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 (FEE REQUIRED) For the fiscal year ended December 31, 1998

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from
     ____________________ to __________________

Commission file number: 0-19889

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
                  ---------------------------------------------
             (Exact name of registrant as specified in its charter)

     Colorado       South Hertfordshire United Kingdom Fund, Ltd.    #84-1145140
--------------------------------------------------------------------------------
(State of Organization)                        (IRS Employer Identification No.)

Caxton Way, Watford, WD1 8XH, England                  011-44-1923-435000
--------------------------------------------------------------------------------
(Address of principal executive                (Registrant's telephone no.
     office and Zip Code)                         including area code)

        Securities registered pursuant to Section 12(b) of the Act: None
           Securities registered pursuant to Section 12(g) of the Act:
                          Limited Partnership Interests

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 _____

Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (e229 405) 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
amendment to this Form 10-K. x

DOCUMENTS INCORPORATED BY REFERENCE:
None

<PAGE>

TABLE OF CONTENTS
                                                                            Page
PART I
ITEM 1.       DESCRIPTION OF BUSINESS                                          3
ITEM 2.       DESCRIPTION OF PROPERTIES                                       23
ITEM 3.       LEGAL PROCEEDINGS                                               23
ITEM 4.       CONTROL OF REGISTRANT                                           23
PART II
ITEM 5.       MARKET FOR THE REGISTRANT'S COMMON EQUITY
              AND RELATED STOCKHOLDER MATTERS                                 23
ITEM 6.       SELECTED FINANCIAL DATA                                         24
ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS                             25
ITEM 7a       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      28
ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                     29
ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
              ON ACCOUNTING AND FINANCIAL DISCLOSURE                          41
ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT              41
ITEM 11.      EXECUTIVE COMPENSATION                                          41
ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT                                                  41
ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                  42
ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND                     42
              REPORTS ON FORM 8-K

Signatures                                                                    43

Exhibit Index                                                                 44

<PAGE>

                                     PART I

ITEM 1.   BUSINESS

     South Hertfordshire United Kingdom Fund, Ltd., formerly known as Jones
United Kingdom Fund, Ltd., (the "Partnership"), is a Colorado limited
partnership that was formed in December 1991 pursuant to the public offering of
limited partnership interests (the "Interests") in the Partnership for the
purpose of acquiring one or more cable television/telephony systems in the
United Kingdom of Great Britain and Northern Ireland (the "United Kingdom" or
the "UK"). Upon acquisition of its system, the Partnership's primary investment
objective is to obtain capital appreciation in the value of its systems over the
term they are held by the Partnership. The capital appreciation in the
Partnership's assets may be converted to cash by the sale of a system, through
one or more refinancings or by the partners' sale of their Interests in the
Partnership.

History

     The Partnership was formed upon the receipt of subscriptions for Interests
totalling the minimum offering of $10,000,000. The general partner of the
Partnership was initially Jones Global Funds, Inc., a Colorado corporation
("Jones Global Funds"). As of August 15, 1992, when the initial offering by the
Partnership terminated, the Partnership had raised $16,548,000 in gross offering
proceeds from the sale of 16,548 Interests, or $14,272,650 net of sales
commissions and other organizational and offering costs. On September 14, 1992,
the Partnership commenced a second offering of Interests. As of April 1994, when
the second offering terminated, the Partnership had raised a total of
$56,935,000 in gross offering proceeds from the sale of 56,935 limited
partnership interests, or $48,817,997 net of sales commissions and other
organizational and offering costs, from both its initial and its second public
offerings.

     On February 20, 1992, upon receipt of approval from United Kingdom
regulatory authorities, the Partnership acquired, through nominees, the
beneficial ownership of all of the shares of Bell Cablemedia (South
Hertfordshire) Limited (formerly Jones Cable Group of South Hertfordshire
Limited) ("Bell Cablemedia South Herts") from Jones Global Funds, Inc. and
certain of its affiliates (the "Former Owners"). Bell Cablemedia South Herts is
a United Kingdom corporation which holds the cable and telecommunications
licenses necessary to build and operate a cable television/telephony system in
the South Hertfordshire franchise area, located adjacent to the north-west
perimeter of Greater London (the "South Herts System"). The acquisition by the
Partnership of all of the shares of Bell Cablemedia South Herts resulted in the
Partnership acquiring an indirect beneficial ownership interest in the South
Herts System. The Partnership paid the Former Owners a total of $4,996,700,
representing, at cost, their expenses in connection with obtaining, holding and
maintaining the licenses for the South Herts System and their capital
expenditures during and before the Partnership acquired the beneficial ownership
of Bell Cablemedia South Herts, plus the amount of operating and interest
expenses in excess of operating receipts incurred during such period. Subsequent
to the Partnership investment in Bell Cablemedia South Herts, cost
reimbursements have been and will continue to be made to the general partner (or
its affiliates) for construction costs of the South Herts System. Partnership
funds are used to reimburse the general partner (or its affiliates) at cost on a
monthly basis for expenditures incurred by the general partner (or its
affiliates) for the South Herts System's construction and operation. Through
December 31, 1998, the total amount reimbursed to fund the South Herts System's
construction and development totalled approximately $ 48,800,000.

     The South Herts System's ownership by Bell Cablemedia South Herts, a United
Kingdom corporation, rather than directly by the Partnership, results from an
intention to insulate the limited partners of the Partnership (the "Limited
Partners") from potential United Kingdom taxation upon the eventual sale of the
South Herts System. Under current United Kingdom tax laws, the sale of the
United Kingdom cable television/telephony system by a U.S. limited partnership
may give rise to limited partner tax liability in the United Kingdom whereas the
sale of shares in a United Kingdom corporation by a U.S. limited partnership
does not give rise to limited partner tax liability in the United Kingdom on the
basis that the limited partnership is not itself trading in the United Kingdom
through a permanent establishment there. The shares of Bell Cablemedia South
Herts are held indirectly by the Partnership through corporate nominees on the
advice of the Partnership's counsel in the United Kingdom. This indirect
ownership structure is intended to afford the Limited Partners more certain
protection from United Kingdom tax liability.


     In order to provide additional funding for the construction of the South
Herts System, two additional participants invested in Bell Cablemedia South
Herts in 1993 and 1994. Jones Intercable of South Hertfordshire, Inc. invested
(pound)3,400,000 in Bell Cablemedia South Herts in exchange for 34,000 Class A
shares in November 1993. Also in November 1993, affiliates of Sandler Capital
Management (the "Sandler Group") committed to invest (pound)6,800,000 in Bell
Cablemedia South Herts, of which (pound)2,266,600 was funded in November 1993
for 22,666 Class B shares. In June 1994, the Sandler Group invested
(pound)3,273,232 for 32,732 Class B shares and Jones Intercable of South
Hertfordshire, Inc. invested (pound)503,283 for 5,033 Class A shares. In July
1994, the Sandler Group invested (pound)1,800,000 for 18,000 Class B shares and
Jones Intercable of South Hertfordshire, Inc. invested (pound)466,800 for 4,668
Class B shares.

     On June 10, 1994, Jones Global Group, Inc., Jones Intercable, Inc. and
certain of their subsidiaries (collectively, "Jones") and the Sandler Group
entered into agreements to transfer all of their interests in their United
Kingdom cable television/telephony operations and franchises, including Jones
Intercable of South Hertfordshire, Inc.'s interest in Bell Cablemedia South
Herts, Jones Global Funds, Inc.'s general partner interest in the Partnership
and the Sandler Group's interest in Bell Cablemedia South Herts, to Bell
Cablemedia plc ("BCM") in exchange for ordinary shares (in the form of American
Depository Shares ("ADSs")) to be issued by BCM in connection with a planned
public equity offering of ADSs by BCM. At that date, BCM was indirectly owned 80
percent by BCI Telecom Holding Inc (formerly Bell Canada International Inc.)
("BCITH") and 20 percent by Cable and Wireless plc ("C&W").

     On July 22, 1994, in connection with the closing of the public equity
offering by BCM, Jones and the Sandler Group completed the exchange of their
interests in United Kingdom cable television/telephony operations and franchises
for ordinary shares (in the form of ADSs) issued by BCM. At closing, BCM
acquired Jones Intercable of South Hertfordshire, Inc.'s interest in Bell
Cablemedia South Herts, the Sandler Group's interest in Bell Cablemedia South
Herts and the general partner interest in the Partnership. These acquisitions
are collectively referred to herein as the "BCM Acquisition." In October 1994,
the Partnership invested (pound)5,108,900 in Bell Cablemedia South Herts for
51,089 Class A shares and BCM invested (pound)2,554,600 in Bell Cablemedia South
Herts for 25,546 Class A shares. In November 1994, the Partnership invested
(pound)1,410,000 in Bell Cablemedia South Herts for 14,100 Class A shares and
BCM invested (pound)705,000 in Bell Cablemedia South Herts for 7,050 Class A
shares. As a result of these transactions, Bell Cablemedia South Herts is now
owned 66.7 percent by the Partnership and 33.3 percent by BCM, and the general
partner of the Partnership is now Fawnspring Limited, a wholly owned subsidiary
of BCM (the "General Partner"). The General Partner provides consulting services
to the Partnership. The General Partner may delegate some or all of the
consulting services to BCM or to other affiliates.

     On October 21, 1996, BCM entered into a number of agreements relating to
the acquisition of control of the outstanding shares of Videotron Holdings Plc
("Videotron"). Prior to the acquisition, BCM owned 26.2% of Videotron and did
not control Videotron's operations. Pursuant to an agreement entered into on
October 21, 1996 and consummated on December 17, 1996, BCM acquired control of
an additional 55.6% of Videotron, increasing its direct and indirect
shareholding in Videotron to 81.8%. Subsequently, certain share options of
Videotron were exercised, and as of January 8, 1997, BCM owned 81.7% of
Videotron's ordinary shares. Also on December 17, 1996, a subsidiary of C&W
subscribed for additional shares in BCM, increasing its stake in the company to
32.5%, with BCI's indirect stake reducing to 32.5%.

     On January 8, 1997, BCM made an offer to acquire all the remaining public
and employee shares of Videotron. BCM now owns all of the current issued
ordinary share capital of Videotron.

     On October 22, 1996, C&W, BCITH and Bell Atlantic (at that time, NYNEX)
announced that they had entered into an agreement, pursuant to which, subject to
the satisfaction of certain conditions precedent, the parties agreed to combine:
(i) Mercury Communications Limited ("Mercury"), (ii) BCM (as enlarged by the
acquisition of Videotron), and (iii) NYNEX CableComms Group PLC and NYNEX
Cablecomms Group Inc. (collectively "NYNEX CableComms") under one company to be
called Cable and Wireless Communications plc ("C&W Comms"). On completion of
this combination, C&W Comms became the largest provider of integrated
telecommunications and television entertainment services in the United Kingdom.

     C&W and Bell Atlantic presently own, directly or indirectly, approximately
52.6 per cent and 18.5 per cent respectively of the issued share capital of C&W
Comms. Public shareholders hold the remaining 28.9 per cent.

     C&W Comms' digital telecommunication network supports a broad range of
voice and data telecommunication services that can be provided to almost any
business establishment in the United Kingdom. Upon completion of the
construction of its broadband cable and local telecommunication networks C&W
Comms will offer a broad range of voice and data telecommunication services plus
multichannel television and other broadband services to approximately six
million potential residential homes, representing approximately 25 per cent. of
all homes in the United Kingdom (including 59 per cent. of all homes in Greater
London), and substantially all small-to-medium sized business customers within
its 47 cable franchise areas.

     Bell Cablemedia South Herts is one of 47 franchise areas which C&W Comms
manages and controls from its headquarters in the South Hertfordshire franchise.
Management control is exercised by Fawnspring Limited, a UK corporation, which
is the general partner of the Partnership (the "General Partner"), although it
is delegated to other affiliated companies of C&W Comms as the General Partner
believes that returns are maximised by management as an integral part of a
larger group to reap the benefits of synergy. C&W Comms Services performs all
billing and collection functions and other C&W Comms group companies procure all
services on behalf of Bell Cablemedia South Herts. C&W Comms arrange all
necessary funding on behalf of Bell Cablemedia South Herts. Bell Cablemedia
South Herts is an integral part of C&W Comms strategy for developing activities
in the UK.

The South Herts System

     Franchise Area

     The South Hertfordshire franchise area comprises the three administrative
areas of Three Rivers, Watford and Hertsmere, with a population of approximately
240,000. The franchise area covers commuter suburbs of London, and many people
who reside in the franchise area use the available fast rail and motorway
services to travel to work in central London. South Hertfordshire has benefited
from the completion in 1986 of the M25 London Motorway, which makes commuting
from the franchise area to other areas in or near London more convenient. An M1
motorway link exists to give London-bound commuters direct access from Watford
to the London highway system. The M1 link is half a mile from the South Herts
System headend and administrative offices. There are approximately 94,000 homes
in the franchise area, of which 87,304 have been passed by the South Herts
System cable television/telephony network. Construction in the franchise area is
substantially complete. The average housing density in the South Herts franchise
area is approximately 1,150 homes per square mile.

     The South Hertfordshire franchise area contains approximately 7,000
businesses, 80 percent of which are small or medium-sized. In addition, there
are several business parks containing predominantly industrial and manufacturing
concerns.

     Operations

     Construction of a cable television-only network in the South Hertfordshire
franchise area commenced in early 1991 and an integrated cable
television/telephony network architecture was developed for this franchise in
late 1991. As of December 31, 1998, approximately 87,304 homes, or 93% percent
of total homes, in this area had been passed. Cable television services
commenced in April 1992 and telephony services commenced in February 1993,
following completion of the installation of a telephony switch. At December 31,
1998, Bell Cablemedia South Herts serviced approximately 23,067 basic cable
television customers and 30,019 residential telephony lines.

