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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, 1997

                                       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         (I.R.S. Employer Identification No.)
   of incorporation or organization)

    1105 North Market Street, Wilmington, Delaware         19801
       (Address of principal executive offices)          (Zip Code)

       Registrant's telephone number, including area code: (302) 427-8991
                        --------------------------------
           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 January 30, 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
                          1997 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I

Item 1    Business.............................................................1
Item 2    Properties...........................................................6
Item 3    Legal Proceedings....................................................7
Item 4    Submission of Matters to a Vote of Security Holders..................7

                                     PART II

Item 5    Market for the Registrant's Common Equity and
              Related Stockholder Matters......................................7
Item 6    Selected Financial Data..............................................7
Item 7    Management's Discussion and Analysis of
              Financial Condition and Results of Operations....................8
Item 8    Financial Statements and Supplementary Data.........................11
Item 9    Changes in and Disagreements with
              Accountants on Accounting and Financial Disclosure..............25

                                    PART III

Item 10   Directors and Executive Officers of the Registrant..................25
Item 11   Executive Compensation..............................................25
Item 12   Security Ownership of Certain Beneficial
              Owners and Management...........................................25
Item 13   Certain Relationships and Related Transactions......................25

                                     PART IV

Item 14   Exhibits, Financial Statement Schedules and Reports
              on Form 8-K.....................................................26
SIGNATURES....................................................................27

This Annual  Report on Form 10-K for the year ended  December 31,  1997,  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; 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")(see  Note  1 to  the  Company's
consolidated  financial  statements)  is a direct  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 a population  ("Pops") of more than 8.2 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 1105 North Market  Street,  Wilmington,  Delaware,  19801,
(302) 427-8991.

                        GENERAL DEVELOPMENTS OF BUSINESS

Senior Notes Offering
In May 1997, the Company sold $1.0 billion  principal amount of senior debt with
an interest rate of 9 1/2% and a maturity date of 2007. The Company used the net
proceeds from the offering to redeem its senior  participating  redeemable  zero
coupon notes and to repay  certain  subsidiary  indebtedness  (see Note 4 to the
Company's consolidated financial statements in Item 8).

                      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, 1997 (in thousands):

Market                          Ownership         Pops (1)

Consolidated Systems
Philadelphia, PA                  100.0%          4,898.5
New Brunswick, NJ                 100.0%            709.7
Wilmington, DE                    100.0%            622.2
Long Branch, NJ                   100.0%            600.3
Ocean County, NJ                  100.0%            484.9
Atlantic City, NJ                  97.4%            336.6
Trenton, NJ                        85.7%            331.3
Vineland, NJ                       94.6%            134.1
Aurora-Elgin, IL                   81.7%             49.1
Joliet, IL                         84.0%             36.0
                                                  -------
Consolidated Pops                                 8,202.7
                                                  -------
Managed System
Delaware 1 RSA                     50.0%            261.4
                                                  -------
Total Pops                                        8,464.1
                                                  =======
---------------
(1)  Source: 1998 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):

                                        1997    1996    1995     1994     1993
Subscribers..............................783     762     665      501      323
Penetration..............................9.5%    9.3%    8.5%     6.8%     4.4%

The  Company  holds  twelve  10-MHz  personal  communications  services  ("PCS")
licenses which cover the Philadelphia and Allentown,  PA markets.  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 cellular  networks  with the wireline
telephone network.

The Company  offers  products and services to increase the value to the customer
of the basic 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  MetrophoneSM brand
name in the Philadelphia, PA metropolitan statistical area ("MSA") 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 54 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 300 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 cellular
telephone system operators and

                                      - 2 -
<PAGE>

various  LECs and  interexchange  carriers  establish  the  manner  in which the
cellular telephone system integrates with other telecommunications 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,  most 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.  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.  Among these are
Personal Identification Numbers ("PINs") and the Company's Security Zone feature
which restricts  certain customer usage outside of the Company's  service areas.
In  addition,  the Company has  implemented  authentication  and  radiofrequency
("RF")   fingerprinting   technologies   which   associate   ESN/mobile   number
combinations with particular  cellular telephone units. While the use of digital
radio technology is expected to make it more difficult to commit cellular fraud,
fraudulent use of the Company's systems remains a significant concern.

Customer Service
In 1997  and  1996,  the  Company  consolidated  its  New  Jersey  and  Delaware
operations,   respectively,   including  customer  care  operations,   into  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 Cincinnati Bell Information  Systems,  Inc.  ("CBIS").
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.

                                      - 3 -
<PAGE>

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,  the Sprint
Corporation ("Sprint") and Omnipoint  Communications,  Inc. ("Omnipoint") (which
operate PCS networks) and 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  have  created  additional   competition  in  the  cellular/PCS
telecommunications  industry.  Many of such providers have access to substantial
capital resources and operate, or through affiliates operate, wireless telephone
systems,  bringing  significant  wireless  experience  to the  new  marketplace.
Accordingly,  while there are only two  cellular  providers  licensed in a given
area, new competitors continue to emerge utilizing 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.  PCS is used to describe
a variety of digital,  wireless  communications systems which are currently best
suited for use in densely  populated  areas.  Broadband  PCS service is a direct
competitor to 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.
The FCC  recently  modified  the rules  applicable  to "C Block"  broadband  PCS
licenses held by small  businesses,  minorities  and women (known as "designated
entities")  to reduce the  government  debt now owed by these  entities,  and is
considering further modifications to those rules. "Designated entities," such as
Omnipoint in the Philadelphia market, compete with the Company.

