SPRINT CORP, PRER14C, 1996-01-05

SPRINT CORP
PRER14C, 1996-01-05
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

Previous: US BANCORP /OR/, 10-C, 1996-01-05

Next: UPTOWNER INNS INC, 10-Q, 1996-01-05

<PAGE>

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934

Check the appropriate box:

[X] Preliminary Information Statement

[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14c-
5(d)(2))

[_] Definitive Information Statement

Sprint Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

[_] $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14c-5(g).

[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.

(1) Title of each class of securities to which transaction applies:

Common Stock of Sprint Cellular Company
-------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

Currently 10 shares of Common Stock of Sprint Cellular
-------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

$1,633,000
-------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

$1,633,000
-------------------------------------------------------------------------

(5) Total fee paid:

$563.10
-------------------------------------------------------------------------

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

-------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

-------------------------------------------------------------------------

(3) Filing Party:

-------------------------------------------------------------------------

(4) Date Filed:

-------------------------------------------------------------------------

Notes:
<PAGE>

LOGO

, 1996

Dear Stockholder:

This Information Statement contains important information regarding Sprint
Cellular Company (the "Company") and how Sprint Corporation ("Sprint") will
divest the Company through a pro rata tax-free distribution of all of the
shares of Common Stock of the Company to the holders of Sprint Common Stock
(the "Spin-off"). If you are a holder of Sprint Common Stock on , 1996,
the record date for the Spin-off, you will receive one share of the Company
Common Stock for every three shares of Sprint Common Stock you own on that
date. We expect that the Company's Distribution Agent (as defined) will begin
mailing stock certificates to such record holders of Sprint Common Stock on
, 1996.

In connection with the Spin-off, the Company will sell pursuant to a public
offering (the "Offering") $800 million of % Senior Notes due 2003 and %
Senior Notes due 2006 (the "Notes") and incur $ million of initial
borrowings under a Credit Facility (as defined below) to repay approximately
$1.4 billion of intercompany debt owed to Sprint and its subsidiaries by the
Company. On the closing of the Spin-off, Sprint and its subsidiaries will
contribute to the equity capital of the Company (the "Capital Contribution")
any debt owed to them by the Company in excess of the intercompany debt being
repaid. The consummation of the Spin-off (which will include the repayment of
such intercompany debt and the Capital Contribution), the closing of the
Credit Facility and the closing of the Offering are each contingent upon the
other, will occur on the same date and be deemed to take place simultaneously,
although the actual distribution of all shares of Company Common Stock to
effect the Spin-off will commence promptly following those closings.

This Information Statement also sets forth information about the Company,
its organization, business and properties, and contains financial statements
and other financial information. Due to the importance of the information
contained in this document, you are urged to retain it for future reference.

This Information Statement is being sent as information to stockholders of
record of Sprint as of the date hereof. Stockholders of record on the record
date for the Spin-off will be entitled automatically to participate in the
Spin-off and are not required to do anything to become entitled to so
participate. You do not need to turn in your Sprint stock certificate. No
stockholder approval of the distribution is required or sought. We are not
asking you for a proxy and you are requested not to send us a proxy.

Sincerely,

W. T. Esrey, Chairman and Chief
Executive Officer
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................................................... 1
THE SPIN-OFF.............................................................. 5
Background and Reasons for the Spin-off................................. 5
Manner of Effecting the Spin-off........................................ 6
Results of the Spin-off................................................. 7
Relationship of Sprint and the Company after the Spin-off............... 7
The Distribution Agreement.............................................. 7
The Tax Sharing Agreement............................................... 9
The Tax Assurance Agreement............................................. 9
Operational Relationship................................................ 10
Federal Income Tax Aspects of the Spin-off.............................. 10
NYSE Listing............................................................ 11
Conditions; Termination................................................. 11
Accounting Treatment.................................................... 11
CERTAIN RISK FACTORS...................................................... 12
SELECTED CONSOLIDATED FINANCIAL DATA...................................... 19
SELECTED PROPORTIONATE OPERATING RESULTS.................................. 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................................................... 22
BUSINESS OF THE COMPANY................................................... 30
General................................................................. 30
Growth and Operating Characteristics of the United States Cellular
Industry............................................................... 30
Markets and Clusters.................................................... 32
Business Strategy....................................................... 35
Human Resource Development.............................................. 41
Cellular Telephone Technology........................................... 41
Competition............................................................. 43
Governmental Regulation................................................. 44
Employees............................................................... 46
Properties.............................................................. 47
Legal Proceedings....................................................... 47
Trademark and Related Matters........................................... 47
CAPITALIZATION............................................................ 48
FINANCING................................................................. 49
MANAGEMENT................................................................ 51
DESCRIPTION OF COMPANY CAPITAL STOCK...................................... 61
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK.............................. 64
ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS................................ 65
SHAREHOLDERS' RIGHTS PLAN................................................. 73
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS.... 74
PRICE RANGE OF SPRINT COMMON STOCK........................................ 74
STOCKHOLDER PROPOSALS AND 1997 ANNUAL MEETING............................. 74
AVAILABLE INFORMATION..................................................... 75
GLOSSARY.................................................................. 76
</TABLE>

ii
<PAGE>

SPRINT CORPORATION
P.O. BOX 11315
KANSAS CITY, MISSOURI 64112

INFORMATION STATEMENT

, 1996

SUMMARY

The following summary (the "Summary") of the information in this information
statement (the "Information Statement") is not intended to be complete and is
qualified in its entirety by the more detailed information appearing elsewhere
in this Information Statement and the Exhibits to this Information Statement or
incorporated herein by reference. Unless the context indicates, or it is
specifically indicated, otherwise: (i) the information in this Information
Statement gives effect to the Spin-off (as defined) and the related
transactions described under the caption "Background of Spin-off and
Relationship with Sprint," (ii) all references to the "Company" include Sprint
Cellular Company and its direct and indirect subsidiaries and assume that the
Spin-off has occurred, and (iii) all statistical information with respect to
the Company's "markets" refers to its controlled markets. Certain other terms
used in this Information Statement are defined under "Glossary." Operating
income plus depreciation and amortization ("EBITDA") is included in this
Information Statement as supplemental disclosure because it is generally
considered useful information regarding a company's ability to service debt.
EBITDA, however, is not a measure determined in accordance with generally
accepted accounting principles ("GAAP") and should not be considered in
isolation or as a substitute for or an alternative to net income (loss), cash
flow provided by operating activities or other income or cash flow data
prepared in accordance with GAAP or as a measure of a company's operating
performance or liquidity. Stockholders are urged to read this Information
Statement and the Exhibits to this Information Statement in their entirety.
Certain data included herein assumes a distribution ratio for the Spin-off of
one share of Company Common Stock for every three shares of Sprint common
stock, but the actual distribution ratio will be established by Sprint's Board
of Directors in connection with its approval of the Spin-off.

THE SPIN-OFF

BACKGROUND

Sprint, together with Cox Enterprises, Inc. ("Cox"), Tele-Communications,
Inc. ("TCI"), and Comcast Corporation ("Comcast"), formed various limited
partnerships, known collectively as Sprint Telecommunications Venture ("STV")
for the purpose of bidding in the Federal Communications Commission ("FCC")
auction of broadband personal communications services spectrum ("PCS"). On June
23, 1995, STV was awarded PCS licenses in 29 out of 51 Major Trading Areas
("MTAs") auctioned by the FCC. Four additional MTAs are held by entities
affiliated with STV or owned by affiliates of STV. FCC regulations prohibit a
PCS licensee from also owning cellular licenses in overlapping markets,
effectively requiring Sprint to divest itself of the cellular licenses in an
MTA covering 10% or more of the population of such MTA. As a result, the Sprint
Board reviewed several alternatives to eliminate conflicted cellular markets,
including the sale of conflicting holdings or the sale of more extensive
holdings and a tax-free spin-off of the Company to the holders of Sprint common
stock. Because of concerns regarding tax consequences of a sale of interests in
individual markets and the effect that such sales might have on the ability of
the Company to market its services and products, the Sprint Board of Directors
("Sprint Board") authorized the officers of Sprint to pursue a possible spin-
off of the Company.

1
<PAGE>

Service ("IRS") on the tax-free nature of the Spin-off, receipt of required
regulatory approvals and final approval by the Sprint Board. Although such
conditions are subject to waiver by the Sprint Board of Directors, the Spin-off
will not proceed without receipt in advance thereof of such a favorable ruling
from the IRS. If such other conditions are satisfied or waived and final
approval is received from the Sprint Board, it is currently anticipated that
the Spin-off would be completed during the first quarter of 1996 and that the
closing of the Spin-off will take place on the closing date of the Offering. On
the closing date of the Spin-off, the Company will pay approximately $1.4
billion of intercompany debt owed by the Company to Sprint and its subsidiaries
from the net proceeds of the sale of $800 million of Senior Notes (the
"Offering") and $ million of initial borrowings under a bank credit facility
(the "Credit Facility"). Sprint and its subsidiaries will contribute to the
equity capital of the Company (the "Capital Contribution") any debt owed to
them by the Company in excess of the intercompany debt being repaid. Also on
the closing date of the Spin-off, the Company will enter into the Credit
Facility. The closing of the Spin-off (which will include such repayment of
intercompany debt and the Capital Contribution), the closing of the Credit
Facility and the closing of the Offering are each contingent upon the other,
will occur on the same date and be deemed to take place simultaneously,
although the actual distribution of all the shares of the Company's Common
Stock to effect the Spin-off will commence promptly following the closing of
the Credit Facility and the Offering. After the Spin-off, the Company will
operate as an independent company and Sprint will continue to operate its
remaining businesses and manage its partnership interests in STV. It is
expected that the Company and Sprint will become competitors in wireless
communications in several markets, including those in which Sprint's PCS
licenses overlap with the cellular licenses of the Company.

THE DISTRIBUTION AGREEMENT

Sprint and the Company will, immediately prior to the Spin-off, enter into an
agreement (the "Distribution Agreement") governing the terms and conditions of
the Spin-off and certain aspects of the relationship between Sprint and the
Company after the Spin-off. See "The Spin-off--The Distribution Agreement."

THE TAX SHARING AGREEMENT

The Company and Sprint have also entered into a tax sharing agreement (the
"Tax Sharing Agreement") which allocates responsibility for certain taxes
arising after the Spin-off between the Company and Sprint. The Tax Sharing
Agreement is effective as of July 31, 1995, and provides for the computation
and allocation of tax liability and benefits attributable to the Company both
before, on and after such date. Among other things the Tax Sharing Agreement
provides that any taxes resulting from a failure of the Spin-off to qualify as
a tax-free distribution under Section 355 of the Code will be allocated between
the Company and Sprint in a manner that takes into account the extent to which
each party's actions might have contributed to the failure. The Tax Sharing
Agreement will also allocate to the Company the tax liability in excess of $25
million, if any, arising from recognition of gain on the distribution of
Company Common Stock to non-U.S. persons. In addition, the Tax Sharing
Agreement will allocate to the Company the tax liability in excess of $25
million, if any, arising from the transfer of assets and liabilities by Sprint
to the Company in connection with the Spin-off. Sprint also agrees to indemnify
the Company against liability for any taxes relating to Sprint or its
affiliates other than the Company for periods up to and including the date of
the Spin-off or for periods after that date if imposed on the Company under
Treasury Regulation 1.1502-6 and the Company agrees to indemnify Sprint against
liability for taxes relating to the Company or its affiliates (as of the time
immediately after the Spin-off) for periods up to and including the Spin-off.

THE TAX ASSURANCE AGREEMENT

The Company and Sprint have also entered into a tax assurance agreement (the
"Tax Assurance Agreement") that, unless certain approvals described below are
obtained, will prohibit the Company for a period of two years after the
consummation of the Spin-off from taking certain actions that would jeopardize
the tax-free status of the Spin-off. Absent an unqualified opinion of counsel
acceptable to Sprint or a ruling of the IRS, each to the effect that the
proposed action would not cause the Spin-off or any related transfer of assets
and liabilities to become taxable, the Company is prohibited during such two-
year period from (i) permitting the acquisition of capital stock by a third
party in connection with a merger consolidation, share exchange or other
business

2
<PAGE>

combination, (ii) transferring more than 40% of the value of its total assets
for assets not qualifying for treatment under certain specified provisions of
the Code, provided that the amount of assets transferred shall not include any
asset transfers permitted pursuant to clause (iii) below, (iii) transferring
more than 50% of the value of its total assets for assets qualifying for
nonrecognition treatment under certain specified provisions of the Code,
provided that the amount of assets transferred shall not include any asset
transfers made pursuant to clause (ii) above, (iv) dissolving or liquidating
the Company or announcing such intent, (v) issuing any capital stock other than
Common Stock or other equity instrument or any options, rights, warrants or
securities exercisable for or into such capital stock, (vi) issuing Common
Stock, including any options, rights, warrants or securities exercisable for or
convertible into Common Stock, which after taking into account certain other
aspects of capital structure of the Company and treating any issued options or
rights as exercised, would exceed (or could exceed if exercised or converted)
19% of the outstanding shares of Common Stock, or (vii) redeeming, repurchasing
or otherwise acquiring capital stock of the Company unless made in the open
market from stockholders owning less than one percent which do not result in
the total acquisition of five percent of such capital stock. The Tax Assurance
Agreement requires the Company to cooperate with Sprint in seeking any rulings
that would assure the parties that a proposed action would not jeopardize the
tax-free status of the Spin-off, and would allow such actions if such a ruling
is obtained.

FEDERAL INCOME TAX ASPECTS OF THE SPIN-OFF

Sprint has conditioned the Spin-off on the receipt of a ruling from the IRS
to the effect, among other things, that the Spin-off will qualify as a tax-free
spin-off under Section 355 of the Internal Revenue Code of 1986, as amended
(the "Code") for Federal income tax purposes. See "The Spin-off--Federal Income
Tax Aspects of the Spin-off."

THE COMPANY

OVERVIEW

The Company is one of the leading and most established wireless
communications companies in the United States. As of September 30, 1995, the
Company served over 1.3 million customers in 86 markets covering 14 states. The
Company's interests in these markets represent approximately 16.6 million Net
POPs as of September 30, 1995. The Company also owns, as of September 30, 1995,
minority interests in 52 additional cellular telephone markets representing
approximately 4.3 million Net POPs, including the New York, Chicago, Houston
and Orlando MSAs. The Company sells and markets cellular communications
services and related products through a distribution network consisting of
nationally recognized and local dealers, full service retail stores and a
direct sales force. For the 12 months ended September 30, 1995, the Company had
consolidated service revenues and EBITDA of $733.1 million and $238.3 million,
respectively.

For the period from January 1, 1990 to June 30, 1995, the Company grew its
customer base by a compounded annualized growth rate ("CAGR") of 54.6%,
compared to an industry CAGR over the same period of 46.1%. As of June 30, 1995
(the latest date for which cellular industry information is available from the
Cellular Telecommunications Industry Association ("CTIA")), the Company had an
average cellular penetration rate of 6.3% in the markets that it controlled,
compared with the industry penetration rate of 5.4%. The Company has also
exhibited above average customer retention rates compared with the industry
average of 1.9%. For the six months ended June 30, 1995 the monthly average
churn was 1.7%.

3
<PAGE>

BUSINESS STRATEGY

The Company intends to maintain its strong growth by continuing to penetrate
its existing markets and to expand its operating clusters by adding contiguous
markets through acquisitions or trades with other cellular carriers. The
Company intends to capitalize on its incumbent position as a leading wireless
provider by: (i) increasing revenues through aggressive customer acquisition,
(ii) improving the retention rate of new and existing customers and (iii)
enhancing its financial performance by continuing to improve its operating
margins. The principal components of the Company's strategy to achieve these
objectives are as follows:

. Regional Clustering. The Company's growth and operating strategies have
been focused on clustering contiguous service areas. By operating
contiguous markets, the Company can provide broad areas of uninterrupted
service combined with simplified dialing and pricing patterns. Clustering
also allows the Company to achieve scale economies in operations as well
as cost efficiencies in deploying its network infrastructure.

. Continuous Network Improvement. The Company continually improves its
systems with the goal of providing service comparable to that of local
telephone companies. The Company believes its network offers broad
coverage as well as excellent clarity and reliability as a result of an
integrated process of network planning, aggressive cell site construction
and rigorous system maintenance. As additional calling capacity is
required to accommodate growth in call volume, the Company plans to
implement a gradual transition to digital technology on a market by
market basis. This approach should provide time for anticipated digital
technology improvements to be proven while also avoiding premature
capital expenditures.

. Aggressive Distribution Management. The Company utilizes multiple methods
of distribution in each of its markets, and regularly seeks out new
distribution channels. The development of multiple distribution channels
in each of its markets enables the Company to provide effective and
extensive marketing of products and services and to reduce its reliance
on any single distribution source. Traditional distribution sources like
dealers and direct sales representatives continue to be important factors
in achieving the Company's growth objectives. Recently introduced
marketing strategies such as the development of newly designed Company
retail stores and the formation of regional distribution alliances are
expected to become increasingly important.

. Exceptional Customer Service. The Company emphasizes exceptional customer
service through highly motivated, experienced and well-trained customer
relations personnel who are focused on satisfying customer needs. The
Company's customer service representatives regularly contact new
customers to answer questions, explain features and service options, and
gauge satisfaction levels. The Company believes this commitment to
customer service results in reduced churn and increased revenue per
customer.

. Targeted Pricing Development. The Company seeks to increase penetration,
improve retention rates and stimulate additional usage through creative
pricing strategies. The Company's pricing strategy is critical to its
success in the consumer market as it seeks to continue increasing its
market penetration.

. Targeted Product and Service Deployment. The Company continues to
introduce new features and services to increase the value of the basic
voice product to the customer and to enhance airtime revenues. Many new
products offered by the Company are designed to give customers enhanced
call management capability and stimulate usage. The Company also has
arrangements with other telecommunications vendors to provide new network
solutions to business and residential customers. The Company expects to
offer these and other products, either separately or as an integrated
communications solution.

4
<PAGE>

THE SPIN-OFF

BACKGROUND AND REASONS FOR THE SPIN-OFF

Sprint, together with Cox, TCI and Comcast, formed various limited
partnerships, known collectively as STV, for the purpose of bidding in the
FCC's auction of broadband PCS spectrum. On June 23, 1995, STV was awarded PCS
licenses in 29 out of 51 MTAs. Four additional MTAs are held by entities
affiliated with STV or owned by affiliates of STV.

The FCC's bidding rules require any bidder winning a PCS license in an MTA
in which it also owns cellular licenses covering 10% or more of the population
of the MTA ("overlap areas") to divest itself of the cellular license within
90 days of the grant of the PCS license. Four of the licenses won, the
Detroit, Dallas, Des Moines and Philadelphia MTAs, overlap areas served by the
Company's operations. Under the 90-day divestiture rule, Sprint would have
been required to divest itself of its cellular licenses in the overlapping
MTAs by September 21, 1995. Sprint has received an extension from the FCC of
this divestiture deadline to , 1996.

The licenses to construct and operate cellular communications systems are
generally owned directly by limited partnerships, of which Sprint Cellular may
in turn own all or part of the partnership interests. The following references
to the consideration given to selling those licenses therefore refer to the
sale of the interests in the partnership owning the applicable licenses and
related assets used to operate the applicable cellular communications systems.

On July 26, 1995, Sprint's Board of Directors authorized Sprint's management
to pursue a possible spin-off of the Company because, on the whole, it
appeared to be the best alternative for meeting the dual goals of complying
with FCC divestiture requirements and seeking to maximize value to Sprint's
common stockholders. Sprint's Board of Directors determined that a sale of
only those licenses in overlapping markets was not a viable alternative
because (i) a sale of other cellular properties would have been required due
to certain restrictions in governing partnership agreements and licenses, (ii)
such a sale likely would have adversely affected the value of the cellular
properties retained by Sprint due to the loss of economies of scale and other
benefits associated with clustering service areas, and (iii) such a sale would
have resulted in a large tax liability.

Apart from the aggregation of overlapping MTAs with non-overlapping MTAs
caused by STV's partnership form of ownership, the economics of the market for
cellular licenses demands that licenses be clustered into geographically
contiguous areas to realize the maximum value for the licenses in a sale. This
would also have required Sprint to sell interests in additional licenses in
order to divest itself of the overlapping MTAs on economically attractive
terms.

Taking both legal and economic considerations into account, Sprint estimated
that it would have to sell licenses covering approximately 38% of its total
cellular market to comply with the FCC's divestiture requirements and also to
maximize the market value of the licenses being sold. Even doing so, however,
would have left the Company's operations impaired. To remain competitive with
the reduced market coverage in Sprint's retained cellular operations, Sprint
would have had to reduce its overhead by cutting the staff, facilities, and
other fixed costs of its cellular operations. Furthermore, the STV partnership
agreements prohibit Sprint's cellular operations from expanding into new
geographic areas without the consent of STV. Likewise, the FCC's rules on
overlapping PCS and cellular licenses would prohibit STV from expanding into
areas in which Sprint holds cellular licenses. Thus, to sell off overlapping
cellular licenses and to continue operating the partnerships owning the
remaining licenses would be, in Sprint's judgment, to split a highly-
effective, integrated cellular business into two less effective and less
valuable pieces.

5
<PAGE>

Furthermore, a partial sale would have caused Sprint to recognize a very
large taxable gain and resulting tax liability, further reducing the value of
the sale alternative to Sprint's common stockholders. The same considerations
made the alternative of selling the entire cellular operation as a unit
unattractive as a way to maximize value to Sprint's common stockholders.

The Sprint Board of Directors also took into account the repayment of
approximately $1.4 billion of intercompany debt owed to it and its other
subsidiaries by the Company in connection with the Spin-off. The Sprint Board
of Directors believes that the indebtedness being repaid by the Company will
not have a material adverse effect on its ability to fund its presently
anticipated operating and capital expenditures due to the Company's expected
level of cash flow from operations and approximately $ million of unused
capacity under the Credit Facility.

Finally, Sprint has made a major strategic commitment to developing its
wireless strategy through the STV venture using PCS-only technology. Were
Sprint to retain its non-overlapping cellular operations, it would have to
invest in additional expensive and unperfected technology to provide
interoperability between its PCS and cellular networks. In addition, by
spinning off the Company's operations, Sprint's common stockholders will
benefit from the managerial commitment of both the Company and the STV
management teams who will be able to focus on their separate business goals
and objectives and to compete freely with one another where their markets
overlap. Similarly, following the Spin-off, Sprint Cellular will be able to
offer prospective and current employees stock-based and other incentive plans
that are tied more directly to the results of their efforts and thereby
motivate performance consistent with its specific strategic goals.

MANNER OF EFFECTING THE SPIN-OFF

If all conditions to the Spin-off are satisfied (or waived by the Board), on
or before the closing of the Spin-off, Sprint will transfer to
, as distribution agent (the "Distribution Agent") for
distribution on a pro rata basis to the holders of record of Sprint common
stock at the close of business on , 1996 (the "Record Date"), all
of the outstanding shares of the Company Common Stock. Prior to the Spin-off,
all of the issued and outstanding the Company Common Stock will be owned by
Sprint. Such shares will be distributed to such holders of record of Sprint
common stock (which holders, as of September 30, 1995 totaled ), on
the basis of one share of the Company Common Stock for each three shares of
Sprint common stock held on the Record Date. As soon as practicable
thereafter, the Distribution Agent will mail certificates for such shares to
the Sprint stockholders entitled to receive shares of the Company Common Stock
pursuant to the Spin-off. Sprint stockholders will also receive the Company
Common Stock purchase rights, as described herein under "Shareholders' Rights
Plan" and as referred to on the Company stock certificates.

No certificates or scrip representing fractional shares of the Company will
be issued to holders of Sprint common stock as part of the Spin-off. The
Distribution Agent will, as soon as practicable, aggregate and sell all
fractional interests of the Company Common Stock on the NYSE or otherwise at
then-prevailing market prices and remit the net proceeds to stockholders
otherwise entitled to fractional shares. See "--Federal Income Tax Aspects of
the Spin-off."

The Company Common Stock distributed in respect of Sprint common stock held
in Sprint's Dividend Reinvestment Plan will be distributed directly to
participants of such plan, along with checks in payment of fractional share
interests.

No Sprint stockholder will be required to pay any cash or other
consideration for the shares of the Company Common Stock received in the Spin-
off or to surrender or exchange Sprint common stock in order to receive shares
of the Company Common Stock. All shares of the Company Common Stock received
in the Spin-off will be fully paid and nonassessable and the holders thereof
will not be entitled to preemptive rights. The Spin-off will not affect the
number of outstanding shares of Sprint common stock or any rights attached
thereto.

6
<PAGE>

RESULTS OF THE SPIN-OFF

Subsequent to the Spin-off, the Company will operate as an independent
company and Sprint will continue to operate its remaining businesses.

RELATIONSHIP OF SPRINT AND THE COMPANY AFTER THE SPIN-OFF

The Spin-off is subject to the satisfaction of several conditions designed
to assure that it is in the best interests of Sprint common stockholders,
including the receipt of a favorable ruling from the IRS on the tax free
nature of the Spin-off, receipt of required regulatory approvals and final
approval by the Sprint Board. Although such conditions are subject to waiver
by the Sprint Board of Directors, the Spin-off will not proceed without
receipt in advance thereof of such a favorable ruling from the IRS. If such
other conditions are satisfied or waived and final approval is received from
the Sprint Board, it is currently anticipated that the Spin-off would be
completed during the first quarter of 1996 and that the closing of the Spin-
off will take place on the closing date of the Offering. On the closing date
of the Spin-off, the Company will pay approximately $1.4 billion of
intercompany debt owed by the Company to Sprint and its subsidiaries from the
net proceeds of $800 million from the Offering and $ million of initial
borrowings under the Credit Facility. Sprint and its subsidiaries will make a
Capital Contribution in an amount equal to any debt owed to them by the
Company in excess of the intercompany debt being repaid. The closing of the
Spin-off (which will include such repayment of intercompany debt and the
Capital Contribution), the closing of the Credit Facility and the closing of
the Offering are each contingent upon the other, will occur on the same date
and be deemed to take place simultaneously, although the actual distribution
of all the shares of the Company's Common Stock to effect the Spin-off will
commence promptly following the closing of the Credit Facility and the
Offering. After the Spin-off, the Company will operate as an independent
company and Sprint will continue to operate its remaining businesses and
participate in the management of STV. It is likely that the Company and Sprint
will become competitors in wireless communications in several markets,
including those in which Sprint's PCS licenses overlap with the cellular
licenses of the Company.

THE DISTRIBUTION AGREEMENT

Sprint and the Company will, immediately prior to the Spin-off, enter into
the Distribution Agreement governing the terms and conditions of the Spin-off
and certain aspects of the relationship between Sprint and the Company after
the Spin-off. The following paragraphs describe the major provisions of the
Distribution Agreement and related agreements as well as relationships between
the two companies after the Spin-off.

Partial Repayment of Intercompany Debt

The Company will issue Notes and incur $ million of initial borrowings
under the Credit Facility to pay approximately $1.4 billion of intercompany
debt owed by the Company to Sprint and its subsidiaries. In addition, Sprint
and its subsidiaries will contribute to the equity capital of the Company any
debt owed to them by the Company in excess of the approximately $1.4 billion
of intercompany debt being repaid. See "Use of Proceeds." At September 30,
1995, the Company had outstanding an aggregate of approximately $1.52 billion
of intercompany debt from Sprint and its subsidiaries at an average annual
interest rate of 8.8%. For a description of certain transactions between the
Company and Sprint or its subsidiaries and amounts paid pursuant thereto for
the preceding three years, see Note 10 of "Sprint Cellular Company and
Subsidiaries Notes to Consolidated Financial Statements" of the Company and
its subsidiaries, which is incorporated herein by reference.

Allocation of Pre-Spin-off Contingent Liabilities

The Company and Sprint have also agreed to allocation of liabilities arising
out of business activities of the other party prior to the Spin-off. In
general, the Company will be allowed liabilities arising out of cellular
operations prior to the Spin-off, and Sprint will be allowed liabilities
arising from non-cellular operations prior to the Spin-off. Sprint and the
Company agree in the Distribution Agreement to equitably allocate liabilities
either jointly attributable to the business activities of Sprint and the
Company or not clearly attributable to either.

7
<PAGE>

The Distribution Agreement provides more specific rules for allocating certain
classes of liabilities between Sprint and the Company. For instance, the
Distribution Agreement allocates employment-related claims to the Company or
Sprint, based on which party employed the claimant on the date the occurrence
giving rise to the claim arose. Also, the Distribution Agreement provides that
(i) any claims based on health effects of electro-magnetic radiation from the
use of cellular telephone service will be allocated entirely to the Company,
and (ii) any claims based on alleged misstatements or omissions in the
disclosure documents relating to the Spin-off or the Offering will be
allocated to the Company, except with respect to those portions of the
disclosure documents for which Sprint provided information.

Release of Spin-off-Related Liabilities

Both the Distribution Agreement and the Company's Amended and Restated
Certificate of Incorporation provide that the Company may not bring any claim
against Sprint, its affiliates, or any officer, director, or other affiliate
of Sprint (including those who are officers or directors of the Company), for
breach of any duty that occurred prior to or in connection with the Spin-off,
including but not limited to, the duty of loyalty or fair dealing, on account
of a diversion of a corporate business opportunity to Sprint or its
affiliates, including STV.

Employee Benefits

The Distribution Agreement also provides for the treatment of Sprint
employee benefits subsequent to the Spin-off, as they relate to employees who
remain employed by Sprint or its subsidiaries after the closing of the Spin-
off and employees who are employed by the Company after the Spin-off. The
Distribution Agreement provides for the adjustment of outstanding stock
options. In the case of grants made under Sprint's stock option plans and
employee stock purchase plans held by individuals who will remain employed by
Sprint, the number of shares covered by a grant under such plans will be
increased, and the exercise or purchase price per share will be decreased,
pursuant to a formula designed to cause the economic value of the grants to
remain the same after the Spin-off, giving effect to the diminution in value
of Sprint common stock. Employees who will be employed by the Company after
the Spin-off and who have grants under a Sprint stock option plan or who elect
to do so under Sprint's employee stock purchase plan will receive replacement
grants to purchase Company Common Stock and their Sprint grants will be
cancelled. The Company will establish a number of mirror employee benefit
plans which will allow the Company to provide many of the same benefits
currently provided to Sprint's employees. The Distribution Agreement provides
that with respect to Sprint's retirement pension plan, all employees who will
be employed by the Company after the Spin-off will continue to earn service
credit under such plan, but only for purposes of vesting. The Company does not
intend to adopt a similar retirement pension plan.

Intellectual Property

The Distribution Agreement provides for Sprint to license certain
intellectual property rights to the Company prior to the Spin-off including
proprietary information and trademarks and trade names, as well as the use of
proprietary information by employees transferred to the Company in connection
with the Spin-off. Use of the Sprint brand name will be for a limited period
after the date of the Spin-off, after which the Company must cease use of the
Sprint brand, including logos, marks, or other insignia or words suggestive of
affiliation with Sprint.

Transitional Administrative Services

The Distribution Agreement provides that Sprint will provide certain
administrative services to the Company for a period of up to two years after
the Spin-off date. The Company has agreed to the manner of compensating Sprint
for these services on a service-by-service basis, but in general the parties
have attempted to make the amount of compensation approximate Sprint's
variable cost. The transitional services to be provided are ministerial in
nature, and the parties do not contemplate that any of them will require
access by the other party to sensitive strategic information. The Distribution
Agreement also requires Sprint to deliver essential corporate records to the
Company and for Sprint and the Company to share information necessary to the
administration of employee benefits, preparation of financial reports, income
tax returns, and other legally-required documents. All information shared in
this manner is to be treated confidentially by the receiving party.

8
<PAGE>

THE TAX SHARING AGREEMENT

The Company and Sprint have also entered into the Tax Sharing Agreement that
allocates responsibility for certain tax liability arising after the Spin-off
between the Company and Sprint. The Tax Sharing Agreement is effective as of
July 31, 1995, and provides for the computation and allocation of tax
liability and benefits attributable to the Company after such date. The
Company is required to pay to Sprint an amount equal to any tax liability
attributable to the Company after July 31, 1995, and included on a
consolidated tax return filed by Sprint. Sprint is required to pay to the
Company an amount equal to any tax benefit received by Sprint attributable to
the Company after July 31, 1995, and included on a consolidated tax return
filed by Sprint. Likewise, if any carryback of a credit or tax attribute
results in a tax refund to Sprint which is attributable to the Company, Sprint
will pay to the Company the amount of the tax refund.

The Tax Sharing Agreement provides that any taxes or liability to
stockholders of Sprint resulting from a failure of the Spin-off to constitute
a tax-free distribution under Section 355 of the Code will be allocated
between Sprint and the Company in a manner that takes into account the extent
to which each contributed to such failure. Responsibility for such failure,
however, may be attributed to Sprint or the Company or both only if the
employees, officers or directors of either or both corporations made a
material misstatement of fact attributable to their business or breached a
representation, warranty, covenant or agreement contained in, or referred to,
in the ruling request filed with the IRS (the "IRS Ruling Request"), the Tax
Assurance Agreement or any other documents, agreements or certificates
contemplated thereby, and the failure of the Spin-off to qualify for tax-free
treatment is related to such misstatements or breach. If it is determined that
neither Sprint nor the Company contributed to the failure of the Spin-off to
qualify for tax-free treatment, the liability of Sprint and the Company will
be borne by each corporation based upon their relative average market
capitalization based on the average closing prices for the 20 trading days
following the date of the Spin-off.

