The company, partly owned by media titan AOL Time Warner Inc. (NYSE:AOL - News), said its net loss swelled to $48.4 million, or 42 cents a share, compared with a loss of $24.3 million, or 21 cents a share, a year earlier.

Wall Street analysts had expected the company's loss to range from 26 cents a share to 39 cents a share, with a mean forecast of a loss of 35 cents a share, according to research firm Thomson First Call.

Time Warner Telecom said its wider net loss reflected higher depreciation and amortization expenses related to its market expansion in 2001 and a reduction in an income tax benefit.

Revenues fell 3 percent to $167.2 million. The revenue decline reflects a 25 percent drop in the connection fees paid by other carriers and lower sales of switched and dedicated telephone services. Data and Internet sales, however, jumped 51 percent to $23.4 million.

Due to the weak economy, some of Time Warner Telecom's financially troubled customers filed for bankruptcy or disconnected service. As a result it lost about $3.3 million in monthly recurring revenue, which was down from the $4.0 million in monthly recurring revenues lost in the second quarter.

Its third-quarter gross margin rose to 58 percent from 55 percent a year ago before due to strong cost controls, the company said. EBITDA, which it defined as operating income before depreciation and amortization expense, rose 8 percent to $40.1 million.

Capital expenditures for the quarter were $25.1 million, as compared with $94.4 million for the third quarter of 2001. It expects capital expenditures to be less than $150 million for the full year 2002.

On Monday, Time Warner Telecom reached an agreement to amended the terms of its bank credit line to relax some financial requirements.