of its mandatorily
     redeemable  Series A Preferred Stock to Comcast  Financial  Corporation,  a
     wholly owned  subsidiary of Comcast.  Each holder of the Series A Preferred
     Stock is entitled to receive  cumulative  cash dividends at the annual rate
     of $12,000 per share,  payable  semi-annually  on May 1 and November 1 each
     year,  in arrears.  At the option of the  Company,  by  declaration  of the
     Company's Board of Directors, dividends may be paid in additional shares of
     Series A Preferred Stock (the "Additional  Shares") instead of cash through
     May 1, 2007. To the extent  dividends are paid in Additional  Shares,  such
     Additional  Shares shall be valued at $100,000 per share with a liquidation
     value of $100,000 per share. The Series A Preferred Stock is redeemable, at
     the  option  of the  Company,  at any  time  prior  to  May 2,  2007,  at a
     redemption price of $100,000 per share,  plus accrued and unpaid dividends,
     and is  mandatorily  redeemable on May 2, 2007 after final  maturity of the
     Senior Notes,  subject to certain conditions.  The Series A Preferred Stock
     is generally non-voting. During the years ended December 31, 1998 and 1997,
     the Company  accrued  $21.5  million and $12.1  million,  respectively,  of
     dividends on the Series A Preferred Stock,  with a corresponding  reduction
     in additional  capital.  Such amounts have been excluded from the Company's
     consolidated statement of cash flows due to their noncash nature.

     In connection  with the closing of the sale of the Company to SBC (see Note
     1), the Series A Preferred Stock will be exchanged into shares representing
     approximately  49%  of  the  total  number  of  outstanding  shares  of the
     Company's common stock.

7.   RELATED PARTY TRANSACTIONS

     Comcast  and  CCCI  were  parties  to  a  management  agreement  (the  "Old
     Management  Agreement")  pursuant to which Comcast managed the business and
     operations  of  CCCI.  In  May  1997,  the  Old  Management  Agreement  was
     terminated  and  replaced  with  a  new  management   agreement  (the  "New
     Management  Agreement") which provides for an annual management fee of 1.5%
     of revenues.  The New Management  Agreement eliminated the prior management
     fee which was limited to $5.0 million, subject to annual increases based on
     the consumer price index. The New Management Agreement has a ten year term.
     Management fees of $6.8 million, $6.4 million and $5.5 million were charged
     to selling,  general  and  administrative  expenses  during the years ended
     December  31,  1998,  1997 and 1996,  respectively  (on a pro forma  basis,
     giving  effect to the New  Management  Agreement,  management  fees for the
     years ended  December  31,  1997 and 1996 would have been $6.7  million and
     $6.4 million, respectively).

                                     - 23 -

<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Continued)


     In November 1997,  the Company repaid $17.0 million of previously  deferred
     management  fees to Comcast with a portion of the proceeds from the initial
     borrowings under the Revolving Credit Facility (see Note 4).

8.   INCOME TAXES

     Comcast,  the Company and CCCI have  entered  into a tax sharing  agreement
     (the "Tax Sharing  Agreement")  whereby,  the Company joins with Comcast in
     filing a consolidated  federal income tax return.  Comcast allocates income
     tax  expense  or  benefit to the  Company  as if the  Company  was filing a
     separate  federal income tax return.  Tax benefits from both losses and tax
     credits are made  available  to the  Company as it is able to realize  such
     benefits  on a separate  return  basis.  The  Company is required to pay to
     Comcast for income  taxes an amount equal to that amount of tax the Company
     would pay if it filed a separate tax return.  Subsidiaries  which were less
     than 80% owned have been excluded from the Tax Sharing  Agreement,  as they
     were not  members  of the  Comcast  consolidated  group  for tax  purposes.
     Accordingly,  their tax  liabilities  have been  determined  on a  separate
     company basis.

     Significant  components  of the Company's net deferred tax liability are as
     follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                           1998             1997
<S>                                                                                    <C>              <C>     
     Deferred tax liabilities:
         Difference between book and tax basis of property and equipment........       $395,200         $397,658
                                                                                       --------         --------
     Deferred tax assets:
         Net operating loss carryforwards.......................................        177,899          180,096
         Difference between book and tax basis of property and equipment and
           deferred charges.....................................................                          24,911
         Less valuation allowance...............................................        (12,745)         (35,293)
                                                                                       --------         --------
                                                                                        165,154          169,714
                                                                                       --------         --------
         Net deferred tax liability.............................................       $230,046         $227,944
                                                                                       ========         ========
</TABLE>

     The Company's net deferred income tax liability  increased by approximately
     $24.0  million as a result of the  distribution  of its  interest  in AWACS
     Garden State (see Note 5).