In addition, the Tax Sharing Agreement will allocate liability between the
Company and Sprint for taxes arising in connection with the Spin-off under
Section 367(e) of the Code for gain on the disposition of Company Common Stock
to non-U.S. persons and from the transfer of assets and liabilities by Sprint
to the Company in connection with the Spin-off. The first $25 million of such
tax is allocated to Sprint, and all such tax liability in excess of $25
million is allocated to the Company.

Finally, the Tax Sharing Agreement provides that Sprint will indemnify the
Company against liability for any taxes relating to Sprint and its affiliates
other than the Company for periods up to and including the date of the Spin-
off, or for periods after the Spin-off on the Company under Treasury
Regulation 1.1502-6.

THE TAX ASSURANCE AGREEMENT

The Company and Sprint have also entered into a Tax Assurance Agreement that
will prohibit the Company for a period of two years after the consummation of
the Spin-off from taking certain actions that would jeopardize the tax-free
status of the Spin-off. In particular, absent a ruling issued by the IRS or an
unqualified opinion of counsel delivered to Sprint, the Company is prohibited
during that two-year period from undertaking, authorizing, approving,
recommending, permitting, facilitating or entering into any contract or
consummate any transaction with respect to (i) the acquisition of capital
stock by a third party other than the issuance by the Company of securities in
connection with a transaction that complies with (ii) or (iii), below, or the
waiver, amendment or termination of the Rights Agreement to permit or
facilitate such acquisition, (ii) the issuance of any capital stock or other
instrument that would constitute "equity" for federal tax purposes other than
Company Common Stock or the issuance of options, rights, warrants or
securities exercisable for or convertible into any such equity, (iii) the
issuance of Company Common Stock in a single transaction or multiple
transactions which would exceed 19% of the outstanding Company Common Stock,
(iv) any redemptions, repurchases or other acquisitions of capital stock or
other equity interests of the Company in a single or multiple transactions,
unless made in the open market from stockholders owning less than 1% which
does not result in the total acquisition of 5% of such capital stock, or (v)
the dissolution or liquidation of the Company or the announcement of such
intent, (vi) the transfer in a single or multiple transaction of assets which
would exceed 50% of the total assets or 50%

9
<PAGE>

of total assets net of liabilities (as of the date of the Spin-off), unless an
opinion of counsel is delivered to Sprint as provided above at least 12 months
after the Spin-off, in which case the limitation is increased to 66 2/3% of
the total assets and total net assets, and (vii) the transfer in a single
transaction or multiple transactions of assets which would exceed 40% of its
assets immediately after the Spin-off, in a transfer of assets which does not
constitute a like-kind exchange under Section 1031 of the Code or certain
contributions to general partnerships in which the Company is the sole
managing partner, unless an opinion of counsel is delivered to Sprint as
provided above at least 12 months after the Spin-off, in which case the
limitation is increased to 50% of the total assets.

OPERATIONAL RELATIONSHIP

Sprint's Long Distance Division currently provides long-distance
telecommunications services to the Company under the terms of a contract that
is currently scheduled to expire in 1997 but which may be extended prior to
the Spin-off for an additional term of up to five years. The parties have made
no agreement to extend the term of such contract beyond its current term.
Sprint's Local Telecommunications Division provides certain regulated long
distance services to the Company in areas served by Sprint's local telephone
companies pursuant to an agreement which was negotiated at arms-length prior
to the acquisition of the Company by Sprint. Sprint's Local Telecommunications
Division provides these services at rates tariffed for such services by state
regulatory authorities.

Sprint also provides the Company with network monitoring and bill printing
and mailing services under existing agreements. These administrative services
are in addition to the administrative services described above (see "--The
Distribution Agreement--Transitional Administrative Services"), and the
Company expects to continue to obtain these services from Sprint for the
indefinite future. In addition, the Company leases from Sprint various
equipment location sites that the Company expects to keep in place.

The amounts paid pursuant to these and other operational agreements and
funding arrangements during each of the last three fiscal years are set forth
in Note 11 of the Notes to Consolidated Financial Statements which is included
elsewhere herein.

Under the STV limited partnership agreement governing the wireless
activities of STV, the Company, as a controlled affiliate of Sprint, is
prohibited from competing with STV except in certain limited ways set forth in
the agreement or with STV's consent. After the Spin-off, the Company will not
be subject to any agreement between Sprint and STV restricting competition
between STV and the Company.

REGULATORY APPROVAL

The Spin-off of the Company, as such, is not subject to FCC approval. The
Spin-off does result in a pro forma transfer of control of the FCC issued
licenses, which must be approved by the FCC.

FEDERAL INCOME TAX ASPECTS OF THE SPIN-OFF

Sprint has conditioned the Spin-off on the receipt of a ruling from the IRS
to the effect, among other things, that the Spin-off will qualify as a tax-
free spin-off under Section 355 of the Code for federal income tax purposes
and that, for federal income tax purposes:

(1) No gain or loss will be recognized by, and no amount will be included
in the income of, the holders of Sprint common stock upon their receipt
of the Company Common Stock from Sprint in the Spin-off.

(2) Where cash is received by a holder of Sprint common stock as a result
of the sale of accumulated fractional shares by the Distribution Agent
on behalf of such stockholder, it will be treated as if such fractional
shares had been received by such stockholder as part of the Spin-off
and then sold by such stockholder. Accordingly, such stockholder will
recognize gain or loss equal to the difference between the cash
received and the amount of tax basis allocable (as described below) to
such fractional share. Such gain or loss would be capital gain or loss
if such fractional share would have been held by such stockholder as a
capital asset.

10
<PAGE>

(3) The aggregate basis of Sprint common stock and the Company Common Stock
(including fractional shares) in the hands of the holders of Sprint
common stock immediately after the Spin-off will be the same as the
aggregate basis of Sprint common stock held immediately before the
Spin-off, allocated in proportion to the fair market value of each.

(4) The holding period applicable to the Company Common Stock received by
each holder of Sprint common stock in the Spin-off will include such
stockholder's holding period for the Sprint common stock, provided that
such stockholder held the Sprint common stock as a capital asset on the
Spin-off Date.

(5) No gain or loss will be recognized by Sprint upon the Spin-off.

Application has been made to the IRS for a ruling to the foregoing effect.
As of the date hereof, the IRS has not yet issued the ruling requested. Sprint
believes and has been advised by its outside tax advisors, King & Spalding,
that the positions asserted by Sprint in requesting the ruling are consistent
with the Code and the rules and regulations promulgated thereunder. However,
there can be no assurance that the IRS will issue a favorable ruling.

The summary of federal income tax consequences set forth above is for
general reference only and does not purport to cover all federal income tax
consequences that may apply to all categories of stockholders. All
stockholders should consult their own tax advisors regarding the particular
federal, foreign, state and local tax consequences of the Spin-off to such
stockholders.

For a description of the Tax Sharing Agreement and Tax Assurance Agreement
pursuant to which Sprint and the Company have provided for various tax
matters, see "--Relationship Between Sprint and the Company after the Spin-
off--Tax Sharing Agreement" and "--Relationship Between Sprint and the Company
after the Spin-off--Tax Assurance Agreement."

NYSE LISTING

The Company Common Stock will be listed on the New York Stock Exchange as of
two trading days before the Record Date for "when issued" trading. On the
first trading day after the Spin-off date, "when issued" trading will cease
and the Company Common Stock will commence trading "regular way" on the New
York Stock Exchange. There has been no prior public market for the Company
Common Stock. As of September 30, 1995, there were holders of record
of Sprint common stock, which also approximates the number of prospective
record holders of the Company Common Stock.

CONDITIONS; TERMINATION

The Distribution Agreement provides that the closing of the Spin-off will be
simultaneous with the closing of the Credit Facility and the Note Offering.
The Spin-off is subject to the satisfaction of several conditions designed to
assure that it is in the best interests of Sprint's common stockholders,
including a favorable ruling from the Internal Revenue Service on the tax-free
nature of the Spin-off, receipt of required regulatory approvals and final
approval by the Sprint Board of Directors.

ACCOUNTING TREATMENT

Upon assurance of a favorable ruling from the IRS regarding the tax-free
nature of the Spin-off, Sprint will present the business of the Company as a
discontinued operation to the extent financial information for periods prior
to the Spin-off is required to be included in Sprint's historical financial
statements.

11
<PAGE>

CERTAIN RISK FACTORS

The following risk factors, in addition to the other information contained
elsewhere in this Information Statement, should be considered carefully in
evaluating the Company and its business:

LOSS OF SPRINT BRAND NAME; COSTS OF INTRODUCING NEW BRAND NAME

In early 1996, the Company intends to adopt a new name and may encounter
significant challenges in marketing its wireless service under the new brand
name. The Company believes that the use of the Sprint brand name and its
participation in Sprint's national advertising program have assisted in
attracting and retaining customers in its markets, which include a total
population of approximately 6.4% of the U.S. population. The Company expects
to make large advertising and promotional expenditures to position its new
brand name in its regional and local markets. In the near term the Company is
unable to predict the extent of expenditures that will be necessary to
implement its brand strategy. The Company is also unable to predict with
certainty the extent to which the substitution of a new brand name and the
loss of national advertising may adversely affect its retention and
acquisition of customers, its access to distribution channels or its financial
performance. In addition, Sprint and its affiliates, including STV, will be
able to use the Sprint name following the Spin-off in connection with
marketing and providing PCS and other wireless communications services. See
"--Relationship with Sprint; Potential Conflicts of Interest."

HISTORY OF NET LOSSES; DEFICIENCY OF EARNINGS AVAILABLE TO COVER FIXED CHARGES

The Company has sustained net losses in each fiscal year since its formation
in 1984. The Company expects to incur a net loss for the year ending December
31, 1995. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." There can be no assurance that the Company will be
profitable in 1996 or thereafter. In addition, the Company's earnings have
been insufficient to cover its fixed charges in each fiscal year since its
formation in 1984. For the year ended December 31, 1994, the Company's
earnings were insufficient to cover fixed charges by $8.9 million. The ratio
of earnings to fixed charges for the nine months ended September 30, 1995 was
1.39. After giving pro forma effect to the Offering and the initial borrowings
under the Credit Facility, the repayment of approximately $1.4 billion of
intercompany debt to Sprint and its subsidiaries with the proceeds therefrom,
the Spin-off, the Capital Contribution, and the probable acquisitions of 50%
interests in South Carolina RSAs 4, 5, and 6, a 100% interest in Ohio RSA No.
1 Cellular General Partnership, the cellular license and network of the North
Carolina RSA No. 14 Cellular General Partnership, and additional partnership
interests in Centel Cellular Company of Ft. Walton Beach Limited Partnership
and Centel Cellular Company of Tallahassee Limited Partnership, as if these
transactions had occurred on January 1, 1994, the Company's earnings would
have been insufficient to cover fixed charges by $42.3 million for the year
ended December 31, 1994. The pro forma ratio of earnings to fixed charges for
the nine months ended September 30, 1995 was 1.44.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT

The Company has substantial leverage. As of September 30, 1995, the
Company's total indebtedness, on a pro forma basis, would have been
approximately 86% of its total capitalization. See "Capitalization." The
degree to which the Company is leveraged may adversely affect the Company's
ability to finance its future operations, to compete effectively against
better capitalized competitors and to withstand downturns in its business or
the economy generally, and could limit its ability to pursue business
opportunities that may be in the interests of the Company and its
securityholders.

The Company's ability to service its debt will require continued growth in
the Company's cash flow. There can be no assurance that the Company will be
successful in continuing to grow its cash flow by a sufficient magnitude or in
a timely manner or in raising additional equity or debt financing to enable it
to meet its debt

12
<PAGE>

service requirements. In addition, the Company's ability to issue additional
equity securities will be subject to certain limitations set forth in the Tax
Assurance Agreement (as defined). See "--Limitation on Business Activities
Imposed by Tax Assurance Agreement." The Indenture relating to the Notes and
the Credit Facility will limit the incurrence of additional indebtedness. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Financing--Description of
Notes and Indenture." If the Company fails to meet certain financial ratios or
to comply with the other provisions of the Credit Facility, future borrowings
under the Credit Facility may be prohibited and the amount outstanding under
the Credit Facility and/or the Notes could become immediately due and payable
unless the lenders party to the Credit Facility or the holders of the Notes
agree to modify or waive such ratios or provisions.

The Company intends to continue pursuing opportunities to acquire additional
cellular communications systems that complement its existing systems and to
acquire additional interests in licenses in which it currently owns less than
a 100% interest. In the past, the Company has relied on Sprint and its
subsidiaries to meet these funding requirements. Following the Spin-off,
Sprint and its subsidiaries will not provide additional capital to meet those
funding requirements. The Company believes that borrowings available under the
Credit Facility and net cash provided by operations will be sufficient to
satisfy its projected funding requirements for operations for the foreseeable
future although acquisitions and possibly other contingencies may require
access to the capital markets. In the event such resources are not sufficient,
however, the Company may be unable to access the capital markets on acceptable
terms and in adequate amounts to accomplish its objectives.

COMPETITION

The FCC currently authorizes only two licensees to operate cellular
communications systems in each cellular market. The Company competes primarily
against the other facilities-based cellular carrier in each metropolitan
statistical area ("MSA") and rural service area ("RSA") market and expects
competition to remain vigorous. Competition for customers between cellular
licensees is based principally upon the services and enhancements offered, the
quality of the cellular system, customer service, system coverage and capacity
and price. The Company expects such competition to continue and anticipates
continued downward pressure on the prices charged for its cellular equipment
and services.

Competition is expected to increase as a result of recent regulatory and
legislative initiatives. The FCC has promulgated rules for the licensing of
operators to provide PCS and enhanced specialized mobile radio ("ESMR")
services. The FCC has allocated 120 MHz of spectrum for licensed PCS and has
decided to offer over 2,000 licenses for PCS use in separate competitive
bidding auctions. The FCC recently completed the initial round of its spectrum
auction process which resulted in the award of two PCS licenses in each Major
Trading Area ("MTA"). The FCC is expected to conduct auctions which will
enable current cellular providers to obtain licenses for only 10 MHz of PCS
spectrum within their existing cellular service areas, although cellular
providers are eligible for licenses for other PCS spectrum outside their
existing cellular service areas. PCS operators, including STV, will compete
directly with the Company and may have access to substantial capital
resources.

The wireless marketplace is expected to become increasingly competitive as a
result of the commencement of operations by new wireless service providers and
due to competition from resellers. The Company faces competition from services
such as conventional mobile telephone service, ESMR systems and PCS. ESMR is a
wireless communications service created by converting analog specialized
mobile radio ("SMR") services into an integrated, digital wireless
communications system. PCS is expected to be a digital, wireless
communications system supported by high-density call transmitters. It is
expected that PCS will involve a network of small, low-powered transceivers
placed throughout a neighborhood, business complex, community or metropolitan
area to provide customers with mobile and portable voice and data
communications. It is not yet known what additional services and features PCS
or EMSR will offer, and there can be no assurance that the Company will be
able to provide such services and features or that it will be able to do so on
a timely and profitable basis.

RELATIONSHIP WITH SPRINT; POTENTIAL CONFLICTS OF INTEREST

Prior to the Spin-off, Sprint will determine certain contractual and other
relationships between Sprint and its affiliates and the Company, which
determinations will survive the Spin-off. In addition, the Company has

13
<PAGE>

entered into other arrangements with Sprint in connection with the Spin-off,
which relate principally to the repayment by the Company of approximately $1.4
billion of intercompany debt. The Company and Sprint have also entered into a
Tax Sharing Agreement allocating tax and other liabilities between the Company
and Sprint, and a Tax Assurance Agreement, which imposes limitations on the
Company's future activities to preserve the tax-free status of the Spin-off.
See "--Potential Liability under Tax Sharing Agreement," "--Limitation on
Business Activities Imposed by Tax Assurance Agreement" and "The Spin-off--
Background of Spin-off and Relationship with Sprint." Such contractual and
other relationships and arrangements with Sprint were generally not the result
of arm's-length negotiations.

Sprint is a 40% owner in STV which, together with its affiliates and
entities affiliated with it, have PCS licenses in 33 MTAs, some of which
overlap with markets served by the Company. Controlled markets served by the
Company which are overlapped by MTAs in which STV has an interest include:
Charlottesville, VA, Virginia RSAs 6B2, 7B2 and 11B2; Harrisburg, York and
Lancaster, PA, Pennsylvania RSAs 1, 6B1, 10B1, 11B1 and 12; Cedar Rapids,
Waterloo-Cedar Falls, Iowa City and Dubuque, IA; Toledo and Lima, OH, Ohio
RSAs 2B1 and 5; Dothan, AL; Fort Walton Beach, FL, Florida RSA 10; Killeen-
Temple, Waco, Tyler and Longview-Marshall, TX, Texas RSAs 7B2, 9B3, 10B2, 10B4
and 15B1; New Mexico RSAs 2 and 4; and Las Vegas, NV. These markets represent
approximately 38.7% and 37.4% of its consolidated revenues for the year ended
December 31, 1994 and the nine months ended September 30, 1995, respectively.
See "Business of the Company--Competition." In addition, STV will generally
compete with the Company after the Spin-off and is expected to use the Sprint
name in marketing and providing wireless communications services. See
"Business--Competition."

Sprint's Long Distance Division and Local Telecommunications Division
provide long distance services to the Company pursuant to agreements which
will continue after the Spin-off. These agreements and various other
agreements that will govern the relationship between the Company and Sprint
after the Spin-off contain terms which are believed to be reasonable but there
can be no assurance that such terms are comparable to those which could be
obtained from unaffiliated third parties. See "The Company--Background and
Reasons for the Spin-off" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations--Cost of
Service."

ADOPTION OF NEW TECHNOLOGIES; TECHNOLOGICAL OBSOLESCENCE

The Company has chosen Code Division Multiple Access ("CDMA") as its digital
technology because it believes that CDMA may offer several advantages over
Time Division Multiple Access ("TDMA"). While TDMA is in commercial service,
CDMA remains untested on a commercial basis in the United States. The Company
will likely incur substantial costs implementing digital technology. In
addition, CDMA may not provide the advantages over TDMA or analog technology
expected by the Company. Although the Company expects to phase-in its
implementation of CDMA technology as its expected advantages become more
established, there can be no assurance that competitive pressures will not
force an accelerated implementation at substantially increased cost.

While the Company has chosen CDMA as its digital technology, all of its
commercial networks currently utilize analog technology. Rather than
immediately converting to digital technology, the Company has begun offering
N-AMPS, an enhanced analog technology, which it has deployed in ten high
traffic markets as an intermediate step to the implementation of digital
technology. Other wireless communications companies may implement digital
technology more rapidly than the Company, and consequently such companies may
be able to provide enhanced services and superior quality compared with what
the Company is able to provide through its existing analog technologies. There
can be no assurance that the Company could respond to such competitive
pressures and convert to digital technology on a timely basis or at an
acceptable cost. One or more of the technologies currently utilized by the
Company may not be preferred by its customers or may become obsolete at some
time in the future, which in either case could have a material adverse effect
on the Company's financial condition and performance. There can be no
assurance that the Company's ongoing network improvements will be sufficient
to meet or exceed the capabilities and quality of competing networks. See
"Business--Competition."

14
<PAGE>

REGULATION OF THE CELLULAR INDUSTRY

The licensing, construction, operation, acquisition, assignment and transfer
of cellular communications systems, as well as the number of licensees
permitted in each market, are regulated by the FCC. Changes in the regulation
of cellular activities could have a material adverse effect on the Company's
operations and financial performance. In addition, initial operating licenses
are generally granted for terms of up to 10 years, renewable upon application
to the FCC. Licenses may be revoked and license renewal applications denied
for cause after appropriate notice and hearing. The FCC has issued a decision
confirming that current licensees will be granted a renewal expectancy if they
have complied with their obligations under the Communications Act of 1934, as
amended (the "Communications Act") during their license term. See "Business--
Governmental Regulation--Regulation and Licensing of Cellular Communications
Systems."

On September 29, 1995, the Company filed for renewal of six expiring FCC
licenses (Raleigh, NC; Las Vegas, NV; Norfolk, VA; Newport News, VA; Johnson
City, TN; and Greenville, SC). While the Company is confident that it has met
and will continue to meet all requirements necessary to secure renewal of its
cellular licenses and expects that its licenses will be renewed, such renewal
is not automatic. The Company's renewal applications may be subject to
petitions to deny or competing applications. Therefore, there can be no
assurance that those six licenses or any of the Company's other licenses will
be renewed.

NON-CONTROLLING OWNERSHIP INTERESTS IN LICENSES

Many of the Company's interests in cellular systems are owned through
affiliates that are partners in limited partnerships which are the licensees
for their respective systems. In partnerships where the Company's affiliate is
a limited partner or is one of several general partners, certain decisions,
such as the timing and amount of cash distributions and sale or liquidation of
the partnership, may not be subject to a vote of the limited partners or may
require a greater percentage vote than that owned by the Company's affiliate.
In partnerships that are not managed by the Company, the Company is dependent
on the managing partner to meet the licensee's obligations under the FCC's
rules and regulations. Any managing partner of a partnership in which the
Company holds an interest may make decisions on such matters which may not be
in the Company's best interests and may adversely affect the continuing
qualification of licenses in which the Company holds an interest.

POTENTIAL LIABILITY UNDER TAX SHARING AGREEMENT

In connection with the Spin-off, Sprint and the Company will enter into the
Tax Sharing Agreement, which will allocate the responsibility for certain
taxes between Sprint and the Company. In the event that the Spin-off fails to
constitute a tax-free distribution under Section 355 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Tax Sharing Agreement will provide
that any taxes resulting from such failure will be allocated between Sprint
and the Company in a manner that will take into account the extent to which
each may have contributed to such failure. The Company's liability in such
case could exceed its net asset value at such time. If neither party is
determined to be responsible, such taxes will be allocated based upon each
company's market capitalization immediately following the Spin-off, as
compared to that of the other company.

The Company has sought from the IRS a private letter ruling that the Spin-
off will qualify as a tax-free distribution, both to Sprint's stockholders and
to Sprint. Receipt of a favorable ruling from the IRS is a condition to
completion of the Spin-off, and Sprint does not anticipate proceeding with the
Spin-off unless it obtains the ruling. If the Company and Sprint receive a
favorable ruling but fail to comply with the assumptions under which the
ruling was issued, Sprint estimates that the total liability for Federal
income taxes both on Sprint and on its stockholders would be approximately $2
billion. There can be no assurance that events occurring subsequent to the
Spin-off, or events not disclosed in Sprint's request for such private letter
ruling, will not cause the Spin-off to be deemed a taxable distribution.
Furthermore, there can be no assurance that in the event the Spin-off is
determined to be a taxable distribution the Company would not incur a material
liability pursuant to the Tax Sharing Agreement.

15
<PAGE>

LIMITATION ON BUSINESS ACTIVITIES IMPOSED BY TAX ASSURANCE AGREEMENT

In connection with the Spin-off, it is anticipated that Sprint and the
Company will enter into an agreement (the "Tax Assurance Agreement") pursuant
to which certain limitations designed to preserve the tax-free status of the
Spin-off (e.g., continuity of business enterprise) will be imposed upon the
Company for a period of two years after the consummation of the Spin-off. Such
limitations, among other things, may (i) prohibit the Company from exchanging,
contributing or otherwise transferring or disposing of more than 40% of its
cellular properties, or (ii) prohibit the Company from issuing preferred stock
or Common Stock which would (together with shares of Common Stock retained by
Sprint) exceed 19% of the outstanding shares of Common Stock unless, in each
case, the Company obtains an unqualified opinion of counsel (which opinion
must in some cases be acceptable to Sprint) or a ruling from the IRS stating
that such action would not cause the Spin-off or any asset transfers related
thereto to become taxable. If the Company were to breach any of its
obligations under the Tax Assurance Agreement and as a result thereof the
Spin-off is not treated as a tax-free distribution under the Code, the Company
would be required to indemnify Sprint pursuant to the Tax Sharing Agreement
for any taxes assessed in respect of the Spin-off. Such indemnification
obligations could be substantial and could exceed the net asset value of the
Company at such time. See "Background of Spin-off and Relationship with
Sprint--The Tax Sharing Agreement."

RESTRICTIONS IMPOSED BY THE CREDIT FACILITY

The Credit Facility is expected to contain a number of significant covenants
that will, among other things, restrict the ability of the Company and its
Restricted Subsidiaries to dispose of assets, merge, incur debt, pay
dividends, repurchase or redeem capital stock and indebtedness, create liens,
make capital expenditures and make certain investments or acquisitions and
otherwise restrict corporate activities. In addition, the Credit Facility is
expected to contain, among other covenants, requirements that the Company
maintain specified financial ratios, including maximum leverage, minimum
interest coverage and minimum working capital. The ability of the Company to
comply with such provisions may be affected by events beyond the Company's
control. The breach of any of these covenants would result in a default under
the Credit Facility. In the event of any such default, lenders party to the
Credit Facility could elect to declare all amounts borrowed under the Credit
Facility, together with accrued interest and other fees, to be due and
payable. Such default or acceleration would be an Event of Default under the
Indenture governing the Notes. If the indebtedness under the Credit Facility
or the Notes were to be accelerated, there can be no assurance that the assets
of the Company would be sufficient to repay such indebtedness and the Notes in
full. See "Financing--Credit Facility" and "Financing--Description of Notes
and Indenture."

OPERATING COSTS DUE TO FRAUD

Like most companies in the cellular industry, the Company incurs costs
associated with unauthorized use of its network. Fraud impacts interconnection
costs, capacity costs, administrative costs, costs incurred for fraud
prevention and payments to other carriers for unbillable fraudulent roaming.
As a percentage of cellular service revenues, unbillable fraudulent roaming
charges were .28% in 1994 and 1.10% for the nine months ended September 30,
1995. It is not possible to fully quantify the additional costs associated
with fraud. While the Company continues to develop and invest in anti-fraud
measures to prevent cellular fraud, there can be no assurance that the Company
will not incur substantial costs due to fraud. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Results of
Operations--Cost of Service."

SHORT-TERM NATURE OF DEALER AGREEMENTS

The Company has entered into agreements with nationally recognized and local
dealers, whereby such dealers are paid commissions for each new cellular
service customer solicited, subject to charge-back provisions if the customer
fails to remain in service for a specified period of time. These arrangements
provide a valuable source of new customers for the Company. Agreements are
renegotiated annually and there can be no assurance that current terms and
conditions will extend beyond one year.

16
<PAGE>

RADIO FREQUENCY EMISSION CONCERNS

Media reports have suggested that certain radio frequency ("RF") emissions
from cellular telephones may be linked to cancer. Note 16 of the Notes to the
Company's Consolidated Financial Statements includes a description of a suit
filed against the GTE Mobilnet of South Texas Limited Partnership, in which
the Company owns an 8.8% limited partnership interest, alleging that the death
by cancer of a subscriber of that system was related to such emissions. The
Company is not aware of any credible evidence linking the usage of cellular
telephones with cancer. The FCC has a rulemaking proceeding to update the
guidelines and methods it uses for evaluation on RF emissions of radio
equipment, including cellular telephones. As a result, more restrictive
standards on RF emissions from low powered devices such as cellular telephones
may be imposed. The Company is unable to predict the nature or extent of these
potential restrictions at the present time and therefore cannot determine
whether these potential restrictions or the basis for them would have a
material adverse effect on its business or results of operations.

LITIGATION INVOLVING MINORITY OWNED MARKETS

The Company has equity investments in various non-controlled entities which
are not consolidated for financial reporting purposes, but are accounted for
under the equity method for such purposes. These entities include GTE Mobilnet
of South Texas Limited Partnership ("South Texas L.P.") and New York SMSA
Limited Partnership ("New York L.P."). As described in Note 16 to the
Company's consolidated financial statements, the South Texas L.P. and the New
York L.P. are parties to separate legal proceedings, the outcome of which
proceedings such partnerships have been unable to determine. As a result, the
audit report furnished by the respective auditors for the financial statements
of the South Texas L.P. and the New York L.P. include explanatory paragraphs
regarding the existence of such legal proceedings. Because the outcome of such
legal proceedings has not been determined by the South Texas L.P. and the New
York L.P., no provision for any liability that may result upon adjudication of
that litigation has been made in the Company's consolidated financial
statements. In addition, because the audit report on the Company's
consolidated financial statements, insofar as it relates to data included for
such partnerships, is based solely on the reports of the respective auditors
for South Texas L.P. and New York L.P., such report also includes an
explanatory paragraph regarding such litigation. The Company's combined
investments in these partnerships, including intangible assets recorded in
connection with the acquisitions of these partnerships, was $200.8 million at
September 30, 1995 and its combined equity in the net income of these
partnerships, net of amortization of intangible assets, was $13.9 million and
$14.8 million for the year ended December 31, 1994 and the nine month period
ended September 30, 1995, respectively. In view of the uncertainty regarding
such litigation, there can be no assurance that the outcome of such litigation
will not have a material adverse effect on the Company's investment in these
partnerships or in its equity in the combined income of such partnerships.

NO PRIOR MARKET FOR COMPANY COMMON STOCK

There has been no prior trading market for Company Common Stock and there
can be no assurance as to the prices at which the Company Common Stock will
trade before or after the Spin-off Date. Although the Company's Common Stock
will be listed on the New York Stock Exchange ("NYSE"), the prices at which
the Company Common Stock trades may fluctuate significantly. Prices for the
Company Common Stock may be influenced by many factors, including the depth
and liquidity of the market for Company Common Stock, investor perceptions of
the Company and its businesses, the Company's dividend policy and general
economic and market conditions. See "--The Company's Dividend Policy" and
"Description of Company Capital Stock--Listing and Trading of Common Stock."

THE COMPANY'S DIVIDEND POLICY

The payment and level of cash dividends, if any, by the Company after the
Spin-off will be at the discretion of the Company's Board of Directors, based
primarily upon the earnings, cash flow and financial requirements of its
businesses. The Company currently does not anticipate paying cash dividends on
its Common Stock in the

17
<PAGE>

foreseeable future. The future dividend policy will be determined on the basis
of various factors, including the Company's results of operations, financial
condition, capital requirements and investment opportunities. In addition, the
Credit Facility and the Indenture with respect to the Notes limit the
Company's ability to pay dividends. See "Financing--Credit Facility" and
"Description of Company Capital Stock--Dividends on the Company Common Stock."

CERTAIN ANTITAKEOVER EFFECTS

The Company's Certificate of Incorporation, Bylaws and Rights (as defined),
and the Delaware General Corporation Law, contain several provisions that
could have the effect of delaying, deferring or preventing a change in control
of the Company in a transaction not approved by the Company's Board of
Directors, or in certain circumstances, by the disinterested members of the
Board of Directors. See "Antitakeover Effects of Certain Provisions."

EFFECTS ON SPRINT STOCK

After the Spin-off, the common stock of Sprint will continue to be listed
and traded on the NYSE and certain other stock exchanges. As a result of the
Spin-off, the trading prices of Sprint common stock are expected to be
correspondingly lower than the trading prices of Sprint common stock
immediately prior to the Spin-off. The combined trading prices of Sprint
common stock and Company Common Stock after the Spin-off may be less than,
equal to or greater than the trading prices of Sprint common stock prior to
the Spin-off.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

Sprint has conditioned the Spin-off on the receipt of a ruling from the IRS
to the effect that, among other things, for Federal income tax purposes the
transfer of certain cellular assets and liabilities to the Company will be
tax-free under Sections 368(a)(1)(D) and 351 of the Internal Revenue Code of
1986, as amended (the "Code") and that the Spin-off will be tax-free under
Section 355 of the Code. As discussed below, cash received in lieu of
fractional share interests in Company Common Stock will generally be taxable
to recipients. The continuing validity of such rulings is subject to certain
factual representations and assumptions. Sprint is not aware of any facts or
circumstances which should cause such representations and assumptions to be
untrue. Sprint has also agreed to certain restrictions on its future actions
for a period of time following the Spin-off to provide further assurances that
the Spin-off will qualify as a tax-free distribution. See "The Spin-off--The
Tax Sharing Agreement" and "The Spin-off--The Tax Assurance Agreement." If the
Spin-off were taxable, then (i) corporate level income taxes would be payable
by the consolidated group of which Sprint is the common parent, based upon the
amount by which the fair market value of the Company Common Stock distributed
in the Spin-off exceeds Sprint's basis therein and (ii) each holder of Company
Common Stock who receives shares of Company Common Stock in the Spin-off would
be treated as if such stockholder received a taxable distribution, taxed as a
dividend to the extent of such stockholder's pro rata share of Sprint's
current and accumulated earnings and profits. The Company has agreed to
indemnify Sprint and Sprint stockholders if its actions result in such tax
liability. Sprint has agreed to indemnify the Company for any losses which it
may incur in the event that Sprint or any of its affiliates fails to comply
with statements and representations made by Sprint to the IRS in connection
with the rulings which have been obtained. The potential corporate tax
liability which could arise from an acquisition of the Company for a period of
time after the Spin-off, together with the foregoing indemnification
arrangements, could have an antitakeover effect on the acquisition of control
of the Company.