Cellular telephone systems, including the Company's systems, also face actual or
potential  competition  from  other  current  and  developing  technologies.  In
addition to SMR systems,  one-way  paging or beeper  services that feature voice
message,  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.  Nextel uses its  available  SMR spectrum in markets
where the Company provides wireless service.

The FCC requires cellular licensees to provide service to resellers who purchase
cellular service from licensees,  usually 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. The FCC currently is seeking comment
on  whether  resellers  should  be  permitted  to  install  separate   switching
facilities in cellular  systems,  although it has  tentatively  concluded not to
require such  interconnections.  The FCC is also considering  whether  resellers
should receive direct assignments of telephone numbers from LECs.

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.  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  with  respect  to
telecommunications,  which became  effective on February 5, 1998, is intended to
increase competition and reduce barriers to entry by telecommunications firms in
foreign and domestic  markets,  and may lead to greater  foreign  investment and
participation  in  the  US  cellular/PCS   telecommunications   industry.  These
developments and further technological  advances and regulatory changes may make
available other  alternatives to cellular service,  thereby creating  additional
sources of competition.

                           LEGISLATION AND REGULATION

FCC Regulation
The FCC regulates 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").

                                      - 4 -
<PAGE>

Under the  Communications  Act,  no party may  transfer  control  of or assign a
cellular license without first obtaining FCC consent.  FCC rules (i) prohibit an
entity  controlling  one 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 system in any market,  if the common
ownership interests present  anti-competitive  concerns under FCC policies,  and
(iii)  restrict the amount of  commercial  mobile radio  spectrum  that a single
entity may hold in any particular area. 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 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 FCC has granted  renewal of
the  Company's  licenses  for  the  Philadelphia,  PA,  Wilmington,  DE and  New
Brunswick,  Long Branch and Trenton, NJ. The licenses for the Aurora/Elgin,  IL,
Joliet,  IL,  Vineland,  NJ and Atlantic City, NJ expire in 1998. The balance of
the Company's licenses expire from 1999 through 2007.

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 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 June  1996,  the FCC  adopted  a  national
regulatory  framework for  implementing the local  competition  provision of the
1996  Telecom  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.  However, the US Court of Appeals for the Eighth Circuit
vacated certain of these  standards and guidelines,  on the grounds that the FCC
lacked the authority to bind state  regulators on the matter of local pricing of
interconnection.  As a result, landline  interconnection pricing will be left to
state-by-state  determinations.  The Eighth Circuit also determined that the FCC
has special authority over Commercial  Mobile Radio Services ("CMRS")  carriers,
which include the Company's  wireless  operations and their  interconnection  to
incumbent LECs. Accordingly,  national  interconnection rules will be maintained
for the Company's CMRS operations.  In January 1998, the US Supreme Court agreed
to review the Eighth Circuit decision. The Company cannot predict the outcome of
this litigation or the FCC rulemakings, and the ultimate impact of any final FCC
regulations on the Company or its businesses cannot be determined at this time.

Notwithstanding   the  federal   court  stay  of  certain  FCC   interconnection
regulations,  a subsidiary of the Company has renegotiated  its  interconnection
contracts with Bell Atlantic Corporation pursuant to the  Telecommunications Act
of 1996 (the "1996 Telecom Act").  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.

The FCC changes  its  regulations  from time to time in response to  competitive
developments in the  telecommunications  marketplace or new federal legislation.
For instance,  the FCC is considering  whether all CMRS providers should provide
interconnection  to all other CMRS providers.  In its implementation of the 1996
Telecom Act, the FCC recently  established new federal  universal service rules,
under which wireless service providers are eligible to receive universal service
subsidies  for the first  time,  but also are  required  to  contribute  to both
federal and state universal service funds.

                                      - 5 -
<PAGE>

The Company  began making its  contributions  to the federal  universal  service
programs in February  1998.  For the first  quarter of 1998,  the FCC's  current
universal service assessments amount to 0.72% of all telecommunications revenues
and an additional 3.19% of all interstate and  international  telecommunications
revenues.  Various parties have challenged the FCC's universal service rules and
the  cases  have  been  consolidated  in the US Court of  Appeals  for the Fifth
Circuit. The Company cannot predict the outcome of this proceeding.

Finally,  the 1996 Telecom Act relieves Regional Bell Operating Company ("RBOC")
affiliated  cellular  providers 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.  In October
1997, the FCC released an order establishing  uniform rules governing  incumbent
LEC participation in broadband CMRS within each LEC's landline telephone region.
These rules will expire in January 2002,  unless  extended by the FCC. 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 new rules designed to address  incentives  incumbent
LECs may have to engage in  anti-competitive  practices  against CMRS providers,
such  as  discriminatory  interconnection,  cost-shifting  and  anti-competitive
pricing.  Specifically,  the FCC will require  incumbent LECs to create separate
corporations for their in-region broadband CMRS operation (whether cellular, PCS
or other) and 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 Telecom 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 also recently  released 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.

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.  In the CMRS order
described  above,  the FCC preempted the states and  established a procedure for
states to petition the FCC for authority to regulate  rates and entry into CMRS.
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, 1997,  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  its
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.

                                      - 6 -
<PAGE>

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  Securities  and  Exchange
Commission ("SEC") General Instruction I to Form 10-K.

                                     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.

Dividends
None.