     Products and Services

     Three main types of service are offered by Bell Cablemedia South Herts:
cable television (mainly to the home but also to businesses), residential
telephony services and telecommunications services for business customers.

     Cable Television Services. Bell Cablemedia South Herts offers a range of
programming, marketed in a series of packages: basic packages, which include
cable exclusive programming and premium packages, which are based on films,
sporting events, Asian programming and adult programming. Pay-per-view ("PPV")
facilities are also available, providing a way for customers to buy television
programming, including high profile movies, sports and music events. Bell
Cablemedia South Herts intends to use its return path network to encourage
viewers to order the PPV events directly using their set top box and remote
control, rather than having to place an order over the telephone, which
direct-to-home ("DTH") television subscribers must do.

     Residential Telephony Services. Bell Cablemedia South Herts offers local
and long distance and international telephony services to its customers,
including advanced services such as call monitoring, call barring, three-way
calling, alarm calls, itemized billing, call waiting, call divert, call
screening and speed dialling.

     Business Telecommunications Services. Bell Cablemedia South Herts offers
businesses a range of services alongside basic telephony, including fax, private
circuits and virtual private networks. A Centrex service, which offers customers
the facilities they would expect from a private switchboard without the need to
buy or maintain their own switching equipment, has been introduced.

     Future Services

     Opportunities for interactive and integrated services, which may be offered
by Bell Cablemedia South Herts in the future, include the following:

     Digital television. Digital television is a technology that allows
customers to have access to a much higher channel capacity. The increased
capacity can be used for more broadcast channels, as well as for PPV, near
video-on-demand, broadband Internet access, games, home shopping/banking and a
wide range of other interactive services. The primary aim of digital television
will be to give more choice to the customer. Bell Cablemedia South Herts is
currently planning the introduction of digital television services as part of
the roll-out of such services by C&W Comms starting in late Spring 1999.

     Near video-on-demand ("NVOD"). NVOD technology allows individual
subscribers to select, on a PPV basis, from a range of channels showing film,
event and sports programming available at staggered start times. NVOD is
distinguished from PPV by the relatively large numbers of channels used to
transmit the movies and events shown. This means that a customer will never have
to wait long for the beginning of a chosen movie. Such a service provides the
subscriber with a wide choice of programming options and flexibility in term of
viewing times.

     Video-on-demand ("VOD"). VOD is an improvement of NVOD service which allows
the viewer a much greater choice of programming selected from the service
provider's inventory for viewing at a specific time of the viewer's choice (ie
not at a time predetermined by the broadcaster). As with NVOD, the programming
selected would be transmitted over the network and is likely to be delivered to
a converter box in the customer's home in viewable form only to the particular
customer requesting the program, on a PPV basis. The provision of true VOD in
the UK is still likely to be several years away, owing to the current cost of
the video servers and the switching equipment needed. However, the upgrade to
digital technology will provide a suitable platform for VOD.

     Internet and other on-line information services. With the growth in the
home PC market fuelling the rapid growth in demand for Internet access and other
on-line information services, Bell Cablemedia South Herts is well placed to
offer both narrowband and broadband services into the home, making use of its
sophisticated "return path" network to offer full interactivity. Internet access
will be available via customers' television sets from Autumn 1999. PC access via
cable modem will be available later.

Strategy and Near-Term Initiatives

     The South Herts franchise is managed as an integral part of C&W Comms. C&W
Comms' strategy is to create significant shareholder value by building upon its
position as a major competitive provider of integrated telecommunication and
television services in the United Kingdom to achieve sustainable growth in
revenues and earnings. The key elements of the Company's near-term initiative
include:

     Continue to Realize Revenue Synergies and Cost Savings - Optimum Resource
Review

     During the fiscal year 1998, C&W Comms has continued its drive to realize
cost savings and revenue-enhancing synergies arising out of its formation. This
objective was reflected in the appointment early in 1998 of Coopers & Lybrand
Management Consultants to advise on an Optimum Resources Review process designed
to target and implement further cost saving measures. This review has led to the
identification of further areas of operating inefficiency and duplication within
the Company, resulting in an ongoing program to reduce employee headcount by
approximately 2,000. In addition, a reduction in overhead expenditure of
approximately (pound)11 million per annum was identified as achievable through a
property rationalisation strategy.

     Revenue savings continue to be derived from the cross-selling of products
and services between Mercury and the Cable Companies and, where possible,
migrating Mercury's indirect customers to direct connection. Interconnection
charges for telecommunication services are also falling, resulting in direct
cost savings.

     Improve Programming and Video Services

     Program supply contracts with owners of television channels carried on C&W
Comms' network are being renegotiated to allow C&W Comms to deliver more
consumer-friendly cable television packages. A formal review of existing
television channels is underway to ensure C&W Comms continues to carry the best
available programs. The process of aligning the channels carried in the former
BCM, Videotron and NYNEX Cable Comms systems will continue. Work is underway to
source additional television channels for the launch of a digital television
service. Cable transmission facilities for digital television are currently
being constructed and a commercial service offering of over 200 digital
satellite channels is planned. In November 1997, C&W Comms entered into an
agreement with BSkyB covering the provision of programming for digital and
analog pay-per-view ("PPV") and co-operation on the launch and marketing of
digital television services. In addition, in June 1998, C&W Comms acquired a
majority stake in Two-Way TV, a company specializing in the provision of
interactive digital television services.

     Offer Integrated Service Packages

     C&W Comms offers packaged services to encourage single service customers to
take multiple services. Such packages are generally offered at a discount to the
single service price. The combined telephony and cable television services
currently available to residential customers were introduced on September 1
1997.

     Standardize Information Systems and Billing

     C&W Comms has undertaken a complete review of its information systems
strategy to ensure that this reflects and supports the new goals and objectives
of C&W Comms and fits the strategy for efficiency being led by C&W. This
resulted in the outsourcing of commercial IT to IBM and, in September 1998, the
transfer of all directly connected customers onto a new customer service and
billing system, the Integrated Customer Management System (ICMS).

     Maintain Successful National Marketing and Branding

     A marketing campaign, launched publicly on September 15, 1997, was
developed with an additional marketing budget of approximately (pound)35 million
for the period to March 31, 1998. This new campaign, using the theme "Cable &
Wireless - What can we do for you?" sought to raise awareness of both the Cable
& Wireless brand name and the range of services available through a wide variety
of media, including television, national newspaper advertisements and posters.
The results captured to date show that all performance targets for the brand
campaign have been met or exceeded and it is widely acknowledged to be a highly
successful introduction of the new brand. C&W Comms believes that this will
create a more favourable environment for the acquisition and retention of
customers.

     Deliver Excellent Customer Service

     The establishment of world class customer service is key to the development
and growth of C&W Comms. C&W Comms has established performance measures and step
targets for all processes and monitors progress on a routine basis. Significant
improvements have already been made, particularly in access to customer services
and meeting appointments for consumer field installations. Additional
initiatives are being put in place to improve the entire installation and fault
repair systems.

     The achievements of improving customer satisfaction and reducing unit costs
underpin the Customer Operations strategies. While process improvements continue
in the short term, and two key projects - the integration of the Cable Companies
subscriber management systems onto a single platform and the consolidation of
call centres - were completed in September 1998 and will deliver greatly
improved customer interface alongside economies of scale.

     C&W Comms is also committing significant investments to upgrade its core.
This will enable us to support future data/Internet/digital/video traffic at a
reduced unit cost over time and will increase network capacity by more than
1,000-fold over the next three years. The programme will update our network from
PDH technology to the more operationally resilient and efficient SDH technology
and upgrade our voice switches and Frame Relay network.

Pricing

     All prices set out in this section include Value Added Tax.

     Cable Television. Bell Cablemedia South Herts currently charges customers
on the basic Access cable television package (pound)9.99 per month. Charges for
dual packages including premium channels are up to (pound)40.99. C&W Comm's
cable television services include the supply and installation of one addressable
converter box which provides service to one television set. There is a monthly
charge of approximately (pound)4.00 per additional channel selector box. Bell
Cablemedia South Herts also charges a one time connection fee, with discounts
for those customers who take telephony services as well as for those who choose
to pay by direct debit.

     As a result of the regulation of BT's prices and increased competition,
telephony prices in the UK telecommunications market have declined significantly
over the past few years. Price remains an important factor in the residential,
small office and home business segments, although in its other business
segments, C&W Comms' pricing strategy is to sell predominantly on value rather
than on price alone. C&W Comms' tariffs for both domestic and international
telephone calls are set on the basis of per second rate, which varies according
to the destination and time of call. Except for a minimum fixed charge, C&W
Comms charges customers only for the actual time elapsed during a call. Leased
circuit services are charged at a fixed rate regardless of usage.

     Dual Product Packages. C&W Comms offers within its C&W Comms franchises
dual product cable television and telephony packages ("Dual Product Packages").
These Dual Product Packages provide customers within these areas with a range of
cable television packages integrated with its telephony services. These services
are priced to compete with the prices of similar products offered separately by
BSkyB and BT. They include both a range of basic television packages together
with the option to add certain "Premium" channels (including sports and movie
channels) and provide the customer with the additional benefit of dealing with
just one communications company. Subscriptions are taken by both existing and
new customers of C&W Comms with the main interest being the entry level package,
a mid-range package and a big basic package. Based on past experience, C&W Comms
believes that customers with both cable television and telecommunications
services are less likely to terminate service than those with only cable
television service. The Unity Packages are designed to provide the consumer with
greater choice and flexibility. They are also intended to increase the rate of
uptake of dual packaged services in addition to stimulating higher penetration
levels.

     Bell Cablemedia South Herts' Network

     Construction of Bell Cablemedia South Herts' cable television/telephony
network is substantially complete with approximately 93% of homes in the South
Hertfordshire franchise area passed at December 31, 1998.

     Network Architecture. Bell Cablemedia South Herts' network is designed to
take integrated two-way broadband cable television systems. Such systems will
incorporate a digital overlay telephony network to service the homes and
businesses within the franchise area. The network utilizes fiber optic cables on
major trunk routes from a central location containing the cable television
headend and telephony switch to nodes that serve approximately 1,500 homes and
600 homes for cable television and telephony, respectively.

     Bell Cablemedia South Herts' network makes extensive use of fiber optic
cable. Fiber optic technology is based on the physical property of optical fiber
that allows transmission at the speed of light over long distances with little
or no distortion. Fiber optic systems are suitable for transmission of voice,
data, video or a combination of these types of information. The main benefits of
deploying fiber in place of traditional coaxial cable or copper wire result from
its smaller size, greater capacity, increased functionality and decreased
requirements for periodic amplification of the signal. These factors contribute
to lower installation and maintenance costs and increase the variety and quality
of the services provided. The network is constructed in underground ducts
installed in both the residential and commercial sectors of the franchise area
and with excess fiber and duct capacity.

     The cable television system has the capacity to carry over 50 channels of
television plus radio, teletext, telecommunications and other related services.
This capacity could be increased four to eight times by the addition of digital
compression techniques. The network is also capable of conveying video and high
speed data transmissions, thus providing the basis for video conference
facilities, television surveillance services and computer communications.
Television and radio programs for cable television services are sourced from
off-air antennas, by satellite earth stations, and from videotape and are then
distributed from a single site (the "headend") to distribution nodes over
networks of fiber optic cable and from these nodes to customers over coaxial
cables. Generally, all cable television signals are delivered to all customers
with the customer selecting which program signal to use (as opposed to sending a
signal to a particular customer). However evolving technologies such as VOD are
blurring this distinction.

     Because of the nature of moving picture video, substantial transmission
capacity, known as bandwidth, is required to provide a cable television program
to the customer. A network's transmission capacity requirement increases
proportionally as additional cable television programs are broadcast to
customers. The inherent bandwidth limitations of twisted pair copper wire
historically used in telephone networks have to date presented a substantial
obstacle to the use of existing telephone networks for the provision of cable
television services. Coaxial cable provides substantially greater bandwidth than
twisted pair copper wire and fiber optic cable can provide substantially greater
bandwidth than coaxial cable.

     Bell Cablemedia South Herts' telephony network is currently capable of
providing a range of analog and digital voice and data services. Multipair
copper cable is used to connect fiber optic nodes serving approximately 600
homes to distribution points housed in street cabinets serving 40 homes. From
these cabinets, twisted pair copper cable is pulled to the customer's home.

     Bell Cablemedia South Herts' telephony switch has multiple interconnects to
the C&W Comms and the BT networks.

     Network Construction Costs. Construction of integrated cable
television/telephony systems is capital intensive, requiring substantial
investment for "network costs" including "construction costs" (including
trenching and laying underground ducts, cable television and telephony plant,
network electronics and headend equipment), "customer costs" (including
converters, customer electronics and installation of cable from the network to
the customer's home), and "other costs" (such as switching offices, land and
buildings, computers, and capitalization of pre-operating costs and labor).
Total capital expenditure by Bell Cablemedia South Herts on its cable
television/telephony systems up to December 31, 1998 was approximately
(pound)66.2 million ($109.8 million based on a December 31, 1998 exchange rate
of (pound)1=$1.66).

     Construction costs for the South Herts System vary depending upon housing
density, geographical terrain and the types of underground conditions
encountered. Construction expenses in the UK have been higher than comparable
costs in the United States, primarily because of the logistics in laying the
fiber optic and coaxial cables for the networks necessitated by the UK's
prohibition on aerial construction. The UK does not have an infrastructure of
existing telephone poles, overhead lines or electrical conduits in which to run
new fiber optic and coaxial cable. Therefore, nearly all cable installation in
the UK requires hand or machine excavation, backfill to specification and
permanent reinstatement of surfaces in compliance with the New Roads and Street
Works Act 1991 (the "Street Works Act"). The Street Works Act has, however,
standardized fees for inspection of construction works by local government
authorities and standardized specifications for reinstatement of property
following excavation. As a result, construction delays previously experienced by
cable operators because of separate and often lengthy negotiations with local
government authorities have been reduced.