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

Set forth below are selected consolidated financial data with respect to the
Company for each of the five fiscal years in the period ended December 31,
1994 and for the nine month periods ended September 30, 1995 and 1994. The
selected consolidated financial data as of December 31, 1994 and 1993 and for
each of the three years in the period ended December 31, 1994 have been
derived from the audited consolidated financial statements included elsewhere
herein. The consolidated financial statements as of December 31, 1994 and 1993
and for each of the two years in the period ended December 31, 1994 have been
audited by Ernst & Young LLP as set forth in their report also included
elsewhere herein. The consolidated financial statements as of December 31,
1992 and for the year ended December 31, 1992 have been audited by Arthur
Andersen LLP. The selected consolidated financial data as of December 31, 1991
and 1990 and for each of the two years in the period ended December 31, 1991
have been derived from unaudited consolidated financial statements. The
information as of and for the nine month periods ended September 30, 1995 and
1994 is unaudited but in the opinion of the Company reflects all adjustments
necessary for the fair presentation of the Company's financial position and
results of operations for such periods, and may not be indicative of the
results of operations for a full year. The selected consolidated financial
data presented below should be read in conjunction with the consolidated
financial statements and related notes appearing elsewhere herein.

<TABLE>
<CAPTION>
FOR THE
NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
OPERATING REVENUES
Cellular Service
Revenues............... $ 572,028 $ 408,760 $ 569,793 $ 372,674 $ 253,593 $ 185,686 $ 136,919
Equipment Sales......... 34,125 36,100 56,682 37,806 26,526 27,829 24,996
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Operating
Revenues.............. 606,153 444,860 626,475 410,480 280,119 213,515 161,915
---------- ---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Cost of Service......... 50,489 37,001 51,071 37,912 29,689 20,879 16,090
Cost of Equipment Sales. 67,520 45,893 76,913 42,635 30,402 33,191 27,603
Other Operating
Expenses............... 28,527 22,014 30,905 20,767 16,835 13,319 13,515
Selling, General,
Administrative
and Other Expenses(1).. 262,032 202,666 289,573 214,355 153,949 113,695 92,676
Depreciation and
Amortization........... 83,666 67,926 92,435 75,009 52,052 43,244 37,850
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Operating
Expenses.............. 492,234 375,500 540,897 390,678 282,927 224,328 187,734
---------- ---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME (LOSS). 113,919 69,360 85,578 19,802 (2,808) (10,813) (25,819)
Interest Expense........ (95,081) (70,183) (98,437) (85,409) (86,662) (100,763) (83,745)
Minority Interests in
Net (Income) Loss of
Consolidated Entities.. (26,218) (17,146) (22,110) (9,697) (4,467) (2,926) 71
Equity in Net Income of
Unconsolidated
Entities............... 23,566 16,740 26,390 19,646 13,251 9,365 9,278
Other Income
(Expense)(2)(3)........ (1,188) (4,951) (5,481) (1,351) 1,157 22,043 211
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES AND
CUMULATIVE EFFECTS OF
CHANGES IN ACCOUNTING
PRINCIPLES............. 14,998 (6,180) (14,060) (57,009) (79,529) (83,094) (100,004)
Income Tax Expense
(Benefit).............. 17,128 5,355 5,697 (7,112) (17,309) (18,817) (25,043)
---------- ---------- ---------- ---------- ---------- ---------- ----------
LOSS BEFORE CUMULATIVE
EFFECTS OF CHANGES IN
ACCOUNTING PRINCIPLES.. (2,130) (11,535) (19,757) (49,897) (62,220) (64,277) (74,961)
Cumulative Effects of
Changes in Accounting
Principles, net(4)..... -- -- -- (1,587) (3,302) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET LOSS................ $ (2,130) $ (11,535) $ (19,757) $ (51,484) $ (65,522) $ (64,277) $ (74,961)
========== ========== ========== ========== ========== ========== ==========
RATIO OF EARNINGS TO
FIXED CHARGES(5)....... 1.39 -- -- -- -- --
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
---------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEETS DATA:
Working Capital
(Deficit).............. $ (41,385) $ (10,683) $ (54,800) $ (18,575) $ (17,020) $ (12,345) $ (817)
Total Assets............ 1,933,477 1,626,166 1,728,344 1,505,221 1,494,648 1,390,245 1,270,563
Advances From and Notes
to Affiliates.......... 1,520,259 1,332,289 1,354,116 1,246,822 1,249,168 1,109,796 969,544
Total Shareholder's
Equity................. 1,633 11,985 3,763 23,520 75,004 140,526 204,803
</TABLE>

19
<PAGE>

- --------
(1) Effective March 9, 1993, Sprint consummated its merger with Centel. The
transaction costs associated with the merger (consisting primarily of
investment banking and legal fees) and the expenses of integrating and
restructuring the operations of the two companies (consisting primarily of
employee severance and relocation expenses and costs of eliminating
duplicative facilities) resulted in nonrecurring charges to Sprint in
1993. The portion of such charges attributable to the Company was
$4,733,000.
(2) In August 1994, the Company sold all of the assets associated with the
cellular communications system in Sioux City, Iowa, to a wholly owned
subsidiary of McCaw Cellular Communications, Inc. The purchase price
received was approximately $9,920,000, and a loss of $4,352,000 was
realized on this divestiture.
(3) In December, 1991, the Company sold its 50% ownership in the Omaha
Cellular Limited Partnership to Lincoln Telecommunications Company. The
Company realized a gain of approximately $21,475,000 on this divestiture.
(4) Effective January 1, 1993, the Company changed its method of accounting
for postretirement and postemployment benefits by adopting Statements of
Financial Accounting Standards ("SFAS") Nos. 106 and 112. The cumulative
effect of these changes in accounting principles reduced 1993 net income
by $1,587,000. Effective January 1, 1992, the Company also changed its
method of accounting for income taxes by adopting SFAS No. 109. The
cumulative effect of this change in accounting principle decreased 1992
net income by $3,302,000.
(5) The ratios of earnings to fixed charges have been computed by dividing
fixed charges into the sum of (a) income (loss) before cumulative effect
of changes in accounting principles, less capitalized interest included in
income and with adjustments to appropriately reflect the Company's
majority-owned, 50%-owned, and less-than-50%-owned affiliates, (b) income
taxes, and (c) fixed charges. Fixed charges consist of interest on all
indebtedness (including amortization of debt issuance expenses) and the
interest component of operating rents, with adjustments as appropriate to
reflect the Company's 50%-owned affiliates. For each of the 5 years in the
period ended December 31, 1994, the deficiency of earnings available to
cover fixed charges was $8,912,000, $60,217,000, $94,819,000, $77,607,000
and $103,530,000, respectively.

20
<PAGE>

SELECTED PROPORTIONATE OPERATING RESULTS

The following table sets forth supplemental financial data reflecting the
proportionate consolidation of entities in which the Company holds interests
significant to its operations. This presentation differs from the
consolidation methodology used to prepare the Company's principal financial
statements in accordance with GAAP (see Note 1 of "Sprint Cellular Company and
Subsidiaries Notes to Consolidated Financial Statements") and does not reflect
operating results in accordance with GAAP. The proportionate operating data
reflects the Company's ownership percentage of entities consolidated for
financial reporting purposes and the Company's ownership percentage of certain
of its significant unconsolidated entities which are accounted for under the
equity method for financial reporting purposes. Because significant assets of
the Company are not consolidated, the Company believes the following
proportionate operating results facilitate the understanding and assessment of
the overall extent of its investments. However, the operating data presented
below are not indicative of the cash flow available to the Company with
respect to its interests in unconsolidated entities. Such interests are
subject to partnership agreements and other restrictions limiting the
Company's ability to effect distributions of cash and other assets of the
entity in which the Company holds a noncontrolling interest. The following
table is not required by GAAP, and is not intended to replace and should not
be viewed as being of greater significance than, or in isolation from, the
consolidated financial statements prepared in accordance with GAAP.

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS
ENDED AND AS OF FOR THE YEAR ENDED AND AS
SEPTEMBER 30, (1) OF DECEMBER 31, (1)
------------------ ----------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
OPERATING REVENUES
Cellular Service Revenues.... $573,772 $412,974 $574,043 $378,167 $265,595
Equipment Sales.............. 33,118 32,860 51,723 33,553 24,112
-------- -------- -------- -------- --------
Total Operating Revenues... 606,890 445,834 625,766 411,720 289,707
-------- -------- -------- -------- --------
OPERATING EXPENSES
Cost of Equipment Sales...... 64,430 42,902 71,896 38,374 27,750
Operating, Selling, General,
Administrative and Other
Expenses.................... 339,963 260,849 368,775 264,514 196,081
Depreciation and
Amortization................ 86,045 72,426 97,880 79,229 59,580
-------- -------- -------- -------- --------
Total Operating Expenses... 490,438 376,177 538,551 382,117 283,411
-------- -------- -------- -------- --------
Operating Income............. $116,452 $ 69,657 $ 87,216 $ 29,603 $ 6,296
======== ======== ======== ======== ========
EBITDA (2)................... $202,497 $142,083 $185,096 $108,832 $ 65,876
EBITDA Margin (3)............ 33.37% 31.87% 29.58% 26.43% 22.74%
Capital Expenditures (4)..... $247,941 $154,954 $251,453 $156,496 $127,002
Selected Net POPs (Unaudited)
(5)......................... 20,004 19,777 20,004 19,777 19,687
Proportionate Customers
(Unaudited) (6)............. 1,300 861 1,009 643 398
</TABLE>
- --------
(1) The proportionate operating results include the Company's ownership
percentage of entities consolidated for financial reporting purposes as
well as the Company's ownership percentage of certain unconsolidated
equity investments which are significant to the Company, consisting of the
Company's investments in cellular partnerships serving markets such as
Chicago, IL; Houston, TX; Kansas City, MO; New York, NY; Omaha, NE;
Orlando, FL; and Richmond, VA. Cellular partnerships excluded from the
proportionate data, in total, represented approximately 3.8% of the
Company's proportionate operating income in 1994 and 4.2% of the Company's
Net POPs at September 30, 1995.
(2) EBITDA is defined as operating income plus depreciation and amortization
and is not the same as cash flow from operating activities as presented in
the Company's consolidated statements of cash flows. Proportionate EBITDA
represents the Company's ownership interest in the respective entities
multiplied by the entities' EBITDA and, therefore, does not represent cash
available to the Company.
(3) EBITDA Margin represents EBITDA divided by Total Operating Revenues.
(4) Capital Expenditures exclude acquisitions.
(5) Selected Net POPs are the estimated market population multiplied by the
Company's ownership interest in each presented market and excludes certain
markets as described above.
(6) Proportionate customers reflect total customers in each presented market
in which the Company owns an interest multiplied by the Company's
ownership interest.

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following is a discussion and analysis of the historical results of
operations and financial condition of the Company and factors affecting the
Company's financial resources. This discussion should be read in conjunction
with the Company's consolidated financial statements, including the notes
thereto, appearing elsewhere in this Information Statement.

For financial reporting purposes, the Company consolidates each cellular
subsidiary and partnership in which it has a controlling interest. Revenues,
expenses, assets and liabilities of consolidated entities are fully reflected
in the corresponding line items in the Company's consolidated financial
statements. The minority investors' share of consolidated entities' net income
or loss is reported as "Minority Interests in Net Income of Consolidated
Entities." The equity method of accounting is used to account for the entities
in which a controlling interest does not exist. The proportionate share of the
net income or loss of such entities is recognized as "Equity in Net Income of
Unconsolidated Entities" and investments in such entities as "Investments in
Unconsolidated Entities." The related assets, liabilities, revenues and
expenses from entities in which the Company does not have a controlling
interest are not otherwise reflected in the consolidated financial statements.

RESULTS OF OPERATIONS

The following table sets forth the components of the Company's operating
revenues and operating expenses and the percentage of cellular service
revenues represented by each component for the periods indicated.

<TABLE>
<CAPTION>
RESULTS OF CELLULAR SERVICE OPERATIONS
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------- -----------------------------------------------
1995 1994 1994 1993 1992
--------------- --------------- --------------- --------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cellular Service
Revenues............... $572,028 100.0% $408,760 100.0% $569,793 100.0% $372,674 100.0% $253,593 100.0%
Cost of Service......... 50,489 8.8 37,001 9.1 51,071 9.0 37,912 10.2 29,689 11.7
Other Operations
Expense................ 28,527 5.0 22,014 5.4 30,905 5.4 20,767 5.6 16,835 6.6
Selling and Customer
Operations............. 213,695 37.4 162,113 39.7 233,116 40.9 165,714 44.5 111,629 44.0
General, Administrative
and Other Expenses..... 48,337 8.5 40,553 9.9 56,457 9.9 48,641 13.1 42,320 16.7
Depreciation............ 69,301 12.1 53,332 13.0 73,054 12.8 55,580 14.9 32,791 12.9
</TABLE>

Within Sprint's Business Segment Information pertaining to its cellular
operations, Sprint historically classified as revenues the fees collected from
customers for placing and receiving calls outside the Company's service area.
Consistent with the predominant practice in the cellular industry, the Company
has reclassified such fees in its income statement from cellular service
revenue to a reduction of cost of service expense. As a result, cost of
service expense reflects the net effect of roaming activity associated with
calls placed and received by its customers outside of the Company's service
area.

Customer Growth Rate

Cellular customers increased 29.7% and 35.2% during the nine month periods
ended September 30, 1995 and 1994, respectively. For the twelve month periods
ended September 30, 1995 and 1994, cellular customers increased 52.9% and
63.7%, respectively, as compared to the corresponding prior year periods. The
Company's penetration rate, which is the number of customers divided by the
total population in its licensed service areas, reached 6.9% by September 30,
1995.

22
<PAGE>

The Company, and the industry in general, have historically experienced
significant customer growth during the fourth quarter. The Company attained
37.0% and 39.4% of its annual customer gain in the 1994 and 1993 fourth
quarter, respectively, and expects this trend to continue. This trend is
specifically attributable to significant increases in cellular communications
service activations during the holiday season. Revenue benefits associated
with significant fourth quarter customer growth, however, are not experienced
until subsequent quarters. During the fourth quarter of each year, the Company
experiences significant increases in sales commission expenses as a result of
the significant customer growth which causes a deterioration in fourth quarter
operating margins. The Company believes that more meaningful operating margins
are reflected in subsequent periods after the revenue benefits of the
significantly increased customer base are experienced.

Cellular Service Revenues

Cellular service revenues consist primarily of charges for airtime, access
fees, roaming fees received from other cellular carriers related to their
customers placing or receiving calls in the Company's service area, charges
for long distance calls placed by the Company's customers and those of other
carriers within the Company's service area, service charges associated with
initial activation and revenues generated by enhanced services such as
voicemail, call forwarding and call waiting. Cellular service revenues
increased 52.9% in 1994, 47.0% in 1993 and 39.9% for the nine months ended
September 30, 1995 when compared to the corresponding prior year periods,
principally from growth in the number of cellular customers. Increased
distribution channels, expanded network capacity, declining cellular telephone
equipment and service prices, and pricing plans targeted at particular market
segments are key factors contributing to the Company's customer growth. The
industry-wide trend for negotiated reduced roaming rates among carriers and
generally lower revenue per customer have partially offset the revenue growth
resulting from increased usage. Roaming revenues increased 39.4% in 1994,
45.9% in 1993 and 33.9% for the nine months ended September 30, 1995, as
compared to the corresponding prior year periods.

Consistent with the rest of the industry, the Company has experienced
increased penetration in the consumer market--a trend attributable to
declining cellular telephone equipment and service prices, an increased
awareness of the benefits of cellular communications, widespread distribution
channels in consumer-oriented retail locations and expanded network coverage
and capacity. The Company expects this trend to continue. New customers
generally use less airtime than existing customers, causing the average
service revenue per customer per month to decline. As a result, cellular
revenue growth has not kept pace with the level of growth in the number of
customers. Service revenue per average customer per month declined 7.5% from
1993 to 1994, 5.2% from 1992 to 1993 and 9.6% from the first nine months of
1994 to the first nine months of 1995. The Company expects that service
revenue per average customer per month will continue to decline as penetration
rates continue to increase.

Future revenue growth will be impacted by the Company's success in
maintaining customer growth in existing markets, additional revenue generated
from the increasing availability of a variety of enhanced and related services
and products and by the Company's success in acquiring additional cellular
communications systems to further strengthen its existing regional clusters.
The growth rate of new customers is expected to decline as the customer base
grows. In an effort to increase cellular telephone usage through increased
roaming airtime, the Company expects the continuation of the industry-wide
trend for negotiated reduced roaming rates between carriers, which may reduce
revenues derived from cellular service users who roam into the Company's
systems. The Company expects that roaming airtime may increase as reduced
roaming rates between carriers are ultimately passed on to customers, thus
stimulating increased usage.

Equipment Sales

Equipment sales consist primarily of revenues from sales of cellular
telephone equipment and accessories. The price of cellular telephones is a key
factor influencing the rate of customer growth. Equipment sales increased
49.9% in 1994 and 42.5% in 1993, in each case due to an increase in the number
of telephone units sold. Equipment sales decreased 5.5% for the nine months
ended September 30, 1995, when compared to the same period in 1994, despite an
increase in the number of telephone units sold. Although declining cellular

23
<PAGE>

telephone prices have generated increased activations of cellular service,
gross margins on equipment sales have declined as the Company has sold
cellular telephones at or below cost. Competitive market pressures are
expected to result in a continued trend of negative gross margins on equipment
sales.

Cost of Service

Cost of service includes interconnection and network facilities costs paid
to wireline telephone companies to complete calls in their respective service
areas, charges from interexchange carriers for providing long distance
telecommunications and operator services to the Company's customers and net
roaming costs charged by other carriers for the Company's customers placing
and receiving calls outside the Company's service area. Cost of service as a
percentage of cellular service revenues was 9.0% in 1994, 10.2% in 1993 and
11.7% in 1992. During the nine months ended September 30, 1995 and 1994, cost
of service as a percentage of cellular service revenues was 8.8% and 9.1%,
respectively. Excluding the impact of unbillable roaming activities discussed
below, cost of service as a percent of cellular service revenue was 7.7% and
8.7% during the nine months ended September 30, 1995 and 1994, respectively.

Costs paid to wireline telephone companies for network facilities and
interconnection services include a fixed and variable component. The variable
component is directly impacted by the number of calls and, therefore,
increases as the number of calls increase; however, as the customer base and
call volumes continue to grow, the fixed component is favorably impacted by
economies of scale, a key factor contributing to the trend in lower cost of
service as a percentage of cellular service revenues.

Charges for long distance telecommunications and operator services provided
to the Company's customers by interexchange carriers are based on terms and
conditions negotiated with those carriers. Costs for providing long distance
and operator services are variable in nature and increase as call volumes
increase. The Company is currently not required to offer its customers options
in the selection of a long distance carrier. As a result, Sprint long distance
service is offered on an exclusive basis unless Sprint does not provide such
service in the relevant service area. The charges incurred are based on the
terms and conditions of a contract governing long distance telecommunications
and operator services charges, which is currently scheduled to expire in 1997
but which may be extended prior to the Spin-off for an additional term of up
to five years. The Company believes that the terms and conditions of such
contract are reasonable and based on fair market value, although there can be
no assurance that these terms are comparable to those which could be obtained
from unaffiliated third parties. Furthermore, upon expiration of this
contract, there can be no assurance that there will be a renewal with Sprint
upon terms and conditions similar to those currently being received due to the
fact that STV and the Company will be competing in certain markets.

Cost of service expense reflects the net effect of roaming activity
associated with calls placed and received by its customers. Unauthorized usage
of customers' telephone numbers, commonly referred to in the industry as
cloning fraud, caused unbillable fraudulent roaming activities to increase in
1995. The Company has invested in systems which provide knowledge-based usage
profiling and real-time call information, thus allowing the Company to monitor
unusual cellular telephone usage patterns and detect cloning fraud activity.
Unbillable fraudulent roaming activity totaled $1.6 million for the 1994
calendar year and $6.3 million in the nine months ended September 30, 1995.
Failure to detect significant fraud activity in a timely manner in several
markets caused the increase in unbillable fraudulent roaming activity during
the first half of 1995. However, during the first half of 1995, the Company
was in the process of implementing fraud control procedures. In the 1995 third
quarter, fraud control procedures were fully implemented and the Company
anticipates that such improved controls will help minimize significant
increases in costs associated with fraud. Unbillable fraudulent roaming
activity in the third quarter of 1995 decreased 42.6% when compared to the
second quarter of 1995.

Other Operations Expenses

Other operations expenses consist primarily of cell site repair and
maintenance costs, engineers' salaries and benefits and other operational
costs. Other operations expenses increased 48.8% in 1994, 23.4% in 1993 and
29.6% for the nine months ending September 30, 1995, when compared to the
corresponding prior year periods. As a percentage of cellular service
revenues, these costs decreased to 5.4% in 1994 from 5.6% in 1993 and 6.6%

24
<PAGE>

in 1992, due primarily to the growth in the number of customers. For the nine
months ended September 30, 1995, these costs were 5.0% of cellular service
revenues as compared to 5.4% for the nine months ended September 30, 1994. The
Company expects that these costs as a percentage of cellular service revenues
will continue to decrease as economies of scale continue to be realized.

Selling, General, Administrative and Other Expenses

Selling and Customer Operations Expenses. Selling and customer operations
expenses consist primarily of sales commissions, wages and benefits for sales
and customer service personnel, billing, roaming administration, advertising
and promotional expense. Increases in customer operations expense relate
principally to growth in the cellular customer base. Increases in selling
expense relate principally to increases in the level of cellular service
revenues. As a percent of cellular service revenues, these costs were 40.9% in
1994, 44.5% in 1993 and 44% in 1992. During the nine months ended September
30, 1995 and 1994, selling and customer operations expenses as a percentage of
cellular service revenues were 37.4% and 39.7%, respectively. The percentages
reflect economies of scale gained from serving additional customers, improved
operational support systems and improved productivity. In 1993, costs
associated with the introduction and promotion of the Sprint brand name
resulted in increased advertising costs. These increased costs resulted in an
increase in selling and customer operations expenses as a percent of cellular
service revenues. Following the Spin-off, additional advertising, promotional
and other marketing expenses associated with the introduction and promotion of
the Company's new brand name will be incurred. See "Certain Risk Factors--Loss
of Sprint Brand Name; Costs of Introducing New Brand Name." Such expenditures
will cause an increase in selling and customer operations expenses as a
percent of cellular service revenues.

Sales, marketing and advertising costs to acquire new customers have
decreased on a per customer basis. Such costs per customer were $246 in 1994,
$277 in 1993 and $303 in 1992. During the nine months ended September 30, 1995
and 1994, such costs per customer were $245 and $266, respectively. The
decline in costs to acquire new customers relates to sales distribution
channel efficiencies which continue to be realized. During 1995, the Company
experienced increases in certain commission rates charged by various local and
national dealers for acquiring new cellular customers, causing a slower rate
of decline in the cost to acquire new customers.

In an effort to reduce costs associated with acquiring new customers, the
Company has begun to utilize more extensively an internal sales force located
in Company retail outlets. Incremental sales costs at a Company retail store
are significantly lower than commissions paid to national dealers. Although
the Company intends to continue to support its large dealer network, continued
increases in its own retail distribution channels are planned. As the level of
distribution through its own retail channels has increased, the Company has
experienced a decline in churn, a factor further contributing to a decrease in
the costs of maintaining and growing its customer base. The Company is unable
to anticipate whether the cost to add new customers will continue to decrease
after 1995, as savings associated with the transition to the use of an
internal sales force level off, the growth rate of new customers declines and
competition for local and national dealers intensifies.

General, Administrative and Other Expenses. General, administrative and
other expenses consist primarily of salaries and related benefits for general,
administrative and support personnel and other overhead expenses. General,
administrative and other expenses as a percentage of cellular service revenues
were 9.9% in 1994, 13.1% in 1993 and 16.7% in 1992. During the nine months
ended September 30, 1995 and 1994, general, administrative and other expenses
as a percent of cellular service revenues were 8.5% and 9.9%, respectively.
The decline relates to economies of scale which the Company continues to
realize as its customer base grows.

In connection with the Spin-off, the Company will begin to perform certain
functions previously provided to the Company by Sprint. The undertaking of
such functions is not expected to have a significant impact on the Company's
future operating expenses. Although costs associated with the Spin-off will
cause the general, administrative and other expenses to increase as a
percentage of cellular service revenues in 1995 and 1996, an ongoing trend of
decreased general, administrative and other expenses as a percentage of
cellular service revenues is anticipated.

25
<PAGE>

A concerted effort to analyze and effectively manage potentially
uncollectible accounts coupled with the development of new technologies and
products has allowed the Company to reduce the possibility of large write-offs
on customer accounts resulting in the declining trend in the allowance for
doubtful accounts as a percentage of total receivables. These technologies are
designed to monitor and identify unusual calling patterns and activity and, in
some situations, result in discontinued service when pre-established limits
have been exceeded. The implementation of these technologies and products has
enabled the Company to monitor and manage customers' usage more effectively,
and efficiently resulting in the declining trend in the allowance for doubtful
accounts as a percentage of total receivables.

Depreciation and Amortization

Depreciation and amortization consists primarily of depreciation expense
related to the Company's cellular network and the amortization of intangibles.
Acquisitions of existing cellular communications systems generated intangible
assets such as FCC license costs and goodwill which are currently being
amortized over 40 years. Amortization expense totaled $19.4 million, $19.4
million and $19.3 million in 1994, 1993 and 1992, respectively. During the
nine months ended September 30, 1995 and 1994, amortization expense totaled
$14.4 million and $14.6 million, respectively. The Company periodically
assesses the ongoing value of these intangible assets and expects the carrying
amounts to be fully recoverable.

Depreciation expense totaled $73.1 million, $55.6 million and $32.8 million
in 1994, 1993 and 1992, respectively. During the nine months ended September
30, 1995 and 1994, depreciation expense totaled $69.3 million and $53.3
million, respectively. Depreciation as a percentage of cellular service
revenues was 12.8%, 14.9% and 12.9% in 1994, 1993 and 1992, respectively.
During the nine months ended September 30, 1995 and 1994, depreciation as a
percentage of cellular service revenues was 12.1% and 13.0%, respectively. The
increases in depreciation expense in 1994, 1993 and for the nine months ended
September 30, 1995, when compared to corresponding prior year periods, are the
result of increased capital investment in the Company's cellular network and
changes in estimated useful lives. In 1994, the estimated useful life for
tools and test equipment was changed from 5 to 3 years and the estimated
service lives for certain switching equipment and analog microwaves were
reduced to reflect the remaining estimated useful lives, which increased
depreciation expense by $2.4 million in 1994. In 1993, the estimated useful
lives for capitalized phones, cell site antennas and certain switches were
changed from 3 to 2 years, 20 to 5 years and 10 to 3 years, respectively,
which increased 1993 depreciation expense by $7.6 million. As a percent of
operating revenues, adjusted for the impacts of changes in estimated useful
lives, depreciation has continued to decline, primarily as a result of
economies of scale as more customers are added to the existing network.
Depreciation and amortization are expected to continue to decline as a
percentage of operating revenues.

The Company continues to invest in analog ("AMPS") and enhanced analog ("N-
AMPS") network infrastructure to support customer growth and maintain the
quality of its service. The Company believes that its networks have sufficient
capacity to handle the Company's expected customer growth rate in the near
term. In the future, the Company intends to relieve any capacity constraints
through frequency planning, additional deployment of N-AMPS and the selective
installation of additional cell sites in densely populated areas. The Company
plans to implement a gradual transition to digital technology on a market by
market basis as additional calling capacity is expected to be required to
accommodate growth in call volume. This approach should provide time for
anticipated digital technology improvements to be proven, while also avoiding
premature capital expenditures. The Company expects that its investment in
digital technology will increase over time. The Company believes the service
lives on its existing analog technology are appropriate.

Interest Expense

Interest expense increased in 1994 and for the nine months ended September
30, 1995, as compared to the corresponding periods in the prior year,
primarily due to increases in interest rates and increased borrowings from
Sprint. The Company has borrowed from Sprint primarily to fund construction
costs and start-up losses at interest rates determined by Sprint. As a result
of the capital structure expected to result from the Spin-off and the related
transactions and other factors that are difficult to predict (such as
prevailing interest rates and acquisition activities), interest expense
incurred during the periods presented may not be indicative of future interest
expense. See "Certain Risk Factors--Substantial Leverage; Ability to Service
Debt."

26
<PAGE>

Minority Interests in Net Income of Consolidated Entities

"Minority Interests in Net Income of Consolidated Entities" represents other
investors' interests in the operating results of cellular systems in which the
Company has a controlling interest. The increases in 1994, 1993 and for the
nine months ending September 30, 1995, when compared to the corresponding
prior year periods, are the result of improved operating results for these
entities.

Equity in Net Income of Unconsolidated Entities

"Equity in Net Income of Unconsolidated Entities" represents the Company's
share of operating results of cellular systems in which the Company does not
have a controlling interest. Equity earnings increased in 1994, 1993 and for
the nine months ended September 30, 1995, when compared to the corresponding
prior year periods, primarily as a result of increased income generated by
minority cellular investments in the Company's larger and more mature systems
in Chicago, Houston, Kansas City, New York and Orlando. The Company expects
that its minority cellular investments operating in other cities will add
increasing income as those markets continue to mature and penetration
increases.

Income Taxes

The Company's income tax expense (benefit) for 1994, 1993 and 1992 was $5.7
million, ($7.1 million) and ($17.3 million), respectively. For the nine months
ended September 30, 1995 and 1994, the income tax expense was $17.1 million
and $5.4 million, respectively. The Revenue Reconciliation Act of 1993, among
other things, raised the Federal corporate income tax rate to 35% from 34%.
The Company's adjustment for the change in tax rate reduced net income
approximately $1.3 million in 1993. See Note 9 of "Sprint Cellular Company and
Subsidiaries Notes to Consolidated Financial Statements" for additional
information regarding differences which cause the effective income tax rates
to vary from the statutory Federal income tax rates.

As of December 31, 1994, deferred income tax assets of $3.3 million related
to postretirement benefits and other benefits, and $12.4 million (net of a
$4.4 million valuation allowance) related to state operating loss
carryforwards have been recorded. The Company has determined that it is more
likely than not that these deferred tax assets, net of the valuation
allowance, will be realized based on current income tax laws and expectations
of future taxable income stemming from the reversal of deferred tax
liabilities or ordinary operations. Uncertainties surrounding income tax law
changes, shifts in operations between state taxing jurisdictions and future
operating income levels may, however, affect the ultimate realization of all
or some portion of these deferred income tax assets.

Net Losses

The Company has sustained net losses in each fiscal year since its formation
in 1982 and expects to incur a net loss for the year ending December 31, 1995.
These losses relate primarily to the start-up nature of the Company's business
which required significant expenditures associated with the acquisition of new
customers and substantial investment in infrastructure to support growth.
Costs as a percentage of cellular service revenue have declined and it is
anticipated that this trend will continue as the Company realizes economies of
scale as its customer base grows. Accordingly, the Company expects to produce
net income in 1996 although there can be no assurance that this will be the
case because of numerous factors outside of the Company's control. Moreover,
the Company's business strategy is intended to produce long-term profitability
in subsequent years.

ACCOUNTING CHANGES

Effective January 1, 1993, the Company changed its method of accounting for
postretirement and postemployment benefits by adopting Statements of Financial
Accounting Standards ("SFAS") Nos. 106 and 112. The cumulative effect of these
changes in accounting principles increased 1993 net loss by $1.6 million.
Effective January 1, 1992, the Company also changed its method of accounting
for income taxes by adopting SFAS No. 109. The cumulative effect of this
change in accounting principle increased 1992 net loss by $3.3 million.

27
<PAGE>

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, was issued. SFAS No. 121
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt SFAS No.
121 in the first quarter of 1996, and based on current circumstances, does not
believe the effect of adoption will be material.

LIQUIDITY AND CAPITAL RESOURCES

Spin-off

In connection with the Spin-off, the Company will issue Notes and incur $
million of initial borrowings under the Credit Facility to pay approximately
$1.4 billion of intercompany debt owed by the Company to Sprint and its
subsidiaries and Sprint and its subsidiaries will contribute to the equity
capital of the Company any debt owed to them by the Company in excess of the
approximately $1.4 billion of intercompany debt being repaid.

Holding Company Structure

The Company's operations are conducted largely through subsidiary
corporations and partnerships. In the case of subsidiary corporations, those
entities are wholly-owned, directly or indirectly, by the Company and are not
restricted in any way from paying dividends or other payments to the Company.
In addition, Restricted Subsidiaries (as defined in the Indenture) generally
would not be permitted under the Indenture to restrict distributions to the
Company. In the case of partnerships, to the extent funds are available for
distribution, distributions are generally required under the partnership
agreements, except to the extent such funds are required for additional
capital investments in the partnership. However, because the Company does not
control the capital structure of certain partnerships in which it holds
minority interests, it is possible that such partnerships may have entered
into loan agreements or other contractual arrangements that restrict or limit
distributions to the partners of such partnerships.