ITEM 6    SELECTED FINANCIAL DATA

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

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

Information  for this  item is  omitted  pursuant  to  Securities  and  Exchange
Commission ("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")(see Note 1 to the Company's  consolidated  financial statements)
for the  years  ended  December  31,  1997 and 1996 is as  follows  (dollars  in
millions, "NM" denotes percentage is not meaningful):
<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,                    Increase / (Decrease)
                                                     1997              1996               $                 %

<S>                                                 <C>              <C>                <C>              <C> 
Service income, net..............................     $444.9           $426.1             $18.8            4.4%
Operating, selling, general and administrative
     expenses....................................      274.9            272.1               2.8            1.0
                                                      ------           ------ 

Operating income before depreciation and
     amortization (1)............................      170.0            154.0              16.0           10.4
Depreciation and amortization....................      109.8            117.2              (7.4)          (6.3)
                                                      ------           ------ 
Operating income.................................       60.2             36.8              23.4           63.6
                                                      ------           ------ 
Interest expense.................................      117.8            116.3               1.5            1.3
Investment income................................       (2.7)            (2.5)              0.2            8.0
Equity in net losses of affiliates...............        6.6              6.6
Litigation settlement............................                        21.6             (21.6)            NM
Other............................................        1.3              2.5              (1.2)         (48.0)
Income tax benefit...............................      (22.9)           (38.1)            (15.2)         (39.9)
Extraordinary item...............................      (10.7)                              10.7             NM
                                                      ------           ------ 
     Net loss....................................     ($50.6)          ($69.6)           ($19.0)        (27.3%)
                                                      ======           ====== 
<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
Of the $18.8 million  increase in service income for the year ended December 31,
1997, $18.2 million is attributable to the Company's subscriber growth and $15.4
million is attributable to roamer growth. Offsetting the increases is a decrease
of $14.8 million,  resulting  primarily from a reduction in the average rate per
minute of use as a result of promotional and free minutes provided to customers.

Operating, Selling, General and Administrative Expenses
The $2.8 million  increase in  operating,  selling,  general and  administrative
expenses from 1996 to 1997 is primarily attributable to a $10.5 million increase
in fixed costs related to retail centers. Offsetting this increase is a decrease
of $7.7 million primarily  attributable to expense  reductions  achieved through
implementation of fraud management  programs,  improved bad debt experience as a
result of  stronger  credit  procedures  and a  reduction  in  commission  costs
resulting from fewer gross subscriber additions in 1997.

                                      - 8 -
<PAGE>

Comcast  Corporation  ("Comcast"),  the Company's  parent,  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,
subsequent to the redemption of the Company's  senior  participating  redeemable
zero coupon notes, 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 $6.4 million and $5.5 million
were charged to selling,  general and  administrative  expenses during the years
ended  December 31, 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).  As of December 31, 1996, deferred management fees payable, which
are included in long-term  investment  in and due to affiliates in the Company's
consolidated balance sheet, totaled $14.7 million. 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 a new $400.0 million
revolving credit facility.

Depreciation and Amortization Expense
The $7.4 million decrease in depreciation and amortization  expense from 1996 to
1997 is  primarily  due to a  decrease  in  amortization  expense as a result of
certain intangible assets becoming fully amortized in 1997.

Interest Expense
In 1992, a subsidiary  of AWACS,  Inc.,  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 $5.2  million  and $8.2
million for the years ended December 31, 1997 and 1996,  respectively.  From the
date of issuance  through  December 31,  1997,  $35.5  million of principal  and
interest  has been paid on the AWACS Note with the proceeds  from  distributions
from Garden State  Cablevision.  The balance of the AWACS Note is due on demand.
Accordingly,  such  balance  has been  classified  as current  in the  Company's
consolidated balance sheet as of December 31, 1997.

Equity in Net Losses of Affiliates
Under  the  terms  of  the   partnership   agreement,   49.5%  of  Garden  State
Cablevision's  net losses are  allocated to the Company.  During the years ended
December  31,  1997 and 1996,  the  Company  recognized  equity in net losses of
Garden State Cablevision of $5.4 million and $6.8 million,  respectively.  While
no  assurances  can be given,  the Company  expects to transfer  its interest in
Garden State Cablevision to Comcast during the second quarter of 1998.

Litigation Settlement
The  Company  was  involved  in  various  civil   lawsuits  and   administrative
proceedings  regarding the ownership,  operation and transfer of the license for
the Atlantic City, NJ metropolitan statistical area. In March 1995, the Company,
Comcast,  Telephone  and Data Systems,  Inc.  ("TDS"),  United  States  Cellular
Corporation,  Ellis  Thompson  and Ellis  Thompson  Corporation  entered  into a
Settlement  Agreement (the  "Settlement  Agreement") with respect to outstanding
civil litigation.  In June 1996, the Company paid $21.6 million to TDS under the
Settlement  Agreement.   The  Company  recorded  the  expenses  related  to  the
Settlement Agreement in its 1996 consolidated statement of operations.

Income Tax Benefit
The $15.2 million  decrease in income tax benefit from 1996 to 1997 is primarily
attributable  to the decrease of $44.8 million in loss before income tax benefit
and extraordinary items.

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.