     Income  tax  benefit  consists  of the  following  components  (dollars  in
     thousands):

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                         1998              1997             1996
<S>                                                                   <C>              <C>              <C>
     Current expense
         Federal..........................................            $                 $                $
         State............................................                388               180              313
                                                                     --------          --------         -------- 
                                                                          388               180              313
                                                                     --------          --------         -------- 
     Deferred benefit
         Federal..........................................            (19,072)          (20,714)         (36,836)
         State............................................             (2,841)           (2,333)          (1,544)
                                                                     --------          --------         -------- 
                                                                      (21,913)          (23,047)         (38,380)
                                                                     --------          --------         -------- 
     Income tax benefit...................................           ($21,525)         ($22,867)        ($38,067)
                                                                     ========          ========         ======== 
</TABLE>

                                     - 24 -

<PAGE>

     The effective  income tax benefit of the Company differs from the statutory
     amount because of the effect of the following items (dollars in thousands):

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                         1998              1997             1996

<S>                                                                  <C>               <C>              <C>      
     Federal tax at statutory rate........................           ($20,522)         ($21,981)        ($37,678)
     State income taxes, net of federal benefit...........             (1,594)           (1,400)            (800)
     Other, net...........................................                591               514              411
                                                                     --------          --------         -------- 
     Income tax benefit...................................           ($21,525)         ($22,867)        ($38,067)
                                                                     ========          ========         ======== 
</TABLE>

     As of December 31,  1998,  the Company has  available  net  operating  loss
     carryforwards  of  approximately  $450.0  million for which a deferred  tax
     asset has been recorded and which expire through the year 2018.

9.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The  Company  made cash  payments  for  interest of $110.7  million,  $72.8
     million and $48.7 million  during the years ended  December 31, 1998,  1997
     and 1996, respectively.

     The Company  made cash  payments  for income  taxes of $0.2  million,  $0.4
     million and $0.8 million during the years ended December 31, 1998, 1997 and
     1996, respectively.

10.  COMMITMENTS AND CONTINGENCIES

     The  Company   primarily   leases  its  sites  used  for  its  transmission
     facilities,  retail stores and administrative  offices under noncancellable
     operating  leases  expiring  on  various  dates  through  2039.  The leases
     generally  provide for fixed annual  rentals plus certain real estate taxes
     and other costs.  Rental expense of $14.2 million,  $11.5 million and $10.5
     million  for  1998,  1997  and  1996,  respectively,  has been  charged  to
     operations.

     As  of  December   31,  1998,   the  minimum   rental   commitments   under
     noncancellable operating leases are as follows (dollars in thousands):

          1999.............................................      $12,756
          2000.............................................       11,238
          2001.............................................        9,005
          2002.............................................        8,215
          2003.............................................        7,281
          Thereafter.......................................       37,826

     The Company is subject to claims which arise in the ordinary  course of its
     business.  In the opinion of management,  the amount of ultimate  liability
     with respect to these  actions  will not  materially  affect the  financial
     position, results of operations or liquidity of the Company.

                                     - 25 -

<PAGE>

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

             Not applicable.

                                    PART III

     The information  called for by Item 10, Directors and Executive Officers of
the Registrant, Item 11, Executive Compensation,  Item 12, Security Ownership of
Certain Beneficial Owners and Management, and Item 13, Certain Relationships and
Related  Transactions is omitted  pursuant to SEC General  Instruction I of Form
10-K.



                                     - 26 -

<PAGE>

                                     PART IV

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

          (a)  The following  consolidated  financial  statements of the Company
               are included in Part II, Item 8:

              Independent Auditors' Report...................................13
              Consolidated Balance Sheet--December 31, 1998 and 1997.........14
              Consolidated Statement of Operations--Years
                Ended December 31, 1998, 1997 and 1996.......................15
              Consolidated Statement of Cash Flows--Years
                Ended December 31, 1998, 1997 and 1996.......................16
              Consolidated Statement of Stockholder's Deficiency--Years
                Ended December 31, 1998, 1997 and 1996.......................17
              Notes to Consolidated Financial Statements.....................18

          (b)  (i)  The following  financial  statement  schedule required to be
                    filed by Item 14(d) of Form 10-K is included in Part IV:

                       Schedule II - Valuation and Qualifying Accounts

                    All  other  schedules  are  omitted  because  they  are  not
                    applicable,  not  required or the  required  information  is
                    included in the consolidated  financial  statements or notes
                    thereto.

          (c)  Reports on Form 8-K - none.

