GI Seeks IPO for NextLevel

General Instrument Corp. plans to raise $125 million from
an initial public offering of shares in the NextLevel Communications LP
broadband-telephony-equipment partnership.

GI indicated some time ago that it planned to do a
NextLevel IPO this year, and last week's registration comes during a hot broadband-gear
market being driven by the explosive growth of the Internet and by accelerating
telephone-company demand for digital-subscriber-line technology.

Platforms such as NextLevel's very high-speed DSL (VDSL)
and asymmetrical DSL (ADSL) infrastructure enable telcos to offer high-speed data, voice
and video over existing phone lines in competition with cable.

Overall U.S. DSL installations tripled during the first
half of this year, compared with cable-modem growth of about 60 percent, according to
estimates by TeleChoice Inc.

NextLevel's revenue jumped to $18.2 million in the first
half of this year from $6.6 million a year earlier. Full-year revenue totaled $43.8
million in 1998, up from $8.3 million in 1997.

Raymond James & Associates Inc. analyst Todd Koffman
has estimated that the company could reach a revenue run-rate of $100 million to $200
million in the coming year.

NextLevel posted a pro forma net loss of $35.3 million in
the first half, down from $42.1 million a year earlier. Losses rose to $75.8 million in
1998 from $66.4 million in 1997 as the company expanded its business activities.

The company's flagship "NLevel3 Switched Digital
Access" system incorporates digital-loop carrier and fiber-to-the-curb
infrastructure, plus customer-premises equipment.

NextLevel has major contracts with U S West and Bell
Atlantic Corp., accounting for 85 percent of its revenue, but it has been broadening its
base by lining up small, independent telcos as customers for NLevel3. The system would be
used to provide bundled Internet access, video and voice services in secondary markets.

NextLevel said Bell Canada is also testing the NLevel3
architecture, with a trial scheduled later this year of integrated bundled voice, video
and data services over existing plant.

GI created NextLevel, based in Rohnert Park, Calif., five
years ago to pursue the advanced telephony business.

Last year, GI placed the division into a limited
partnership controlled by technology-investment firm Spencer Trask & Co. as part of a
restructuring under which GI changed its own name back from NextLevel Systems Inc. and
refocused on its core cable and satellite TV businesses.

GI held an 89 percent equity interest in the partnership,
and it said that after the IPO, it will own 65 percent to 70 percent of the new NextLevel
Communications Inc.

Lead underwriters for the IPO are Merrill Lynch & Co.,
Credit Suisse First Boston, Lehman Bros. Inc. and Warburg Dillon Read LLC. MCN