                                      - 9 -
<PAGE>

Earnings to Fixed Charges
For the years ended December 31, 1997 and 1996, the Company's distributions from
Garden State  Cablevision  and income  before  extraordinary  items,  income tax
benefit, equity in net losses of affiliates and fixed charges (interest expense)
was $61.6  million  and  $50.7  million,  respectively.  Such  amounts  were not
adequate  to cover the  Company's  fixed  charges of $117.8  million  and $116.3
million for these periods, respectively. Fixed charges include non-cash interest
expense of $30.7 million and $69.4 million for the years ended December 31, 1997
and 1996,  respectively.  The  inadequacy  of the Company's  distributions  from
Garden State  Cablevision  and income to cover fixed charges is primarily due to
substantial non-cash charges for depreciation and amortization expense of $109.8
million and $117.2  million  during the years ended  December 31, 1997 and 1996,
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.

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. The Company presently 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 impact on the operations of the Company.

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.  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  material  adverse  effect on the
Company.

The Company  continues to use both internal and external  resources to reprogram
or replace software for Year 2000 modifications.  Management of the Company will
also continue to periodically  report the progress of its Year 2000  remediation
plan to the Audit Committee of Comcast's  Board of Directors.  The Company plans
to complete the Year 2000 mitigation in 1999. The costs directly attributable to
the Year 2000 Issue are not expected to have a material  effect on the Company's
results of operations.

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 might cause such material differences include, but are not
limited to, the availability  and cost of personnel with  appropriate  necessary
skills, the ability to locate and correct all relevant computer code and similar
uncertainties.

                                     - 10 -
<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"),  the successor to a merger between the Company and
Comcast  Cellular  Holdings,   Inc.,  (a  wholly  owned  subsidiary  of  Comcast
Corporation)  and its  subsidiaries  as of December  31, 1997 and 1996,  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, 1997.
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,  1997 and 1996 and the  results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.




/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 23, 1998


                                     - 11 -

<PAGE>



COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                    December 31,
ASSETS                                                                        1997                1996
<S>                                                                          <C>                  <C>   
CURRENT ASSETS
   Cash and cash equivalents.............................................    $4,692               $4,980
   Accounts receivable, less allowance for doubtful accounts
     of $6,356 and $3,148................................................    59,252               66,425
   Inventories...........................................................    14,154               10,458
   Other current assets..................................................     3,147                3,470
                                                                         ----------           ----------
       Total current assets..............................................    81,245               85,333
                                                                         ----------           ----------
INVESTMENT IN AFFILIATE..................................................    28,570               29,823
                                                                         ----------           ----------
PROPERTY AND EQUIPMENT...................................................   595,861              467,558
   Accumulated depreciation..............................................  (182,632)            (114,144)
                                                                         ----------           ----------
   Property and equipment, net...........................................   413,229              353,414
                                                                         ----------           ----------
DEFERRED CHARGES AND OTHER............................................... 1,275,861            1,245,283
   Accumulated amortization..............................................  (321,450)            (285,671)
                                                                         ----------           ----------
   Deferred charges and other, net.......................................   954,411              959,612
                                                                         ----------           ----------
                                                                         $1,477,455           $1,428,182
                                                                         ==========           ==========

LIABILITIES AND STOCKHOLDER'S DEFICIENCY

CURRENT LIABILITIES
   Accounts payable and accrued expenses.................................  $100,159             $100,958
   Accrued interest......................................................    17,388                3,166
   Current portion of long-term debt.....................................       430                1,902
   Due to affiliates.....................................................    47,116               46,275
                                                                         ----------           ----------
     Total current liabilities...........................................   165,093              152,301
                                                                         ----------           ----------
LONG-TERM DEBT, less current portion..................................... 1,224,511            1,259,325
                                                                         ----------           ----------
INVESTMENT IN AND DUE TO AFFILIATES......................................    99,014              108,455
                                                                         ----------           ----------
DEFERRED INCOME TAXES....................................................   227,944              256,737
                                                                         ----------           ----------
MINORITY INTEREST AND OTHER..............................................     5,878                7,219
                                                                         ----------           ----------

COMMITMENTS AND CONTINGENCIES

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

STOCKHOLDER'S DEFICIENCY
   Common stock, $.01 par value - authorized, 1,000 shares;
     issued, 100 shares .................................................
   Additional capital....................................................   488,301              500,425
   Accumulated deficit...................................................  (906,888)            (856,280)
                                                                         ----------           ----------
     Total stockholder's deficiency......................................  (418,587)            (355,855)
                                                                         ----------           ----------
                                                                         $1,477,455           $1,428,182
                                                                         ==========           ==========
</TABLE>

See notes to consolidated financial statements.

                                     - 12 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1997              1996             1995
<S>                                                                     <C>              <C>              <C>      
SERVICE INCOME, net...........................................          $444,946         $426,053         $ 374,880
                                                                        --------         --------         ---------

COSTS AND EXPENSES
   Operating..................................................            35,525           36,876            28,923
   Selling, general and administrative........................           239,383          235,176           212,657
   Depreciation and amortization..............................           109,820          117,225           205,733
                                                                        --------         --------         ---------
                                                                         384,728          389,277           447,313
                                                                        --------         --------         ---------
OPERATING INCOME (LOSS).......................................            60,218           36,776           (72,433)

OTHER (INCOME) EXPENSE
   Interest expense...........................................           117,756          116,297            97,694
   Investment income..........................................            (2,696)          (2,525)           (3,288)
   Equity in net losses of affiliates.........................             6,603            6,559             9,600
   Litigation settlement......................................                             21,647
   Other......................................................             1,359            2,449            (3,716)
                                                                        --------         --------         ---------
                                                                         123,022          144,427           100,290
                                                                        --------         --------         ---------

LOSS BEFORE INCOME TAX BENEFIT
   AND EXTRAORDINARY ITEMS....................................           (62,804)        (107,651)         (172,723)

INCOME TAX BENEFIT............................................           (22,867)         (38,067)          (62,944)
                                                                        --------         --------         ---------

LOSS BEFORE EXTRAORDINARY ITEMS...............................           (39,937)         (69,584)         (109,779)

EXTRAORDINARY ITEMS...........................................           (10,671)                            (3,047)
                                                                        --------         --------         ---------

NET LOSS......................................................           (50,608)         (69,584)         (112,826)

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

NET LOSS FOR COMMON STOCKHOLDER...............................          ($62,732)        ($69,584)        ($112,826)
                                                                        ========         ========         =========
</TABLE>

See notes to consolidated financial statements.