Cash Flows--Operating Activities

Cash flows from operating activities were $141.8 million, $23.8 million and
$(23.9) million in 1994, 1993 and 1992, respectively. During the nine months
ended September 30, 1995 and 1994, cash flows from operating activities were
$110.9 million and $70.5 million, respectively. Operating cash flow increases
reflect improved operating results. Future operating cash flows will be
impacted by costs associated with the Spin-off, as well as by the additional
advertising, promotional and other marketing expenses associated with the
introduction and promotion of the Company's new brand name. See "Certain Risk
Factors--Loss of Sprint Brand Name; Costs of Introducing New Brand Name."

Cash Flows--Investing Activities

The Company's investing activities used cash of $262.4 million, $170.3
million and $121.6 million in 1994, 1993 and 1992, respectively. During the
nine months ended September 30, 1995 and 1994, the Company's investing
activities used cash of $273.7 million and $160.8 million, respectively.
Capital expenditures, representing the Company's most significant investing
activity, were $264.3 million, $165.7 million and $120.4 million in 1994, 1993
and 1992, respectively. During the nine months ended September 30, 1995 and
1994, capital expenditures were $270.0 million and $164.0 million,
respectively. The increases in capital expenditures were due to the expansion
of the footprint or coverage area of the Company's cellular systems, and
additions to system capacity which were necessitated by significant increases
in the number of cellular customers during each of the periods.

28
<PAGE>

Cash Flows--Financing Activities

Cash received from financing activities was $120.6 million, $149.1 million
and $146.4 million for 1994, 1993 and 1992, respectively. During the nine
months ended September 30, 1995 and 1994, cash received from financing
activities was $160.8 million and $95.5 million, respectively. Cash received
from financing activities reflects borrowings from Sprint and contributions
from minority investors. Following the Spin-off, capital to meet funding
requirements will not be available from Sprint and its subsidiaries.

Liquidity and Capital Requirements

Substantial capital is required to expand and operate the Company's existing
cellular systems and to acquire interests in additional cellular systems. The
Company has met its funding requirements in the past through existing cash
resources, cash flow from operations and borrowings from Sprint. Indebtedness
to Sprint totaled $1.35 billion at December 31, 1994, and $1.52 billion at
September 30, 1995. Prior to the Spin-off, the Company will continue to borrow
from Sprint to the extent its existing cash needs are not met through existing
cash resources and cash flows from operations.

The Company expects to make capital expenditures of approximately $323
million in 1995 and $280 million in 1996. Funding for these expenditures is
expected to be derived from existing cash resources, cash flow from operations
and borrowings under the Credit Facility. These expenditures will expand and
enhance existing cellular systems. Enhancements will include a minimal level
of digital technology deployment.

As discussed in Note 16 to the Company's Consolidated Financial Statements,
contingencies have been identified in the South Texas (Houston) and New York
partnerships the outcome of which cannot presently be determined, but may be
material to the Company.

For the next several years the Company does not expect its operations to
generate sufficient cash flows to meet both future capital requirements needed
to fund operating activities and cash requirements for acquisitions of
ownership interests in cellular communications systems. Acquisition activities
may include acquisitions of new cellular communications systems or additional
investments in cellular communications systems in which the Company already
holds an ownership interest. The Company expects that it will need to raise
additional funds through borrowings under the Credit Facility or public or
private sale of debt or equity securities to make such acquisitions, subject
to the limitations of the Tax Assurance Agreement. The Company believes that
it will be able to obtain the needed access to the capital markets on suitable
terms and that, together with borrowings under the Credit Facility and net
cash provided by operations, it will have adequate capital to satisfy its
projected funding requirements for operations for the foreseeable future,
although acquisitions and possibly other contingencies may require access to
the capital markets. However, there can be no assurance that access to the
capital markets can be obtained in amounts and on terms adequate to meet its
objectives or that the borrowings or net cash from operations will be adequate
to meet the Company's projected funding requirements. See "Certain Risk
Factors--Substantial Leverage; Ability to Service Debt."

Dividend Policy

The Company currently does not anticipate paying cash dividends on its
Common Stock in the foreseeable future.

29
<PAGE>

BUSINESS

GENERAL

The Company is one of the leading and most established wireless
communications companies in the United States. As of September 30, 1995, the
Company served over 1.3 million customers in 86 markets covering 14 states.
The Company's interests in these markets represent approximately 16.6 million
Net POPs as of September 30, 1995. The Company also owns, as of September 30,
1995, minority interests in 52 additional cellular telephone markets
representing approximately 4.3 million Net POPs, including the New York,
Chicago, Houston and Orlando MSAs. The Company sells and markets cellular
communications services and related products through a distribution network
consisting of nationally recognized and local dealers, full service retail
stores and a direct sales force. For the 12 months ended September 30, 1995,
the Company had consolidated service revenues and EBITDA of $733.1 million and
$238.3 million, respectively.

The Company operates in five regions in the United States: Mid-Atlantic,
Midwest, North Carolina, Southeast and West. The controlled markets comprising
each region include a number of geographic operating clusters which are
primarily located in mid-sized communities in which the Company has achieved
some of the highest cellular penetration rates in the United States. The
Company believes that its most significant minority investments are located
primarily in densely populated, profitable markets and that such investments
are attractive and sound. These investments are generally in the form of
limited partnership interests. The Company provides capital to each such
partnership at a level proportionate to its ownership percentage, and receives
distributions, determined by the general partners in accordance with the
partnership agreement, of excess cash generated by a particular market.

For the period from January 1, 1990 to June 30, 1995, the Company grew its
customer base by a CAGR of 54.6%, compared to an industry CAGR over the same
period of 46.0%. As of June 30, 1995 (the latest date for which cellular
industry information is available from the CTIA), the Company had an average
cellular penetration rate of 6.3% in the markets that it controlled, compared
with the industry penetration rate of 5.4%. The Company has also exhibited
above average customer retention rates. For the six months ended June 30,
1995, the Company's average monthly churn was 1.7% compared with the industry
average of 1.9% for the same period.

Sprint Cellular was incorporated in October 1982 under the laws of the State
of Delaware by Centel Corporation. The Company, then known as Centel Cellular
Company, received its first operating license from the FCC in 1985. Over the
next three years, the Company received additional licenses to operate wireline
systems in 19 small and medium sized metropolitan areas, including MSAs in Las
Vegas, Greensboro and Tallahassee. In 1988, the Company's aggressive expansion
effort included the acquisition of United TeleSpectrum, Inc. from Sprint.
Valued at more than $750 million, the acquisition more than doubled the size
of the Company, adding approximately 7.9 million Net POPs and making it the
second largest domestic cellular company at that time in terms of the number
of markets served. On March 9, 1993, Centel Corporation, the Company's
immediate parent, merged with a wholly owned subsidiary of Sprint, and the
Company changed its name to Sprint Cellular Company. The Company expects to
expand its clusters through additional acquisitions of new cellular
properties.

GROWTH AND OPERATING CHARACTERISTICS OF THE UNITED STATES CELLULAR INDUSTRY

The United States cellular telephone industry is a regulated duopoly. See
"--Governmental Regulation--Regulation and Licensing of Cellular
Communications Systems." The FCC has designated 734 distinct cellular markets,
divided into 306 MSAs and 428 RSAs. For the year ended December 31, 1994, the
cellular industry reported total revenues of $14.2 billion versus $10.9
billion in 1993. The total number of cellular customers grew by 50.8% during
1994, expanding the customer base from an estimated 16.0 million to an
estimated 24.1 million customers. According to industry reports, there were an
estimated 28.2 million cellular customers as of June 30, 1995, up 46.1% from
19.3 million customers as of June 30, 1994. The industry's penetration rate as
of June 30, 1995, was 10.8% for both carriers on a nationwide basis, or 5.4%
for the average carrier on a nationwide basis.

30
<PAGE>

The industry's rapid growth has been aided by rigorous competition and rapid
technological advancement. While industry growth continues to be strong,
average revenue per customer has declined consistently. This trend is
indicative of the industry's penetration of consumer markets as well as
competitive pressures on airtime rates.

The following table sets forth certain domestic cellular industry statistics
published by the CTIA (Mid-Year 1995 Data Survey Results) as of June 30, 1995
and for the six month period ended thereon, and as of each December 31, and
for each of the respective years then ended, for the five year period ended
December 31, 1994.

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------------------
1995 1994 1993 1992 1991 1990
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CELLULAR INDUSTRY STATISTICS
Total Service Revenues
(dollars in billions)........ $ 8.8 $14.2 $10.9 $ 7.8 $ 5.8 $ 4.5
Cellular Customers (millions). 28.2 24.1 16.0 11.0 7.6 5.3
Customer Growth (year-over-
year)........................ 46.0% 50.8% 45.1% 46.0% 43.0% 50.6%
Average Monthly Bill per
Customer (dollars)........... $52.45 $56.21 $61.49 $68.68 $72.74 $80.90
Penetration--Average Carrier*. 5.4% 4.7% 3.1% 2.2% 1.5% 1.1%
</TABLE>
- --------
*Represents the total nationwide cellular penetration, divided by two to
reflect two cellular licensees in each market.

Industry growth has been aided by nationwide roaming agreements which have
made it possible for customers to use their cellular telephones nearly
everywhere in the United States. This ubiquity of service is one of the
industry's greatest strengths.

In March 1995, the FCC completed the initial round of its spectrum auction
process, awarding two 30 MHz PCS licenses in each of 51 MTAs. PCS is the term
used to describe the services that will be offered by the companies that
acquired licenses in the March auction. In addition, the FCC has allocated an
additional 60 MHz of spectrum (three 10 MHz BTA licenses and one 30 MHz BTA
license) for such potential licensees. It is currently anticipated that the
auction for the 30 MHz BTA licenses will be held on December 11, 1995. It is
expected that the FCC will allow current cellular providers to obtain a
license for only 10 MHz of PCS spectrum in their current cellular service
areas. As a result, it is possible that an additional five or six wireless
providers could compete in any given service area.

Despite the fact that PCS operators, including STV, will compete directly
with the Company, the Company believes that the existence of new competitors
and increased capacity should change the existing competitive dynamic of the
industry by significantly increasing penetration rates and the overall size of
the market for wireless communications services. The Company believes that the
entrance of new competitors caused cellular growth to accelerate in other
telecommunications markets: the United Kingdom wireless market experienced
increased cellular growth rates following the introduction of PCS services. In
addition, the introduction of PCS is expected to increase the range of new
services offered by wireless providers, including information and data
communications.

31
<PAGE>

MARKETS AND CLUSTERS

The following table sets forth as of September 30, 1995 (i) the markets in
which the Company owns an interest in a cellular system by region and by
cluster, (ii) the wireline or non-wireline nature of the market, (iii) the
total population of the market (as derived from 1994 population estimates),
(iv) the Company's ownership percentage of the system, and (v) the Company's
Net POPs based on its ownership percentage:

<TABLE>
<CAPTION>
WIRELINE/
NON- TOTAL OWNERSHIP NET
WIRELINE POPULATION PERCENTAGE POPS
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
CONTROLLED MARKETS
MID-ATLANTIC REGION:
Central Virginia Cluster:
Charlottesville, VA.............. WL 140,516 100.0% 140,516
Danville, VA..................... WL 112,079 75.0 84,059
Lynchburg, VA.................... WL 161,669 100.0 161,669
Virginia RSA 4B2................. WL 106,252 100.0 106,252
Virginia RSA 6B2................. WL 13,890 100.0 13,890
Virginia RSA 7B2................. WL 50,476 100.0 50,476
Virginia RSA 11B2................ WL 43,384 100.0 43,384
Central Pennsylvania Cluster:
Harrisburg, PA................... WL 491,154 86.8% 426,125
York, PA......................... WL 442,574 86.8 383,977
Lancaster, PA.................... WL 445,504 86.8 386,519
Pennsylvania RSA 10B1............ WL 142,339 100.0 142,339
Pennsylvania RSA 11B1............ WL 21,303 100.0 21,303
Pennsylvania RSA 12.............. WL 118,103 66.7 78,735
Eastern Virginia Cluster:
Norfolk--VA Beach--Portsmouth,
VA.............................. NWL 1,020,794 100.0% 1,020,794
Newport News--Hampton, VA........ NWL 474,518 100.0 474,518
Petersburg--Colonial Heights--
Hopewell, VA.................... NWL 130,585 73.5 95,980
Virginia RSA 8................... NWL 84,513 100.0 84,513
Virginia RSA 9................... NWL 87,028 100.0 87,028
Tri-Cities Cluster:
Johnson City--Kingsport--Bristol,
TN.............................. WL 456,532 100.0% 456,532
Tennessee RSA 4B1................ WL 114,101 100.0 114,101
Tennessee RSA 8.................. WL 15,196 100.0 15,196
Virginia RSA 1................... WL 149,034 100.0 149,034
Virginia RSA 2................... WL 138,905 71.3 98,984
--------- ---------
Total Region................... 4,960,449 4,635,924
--------- ---------
MIDWEST REGION:
Eastern Iowa Cluster:
Cedar Rapids, IA................. WL 172,956 100.0% 172,956
Waterloo--Cedar Falls, IA........ WL 149,811 88.5 132,645
Iowa City, IA.................... WL 98,367 100.0 98,367
Dubuque, IA...................... WL 87,901 85.0 74,716
Central Illinois Cluster:
Peoria, IL....................... WL 349,020 100.0% 349,020
Illinois RSA 5B1................. WL 11,527 100.0 11,527
Northern Indiana Cluster:
South Bend--Mishawaka, IN........ WL 297,642 83.7% 249,097
Elkhart--Goshen, IN.............. WL 160,738 83.7 134,522
Indiana RSA 2.................... WL 164,186 75.0 123,140
</TABLE>

32
<PAGE>

<TABLE>
<CAPTION>
WIRELINE/
NON- TOTAL OWNERSHIP NET
WIRELINE POPULATION PERCENTAGE POPS
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Northwestern Ohio Cluster:
Toledo, OH....................... WL 792,651 74.7% 592,110
Lima, OH......................... WL 221,946 74.7 165,794
Ohio RSA 2B1..................... WL 207,458 67.5 139,974
Ohio RSA 5....................... WL 234,411 57.5 134,786
Mansfield, OH.................... WL 127,143 100.0 127,143
Ohio RSA 6....................... WL 440,305 80.0 352,244
Eastern Ohio Cluster:
Youngstown--Warren, OH........... WL 498,090 77.1% 383,843
Sharon, PA....................... WL 123,417 77.1 95,109
Ohio RSA 11...................... WL 112,534 100.0 112,534
Pennsylvania RSA 1............... WL 197,858 80.0 158,286
Pennsylvania RSA 6B1............. WL 219,018 57.1 125,125
--------- ---------
Total Region................... 4,666,979 3,732,938
--------- ---------
NORTH CAROLINA REGION:
North Carolina Cluster:
Fayetteville, NC................. WL 282,303 85.0% 239,870
North Carolina RSA 5B2........... WL 35,135 100.0 35,135
North Carolina RSA 6............. WL 149,416 100.0 149,416
North Carolina RSA 11............ WL 214,943 100.0 214,943
Greensboro--Winston Salem--High
Point, NC....................... WL 965,316 61.8 596,877
Hickory, NC...................... WL 232,496 100.0 232,496
North Carolina RSA 2B2........... WL 72,850 100.0 72,850
North Carolina RSA 15B1.......... WL 189,510 67.0 126,934
Raleigh--Durham, NC.............. WL 780,103 85.0 662,846
Burlington, NC................... WL 114,994 85.0 97,709
North Carolina RSA 7 (B1 and B2). WL 280,505 100.0 280,505
North Carolina RSA 8............. WL 286,115 100.0 286,115
North Carolina RSA 9............. WL 118,780 100.0 118,780
North Carolina RSA 10............ WL 271,342 100.0 271,342
Wilmington, NC................... WL 192,117 100.0 192,117
Jacksonville, NC................. WL 134,417 100.0 134,417
North Carolina RSA 12............ WL 122,512 100.0 122,512
North Carolina RSA 13............ WL 238,023 100.0 238,023
--------- ---------
Total Region................... 4,680,877 4,072,887
--------- ---------
SOUTHEAST REGION:
Charleston Cluster:
Charleston--North Charleston, SC. WL 556,775 75.0% 417,637
South Carolina RSA 8............. WL 166,821 50.0 83,411
Greenville Cluster:
Greenville--Spartanburg, SC...... WL 667,011 89.2% 594,774
Anderson, SC..................... WL 146,845 89.2 130,942
South Carolina RSA 1............. WL 59,104 100.0 59,104
South Carolina RSA 2............. WL 222,724 50.0 111,362
Florida/Alabama Cluster:
Dothan, AL....................... WL 135,297 100.0% 135,297
Ft. Walton Beach, FL............. WL 158,696 70.0 111,087
Florida RSA 10................... WL 108,456 70.0 75,919
</TABLE>

33
<PAGE>

<TABLE>
<CAPTION>
WIRELINE/
NON- TOTAL OWNERSHIP NET
WIRELINE POPULATION PERCENTAGE POPS
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Panama City, FL................. WL 138,574 100.0% 138,574
Tallahassee, FL................. WL 272,127 60.0 163,276
Florida RSA 8B1................. WL 53,061 60.0 31,837
---------- ----------
Total Region.................. 2,685,491 2,053,220
---------- ----------
WEST REGION:
Central Texas Cluster:
Killeen--Temple, TX............. WL 258,669 66.9% 173,101
Waco, TX........................ WL 196,706 66.9 131,636
Texas RSA 9B3................... WL 51,904 70.0 36,329
Texas RSA 10 (B2 and B4)........ WL 189,383 75.0 142,037
Texas RSA 15B1.................. WL 83,825 100.0 83,825
East Texas Cluster:
Tyler, TX....................... WL 160,581 60.0% 96,349
Longview--Marshall, TX.......... WL 173,479 60.0 104,087
Texas RSA 7B2................... WL 43,496 97.5 42,409
New Mexico Cluster:
New Mexico RSA 1................ NWL 251,919 100.0% 251,919
New Mexico RSA 2................ NWL 21,815 100.0 21,815
New Mexico RSA 4................ NWL 252,312 100.0 252,312
New Mexico RSA 5................ NWL 56,850 100.0 56,850
Las Vegas, NV..................... WL 935,799 72.2 675,704
---------- ----------
Total Region.................. 2,676,738 2,068,373
---------- ----------
TOTAL CONTROLLED MARKETS............ 19,670,534 16,563,342
========== ==========
<CAPTION>
TOTAL OWNERSHIP NET
POPULATION PERCENTAGE POPS
---------- ---------- ----------
<S> <C> <C> <C> <C>
NON-CONTROLLED MARKETS*
New York, NY--Long Branch--New Brunswick,
NJ......................................... 16,311,702 10.0% 1,631,170
Chicago--Aurora/Elgin--Joliet--Kankakee,
IL--Gary, IN............................... 8,315,023 5.0 415,751
Houston--Beaumont--Galveston/Texas City, TX. 4,521,016 8.8 396,493
Kansas City--Lawrence, KS................... 1,590,133 19.0 302,125
Orlando--Melbourne--Daytona Beach, FL....... 2,032,042 15.0 304,806
Richmond, VA................................ 797,942 27.3 217,599
Omaha, NE................................... 626,891 27.6 172,959
Cleveland--Akron--Canton--Lorain, OH--Erie,
PA......................................... 3,502,722 3.5 122,595
Allentown--Bethlehem--Easton, PA............ 711,560 16.8 119,329
Ft. Wayne, IN............................... 432,628 25.0 108,157
Virginia RSA 10............................. 231,404 33.0 76,363
Cincinnati--Dayton--Columbus, OH............ 3,665,401 1.2 43,985
Georgia RSA 1............................... 211,637 20.0 42,327
Illinois RSA 3**............................ 204,375 18.1 37,069
Illinois RSA 2B2............................ 81,086 40.0 32,434
Texas RSA 7B1............................... 125,759 25.0 31,440
Texas RSA 11B2.............................. 109,716 28.0 30,720
Indiana RSA 3............................... 146,160 20.0 29,232
Pennsylvania RSA 4B2........................ 68,520 33.3 22,838
Reading, PA................................. 349,021 5.9 20,418
Iowa RSA 13**............................... 66,706 30.0 20,012
St. Joseph, MO.............................. 99,244 20.0 19,849
</TABLE>

34
<PAGE>

<TABLE>
<CAPTION>
TOTAL OWNERSHIP NET
POPULATION PERCENTAGE POPS
---------- ---------- ----------
<S> <C> <C> <C> <C>
Florida RSA
9**....... 39,382 49.0% 19,297
Pennsylvania
RSA 3B2... 58,650 27.8 16,293
Iowa RSA
11........ 108,706 14.1 15,371
Missouri
RSA 4..... 68,835 12.5 8,604
Iowa RSA
16........ 102,917 8.3 8,573
Iowa RSA
5**....... 108,063 7.1 7,716
Austin, TX. 874,277 0.8 7,169
Missouri
RSA 9B1... 35,343 19.6 6,927
Missouri
RSA 1..... 43,276 14.3 6,180
Iowa RSA
14........ 107,924 5.6 6,001
Iowa RSA
15........ 85,106 6.7 5,677
Iowa RSA 1. 61,319 3.9 2,391
Iowa RSA 8. 54,653 2.3 1,256
---------- ----------
TOTAL NON-
CONTROLLED
MARKETS... 45,949,139 4,309,126
---------- ----------
TOTAL
COMPANY
MARKETS... 65,619,673 20,872,468
========== ==========
</TABLE>
- --------
*All non-controlled markets are wireline systems.
**Represents non-controlled markets that are managed by the Company on a day-
to-day basis.

BUSINESS STRATEGY

The Company intends to maintain its strong growth by continuing to penetrate
its existing markets and to expand its clusters by adding contiguous markets.
The Company believes that its primary growth will be internally generated
through the implementation of its operating strategies as described below. In
addition, a key part of the Company's growth strategy is to expand its
regional market clusters or develop new strategic market clusters through
acquisitions or trades or alliances with other cellular carriers. In
anticipation of an increasingly competitive wireless market, primarily as a
result of the longer-term development of PCS networks, the Company intends to
capitalize on its incumbent position as a leading wireless provider in its
markets by: (i) increasing revenues through aggressive customer acquisition,
(ii) improving the retention rate of new and existing customers, and (iii)
enhancing its financial performance by continuing to improve operating
margins. The principal components of the Company's strategy to achieve these
objectives are as follows:

. clustering of markets to provide broad areas of uninterrupted service
combined with simplified dialing and pricing patterns and operating
efficiencies through economies of scale;

. continuous network improvement to meet customer expectations of
ubiquitous coverage, clarity and reliability;

. aggressive distribution management to provide effective and extensive
marketing of products and services through dealers, Company retail stores
and a direct sales force targeted at high volume users;

. exceptional customer service provided by highly motivated, experienced
and trained customer relations personnel who are focused on satisfying
customer needs to build loyalty, improve retention and increase usage;

. targeted pricing strategies and rate plans to increase penetration,
improve customer retention and increase usage; and

. targeted product and service deployment to introduce new features and
network solutions to stimulate increased usage and improve customer
satisfaction and retention.

The Company believes that the strategies employed to meet existing
competition will also be effective in competing against new service providers.
The Company believes that it will be at least two years before PCS providers
will be in a position to offer a competitive wireless communications service,
in terms of quality and

35
<PAGE>

coverage, in the Company's markets. During this period, the Company will
endeavor to build upon the competitive strengths which it derives from its
position as a leading and well established wireless communications provider in
such key areas as network coverage and quality, distribution and customer
service.

The Company's external growth strategy is designed to reinforce its
incumbent position by increasing its customer base prior to PCS competition as
well as to improve operating margins by achieving significant economies of
scale. For example, on May 24, 1995, the Company agreed to purchase a 50%
interest in South Carolina RSAs 4, 5 and 6, which will add 323,537 Net POPs to
those that the Company currently manages. In addition, the Company recently
announced an agreement to acquire a 100% interest in the cellular license and
network in North Carolina RSA 14, which will add 236,279 Net POPs. These
acquisitions will fill gaps in the Company's existing North Carolina and South
Carolina clusters, and will give the Company continuous coverage along the
Atlantic Ocean coastline from Newport News, Virginia to Hilton Head, South
Carolina. The Company also expects to acquire a 100% interest in the Ohio RSA
1 market, which will add 127,140 Net POPs. This acquisition will fill a gap in
the Company's Midwest Region and give the Company continuous coverage from
South Bend, Indiana to Mansfield, Ohio. The Company also intends to purchase
177,702 Net POPs in four Florida markets it currently controls, increasing its
ownership in the Fort Walton Beach MSA and Florida RSA 10 from 70% to 100% and
increasing its ownership in the Tallahassee MSA and Florida RSA 8 from 60% to
90%. Giving effect to these transactions, the Company's Net POPs as of
September 30, 1995 would have been 21.7 million.

To the extent feasible, the Company intends to exchange some or all of its
minority investments in cellular communications systems for increased
ownership interests in markets it currently controls or for ownership
interests in new markets in which it could obtain control.

Network Improvement

Network quality is a key factor in retaining customers and generating
revenue and is generally viewed as a critical competitive factor in the
cellular marketplace. Customers expect their cellular telephones to deliver
ubiquitous coverage, clarity and reliability. The Company continually improves
its systems with the goal of providing service comparable to that of local
telephone companies. The Company believes that the quality and reliability of
its network significantly exceeds industry standards.

The Company believes such quality and reliability, as well as its network's
broad coverage, result from an integrated process of network planning,
aggressive cell site construction and rigorous system maintenance. The Company
had over 1,100 cell sites in service as of September 30, 1995 and
approximately 400 of the Company's employees are engaged in engineering or
network maintenance. In addition, the Company monitors each cellular market
from its Chicago network operations center twenty-four hours a day to ensure
reliable network performance. The Company will continue to stress high quality
portable telephone coverage and the integrity of data transmissions.

The Company was the first cellular carrier to employ N-AMPS. This enhanced
analog technology, first offered in the Company's Las Vegas market, provides a
three-fold capacity increase over conventional analog technology. N-AMPS
technology has since been deployed in nine additional high-traffic markets,
serving as an intermediate step to the implementation of digital technology.
The Company has sold N-AMPS-capable telephones in all of its markets since
1991 in anticipation of the deployment of N-AMPS technology, allowing the
change to be indiscernible to customers.

The Company believes that its networks have sufficient capacity to handle
the Company's customer growth rate in the near term. In the future, the
Company intends to relieve any capacity constraints through frequency
planning, additional deployment of N-AMPS and the prudent installation of
additional cell sites in densely populated areas. As additional calling
capacity is required to accommodate growth in call volume, the Company plans
to implement a gradual transition to digital technology on a market by market
basis. This approach should provide time for anticipated digital technology
improvements to be proven while also avoiding premature capital expenditures.

36
<PAGE>

The Company currently intends to deploy CDMA as its digital technology. The
Company believes that CDMA may offer several advantages over its principal
technological competitor, TDMA.

Based on industry reports, CDMA will offer greater call carrying capacity.
The Company currently believes that the CDMA technology will be able to offer
up to a ten-fold call carrying capacity increase over that of the AMPS
technology. This capacity gain compares to an estimated maximum of a six-fold
call carrying increase for the TDMA technology.

CDMA employs "soft handoff", a technique which makes the process of carrying
a call from cell site to cell site virtually undetectable to the customer.
CDMA also utilizes an improved variable rate voice encoding (vocoding)
technology compared to the fixed rate vocoding technology used by TDMA. Based
upon preliminary laboratory Mean Opinion Scores (MOS), the CDMA vocoding
technology offers a statistically significant improvement in voice quality
compared to TDMA.

In addition, while both technologies offer enhanced call privacy over
existing analog service, the Company believes that CDMA is superior in this
regard. Furthermore, the Company believes that CDMA phones will be more
difficult to clone than phones utilizing the TDMA technology because of its
unique encryption design. Although not yet developed, CDMA will also be able
to provide more sophisticated data features than TDMA including the
simultaneous transmission of voice and data, higher data transmission rates,
and the ability to offer both circuit switch and packet based data services
utilizing the same spectrum.

The Company is deploying CDMA on a trial basis in its Las Vegas market.
While this network is not currently in immediate need of the capacity increase
obtained from digital, the Company believes it is the appropriate time to
introduce this new technology to meet future network growth demands. Following
the successful completion of that trial, which is expected in the first
quarter of 1996, the Company plans to deploy CDMA in Las Vegas on a commercial
basis in the second quarter of 1996.

Distribution Management and Marketing

The Company's distribution management and marketing programs have yielded
strong growth results. The Company has posted twelve consecutive quarters of
more than fifty percent growth in its customer base, when compared with the
corresponding quarter of the prior year, and its rate of penetration is above
the industry average despite its presence in mid-sized markets. Expansion and
management of the Company's distribution channels is expected to result in
continued high growth rates, along with controlled churn and acquisition
costs.

The Company utilizes multiple methods of distribution in each of its
markets, and regularly seeks out new distribution channels. The development of
multiple distribution channels in each of its markets enables the Company to
provide effective and extensive marketing of products and services and to
reduce its reliance on any single distribution source. Traditional
distribution sources like dealers and direct sales representatives continue to
be important factors in achieving the Company's growth objectives. Recently
introduced marketing strategies such as developing newly designed Company
retail stores and regional distribution alliances are expected to become
increasingly important. The table below shows the Company's distribution
channels as of September 30, 1995.

<TABLE>
<CAPTION>
DISTRIBUTION CHANNEL NUMBER
-------------------- ------
<S> <C>
Dealer Locations.................. 1,500
Company Retail Stores............. 102
Company Retail Kiosks............. 51
Direct Sales Representatives...... 239
</TABLE>

The Company is actively seeking to increase the proportion of new customers
acquired through its retail stores channel. While the dealer and direct sales
channels remain important components of the Company's growth strategy, the
Company believes that its retail stores produce the best combination of lower
customer acquisition costs and higher retention rates.

37
<PAGE>

Retail Sales. The Company currently conducts its retail operations through
over 100 Company retail locations, including 17 full-service, stand-alone
retail facilities. The Company expects to open 15 more full-service, stand-
alone retail facilities in 1996. Stand-alone stores are strategically located
in smaller local and neighborhood retail centers as well as in large shopping
malls to capitalize on favorable demographics and retail traffic patterns. The
Company's retail focus helps accomplish three key goals. First, the highly
visible retail stores attract new customers from the consumer market segment.
Second, new customers receive training from dedicated cellular sales
representatives, which increases customer retention rates and average revenue
per customer. Third, the incremental cost of obtaining a customer through a
Company retail store is the lowest of any distribution channel.

The Company focuses its full-service, stand-alone retail efforts on using
sophisticated design and merchandising techniques to simplify the selling
process for potential customers. Customers who enter one of the newly designed
retail stores are drawn to one of several "lifestyle zones" which display
carefully selected combinations of cellular telephones, accessories, custom
calling features and rate plans. Each "lifestyle zone" is tailored to attract
potential customers from specific market segments. After selecting a phone and
service plan, new customers receive extensive assistance on the use of a
cellular phone and on the Company's various services.

The Company also partners with large national retail stores to sell cellular
service directly through Company kiosks. The Company stations retail sales
representatives at kiosks in larger retailers like Sam's Club to take
advantage of high traffic generated by the retailers, to reduce the cost of
the sale, and to ensure proper training and increase the retention rate of new
customers. Existing customers can purchase cellular telephone accessories, pay
bills or inquire about the Company's services and features while in retail
stores or at kiosks. Many retail locations provide vehicle installation
services and while-you-wait cellular telephone troubleshooting and repair.

Dealers. The Company has entered into dealer agreements with several large
electronics retailers and discounters in its markets, including Sears, Radio
Shack and Wal-Mart. The Company also contracts with local dealers who operate
on a smaller scale and may offer other wireless services like two-way radio or
paging. The Company's dealers attract more customers than any of its other
distribution channels.

In exchange for a commission payment, these dealers solicit customers for
the Company's cellular service. Such dealers are paid a commission for each
customer subject to chargeback provisions if the customer fails to maintain
service for a specified period of time. This arrangement increases store
traffic and sales volume for the dealers, and provides a valuable source of
new customers for the Company.

The Company actively supports its dealers with regular training and
promotional support. In certain markets, the Company stations its own
employees at dealer locations to increase sales volume and improve customer
retention.

Direct Sales. The Company's direct sales force, comprised of more than 230
employees, focuses its efforts on business customers with high phone usage and
multiple lines of service. This channel produces the lowest churn and highest
revenue per customer compared with any other distribution channel.

The Company's compensation structure for the direct sales force has been
designed to reward long-term relationships with business accounts. Direct
sales representatives provide ongoing customer service to business customers,
including bill analysis, equipment upgrades, accessory sales and training on
features and functions. This distribution channel is also responsible for
selling advanced services like custom calling features, data applications,
wireless office extension service to existing office phone systems, voicemail
notification and message retrieval services.

