Alltel Adds One Million Gross Wireless Customers in the Third Quarter

LITTLE ROCK, Ark.--(BUSINESS WIRE)--Alltel achieved strong customer growth in the third quarter, adding more than 1 million gross customers for the fourth consecutive quarter. Net customer additions increased 63 percent year-over-year.

“The Alltel team delivered another terrific quarter, and I continue to admire their ability to execute in a fiercely competitive marketplace,” said President and Chief Executive Officer Scott Ford. “Once again we had strong customer additions and record consolidated EBITDA.”

Alltel announced plans on June 5 to be acquired by Verizon Wireless. The deal is awaiting final regulatory approval and is expected to close before year’s end.

Among Alltel’s highlights for the third quarter:

• Revenues were $2.5 billion, a 10 percent increase from the same period a year ago. The company reported a loss of $55.2 million, due primarily to significant increases in interest costs and depreciation and amortization expense following the completion of the company’s November 2007 merger with an affiliate of TPG Capital and GS Capital Partners.
• Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) was $929.8 million, a 13 percent increase from the same period a year ago.
• Alltel added more than 1 million gross customers through internal growth, a 28 percent increase from a year ago. Post-pay net additions were 255,299, up 20 percent year-over-year, and prepay net adds were 52,722. Reseller net adds were 27,131. Total net adds were 335,152.
• Post-pay churn was 1.33 percent, and total churn was 2.02 percent.
• Average revenue per wireless customers (ARPU) was $55.62. Data revenue per wireless customer was $8.99, up 42 percent year-over-year.

A table describing consolidated EBITDA and reconciling net income to consolidated EBITDA is included in the schedules accompanying this release.

Alltel operates America’s largest wireless network, which delivers voice and advanced data services nationwide to nearly 14 million customers. Headquartered in Little Rock, Ark., Alltel is a Forbes 500 company with annual revenues of nearly $9 billion.

Alltel claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events and results. Actual future events and results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Cellco Partnership and AirTouch Cellular (both doing business as Verizon Wireless); the inability to complete the merger due to the failure to satisfy conditions to the completion of the merger, including receipt of all regulatory approvals related to the merger; risks that the proposed transaction disrupts current plans and operations; adverse changes in economic conditions in the markets served by Alltel; the extent, timing, and overall effects of competition in the communications business; material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; failure of our suppliers, contractors and third-party retailers to provide the agreed upon services; changes in communications technology; the effects of a high rate of customer churn; adverse changes in the terms and conditions of the wireless roaming agreements of Alltel; our withdrawal from the bidding for licenses in the 700 MHz spectrum auction; potential increased costs due to perceived health risks from radio frequency emissions; the effects of declines in operating performance, including impairment of certain assets; risks relating to the renewal and potential revocation of our wireless licenses; potential higher than anticipated inter-carrier costs; potential increased credit risk from first-time wireless customers; the potential for adverse changes in the ratings given to Alltel’s debt securities by nationally accredited ratings organizations; risks relating to our substantially increased indebtedness following the private equity merger and related transactions, including a potential inability to generate sufficient cash to service our debt obligations, and potential restrictions on the Company’s operations contained in its debt agreements; potential conflicts of interest and other risks relating to the private equity sponsors having control of the Company; loss of the Company’s key management and other personnel or inability to attract such management and other personnel; the effects of litigation, including relating to telecommunications technology patents and other intellectual property; the effects of federal and state legislation, rules, and regulations governing the communications industry; and potential unforeseen failure of the Company’s technical infrastructure and system. In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.

ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS AND SUPPLEMENTAL OPERATING INFORMATION (UNAUDITED)
(Dollars in millions, except per customer amounts)
	THREE MONTHS ENDED
									Increase
	September 30,				September 30,				(Decrease)
	2008				2007				Amount				%
Service revenues	$	2,279.9			$	2,071.5			$	208.4			10
Total revenues and sales	$	2,507.5			$	2,281.5			$	226.0			10
Operating income	$	353.1			$	434.0			$	(80.9	)		(19	)
Income (loss) from continuing operations
	$	(55.2	)		$	278.7			$	(333.9	)		(120	)
Net income (loss)	$	(55.2	)		$	282.6			$	(337.8	)		(120	)
Consolidated EBITDA	$	929.8			$	820.2			$	109.6			13
Capital expenditures(A)	$	271.8			$	249.6			$	22.2			9
Service revenue operating margin(B)
		15.5%				20.9%				(5.4%	)		(26	)
Operating margin(C)		14.1%				19.0%				(4.9%	)		(26	)
Service revenue consolidated EBITDA margin(D)
		40.8%				39.6%				1.2%			3
Controlled POPs		79,383,821				79,575,793				(191,972	)		-
Customers		13,824,973				12,447,085				1,377,888			11
Penetration rate		17.4%				15.6%				1.8%			12
Average customers		13,663,065				12,338,361				1,324,704			11
Average retail customers (excludes reseller customers)
		12,846,823				11,576,094				1,270,729			11
Gross customer additions:
Postpay		694,265				644,055				50,210			8
Prepay		367,478				260,746				106,732			41
Reseller		99,775				-				99,775			-
Total internal		1,161,518				904,801				256,717			28
Net customer additions (losses):
Postpay		255,299				212,791				42,508			20
Prepay		52,722				(7,772	)			60,494			778
Reseller		27,131				-				27,131			-
Total internal		335,152				205,019				130,133			63
Cash costs:
Cost of services	$	715.9			$	682.2			$	33.7			5
Cost of products sold		343.4				300.0				43.4			14
Selling, general, administrative and other
		557.6				496.1				61.5			12
Less product sales		227.6				210.0				17.6			8
Total	$	1,389.3			$	1,268.3			$	121.0			10
Cash costs per unit per month(E)
		$33.89				$34.26				$(.37	)		(1	)
Revenues:
Service revenues	$	2,279.9			$	2,071.5			$	208.4			10
Less wholesale roaming revenues
		204.0				196.5				7.5			4
Less wholesale transport revenues
		32.9				38.1				(5.2	)		(14	)
Less reseller revenues		4.8				8.1				(3.3	)		(41	)
Retail revenues	$	2,038.2			$	1,828.8			$	209.4			11
Average revenue per customer per month(F)
	$55.62				$55.96				$(.34		)		(1	)
Retail revenue per customer per month(G)
	$52.88				$52.66				$.22				-
Retail minutes of use per customer per month(H)
		804				746				58			8
Postpay churn excluding resellers
		1.33%				1.31%				.02%			2
Total churn		2.02%				1.90%				.12%			6
Note: Since January 1, 2002, the number of reseller customers included in the customer base has not changed and Alltel has not included the effects of reseller activity in its reported gross and net customer additions for any period subsequent to 2001. Revenues earned from resellers had been classified as retail revenues. Effective January 1, 2008, Alltel changed its classification of reseller activity from retail to wholesale operations and prospectively has included reseller customers in its reported gross and net customer additions, consistent with industry practice. Prior period retail revenue per unit statistics were adjusted to reflect the reclassification of the reseller operations. Prior period average and total customer counts were not adjusted for reseller customers because the effects were immaterial.
(A) Includes capitalized software development costs.
(B) Service revenue operating margin is calculated by dividing operating income by service revenues.
(C) Operating margin is calculated by dividing operating income by total revenues and sales.
(D) Service revenue consolidated EBITDA margin is calculated by dividing consolidated EBITDA by service revenues.
(E) Cash costs per unit per month is calculated by dividing the sum of the reported cost of services, cost of products sold, selling, general, administrative and other expenses less product sales by average customers for the period.
(F) Average revenue per customer per month is calculated by dividing service revenues by average customers for the period.
(G) Retail revenue per customer per month is calculated by dividing retail revenues (service revenues less wholesale and reseller revenues) by average retail customers for the period.
(H) Retail minutes of use per customer per month represents the average monthly minutes that Alltel's customers use on both the Company's network and while roaming on other carriers' networks.
Consolidated EBITDA has been reconciled to net income (loss) on page 5.

ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS AND SUPPLEMENTAL OPERATING INFORMATION (UNAUDITED)
(Dollars in millions, except per customer amounts)
	NINE MONTHS ENDED
									Increase
	September 30,				September 30,				(Decrease)
	2008				2007				Amount				%
Service revenues	$	6,543.7			$	5,923.2			$	620.5			10
Total revenues and sales	$	7,216.5			$	6,535.1			$	681.4			10
Operating income	$	965.1			$	1,166.8			$	(201.7	)		(17	)
Income (loss) from continuing operations
	$	(249.6	)		$	707.5			$	(957.1	)		(135	)
Net income (loss)	$	(250.0	)		$	708.4			$	(958.4	)		(135	)
Consolidated EBITDA	$	2,675.4			$	2,323.3			$	352.1			15
Capital expenditures(A)	$	653.4			$	744.6			$	(91.2	)		(12	)
Service revenue operating margin(B)
		14.7%				19.7%				(5.0%	)		(25	)
Operating margin(C)		13.4%				17.9%				(4.5%	)		(25	)
Service revenue consolidated EBITDA margin(D)
		40.9%