                                     - 13 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                         1997              1996             1995
<S>                                                                   <C>              <C>              <C>       
OPERATING ACTIVITIES
   Net loss...................................................          ($50,608)        ($69,584)        ($112,826)
   Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Extraordinary items......................................            10,671                              3,047
     Depreciation and amortization............................           109,820          117,225           205,733
     Non-cash interest expense................................            30,714           69,400            62,461
     Equity in net losses of affiliates.......................             6,603            6,559             9,600
     Minority interest........................................             1,157              773             1,099
     Deferred management fees.................................             2,211            5,545             6,746
     Deferred income taxes and other..........................           (25,545)         (38,070)          (80,335)
                                                                        --------         --------         --------- 
                                                                          85,023           91,848            95,525
     Decrease (increase) in net accounts receivable,
       inventories and other current assets...................             3,800           22,726           (15,752)
     Increase (decrease) in accrued interest..................            14,222           (1,853)            1,498
     (Decrease) increase in accounts payable and
       accrued expenses.......................................              (799)           9,375           (11,931)
                                                                        --------         --------         --------- 
       Net cash provided by operating activities..............           102,246          122,096            69,340
                                                                        --------         --------         --------- 

FINANCING ACTIVITIES
   Proceeds from borrowings of long-term debt.................         1,243,370          166,908           553,618
   Repayments of long-term debt...............................        (1,305,180)         (36,500)         (423,438)
   Deferred financing costs...................................           (28,912)                           (20,350)
   (Repayments) borrowings under deferred payment plan........                           (120,177)          134,636
   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...........................           (21,351)           7,100           (12,035)
                                                                        --------         --------         --------- 
     Net cash provided by (used in) financing
     activities...............................................            49,405          (18,148)          232,431
                                                                        --------         --------         --------- 

INVESTING ACTIVITIES
   Acquisitions, net of cash acquired.........................           (18,918)         (13,958)          (75,755)
   Capital expenditures.......................................          (130,021)        (116,018)         (228,706)
   Proceeds from sale of equipment and other..................                                256            17,872
   Purchase of minority interests, license acquisition
     costs and other..........................................            (3,000)         (24,367)           (3,601)
   Distributions from Garden State Cablevision................                             35,479
                                                                        --------         --------         --------- 
       Net cash used in investing activities..................          (151,939)        (118,608)         (290,190)
                                                                        --------         --------         --------- 

(DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS................................................              (288)         (14,660)           11,581

CASH AND CASH EQUIVALENTS, beginning of year..................             4,980           19,640             8,059
                                                                        --------         --------         --------- 

CASH AND CASH EQUIVALENTS, end of year........................            $4,692           $4,980           $19,640
                                                                        ========         ========         =========
</TABLE>

See notes to consolidated financial statements.

                                     - 14 -
<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, 1995............................        $               $500,425        ($673,870)        ($173,445)
   Net loss.........................................                                         (112,826)         (112,826)
                                                            ---------       --------        ---------         --------- 

BALANCE, DECEMBER 31, 1995..........................                         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)
                                                            =========       ========        =========         ========= 
</TABLE>


See notes to consolidated financial statements.

                                     - 15 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


1.   BUSINESS

     Comcast  Cellular  Corporation  ("the  Company")(the  successor to a merger
     between  the  Company and Comcast  Cellular  Holdings,  Inc.),  is a direct
     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 a population  of more than 8.2 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.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and  its  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, 1997 and 1996, 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, 1997
     and 1996.

     Inventories
     Inventories,  which include products held for sale, materials and supplies,
     are stated at the lower of cost or market.  Cost for products held for sale
     is 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  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.

                                     - 16 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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 license acquisition costs and debt
     acquisition  costs.  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,  including interest rate
     exchange   agreements   ("Swaps")  and  interest  rate  collar   agreements
     ("Collars") to manage its exposure to fluctuations in interest rates. Swaps
     and  Collars  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.

     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.

                                     - 17 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1997.

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 New Bank Facility (see Note 4). This  acquisition was
     accounted for under the purchase method.

     Cellular Retail Stores
     In August 1996,  the Company  acquired  twelve  cellular  retail stores and
     direct  sales  locations  in  Pennsylvania,  New Jersey and  Delaware,  and
     related assets from Advanced  Telecomm,  Inc. for $6.5 million in cash. The
     Company accounted for the acquisition 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 $28.6 million and $29.8 million
     as of December 31, 1997 and 1996, respectively,  is accounted for under the
     equity method and is classified as investment in affiliate in the Company's
     consolidated balance sheet.