Telemarketing and Customer Care. Telemarketing is used to recommend a more
cost-effective, and thus usage-stimulating, rate plan. New and existing
customers are contacted regularly through telemarketing to measure overall
customer satisfaction with the Company's products and services. During these
calls, customers

38
<PAGE>

are also offered revenue-enhancing cellular accessories like batteries,
battery chargers, enhanced antennas or hands-free speaker adaptors. In
addition, custom calling features and enhanced products like data applications
are telemarketed to the Company's existing customer base. While this practice
varies by market, the Company generally contacts all new customers shortly
after the initial activation to ensure that their new cellular service is
meeting expectations. These customer care efforts are designed to improve
customer retention levels by anticipating questions and problems before they
arise.

Distribution of Other Products. The Company is exploring partnerships with
long distance, paging and other carriers who might wish to use the Company's
retail stores and direct sales representatives to sell their services or
products to the consumer and small business market segments. The Company
believes that its ability to penetrate such segments makes it an attractive
potential partner.

Brand Identity. The Company has developed a new brand name which has not yet
been disclosed. The Company expects to introduce and use its new brand name
before the Spin-off but will continue to use the Sprint brand name for a
short, transitional period following the Spin-off. Due to the loss of the
Sprint brand name, the Company expects to incur substantial advertising and
promotional expenditures in order to launch the brand in its existing cellular
markets. See "Certain Risk Factors--Loss of Sprint Brand Name; Costs of
Introducing New Brand Name."

With its new brand identity the Company intends to convey its core values
and operational strengths and to reinforce key messages to customers. The
Company is exploring possible regional and national brand alliances with other
companies, which may or may not utilize its new brand name, that might further
the Company's growth and operating strategies.

Customer Service

Reducing churn is a primary goal of the Company, particularly as new
competitors enter the marketplace. Lower churn contributes directly to
acquisition cost savings, since fewer new customers are needed to meet growth
targets. The Company has one of the industry's best customer retention rates
evidenced by an average monthly churn rate of 1.70% and 1.67% for the year
ended December 31, 1994 and the six months ended June 30, 1995, compared to an
industry average of 1.81% and 1.93% for the same periods, respectively. The
Company attributes its success in this area to its customer support
proficiency.

The Company's customer service representatives regularly contact new
customers to answer questions, explain features and service options and gauge
satisfaction levels. Annual third-party customer satisfaction surveys and
periodic focus groups measure overall system quality and provide valuable
insights into customer needs.

Through customer research, the Company has identified speed, accuracy and
simplicity as critical components for success in its customer service
operations. Customers can typically expect to have fully functional service
within fifteen minutes after purchasing a cellular telephone. By employing
advanced computer technology, the Company has further reduced its sales cycle
time. Point of sale terminals provide prompt on-site activation of customer
cellular service. This level of service gives the Company a competitive
advantage as it seeks to partner with dealers in its various markets. The
Company will continue to deliver more flexible customer care and billing,
shorter service activation cycles and increasingly automated processes. These
improvements are intended to reduce churn and lower per-customer operating
costs.

The Company offers twenty-four hour, seven day a week customer service to
all of its markets without charge using three or four digit speed dialing
patterns on their cellular telephones or through a conventional toll-free 800
number. Airtime and toll free numbers have been established to allow customers
to call emergency services or roadside assistance. The Company operates more
than 50 customer service facilities across its service

39
<PAGE>

areas. Customers can purchase new cellular telephone equipment and service at
these facilities, pay cellular bills, inquire about products and features and
obtain cellular phone repair services.

Regional call centers have been established to handle customer service after
business hours and on weekends. Customer service provided by these facilities
generally includes activation of new cellular access lines, response to
billing and service inquiries, assistance to customers from other cellular
markets roaming in the area and response to network outage reports.

Pricing

The Company seeks to increase penetration, improve retention rates and
stimulate additional usage through creative pricing strategies. The Company
creates local and expanded service territories designed to meet customer
needs. These range from low-cost, local areas to expanded roaming regions.

Airtime rate plans are crafted to attract users from all market segments at
profitable margins. The Company offers a variety of cellular rate plans to
prospective customers. These plans typically consist of a fixed monthly rate
for network access, a package of airtime minutes included in the monthly rate
and a per minute rate for airtime used in excess of the included airtime
package. The Company also sells airtime in bulk to resellers in certain
markets.

Multiple monthly rate plans are designed by the Company to meet different
customer needs. Innovative rate plan development enhances the value of
cellular service to the customer and helps the Company achieve its growth and
revenue targets. Customers who frequently use cellular service generally
prefer rate plans with a higher than average fixed monthly rate, a large
package of included minutes and a lower than average per minute airtime rate.
The Company offers several high-end rate plans which include large blocks of
airtime and several usage-enhancing custom calling features. Customers who use
cellular service less frequently prefer a lower monthly fixed rate and will
pay a premium for airtime.

Custom calling features are also made available to enhance the Company's
basic airtime product. These features are similar to custom calling features
available from most local exchange companies, and include call waiting, call
forwarding, three way calling, no-answer transfer and voicemail. Custom
features allow customers to better manage calls and messages, and the Company
benefits from increased airtime usage.

The Company has entered into roaming agreements with other domestic cellular
companies to allow its customers to use cellular service nearly everywhere in
the United States. This system increases the utility of the Company's product
to its customers by making it ubiquitous; with few exceptions, customers can
call from anywhere in the United States, to anywhere in the United States.
Although roaming rates are declining, roaming usage is expected to increase.
Consistent with industry trends, the Company has begun to make its roaming
rates more affordable which is expected to increase roaming and usage.

The Company is developing three levels of pricing and service offerings
which may vary depending on the geographic area covered to meet the customers'
needs: (i) zone pricing, (ii) regional clustering, and (iii) SuperNet. The
Company's zone pricing service offers low airtime rates within a restricted
geographic area and is currently available only in certain areas of Florida
and South Carolina. Customers selecting zone pricing primarily use the service
in a restricted area, but can roam elsewhere as necessary at a higher rate.
For example, this application is in use on the campus of Florida State
University in Tallahassee, where college students are attracted by this
"localized" campus service, and is being expanded to other markets. Regional
clustering of controlled markets permits the Company to offer customers wide
"local" service areas. Within these local areas, customers enjoy home airtime
rates, toll free dialing and automatic delivery of inbound calls.

The Company has also established regional network and roaming alliances with
neighboring cellular carriers which permit the expansion of the customers'
home footprint. Marketed under the SuperNet and other brands,

40
<PAGE>

these wide area networks offer reduced roaming rates, seamless hand-off from
the Company's network to a neighboring cellular network and automatic delivery
of inbound calls to the neighboring market.

Product and Service Deployment

The Company continues to introduce new features and services to increase the
value of the basic voice product to the customer and to enhance airtime
revenues. Many new products offered by the Company are designed to give
customers enhanced call management capability and stimulate usage. For
example, Message Retrieval Service alerts customers to incoming voicemail
messages while features like voice-activated dialing, multi-ring (cellular
extension service) and caller ID further enhance the basic cellular offering.
The Company also has arrangements with other telecommunications vendors to
provide new network solutions to business and residential customers. The
BusinessLink product offers both standard cellular service and wireless
"extension" service to existing office phone systems. The Company expects
BusinessLink to solidify long-term relationships with large voice customers
while stimulating additional network usage.

The Company also offers a wide array of wireless data solutions to its
customers in an effort to stimulate network usage. The Company intends to
capitalize on growth in data traffic that it expects in the near term. Simple
applications like cellular fax machines, mobile computing and remote credit
card validation terminals are available on the Company's existing network. The
Company offers nationwide cellular service to United Parcel Service to track
its package deliveries. More advanced data applications are available in
certain markets using the Cellular Digital Packet Data ("CDPD") standard. The
Company is one of several cellular companies in a CDPD consortium which sets
industry standards for advanced data applications.

The Company expects to offer these and other products, like two-way paging
and long distance services, either separately or as an integrated
communications solution.

HUMAN RESOURCE DEVELOPMENT

The Company utilizes competitive human resource programs, training and
career development practices and financial incentives tied to performance to
provide superior customer service as well as to successfully implement its
operating strategies.

The Company places a strong emphasis on training at all levels of the
organization to augment experience-based learning and to promote performance
at a high level in each position. Formal succession planning and training is
also employed to provide the knowledge and skills needed to create depth of
expertise and enable career advancement within the organization.

All employees are rewarded for performance in key areas of the business. The
objectives which determine the executive management team's compensation are
shared by the entire organization, and every employee receives incentive pay
in some form. Those employees who do not earn sales commissions are eligible
for an annual incentive payment based on a combination of personal achievement
and performance measured by key objectives at the appropriate operating level
(e.g., local markets or regions). In 1995, these objectives included
increasing operating income, gross revenues, net customer gain and cash flow,
and decreasing customer acquisition cost and churn.

CELLULAR TELEPHONE TECHNOLOGY

Cellular communications systems are capable of providing high quality, high
capacity voice and data communications to and from vehicle-mounted and hand-
held radio telephones. Cellular communications systems generally offer
customers the features offered by the most technologically advanced landline
telephone services.

The FCC has allocated two cellular communications system frequencies in the
800 MHz band of the radio spectrum and has promulgated rules governing the
construction and operation of cellular communications

41
<PAGE>

systems and licensing and technical standards for the provision of cellular
telephone service. For licensing purposes, the United States is divided into
734 discrete geographically defined market areas comprised of 306 MSAs and 428
RSAs.

Cellular communications technology is based upon the division of a given
market area into a number of smaller geographic areas or "cells." Each cell is
equipped with transmitter-receivers and other equipment that communicate by
radio signal with cellular telephones located within range of the cell. Cells
generally have an operating range of up to 25 miles. The cells are typically
designed on a grid, although terrain factors, including natural and man-made
obstructions, signal coverage patterns and capacity constraints may result in
irregularly shaped cells and overlaps or gaps in coverage.

Each cell site is connected to a mobile switching center ("MSC"), which, in
turn, is connected to the local landline telephone network. Because cellular
communications systems are fully interconnected with the landline telephone
network and long distance networks, customers can receive and originate both
local and long-distance calls from their cellular telephones on a worldwide
basis. When a customer in a particular cell dials a number, the cellular
telephone sends the call by radio signal to the cell's transmitter-receiver,
which in turn transmits it to the MSC. The MSC then completes the call by
connecting it with the landline telephone network or another cellular
telephone unit. Incoming calls are received by the MSC, which instructs the
appropriate cell to complete the communications link by radio signal between
the cell's transmitter-receiver and the cellular telephone. Cellular
communications systems operate under interconnection agreements with various
local exchange carriers and interexchange carriers. The interconnection
agreements establish the manner in which the cellular telephone system
integrates with other telecommunications systems. The cellular operator and
the local landline telephone company must cooperate in the interconnection
between the cellular and landline telephone systems to permit cellular
customers to call landline customers and vice versa. The technical and
financial details of such interconnection arrangements are subject to
negotiation and vary from system to system.

FCC rules require that all cellular telephones be functionally compatible
with cellular communications systems in all markets within the United States
and with all frequencies allocated for cellular use, allowing a cellular
telephone to be used wherever a customer is located, subject to appropriate
arrangements for service charges. Changes to cellular telephone numbers or
other technical adjustments to cellular telephones by the manufacturer or
local cellular telephone service businesses may be required, however, to
enable the customer to change from one cellular service provider to another
within a service area.

The rapid growth of the cellular customer base has begun to strain the call-
processing capacity of many existing analog networks. Present technology and
assigned spectrum limits the number of signals that can be transmitted
simultaneously in a given area. In highly populated MSAs, the level of demand
for mobile and portable service is often large in relation to the existing
capacity. Because the primary objective of the cellular licensing process is
to address mobile and portable uses, operators in highly populated MSAs may
have capacity constraints which limit their ability to provide alternate
cellular service. See "Certain Risk Factors" and "--Business Strategy--Product
and Service Deployment."

Each cellular network is designed to meet a certain level of customer
density and traffic demand. Once these traffic levels are exceeded, the
operator must take steps to improve the network capacity. This improvement can
initially be accomplished by using techniques such as sectorization and cell
splitting. Network operators and infrastructure manufacturers are developing a
number of additional solutions which are expected to increase network capacity
and coverage.

Within certain limitations, increasing demand may be met by simply adding
available frequency capacity to cells as required, or by using directional
antennae to divide a cell into discrete multiple sectors or coverage areas
(also known as sectorization), thereby reducing the required distance between
cells using the same frequency. Furthermore, an area within a cellular
communications system may be served by more than one cell through procedures
which utilize available channels in adjacent cells. When all possible channels
are in use, further growth can be accomplished through a process called "cell
splitting." Cell splitting entails dividing a single cell

42
<PAGE>

into a number of smaller cells served by lower-tower transmitters, thereby
increasing the reuse factor and the number of calls that can be handled in a
given area.

Network capacity can also be enhanced through the development of newer
network technologies like N-AMPS analog technology (which triples call
carrying capacity over conventional analog technology) and CDMA digital
technology (which increases call carrying capacity by an estimated factor of
10), which in each case allow cellular carriers to add customers without
degrading service quality. Digital technology offers advantages, including
larger system capacity, and perhaps lower incremental costs for additional
customers. The conversion from analog to digital radio technology is expected
to be an industry-wide process that will take a number of years. The Company
believes that its networks have sufficient capacity to handle the Company's
customer growth rate in the near term. In the future, the Company intends to
relieve any capacity constraints through frequency planning, additional
deployment of N-AMPS and the prudent installation of additional cell sites in
densely populated areas. As additional calling capacity is required to
accommodate growth in call volume, the Company plans to implement the
transition to digital technology on a market by market basis.

COMPETITION

Cellular carriers compete primarily against the other facilities-based
cellular carrier in each MSA and RSA market. The Company faces competition
from services such as conventional mobile telephone service, ESMR systems, PCS
and resellers. ESMR is a wireless communications service supplied by
converting analog SMR services into an integrated, digital transmission
system.

The Company believes that competition for customers between cellular
licensees is based principally upon the services and enhancements offered, the
quality of the cellular system, customer service, system coverage and capacity
and price. Such competition may increase to the extent that licenses are
transferred from smaller, stand-alone operators to larger, better capitalized
and more experienced cellular operators who may be able to offer consumers
certain network advantages similar to those offered by the Company.

Existing and new users of cellular systems may also find their
communications needs satisfied by other current and developing technologies,
such as PCS. Licensing areas for broadband PCS have been divided into 51 MTAs
and 493 smaller Basic Trading Areas ("BTAs") based on the geographic divisions
in the 1992 Rand McNally Commercial Atlas & Marketing Guide. There could be a
minimum of two and a maximum of six broadband PCS providers in each MTA. Of
the six licensees, three will hold 30 MHz of PCS spectrum, one of which will
be licensed for a BTA, and the remaining three licensees of 10 MHz will offer
a broad range of voice, data and related communications services in a BTA.

The FCC will allocate a total of 2,071 broadband licenses by auction,
according to rules that, among other things, limit a cellular licensee until
the year 2000 to a single 10 MHz PCS license in an area in which it also
provides cellular services to 10 percent or more of the population. Thus,
given the 25 MHz of spectrum afforded cellular carriers under the cellular
rules, cellular carriers are subject to a 35 MHz spectrum cap for their
combined PCS and cellular spectrum in areas where they offer both services.
After January 1, 2000, cellular licensees will be permitted to acquire an
additional five MHz for a total of 15 MHz of PCS spectrum in their cellular
service areas.

PCS services are expected to consist of wireless two-way telecommunications
services for voice, data and other transmissions employing digital micro-
cellular technology. PCS will operate in the 1850 to 1990 MHz band. It is
expected that PCS will involve a network of small, low-powered transceivers
placed throughout a neighborhood, business complex, community or metropolitan
area to provide customers with mobile and portable voice and data
communications. PCS customers could have dedicated personal telephone numbers
and would communicate using small digital radio handsets that could be carried
in a pocket or purse. Although the Company currently has the technology and
the engineering ability to offer similar services, there can be no assurance
that it will be able to do so on a timely and profitable basis.

43
<PAGE>

Many PCS license winners who will compete with the Company have access to
more substantial capital resources than the Company. In addition, many of
these companies, or their predecessors and affiliates, already operate large
cellular telephone networks and thus bring significant wireless experience to
this new marketplace.

The Company is preparing for this new competitive environment by enhancing
its networks, expanding its service territory and offering new features,
products and services to its customers. The Company believes it will benefit
from its position as an incumbent in the cellular field with a high quality
network and extensive footprint that is not capacity constrained, strong
distribution channels, superior customer service capabilities and an
experienced management team. Since the Company operates in medium to small
markets, the new PCS licensees are unlikely to offer viable wireless service
in many of the Company's territories in the near term because the extensive
capital expenditures required to deploy the infrastructure for PCS are more
readily justifiable from an economic standpoint in larger, more densely
populated urban areas. This may position the Company to offer roaming services
to PCS customers as well as to provide bulk lines of service for resale to
certain PCS companies.

The FCC requires all cellular system operators to provide service to
"resellers." A reseller provides cellular service to customers but does not
hold an FCC cellular license or own cellular facilities. Instead, the reseller
buys blocks of cellular telephone numbers from one or both licensed carriers
in a particular market and resells service through its own distribution
channels to the public. Thus, a reseller may be a customer of a cellular
licensee's services, a competitor of that licensee, or both. The Company will
explore additional relationships with resellers to supplement existing
distribution channels and to reach specific market segments. The Company
expects to offer competitive bulk airtime pricing, as well as enhanced billing
and marketing services in order to attract resellers in its markets without
eroding airtime profit margins or inflating acquisition costs. The number of
resellers is currently small, but it is expected to increase in the Company's
markets. Recently, several well-known telecommunications companies have begun
reselling cellular service as a complement to their long distance, local
telephone, paging, cable television or InterNet offerings. The Company
believes that this development will stimulate overall market interest in
cellular service and thus is not expected to have a material adverse effect on
the Company's business for the foreseeable future.

GOVERNMENTAL REGULATION

Regulation and Licensing of Cellular Communications Systems

The Company is subject to extensive regulation by the Federal government as
a provider of cellular communications services. Pursuant to the Communications
Act, the licensing, construction, operation, acquisition and transfer of
cellular communications systems in the United States are regulated by the FCC.
The FCC has promulgated rules governing the construction and operation of
cellular communications systems and licensing and technical standards for the
provision of cellular telephone service ("FCC Rules"). For licensing purposes,
the United States is divided into 734 discrete geographically defined market
areas comprised of 306 MSAs and 428 RSAs.

In each market, the frequencies allocated for cellular telephone use are
divided into two equal 25 MHz blocks and designated as Block A and Block B.
Block B licenses were initially reserved for entities affiliated with a
wireline telephone company, such as the Company, while Block A licenses were
initially reserved for non-wireline entities. Under current FCC Rules, a Block
A or Block B license may be transferred with FCC approval without restriction
as to wireline affiliation, but generally, no entity may own a substantial
interest in both systems in any one MSA or RSA. The FCC may prohibit or impose
conditions on sales or transfers of licenses.

Initial operating licenses are generally granted for terms of up to 10
years, beginning on the dates of the grant of the Initial Operating Authority
and are renewable upon application to the FCC. Licenses may be revoked and
license renewal applications denied for cause after appropriate notice and
hearing. The FCC generally grants current licensees a license renewal if they
have complied with their obligations under the Communications Act

44
<PAGE>

during their license terms. A potential challenger would bear a heavy burden
to demonstrate that a license should not be renewed if the licensee's
performance merits a renewal expectancy.

Cellular service providers must satisfy a variety of FCC requirements
relating to technical and reporting matters. One such requirement is the
coordination of proposed frequency usage with adjacent cellular users,
permittees and licensees in order to avoid interference between adjacent
systems. In addition, the height and power of base station transmitting
facilities and the type of signals they emit must fall within specified
parameters. The FCC also regulates cellular service resale practices and the
terms under which certain ancillary services may be provided through cellular
facilities.

The Company also regularly applies for FCC authority to use additional
frequencies, to modify the technical parameters of existing licenses, to
expand its service territory and to provide new services. The Communications
Act requires prior FCC approval for transfers to or from the Company of a
controlling interest in any license or construction permit, or any rights
thereunder. Although there can be no assurance that any future requests for
approval of applications filed will be approved or acted upon in a timely
manner by the FCC, the Company has no reason to believe such requests or
applications would not be approved or granted in due course.

Near the conclusion of the license term, licensees must file applications
for renewal of licenses to obtain authority to operate for up to an additional
10-year term. Applications for license renewal may be denied if the FCC
determines that the grant of an application would not serve the public
interest. In addition, at license renewal time, other parties may file
competing applications for authorization. In the event that qualified
competitors file, the FCC may be required to hold a hearing to determine
whether the incumbent or the competitor will receive the license. In 1993, the
FCC adopted specific standards to apply to cellular renewals, concluding that
it will award a renewal expectancy to a cellular licensee that meets certain
standards of past performance. If the existing licensee receives a renewal
expectancy, it is very likely that the existing licensee's cellular license
will be renewed without a full comparative hearing. To receive a renewal
expectancy, a licensee must show that it (i) has provided "substantial"
service during its past license term, and (ii) has substantially complied with
applicable FCC rules and policies and the Communications Act. "Substantial"
service is defined as service which is sound, favorable and substantially
above a level of mediocre service that might only minimally warrant renewal.

In 1994, the Company filed for renewal of five expiring licenses which were
originally granted by the FCC during 1985. In its applications for renewal,
the Company demonstrated not only its compliance with FCC regulations, but
also its service in the public interest. All five licenses (Harrisburg, PA;
Charleston, SC; Youngstown, OH; Greensboro, NC; and Toledo, OH) were approved
without challenge. On September 29, 1995, the Company filed for renewal of six
expiring FCC licenses (Raleigh, NC; Las Vegas, NV; Norfolk, VA; Newport News,
VA; Johnson City, TN; and Greenville, SC). The Company is confident that it
has met and will continue to meet all requirements necessary to secure renewal
of its cellular licenses.

In July 1994, the FCC issued a notice proposing to require that all cellular
carriers provide inter-exchange carriers with equal access. Currently, only
AT&T-affiliated cellular carriers and the cellular affiliates of the regional
Bell operating companies ("RBOCs") are required to provide equal access. The
FCC also proposed requiring all commercial mobile radio service providers to
provide interconnection to other mobile service providers. In April 1995,
however, the FCC tentatively concluded that it would be premature to adopt
such a requirement.

Character and Citizenship Requirements

Applications for FCC authority may be denied, and in extreme cases licenses
may be revoked, if the FCC finds that an entity lacks the requisite
"character" qualifications to be a licensee. In making that determination, the
FCC considers whether an applicant or licensee has been the subject of adverse
findings in a judicial or administrative proceeding involving felonies, the
possession or sale of unlawful drugs, fraud, antitrust violations

45
<PAGE>

or unfair competition, employment discrimination, misrepresentations to the
FCC or other government agencies, or serious violations of the Communications
Act or FCC regulations. The FCC also requires licensees to comply with
statutory restrictions on the direct or indirect ownership or control of radio
licenses by non-U.S. persons or entities. The FCC has found the Company to be
qualified to hold FCC licenses and the Company has included provisions in its
Certificate of Incorporation which authorizes it to redeem its stock from any
person whose ownership would jeopardize the grant, holding or renewal of any
material license held by the Company.

Federal Legislation

Legislative changes to the Communications Act and the antitrust consent
decree applicable to the RBOCs could affect the cellular industry. Many bills
have been introduced in recent years without enactment. Congress decided not
to pass any significant telecommunications legislation in 1994. However,
similar and expanded legislation has been introduced in 1995, and separate
bills have been passed by the Senate and the House of Representatives. If
enacted, such legislation could, among other changes, affect competition for
local telecommunications services, interconnection arrangements for carriers,
universal service funding and the provision of interexchange services by the
RBOCs' wireless systems.

State, Local and Other Regulation

Congress amended the Communications Act to preempt, as of August 10, 1994,
state or local regulation of the entry of, or the rates charged by, any
commercial mobile service or any private mobile service, which includes
cellular telephone service. Notwithstanding such preemption, a state had until
August 10, 1994 to petition the FCC for authority to continue regulating the
rates for any commercial mobile service. Eight states filed petitions to
continue their rate regulation authority: Arizona, California, Connecticut,
Hawaii, Louisiana, New York, Ohio and Wyoming. In May 1995, the FCC denied all
eight petitions and precluded those states from regulating the rates for
commercial mobile service providers, including cellular operators. Its actions
on those petitions remain subject to reconsideration and judicial review. As a
practical matter, the Company is free to establish rates and offer new
products and service with a minimum of regulatory requirements. A few of the
Company's 14 states of operation still maintain nominal oversight
jurisdiction, primarily focusing upon resolution of customer complaints. In
such states (primarily Nevada and Ohio), the Company devotes resources as
necessary to maintaining positive relationships with state utility
commissions.

The location and construction of cellular transmitter towers and antennas
are subject to Federal Aviation Administration ("FAA") regulations and may be
subject to Federal, state and local environmental regulation as well as state
or local zoning, land use and other regulation. Before a system can be put
into commercial operation, the grantee of a construction permit must obtain
all necessary zoning and building permit approvals for the cell sites and MSC
locations and must secure state certification and tariff approvals, if
required. The time needed to obtain zoning approvals and requisite state
permits varies from market to market and state to state. Likewise, variations
exist in local zoning processes. There can be no assurance that any state or
local regulatory requirements currently applicable to the systems in which the
Company's affiliates have an interest will not be changed in the future or
that regulatory requirements will not be adopted in those states and
localities which currently have none.

Zoning and planning regulation may become more restrictive in the future
with the addition of PCS carriers who will be seeking sites for network
construction as well. The industry is seeking relief from local laws which
arbitrarily restrict the expansion of cellular networks.

EMPLOYEES

At September 30, 1995 the Company had approximately 3,100 employees,
including non-controlled Company markets that are managed by the Company, none
of whom is represented by a labor organization. Management considers its
relations with employees to be excellent.

46
<PAGE>

PROPERTIES

The Company maintains its corporate headquarters in Chicago, Illinois. The
Company leases approximately 160,000 square feet in this facility. For each
cluster of markets served by the Company's operations, the Company maintains
at least one sales or administrative office and a number of cell transmitter
and antenna sites. Most facilities are leased and some are owned. As of
September 30, 1995, the Company had approximately 100 leases for retail stores
used as one of its distribution channels. The Company believes that its
facilities are in good working condition, suitable for its current business
and that additional facilities will be available for its foreseeable needs.

LEGAL PROCEEDINGS

The Company is not currently involved in any pending legal proceedings that
are individually or in the aggregate material to the Company.

TRADEMARKS AND RELATED MATTERS

At the time of the Spin-off, Sprint and the Company will enter into an
Intellectual Property Agreement that will, among other things, provide a
license of certain trademarks (including service marks and logos) from Sprint
to the Company for a transition period after the Spin-off. Prior to the Spin-
off, the Company will introduce a new brand identity and will initiate the
Federal trademark application process seeking protection of the new brand name
and logo under Federal law. The Company expects to begin operating under the
new brand identity during the first quarter of 1996.

47
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1995, giving pro forma effect to the consummation of certain
probable acquisitions, the Offering and the estimated initial borrowings of
$600 million under the Credit Facility and the effects of the Spin-off. This
table should be read in conjunction with the Company's consolidated financial
statements and notes thereto and the Pro Forma Condensed Combined Statements
appearing elsewhere herein.

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1995
-------------------------
ACTUAL PRO FORMA (1)
---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-Term Debt...................................... $ -- $ --
========== ==========
Long-Term Debt:
Advances From and Notes to Affiliates.............. $1,520,259 $ --
Credit Facility.................................... -- 600,000
Notes Offered Hereby............................... -- 800,000
---------- ----------
Total Long-Term Debt............................. 1,520,259 1,400,000
---------- ----------
Shareholders' Equity:
Preferred Stock, $.01 par value; 100,000,000 shares
authorized;
no shares issued and outstanding.................. -- --
Common Stock, no par value; 10 shares authorized;
10 shares issued and outstanding.................. 11,541 --
Common Stock, $.01 par value; 1,000,000,000 shares
authorized;
116,263,603 shares issued and outstanding......... -- 1,163
Additional Paid-In Capital......................... 360,978 597,572
Accumulated Deficit................................ (370,886) (370,886)
---------- ----------
Total Shareholders' Equity....................... 1,633 227,849
---------- ----------
Total Capitalization............................. $1,521,892 $1,627,849
========== ==========
</TABLE>
- --------

(1) The pro forma capitalization of the Company reflects the effects of the
following transactions as if such transactions had occurred on September
30, 1995:

(a) The acquisition by the Company of certain probable acquisitions with an
estimated purchase price of $107.0 million, financed through an increase
in Advances From and Notes to Affiliates.

(b) The proceeds of $800 million from the Offering, before underwriting
discount and expenses, and $600 million of initial borrowings under the
Credit Facility, and

(c) The effects of the Spin-off under which (i) the Company will reclassify
its existing capital stock to reflect Sprint shares outstanding at
September 30, 1995 adjusted assuming a conversion ratio of 1 to 3 and a
par value of $.01 per share in preparation for the Spin-off; (ii) Sprint
will distribute to all holders of Sprint common stock all of the shares of
Common Stock of the Company; (iii) the Company will repay approximately
$1.4 billion of intercompany debt owed to Sprint with proceeds from the
Offering and borrowings under the Credit Facility; and (iv) Sprint will
contribute any remaining net intercompany debt to the equity capital of
the Company at the time of the Spin-off.

48
<PAGE>

FINANCING

DESCRIPTION OF NOTES AND INDENTURE

The Company will issue two series of Senior Notes in an aggregate principal
amount of $800 million (the "Notes"), the net proceeds of which will be used
to repay a portion of the $1.4 billion of intercompany debt to be repaid at
the simultaneous closings of the Spin-off, the Offering and the Credit
Facility. One series will mature on , 2003 and bear interest at
% per annum (the "2003 Notes") and the other series will mature on
, 2006 and bear interest at % per annum (the "2006 Notes"). The Notes
will be senior unsecured obligations of the Company, will rank pari passu in
right of payment with all unsecured, unsubordinated indebtedness of the
Company, including indebtedness pursuant to the Credit Facility, and will be
senior in right of payment to all future subordinated indebtedness of the
Company.

The Notes are not redeemable prior to , 2001 and are redeemable
thereafter at the option of the Company. The redemption price will be equal to
principal, accrued and unpaid interest thereon, and a premium (based on a
specified percentage of the principal amount) which declines to par in the
case of the 2003 Notes, beginning , 2002 and, in the case of 2006
Notes, beginning , 2004. Upon the occurrence of a Change of Control
Triggering Event each holder of the Notes shall have the right to require the
Company to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of such holder's Notes at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
purchase date. A Change of Control Triggering Event is generally defined to
mean (i) an acquisition of 35% or more of the total voting power of the
Company, (ii) a majority or more of the directors changes within a two-year
period which have not been nominated by 66 2/3% of the directors in office at
the issuance date of the Notes, or by their successors who were so nominated;
(iii) a consolidation or a merger with a party other than with a wholly-owned
subsidiary or after which the Company's pre-combination stockholders do not
have a majority of the voting power, or (iv) a sale of substantially all of
the assets of the Company. Without the appropriate consent of the holder of
the Notes, neither the Board of Directors of the Company nor the Trustee may
waive the provisions of the Indenture requiring the Company to make a Change
of Control Offer upon a Change of Control Triggering Event. The Notes will not
be entitled to any sinking fund.

DESCRIPTION OF CREDIT FACILITY

In order to pay a portion of the approximately $1.4 billion of intercompany
debt owed by the Company to Sprint and its subsidiaries and to meet its future
capital requirements needed to fund operating activities and acquisitions, the
Company is negotiating with lenders for a $800 million five-year revolving
Credit Facility. Interest rates will be based upon either Citibank's base rate
or the London Interbank Offered Rate. The Credit Facility will be unsecured
and will be pari passu in right of payment with the Notes. The Credit Facility
will have a quarterly commitment fee payable on the unused portion of the
total commitment of the Credit Facility.

The Credit Facility will have covenants which place restrictions on (i)
dividend payments and other restricted payments, (ii) consolidations and
mergers, other than mergers of certain subsidiaries of the Company, and sales
of assets, (iii) changes of business, Certificate of Incorporation and bylaws,
accounting policies and reporting practices, (iv) the incurrence of additional
debt and liens, (v) certain investments and leases, (vi) use of loan proceeds,
(vii) ability to designate unrestricted subsidiaries, (viii) transactions with
affiliates, and (ix) prepayment of senior and subordinated debt other than
required payments of the Notes. The Credit Facility will also have financial
covenants which require that the Company not exceed a maximum ratio of total
Debt to EBITDA, and maintain a minimum ratio of EBITDA to Interest. For
purposes of the Credit Facility: "EBITDA" means consolidated net income plus
interest expense, income tax expense, depreciation and amortization expenses,
non-cash losses (less non-cash gains), in each case determined in accordance
with GAAP; "Debt" means consolidated (a) indebtedness for borrowed money
(including without limitation, in respect of securitizations), (b) deferred
purchase price of property or services (other than trade payables less than 60
days overdue), (c) obligations evidenced by notes or other instruments, (d)
obligations arising under conditional sale agreements or capitalized leases,
(e) obligations under letter of credit or similar facilities, (f) obligations
to

49
<PAGE>

purchase, redeem or otherwise make payments in respect of capital stock, (g)
guaranties, and (h) pledges or hypothecations; "Interest" means interest
payable on, and amortization of debt discount in respect of, Debt.