     Build Milestones. Because Bell Cablemedia South Herts did not meet the
construction timetable set forth in the original telecommunications license
issued for the South Herts franchise area, Bell Cablemedia South Herts requested
an amendment of the construction timetable from the UK Office of
Telecommunications ("OFTEL"), the authority that regulates the license. On
February 28, 1994, OFTEL modified the South Herts System's telecommunications
license. The license, as modified, required the South Herts System to be
completed (by passing 85,000 premises) by December 31, 1995. At December 31,
1995 the South Herts System passed approximately 83,400 homes and over 3,000
businesses, thereby complying with the construction timetable in its license.

     Domestic Interconnect. Tariffs for national calls are influenced by
interconnect charges payable to BT, the dominant operator in the UK
telecommunications market. BT's interconnect rates are regulated by OFTEL. BT's
interconnect charges are, at present, controlled through a price control
mechanism linked to the UK Retail Price Index. The interconnect rate entitles an
operator to compensation for (i) terminating in its network a call that has
originated in another network, (ii) providing its customers with access to those
services of another network operator which are invoiced by such other network
operator, and (iii) transit of traffic between two networks. Interconnection
with other licensed operators is an important component of C&W Comms' network,
since the majority of the traffic handled by C&W Comms originates from or
terminates on BT's or on other licensed operators' networks. C&W Comms operates
under interconnection agreements with BT and a number of other licensed
operators, including cellular, PCN, ISR and cable operators.

     International Interconnect. Turnover from international telephone services
is derived from outgoing calls made by customers in the United Kingdom and from
receipts from overseas telecommunication operators for incoming calls which are
passed to C&W Comms' network for delivery to their final destinations within the
United Kingdom or overseas. In turn, C&W Comms makes payments to overseas
operators for the international use of their facilities to deliver the outgoing
calls from C&W Comms' customers.

     C&W Comms enters into operating agreements with overseas carriers to
provide for interconnection between its network and the domestic network of
overseas carriers. C&W Comms continues to seek additional operating agreements
with telecommunication administrations in other countries as C&W Comms believes
it is economically justified in order to increase the percentage of outgoing
international calls from the United Kingdom that can be carried on C&W Comms'
network. There can be no assurance as to whether or when C&W Comms will enter
into any additional operating agreements or that existing operating agreements
will be renewed in similar terms. Where C&W Comms does not have an operating
agreement for direct connection with, or the agreement has not yet been
implemented by, the overseas telecommunication administration to which a call is
directed, agreements are sought whereby calls can be routed through an
intermediate switching centre, paying the intermediary an agreed rate determined
in accordance with regulatory obligations.

     Relationships with overseas international carriers are becoming
increasingly commercial. The International and Partner Services division of C&W
Comms is active in managing this transition profitably. This includes developing
relationships with the new operators which are emerging in many countries to
challenge the former monopoly operators. It also involves, where appropriate and
where costs can be reduced, exploiting liberalization by routing certain
international traffic outside correspondent relationships.

Competition

     Cable Television

     Overview. It has been the UK Independent Television Commission's (the
"ITC's") policy not to grant more than one cable television license in any
franchise area. Accordingly, Bell Cablemedia South Herts is the exclusive
provider of cable television services in its licensed franchise area. However on
23 April 1998 the Department of Trade and Industry announced its intention to
end this policy of exclusivity from 1 January 2001 for all cable operator
franchise licensees. In addition, Bell Cablemedia South Herts' cable television
system competes with direct reception of terrestrial broadcast television
signals and with other methods of delivering television signals to the home for
a fee, such as DTH satellite services.

     Important factors which affect the success of a cable television business
are: the general demographics of the area in which the services are being
provided (i.e., the desire and ability to pay for enhanced television services)
the quality and range of the programming available over the cable television
network and the competitive advantages of cable television (including pricing)
over other multichannel distribution methods.

     BSkyB. The most significant competitor in the multichannel television
market in the South Herts franchise area is BSkyB which offers DTH satellite
television services and therefore does not require a cable television network. A
DTH satellite customer must either purchase or rent a satellite dish and a
receiver/decoder (a set top box) and pay subscriber fees to BSkyB for a card
which, inserted in the decoder, decodes the satellite signal. Although BSkyB's
DTH satellite service currently presents substantial competition to Bell
Cablemedia South Herts' cable television service, the General Partner believes
that cable television has a number of competitive advantages over DTH satellite
systems and that cable will become the preferred medium for multichannel
programming distribution. First, for a subscriber with more than one television,
cable television is significantly more economical in providing service to the
additional sets than DTH satellite. Second, greater channel capacity and faster
interactive services can be offered by cable digital television in comparison to
digital satellite services. Third, C&W Comms has already introduced
competitively priced product packages, combining telephone line maintenance and
usage and cable television services, together with free upgrade to digital
television upon availability. Fourth, installation of satellite dishes may
require planning permission from local authorities and, because they must be
installed with a line of site orientation toward the transmitting satellite,
aesthetic objections to installation may be voiced, particularly in urban areas.
Fifth, DTH satellite subscribers who purchase, as opposed to rent their
satellite dishes must arrange and pay for any maintenance or servicing required
for the dishes. Sixth, the General Partner believes that, without substantial
improvements in existing technology, BSkyB will not be able to offer integrated
telephone services over its satellite network.

     The General Partner, however, expects BSkyB to provide substantial
competition for the foreseeable future and no assurance can be given that it
will not become an even stronger competitor, especially following the launch of
BSkyB's digital satellite offerings in October. A significant factor in BSkyB's
favor is its role as sole source supplier of many of the South Herts System's
popular cable television programs. BSkyB has given undertakings to the OFT in
respect of its terms of supply of programming to cable companies. However, if in
the future, BSkyB chooses to restrict the programming it makes available to Bell
Cablemedia South Herts or offers such programming to Bell Cablemedia South Herts
at prices relatively higher than those it currently charges, then Bell
Cablemedia South Herts' cable television business could be at a significant
competitive disadvantage. C&W Comms has entered into an agreement with BSkyB
covering, amongst other things, the terms of supply by BSkyB of programming for
digital and analog PPV and co-operation on the launch and marketing of digital
television services. BSkyB's position may be further strengthened in view of its
potential ability to control the conditional access technology which is required
to gain access to digital television services. Other than the considerations
noted above, DTH satellite is currently more readily available than cable
television as BSkyB is competing with generally incomplete television networks
and can also provide services in, for example, rural areas more readily. C&W
Comms believes that if the costs of purchasing DTH equipment together with the
associated maintenance costs are taken into account, then cable television is
generally cheaper than the equivalent DTH satellite service.

     Digital Television. Digital television is expected to provide a wide range
of additional services to customers. Its impact is likely to be significant as
many more digital channels will be able to be transmitted in a frequency range
that previously could carry only one analog channel. This combining of channels
in the same frequency range is known as multiplexing. Because affordable digital
television sets are not yet readily available, it is likely that digital
television will initially be received through a set top box containing a
processor that can decode and decompress scrambled signals and convert them to
analog form.

     Digital Terrestrial Television The 1996 Broadcasting Act laid down the
regulatory framework for Digital Terrestrial Television ("DTT) in the UK. The
long term goal of DTT is to replace analogue terrestrial broadcasting with
digital broadcasting within 15 years. Under the Broadcasting Act, it was
intended that the 6 available multiplexes would be given to the existing
terrestrial broadcasters (BBC, ITV, Channels 4&5, S4C and Teletext Ltd) and to
other applicants.

     In December 1997, the ITC awarded the 12 year franchise for operating 3 of
the 6 multiplexes to British Digital Broadcasting, now known as ONdigital.
ONdigital is a consortium owned by Granada and Carlton, two of the largest
regional ITV broadcasters. A further licence was awarded to SDN Limited ("SDN")
on 26 May 1998, a consortium made up of NTL, S4C and United News and Media.

     ONdigital's DTT service was launched 15 November 1998, offering customers
with DTT receivers 30 new television channels. Eight of the channels are
available to customers free of charge once they buy a receiver. Additional
channels are available on subscription. ONdigital are subsidizing the cost of
set top boxes to (pound)199. The DTT services are likely to be significant
competition for cable. ONdigital and SDN are likely to be targeting the same
potential customers as C&W Comms.

     The General Partner believes that, to the extent that DTT creates more
programming content, it may be a benefit to the multichannel television industry
as a whole. However no assurance can be taken that DTT will not become the
preferred multichannel television technology of the future.

     PTO's. HM Government reviewed the broadcast restrictions on BT and the
other PTOs during 1998. As a result, BT (and all other national PTOs) will be
allowed entry to the nation-wide entertainment market from January 2001, while
currently unfranchized areas will be let on a non-exclusive basis with national
PTOs being able to provide services in these areas. Since March 1994, BT and
other national PTOs have ceased to be prohibited from bidding for these
franchise licences despite the restrictions on their ability to provide
nation-wide broadcast entertainment services. As a result, however, of the
transmission capacity limitations of twisted pair copper wires historically used
in BT's telecommunication network, particularly between its local distribution
points and its customers' homes, and the age and condition of older portions of
BT's network, C&W Comms believes that, unless substantial improvements are made
in digital compression or other technologies, BT may not be able to provide a
broadband cable television service comparable to that offered by Bell Cablemedia
South Herts without substantial investment. Furthermore, BT has publicly
indicated that it has no plans currently to provide broadcast entertainment
services on a nation-wide basis.

     On September 29, 1993, the ITC issued a statement in which it took the
position (shared by OFTEL and the Department of Trade and Industry (the "DTI"))
that BT and other national PTOs were permitted to provide VOD services under
their existing national PTO licenses. Bell Cablemedia South Herts similarly is
not prevented from providing VOD services. In order to offer VOD services on a
broad scale, the General Partner believes that BT would have to upgrade its
existing telecommunications switches and to install video distribution
facilities. BT conducted a trial of a VOD system in the towns of Ipswich and
Colchester (which are not within Bell Cablemedia South Herts' franchise area) in
collaboration with BSkyB and has undertaken trials in Westminster but has not
yet offered the service in other areas. The General Partner is unable to assess
fully the technical feasibility or timing of BT or any other provider offering
VOD services. No assurance can be given that VOD will not provide substantial
competition to Bell Cablemedia South Herts in the future

     Other Competitors to Cable Television. In addition to the then existing UK
terrestrial channels (BBC1, BBC2, ITV and Channel 4), a new terrestrial
television channel, Channel 5, began broadcasting in March 1997. C&W Comms does
not expect that the introduction of Channel 5 will have a significant impact on
its business because, it believes, the introduction only made terrestrial
television marginally more attractive to viewers. Channel 5 has only been
allocated a limited range of frequencies to broadcast its service and is only
available to approximately 76 per cent of the UK population through terrestrial
distribution. For some homes, therefore Channel 5 will only be available by
subscribing to cable television or DTH satellite. C&W Comms intends to monitor
closely all relevant technological developments and, where possible, to position
itself to remain competitive.

     Cable Telephony

     Overview. Until 1981, the UK Post Office was, with certain minor
exceptions, the monopoly supplier of telecommunications services throughout the
UK. BT was formed in 1981, when it took over the telecommunications assets of
the Post Office and became the monopoly UK telecommunications supplier. BT was
privatized in three tranches between 1984 and July 1993.

     In 1984, Mercury was formally granted a license to compete with BT. Prior
to this, in November 1983, the Government had given a commitment not to license,
for a period of seven years, companies other than BT or Mercury to carry
telecommunications services nationally over fixed links ("the Duopoly Policy").
In November 1990 the Secretary of State for Trade and Industry published a
consultative document entitled "Competition and Choice: Telecommunications
Policy for the 1990's", which commenced a review of the Duopoly Policy and the
UK telecommunications market generally (the "Duopoly Review").

     The Duopoly Review was completed in March 1991, and represented, with
consequent changes in policy and to the licenses of telecommunications
operators, a fundamental turning point in the telecommunications industry in the
UK. The major policy change was that anyone could come forward and apply to the
UK Government to run new telecommunications networks over fixed links. The
general presumption, subject to financial and technical competence, would be
that such licenses should be granted unless there were specific reasons to the
contrary. Cable television/telephony operators were permitted to provide
telephony services in their own right, instead of as agents of BT or Mercury as
previously required, and had the right to switch their telephony customers'
calls. These changes significantly improved the terms on which cable operators
had been able to require PTOs to interconnect with them. As at 31 March 1998,
over 200 companies were licensed by the DTI to compete in the telecommunications
market, operating in various areas and providing a variety of services. Of
these, over 140 were granted to cable companies (including Bell Cablemedia South
Herts) which are licensed to install and operate telecommunications systems in
specified franchise areas and to provide a full range of telecommunication and
broadcasting services (other than mobile services) within their licensed areas.
The ITC's historic policy was to grant only a single licence for the provision
of cable television services to dwelling houses in each geographical franchise
with the result that cable companies currently have exclusive rights to provide
such services in their franchise areas. HM Government confirmed in April 1998,
however, that while this policy will continue until January 2001 in existing
franchise areas, after that date national PTOs will be able to apply to serve
those areas. BT has indicated publicly that it has no plans currently to provide
entertainment services on a national basis. No such exclusivity exists in
relation to telephone services or in relation to delivery of pay television
services by other means such as DTH satellite.

     Residential Telephony. Bell Cablemedia South Herts' principal competitor in
the UK residential market is BT, which is expected to continue to hold over 80%
of the estimated national market in 1999. Competition is also provided by other
PTOs, including cellular telephone operators described below.