     Ocean County RSA
     In 1995, the Company  completed its exchange  agreement with McCaw Cellular
     Communications,  Inc.  whereby the Company  acquired a 100% interest in the
     entity  that  held the  Ocean  County,  NJ RSA  (the  "Ocean  County  RSA")
     non-wireline  cellular  license in  exchange  for the  Company's  Hunterdon
     County,  NJ RSA cellular  license and related assets,  and $55.2 million in
     cash.

     Vineland/Atlantic City MSA
     In June 1995, the Company  purchased all of the outstanding stock of United
     States Cellular Operating Company of Vineland, Inc.  ("USCC/Vineland") from
     United  States  Cellular  Corporation  ("USCC") for $21.2  million in cash.
     USCC/Vineland  held an approximate  80.4% interest in the Vineland Cellular
     Telephone Company,  Inc.  ("VCTC"),  which holds the license to operate the
     non-wireline   cellular   telephone   system   serving  the  Vineland,   NJ
     Metropolitan  Statistical Area ("MSA"), and an approximate 9.3% interest in
     the  non-wireline  cellular  telephone system for the Atlantic City, NJ MSA
     (the "Atlantic City Cellular  System").  The entire cost of the acquisition
     of these  interests  was funded with the  proceeds of a loan from  Comcast,
     which was repaid  during  1995.  As of June 30,  1995,  the  Company  began
     consolidating VCTC.

     In June 1996,  the  Company  completed  the  acquisition  of the license to
     operate the Atlantic  City  Cellular  System and paid $7.5 million in cash.
     The Company began consolidating the Atlantic City Cellular System effective
     June 1, 1996. The Company accounted for the acquisitions under the purchase
     method.

                                     - 18 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Litigation Settlement
     The  Company was  involved in various  civil  lawsuits  and  administrative
     proceedings regarding the ownership,  operation and transfer of the license
     for the Atlantic City Cellular System. In March 1995, the Company, Comcast,
     Telephone and Data Systems,  Inc.  ("TDS"),  USCC, Ellis Thompson and Ellis
     Thompson  Corporation entered into a Settlement  Agreement (the "Settlement
     Agreement") with respect to outstanding civil litigation. In June 1996, the
     Company  paid $21.6  million  to TDS under the  Settlement  Agreement.  The
     Company  recorded the expenses  related to the Settlement  Agreement in its
     1996 consolidated statement of operations.

     Cellular Rebuild
     In 1995,  the Company  purchased  $172.0 million of switching and cell site
     equipment  which  replaced the existing  switching and cell site  equipment
     (the "Cellular Rebuild").  The Company substantially completed the Cellular
     Rebuild during 1995.  Accordingly,  during 1995, the Company charged $110.0
     million to depreciation  expense,  which represented the difference between
     the net  book  value  of the  equipment  replaced  and the  residual  value
     realized upon its disposal.

4.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                                  1997             1996
<S>                                                                          <C>               <C>       
     9 1/2% Senior Notes due 2007.................................             $998,435        $
     New Bank Facility............................................              225,000
     Zero Coupon Notes............................................                                602,819
     Term Loan....................................................                                300,000
     Revolving Credit Loan........................................                                355,000
     Other, due through 2001......................................                1,506             3,408
                                                                             ----------        ----------
                                                                              1,224,941         1,261,227
     Less current portion.........................................                  430             1,902
                                                                             ----------        ----------
                                                                             $1,224,511        $1,259,325
                                                                             ==========        ==========
</TABLE>

     Maturities of long-term  debt  outstanding  as of December 31, 1997 for the
     four years after 1998 are as follows (dollars in thousands):

         1999.................................................         $461
         2000.................................................          495
         2001.................................................          120
         2002.................................................           --

     As of December 31, 1997 and 1996, the Company's  effective weighted average
     interest  rate on its  long-term  debt  outstanding  was 8.88%  and  9.09%,
     respectively.

     Senior Notes Offering
     In May 1997,  the  Company  completed  the sale of $1.0  billion  principal
     amount  of 9 1/2%  Senior  Notes due 2007 (the  "Senior  Notes")  through a
     private offering with  registration  rights (the  "Offering").  The Company
     used the net proceeds from the Offering to redeem its senior  participating
     redeemable zero coupon notes (see  "Redemption of Zero Coupon Notes" below)
     and to repay certain subsidiary indebtedness.

     Interest on the Senior Notes is payable in cash  semi-annually on May 1 and
     November 1 of each year,  commencing on November 1, 1997.  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

                                     - 19 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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.

     In October  1997,  the Company  completed an exchange of 100% of the Senior
     Notes  for  new  notes  (having  the  terms  described  above)  which  were
     registered under the Securities Act of 1933, as amended.

     Redemption of Zero Coupon Notes
     In May 1997,  the Company used the net proceeds from the sale of the Senior
     Notes to redeem all of its Series A Senior  Participating  Redeemable  Zero
     Coupon  Notes Due 2000 and Series B Senior  Participating  Redeemable  Zero
     Coupon Notes Due 2000 (together,  the "Zero Coupon  Notes"),  including the
     Zero Coupon Notes held by CCCI, and Comcast Financial  Corporation ("CFC"),
     a wholly owned subsidiary of Comcast.  Unamortized  debt acquisition  costs
     related to the Zero Coupon Notes were not significant. As of the redemption
     date,  the Zero  Coupon  Notes had an  aggregate  accreted  value of $742.4
     million, including the Zero Coupon Notes held by CCCI and CFC with accreted
     values  of  $114.1  million  and  $161.5  million,   respectively.  On  the
     redemption  date, CFC used the $161.5 million  received upon  redemption of
     the Zero  Coupon  Notes  held by it to  purchase  1,614.775  shares  of the
     Company's newly  authorized  $.01 par value,  Series A Preferred Stock (see
     Note 6). The Company  contributed the $161.5 million received from the sale
     of its Series A Preferred  Stock and the  remaining  net proceeds  from the
     Offering,  totaling  $228.8  million,  to CCCI to  repay a  portion  of the
     amounts  outstanding  under its $1.3 billion credit  agreement with certain
     banks (the "Credit Agreement").