The Credit Facility is subject to the satisfaction of a number of
significant conditions, including, among other things (i) the syndication of
the Credit Facility, (ii) the execution of definitive credit agreements and
related documents satisfactory to the lenders, (iii) the completion of due
diligence satisfactory to the lenders, and (iv) the absence of any material
adverse change affecting the Company. The closing of the Credit Facility, the
closing of the Spin-off and the closing of the Offering are each contingent
upon the other.

50
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information concerning the directors and
executive officers of the Company. Prior to the closing of the Offering and
the Spin-off, each of the current directors will resign. Sprint, as the
Company's sole stockholder, will elect a new Board of Directors. Directors
will be elected by stockholders at each annual meeting or, in the case of a
vacancy or increase in the number of directors, by the directors then in
office, to serve the remaining portion of the terms of office, or until their
successors are elected and qualified.

<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES HELD
- ---- --- -------------------------
<S> <C> <C>
Dennis E. Foster........ 55 President and Chief Executive Officer and Prospective Director
Kevin L. Beebe.......... 36 Executive Vice President of Operations
Michael J. Small........ 38 Executive Vice President and Chief Financial Officer
Susan L. Amato.......... 37 Senior Vice President of Engineering and Network Operations
Gary L. Burge........... 41 Senior Vice President of Finance
Kevin C. Gallagher...... 48 Senior Vice President, General Counsel and Secretary
Debra L. Ferrari........ 38 Vice President of Human Resources
Frank E. Reed........... 60 Prospective Chairman of the Board of Directors
Robert E. R. Huntley.... 66 Prospective Director
Charles H. Price, II.... 64 Prospective Director
</TABLE>

The executive officers' continued service is determined solely by the Board
of Directors. Set forth below is a description of the business experience of
each director and executive officer of the Company. Mr. Foster currently
serves as President and Chief Operating Officer of the Cellular and Wireless
Division of Sprint, a position he will resign at the time of the Spin-off.

Mr. Foster has been President and Chief Operating Officer of the Cellular
and Wireless Division of Sprint since March 1993, and prior to that he was
Senior Vice President of the Local Telecommunications Division of Sprint
beginning in May 1992. Prior to joining Sprint, in June 1991 he became
President and Chief Operating Officer of GTE Mobilnet. In September 1989, Mr.
Foster became Area Vice President and General Manager of GTE North. He has
over 28 years of experience in the telecommunications industry.

Mr. Beebe has been employed by Sprint or its subsidiaries for over 11 years,
joining Sprint Cellular in February 1994 as Vice President of Marketing and
Administration. In March 1995, he became Vice President of Operations. Prior
to joining Sprint Cellular and beginning in June 1991, he served with Sprint's
United North Central as Director of Marketing. In November 1990, Mr. Beebe
became Director of the Engineering and Operations Staff at United Telephone
Systems--Southeast Group and became Director of Product Management Business
Development in June 1988.

Mr. Small rejoined Sprint Cellular in December 1995. Prior to that time he
served as a member of the Office of the President of Lynch Corporation as well
as President and Chief Executive Officer of Lynch Multimedia since January
1994. Prior to his positions with Lynch Corporation, he was employed by Sprint
or its subsidiaries and Centel Corporation, a predecessor corporation, or its
subsidiaries for over 12 years. He joined the cellular organization in March
1991 as Executive Vice President of Administration and Engineering and prior
to that served as Vice President of Investor Relations at Centel Corporation
since September 1989.

Ms. Amato has been employed by Sprint or its subsidiaries and Centel
Corporation, a predecessor corporation, or its subsidiaries for over 14 years.
She joined the cellular organization in September 1990 as Regional Vice
President of the Mid-Atlantic region, became Vice President of Wireless
Business Development in February 1994 and Vice President of Engineering and
Network Operations in February 1995.

51
<PAGE>

Mr. Burge has been employed by Sprint or its subsidiaries and Centel
Corporation, a predecessor corporation, or its subsidiaries for over 14 years.
He joined the cellular organization in November 1989 as Controller and became
Vice President and Controller in May 1991 and Vice President of Finance and
Administration in March 1995.

Mr. Gallagher has been employed by Sprint or its subsidiaries and Centel
Corporation, a predecessor corporation, or its subsidiaries for over 14 years.
He joined the cellular organization in January 1990 as Vice President of Legal,
became Vice President of Legal and External Affairs in May 1991 and Vice
President and General Counsel in September 1992.

Ms. Ferrari has been employed by Sprint or its subsidiaries and Centel
Corporation, a predecessor corporation, or its subsidiaries for over 12 years.
She joined Sprint Cellular in September 1993 as Director of Human Resources.
Prior to joining Sprint Cellular and beginning in January 1987, she was with
Centel Corporation as General Staff Manager of Compensation Planning.

Mr. Reed is expected to become the nonmanagement Chairman of the Board of
Directors of the Company either prior to or upon the Spin-off. He is former
President and Chief Executive Officer of CoreStates Philadelphia National Bank,
Philadelphia, Pennsylvania and Director of Harleysville Group, Inc. Mr. Reed
had been President and Chief Executive Officer of CoreStates Philadelphia
National Bank for more than five years prior to December 31, 1994. Prior to
becoming a Director of Sprint in 1993, Mr. Reed had been a Director of Centel
Corporation since 1978.

Mr. Huntley is expected to become a director of the Company either prior to
or upon the Spin-off. He is Counsel to Hunton & Williams, a law firm, Richmond,
Virginia and Director of Philip Morris Companies, Inc. Mr. Huntley has been
counsel to Hunton & Williams for more than five years. Prior to becoming a
Director of Sprint in 1993, Mr. Huntley had been a Director of Centel
Corporation, a predecessor corporation, since 1975.

Mr. Price is expected to become a director of the Company either prior to or
upon the Spin-off. He is Chairman of the Board of Mercantile Bank of Kansas
City, Kansas City, Missouri; Director of British Airways PLC, Hanson PLC,
Mercantile Bancorporation, Inc., The New York Times Company and Texaco, Inc.
Mr. Price was elected Chairman of the Board of Mercantile Bank of Kansas City
in 1992. He was President and Chief Executive Officer of Ameribanc, Inc. from
1989 to 1992 and the United States Ambassador to the United Kingdom of Great
Britain and Northern Ireland from 1983 to 1989. Mr. Price has been a Director
of Sprint since 1989.

DIRECTOR COMPENSATION AND RELATED TRANSACTIONS

The Company has not yet adopted specific policies on directors' compensation.

COMMITTEES

The Company's Bylaws establish an Audit Committee and a Compensation
Committee. The Audit Committee will examine and consider matters relating to
the financial affairs of the Company, including reviewing the Company's annual
financial statements, the scope of the independent annual audit and internal
audits and the independent auditor's letter to management concerning the
effectiveness of the Company's internal financial and accounting controls. The
Compensation Committee will consider and make recommendations to the Company's
Board of Directors with respect to programs for human resource development and
management organization and succession, approve changes in senior executive
compensation, consider and make recommendations to the Company's Board of
Directors with respect to compensation matters and policies and employee
benefit and incentive plans, exercise authority granted to it to administer
such plans, and administer the Company's stock option and equity based plans
and grant stock options and other rights under such plans.

52
<PAGE>

EXECUTIVE COMPENSATION

The following table summarizes the cash and non-cash compensation for
services rendered in all capacities to the Company for the year ended December
31, 1995 for the Chief Executive Officer and the four most highly compensated
executive officers (collectively, the "Named Officers") of the Company.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ -----------------------------
AWARDS PAYOUTS
--------------------- -------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) AWARDS ($) (#) ($) ($)
------------------ ---- -------- -------- ------------ ---------- ---------- ------- ------------
(NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4) (NOTE 5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis E. Foster
President and Chief
Executive Officer 1995 $249,339 $164,008 $21,519 $-- 12,000 $60,775 $4,995
Kevin C. Gallagher
Senior Vice President,
General Counsel and
Secretary 1995 144,122 59,192 10,800 -- 3,500 -- 6,301
Kevin L. Beebe Executive
Vice President of
Operations 1995 134,979 60,367 14,919 -- 3,500 -- 7,338
Gary L. Burge Senior
Vice President of
Finance 1995 132,571 60,367 14,588 -- 3,500 -- 4,227
Susan L. Amato Senior
Vice President of
Engineering and Network
Operations 1995 114,194 43,856 10,500 -- 2,500 -- 8,608
</TABLE>

NOTES:

(1) Includes salary earned for 1995, even if deferred under Sprint's Executive
Deferred Compensation Plan or Retirement Savings Plan.

(2) Bonus earned in 1995 is not calculable until mid-February of 1996;
therefore, amounts reflect bonus earned in 1994 (whether or not deferred).

(3) At December 31, 1995, Mr. Foster held 10,750 shares of Sprint restricted
stock valued at $425,969, based on the closing price of Sprint Common
Stock on December 29, 1995 of $39.625.

(4) Represents options to purchase Sprint Common Stock.

(5) Consists of the following amounts for 1995: (a) $4,995, $6,101, $4,807,
$4,092 and $6,179 contributed by Sprint on behalf of Messrs. Foster,
Gallagher, Beebe and Burge and Ms. Amato, respectively, as matching
contributions under Sprint's Retirement Savings Plan; (b) $2,531 and
$2,325 in relocation expenses for Mr. Beebe and Ms. Amato, respectively;
and (c) $200, $135 and $104 in cash dividends paid to Messrs. Gallagher
and Burge and Ms. Amato, respectively, on Sprint Common Stock held under
the Central Employees' Stock Ownership Plan.

OPTION GRANTS

The following table summarizes options granted during 1995 under Sprint's
stock option plans to the Named Officers. These grants reflect options to
purchase Sprint common stock. At the Spin-off, these grants, as well as all
other outstanding options of employees of the Company under Sprint plans as of
the closing date of the Spin-off, will be replaced by Company options (the
"Replacement Options"). The Replacement Options will cover the same aggregate
fair market values of Sprint common stock underlying the options and continue
the vesting schedules and other conditions for exercise of the Sprint options
they replace. Aggregate fair market value of the options will be maintained by
adjusting the per share exercise price of the options as well as the number of
shares which may be purchased under the options. The formula to determine per
share exercise prices is dependent on the respective weighted average market
values of Sprint common stock during the ten trading days prior to the closing
date of the Spin-off and Company Common Stock during the ten trading days
after the closing date of the Spin-off. As such, the Company cannot currently
determine the number of Replacement Options that will be outstanding after the
Spin-off date. The total number of shares of Company Common Stock that may be
purchased by exercise of the Replacement Options will be determined by
multiplying the unadjusted number of shares of Sprint common stock that could
have been purchased by exercise of the Sprint options by an adjustment

53
<PAGE>

factor, the numerator of which is the pre-Spin-off value of Sprint common
stock, and the denominator of which is the post-Spin-off value of the Company's
Common Stock truncated to a whole number of shares. The per share exercise
price of Replacement Options will be determined by subtracting from the post-
Spin-off market value of the Company's Common Stock the product of (a) the
excess of the pre-Spin-off market value of Sprint's common stock over the
unadjusted exercise price of the Sprint options and (b) the ratio of the
unadjusted number of shares of Sprint common stock that could have been
purchased by exercise of the Sprint options over the number of shares of
Company common stock purchasable post-Spin-off adjusted as described in the
preceding sentence. No stock appreciation rights were granted during 1995.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM (2)
GRANTED IN FISCAL PRICE EXPIRATION -----------------
NAME (1) YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Dennis E. Foster........ 12,000 0.4% $29.625 2/17/05 $223,572 $566,575
Kevin C. Gallagher...... 3,500 0.1% 29.625 2/17/05 65,209 165,251
Kevin L. Beebe.......... 3,500 0.1% 29.625 2/17/05 65,209 165,251
Gary L. Burge........... 3,500 0.1% 29.625 2/17/05 65,209 165,251
Susan L. Amato.......... 2,500 0.1% 29.625 2/17/05 46,578 118,037
</TABLE>
- --------
(1) The options shown for each Named Officer include a reload feature. A reload
feature means that a reload option may be granted when an optionee
exercises a stock option and makes payment of the purchase price using
shares of previously owned Sprint common stock. A reload option grant is
for the number of shares utilized in payment of the purchase price and tax
withholding, if any. The option price for a reload option is equal to the
market price of Sprint common stock on the date of exercise of the original
option. A reload option becomes exercisable one year from the date the
original option was exercised.

Twenty-five percent of the options shown for each Named Officer became
exercisable on February 17, 1996, and an additional 25% will become
exercisable on February 17 of each of the three successive years.
(2) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the Commission and are not
intended to forecast future appreciation of Sprint common stock.

OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table summarizes the value of the outstanding options to
purchase Sprint common stock at December 31, 1995, for the Named Officers. At
the Spin-off, all outstanding options to purchase Sprint common stock held by
employees of the Company will be converted into options to purchase the
Company's Common Stock. See "--Option Grants." There were no exercises of
options by the Named Officers during 1995.

YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT 12/31/95 OPTIONS/SARS AT 12/31/95
------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) (#) ($) ($)
- ---- ----------- ------------- ----------- -------------
(NOTE 1) (NOTE 1)
<S> <C> <C> <C> <C>
Dennis E. Foster............ 14,500 53,500 $150,657 $321,345
Kevin C. Gallagher.......... 27,559 7,875 507,327 58,133
Kevin L. Beebe.............. 3,750 12,750 36,001 79,282
Gary L. Burge............... 19,113 17,375 356,761 91,852
Susan L. Amato.............. 7,954 4,749 157,484 33,804
</TABLE>
- --------

(1) The value of unexercised, in-the-money options/SARs is the difference
between the exercise price of the options and the fair market value of
Sprint common stock at December 31, 1995 ($39.625).

54
<PAGE>

LONG-TERM INCENTIVE PLAN AWARDS

The following table represents potential awards to Named Officers under
Sprint's Long-Term Incentive Plan ("LTIP"). The Company does not have a long-
term incentive plan and does not currently have plans to establish such a
plan.

Subject to Sprint's right to amend the LTIP at any time prior to Sprint's
Organization and Compensation Committee's approval of payouts, awards can be
earned by the achievement of certain financial objectives over the three year
period ending December 31, 1997. Payouts of awards are tied to achieving
specified levels of performance criteria, based on certain financial
objectives, within Sprint's Long Distance Division ("SLDD"), Sprint's Local
Telecommunications Division ("SLTD") and Sprint's Cellular Division ("SCD").
The relative weight given to the performance criteria of SLDD, SLTD and SCD in
computing an executive's payout is based on the executive's responsibilities
with Sprint. A portion of the payout for Mr. Foster is also tied to
consolidated economic value added ("EVA") improvement.

The portion of the payout applicable to SLDD is tied to achieving specified
levels of operating margin and net collectible revenue growth and EVA
improvement. The portion of the payout applicable to SLTD is tied to achieving
specified levels of return on assets, nonregulated net collectible revenues
and nonregulated operating income and EVA improvement. The portion of the
payout applicable to SCD is tied to achieving specified levels of operating
income, net collectible revenue and EVA improvement. The target amount will be
earned if 100% of the targeted levels of such criteria is achieved. An award
payout will not be earned for performance below the threshold.

The calculated payout, based on the achievement of the above financial
criteria, is adjusted (increased or decreased) by the percent change in the
market price of Sprint's common stock as determined by the change in the
average of the high and low prices on January 1, 1995 and December 31, 1997.
If the stock price increases over the three-year performance period, the
payout is adjusted by the percentage increase in stock price. Conversely, if
the stock price decreases over the three-year performance period, the payout
is reduced by the percentage decrease in stock price. Upon approval of the
payouts by the Organization and Compensation Committee of Sprint, each payout
will be paid as specified by the executive in restricted or unrestricted
shares of Sprint common stock, or deferred under Sprint's Executive Deferred
Compensation Plan.

LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED
OTHER PERIOD PLANS (1)
UNTIL --------------------------
MATURATION OR THRESHOLD TARGET MAXIMUM
NAME PAYOUT ($) ($) ($)
- ---- --------------- --------- ------- --------
<S> <C> <C> <C> <C>
Dennis E. Foster..................... 1/1/95-12/31/97 $16,184 $64,736 $126,804
Kevin C. Gallagher................... 1/1/95-12/31/97 3,550 14,200 27,814
Kevin L. Beebe....................... 1/1/95-12/31/97 3,985 15,941 31,226
Gary L. Burge........................ 1/1/95-12/31/97 3,985 15,941 31,226
</TABLE>
- --------

(1) Awards are based on a target opportunity over the three-year performance
cycle which ends December 31, 1997. In calculating the average base salary
midpoint, the table assumes the base midpoint for 1996 will equal the 1995
base salary midpoint. In addition, the estimated future payouts should
assume that the average of the high and low price of Sprint common stock
on December 31, 1997 will be the same as it was on January 1, 1995.

Pursuant to the Distribution Agreement, employees of the Company will
receive, subject to approval by Sprint's Compensation Committee, pro-rata
payouts based on the length of time each participant participated in the LTIP
prior to the Spin-off. Payouts under the LTIP will not be accelerated, but
will be paid after the end of the cycle concluding on December 31, 1997.
EMPLOYMENT CONTRACTS

In connection with the Spin-off, it is expected that any agreements between
Sprint and management will be replaced by new agreements with the Company. The
remaining executive officers would also enter into such agreements. The terms
and conditions are expected to be determined prior to the Spin-off by the
Company's Board of Directors.

55
<PAGE>

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation requires the Company to indemnify
directors and officers to the fullest extent permitted by Delaware law. The
Company's Bylaws require the Company to indemnify any person who is a party or
is threatened to be made a party to any action, suit or proceeding by reason
of the fact that such person is or was a director, officer, employee or agent
of the Company, or is serving as a director, officer, employee or agent of the
Company, or is serving as a director, officer, employee or agent of another
enterprise at the Company's request; provided that such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the Company's best interests and, with respect to any criminal action or
proceeding, that such person had no reasonable cause to believe such person's
conduct was unlawful. The Company's Bylaws further provide that the Company
shall not indemnify any person for any liabilities or expenses incurred by
such person in connection with an action, suit or proceeding by or in the
right of the Company in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Company, unless and only
to the extent that the court in which the action, suit or proceeding is
brought determines that the person is entitled to indemnity for such expenses.
The indemnification provided by the Company's Certificate of Incorporation and
Bylaws is not exclusive of any other rights to which those seeking
indemnification may be otherwise entitled.

Prior to the consummation of the Spin-off, the Company plans to enter into
indemnification agreements (the "Agreements") with each of the Company's
directors and officers. The Agreements will provide that the Company will
indemnify the directors and officers against all liabilities and expenses
actually and reasonably incurred in connection with any action, suit or
proceeding (including an action by or in the right of the Company) to which
any of them is, was or at any time becomes a party, or is threatened to be
made a party, by reason of their status as a director or officer of the
Company, or by reason of their serving or having served at the request or on
behalf of the Company as a director, officer, trustee or in any other
comparable position of any other enterprise to the fullest extent allowed by
law. No indemnity will be provided under the Agreements for any amounts for
which indemnity is provided by any other indemnification obligation or
insurance maintained by the Company or another enterprise or otherwise. Nor
will any indemnification provided under the Agreements be used as a source of
contribution to, or as a substitute for, or as a basis for recoupment of any
payments pursuant to, any indemnification obligation or insurance coverage
which is available from another enterprise. Nor will indemnity be provided to
any director or officer on account of conduct which is finally adjudged by a
court to have been knowingly fraudulent, deliberately dishonest or a knowing
violation of law. In addition, no indemnification will be provided if a final
court adjudication shall determine that such indemnification is not lawful, or
in respect of any suit in which judgment is rendered against any director or
officer for an accounting of profits made from a purchase or sale of
securities of the Company in violation of Section 16(b) of the Securities
Exchange Act of 1934 or of any similar law, or on account of any remuneration
paid to any director or officer which is adjudicated to have been paid in
violation of law.

ONGOING EMPLOYEE BENEFIT PLANS

1996 Equity Incentive Plan

In anticipation of the Spin-off, the Company will adopt, and Centel as sole
stockholder of the Company will approve, the 1996 Equity Incentive Plan (the
"Equity Incentive Plan"), effective as of . Under the Equity
Incentive Plan, a committee of outside directors (the "Committee") is
authorized to grant nonqualified stock options, incentive stock options, stock
appreciation rights, limited stock appreciation rights ("LSARs"), shares of
restricted Common Stock ("restricted shares"), performance shares, and shares
of Common Stock awarded as a bonus (all of the foregoing collectively,
"Awards"). The amount of Common Stock available under the Equity Incentive
Plan for grants of Awards during any one year is % of the number of
shares of Common Stock outstanding at the beginning of the year, reduced by
the number of shares covered by uncancelled Awards granted during the two
preceding years.

56
<PAGE>

Eligibility. All employees (including officers) of the Company are eligible
to receive Awards. No employee may receive Awards covering an aggregate of
more than shares of Common Stock during any three-calendar year period.
The Committee is authorized, subject to certain limits specified in the Equity
Incentive Plan, to determine to whom and on what terms and conditions Awards
shall be made.

Stock options. Options must be granted at an exercise price of no less than
100% of the fair market value of a share of Common Stock on the date of grant.
Unless otherwise specified by the Committee, options will become exercisable
in four annual installments of 25% beginning on the first anniversary of the
grant date. The option exercise price may be paid by any one or more of the
following methods: (i) cash, (ii) unrestricted or restricted Common Stock, or
(iii) a "cashless" exercise pursuant to a sale through a broker of a portion
of the shares covered by the option. Options may be granted as either (i)
nonstatutory options upon exercise of which grantees would recognize ordinary
taxable income, and the Company would be entitled to a compensation expense
deduction or (ii) as incentive stock options (ISOs) which, subject to certain
conditions, would not result in the recognition of taxable income by the
grantee upon exercise, nor a compensation deduction to the Company until the
shares are disposed of by the grantee. The Plan also authorizes the Committee
to agree to the grant of reload options to replace shares paid by grantees for
the exercise price of options or to satisfy the grantee's payroll tax
withholding obligations with respect to the exercise of stock options.

Stock appreciation rights. An award of a stock appreciation right entitles
the grantee to receive a payment equal to the appreciation in value of the
Common Stock over the strike price. The strike price will equal either (i) at
least 100% of the fair market value of the Common Stock on the grant date of
the stock appreciation right, or (ii) if the stock appreciation right is
linked to an option, the exercise price of such option. The amount of
appreciation will be payable in cash or Common Stock.

Restricted shares. Restricted shares will be forfeited if the conditions set
by the Committee have not been satisfied or waived. The Committee will
determine whether or not a grantee shall be required to pay for such
restricted shares and, if so, what the price shall be.

Performance shares. To the extent that the performance goals specified by
the Committee (including without limitation stock price, market share, sales,
earnings per share, and return on equity) in a grant of performance shares
have been achieved, then a benefit shall be paid after the end of the
performance-measuring period specified by the Committee. The amount of the
benefit is based upon the percentage attainment of the performance goals
multiplied by the value of a share of Common Stock at the end of the
performance period. No benefit will be payable if the minimum performance
goals have not been met.

LSARs. LSARs may in the discretion of the Compensation Committee be granted
with any option or stock appreciation right, either in connection with the
original grant or at any later date. Each LSAR held by a person who is subject
to potential "short swing" trading liability under Section 16(b) of the
Securities Exchange Act of 1934 will be automatically exercised upon a change
of control of the Company (except in the case of certain mergers with a public
company), resulting in a cash payment to the grantee equal to the difference
between (i) the market value of the Common Stock on date of the change of
control and (ii) the exercise price of the underlying option or the strike
price of the underlying stock appreciation right, as applicable.

Termination of employment. If a grantee's employment is terminated for
cause, all unexercised options (and any associated LSARs) and SARs will
immediately terminate and unvested restricted shares and performance shares
will be forfeited. In the event of death or permanent disability, any
restricted shares will be vested, any unexercised options (and any associated
LSARs) or SARs (whether or not previously exercisable) may be exercised by a
beneficiary for one year after the date of death or disability, and any
unexercised performance shares may be exercised for one year thereafter,
provided that if a performance-measuring period has not ended, the benefit
will be pro-rated. If a grantee terminates for any other reason, restricted
shares will be forfeited, any unexercised option (and any associated LSARs) or
SARs may be exercised for three months following the date of termination, and
any unexercised performance shares may be exercised only as determined by the
Committee.

57
<PAGE>

Other. Options and stock appreciation rights will have a maximum term of 10
years. In the event of a Change of Control (as defined in the Equity Incentive
Plan) of the Company, restricted shares will become nonforfeitable, all other
Awards will become exercisable, and, if the Change of Control involves a
merger with a public company, all options and SARs will be converted into
options of the surviving corporation. The Equity Incentive Plan may be amended
by the Board without stockholder approval unless stockholder approval is
required by federal securities law or the listing requirements of a securities
exchange on which any of the Company's equity securities are listed. The
Equity Incentive Plan will terminate on its tenth anniversary.

Director Equity Plan

In anticipation of the Spin-off, the Company will adopt, and Centel as sole
stockholder of the Company will approve, the Director Equity Plan (the
"Director Plan"), effective as of . The Director Plan provides for
the following: (i) annual, automatic option grants; and (ii) an elective
deferred compensation opportunity with "phantom stock" rate of return. The
number of shares of Common Stock available under the Director Plan for option
grants is shares, subject to anti-dilution adjustments.

Eligibility. Only directors of the Company who are not officers or employees
of the Company or any of its subsidiaries ("Outside Directors") will be
eligible to participate in the Director Plan.

Option Grants. The Director Plan provides for the following option grants to
Outside Directors, the timing, size, and exercise price of which are all
determined by a fixed formula: (i) an initial option grant of shares as
of the Spin-off date, for Outside Directors serving at that time, or on the
date an Outside Director joins the Board, for those who become Outside
Directors at a later date; and (ii) subsequent option grants of shares
at the close of business on the date of each annual meeting of shareowners in
calendar years after the year of the initial grant provided for in clause (i).
The option exercise price shall be 100% of the fair market value of the Common
Stock on the option grant date. Options will become exercisable as follows:
50% on the first anniversary of the grant date; 25% on the second anniversary;
and 25% on the third anniversary. Options will vest earlier in the event of
the director's death, permanent disability, or a change in control of the
Company. Vested options are exercisable for the year after termination of
service as a director for any reason. The option exercise price may be paid in
cash, Common Stock, or a combination of both.

Elective Deferred Compensation. An Outside Director may elect to defer all
or a portion of his annual retainer. Each Outside Director's deferral account
is maintained in a number of "phantom shares," each carrying the same value as
the market value of Common Stock at any given time. Amounts deferred are
converted to phantom shares using the market value of Common Stock on the date
the retainer would have otherwise been paid. The phantom shares in the account
will also be increased by any dividends that may be paid on Common Stock, by
dividing the amount of the dividend on such shares by the market value on the
record date of the dividend. The Outside Director must make an election to
defer some or all of the annual retainer by December 31 of the year preceding
the calendar year in which the retainer is earned (or within 30 days after
becoming an Outside Director with respect to the compensation earned after the
date of such election) and must specify the deferral period as either a fixed
number of years or until termination of service as an Outside Director. All
distributions of deferred compensation will be made in cash only. Taxable
income will be recognized by the Outside Director and the Company will be
entitled to a deduction only in the year of distribution.

Other. The Director Plan will terminate December 31, 2005.

REPLACEMENT EMPLOYEE BENEFIT PLANS

Replacement Stock Option Plan

In anticipation of the Spin-off, the Company will adopt, and Centel as sole
shareholder of the Company will approve, the Replacement Stock Option Plan
(the "Replacement Plan"), effective as of the closing date of the Spin-off.
The purpose of the Replacement Plan is to provide continuation of stock
options for Sprint Cellular employees under various Sprint stock option plans
that would otherwise expire within 90 days of the Spin-off. Sprint stock
option plans for which replacement grants will be made are the Management
Incentive Stock Option Plan, the 1990 Stock Option Plan, the 1985 Stock Option
Plan, the Sprint Long-Term Stock Incentive Program,

58
<PAGE>

and the Centel Stock Option Plan (collectively, the "Sprint Plans"). Under the
Replacement Plan, all outstanding options of employees of the Company under
Sprint plans as of the closing date of the Spin-off will be replaced by
options to purchase Company Common Stock (the "Replacement Options"). See "--
Option Grants" for a description of the method by which Sprint options will be
replaced by Company options. Options to purchase Sprint stock will be canceled
by Sprint as of the Spin-off. The number of shares of Common Stock available
under the Replacement Plan for grants of Replacement Options is
shares.

Eligibility. All employees of the Company immediately after the Spin-off who
have outstanding options to purchase Sprint common stock under Sprint Plans
will be eligible to receive Replacement Options.

Replacement Options. Options will be granted to eligible employees of the
Company who hold unexercised options under Sprint Plans at the Spin-off and
the rights to exercise any option under Sprint Plans will be forfeited or
canceled in connection with the Spin-off. See "--Option Grants" for a
description of the method to determine the per share exercise price and the
number of shares to be covered by such Replacement Options. The Replacement
Options will carry the same terms (including, but not limited to, term,
vesting, ability to utilize share withholding, period of time to exercise
following termination of employment, providing for reload options or stock
appreciation rights, and options exercisable for restricted stock) as those
under the Sprint Plan under which the replaced option were originally awarded.

Exercise. The option exercise price may be paid either in cash or in Common
Stock, or a combination of both, having a fair market value on the date the
Replacement Option is exercised equal to the exercise price.

Terms of Options. All Replacement Options will expire on the expiration date
of the Sprint stock option with respect to which the Replacement Option was
granted. The following terms related to termination of employment apply to
Replacement Options depending on the Sprint plan under which they were
originally awarded.

Management Incentive Stock Option Plan. Vested Replacement Options of
employees whose employment with the Company has been terminated shall remain
exercisable as follows (but in no event may a Replacement Option be exercised
after the end of its term) if the employee's employment was terminated by
reason of: (i) involuntary termination by the Company other than for cause,
for ten years from the original date of grant of the predecessor Sprint stock
option; (ii) death, one year from date of death; (iii) retirement or
disability, five years from date of termination of employment; (iv) voluntary
termination, three months from date of termination; and (v) involuntary
termination for cause, immediately on termination of employment.

1990 Stock Option Plan and 1985 Stock Option Plan. Vested Replacement
Options of employees whose employment with the Company has been terminated
shall remain exercisable as follows (but in no event may a Replacement Option
be exercised after the end of its term) if the employee's employment was
terminated by reason of: (i) voluntary termination or involuntary termination
other than for cause, three months from termination of employment; (ii) death,
one year from date of death; (iii) retirement or disability, five years from
date of termination of employment; and (iv) involuntary termination for cause,
immediately on termination of employment. In the case of Replacement Options
for grants originally awarded under the 1990 Stock Option Plan, options shall
terminate if the employee, after termination of employment for whatever
reason, becomes associated with a competing business.

Centel Stock Option Plan. All Replacement Options will be forfeited and
canceled upon termination of employment, except (but in no event may a
Replacement Option be exercised after the end of its term): (i) in the case of
death or disability, one year from date of death; (ii) in the case of
retirement, three years from date of termination of employment.

Other. The Plan may be amended by the Board without stockholder approval
except as may be required under federal securities law or under the listing
requirements of a securities exchange on which any of the Company's equity
securities are listed. The Replacement Plan will terminate on its tenth
anniversary.

59
<PAGE>

Replacement Employees Stock Purchase Plan

In anticipation of the Spin-off, the Company will adopt, and Centel as sole
stockholder of the Company will approve, the Replacement Employees Stock
Purchase Plan (the "Company ESPP"), effective as of the date of the Spin-off.
The purpose of the Company ESPP is to provide continuation of benefits and
opportunities provided to former participants in the Sprint Corporation 1988
Employees Stock Purchase Plan, as Amended and Restated for 1994 ("Sprint
ESPP"), under which employees of the Company or its subsidiaries would be
treated as terminated employees, requiring them to exercise their purchase
options or take a cash distribution within 30 days of the date of the Spin-
off.

Eligibility. All employees of the Company immediately after the Spin-off are
eligible to participate if they had in effect immediately prior to the Spin-
off, an option to purchase shares under the Sprint ESPP.

Number of shares that may be purchased. Each Eligible Employee who timely
elected to participate in the Company ESPP shall be granted an option to
purchase Company Shares under the Company ESPP for a number of shares of
Company Common Stock equal to the number of Sprint Shares he had an option to
purchase under the Sprint ESPP multiplied by a fraction ("Share Adjustment
Fraction"), the numerator of which is the Sprint Pre-Spin Market Value (as
defined in the Distribution Agreement) and the denominator of which is SpinCo
Post-Spin Market Value (as defined in the Distribution Agreement).