     BT has a fully built national telephone network and has extensive
experience in the marketing and operation of telecommunications services in the
UK. In BT's latest fiscal year ended March 31, 1998 revenues exceeded
(pound)15.6 billion. However, BT's ability to respond to price competition from
local cable/telephony operators is restricted by its license obligations to
average its pricing geographically. BT is not permitted to show undue preference
to or unduly discriminate against different classes of customers and is required
to offer uniform rates nationally, although BT does offer certain discount
schemes that reduce the price of calls. Cable television/telecommunications
providers are only required to offer uniform rates within a franchise.

     Bell Cablemedia South Herts also competes in the residential telephony
market with cellular telephone operators such as Vodafone Group PLC ("Vodafone")
and Telecom Securicor Cellular Radio Limited ("Cellnet") (60% owned by BT),
One2One (50% owned by C&W) and Orange plc ("Orange"). Due to the non-exclusive
nature of telecommunications licenses in the UK, Bell Cablemedia South Herts
also competes with additional entrants to the residential telephony markets,
such as Energis Communications Limited ("Energis"), a long-distance operator.

     Business Telephony. Competition in business telephony has been more intense
than that experienced in residential telephony and, because of the number of
competitors in the area, is expected to intensify further. BT is Bell Cablemedia
South Herts' principal competitor in providing business telephony services. In
addition to BT, Bell Cablemedia South Herts currently competes with other
telecommunications companies, such as Energis and MCI WorldCom, Inc.
("WorldCom"). Bell Cablemedia South Herts may compete in the future with
additional entrants into the business telephony market, some of which may have
substantially larger resources than those of the Partnership.

Regulation

     The operation of cable television/telephony services in the UK is regulated
under both the Broadcasting Act 1990 (the "Broadcasting Act") which replaced the
Cable and Broadcasting Act 1984 (the "Cable and Broadcasting Act"), and the
Telecommunications Act 1984 (the "Telecommunications Act"). The operation of
cable television/telephony services in the UK requires two principal licenses:
(i) a license (a "cable television license") issued either under the Cable and
Broadcasting Act (prior to January 1991) or under the Broadcasting Act (since
1991), which permits the holder to provide cable television services within a
specific franchise area and (ii) a telecommunications license issued under the
Telecommunications Act, which allows the holder to construct and operate the
physical network necessary to provide cable television and telecommunications
services. The ITC is responsible for issuing and enforcing cable television
licenses. The DTI is responsible for issuing, and OFTEL is responsible for
enforcing, telecommunications licenses. In addition, if an operator utilizes
microwave distribution systems as part of its network, such operator is required
to hold a license under the Wireless Telegraphy Acts of 1949-1967. Any SMATV
system covering 1,000 homes or less requires a telecommunications license, but
not a cable television license, and a cable television system that covers only
one building or generally two adjacent buildings can operate pursuant to an
existing telecommunications services class license.

     By virtue of the Telecommunications Code, contained in the
Telecommunications Act and included in a modified form in the telecommunications
licenses of cable operators, cable operators also must comply with, and are
entitled to the benefits of, the Street Works Act, the principal benefit of
which is to allow cable operators the right to undertake civil construction on
public roads. In addition, because the Street Works Act standardized fees for
inspections of construction works by local government authorities and
standardized specifications for reinstatement of property following excavation,
construction delays previously experienced by cable operators because of
separate and often lengthy negotiations with local government authorities have
been reduced.

     The rights of cable operators under the Telecommunications Code are subject
to planning legislation. In April 1994, a Planning Order came into force which
requires planning consent for the installation, alteration or replacement of any
telecommunication apparatus on, or within the land surrounding, a dwelling.

     The cable television license held by Bell Cablemedia South Herts was issued
for a 15 year period and is scheduled to expire in 2005. The telecommunications
license held by Bell Cablemedia South Herts was issued for a 15 year period,
which has been extended to a 23 year period, and is scheduled to expire in 2013.

     Cable Television Licenses

     Under the Broadcasting Act, cable companies may carry certain television
and radio services on their networks. Cable television licenses require cable
companies to ensure that certain foreign satellite programs carried by them
conform to ITC requirements and that advertisements, which the cable company
itself inserts, conform to the Broadcasting Act's advertising requirements. The
ITC must discharge its functions in the way it considers best calculated to
ensure the availability of a wide range of services and fair and effective
competition in their provision. Each cable television license gives the holder
the right to provide television services within the cable television franchise
area using cable television distribution networks.

     Restrictions on Ownership. The ITC is under a duty to ensure that certain
entities, including local authorities, political bodies, advertising agencies
and religious bodies do not own, or otherwise participate in a manner against
the public interest in, entities holding cable television licenses issued under
the Cable and Broadcasting Act. Restrictions may also be imposed on cross
ownership of different licensed services (including local delivery services,
independent television licenses and radio services) and different media
(including local and national newspapers and licensed services, such as local
delivery services) operating in substantially the same franchise area. Cable
television licenses issued under the Cable and Broadcasting Act continue to be
substantially regulated as if the Cable and Broadcasting Act remained in force
under the Broadcasting Act. The ownership rules are substantially similar for
cable television licenses issued under the Broadcasting Act. The cross media
ownership rules have changed following the entry into force of the Broadcasting
Act 1996 and do not now apply to local delivery services. The BBC, Channel 4 and
S4C (the Welsh Channel) are not permitted to hold local delivery operations
licenses. The Secretary of State for Trade and Industry has wide discretion to
amend the rules relating to cross media ownership and accumulations of interests
in licensed services.

     The ITC has the authority to revoke any cable television license in order
to enforce the restrictions on ownership contained in the Broadcasting Act. The
ITC may also revoke any cable television license issued under the Cable and
Broadcasting Act if any change in the nature or characteristics of the licensee,
or any change in the persons having control over or interests in it, are such
that, had they occurred before the granting of the license, such change would
have induced the ITC to refrain from granting the license. For cable television
licenses issued under the Broadcasting Act the test is one of fitness and
propriety of the holder of the license. The ITC also has authority to impose
fines, shorten the license period or revoke cable television licenses if a cable
operator fails to comply with the conditions of its cable television license or
with any direction of the ITC.

     License Term and Renewals. Cable television licenses extend for a period of
15 years, and all cable television licenses, including those issued under the
Cable and Broadcasting Act, are renewable under the Broadcasting Act for
additional 15 year periods. An application for renewal must be made not earlier
than five years prior to the expiration of the cable television license and not
later than the date on which the ITC publishes a notice inviting applications
for a replacement license. The ITC may refuse such application but only on
limited grounds, including that the ITC proposes to grant a license in an area
different from that described under the existing license or that the applicant
is not providing services through the whole of its franchised area. If an
operator chooses to renew for an eight year period, it will not be required to
pay the annual fees referred to below, but at the end of the eight year period
the license cannot be renewed again and will be put out for tender and awarded
to the highest bidder, as described below with respect to the award of a new
license. If an operator chooses to renew its license for a 15 year period, it
will currently be required to pay annually during the renewal period a
percentage to be fixed by the ITC of the operator's cable television related
revenues, plus an additional amount that the ITC believes a successful applicant
would have bid for the franchise if it were being offered as a new franchise.
Licensees holding licenses issued under the Cable and Broadcasting Act are
currently only required to pay to the ITC annual fees, which in the aggregate
are intended to cover the ITC's administrative costs. Fees are payable annually
and upon the renewal of a license. Bell Cablemedia South Herts has not yet
renewed its cable television license.

     Revocation of cable television licenses. The ITC can revoke a cable
television license if an operator fails to comply with its conditions or with
any direction of the ITC and the ITC considers revocation to be in the public
interest. If there is any change in either the nature or characteristics of an
operator that is a corporate entity, or any change in the persons controlling or
having an interest in it, the ITC can decide to revoke the license if due to
such changes it would not have awarded the license under the new circumstances.
With respect to licenses issued under the Broadcasting Act, the ITC can also
impose fines and shorten the license period.

     Restrictions on Transfer. The Broadcasting Act permits the transfer of a
cable television license issued under such Act to a third party with the written
consent of the ITC. The ITC has absolute discretion to refuse any proposed
transfer of a license.

     Obligations of Licensees. Under the Broadcasting Act, cable television
operators may carry any programming licensed under the Broadcasting Act but are
responsible for ensuring that advertising included by them in their services
conforms to the restrictions set forth in the codes on advertising, sponsorship
and programming produced by the ITC. Both the cable television and
telecommunications licenses impose obligations on the licensees to provide any
information which either OFTEL or the ITC may require for purposes of exercising
their statutory functions.

Review of Regulation

     UK Government Policy

     A General Election was held on May 1 1997 which saw the election of the
first Labour Government for 18 years, by an overwhelming majority. The new
government has begun to review regulatory and public policy in a number of areas
that have an impact on C&W Comms' business. References within this document to
"HM Government" refer to the Conservative government of the UK prior to May 1
1997, and to the new Labour government after that date.

     A review of the regulatory processes governing the UK gas, electricity,
water and telecommunications industries has been initiated by HM Government.
Issues for consideration include accountability to customers, transparency,
regulatory authorities headed by panels rather than individuals, price controls
(including profit sharing) and the duties of the regulator. It is possible that
recommendations relating to the telecommunications sector from this review will
form part of a general legislation package relating to utilities, however they
could also be considered in the context of a second review specifically
examining the regulation of the telecommunications and broadcasting industries.
This consultation will involve a review of the roles of the ITC and OFTEL, and
commenced in the summer of 1998. The DMCS Select Committee reported in May 1998
and recommended the establishment of a new Department of Communications and a
communications regulation commission taking over the functions of all statutory
and self-regulatory bodies for media and communications. It also made
recommendations on Internet regulation.

     Bundling of Services

     The ITC has undertaken a wide ranging consultation into the way in which
pay television channels are marketed at the wholesale and retail levels. Issues
considered included the competition and consumer effects of minimum carriage
requirements, the practice of deep discounting premium channels, and the
bundling of telephony and cable television. The ITC published its conclusions
from the consultation on June 28 1998. They confirmed that minimum carriage
requirements (MCRs) would be prohibited in future on pay-TV channels for all new
agreements from July 1 1998. For existing agreements the prohibition will apply
from July 1 1998 for services broadcast for digital reception contracts and from
January 1 2000 for services broadcast for analogue reception. There would be two
important exceptions to this general prohibition. First, MCRs will be allowed to
continue for a yet to be determined period for existing channels which are
contractually exclusive to one platform (eg cable, satellite) where those
contracts were entered into before April 1 1998. Second, new channels may for
the first 12 months of their operation negotiate MCRs with their distributors.
Introductory offers of this kind will allow operators to become acquainted with
the new channels and indicate their interest in having those channels included
in the bundles of channels they purchase. The ITC has said it will continue to
look into the practices of deep discounting and bundling of cable television and
telephony. The final outcome of this consultation will have important
implications in terms of the flexibility afforded to C&W Comms in packaging its
television and telephony services.

     Conditional Access Regulation

     In July 1997, OFTEL and the DTI published a joint consultation document on
the extension of the UK conditional access regulatory regime to cover
non-broadcast and digital broadcast television services. These regulations are
designed to complement those currently in place for digital broadcast television
services. The regulations require conditional access services to be provided on
a non-discriminatory basis, address anti-competitive agreements or abuse of a
dominant position, and provide cable operators such as C&W Comms with the right
to control the presentation of services to its customers through a process known
as transcontrol. In October 1997, OFTEL published for consultation the
principles it would use when examining the prices proposed by a conditional
access provider.

     Digital Broadcasting

     The introduction of digital technology by Bell Cablemedia South Herts will
greatly increase the number of channels it is able to provide, allow greater
flexibility in packaging channels and enhance the provision of services such as
pay-per-view which require greater bandwidth than existing services. BSkyB
launched a digital satellite service on 1 October 1998 and DTT was launched on
15 November 1998.

     Digital Terrestrial Broadcasting. The New Broadcasting Act introduced a
legal framework for the regulation of digital terrestrial broadcasting. Most of
the New Broadcasting Act's provisions ONdigital terrestrial broadcasting came
into force on October 1, 1996.

     The New Broadcasting Acts permits the provision of digital program
services, digital additional services (e.g., text-based services) and qualifying
services. Broadly speaking, qualifying services are the digital equivalent of
services provided in analog form by existing terrestrial broadcasters such as
ITV, Channel 4 and the new Channel 5.

     The New Broadcasting Act distinguishes between multiplex service providers,
that is those providing the transmission infrastructure, and digital program
providers, that is, those providing the programs to be transmitted. Both need to
be licensed under the New Broadcasting Act (except the BBC which may act as a
digital program provider pursuant to its Royal Charter), although the holders of
existing licenses for ITV, Channel 4 and Channel 5 and the public teletext
service will not require new broadcast licenses in order to simulcast their
existing output in digital form.

     The New Broadcasting Act created a framework for the licensing by the ITC
of digital terrestrial television multiplexes. Capacity on multiplexes has been
allocated to existing terrestrial broadcasters, being one full multiplex
frequency for BBC1 and BBC2, one multiplex frequency for ITV and Channel 4 and
half a multiplex frequency for Channel 5 and S4C. On January 31, 1997
applications for further digital terrestrial multiplex licenses were received by
the ITC from British Digital Broadcasting, now known as ONdigital, (owned by NTL
Incorporated) and S4C Digital. ONdigital, a consortium incorporating Carlton
Communications and Granada Group and S4C Digital were successful in their
applications and were awarded multiplex licenses, ONdigital 's licence for three
multiplex frequencies only being awarded after BSkyB had withdrawn from the
consortium on the ITC's request. On December 19, 1997 the ITC granted multiplex
licenses to ONdigital and Channels 3 and 4. The licenses granted to ONdigital
included a number of specific conditions to address concerns raised by the
European Commission. These conditions include:

     o    program supply agreements to be limited to five years;

     o    support of open standard in integrated television sets;

     o    conditions to ensure Granada's equity interest in BSkyB does not
          prevent ONdigital competing with BSkyB.