     Repayment of Term Loan and Revolving Credit Loan
     The Credit  Agreement  provided for a term loan in the principal  amount of
     $300.0 million due 2004 (the "Term Loan") and a reducing  revolving  credit
     facility of up to $1.0 billion (the "Revolving  Credit Loan"). In May 1997,
     subsequent to the Offering,  CCCI canceled  $575.0 million of its Revolving
     Credit  Loan,  thereby  reducing  the $1.0  billion  commitment  to  $425.0
     million.  CCCI used the amounts contributed by the Company and the proceeds
     received upon  redemption of the Zero Coupon Notes held by it  (aggregating
     $504.4  million),  as well as  available  cash,  to repay the Term Loan and
     $205.0 million under the Revolving Credit Loan.

     In October 1997, the Company  refinanced the Revolving Credit Loan with the
     proceeds from borrowings  under a new $400.0 million credit  agreement (the
     "New Bank Facility") with certain banks, which consists of a $300.0 million
     five and  one-quarter  year  revolving  credit  facility  (the  "Tranche  A
     Facility")  and a $100.0 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.  Borrowings under the New Bank
     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). As of December 31, 1997, the Company had  outstanding
     $225.0 million under the New Bank Facility.

                                     - 20 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Borrowings  under the New Bank Facility are senior to the Senior Notes. The
     New Bank 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 New Bank Facility in November 1997.

     Extraordinary  items for the year ended  December  31, 1995 of $3.0 million
     consist of  unamortized  debt  acquisition  costs of $4.7  million,  net of
     related  tax  benefit of $1.7  million,  expensed  in  connection  with the
     refinancing  of a portion of its  outstanding  debt with the proceeds  from
     borrowings under the Credit Agreement.

     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 and
     Collars,  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.   Collars  limit  the  Company's
     exposures to and benefits from interest rate  fluctuations on variable rate
     debt to within a range of rates.

     The following table summarizes the terms of the Company's existing Swap and
     Collars as of December 31, 1997 and 1996 (dollars in thousands):
<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%

     As of December 31, 1996
     Variable to Fixed Swap..........................           $50,000         1998               5.65%
     Collars.........................................           220,000         1997           6.78% / 5.38%
</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 Swaps and Collars
     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, 1997, 1996 and 1995 was not significant.

     Estimated Fair Value
     The Company's  long-term  debt had carrying  amounts of $1.225  billion and
     $1.261  billion  and  estimated  fair  values of $1.274  billion and $1.113
     billion as of December 31, 1997 and 1996, 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 values and estimated fair values of the
     Company's  derivative  financial  instruments  was  not  significant  as of
     December 31, 1997 and 1996,  and has been  estimated  based upon amounts at
     which such items could be settled.

                                     - 21 -

<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


5.   INVESTMENT IN AND DUE TO AFFILIATES

     In 1992,  a  subsidiary  of AWACS,  Inc.,  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 $5.2 million,  $8.2 million,  and $7.5 million for the years ended
     December 31, 1997, 1996 and 1995,  respectively.  From the date of issuance
     through December 31, 1997, $35.5 million of principal and interest has been
     paid on the AWACS Note with the  proceeds  from  distributions  from Garden
     State  Cablevision.  The  balance  of the  AWACS  Note  is  due on  demand.
     Accordingly,  such balance has been  classified as current in the Company's
     consolidated balance sheet as of December 31, 1997.

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 CFC.  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.

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,  subsequent to the  redemption of the Zero
     Coupon Notes, 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 $6.4
     million, $5.5 million and $5.5 million were charged to selling, general and
     administrative  expenses during the years ended December 31, 1997, 1996 and
     1995,  respectively  (on a pro  forma  basis,  giving  effect  to  the  New
     Management  Agreement,  management  fees for the years ended  December  31,
     1997,  1996 and 1995 would have been $6.7  million,  $6.4  million and $5.6
     million,  respectively).  For the year ended  December 31,  1995,  CCCI was
     charged  additional  management  fees of $2.7  million  pursuant to the Old
     Management  Agreement.  As of December 31, 1996,  deferred  management fees
     payable,  which  are  included  in  long-term  investment  in  and  due  to
     affiliates  in the  Company's  consolidated  balance  sheet,  totaled $14.7
     million.  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 New Bank 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

                                     - 22 -
<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     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,
                                                                                        1997              1996
<S>                                                                                    <C>              <C>     
     Deferred tax liabilities:
         Difference between book and tax basis of property and equipment........       $397,658         $394,308
                                                                                       --------         --------
     Deferred tax assets:
         Net operating loss carryforwards.......................................        180,096          147,953
         Difference between book and tax basis of property and equipment and
           deferred charges.....................................................         24,911           24,911
         Less valuation allowance...............................................        (35,293)         (35,293)
                                                                                       --------         --------
                                                                                        169,714          137,571
                                                                                       --------         --------
         Net deferred tax liability.............................................       $227,944         $256,737
                                                                                       ========         ========
</TABLE>