Purchase price. The purchase price per Company Share shall be the lower of
(a) the Adjusted Grant Date Price (as defined in the Plan) and (b) the
Exercise Date Price. However, the purchase price will in no event be less than
$12.00 per Company Share divided by the Share Adjustment Fraction. The
Adjusted Grant Date Price shall be the Maximum Purchase Price under the Sprint
ESPP divided by the Share Adjustment Fraction.

Termination of Employment. Termination of employment before the completion
of payments shall be deemed a cancellation of the option as of the last
business day of the calendar month immediately before such termination unless
the employee files with the Company an election to purchase Common Stock
within 30 days of date of termination. If the employee fails to timely elect a
purchase of Common Stock, he will receive, in cash, the total amount credited
to his or her account at that time.

60
<PAGE>

DESCRIPTION OF COMPANY CAPITAL STOCK

GENERAL

At the time of the Spin-off, the authorized capital stock of the Company
will consist of (i) 1,000,000,000 shares of Common Stock, par value $0.01 per
share (the "Company Common Stock"), and (ii) shares of Preferred
Stock, par value $0.01 per share (the "Company Preferred Stock"). The
following summary descriptions of the capital stock and the provisions of the
Company Certificate and Bylaws is qualified in its entirety by reference to
the Certificate and Bylaws of the Company, copies of which are filed as
exhibits to the Registration Statement on Form 10 of the Company, pursuant to
the Securities Exchange Act of 1934, as amended.

COMMON STOCK

Following the Spin-off, there will be approximately shares of the
Company Common Stock outstanding. All of the shares of the Company Common
Stock distributed by Sprint will be fully paid and nonassessable. See "The
Spin-off--Manner of Effecting the Spin-off."

The holders of the Company Common Stock have no preemptive rights to
subscribe for or purchase any stock, obligations, warrants or other securities
of the Company and do not have cumulative voting rights in the election of
directors. Holders of the Company Common Stock are entitled:

(a) To receive such dividends as are declared by the Board of Directors
subject to applicable law and the rights of the Company Preferred Stock;

(b) To one vote for each share on all matters upon which stockholders have
the right to vote generally to the exclusion of all other classes of stock,
except the Company Preferred Stock, which shall have such voting rights as
may be expressly provided in the resolutions adopted by the Board of
Directors covering the issuance from time to time of one or more series of
the Company Preferred Stock; and

(c) To the remaining net assets of the Company upon any liquidation,
dissolution or winding up of the Company, after provision has been made for
the payment of the amount per share fixed by the resolutions of the Board
of Directors covering the issuance of the Company Preferred Stock.

PREFERRED STOCK

General

The Company will be authorized to issue up to shares of the Company
Preferred Stock without further stockholder approval, except as may be
required by applicable stock exchange regulations. The Board of Directors will
be authorized to determine, without any further action by the holders of the
Company Common Stock, the dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption, liquidation preferences and
sinking fund terms of any series of the Company Preferred Stock, the number of
shares constituting any such series and the designation thereof. Should the
Board of Directors elect to exercise its authority, the rights, preferences
and privileges of holders of the Company Common Stock would be subject to the
rights, preferences and privileges of the Company Preferred Stock. The Company
has no present plans to issue any the Company Preferred Stock.

First Series Preferred Stock

General. Prior to the Spin-off, the Board of Directors of the Company will
authorize and designate the rights and preferences of shares of First
Series Preferred Stock, which will only be available for issuance upon certain
exercises of the Rights.

61
<PAGE>

Dividend. When issued, shares of First Series Preferred Stock will be
entitled to a dividend at a rate of the greater of (i) $ per share each
quarter, or (ii) 100 times the aggregate per share cash dividend and 100 times
the aggregate per share fair market value of non-cash dividends or other
distribution declared and payable to holders of the Company Common Stock,
other than dividends payable in the Company Common Stock.

Voting Rights. Each share of First Series Preferred Stock will be entitled
to 100 votes which voting rights may be exercised at any annual or special
meeting of stockholders for the election of directors and on any other matter
coming before such meeting. Such voting rights are adjusted to reflect any
dividend payable in Common Stock or any combination of outstanding Common
Stock.

Liquidation, Dissolution or Winding Up. In the event of a voluntary or
involuntary liquidation, holders of First Series Preferred Stock will be
entitled to receive the greater of (i) $ per share, or (ii) an amount per
share equal to 100 times the amount to be distributed per share to holders of
the Company Common Stock, subject to adjustment to reflect any dividend
payable in Common Stock or any combination of outstanding Common Stock.

Consolidation, Merger, etc. If the Company enters into any consolidation,
merger, combination or other transaction in which the shares of the Company
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of the First
Series Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property, as the case may be, into
which or for which each share of the Company Common Stock is changed or
exchanged.

LISTING AND TRADING OF COMMON STOCK

Prior to the date hereof, there has been no trading market for the Company
Common Stock. The Company Common Stock will be approved for listing on the New
York Stock Exchange ("NYSE"), and it is anticipated that trading will commence
on the NYSE on a "when issued" basis two trading days prior to the Record
Date. The term "when issued" means that shares can be traded prior to the time
certificates are actually available or issued. The Company is unable to
predict the extent of the market for the Company Common Stock or the prices at
which such shares will trade. The prices at which the Company Common Stock
trades will be determined by the marketplace and may be influenced by many
factors, including, among others, investor perception of the Company and of
the cellular telecommunications industry, the Company's dividend policy and
general economic and market conditions.

RESTRICTIONS ON TRANSFER

Shares of the Company Common Stock distributed to Sprint stockholders will
be freely transferable, except for shares received by any persons who may be
deemed to be "affiliates" of the Company as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), which shares will remain subject to the resale limitations of Rule 144.
Persons who may be deemed to be affiliates of the Company after the Spin-off
generally include individuals or entities that control, are controlled by, or
are under common control with the Company and may include certain officers and
directors of the Company as well as principal stockholders of the Company.
Persons who are affiliates of the Company will be permitted to sell their
shares of the Company only pursuant to an effective registration statement
under the Securities Act or an exemption from the registration requirements of
the Securities Act, such as the exemption provided by Section 4(1) of the
Securities Act or Rule 144 thereunder. The Section 4(1) exemption allows the
sale of unregistered shares by a person who is not an issuer, an underwriter
or a dealer. Rule 144 provides persons who are not issuers with objective
standards for selling restricted securities and securities held by affiliates
without registration. The rule requires that (1) current public information be
available concerning the issuer; (2) restricted stock be held two years or
more; (3) volume limitations are placed on sales during any three-month
period; and (4) compliance with certain manner of sale restrictions. The
amount of the Company Common Stock which could be sold under Rule 144 during a
three-month period cannot exceed the greater of (1) approximately
shares, or (2) the average weekly trading volume for the shares for a four-
week period prior to the date that notice of the sale is filed with the
Securities and Exchange Commission ("SEC").

62
<PAGE>

DIVIDENDS ON THE COMPANY COMMON STOCK

The Company currently does not anticipate paying cash dividends on its
Common Stock in the foreseeable future. The future dividend policy will be
determined on the basis of various factors, including the Company's results of
operations, financial condition, capital requirements and investment
opportunities. In addition, the Credit Facility and the Indenture limit the
Company's ability to pay dividends.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company Common Stock will be
.

63
<PAGE>

BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK

Prior to the Spin-off, Sprint owns, directly or indirectly, all of the
outstanding shares of Common Stock of the Company. Assuming completion of the
Spin-off and that Sprint shareholders continue to own beneficially on the
Record Date the same number of shares of Sprint common stock believed by
Sprint to be owned beneficially by such persons on September 30, 1995, the
following table sets forth certain information with respect to the Company's
Common Stock that will be owned beneficially by: (i) each Named Officer and
each director of the Company, (ii) each person who beneficially owns more than
five percent (5%) of Sprint's outstanding Common Stock, and (iii) all
directors and executive officers as a group, assuming a 1 for 3 distribution-
ratio. If no change in the number of shares of Sprint common stock outstanding
as of September 30, 1995, approximately 116,263,603 shares of the Company
would be outstanding immediately after the Spin-off.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
------------------- ------------------ ------------------
<S> <C> <C>
Sprint Retirement Savings Plan 6,033,320 5.19
Oppenheimer Capital Group 6,307,168 5.24

</TABLE>
- --------
(1) Includes shares which may be acquired upon the exercise of stock options
exercisable on or within sixty days after September 30, 1995, under
Sprint's stock option plans as follows:
(2) Includes shares held by or for the benefit of family members in which
beneficial ownership has been disclaimed:

64
<PAGE>

ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS

Set forth below is a brief description of some of the important provisions
of the Company's Certificate and Bylaws to be adopted prior to the Spin-off
and a description of any comparable provisions of the Sprint Articles of
Incorporation (the "Sprint Articles") and Sprint's Bylaws. The description of
the Sprint Articles and Bylaws assumes that the amendments described in its
Proxy Statement dated November 21, 1994 have been adopted. Certain provisions
could make the acquisition of control of the Company by means of a tender
offer, open market purchases, a proxy contest or otherwise more difficult.
These provisions are designed to enable the Company's Board of Directors,
particularly in the initial years of the Company's existence as an
independent, publicly-owned company, to develop the Company's business in a
manner that will foster its long-term growth without the potential disruption
that might be entailed by the threat of a takeover not deemed by the Company's
Board of Directors to be in the best interests of the Company and its
stockholders. The following description is intended as a summary only and is
qualified in its entirety by reference to the Certificate and Bylaws, copies
of which will be available upon request. In addition, the Tax Assurance
Agreement and the Tax Sharing Agreement could also deter a takeover proposal.
See "The Spin-off--The Tax Sharing Agreement" and "The Spin-off--The Tax
Assurance Agreement."

CLASSIFIED BOARD OF DIRECTORS

The Certificate provides that the Board of Directors will be divided into
three classes of directors, with the classes to be as nearly equal in number
as possible. The Board of Directors consists of the persons referred to in
"Management--Directors and Executive Officers. At each annual meeting of
stockholders, one class of directors will be elected, each year for a three-
year term.

The Company believes that the classified board provision of the Certificate
is advantageous to the Company and its stockholders because, by providing that
directors will serve three-year terms rather than one-year terms, it will
enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors.
The Company believes that this, in turn, will permit the board to represent
more effectively the interests of all stockholders.

With a classified Board of Directors, it will generally take a majority
stockholder two annual meetings of stockholders to elect a majority of the
Board of Directors. As a result, a classified board may discourage proxy
contests for the election of directors or purchases of a substantial block of
stock because its provisions could operate to prevent obtaining control of the
board in a relatively short period of time. The classification provisions
could also have the effect of discouraging a third party from making a tender
offer or otherwise attempting to obtain control of the Company, even though
such an attempt might be beneficial to the Company and its stockholders. In
addition, because under the Certificate directors may be removed only for
cause, a classified board would delay stockholders who do not agree with the
policies of the Board of Directors from replacing a majority of the Board of
Directors for two years, unless they can demonstrate that the directors should
be removed for cause and obtain the requisite vote.

Sprint's Articles of Incorporation (the "Sprint Articles") have
substantially similar provisions establishing a classified Board of Directors
and requiring that directors may only be removed for cause.

NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES

The Certificate and the Bylaws provide that the number of directors will be
fixed from time to time exclusively by the Board of Directors, but shall
consist of no less than five nor more than ten directors. In addition, the
Certificate and the Bylaws provide that, subject to any rights of holders of
any shares of Preferred Stock, if any, a majority of the Board of Directors
then in office may fill any vacancies on the Board of Directors provided that
the vacancy to be filled is also approved by a majority of the Continuing
Directors (as defined below) then in office. Accordingly, the Board of
Directors could temporarily prevent any stockholder from obtaining majority
representation on the Board by enlarging the size of the board and filling the
new directorships with its own nominees.

65
<PAGE>

Under the Delaware General Corporation Law ("DGCL") and the Certificate, a
director serving on a classified board may be removed by the stockholders only
for cause. Moreover, the Certificate provides that directors may be removed
only by the affirmative vote of holders of at least a majority of the voting
power of all the then outstanding shares of stock entitled to vote generally in
the election of directors (the "Voting Stock"), voting together as a single
class.

The Sprint Articles similarly provide that the number of directors will be
fixed from time to time exclusively by the Board of Directors, but shall
consist of no less than 10 nor more than 20 directors, which directors may be
removed by the stockholders only for cause under Kansas law. As with the
Company, the Sprint Articles provide that directors may only be removed by the
affirmative vote of holders of at least a majority of the Voting Stock of
Sprint and vacancies may only be filled by the affirmative vote of a majority
of the directors then in office. However, unlike the Certificate, the Sprint
Articles do not require that a majority of the Continuing Directors approve the
vacancy to be filled.

LIMITATIONS ON STOCKHOLDER ACTION BY WRITTEN CONSENT

The Certificate also provides that any action required or permitted to be
taken by the stockholders of the Company must be taken at an annual or special
meeting of stockholders, and prohibits stockholder action by written consent,
unless such consent is unanimous. The Sprint Articles do not have a similar
provision because under Kansas law a written consent of stockholders must be
unanimous.

SPECIAL STOCKHOLDERS' MEETINGS

The Certificate allows only the Chairman of the Board, the President or the
Board of Directors to call a special stockholders' meeting. Sprint's Bylaws
differ from that of the Company in that a majority of the shares outstanding
may also demand a special meeting by written request.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER PROPOSALS

The Bylaws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors (the "Nomination Procedure") and with
regard to business to be brought before an annual or special meeting of
stockholders of the Company (the "Business Procedure").

The Nomination Procedure provides that, subject to the rights of holders of
any series of Preferred Stock, if any, only persons who are nominated by, or at
the direction of, the Board of Directors or by a stockholder who has given
timely written notice to the Secretary prior to the meeting at which directors
are to be elected, will be eligible for election as directors of the Company.
The Business Procedure provides that at an annual or special meeting only such
business may be conducted as has been specified in the notice of meeting,
brought before the meeting by or at the direction of the Board of Directors or
by a stockholder who has given timely written notice to the Secretary of such
stockholder's intention to bring such business before the meeting. Under the
Nomination Procedure or the Business Procedure, to be timely, notice must be
received by the Company not less than 50 days nor more than 75 days prior to
the annual or special meeting of stockholders, provided, however, that in the
event that less than 65 days' notice or prior public disclosure of the meeting
date is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the fifteenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made, whichever first occurs.

Under the Nomination Procedure, a stockholder's notice to the Company
proposing to nominate a person for election as a director must contain certain
information (i) about each proposed nominee, including, without limitation, (a)
the name, age, business address and residence address of the nominee, (b) the
class and number of shares of capital stock of the Company which are
beneficially owned by the nominee, and (c) any other information relating to
the nominee that is required to be disclosed in solicitations of proxies for
election of

66
<PAGE>

directors pursuant to the Rules and Regulations of the Commission under the
Exchange Act; and (ii) about the stockholder proposing to nominate such person,
including, without limitation, the name and record address of the stockholders
and the class and number of shares of capital stock of the Company which are
beneficially owned by the stockholders. The Company may require any proposed
nominee to furnish such other information as may reasonably be required by the
Company to determine the eligibility of such proposed nominee to serve as a
director of the Company. Under the Business Procedure, a stockholder's notice
relating to the conduct of business other than the nomination of directors at
an annual meeting must contain certain information about such business and
about the proposing stockholder including, without limitation, a brief
description of the business desired to be brought before the meeting, the name
and record address of the proposing stockholder, the class and number of shares
of capital stock of the Company owned by the proposing stockholder and a
description of any material interest of the stockholder in such business. If
the officer presiding at a meeting determines that a person was not nominated
in accordance with the Nomination Procedure, such person will not be eligible
for election as a director and such nomination shall be disregarded. If such
presiding officer determines that business was not properly brought before such
meeting in accordance with the Business Procedure, such business will not be
transacted at such meeting.

By requiring advance notice of nominations by stockholders, the Nomination
Procedure will afford the Board of Directors a meaningful opportunity to
consider the qualifications of the proposed nominees and, to the extent deemed
necessary or desirable by the Board of Directors, to inform stockholders about
such qualification. By requiring advance notice of proposed business, the
Business Procedure will provide a more orderly procedure for conducting annual
and special meetings of stockholders and, to the extent deemed necessary or
desirable by the Board of Directors, will provide the Board of Directors with a
meaningful opportunity to inform stockholders, prior to such meetings, of any
business proposed to be conducted at such meetings, together with any
recommendation of the Board of Directors' position as to action to be taken
with respect to such business, so as to enable stockholders better to determine
whether they desire to attend such a meeting or grant a proxy to the Board of
Directors as to the disposition of any such business. Although the Certificate
and the Bylaws do not give the Board of Directors any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, they may have the effect of precluding a contest for the election
of directors or the consideration of stockholder proposals if the proper
procedures are not followed, and of discouraging or deterring a third party
from conducting a solicitation of procedures to elect its own slate of
directors or to approve its proposal without regard to whether consideration of
such nominees or proposals might be harmful or beneficial to the Company and
its stockholders.

Sprint's Bylaws have substantially similar provisions regarding advance
notice provisions for stockholder nominations and stockholder proposals.

PREFERRED STOCK

The Certificate authorizes the Board of Directors to issue one or more series
of Preferred Stock and to determine, with respect to any series of Preferred
Stock, the powers, designations, preferences, optional or other rights, if any,
and the qualifications, limitations or restrictions thereof. See "Description
of Company Capital Stock--Preferred Stock."

The Company believes that the ability of the Board of Directors to issue one
or more series of Preferred Stock will provide increased flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise. The authorized shares of Preferred Stock, as
well as shares of the Common Stock, will be available for issuance without
further action by the Company's stockholders, unless such action is required by
applicable law or the rules of any stock exchange on which the Company's
securities may be listed or applicable rules of any self-regulatory
organization. If the approval of the Company's stockholders is not required for
the issuance of shares of Preferred Stock or the Company Common Stock, the
Board of Directors does not intend to seek stockholder approval. The Board of
Directors will make any determination to issue such shares based on its
judgment as to the best interests of the Company and its stockholders. The
Board of Directors, in so acting, could issue Preferred Stock having terms that
could discourage an acquisition attempt or other

67
<PAGE>

transaction that some or a majority of the stockholders might believe to be in
their best interests or in which stockholders might receive a premium for their
stock over the then current market price of such stock. Although the Company
has no present plan to issue any shares of Preferred Stock, shares
of First Series Preferred Stock have been designated and reserved for issuance
pursuant to the Rights Agreement.

The Sprint Articles also authorize the Board of Directors to issue one or
more series of preferred stock and to determine, with respect to any series of
preferred stock, the powers, designations, preferences, optional or other
rights, if any, and the qualifications, limitations or restrictions thereof.

CONSIDERATION OF NON-STOCKHOLDER CONSTITUENCIES

The Certificate authorizes the Board of Directors to take into account (in
addition to any other considerations which the Board of Directors may lawfully
take into account) in determining whether to take or to refrain from taking
corporate action on any possible acquisition proposals, including proposing any
related matter to the stockholders of the Company, the long-term as well as
short-term, interests of the Company and its stockholders (including the
possibility that these may be best served by the continued independence of the
Company), customers, employees and other constituencies of the Company and any
subsidiaries, as well as the effect upon communities in which the Company and
any subsidiaries do business. In considering the foregoing and other pertinent
factors, the Board of Directors is not required, in considering the best
interests of the Company, to regard any particular corporate interest or the
interest of any particular group affected by such action as a controlling
interest.

The Sprint Articles do not have provisions authorizing the Board of Directors
to take into account such non-stockholder constituencies when determining
whether to take or to refrain from taking corporate action on any possible
acquisitions proposals.

FAIR PRICE PROVISION

The Certificate has a provision (the "Fair Price Provision") which provides
that a "Business Combination" transaction between the Company or a subsidiary
of the Company and an "Interested Stockholder" or an affiliate or associate of
an Interested Stockholder would require approval by the affirmative vote of the
holders of 80% of the Company's "Voting Stock," together with the affirmative
vote of a majority of the combined voting power of the Voting Stock held by
stockholders who are not Interested Stockholders or Affiliates (as defined
below) or Associates (as defined below) of an Interested Stockholder
(collectively such 80% vote and disinterested stockholder vote is referred to
hereinafter under this subcaption as the "80% vote") unless either (a) a
majority of the directors who are not affiliated with the Interested
Stockholder and who were directors before the Interested Stockholder acquired
its 15% interest ("Continuing Directors" including any successors to such
directors) has approved the Business Combination transaction at a meeting if
the directors at which at least Continuing Directors were present, or (b)
certain form of consideration, minimum price and procedural conditions are met.
If the required number of Continuing Directors approve the Business Combination
or if all of the alternative conditions are met, only Delaware law, other
provisions of the Certificate and the terms of any outstanding class or series
of capital stock would govern the transaction. If the 80% vote is obtained in
connection with a particular proposed Business Combination transaction, the
specified conditions would not have to be met and approval of a majority of the
Continuing Directors would not be needed to consummate the transaction. The
Fair Price Provision is intended to assure fair and equitable treatment to all
holders of Company Common Stock in the event of a Business Combination that is
subject to such provision.

For purposes of the Fair Price Provision, the following terms have the
meanings set forth below:

A "Business Combination" includes the following transactions: (a) a
merger or consolidation of the Company or any subsidiary with an Interested
Stockholder or any other corporation which is, or after the merger or
consolidation would be, an "Affiliate" (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934 ("Exchange Act")) or "Associate" (as also
defined in such Rule 12b-2) of an Interested Stockholder, (b) the sale or
other disposition by the Company or any subsidiary of assets having a value
of

68
<PAGE>

or more to or with an Interested Stockholder or an
Affiliate or Associate of an Interested Stockholder, (c) the issuance, sale
or other transfer by the Company or any subsidiary of securities of the
Company or any subsidiary having a value of or more to an
Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder, (d) the adoption of any plan or proposal for the liquidation
or dissolution of the Company proposed by or on behalf of an Interested
Stockholder, or (e) any reclassification of securities, recapitalization,
merger with a subsidiary or other transaction which has the effect,
directly or indirectly, of increasing an Interested Stockholder's
proportionate interest in the outstanding stock of any class of the Company
or a subsidiary.

An "Interested Stockholder" is defined to include (a) any Beneficial
Owner (as defined in Rule 13d-3 under the Exchange Act) of 10% or more of
the then outstanding Voting Stock, other than the Company or any
subsidiary, (b) an Affiliate of the Company and at any time within the two-
year period immediately prior to the date in question was the beneficial
owner of 10% or more of the combined voting power of the then outstanding
Voting Stock, or (c) an assignee or successor to the beneficial ownership
of any shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned by an
Interested Stockholder, if such assignment or succession occurred in a
transaction not involving a public offering.

"Voting Stock" means all shares of capital stock of the Company
outstanding and entitled to vote generally.

The 80% affirmative vote requirement will not apply, absent the requisite
Continuing Director approval, if (a) form of consideration, (b) minimum price
requirements and (c) procedural requirements are all met.

In a Business Combination, the form of consideration required to be paid to
holders of Voting Stock must be either cash or the same type of consideration
used by the Interested Stockholder in acquiring beneficial ownership of the
largest number of shares of its Voting Stock. In addition the fair market
value of such consideration (including cash) would be required to meet certain
minimum price criteria. In the case of payments to holders of Company Common
Stock, the fair market value per share of such payments would have to be at
least equal to the highest value determined under the following alternatives:
(i) the highest per share price paid by or on behalf of the Interested
Stockholder during the two years prior to the public announcement of the
proposed Business Combination (the "Announcement Date") or in the transaction
in which it became an Interested Stockholder, whichever is higher, for any
share of Company Common Stock beneficially owned by the Interested
Stockholder, (ii) the fair market value per share of Company Common Stock on
the Announcement Date or on the date on which the Interested Stockholder
became an Interested Stockholder (the "Determination Date"), whichever is
higher. The comparable provision in the Sprint Articles sets the minimum price
as the highest amount paid by the Interested Stockholder for its stock.

In the case of payments to holders of any class or series of Company
Preferred Stock at the time outstanding, the fair market value per share of
such payments would have to be at least equal to the higher of (a) the highest
per share price determined with respect to such class or series of stock in
the same manner as described in (i) or (ii) above with respect to Common
Stock, or (b) the highest preferential amount per share to which the holders
of such class or series of Preferred Stock would be entitled in the event of a
voluntary or involuntary liquidation of the Company.

In order to avoid the requirement of an 80% affirmative vote of the Voting
Stock without obtaining approval by a majority of the Continuing Directors,
after an Interested Stockholder became an Interested Stockholder and prior to
the consummation of a Business Combination, an Interested Stockholder would
have to comply with certain procedural requirements involving the prohibition
of certain transactions that are designed to prevent the Interested
Stockholder from causing the reduction of the market value of the Company
Common Stock, purchasing shares of the Company Common Stock at lower prices or
entering into self dealing transactions.

The Certificate requires the affirmative vote of the holders of at least 80%
of the Voting Stock, together as a single class, for the amendment or repeal
of the Fair Price provision, together with the affirmative vote of a

69
<PAGE>

majority of the combined voting power of the Voting Stock held by stockholders
who are not Interested Stockholders or an Affiliate or Associate of an
Interested Stockholder. This required vote would be in addition to any
separate class vote that might in the future be accorded by the Board to any
class or series of the Voting Stock which might be outstanding at the time any
such alteration, amendment or repeal were submitted to the stockholders.
However, the Fair Price provision may be amended or repealed by the holders of
a majority of the combined Voting Power, together with the affirmative vote of
a majority of the combined Voting Power of the Voting Stock held by
stockholders who are not Interested Stockholders or an Affiliate or Associate
of an Interested Stockholder, if a majority of the Continuing Directors
approve such action at a meeting at which at least Continuing Directors
are present.

The Sprint Articles have provisions that are substantially similar to the
Fair Price Provisions, except as described above and except that Sprint's
provisions do not have the specific price provisions relating to payments to
holders of preferred stock and procedural provisions regarding the prohibition
of certain transactions that are designed to prevent the Interested
Stockholder from causing the reduction of the market value of the Sprint
Common Stock, purchasing shares of Sprint Common Stock at lower prices or
entering into self dealing transactions.

SUPERMAJORITY VOTING REQUIREMENTS

The Certificate has a provision (the "Supermajority Voting Provision") which
provides any merger or consolidation of the Company or any subsidiary of the
Company with or into any other corporation, or any sale, lease or exchange of
all or substantially all of the property and assets of the Company or any
subsidiary of the Company, would require approval by "the affirmative vote of
the holders of 66 2/3% of the Company's voting stock," together with the
affirmative vote of a majority of the combined voting power of the Voting
Stock held by stockholders who are not Interested Stockholders or an Affiliate
or an Associate of an Interested Stockholder unless either (a) a majority of
the Continuing Directors has approved the transaction at a meeting if the
directors at which at least Continuing Directors were present, or (b)
the transaction involves solely the Company or a subsidiary of the Company,
none of whose stock is beneficially owned by an Interested Stockholder (other
than beneficial ownership arising solely because of control of the Company)
provided that if the Company is not the surviving company, (i) each
stockholder of the Company receives the same type of consideration in such
transaction in proportion to his stockholdings, (ii) certain provisions of the
Certificate are adopted or otherwise continued in effect by the surviving
corporation as part of its organization documents, and (iii) the provisions of
the Bylaws are continued in effect or adopted by said surviving company. The
Certificate requires the affirmative vote of the holders of at least 66 2/3%
of the Voting Stock, together as a single class, for the amendment or repeal
of the Supermajority Voting Provision, together with the affirmative vote of a
majority of the combined voting power of the Voting Stock held by stockholders
who are not Interested Stockholders or an Affiliate or Associate of an
Interested Stockholder. This required vote would be in addition to any
separate class vote that might in the future be accorded by the Board to any
class or series of the Voting Stock which might be outstanding at the time any
such alteration, amendment or repeal were submitted to the stockholders.
However, the Supermajority Voting Provision may be amended or repealed by the
holders of a majority of the combined voting power, together with the
affirmative vote of a majority of the combined voting power of the Voting
Stock held by stockholders who are not Interested Stockholders or an Affiliate
or Associate of an Interested Stockholder, if a majority of the Continuing
Directors approve such action as a meeting at which at least Continuing
Directors are present.

The Sprint Articles do not have provisions similar to the Company's
Supermajority Voting Provisions.

AMENDMENT OF CERTAIN CHARTER AND BYLAW PROVISIONS

Under the DGCL, the stockholders have the right to adopt, amend or repeal
the Bylaws of a corporation. The Certificate provides that the Bylaws may be
amended by the Board of Directors or stockholders, provided that if the
amendment is to be adopted by the stockholders, the affirmative vote of the
holders of at least 66 2/3% of the Voting Stock, voting together as a single
class, is required. Similarly, provisions relating to the following

70
<PAGE>

matters may be amended only by the affirmative vote of the holders of 66 2/3%
of the Voting Stock voting together as a single class: the election and term
of directors, removal of directors and filling of vacancies, the prohibition
of stockholder action without a meeting or unanimous consent, or calling a
special meeting. In addition, the Certificate provides that the Fair Price
Provision and the Supermajority Voting Provision may be amended only by the
affirmative vote of the holders of 80% and 66 2/3%, respectively, of the
Voting Stock voting together as a single class.

With respect to Sprint, under Kansas law the stockholders have the right to
adopt, amend or repeal the Sprint Bylaws and Sprint Articles provided that the
Board of Directors may also amend the Bylaws (subject in certain cases to the
approval of the holders of a majority of the outstanding shares of Class A
Stock of Sprint). Sprint's Bylaws and the Sprint Articles do not require a
vote of the stockholders in excess of that required by Kansas law to amend the
Sprint Bylaws. Accordingly, the Bylaws of Sprint may be amended by a majority
of the votes cast at an annual or special meeting wherein a quorum is present.
The Sprint Articles do not have special voting requirements for the amendment
of the Sprint Articles, except that the approval of the holders of a majority
of the outstanding shares of Class A Stock of Sprint is required in the case
of the amendment of certain identified provisions in which the amendment could
effect the rights of the holders of Class A Stock.

In addition to the provisions of the Certificate and the Sprint Articles,
Section 242 of the DGCL and Kansas Statutes Annotated ("K.S.A.") Section 17-
6602 provide that whenever the certificate or articles of incorporation
require action by the board of directors, by the holders of any shares or by
the holders of any other securities having voting power the vote of a greater
number or proportion than is required by law, the provision of the certificate
or articles of incorporation requiring such greater vote shall not be altered,
amended or repealed except by such greater vote. This statutory requirement is
in addition to those requirements set forth in the Certificate and the Sprint
Articles.

RESTRICTIONS ON ALIEN OWNERSHIP AND BOARD REPRESENTATION

The Communications Act and FCC regulations require cellular licensees to
comply with statutory restrictions on the direct or indirect ownership or
control of radio licenses by non-U.S. persons or entities. To assure
compliance with these requirements, the Company has included provisions in its
Certificate which (i) authorize it to redeem its stock from any person whose
ownership would jeopardize the holding or renewal of any material license held
by the Company, and (ii) require, as a qualification for a director to hold
office, that a newly elected director not jeopardize the holding or renewal of
any material license held by the Company.

The Sprint Articles provide that so long as Section 310 of the
Communications Act (the statute limiting the number of alien directors that
may serve with companies receiving certain licenses from the FCC) is in
effect, no alien director elected by the holders of Sprint Common Stock may
serve if the number of aliens who would be serving as members of the Board of
Directors, including such elected alien, would constitute more that the
maximum number of alien directors permitted on the Sprint Board of Directors
by Section 310 of the Communications Act. Likewise, FT and DT are not
permitted to elect a number of directors which would result in violation of
such Section 310. The provisions of the Sprint Articles relating to the
qualification of directors are not as broad in scope as those set forth in the
Company's Certificate, in that the former are limited to compliance with
Section 310 of the Communications Act.

ANTITAKEOVER STATUTES

Section 203 of the DGCL prohibits transactions between a Delaware
corporation and an "interested stockholder," which is defined therein as a
person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15% or more of the outstanding
voting shares of a Delaware corporation. This provision prohibits certain
business combinations (defined broadly to include mergers, consolidations,
sales or other dispositions of assets having an aggregate value in excess of
10% of the consolidated assets of the corporation, and certain transactions
that would increase the interested stockholder's proportionate share ownership
in the corporation) between an interested stockholder and a corporation for a

71
<PAGE>

period of three years after the date the interested stockholder acquired its
stock unless (i) the business combination is approved by the corporation's
Board of Directors prior to the date the interested stockholder acquired
shares, (ii) the interested stockholder acquired at least 85% of the voting
stock of the corporation in the transaction in which it becomes an interested
stockholder, or (iii) the business combination is approved by a majority of
the Board of Directors and by the affirmative vote of 66 2/3% of the votes
entitled to be cast by disinterested stockholders at an annual or special
meeting. The Certificate and Bylaws do not exclude the Company from the
restrictions imposed under Section 203 of the DGCL.