C&W Comms is under "must carry" obligations for digital qualifying services
(i.e., digital simulcasts of current analog television broadcasts) if C&W Comms
is itself operating a digital system.

     Telecommunications Licenses

     General. The telecommunications license granted to a cable operator permits
the holder to install and operate a telecommunications system over which
television and other telecommunications services are provided. The
telecommunications license also permits the holder to connect its system to
other telecommunications systems, which may include systems operated by the
broadcasting authorities, satellite television delivery systems and other
telecommunications systems in the UK. Although a telecommunications license is
granted to a cable operator for a particular franchise area, it is not exclusive
and, as a result, a cable operator may compete in the provision of telephony and
other telecommunications services with national PTOs, such as BT and Energis,
and other telecommunications companies in its franchise areas.

     Pursuant to its telecommunications license, a cable operator is entitled to
the benefits of the Telecommunications Code, which is contained in the
Telecommunications Act. The Telecommunications Code grants rights and imposes
obligations in respect of the installation and maintenance of apparatus such as
ducts, cables and equipment on private or public land and incorporates
procedures to be used for the installation of equipment on public highways.
Cable operators are generally required to enter into bonding obligations with
local government authorities in order to ensure removal of certain apparatus and
reinstatement of roads and streets in the event of the telecommunications
license being terminated.

     Build Schedules. Each telecommunications license specifies the build
schedule of the system that the cable operator is required to implement (by
reference to the number of premises passed by specified dates) and the
particular technical characteristics to which the system must adhere. It is
OFTEL's responsibility to enforce compliance with the build schedules. Failure
to comply with the build schedules could result in revocation of the relevant
telecommunications license.

     License Term and Renewals. Telecommunications licenses that have been
issued to date have been for periods of either 15 or 23 years from the date of
issuance. Prior to 1992, telecommunications licenses with 23 year terms were
granted only to cable operators utilizing systems with a "switched star"
architecture, while all other operators received licenses with 15 year terms.
Since 1992, the DTI has amended this policy and upon request has extended the
terms of existing 15 year licenses to 23 years provided the cable operator's
system meets certain technical requirements. Telecommunications licenses do not
contain any provisions for renewal, however, it is expected that renewals of
telecommunications licenses will be on similar terms to the current ones. The
Director General may modify telecommunications licenses either with the
agreement of the licensee following a statutory period of public consultation or
following a report of the Monopolies and Mergers Commission ("MMC").

     Restrictions on Transfer. Telecommunications licenses may not be
transferred. However, a change of control of an entity holding a license is
allowed subject to compliance with a notification requirement. Licenses may be
revoked if the change in control is deemed to be contrary to the UK's national
security interests or its relations with any other country.

     Technical Requirements. The principal technical requirements for the cable
television/telephony systems are contained in the telecommunications licenses,
which address, among other things, technical requirements for transmissions and
performance. 

     Telephony Operations

     Interconnect Principles. Each individual PTO licensee is obliged under the
terms of its Telecommunications Act license to permit, on agreed terms,
connection between its network and the networks of other licensed operators in
order to enable a customer of one licensee to make calls to the customers of
other licensees.

     Interconnection agreements generally provide for (among other things):

     (a)  the connection of the network of one licensee with the network of
          another in order to deliver traffic to and, in some cases, originate
          and carry traffic for, the other;

     (b)  where and how those connections are to be made; and

     (c)  payments with respect to connection and the conveyance of traffic and
          any other services provided by one licensee to another.

If two licensees cannot reach agreement, material terms of interconnection can
be determined by the Director General on the application of either licensee.

     Network Charge Cap. In June 1996, OFTEL released a statement entitled
"Pricing of Telecommunication Services from 1997 - OFTEL's Proposals for Price
Control and Fair Trading". In this statement, OFTEL indicated that it intended
to introduce network charge caps (see below) for interconnection charges, the
starting values of which will be based on long-run incremental costs. In
December 1996 and May 1997, OFTEL released further consultative documents in
which it sets out its refined proposals for network charges.

     In July 1997, OFTEL published its final statement on the network charge
cap, setting out a framework effectively comprising four different approaches
which OFTEL intends to adopt in relation to the pricing of BT's interconnection
services, depending on the degree of competition which exists in relation to the
provision of those services. The approaches, which remain effective for four
years commencing October 1, 1997, are as follows:

     (a)  for "competitive services", BT will be free to set the charges;

     (b)  for "prospectively competitive services", BT will be subject to a
          charge cap on each such service equal to the percentage change in the
          UK domestic retail price index (i.e., "RPI" plus zero);

     (c)  for "bottleneck and non-competitive services", two baskets of services
          will be introduced, each subject to a cap equal to RPI less 8 per
          cent; and

     (d)  for "interconnection-specific services", BT will be subject to
          individual charge caps equal to RPI less 8 per cent.

     The starting values for the price-capped services are set at long-run
incremental cost. BT agreed to modifications to its PTO license to implement
these proposals and the new charge controls took effect on October 1, 1997.

     The interconnection charges BT sets will, in any event, be subject to the
general application of the fair trading condition described below and the other
fair trading conditions in BT's PTO license. OFTEL has indicated that it intends
to use a system of cost floors based on incremental costs and ceilings based on
stand alone costs in considering whether or not a charge is anti-competitive.

     European Interconnect Directive. In June 1997, the European Commission
adopted the Interconnect Directive. The Directive aims to guarantee the rights
of operators to obtain interconnection with the networks and services of others.
Operators with "significant market power" must provide interconnection on
cost-oriented terms. These principles also apply to European cross-border
interconnection traffic, currently subject to the accounting rate regime. The
Directive was implemented in December 1997 and resulted in the following
statements:

     o    identification of BT and Kingston Communications as having significant
          market power in the fixed telephony market and Cellnet and Vodafone in
          mobile (though not in the national market for interconnection);

     o    classification of those operators that would have access to
          cost-oriented interconnection rates, representing in OFTEL's view a
          slight widening from the current position; and

     o    requirements on those telecommunication operators with special or
          exclusive rights in another sector to produce separate accounts where
          the turnover in that sector exceeds ECU 50m. This may have
          applicability to certain of C&W Comms' Franchises over time.

     These proposals were implemented via a Statutory Instrument laid before
Parliament on December 10, 1997, coming into force on December 31, 1997.
Consultation on certain aspects of the regime, in particular access to
cost-oriented rates is, however, continuing.

     Equal access Indirect access allows a customer to enter into a contract to
buy a telecommunication service from a operator to which the customer is not
directly connected. In these circumstances, the second operator pays the first
operator (the access operator) for use of the connection to the customer. Equal
access is an enhanced form of indirect access and can be achieved by dialling
parity (where a customer has to dial the same number of digits regardless of
which long distance or international network is to carry its calls) and by
carrier pre-selection. Carrier pre-selection is a facility offered to customers
which allows them to opt for certain defined classes of calls to be carried by
an operator selected in advance (and having a contract with the customer),
without having to dial an indirect access prefix or follow any other different
procedure to achieve that routing. The European Commission has adopted a
directive requiring the introduction of carrier pre-selection by those operators
with significant market power in the provision of fixed public telephone
networks or fixed public telephone services by January 1 2000. Equal access (in
the form of carrier pre-selection) must therefore be introduced in the UK
market.

     In July 1998, OFTEL issued a consultation document outlining the form that
the implementation of carrier pre-selection will take. Customers will be able to
opt to pre-select one alternative carrier for either of international or
national calls, or make a single pre-selection for all types of call (excluding
emergency and operator calls). It is not technically possible for BT and
Kingston to implement carrier pre-selection by the January 1 2000 deadline, and
hence the DTI and OFTEL will be seeking from the Commission and eight month
derogation for the implementation of the international and national options and
an eighteen month derogation for the all call option. In addition, OFTEL has
issued a consultation on the delivery of multi-media services to the mass market
through the unbundling of BT's local loop access network. A number of technical
options are being put forward for consideration. Responses are due by 10 March
1999.

     Interconnection Agreements with Other Operators. BT now offers a published
standard interconnections agreement to other telecommunications operators. On
September 23, 1997, BT and C&W Comms signed a new interconnect agreement based
on BT's standard contract, replacing the previous agreement between BT and
Mercury dated November 1994.

     C&W Comms has interconnection agreements in place with many of the other
Telecommunications Act licensees in the UK market, such as those operating
cellular and personal communication networks, cable companies and others
including Worldcom and Energis. C&W Comms also has interconnection agreements or
less formal accounting arrangements with international operators worldwide.

     Retail Price Regulation. BT was previously subject to retail price cap
regulation on approximately 65 per cent of its revenues pursuant to the terms of
the August 1992 price cap review. The new price control of RPI less 4.5 per cent
took effect on August 1, 1997 and will remain until 2001, but only in relation
to the bottom 80 per cent of residential customers by bill spend. OFTEL has
indicated that this is likely to be the last retail price control imposed on BT.
The level of retail rates charged by Bell Cablemedia South Herts and
telecommunication providers other than BT is not limited by specific regulation
by any HM Government entity, but are subject to general competition and fair
trade rules.

     Universal Service Obligation. In July 1997, OFTEL published its final
proposals for Universal Service following extensive consultation. The key
elements are:

     (a)  the level of Universal Service is established for the four year period
          from September 30, 1997 to September 27, 2001, subject to a review in
          1999;

     (b)  "Universal Service" is defined as:

          o    connection to the fixed PSTN to support voice telephony and low
               speed data/ fax;

          o    the option of a more restricted service package at a lower cost;
               and

          o    reasonable geographic access to public call boxes across the
               United Kingdom at affordable prices;

     (c)  OFTEL found that the costs of the provision of this level of Universal
          Service do not represent an undue financial burden on BT, but
          continued examination of the costs and benefits will be undertaken as
          an input to the 1999 review;

     (d)  as there was no substantive net cost to finance, a fund would not be
          established;

     (e)  the Disability Discrimination Act will be used as the framework to
          develop proposals for delivering Universal Service to people with
          disabilities;

     (f)  all consumers should be given the option of an outgoing calls barred
          service as an alternative to disconnection.

     Modifications to BT's license implementing the new regime were made in
November 1997. The next round of review of USO is expected to commence in the
next few months.

     Number Portability. Business and residential telecommunications customers
changing their telephone services from one telecommunications service provider
to another previously had to change their telephone numbers. BT did not offer
customers telephone number portability until 1996, although its PTO license has
required this, subject to certain preconditions including technical feasibility
and cost-benefit study, since 1991. As a result, some business customers have
used their new telecommunications provider lines primarily for outbound
telephone calls and maintained their BT or Mercury lines for inbound calls.

     BT's PTO license was modified in July 1996 to incorporate a condition which
supports the implementation of number portability and on January 6, 1997, the
Director General determined BT's costs in providing number portability and the
charges it can make to other operators to recover those costs. BT has reached
agreement with several cable companies on number portability. Bell Cablemedia
South Herts believes that the absence of number portability was a significant
impediment to competition in the telecommunication market and that its
implementation will provide and is providing BT's competitors with access to
greater numbers of customers. The number portability modifications made to BT's
license related to the portability of numbers at a particular geographic
address. In April 1997, OFTEL consulted on modifications to the licenses of BT
and other operators to implement number portability of non-geographic numbers
(e.g., freephone, premium rate services, etc.). These modifications also altered
the number portability license provisions of other operators in a similar
(though not identical) way to BT's and were finalized for the majority of UK
operators, including Mercury and Bell Cablemedia South Herts on December 17,
1997. A draft determination of BT's charges for non-geographic number
portability was issued in November 1997.

European Legislation

     In addition to direct UK legislation, the activities of C&W Comms are
subject to the impact of European Directives relating to telecommunications,
broadcasting and competition.

     The UK telecommunications regime was liberalized well in advance of other
European countries and hence in many cases the UK's domestic regulations are
already compliant with European rules to promote market liberalization. European
legislation in certain instances may, however, result in alterations to the
existing UK regulatory environment. In particular the following Directives and
proposed Directives may affect Bell Cablemedia South Herts' activities when
implemented in the United Kingdom.

     On November 20, 1996, the European Commission issued its Green paper on a
numbering policy for telecommunications services in Europe. It included
proposals aimed at harmonization of certain numbering ranges at a European
level, carrier selection (call by call) by 1998 and carrier preselection, also
known as equal access, by 2000. The first stage of the consultation process on
the Green Paper was completed on February 21, 1997. On June 27, 1997, the
European Telecoms Council adopted a resolution in response to the Commission's
Green Paper. This resolution largely endorsed the Commission's proposals. On
December 1, 1997, the Council of the European Union agreed the text of a
modification to the Interconnect Directive requiring the introduction of equal
access by those operators with significant market power by January 1, 2000. The
text allows for deferment by a particular Member State where it can be
demonstrated that equal access will impose an excessive burden on an
organization or category of organization.

Employees

     The Partnership has no employees. Bell Cablemedia South Herts is managed as
a part of C&W Comms, thus benefiting from the economies of scale of sharing
support functions.

<PAGE>

ITEM 2.   PROPERTIES

     Bell Cablemedia South Herts owns a freehold property at 9 Greycaine Road,
Watford consisting of approximately 18,500 square feet of office space.

ITEM 3.   LEGAL PROCEEDINGS

None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                     Part II

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

     While the Partnership's interests are publicly held, there is no
established public market for the limited partnership interests, and it is not
expected that such a market will develop in the future. As of March 31, 1998,
the approximate number of investors in the Partnership was 5,200.

