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SEC Filings

AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
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  Novagate Communications ISP. In March 1999, we completed our acquisition of
the assets of Novagate Communications for approximately $2.9 million. As of
March 31, 1999, Novagate Communications served approximately 5,000 residential
Internet customers in the Grand Rapids area. Novagate Communications currently
provides Internet access through a standard dial-up phone modem connection. We
plan to upgrade these customers to cable modem based Interest access, which
will provide the same service at much higher speeds.
 The Michigan Cluster--Operations
   The cable systems located in the Michigan cluster serve communities situated
in the western, middle and southern portions of Michigan. The following chart
sets forth certain information relating to the cable systems located in the
Michigan cluster as of March 31, 1999, on a pro forma basis, including all
completed and pending acquisitions except the Galaxy American Communications

                                    Western Michigan      Mid Michigan Southern Michigan
                               -------------------------- ------------ -----------------
                               Grand Rapids Traverse City    Lapeer         Monroe
                               ------------ ------------- ------------ -----------------
      <S>                      <C>          <C>           <C>          <C>
      Homes passed............   128,454       137,914       27,285         69,785
      Basic subscribers.......    77,929        81,498       16,737         40,917
      Basic penetration.......      60.7%         59.1%        61.3%          58.6%
      Premium units...........    18,405        16,982        5,107         15,419
      Premium penetration.....      23.6%         20.8%        30.5%          37.7%
      Average monthly revenue
       per basic subscriber...   $ 32.89       $ 33.64       $35.76         $34.00

   Approximately 80% of the Michigan cluster's subscriber base is located in
and around Grand Rapids and Traverse City. Our Grand Rapids cluster, located
near Lake Michigan in Kent and Ottawa Counties, is an affluent residential
community and popular recreational area. The economy of Grand Rapids is
supported by the presence of many large employers, including pharmaceutical
companies, automotive parts manufacturing companies and large office furniture
manufacturers. According to Market Statistics, 1997, the Grand Rapids area is
currently the fastest growing region in Michigan. Traverse City is located at
the southern end of Grand Traverse Bay in northwest Michigan, approximately 140
miles north of Grand Rapids. Traverse City is also an affluent residential
community and popular recreational area. Recently, Traverse City's tourism
industry has fueled strong commercial and residential real estate development.
   The markets and towns located within the Michigan cluster are, for the most
part, characterized by high homes passed and subscriber growth rates. The
compound annual growth in homes passed and basic subscribers in the Michigan
cluster was 3.2% and 4.6%, respectively, from 1993 to 1997, as compared to the
national averages of 1.0% and 2.9%, respectively, according to Paul Kagan Inc.
The majority of this growth resulted from planned extensions of cable plant
into areas of new home construction. According to Market Statistics, 1997, over
the next five years, the number of households in the Michigan cluster is
forecasted to grow at a rate equal to 175% of the national average and 200% of
the Michigan average.
   Giving effect to our merger with Cable Michigan and our other completed and
pending acquisitions, as of March 31, 1999, approximately 42% of the Michigan
cluster's plant capacity was 330 MHz (40 analog channels) or less. Over the
next five years, we expect to invest approximately $43 million to complete its
capital plan for the Michigan cluster. Cable Michigan initiated a plan in 1996
under which approximately $31.6 million had been invested as of March 31, 1999.
Our plan continues Cable Michigan's plan and anticipates the deployment of a
fiber optic network that will span approximately 75% of the Michigan cluster's
customer base. After completion of the plant upgrade projects, approximately
98% of the Michigan cluster's cable systems will have a bandwidth capacity of
at least 450 MHz (60+ analog channels) and approximately 90% of the Michigan
cluster's cable systems will have a bandwidth capacity of at least 550
MHz (78+ analog channels).