          (d)  Exhibits required to be filed by Item 601 of Regulation S-K:

                3.1   Certificate of  Incorporation  of the Company,  as amended
                      (incorporated by reference to Exhibit 3.1 to the Company's
                      Registration  Statement on Form S-4, as amended,  filed on
                      September 30, 1997).
                3.2   By-laws  of the  Company  (incorporated  by  reference  to
                      Exhibit 3.2 to the  Company's  Registration  Statement  on
                      Form S-4, as amended, filed on September 30, 1997).
                4.1   Indenture  dated  as of May 8,  1997  by and  between  the
                      Company and The Bank of New York,  as Trustee,  in respect
                      of the 9 1/2% Senior Notes due 2007 (including the form of
                      Notes)  (incorporated  by  reference to Exhibit 4.1 to the
                      Company's  Registration Statement on Form S-4, as amended,
                      filed on September 30, 1997).
                10.1  Management  Agreement  dated  as of May  20,  1997  by and
                      between  Comcast   Corporation   ("Comcast")  and  Comcast
                      Cellular  Communications,  Inc. ("CCCI")  (incorporated by
                      reference  to Exhibit 10.1 to the  Company's  Registration
                      Statement on Form S-4, as amended,  filed on September 30,
                      1997).
                10.2  Tax  Sharing  Agreement  dated as of March 5,  1992 by and
                      among the Company,  Comcast Cellular Holdings,  Inc., CCCI
                      and  Comcast,  as amended  May 20, 1997  (incorporated  by
                      reference  to Exhibit 10.2 to the  Company's  Registration
                      Statement on Form S-4, as amended,  filed on September 30,
                      1997).
                10.3  Credit  Agreement  dated as of October  14, 1997 among the
                      Company,  the banks listed therein,  The Bank of New York,
                      Barclays Bank PLC, The Chase  Manhattan  Bank,  N.A.,  PNC
                      Bank National Association,  and the Toronto-Dominion Bank,
                      as Arranging Agents,  and Toronto Dominion (Texas),  Inc.,
                      as Administrative Agent.
                10.4  Purchase and Sale  Agreement  dated as of January 19, 1999
                      among SBC Communications,  Inc., Comcast Cellular Holdings
                      Corporation,  Comcast  Financial  Corporation  and Comcast
                      (incorporated by reference to Exhibit 10.34 to the Comcast
                      Corporation  Annual Report on Form 10-K for the year ended
                      December 31, 1998).
                12.1  Statement  re:  Computation  of Ratio of Earnings to Fixed
                      Charges.
                27.1  Financial Data Schedule.

                                     - 27 -
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf  by  the   undersigned,   thereunto  duly  authorized  in   Philadelphia,
Pennsylvania on March 18,1999.

                                        Comcast Cellular Corporation



                                        By: /s/ Brian L. Roberts
                                            ------------------------------------
                                            Brian L. Roberts
                                            President and Director

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

SIGNATURE                          TITLE                                DATE

/s/ Ralph J. Roberts
-----------------------
Ralph J. Roberts              Chairman; Director                   March 18,1999


/s/ Julian A. Brodsky
-----------------------
Julian A. Brodsky             Vice Chairman; Director              March 18,1999


/s/ Brian L. Roberts
-----------------------
Brian L. Roberts              President; Director                  March 18,1999
                              (Principal Executive Officer)

/s/ Lawrence S. Smith
-----------------------
Lawrence S. Smith             Executive Vice President             March 18,1999
                              (Principal Accounting Officer)

/s/ John R. Alchin
-----------------------
John R. Alchin                Senior Vice President, Treasurer     March 18,1999
                              (Principal Financial Officer)

/s/ Stanley L. Wang
-----------------------
Stanley L. Wang               Senior Vice President, Secretary;    March 18,1999
                              Director

                                     - 28 -
<PAGE>





INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE

Board of Directors and Stockholder
Comcast Cellular Corporation
Wilmington, Delaware


We have  audited  the  consolidated  financial  statements  of Comcast  Cellular
Corporation  (the  "Company")  (an indirect  wholly owned  subsidiary of Comcast
Corporation) and its subsidiaries as of December 31, 1998 and 1997, and for each
of the three years in the period ended  December  31, 1998,  and have issued our
report thereon dated February 9, 1999; such report is included elsewhere in this
Form 10-K.  Our audits also  included the  financial  statement  schedule of the
Company,   listed  in  Item  14.  This  financial   statement  schedule  is  the
responsibility of the Company's management.  Our responsibility is to express an
opinion based on our audits. In our opinion,  such financial statement schedule,
when considered in relation to the basic financial  statements taken as a whole,
presents fairly in all material respects the information set forth therein.


/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 9, 1999

                                     - 29 -

<PAGE>


                  COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                     Additions
                                                       Balance at   Charged to   Deductions     Balance
                                                        Beginning    Costs and      from        at End
                                                         of Year     Expenses    Reserves(A)    of Year

Allowance for Doubtful Accounts

<S>                                                     <C>          <C>          <C>          <C>   
   1998.....................................            $6,356       $5,881       $7,367       $4,870

   1997.....................................             3,148        9,502        6,294        6,356

   1996.....................................             3,264       14,032       14,148        3,148


<FN>

(A) Uncollectible accounts written off.
</FN>
</TABLE>



                                     - 30 -