<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                   South Hertfordshire United Kingdom Fund, Ltd.
                                   ---------------------------------------------

                                                         For the years ended December 31

Income Statement Data:               1998             1997             1996            1995             1994
                                     ----             ----             ----            ----             ----
<S>                              <C>              <C>             <C>              <C>               <C>        
Revenues                         $28,396,020      $23,603,312     $20,851,777      $16,554,283       $9,088,929
Operating, General and
Administrative Expenses          (12,014,013)     (13,648,846)    (15,691,431)     (16,079,815)     (13,478,273)
Management Fees and
Allocations from General          (8,173,374)      (6,058,801)     (3,943,096)      (2,754,941)      (2,004,964)
Partner
Depreciation and Amortization     (4,119,297)      (6,177,968)     (5,129,620)      (4,214,341)      (3,064,313)
Write down of fixed assets                --       (6,562,400)             --               --               --
                               ---------------------------------------------------------------------------------
Operating Profit/(Loss)            4,089,336       (8,844,703)     (3,912,370)      (6,494,814)      (9,458,621)
Interest Income                       39,777           78,749          30,667           17,251          185,472
Interest Expense                  (3,668,950)      (3,599,912)     (2,836,056)      (2,442,312)        (549,834)
Other Expenses (net)                 (74,582)              --              --               --       (2,410,724)
                               ---------------------------------------------------------------------------------
Profit/(Loss) from continuing
operations                           385,581      (12,365,866)     (6,717,759)      (8,919,875)     (12,233,707)
Before minority interests
Minority Interests                  (249,713)       3,975,339       2,100,658        2,767,869        3,991,358
                               ---------------------------------------------------------------------------------
Net Loss                             135,868       (8,390,527)     (4,617,101)      (6,152,006)      (8,242,349)
                                     -------        ---------       ---------        ---------        ---------
Net Profit/(Loss) per Limited
Partnership Unit                        2.36          (145.90)         (80.28)         (106.97)         (149.06)
Weighted Average Number of
Limited Partnership Units             56,935           56,935          56,935           56,935           54,743
Outstanding
Balance Sheet Data:
Total Assets                      77,814,972       76,963,343      91,119,344       80,239,942       73,473,610
Accounts Payable to
Affiliates/Related Parties        19,157,847       18,335,570      10,202,585        2,232,050        6,028,108
Long term debt                    32,028,350       31,756,220      30,290,110       24,220,560        1,043,000
General Partner's Capital
(Deficit)                           (335,158)        (336,517)       (252,612)        (206,441)        (144,921)
Limited Partners' Capital         15,819,586       15,685,077      23,991,699       28,562,629       34,653,115
Minority Interests                 8,912,532        8,588,899      13,079,544       13,948,743       18,553,653
</TABLE>

<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Results of Operations

     1998 Compared to 1997

     Revenues of the Partnership increased $4,792,708 for the year ended
December 31, 1998, over the similar period in 1997 from $23,603,312 in 1997 to
$28,396,020 in 1998. This increase is primarily the result of an increase in the
South Herts System's customer base. The South Herts System served approximately
23,067 basic cable television customers and 30,019 residential telephony lines
at December 31, 1998, compared to 22,400 basic cable television customers and
27,400 residential telephony lines at December 31, 1997.

     Operating expenses increased $311,327 or 2.7% for the year ended December
31, 1998 over the similar period in 1997 from $11,474,356 in 1997 to $11,785,683
in 1998. This compares to a rise of $2,138,446 or 22.9% for the year ended 31
December, 1997. Operating expenses have risen due to increased activity levels
(see discussion of revenue above), however the reduction in rate of increase and
the reduction in operating costs as a proportion of revenue (from 49% to 42%)
reflects ongoing efforts by C&W Comms to control costs.

     Selling, general and administrative expenses reduced $1,946,160 for the
year ended December 31, 1998 over the similar period in 1997 from $2,174,490 in
1997 to $228,330 in 1998. This was primarily due to reductions in overhead
costs, resulting from the provision of additional services by affiliates of the
General Partner in 1998.

     Management fees and allocated overhead from the General Partner increased
$2,114,573 for the year ended December 31, 1998 over the similar period in 1997
from $6,058,801 in 1997 to $8,173,374 in 1998. These costs relate to additional
services provided by affiliates of the General Partner in order to reduce
overall costs by taking advantage of economies of scale within the C&W Comms
Group.

     Depreciation and amortization expense decreased $2,058,671 for the year
ended December 31, 1998 over the similar period in 1997 from $6,177,968 in 1997
to $4,119,297 in 1998. This decrease was largely due to the write down of fixed
assets by $6,562,400 during the year ended December 31, 1997 following a review
of the net book values of Bell Cablemedia South Herts' assets.

     Interest income decreased $38,972 for the year ended December 31, 1998 over
the similar period in 1997 from $78,749 in 1997 to $39,777 in 1998. The decrease
reverses the increase of $48,082 between 1996 and 1997 which was the result of
interest received on temporary cash balances held during 1997.

     Interest expense increased $69,038 for the year ended December 31, 1998
over the similar period in 1997 from $3,599,912 in 1997 to $3,668,950 in 1998.
This was due primarily to the strengthening of sterling against the US dollar.

     Net cash outflow in the year was $361,332. Cash inflow of $5,379,704 was
from operating activities. Working capital levels were consistent with 1997
levels. The majority of the inflow ($4,798,137) was applied to investment in the
cable network. This compares to $11,259,882 in 1997, the 57% reduction
reflecting the fact that construction work was nearing completion in 1998 with
93% of homes in the area passed by the network. Principal payments under finance
leases fell from $1,012,870 in 1997 to $894,989 in 1998, reflecting the fact
that no new finance leases have been entered into as existing leases have
expired.

<PAGE>

     1997 Compared to 1996

     Revenues of the Partnership increased $2,751,535 for the year ended
December 31, 1997, over the similar period in 1996 from $20,851,777 in 1996 to
$23,603,312 in 1997. This increase is primarily the result of an increase in the
South Herts System's customer base. The South Herts System served approximately
20,900 basic cable television customers, 24,200 residential telephony lines and
1,000 business telephony customers at December 31, 1996 as compared to 22,400
basic cable television customers, 27,400 residential telephony lines and 1,200
business telephony customers at December 31, 1997.

     Operating expenses increased $2,138,446 for the year ended December 31,
1997 over the similar period in 1996 from $9,335,910 in 1996 to $11,474,356 in
1997. This increase relates to telephony and programming costs arising from the
growth in the South Herts' customer base.

     Selling, general and administrative expenses reduced $4,181,031 for the
year ended December 31, 1997 over the similar period in 1996 from $6,355,521 in
1996 to $2,174,490 in 1997. This reduction was primarily due to reductions in
overhead costs, resulting from the provision of additional services by the
General Partner in 1997 as compared to 1996.

     Management fees and allocated overhead from the General Partner increased
$2,115,705 for the year ended December 31, 1997 over the similar period in 1996
from $3,943,096 in 1996 to $6,058,801 in 1997. These costs relate to additional
services provided by affiliates of the General Partner in order to reduce
overall costs by taking advantage of economies of scale within the C&W Comms
Group. Overall, the aggregate of selling, general and administrative expenses
and management fees and allocated overhead from the General Partner has declined
in 1997 as compared to 1996.

     Depreciation and amortization expense increased $1,048,348 for the year
ended December 31, 1997 over the similar period in 1996 from $5,129,620 in 1996
to $6,177,968 in 1997. This increase was due to an increase in the Partnership's
depreciable asset base resulting from the buildout of the South Herts System.

     During 1997, the General Partner undertook a review of the net book values
of Bell Cablemedia South Herts' assets. This resulted in a write down of fixed
assets of $6,562,400 for the year ended December 31, 1997 principally relating
to assets which will have no value to the Company upon the planned introduction
of digital cable television. The Company wrote off the total value of its analog
converters and headend, amounting to $2,939,128 and $2,193,782, respectively. In
addition, it wrote off part of its computer hardware and software and freehold
property amounting to $676,453 and $753,037, respectively.

     Interest income increased $48,082 for the year ended December 31, 1997 over
the similar period in 1996 from $30,667 in 1996 to $78,749 in 1997. The increase
in interest income was the result of interest received on temporary cash
balances.

     Interest expense increased $763,856 for the year ended December 31, 1997
over the similar period in 1996 from $2,836,056 in 1996 to $3,599,912 in 1997.
This increase was mainly due to an increase in outstanding indebtedness during
1997, under a credit facility entered into in April 1995, and interest on
deferred fees charged by an affiliate of the General Partner.

Net cash outflow in the period was $1,766,596. Of the $8,660,288 cash inflow
from operating activities, the majority was derived from increases in working
capital. $11,259,882 was invested in the cable network facilitated by an
additional (pound)1,600,000 ($2,624,960) draw-down under the South Herts Credit
Agreement (see Liquidity and capital resources below).

Liquidity and capital resources

     The Partnership

     The Partnership's source of cash has been the net proceeds of its offerings
of limited partnership interests. Historically, the Partnership's principal uses
of cash have been capital contributions to Bell Cablemedia South Herts in order
to fund the Partnership's proportionate share of the construction costs of the
South Herts System. As discussed below, the General Partner believes that no
additional capital contributions will be required to fund the completion of
construction and operations of the South Herts System. Accordingly, in the
future, the Partnership's uses of cash will be restricted to covering its
administration costs (principally insurance premiums, legal and accounting costs
associated with the Partnership's annual audit and periodic regulatory filings
and general administration). As of December 31, 1998 the Partnership had current
liabilities of approximately $1,120,741 owing to BCM. Accordingly, until such
time as Bell Cablemedia South Herts begins to pay dividends on its ordinary
shares (which is not expected in the foreseeable future) the Partnership will be
required to fund its administrative expenses by additional issuances of limited
partnership interests or from borrowings. The General Partner will arrange for
resources to be made available for the Partnership to meet its obligations as
they fall due.

     Bell Cablemedia South Herts

     On April 18, 1995, Bell Cablemedia South Herts entered into an agreement
with two major banks to provide a (pound)25,000,000 revolving and term loan
credit facility agreement maturing on December 31, 2003 (the "South Herts Credit
Agreement"). On October 18, 1996, (pound)5,000,000 was cancelled and the
facility reduced to (pound)20,000,000.

     The obligations of Bell Cablemedia South Herts under the South Herts Credit
Agreement are secured by first fixed and floating charges over all of the assets
of Bell Cablemedia South Herts. In addition, there is a pledge of all of the
share capital of Bell Cablemedia South Herts given by BCM and the Partnership as
additional security for the facility.

     Drawdowns of (pound)19.3 million have occurred under the South Herts Credit
Agreement since April 1995, partly to repay the temporary loans made to Bell
Cablemedia South Herts by BCM since November 1994. The General Partner believes
that the South Herts Credit Agreement will be sufficient to fund the completion
of construction and operation of the South Herts system. The amount outstanding
under the facility at December 31, 1998 was (pound)19.3 million.

     Capital expenditure is funded from operating cash flow and by funds made
available by the General Partner.

Year 2000

     The year 2000 problem results from the use of two digits rather than four
to define the year in computer hardware and software and in electronic
equipment. When electronic systems process dates before and after January 1,
2000, they may recognise a date represented by "00" as indicating the year 1900,
instead of 2000. Unless steps are taken to re-programme affected equipment and
re-write software, this may create processing ambiguities that can cause errors
and system failures, the effects of which may be limited or pervasive depending
on the computer chip, system or software, and its location and function. By
definition, the precise effects of the problem can only be estimated in advance
and will not be known with certainty until into and even after the year 2000
itself.

     Bell Cablemedia South Herts' operations are highly dependent upon equipment
with embedded computer technology (network, switches etc), the widespread
failure of which would have a material adverse impact on its results of
operations. C&W Comms has established a year 2000 compliance plan and timetable
which includes a comprehensive review to identify systems and equipment (both in
Bell Cablemedia South Herts and in third party vendors) that could be affected
by the year 2000 issue. C&W Comms is well advanced in its program. Total
awareness of the scale of work required to become Millennium compliant has been
based on a comprehensive audit of all the IT and network systems. The program
has detailed milestones for every activity, and adequate time has been allowed
for extensive testing to ensure compliance. The company believes it is well
placed to ensure continuity of its systems after January 1, 2000. However, C&W
Comms will continually review its progress against its year 2000 plans and
conclude on appropriate and feasible contingency plans to reduce its exposure to
the year 2000 issue. Further details of C&W Comms' year 2000 programme will be
published in C&W Comms' Form 20F, which is scheduled to be published before
September 30, 1999.

     Accounting rules require that year 2000 compliance costs are expensed as
incurred. Bell Cablemedia South Herts' costs of Year 2000 compliance are
included within those for C&W Comms as a whole, and an analysis of these costs
has not been performed. Bell Cablemedia South Herts will continue to contribute
its share of such costs.

Inflation

     On average, inflation rates in the UK economy have been relatively low over
the past few years. Although long term inflation rates are difficult to predict,
the General Partner believes it has the flexibility in operations and capital
structure to maintain a competitive position.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The functional currency of Bell Cablemedia South Herts is UK pounds
sterling and all revenue and significantly all costs are incurred in UK pounds
sterling. In order to partially fund capital expenditure on the system, the
company arranged a credit facility denominated in UK pounds sterling. The
balance outstanding on the facility at December 31, 1998 was (pound)19,300,000
($32,038,000 at the closing rate of (pound)1 = $1.66). The loan bears interest
at sterling LIBOR plus a margin ranging from 0.75% to 2.0% depending on the bank
debt ratio (the ratio of bank debt to annualized operating cash flow) of Bell
Cablemedia South Herts. At December 31, 1998, sterling LIBOR was 6.34%. The
average interest rate during the year was 9.2%.

     Repayment of the credit facility falls due as follows:

                                           (pound)                   $*

         1999                           1,351,000             2,242,660
         2000                           3,474,000             5,766,840
         2001                           4,825,000             8,009,500
         2002                           4,825,000             8,009,500
         2003                           4,825,000             8,009,500
                                 ----------------      ----------------
                                       19,300,000            32,038,000
                                 ----------------      ----------------
     * At closing rate (pound)1 = $1.66

     This loan represents the Fund's principal exposure to market risk,
specifically to variations in the sterling LIBOR interest rate and in the UK
pound sterling - US dollar exchange rate. Exposure to foreign exchange risk is,
however, partially mitigated by the fact that the loan is denominated in the
functional currency of Bell Cablemedia South Herts.