     Income  tax  benefit  consists  of the  following  components  (dollars  in
thousands):
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996              1995
<S>                                                                  <C>               <C>              <C>      
     Current expense
         Federal..........................................           $                $                   $1,932
         State............................................                180               313              921
                                                                     --------          --------         -------- 
                                                                          180               313            2,853
                                                                     --------          --------         -------- 
     Deferred benefit
         Federal..........................................            (20,714)          (36,836)         (60,571)
         State............................................             (2,333)           (1,544)          (5,226)
                                                                     --------          --------         -------- 
                                                                      (23,047)          (38,380)         (65,797)
                                                                     --------          --------         -------- 
     Income tax benefit...................................           ($22,867)         ($38,067)        ($62,944)
                                                                     ========          ========         ======== 
</TABLE>

     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,
                                                                     1997             1996              1995

<S>                                                                  <C>               <C>              <C>      
     Federal tax at statutory rate........................           ($21,981)         ($37,678)        ($60,453)
     State income taxes, net of federal benefit...........             (1,400)             (800)          (2,798)
     Other, net...........................................                514               411              307
                                                                     --------          --------         -------- 
     Income tax benefit...................................           ($22,867)         ($38,067)        ($62,944)
                                                                     ========          ========         ======== 
</TABLE>

     As of December 31,  1997,  the Company has  available  net  operating  loss
     carryforwards  of  approximately  $459.0  million for which a deferred  tax
     asset has been recorded and which expire through the year 2012.

9.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The Company made cash payments for interest of $72.8 million, $48.7 million
     and $33.7 million during the years ended December 31, 1997,  1996 and 1995,
     respectively.

     The Company  made cash  payments  for income  taxes of $0.4  million,  $0.8
     million and $7.5 million during the years ended December 31, 1997, 1996 and
     1995, respectively.

                                     - 23 -

<PAGE>
COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Concluded)

10.  COMMITMENTS AND CONTINGENCIES

     The  Company  leases  certain  office and  transmissions  facilities  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 $11.5 million,  $10.5 million and
     $7.6  million for 1997,  1996 and 1995,  respectively,  has been charged to
     operations.

     As  of  December   31,  1997,   the  minimum   rental   commitments   under
     noncancellable operating leases are as follows (dollars in thousands):

          1998...................................................  $11,575
          1999...................................................   10,341
          2000...................................................    9,055
          2001...................................................    6,903
          2002...................................................    6,212
          Thereafter.............................................   24,930

     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.

                                     - 24 -
<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 Securities and Exchange  Commission
General Instruction I of Form 10-K.



                                     - 25 -

<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.........................................11
         Consolidated Balance Sheet--December 31, 1997 and 1996...............12
         Consolidated Statement of Operations--Years
           Ended December 31, 1997, 1996 and 1995.............................13
         Consolidated Statement of Cash Flows--Years
           Ended December 31, 1997, 1996 and 1995.............................14
         Consolidated Statement of Stockholder's Deficiency--Years
           Ended December 31, 1997, 1996 and 1995.............................15
         Notes to Consolidated Financial Statements...........................16

     (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

          (i)  The  Company filed a Current  Report on Form 8-K under  Item 5 on
               October  27,  1997  relating  to the  change  in  control  of the
               Registrant.

     (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 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 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 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 CCCI  (incorporated by
                    reference  to  Exhibit  10.1 to the  Company's  Registration
                    Statement 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 Corporation, Comcast and CCCI,
                    as  amended  May 20,  1997  (incorporated  by  reference  to
                    Exhibit 10.2 to the Company's Registration Statement 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.

          12.1      Statement  re:  Computation  of Ratio of  Earnings  to Fixed
                    Charges.

          27.1      Financial Data Schedule.

                                     - 26 -

<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 25,1998.

                                            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 25,1998


/s/ Julian A. Brodsky
---------------------------
Julian A. Brodsky               Vice Chairman; Director            March 25,1998


/s/ Brian L. Roberts
---------------------------
Brian L. Roberts                President; Director                March 25,1998
                                (Principal Executive Officer)

/s/ Lawrence S. Smith
---------------------------
Lawrence S. Smith               Executive Vice President           March 25,1998
                                (Principal Accounting Officer)

/s/ John R. Alchin
---------------------------
John R. Alchin                  Senior Vice President, Treasurer   March 25,1998
                                (Principal Financial Officer)

/s/ Stanley L. Wang
---------------------------
Stanley L. Wang                 Senior Vice President, Secretary;  March 25,1998
                                Director

                                     - 27 -

<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"),  the successor to a merger between the Company and
Comcast  Cellular  Holdings,   Inc.,  (a  wholly  owned  subsidiary  of  Comcast
Corporation) and its subsidiaries as of December 31, 1997 and 1996, and for each
of the three years in the period ended  December  31, 1997,  and have issued our
report  thereon dated  February 23, 1998;  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 23, 1998

                                     - 28 -

<PAGE>
                  COMCAST CELLULAR CORPORATION AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                   Additions
                                                     Balance at   Charged to    Deductions    Balance
                                                      Beginning    Costs and       from       at End
                                                       of Year     Expenses     Reserves(A)   of Year
<S>                                                   <C>          <C>          <C>          <C>   
Allowance for Doubtful Accounts

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

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

   1995.....................................             2,796        7,268        6,800        3,264
</TABLE>



(A) Uncollectible accounts written off.



                                     - 29 -