<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

                        CONSOLIDATED FINANCIAL STATEMENTS

                        AS OF DECEMBER 31, 1998, AND 1997

            AND FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996

                                      INDEX
                                      -----

                                                                            Page
                                                                            ----

Independent Auditors' Reports                                                 30

Consolidated Balance Sheets                                                   32

Consolidated Statements of Operations and Consolidated Statement of
Comprehensive Income                                                          33

Consolidated Statements of Partners' Capital (Deficit)                        34

Consolidated Statements of Cash Flows                                         35

Notes to Consolidated Financial Statements                                    36

<PAGE>

INDEPENDENT AUDITORS' REPORT


South Hertfordshire United Kingdom Fund, Ltd.

     We have audited the accompanying consolidated balance sheets of South
Hertfordshire United Kingdom Fund, Ltd. (a Colorado limited partnership) and its
subsidiary as of December 31, 1998 and December 31, 1997, and the related
consolidated statements of operations, comprehensive income, partners' capital
(deficit) and cash flows for the years then ended. These financial statements
are the responsibility of the General Partner's management. Our responsibility
is to express an opinion on these financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards in the United States. 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 audit provides a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of South
Hertfordshire United Kingdom Fund, Ltd. and its subsidiary as of December 31,
1998 and December 31, 1997, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States.



ARTHUR ANDERSEN
London, England
24 March, 1999

<PAGE>

INDEPENDENT AUDITORS' REPORT


South Hertfordshire United Kingdom Fund, Ltd.

     We have audited the statements of operations, comprehensive income,
partners' capital (deficit) and cash flows of South Hertfordshire United Kingdom
Fund, Ltd. (a Colorado limited partnership) for the year ended December 31,
1996. These financial statements are the responsibility of the General Partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards in the United States. 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 audit provides a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material aspects, the results of South Hertfordshire United Kingdom Fund,
Ltd's operations and its cash flows for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.



DELOITTE & TOUCHE
London, England

March 20, 1997

<PAGE>

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
                             (A Limited Partnership)

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             December 31
ASSETS                                                                   1998           1997
                                                                         ----           ----
<S>                                                               <C>            <C>        
  Cash and cash equivalents                                           $76,337       $434,386
     Prepaid expenses                                                      --         19,919
                                                              -------------------------------
     Current assets                                                    76,337        454,305
  Investment in cable television and telecommunications
  properties
 (net of accumulated depreciation and amortization of
 $32,586,193 and $28,220,589 at December 31, 1998 and
 1997 respectively)                                                77,249,082     75,924,942
     Other assets                                                     489,553        584,096
                                                              -------------------------------
     Total assets                                                 $77,814,972    $76,963,343
                                                              ===============================

LIABILITIES
  Accounts payable to affiliates and related parties              $19,151,681    $18,335,570
  Accrued liabilities                                                 175,779        134,018
  Short term obligations under capital leases                         288,753        888,516
                                                              -------------------------------
    Current liabilities                                            19,616,213     19,358,104
  Long-term debt                                                   32,028,350     31,756,220
  Long-term obligations under capital leases                           36,509        322,498
                                                              -------------------------------
    Total liabilities                                              51,681,072     51,436,822
                                                              -------------------------------

MINORITY INTERESTS                                                  8,912,532      8,588,899

PARTNERS' CAPITAL (DEFICIT)
  General Partner-
  Contributed capital                                                   1,000          1,000
  Accumulated deficit                                                (336,158)      (337,517)
                                                              -------------------------------
                                                                     (335,158)      (336,517)
                                                              -------------------------------
Limited Partners-
  Net contributed capital (56,935 units outstanding at
  December 31, 1998 and 1997 respectively)                         48,817,997     48,817,997
  Accumulated deficit                                             (32,998,411)   (33,132,920)
                                                              -------------------------------
                                                                   15,819,586     15,685,077
                                                              -------------------------------

 Currency translation adjustment                                    1,736,939      1,589,062
                                                              -------------------------------
 Total partners' capital                                           17,221,368     16,937,622
                                                              -------------------------------

TOTAL LIABILITIES AND PARTNER'S CAPITAL                           $77,814,972    $76,963,343
                                                              ===============================
</TABLE>

                          The accompanying notes are an
               integral part of these consolidated balance sheets.

<PAGE>

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
                             (A Limited Partnership)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 For the years ended December 31
                                                                1998             1997            1996
                                                                ----             ----            ----
<S>                                                         <C>              <C>           <C>         
REVENUES                                                    $28,396,020      $23,603,312   $20,851,777
COSTS AND EXPENSES
Operating                                                   (11,785,683)     (11,474,356)   (9,335,910)
Selling, general and administrative                            (228,330)      (2,174,490)   (6,355,521)
Management fees and allocated overhead from the General
Partner                                                      (8,173,374)      (6,058,801)   (3,943,096)
Depreciation and amortization                                (4,119,297)      (6,177,968)   (5,129,620)
Write down of fixed assets                                           --       (6,562,400)           --
                                                         ------------------------------------------------
OPERATING PROFIT/(LOSS)                                       4,089,336       (8,844,703)   (3,912,370)

OTHER INCOME (EXPENSE)
Interest income                                                  39,777           78,749        30,667
Interest expense                                             (3,668,950)      (3,599,912)   (2,836,056)
Other                                                           (74,582)              --            --
                                                         ------------------------------------------------
PROFIT/(LOSS) BEFORE MINORITY INTERESTS
                                                                385,581      (12,365,866)   (6,717,759)
Minority interests                                             (249,713)       3,975,339     2,100,658
                                                         ------------------------------------------------
NET PROFIT/LOSS                                                 135,868      $(8,390,527)  $(4,617,101)
                                                         ================================================
ALLOCATION OF NET PROFIT/(LOSS) (Note 1)
General Partner                                                  $1,359         $(83,905)     $(46,171)
Limited Partners                                               $134,509      $(8,306,622)  $(4,570,930)
NET PROFIT/(LOSS) PER LIMITED
PARTNERSHIP UNIT                                                  $2.36         $(145.90)      $(80.28)
                                                         ================================================
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS
OUTSTANDING                                                      56,935           56,935        56,935
                                                         ================================================
</TABLE>


                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                For the years ended December 31
                                                                1998             1997            1996
                                                                ----             ----            ----
<S>                                                            <C>           <C>           <C>         
NET PROFIT/LOSS:                                               $135,868      $(8,390,527)  $(4,617,101)
Foreign currency translation adjustments                        147,877       (1,030,616)    2,436,338
                                                         ================================================
COMPREHENSIVE INCOME                                           $283,745      $(9,421,143)  $(2,180,763)
                                                         ================================================
</TABLE>

                             The accompanying notes
        are an integral part of these consolidated financial statements.

<PAGE>

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
                             (A Limited Partnership)

             CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)

                                           For the years ended December 31,
                                        1998             1997            1996
                                        ----             ----            ----
GENERAL PARTNER:
Balance, beginning of year          $  (336,517)       $(252,612)  $  (206,441)
Net profit/(loss) for year                1,359          (83,905)      (46,171)
                              -------------------------------------------------
Balance, end of year                $  (335,158)       $(336,517)  $  (252,612)
                              =================================================

LIMITED PARTNERS:
Balance, beginning of year          $15,685,077      $23,991,699   $28,562,629
Net profit/(loss) for year          $   134,509       (8,306,622)   (4,570,930)
                              -------------------------------------------------
Balance, end of year                $15,819,586      $15,685,077   $23,991,699
                              =================================================

Translation adjustment                1,736,939        1,589,062     2,619,678

Total partners' capital             $17,221,368      $16,937,622   $26,358,765
                              =================================================

                             The accompanying notes
        are an integral part of these consolidated financial statements.

<PAGE>

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
                             (A Limited Partnership)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                For the years ended December 31,
                                                             1998          1997             1996
                                                             ----          ----             ----
<S>                                                     <C>             <C>             <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit/(loss)
                                                        $  123,570     $(8,390,527)    $(4,617,101)
Adjustments to reconcile net profit/loss to net
cash generated by operating activities
Minority interests
Depreciation and amortization                              249,713      (3,975,339)     (2,100,658)
Write down of fixed assets                               4,119,297       6,176,710       5,129,620
                                                                --       6,562,400              --
Change in operating assets and liabilities
Decrease/(increase) in other receivables
Decrease/(increase) in prepaid expenses and                     --       4,813,885      (1,124,204)
other assets                                               119,341         285,150         178,287
Increase in accounts payable to related parties
Decrease in trade accounts payable and accrued             671,961       8,482,550       7,134,099
liabilities
                                                            47,910      (5,294,541)       (846,131)
                                                  ---------------------------------------------------
Net cash generated by operating activities               5,379,704       8,660,288       3,753,912
                                                  ---------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction payments for cable
television/telephony system                             (4,798,137)    (11,259,882)     (5,538,433)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loans
Overdraft movement                                              --       2,624,960       3,289,440
Repayments of shareholder loans                                 --        (689,426)        658,245
Increase in accounts payable to affiliates                      --              --              --
Repayment of property loan                                      --              --              --
Principal payments under capital leases                         --              --              --
                                                          (894,989)     (1,012,870)       (831,290)
                                                  ---------------------------------------------------
Net cash provided by (used in) financing
activities                                                (894,989)        922,664       3,116,395
                                                  ---------------------------------------------------

Effect of exchange rate changes on cash                      3,283         (89,666)        192,377
Net (Decrease)/Increase in cash and cash
equivalents                                               (361,332)     (1,766,596)      1,524,251
Cash and cash equivalents, beginning of  year
                                                           434,386       2,200,982         676,731

Cash and cash equivalents, end of year                      76,337         434,386       2,200,982
                                                  ===================================================

SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid
                                                        $3,091,883      $3,060,608      $2,492,396
                                                  ===================================================
</TABLE>

                             The accompanying notes
        are an integral part of these consolidated financial statements.

<PAGE>

                  SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
                             (A Limited Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  ORGANIZATION AND PARTNERS' INTERESTS

     Formation and Business

     South Hertfordshire United Kingdom Fund, Ltd. (the "Partnership"), a
Colorado limited partnership, was formed on December 23, 1991, pursuant to a
public offering. The Partnership was formed to acquire, construct, develop, own
and operate cable television/telephony systems in the United Kingdom. Fawnspring
Limited, a UK corporation, is the general partner of the Partnership (the
"General Partner").

     The General Partner has complete and unrestricted authority to manage the
business, properties and activities of the Partnership. This includes the
ability to operate and maintain cable television and telephony properties, and
to purchase or lease property at the expense of the Partnership, the ability to
make on behalf of the Partnership all payments required of the Partnership for
all direct and indirect costs incurred in the conduct of its business, the
ability to borrow money in the name of the Partnership, and the obligation to
maintain accurate financial records and to prepare and file the reports required
under applicable regulations.

     Contributed Capital

     The capitalization of the Partnership is set forth in the accompanying
Consolidated Statements of Partners' Capital (Deficit). No existing partner is
obligated to make any additional contributions to partnership capital.

     The General Partner purchased its interest in the Partnership by
contributing $1,000 to partnership capital.

     Profits, losses and distributions of the Partnership are allocated 99
percent to the limited partners and 1 percent to the General Partner until the
limited partners have received distributions equal to 100 percent of their
capital contributions plus an annual return thereon of 12 percent, cumulative
and non-compounded. Thereafter, profits and distributions will generally be
allocated 75 percent to the limited partners and 25 percent to the General
Partner. Interest income earned prior to the formation of the Partnership was
allocated 100 percent to the limited partners.

     Investment in Subsidiary

     Bell Cablemedia (South Hertfordshire) Limited is a United Kingdom
corporation originally owned by Jones Global Funds, Inc. (the previous general
partner) and Jones Cable Group, Ltd., an affiliate of the previous general
partner. Bell Cablemedia South Herts is the holder of a franchise to own and
operate a cable television/telephony system in the South Hertfordshire franchise
area, located adjacent to the north-west perimeter of Greater London, England
(the "South Herts System").

     Bell Cablemedia South Herts is owned 66.7 percent by the Partnership and
33.3 percent by Bell Cablemedia plc ("BCM"), which itself is a subsidiary of C&W
Comms. The general partner of the Partnership is Fawnspri-ng Limited, a wholly
owned subsidiary of BCM. The General Partner provides consulting services to the
Partnership and may delegate some or all of the consulting services to BCM or to
other affiliates.

<PAGE>

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Accounting Records

     The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles
in the United States.

     Principles of Consolidation

     Bell Cablemedia South Herts has been consolidated with the Partnership's
operations in the accompanying consolidated financial statements. All
intercompany balances and transactions have been eliminated.

     Cash and Cash Equivalents

     Cash and cash equivalents include cash on hand, amounts held in banks and
highly liquid investments purchased with an original maturity of three months or
less.

     Currency Exchange Rates

     Foreign currency transactions arising from normal trading activities are
recorded in local currency at current exchange rates. Monetary assets and
liabilities denominated in foreign currencies at the year end are translated at
the year end exchange rate. Foreign currency gains and losses are credited or
charged to the profit and loss account as they arise. The statements of
operations of overseas subsidiary undertakings are translated into United States
dollars at average exchange rates and the year end net investments in these
companies are translated at year end exchange rates. Exchange differences
arising from retranslation at year end exchange rates of the opening net
investments and results for the year are charged or credited directly to
cumulative translation adjustment in partners' capital.

     Limited Partner investments in Bell Cablemedia South Herts were made at an
average exchange rate of $1.62 per (pound)1. The average exchange rates used in
the preparation of this report for the year ended December 31, 1998 and the year
ended December 31, 1997 were both $1.66 per (pound)1.

     Property, Plant and Equipment

     At December 31, 1998 and 1997, the investment in the cable television and
telecommunications network was comprised of $73,825,090 and $70,989,325 of cable
network and other electronic equipment, $2,288,285 and $2,308,713 of freehold
buildings, and $1,135,927 and $2,626,904 of office equipment and other fixed
assets respectively.

     Depreciation is provided on property, plant and equipment at rates that are
intended to write off the cost of the assets over their estimated useful lives.
Effect is given to commercial and technical obsolescence. Depreciation is
provided on a straight line basis over 10-40 years for the cable network and
other electronic equipment, 40 years for buildings and 3-10 years for office and
other equipment. Depreciation of the capitalized construction costs begins from
the time of receiving first revenues from subscribers. During the prematurity
period a portion of the depreciation is recognized, based on the projected
construction costs at the end of the prematurity period. The portions
depreciated are increased as progress is made toward the prematurity period,
after which full depreciation continues. Bell Cablemedia South Herts has
completed its prematurity period.

     In the light of the losses arising from continuing operations arising
during 1997, an impairment review was undertaken to assess whether the carrying
value of tangible fixed assets was in excess of their fair value. In accordance
with SFAS 121 the company assessed the expected level of future cash flows. This
resulted in a write down of fixed assets of $6,562,400 for the year ended
December 31, 1997 principally relating to assets which will have no value to the
Company upon the planned introduction of digital cable television.

     Revenue Recognition

     Subscriber prepayments are initially deferred and recognized rateably over
the service period.

     Current assets and liabilities

     Since the final quarter of 1997, the current assets and liabilities of Bell
Cablemedia South Herts have been managed by C&W Comms. The net balance payable
by Bell Cablemedia South Herts to C&W Comms is disclosed under Accounts payable
to affiliates and related parties.

     Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles in the United States 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 these estimates.

(3)  TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATED ENTITIES

     Consulting and Management Fees

     An affiliate of the General Partner is entitled to be paid a consulting fee
by Bell Cablemedia South Herts. During the construction phases of the South
Herts System, this consulting fee was 2 percent of construction costs. Since
completion of construction of each portion of the system, the consulting fee for
the completed portion has been 5 percent of the gross revenues, excluding
revenues from the sale of cable television/telephony systems. The consulting fee
is calculated and payable monthly. Consulting fees paid or payable by Bell
Cablemedia South Herts for the years ended December 31, 1998, 1997 and 1996 were
$1,490,780, $1,310,839 and $1,370,755 respectively. These amounts were expensed
on the Consolidated Statements of Operations each year.

     Distribution Ratios and Reimbursement

     Any Partnership distributions made from cash flow (defined as cash receipts
derived from routine operations, less debt principal and interest payments and
cash expenses) are allocated 99 percent to the limited partners and 1 percent to
the General Partner. Any distributions other than interest income on limited
partner subscriptions earned prior to the acquisition of the Partnership's first
cable television system or from cash flow, such as from the sale or refinancing
of a system or upon dissolution of the Partnership, will be made as follows: 99
percent to the limited partners and 1 percent to the General Partner until any
negative balances in the limited partners' capital accounts are reduced to zero;
100 percent to the General Partner until any negative balance in its capital
account is reduced to zero; 99 percent to the limited partners and 1 percent to
the General Partner until the balance in the limited partners' capital accounts
is equal to their adjusted capital contribution plus a 12 percent return; 100
percent to the General Partner until the balance in its capital account is equal
to its adjusted capital contribution, and any remaining income or gain shall be
allocated 75 percent to the limited partners and 25 percent to the General
Partner.

     The General Partner and its affiliates are entitled to reimbursement from
Bell Cablemedia South Herts for direct and indirect expenses allocable to the
operation of the South Herts System, and from the Partnership for direct and
indirect expenses allocable to the operation of the Partnership which include
but are not limited to, rent, supplies, telephone, travel, copying charges and
salaries of any full or part-time employees. The General Partner believes that
the methodology used in allocating these expenses is fair and reasonable. During
the years ended December 31, 1998, 1997 and 1996, reimbursement made by Bell
Cablemedia South Herts and the Partnership to the General Partner or its
affiliates for any allocable direct and indirect expenses totalled $6,682,595,
$4,747,962 and $2,572,141 respectively.

     The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by, the Partnership, although
they are not required to do so. The Partnership is charged interest on such
advances and deferred amounts at a rate equal to the General Partner's or
certain affiliates' weighted average cost of all debt financing from
unaffiliated entities. For the years ended December 31, 1998, 1997 and 1996,
interest on deferred fees of $658,325, $449,341 and $136,183 respectively was
charged by an affiliate of the General Partner, and interest on advances of
$69,104, $51,294 and $15,676 respectively was charged by the General Partner.

(4)  FINANCING

     Bell Cablemedia South Herts

     On April 18, 1995, Bell Cablemedia South Herts entered into an agreement
with two major banks to provide a (pound)25,000,000 revolving and term loan
credit facility agreement maturing on December 31, 2003 (the "South Herts Credit
Agreement"). On October 18, 1996, (pound)5,000,000 was cancelled and the
facility reduced to (pound)20,000,000.

     The credit facility was structured as a revolving facility through December
31, 1997, at which time the facility was converted into a term loan. The
facility is divided into two tranches, denoted Facility A and Facility B, and
the aggregate amount drawn down under both tranches may not exceed
(pound)20,000,000. Amounts drawn down under Facility A bear interest at sterling
LIBOR plus a margin of 2.5%. The availability of Facility B of (pound)20,000,000
is subject to certain conditions which have been satisfied and amounts drawn
down under Facility B bear interest at sterling LIBOR plus a margin ranging from
0.75% to 2.0% depending on the bank debt ratio (the ratio of bank debt to
annualized operating cash flow) of Bell Cablemedia South Herts. At December 31,
1998, sterling LIBOR was 6.34%.

     The South Herts Credit Agreement contains various covenants including
financial covenants such as a cumulative revenue test, bank debt ratio, interest
cover ratio, a fixed charges ratio and a pro-forma debt service ratio and other
covenants such as restrictions on disposals and on the creation of indebtedness
and encumbrances. The South Herts Credit Agreement also includes a restriction
on the payment of dividends which provides that dividends or distributions in
respect of its issued share capital and payments in respect of certain
intercompany loans may not be made prior to December 31, 1997. Such payments
will be permitted thereafter only if the bank debt ratio for the previous two
accounting quarters is less than 5.5:1 and no event of default or potential
event of default has occurred and is continuing at such time and the payment of
such dividend or distribution will not give rise to an event of default or
potential default.

     The South Herts Credit Agreement contains certain events of default
including non-payment of amounts due under the South Herts Credit Agreement,
breaches of representations and covenants (including financial ratios) contained
in the South Herts Credit Agreement, cross-default to certain other indebtedness
of Bell Cablemedia South Herts, certain bankruptcy and insolvency events and
certain changes of ownership.

     The obligations of Bell Cablemedia South Herts under the South Herts Credit
Agreement are secured by first fixed and floating charges over all of the assets
of Bell Cablemedia South Herts. In addition, there is a pledge of all of the
share capital of Bell Cablemedia South Herts given by BCM and the Partnership as
additional security for the facility.

     The General Partner believes that the South Herts Credit Agreement will be
sufficient to fund the completion of construction and operation of the South
Herts system. The amount outstanding under the facility at December 31, 1998 was
(pound)19,300,000 and this amount was all drawn under Facility B. Repayment of
the credit facility falls due as follows:

                                                $

         1999                           2,242,660
         2000                           5,766,840
         2001                           8,009,500
         2002                           8,009,500
         2003                           8,009,500
                                       ----------
                                       32,038,000
                                       ----------

(5)  INCOME TAXES

     Income taxes have not been recorded in the accompanying consolidated
financial statements because they accrue directly to the partners. The
Partnership's tax returns, the qualification of the Partnership as such for tax
purposes, and the amount of distributable Partnership income or loss are subject
to examination by Federal and state taxing authorities. If such examinations
result in changes with respect to the Partnership's qualification as such, or in
changes with respect to the Partnership's recorded income or loss, the tax
liability of the general and limited partners would likely be changed
accordingly.

     United Kingdom profits (comprising income and gains) of a corporation owned
by the Partnership will be subject to United Kingdom corporation tax. However
corporations are able to carry forward losses from operations to be offset
against subsequent profits for the same operations for an indefinite number of
years. Bell Cablemedia South Herts has approximately (pound)10.4 million of tax
net operating losses carried forward at December 31, 1998 ((pound)10.4 million
at December 31, 1997).

(6)  OBLIGATIONS UNDER CAPITAL LEASES

                                                   1998              1997
Minimum lease payments due:                           $                 $
Less than one year                              318,105           979,049
1-2 years                                        40,347           315,402
2-3 years                                            --            40,174
3-4 years                                            --                --
                                                -------         ---------
                                                358,452         1,334,625
                                                =======         =========

Less finance charges allocated
  to future periods                             (33,190)         (123,611)
                                                -------         ---------
                                                325,262         1,211,014
                                                =======         =========
Due within one year                             288,753           888,516
Due after more than one year                     36,509           322,498
                                                -------         ---------
                                                325,262         1,211,014
                                                =======         =========

(7)  IMPACT OF NEW PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Operations. The business of the Fund and its subsidiaries
is managed as a single segment, and the Statement therefore has no material
impact on required disclosure.

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. This is not material to the Fund or its subsidiaries.

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

None.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The Partnership itself has no officers or directors. Certain information
concerning directors and executive officers of the General Partner is set forth
below.

     Name                          Age       Positions with the General Partner
     ----                          ---       ----------------------------------

     Graham Wallace                 50       Director

     Robert Drolet                  42       Director and Company Secretary

Graham Wallace was appointed Chief Executive of Cable & Wireless plc in February
1999. Prior to that, he had served as Chief Executive of C&W Comms since
February 1997, and Chief Executive of the Restaurants and Services division of
Granada Group plc between 1995 and 1997. He joined the Granada Group in 1986 as
Head of Finance and Planning and in 1989 was appointed to the Board of Granada
Group plc as Finance Director. During this time he was involved in setting up
British Satellite Broadcasting and was closely involved in the merger of British
Satellite Broadcasting and Sky in 1990.

Mr. Drolet has been a Director of the General Partner since January 1997. On
March 19, 1997 he was appointed as Legal Director and Company Secretary of C&W
Comms. He has been General Counsel and Company Secretary of BCM since July 1996.
He was General Counsel and Assistant Corporate Secretary of BCI from May 1995 to
July 1996, and from March 1993 to May 1995, Assistant General Counsel and
Assistant Corporate Secretary. Previously, Mr. Drolet was Vice President,
Corporate Affairs and Corporate Secretary of The Canam Manac Group Inc. from
January 1991 to March 1993.

ITEM 11.  EXECUTIVE COMPENSATION

     The Partnership has no employees; however, various personnel are required
to operate the South Herts System. Personnel are employed by C&W Comms and its
affiliates and, pursuant to the terms of the Partnership's limited partnership
agreement, the cost of such employment is charged by C&W Comms and its
affiliates to the Partnership as a direct reimbursement item. See Item 13.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     No person or entity owns more than 5 percent of the limited partnership
interests in the Partnership.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The General Partner and its affiliates engage in certain transactions with
the Partnership as contemplated by the limited partnership agreement of the
Partnership and as disclosed in the prospectuses for the Partnership's public
offerings. The General Partner believes that the terms of such transactions,
which are set forth in the Partnership's limited partnership agreement, are
generally as favorable as could be obtained by the Partnership from unaffiliated
parties. This determination has been made by the General Partner in good faith,
but none of the terms were or will be negotiated at arm's-length and there can
be no assurance that the terms of such transactions have been or will be as
favorable as those that could have been obtained by the Partnership from
unaffiliated parties.

     An affiliate of the General Partner is entitled to be paid a consulting fee
by Bell Cablemedia South Herts. During the construction phases of the cable
television/telephony system, this consulting fee was 2 percent of construction
costs. After completion of construction of each portion of the system, the
consulting fee for the completed portion is 5 percent of gross revenues,
excluding revenues from the sale of cable television/telephony systems.
Consulting fees paid or payable by the Partnership for the year ended December
31, 1998 totalled $1,490,780.

     The General Partner and its affiliates are entitled to reimbursement from
Bell Cablemedia South Herts for direct and indirect expenses allocable to the
operation of the South Herts System and from the Partnership for direct and
indirect expenses allocable to the operation of the Partnership, which include
but are not limited to rent, supplies, telephone, travel, copying charges and
salaries of any full or part time employees.

     The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by, the Partnership, although
they are not required to do so. The Partnership will be charged interest on such
advances and deferred amounts. Interest charges incurred by the Partnership for
the year ended December 31, 1998 amounted to $69,104.

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

     (a)  The following documents are filed herewith as part of this report:

     1. See index to financial statements at page 31 for the list of financial
     statements and exhibits thereto filed as part of this report.

     2. The following exhibits are filed herewith:

     27.1 Financial Data Schedule.

     (b)  Reports on Form 8-K

     The Partnership has not filed a report on Form 8-K during the last fiscal
quarter of the period for which this Form 10-K is filed.

<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.

                                        SOUTH HERTFORDSHIRE UNITED
                                        KINGDOM FUND, LTD.
                                        a Colorado limited partnership

                                        By: Fawnspring Limited,
                                        its General Partner



                                        By:  /s/ Robert Drolet
                                           ---------------------------
                                        Robert Drolet
                                        Director of Fawnspring Limited
                                        Date: 24 March 1999

<PAGE>

EXHIBIT INDEX
-------------

Number                   Description
------                   -----------

27                       Financial Data Schedule.