K.S.A. Section 17-12,000 et seq. (the "Business Combination Statute") is
substantially similar to Section 203 of DGCL. K.S.A. Section 17-1,200 et seq.
(the "Control Share Acquisitions Statute") applies to the acquisition of
shares of a Kansas corporation, such as Sprint, by a person which, except for
the limitations imposed under the Control Share Acquisitions Statute, would
entitle such person after such acquisition, directly or indirectly, also or as
part of a group, to exercise, or direct the exercise of, voting power in the
election of directors of such corporation falling within any of the following
ranges:

(i) 20% or more but less than 33 1/3%,

(ii) 33 1/3% or more but less than or equal to 50%, or

(iii) more than 50%.

Unless such acquisition is duly approved by (a) a majority of the outstanding
shares of Sprint voting stock; and (b) a majority of the outstanding shares of
Sprint voting stock, excluding any shares held by the acquiring person, the
shares acquired will lose their voting rights. Delaware does not have a
statute similar to the Control Share Acquisitions Statute.

72
<PAGE>

SHAREHOLDERS' RIGHTS PLAN

Prior to the Spin-off, the Company's Board adopted the Rights Agreement
pursuant to which the Company distributed a dividend of one right (a "Right")
to purchase certain shares of capital stock of the Company under certain
circumstances, for each outstanding share of Common Stock. The Rights are
currently traded with the Common Stock and detach and become exercisable only
if, in a transaction not approved by the Company's Board, a person or entity
acquires 15% or more of the outstanding shares of Common Stock or announces a
tender offer the consummation of which would result in ownership by a person
or group of 15% or more of such shares.

Once the Rights detach and become exercisable, unless subsequently redeemed,
each Right then entitles its holder to purchase one one-hundredths of a share
of the First Series Preferred Stock for an exercise price of [$ ], subject
to certain adjustments. If the Company is involved in a merger or other
business combination transaction after the Rights become exercisable, each
Right will entitle its holder to purchase, for the Right's exercise price, a
number of the acquiring or surviving company's shares of common stock having a
market value equal to twice the exercise price. The Company will be entitled
to redeem the Rights at $.01 per Right at any time until ten business days
following a public announcement that a person or group of persons has acquired
beneficial ownership of 10% or more of the outstanding shares of Common Stock
("Acquiring Person"). Following such an announcement, or, subject to certain
exceptions, the acquisition of beneficial ownership of 15% or more of the
outstanding shares of Common Stock by the Acquiring Person or certain related
persons, the rights acquired by such person or persons shall be null and void.
The terms of the Rights Plan may be amended by the Company's Board without the
consent of the holders of the Rights. The Rights will expire on ,
2006, unless earlier redeemed by the Company. The Rights Plan was not intended
to deter all takeover bids for the Company and will not do so. For example,
the Rights Plan does not foreclose an attractive offer to acquire all the
Common Stock at the same price or transactions approved by the Company Board.
To the extent an acquiror is discouraged by the Rights Plan from acquiring an
equity position in the Company, stockholders may be deprived from receiving a
premium for their shares. The issuance of additional shares of Common Stock
prior to the time the Rights become exercisable will result in an increase in
the number of Rights outstanding.

First Series Preferred Stock, if issued, will rank junior to all other
series of Preferred Stock as to payment of dividends and the distribution of
assets in liquidation, unless the terms of any such other series shall provide
otherwise. Each share of First Series Preferred Stock will have a quarterly
dividend rate per share equal to the greater of $ or 100 times the per
share amount of any dividend (other than a dividend payable in shares of
Common Stock or a subdivision of the Common Stock) declared from time to time
on the Common Stock, subject to certain adjustments. The holders of First
Series Preferred Stock will be entitled to receive a preferred liquidation
payment per share of $ (plus accrued and unpaid dividends) or, if
greater, an amount equal to 100 times the payment to be made per share of
Common Stock. Generally, the holder of each share of First Series Preferred
Stock will vote together with the Common Stock (and any other series of
Preferred Stock, entitled to vote on such matter) on any matter as to which
the Common Stock is entitled to vote, including the election of directors. The
holder of each share of First Series Preferred Stock will be entitled to 100
votes. In the event of any merger, consolidation, combination or other
transaction in which shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or property, the holder of each share of
First Series Preferred Stock will be entitled to receive 100 times the
aggregate amount of stock, securities, cash and/or property, into which or for
which each share of Common Stock is changed or exchanged.

The foregoing dividend, voting and liquidation rights of the First Series
Preferred Stock are protected against dilution in the event that additional
shares of Common Stock are issued pursuant to a stock split or stock dividend.
Because of the nature of the First Series Preferred Stock's dividend, voting,
liquidation, and other rights, the value of the one one-hundredths of a share
of First Series Preferred Stock purchasable with each Right is intended to
approximate the value of two shares of Common Stock.

Sprint has adopted a Rights Agreement which is substantially similar to the
Company's Rights Agreement. The principal difference between the Sprint Rights
Agreement and the Company's Rights Agreement is that

73
<PAGE>

Sprint's Rights detach from the Sprint common stock and become exercisable if,
in a transaction not approved by Sprint's Board, a person or entity acquires
20% or more of the outstanding shares of Sprint common stock or announces a
tender offer the consummation of which would result in ownership by a person
or group of 20% or more of such shares. The Company's Rights, on the other
hand, detach and become exercisable if a person or entity acquires 15% or more
of the outstanding shares of Common Stock or announces a tender offer the
consummation of which would result in ownership by a person or group of 15% or
more of such shares. Because the market prices per share of Sprint's common
stock and the Company's Common Stock are expected to differ, the exercise
prices of their Rights and the dividend rate and liquidation preference of the
preferred stock acquired upon exercise of their Rights are not the same.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES

Pursuant to authority conferred by Delaware law, the Certificate contains a
provision providing that no director of the Company shall be personally liable
to it or its stockholders for monetary damages for breach of fiduciary duty as
a director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of a director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of the law,
(iii) under Section 174 of the DGCL (involving the payment of an unlawful
dividend), or (iv) for any transaction from which the director derived an
improper personal benefit.

The Certificate also provides that if Delaware law is amended to further
eliminate or limit the liability of directors, then the liability of a
director of the Company shall be eliminated or limited, without further
stockholder action, to the fullest extent permissible under Delaware law as so
amended.

INDEMNIFICATION AND INSURANCE

Delaware law contains provisions permitting and, in some situations,
requiring Delaware corporations, such as the Company, to provide
indemnification to their officers and directors for losses and litigation
expense incurred in connection with their service to the corporation in those
capacities. The Certificate and Bylaws contain provisions requiring
indemnification by the Company of its directors and officers to the fullest
extent that is permitted by law. Among other things, these provisions provide
indemnification for officers and directors against liabilities for judgments
in and settlements of lawsuits and other proceedings and for the advance and
payment of fees and expenses reasonably incurred by the director or officer in
defense of any such lawsuit or proceeding. In addition, the Certificate and
Bylaws authorize it to purchase insurance for its directors and officers
insuring them against certain risks as to which the Company may be unable
lawfully to indemnify them. The Company intends to obtain this insurance
coverage for its officers and directors as well as insurance coverage to
reimburse the Company for potential costs of its corporate indemnification of
officers and directors.

PRICE RANGE OF SPRINT COMMON STOCK

On July 26, 1995, Sprint announced that it intended to pursue the Spin-off
of its cellular operations, subject to a favorable tax ruling and other
government approvals. On July 25, 1995, the day before the announcement,
Sprint's common stock traded at prices ranging from a low of $34.25 per share
to a high of $35.25.

STOCKHOLDER PROPOSALS AND 1997 ANNUAL MEETING

The Company's Bylaws contain advance notice requirements applicable to
stockholders desiring to nominate candidates for directors or to present a
proposal or bring other business before a meeting of the Company's
stockholders. In each case the notice must be given to the Secretary of the
Company, at 8725 W. Higgins Road, Chicago, Illinois 60631-2702. In order for a
proposal to be considered at the first Annual Meeting

74
<PAGE>

of the Stockholders of the Company, notice of any such nomination or proposal
must be received by , 1997. To be included in the Company's
proxy statement and form of proxy for that meeting, any such proposal must also
comply in all respects with the rules and regulations of the U.S. Securities
and Exchange Commission.

The Company's Bylaws provide that, unless otherwise determined by the Board
of Directors or the stockholders, annual meeting of stockholders will be held
at the principal office in the City of Chicago in the State of Illinois. The
first annual meeting for which proxies will be solicited from stockholders is
expected to be held on , 1997.

AVAILABLE INFORMATION

The Company has filed with the SEC a Registration Statement on Form 10 (the
"Form 10") under the Securities Exchange Act of 1934, as amended ("1934 Act")
with respect to the Company Common Stock described herein. This Information
Statement does not contain all of the information set forth in the Form 10 and
the exhibits thereto. For further information, reference is made to the Form
10, including the exhibits thereto. When the Form 10 becomes effective, the
Company will be subject to the reporting requirements of the 1934 Act and, in
accordance therewith, all file reports, proxy statements and other information
with the SEC. Copies of the Form 10, including the exhibits thereto, and the
reports, proxy statements and other information filed by the Company with the
SEC can then be inspected and copies at the public reference facilities of the
SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's
Regional Offices: 7 World Trade Center, 13th Floor, New York, NY 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
of such material can be obtained at prescribed rates from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
Following the listing of the Company Common Stock on the NYSE, the Company will
be required to file with that exchange copies of such reports, proxy statements
and other information which then can be inspected at the offices of such
exchange at 20 Broad Street, New York, NY 10005. See "Description of Company
Capital Stock--Listing and Trading of Common Stock."

75
<PAGE>

GLOSSARY

Certain terms used in this Prospectus are defined with particular meanings as
used herein.

Airtime: The total time that a cellular telephone channel is occupied
including call time, call set-up and clear-down time.

Analog: Transmission method employing a continuous (rather than pulsed or
digital) electrical signal that varies in amplitude or frequency in response to
changes in sound, light or position.

Bandwidth: (1) Difference between the top and bottom limiting frequencies of
a continuous frequency band. (2) Indicates the information-carrying capacity of
a channel. FCC-licensed cellular operators have been allocated a continuous 25
MHz bandwidth in the 850-900 MHz band.

Blocked calls: Call attempts which fail due to a lack of network capacity
within a cell site coverage area.

Broadband: The type of FCC license that has or will be awarded in the PCS
auctions in the 1850-1990 MHz band.

BTA: One of the 493 basic trading areas, which are smaller than MTAs, into
which the licensing for broadband PCS has been divided based on the geographic
divisions in the 1992 Rand McNally Commercial Atlas & Marketing Guide.

BusinessLink: A Company product which combines wireless extension and basic
cellular service with business office phone systems such as PBX system.

Caller ID: A call management feature that displays the phone number of the
incoming caller on the cellular telephone handset.

CDMA: Code division multiple access digital technology. Technique that
spreads a signal over a frequency band that is larger than the signal to gain
interface immunity; users transmit different spreading codes over a
communications channel.

CDPD: Cellular Digital Packet Data, a new packet data network protocol which
offers fast and reliable data transmission without using large amounts of
network capacity.

Cell site: The entire infrastructure and radio equipment associated with a
cellular transmitting and receiving station, including the land, building,
tower, antennas and electrical equipment.

Cell splitting: Dividing a single cell into a number of smaller cells served
by lower tower transmitters, thereby increasing the ability to reuse frequency
and the number of calls that can be handled in a given area.

Churn: The rate of customer defection, typically expressed as a percentage of
the total customer base.

Clusters: A group of contiguous markets, the provision of which facilitates
wide areas of uninterrupted cellular service, reduced airtime rates, automatic
delivery of inbound calls and simplified dialing patterns.

Communications Act: The Communications Act of 1934, as amended.

Controlled markets: Markets in which the Company's ownership percentage is
50% or greater.

76
<PAGE>

Controlled POPs: The Net POPs in a controlled market.

CTIA: The Cellular Telecommunications Industry Association.

Digital: Transmission system in which information is transmitted in a series
of pulses.

Dropped calls: Calls that are prematurely terminated due to degraded cellular
coverage within a certain area.

ESMR: Enhanced Specialized Mobile Radio communications services, supplied by
converting analog SMR services into an integrated, digital transmission system
providing for call hand-off, frequency reuse and wide call delivery networks.

FAA: The United States Federal Aviation Administration.

FCC: The United States Federal Communications Commission.

FCC Rules: The rules promulgated by the FCC governing the construction and
operation of cellular communications systems and licensing and technical
standards for the provision of cellular communications service.

Managed market: A cellular telephone market that is managed and operated by
the Company on a day-to-day basis.

Market: An MSA or RSA.

Message Retrieval Service: An enhanced call management feature which notifies
the cellular customer that a voice mail message is waiting.

MSA: One of the Metropolitan Statistical Areas for which the FCC licensed
cellular communications systems.

MSC: A mobile switching center, through which cell sites are connected to the
local landline telephone network.

MTA: One of the 51 Major Trading Areas into which the licensing for broadband
PCS has been divided based on the geographic divisions in the 1992 Rand McNally
Commercial Atlas & Marketing Guide.

Multi-ring: A feature which allows one phone number to ring up to four
separate cellular telephones simultaneously.

N-AMPS: Narrow band advanced mobile phone service, an enhanced analog
technology providing a three-fold capacity increase over conventional analog
technology.

Net POPs: The estimated population with respect to a given service area
multiplied by the percentage interest that the Company owns in the entity
licensed by the FCC to operate a cellular communications system within that
service area.

Non-wireline license: The license for a market initially awarded to a company
or group that was not affiliated with a local landline telephone carrier in
such market.

PCS: Personal Communications Services. Emerging technologies providing
wireless access to the local and long distance telephone system. Most PCS plans
call for low-powered, light weight pocket phones with individual, personal
telephone numbers that can be accessed without geographic restriction.

77
<PAGE>

Penetration: Customers divided by POPs in a given area.

POPs: The estimate of the 1994 population of a Metropolitan Statistical Area
or Rural Service Area, as derived from the 1994 population estimates prepared
by Strategic Mapping, Inc.

RBOCs: The Regional Bell Operating Companies.

Reseller: A company that provides cellular service to customers but does not
hold an FCC cellular license or own cellular facilities. A reseller buys blocks
of cellular telephone numbers from a licensed carrier and, in turn, sells
service through its own distribution network to the public.

RF: Radio Frequency.

Roaming: The ability of cellular customers to make or receive calls when
traveling in another cellular company's system. Occurs when a cellular customer
leaves the cellular carrier's home area and uses his cellular phone.

Roaming agreements: Agreements entered into with other domestic cellular
companies that allow the Company's customers to make or receive calls when
traveling in another cellular companies' system.

RSA: One of the Rural Service Areas for which the FCC licensed cellular
communications systems.

Service area: An MSA or RSA.

SMR: Specialized mobile radio communications services.

STV: The Sprint Telecommunications Venture, in which Sprint has a 40%
interest, consisting of various limited partnerships which have acquired PCS
licenses.

TDMA: Time division multiple access digital technology, which designates a
time frame for cellular users to transmit within a frequency.

Voice-activated dialing: A feature which allows customers to place a call by
speaking aloud the telephone number they wish to dial.

Wireline license: The license for a market initially awarded to a company or
group that was affiliated with a local landline telephone carrier in such
market.

78
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA CONDENSED COMBINED STATEMENTS
Pro Forma Condensed Combined Financial Statements Introduction.......... F-2
Pro Forma Condensed Combined Statement of Operations for the year ended
December 31, 1994...................................................... F-3
Pro Forma Condensed Combined Statement of Operations for the Nine Months
ended September 30, 1995............................................... F-4
Pro Forma Condensed Combined Balance Sheet as of September 30, 1995..... F-5
Notes to Pro Forma Condensed Combined Financial Statements.............. F-6
SPRINT CELLULAR COMPANY AND SUBSIDIARIES
Report of Independent Auditors.......................................... F-8
Report of Independent Public Accountants................................ F-9
Consolidated Balance Sheets as of September 30, 1995 and December 31,
1994 and 1993.......................................................... F-10
Consolidated Statements of Operations for the nine months ended
September 30, 1995 and 1994 and for the years ended December 31, 1994,
1993 and 1992.......................................................... F-11
Consolidated Statements of Shareholder's Equity for the nine months
ended September 30, 1995 and 1994 and for the years ended December 31,
1994, 1993 and 1992.................................................... F-12
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1995 and 1994 and for the years ended December 31, 1994,
1993 and 1992.......................................................... F-13
Notes to Consolidated Financial Statements.............................. F-14
KANSAS CITY SMSA LIMITED PARTNERSHIP
NEW YORK SMSA LIMITED PARTNERSHIP
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY
Report of Independent Accountants on Compilation of Combined Financial
Statements............................................................. F-32
Reports of Independent Auditors......................................... F-33
Combined Balance Sheets as of December 31, 1994 and 1993................ F-41
Combined Statements of Income for the years ended December 31, 1994,
1993 and 1992.......................................................... F-42
Combined Statements of Changes in Partners' Capital for the years ended
December 31, 1994, 1993 and 1992....................................... F-43
Combined Statements of Cash Flows for the years ended December 31, 1994,
1993 and 1992.......................................................... F-44
Notes to Combined Financial Statements.................................. F-45
SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP
Report of Independent Accountants....................................... F-56
Combined Balance Sheet as of December 31, 1994.......................... F-57
Combined Statement of Income for the year ended December 31, 1994....... F-58
Combined Statement of Changes in Partners' Capital for the year ended
December 31, 1994...................................................... F-59
Combined Statement of Cash Flows for the year ended December 31, 1994... F-60
Notes to Combined Financial Statements.................................. F-61
Combined Balance Sheet as of September 30, 1995......................... F-64
Combined Statements of Income for the nine months ended September 30,
1995 and 1994.......................................................... F-65
Combined Statements of Changes in Partners' Capital for the nine months
ended September 30, 1995 and 1994...................................... F-66
Combined Statements of Cash Flows for the nine months ended September
30, 1995 and 1994...................................................... F-67
Notes to Combined Financial Statements.................................. F-68
</TABLE>

F-1
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS INTRODUCTION

The following unaudited pro forma condensed combined financial statements
include the accounts of the Company as defined in Note 1 of the Notes to
Consolidated Financial Statements appearing on page F-14. The condensed
combined financial statements have been adjusted to reflect the accounts of
the following probable acquisitions:

50% interest in South Carolina RSA No. 4 Cellular General Partnership;
50% interest in South Carolina RSA No. 5 Cellular General Partnership;
50% interest in South Carolina RSA No. 6 Cellular General Partnership;
100% interest in Ohio RSA No. 1 Cellular General Partnership;

The cellular license and network of the North Carolina RSA No. 14 Cellular
General Partnership; and

Additional partnership interests in Centel Cellular Company of Ft. Walton
Beach Limited Partnership and Centel Cellular Company of Tallahassee
Limited Partnership.

The Combined Proposed Acquisitions column in the following Condensed
Combined Financial Statements reflects the pre-acquisition balance sheets and
results of operations of the probable acquisitions, except for the additional
partnership interests in Centel Cellular Company of Ft. Walton Beach Limited
Partnership and Centel Cellular Company of Tallahassee Limited Partnership. As
a result of the Company's existing controlling interests in these
partnerships, their assets, liabilities and operating results are included in
the consolidated results of the Company as reported. The probable
acquisitions, with a combined purchase price of $107 million, will be
accounted for as purchases.

The pro forma condensed combined financial statements have also been
adjusted to reflect the effects of the Spin-off under which (a) the Company
will reclassify its existing capital stock in preparation for the Spin-off (b)
Sprint Corporation ("Sprint") will distribute to all holders of Sprint common
stock all of the shares of common stock of the Company; (c) the Company will
repay approximately $1.4 billion of intercompany debt owed to Sprint and its
subsidiaries with proceeds from the offering of notes and borrowings under a
credit facility; and (d) Sprint and its subsidiaries will contribute to the
capital of the Company any remaining intercompany debt at the time of the
Spin-off.

The pro forma condensed combined financial statements assume all of the
above described transactions occurred as of January 1, 1994 for the condensed
combined statements of operations and as of September 30, 1995 for the
condensed combined balance sheet.

In the opinion of management, all adjustments necessary to present fairly
the pro forma condensed combined financial statements have been made.

These pro forma condensed combined financial statements should be read in
conjunction with the historical financial statements and notes thereto
included elsewhere in this document. The pro forma condensed combined
statements of operations are not necessarily indicative of what actual results
of operations would have been had the transactions occurred at the beginning
of the respective periods nor do they purport to indicate the results of
future operations of the Company.

F-2
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1994
UNAUDITED
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SPRINT
PRO FORMA CELLULAR
SPRINT CELLULAR COMBINED PROPOSED SPIN-OFF COMPANY
COMPANY AS PROPOSED ACQUISITION AND PRO
REPORTED ACQUISITIONS ADJUSTMENTS OFFERING FORMA
--------------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Cellular Service
Revenues............... $569,793 $25,099 $ $ $594,892
Equipment Sales......... 56,682 1,351 58,033
-------- ------- --------
Total Operating
Revenues........... 626,475 26,450 652,925
-------- ------- --------
OPERATING EXPENSES
Cost of Service......... 51,071 4,061 55,132
Cost of Equipment Sales. 76,913 2,531 79,444
Other Operations
Expense................ 30,905 427 31,332
Selling, General,
Administrative and
Other Expenses......... 289,573 10,736 (2,635)(c) 20,000 (g) 317,674
Depreciation and
Amortization........... 92,435 2,624 1,885 (b) 96,944
-------- ------- ------- -------- --------
Total Operating
Expenses........... 540,897 20,379 (750) 20,000 580,526
-------- ------- ------- -------- --------
OPERATING INCOME........ 85,578 6,071 750 (20,000) 72,399
Interest Expense........ (98,437) (228) (13,563)(f)
(2,186)(e) (114,414)
Minority Interests in
Net Income of
Consolidated Entities.. (22,110) (2,002)(a) (24,112)
Equity in Net Income of
Unconsolidated
Entities............... 26,390 26,390
Other Income (Expense).. (5,481) 489 (4,992)
-------- ------- ------- -------- --------
Income (Loss) Before
Income Taxes........... (14,060) 6,332 (1,252) (35,749) (44,729)
Income Tax Expense
(Benefit).............. 5,697 2,032 (d) (12,512)(h) (4,783)
-------- ------- ------- -------- --------
Net Income (Loss)....... $(19,757) $ 6,332 $(3,284) $(23,237) $(39,946)
======== ======= ======= ======== ========
Net Loss Per Share...... $ (.34)(m)
========
Average Shares of Common
Stock Outstanding, in
thousands.............. 116,200 (m)
========
</TABLE>

F-3
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
UNAUDITED
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SPRINT
PRO FORMA CELLULAR
SPRINT CELLULAR COMBINED PROPOSED SPIN-OFF COMPANY
COMPANY AS PROPOSED ACQUISITION AND PRO
REPORTED ACQUISITIONS ADJUSTMENTS OFFERING FORMA
--------------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Cellular Service
Revenues............... $572,028 $26,949 $ $ $598,977
Equipment Sales......... 34,125 726 34,851
-------- ------- --------
Total Operating
Revenues............. 606,153 27,675 633,828
-------- ------- --------
OPERATING EXPENSES
Cost of Service......... 50,489 3,836 54,325
Cost of Equipment Sales. 67,520 2,465 69,985
Other Operations
Expense................ 28,527 301 28,828
Selling, General,
Administrative and
Other Expenses......... 262,032 8,061 (3,693)(c) 15,000 (g) 281,400
Depreciation and
Amortization........... 83,666 2,314 1,414 (b)
(58)(b) 87,336
-------- ------- ------- -------- --------
Total Operating
Expenses............. 492,234 16,977 (2,337) 15,000 521,874
-------- ------- ------- -------- --------
OPERATING INCOME........ 113,919 10,698 2,337 (15,000) 111,954
Interest Expense........ (95,081) (142) 11,081 (f)
(1,639)(e) (85,781)
Minority Interests in
Net Income of
Consolidated Entities.. (26,218) (3,090)(a) (29,308)
Equity in Net Income of
Unconsolidated
Entities............... 23,566 23,566
Other Income (Expense).. (1,188) 130 (1,058)
-------- ------- ------- -------- --------
Income (Loss) Before
Income Taxes........... 14,998 10,686 (753) (5,558) 19,373
Income Tax Expense
(Benefit).............. 17,128 3,973 (d) (1,945)(h) 19,156
-------- ------- ------- -------- --------
Net Income (Loss)....... $ (2,130) $10,686 $(4,726) $ (3,613) $ 217
======== ======= ======= ======== ========
Net Loss Per Share...... $ -- (m)
========
Average Shares of Common
Stock Outstanding, in
thousands.............. 116,600(m)
========
</TABLE>

F-4
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED BALANCE SHEET

SEPTEMBER 30, 1995
UNAUDITED
(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
SPRINT PRO FORMA SPRINT
CELLULAR COMBINED PROPOSED SPIN-OFF CELLULAR
COMPANY AS PROPOSED ACQUISITION AND COMPANY
REPORTED ACQUISITIONS ADJUSTMENTS OFFERING PRO FORMA
---------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Total Current Assets.... $ 141,890 $10,219 $ $ $ 152,109
Property, Plant and
Equipment, net......... 822,109 17,413 839,522
Investments in
Unconsolidated
Entities............... 308,823 308,823
Intangibles, net........ 636,712 28,276 75,415 (j)
(27,904)(j) 712,499
Receivables from
Affiliates............. 19,043 (19,043)(k)
Other Assets............ 4,900 18,000 (l) 22,900
---------- ------- -------- ----------- ----------
Total Assets........ $1,933,477 $55,908 $ 47,511 $ (1,043) $2,035,853
========== ======= ======== =========== ==========
LIABILITIES AND
SHAREHOLDER'S EQUITY
Total Current
Liabilities............ $ 183,275 $ 3,182 $ $ $ 186,457
Advances from and Notes
to Affiliates.......... 1,520,259 107,000 (j) (1,645,259)(k)
18,000 (l)
Long-term Debt.......... 1,400,000 (k) 1,400,000
Deferred Credits and
Other Liabilities...... 90,104 90,104
---------- ------- -------- ----------- ----------
Total Liabilities... 1,793,638 3,182 107,000 (227,259) 1,676,561
Minority Interests in
Consolidated Entities.. 138,206 (6,763)(i) 131,443
Partners' Capital/Net
Assets................. 52,726 (52,726)(j)
Common Stock............ 11,541 (10,378)(k) 1,163
Additional Paid-In
Capital................ 360,978 226,216 (k)
10,378 (k) 597,572
Accumulated Deficit..... (370,886) (370,886)
---------- ------- -------- ----------- ----------
Total Shareholder's
Equity............. 1,633 52,726 (52,726) 226,216 227,849
---------- ------- -------- ----------- ----------
Total Liabilities
and Shareholders'
Equity............. $1,933,477 $55,908 $ 47,511 $ (1,043) $2,035,853
========== ======= ======== =========== ==========
</TABLE>

F-5
<PAGE>

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

PRO FORMA STATEMENTS OF OPERATIONS

a. This entry reflects the 50% minority interest in net income of South
Carolina RSA No. 4 Cellular General Partnership, South Carolina RSA No. 5
Cellular General Partnership, and South Carolina RSA No. 6 Cellular General
Partnership and decreases the minority interests in net income of Centel
Cellular Company of Ft. Walton Beach Limited Partnership and Centel Cellular
Company of Tallahassee Limited Partnership, due to the proposed increases in
partnership interests. The financial position and results of operations of
South Carolina RSA No. 4 Cellular General Partnership, South Carolina RSA No.
5 Cellular General Partnership and South Carolina RSA No. 6 Cellular General
Partnership have been consolidated as the Company will act as managing general
partner.

b. Amortization has been adjusted to reflect the 40 year amortization of the
intangibles (the excess of the estimated purchase price over the estimated
value of net tangible assets to be acquired).

c. Certain administrative charges of the businesses to be acquired will not
be incurred subsequent to the acquisitions and have been eliminated.

d. The provision for income taxes has been adjusted to reflect the tax
effects of pro forma adjustments a. through c. In addition, pro forma
adjustments were recorded to give effect to the tax provision associated with
historical operating results of the businesses to be acquired.

e. This entry reflects the amortization of estimated debt issuance costs
associated with the offering over the life of the related debt, seven and ten
years, respectively.

f. This entry reflects the net effect on interest expense resulting from the
application of an estimated $1.4 billion in net proceeds from the offering of
notes and borrowings under a credit facility to reduce Advances from and Notes
to Affiliates and reflects the contribution by Sprint of any remaining
intercompany debt to the capital of the Company. An average interest rate of
8% was used for the proceeds from the offering of the notes and borrowings
under the credit facility. A 1/8% difference in the estimated average interest
rate would have the effect of changing interest expense by $1,750,000 for the
year ended December 31, 1994 and by $1,312,500 for the nine months ended
September 30, 1995.

g. Selling, general, administrative and other expenses have been adjusted to
reflect the estimated incremental costs associated with ongoing advertising,
promotional and other marketing expenses associated with the Company's new
brand name.

h. The provision for income taxes has been adjusted to reflect the tax
effects of pro forma adjustments e through g.

PRO FORMA BALANCE SHEET ADJUSTMENTS

i. This entry reflects the 50% minority interest in South Carolina RSA No. 4
Cellular General Partnership, South Carolina RSA No. 5 Cellular General
Partnership, and South Carolina RSA No. 6 Cellular General Partnership held by
unaffiliated entities and decreases the minority interests in Centel Cellular
Company of Ft. Walton Beach Limited Partnership and Centel Cellular Company of
Tallahassee Limited Partnership held by unaffiliated entities.

F-6
<PAGE>

j. The aggregate purchase price for proposed acquisitions is approximately
$107 million. This entry eliminates certain intangibles of the proposed
acquisitions and adjusts intangibles for the excess of the estimated purchase
price over the estimated value of net tangible assets to be acquired. A
preliminary allocation of the combined purchase price follows:

<TABLE>
<S> <C> <C>
Increase in Partnership Interests (partnerships in which
the Company has an existing controlling interest)......... $ 15,803
Tangible Assets to be Acquired............................. 27,632
Intangible Assets to be Acquired........................... 372
Liabilities to be Assumed.................................. (3,182)
------
24,822
Ownership Percentage Adjustment............................ (9,040)
------
Net Assets to be Acquired.................................. 15,782
Intangibles................................................ 75,415
--------
Estimated Purchase Price................................... $107,000
========
</TABLE>

k. This entry reflects the effects of the following:

Advances from and Notes to Affiliates

This adjustment eliminates the intercompany liability between Sprint and the
Company at the time of Spin-off. Such amount will either be repaid or
contributed to the capital of the Company, as noted below.

Common Stock

This entry reflects the effects of the Spin-off under which the Company will
reclassify its existing capital stock to reflect Sprint shares outstanding at
September 30, 1995, adjusted assuming a conversion ratio of 1 to 3 and a par
value of $.01 per share. The adjustment is calculated as follows (thousands of
dollars, except per share information):

<TABLE>
<S> <C>
Sprint Shares Outstanding at September 30, 1995................. 348,790,809
Conversion Ratio................................................ 1 to 3
Company Shares Outstanding at Spin-off.......................... 116,263,603
Par Value Per Share............................................. $ .01
===========
Common Stock Balance--Post Spin-off............................. $ 1,163
Common Stock Balance at September 30, 1995...................... 11,541
-----------
Adjustment (reclassified from Additional Paid-In Capital)....... $ 10,378
===========
</TABLE>

Additional Paid-In Capital

Sprint will contribute any remaining intercompany debt to the equity capital
of the Company at the time of Spin-off. The amount to be contributed is
calculated as follows (thousands of dollars):

<TABLE>
<S> <C>
Balance--Advances from and Notes to Affiliates at Spin-off...... $ 1,645,259
Balance--Receivable from Affiliates at Spin-off................. (19,043)
Repayment of Intercompany Debt to Sprint........................ (1,400,000)
-----------
Contributed Capital............................................. $ 226,216
===========
</TABLE>

l. This entry reflects estimated debt issuance costs associated with the
offering.

EARNINGS PER SHARE

m. Net income (loss) per share has been calculated based upon the number of
Sprint weighted average shares outstanding, adjusted assuming a conversion
ratio of 1 to 3.

F-7
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholder
Sprint Cellular Company and Subsidiaries

We have audited the accompanying consolidated balance sheets of Sprint
Cellular Company and Subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, shareholder's equity, and cash
flows for each of the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not audit
the financial statements of GTE Mobilnet of South Texas Limited Partnership
and New York SMSA Limited Partnership, equity investees of the Company, for
which the Company's investment in these partnerships is $55,914,000 and
$45,592,000 at December 31, 1994 and 1993, respectively, and the Company's
equity in the net income of these partnerships is $18,197,000 and $15,173,000
for years ended December 31, 1994 and 1993, respectively. Those financial
statements were audited by other auditors whose reports, which have been
furnished to us, included explanatory paragraphs regarding the existence of
certain litigation, the outcome of which cannot presently be determined, as
described in Note 16 to the consolidated financial statements. Our opinion,
insofar as it relates to data included for such partnerships, is based solely
on the reports of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. 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 our audits and the reports of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Sprint Cellular
Company and Subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the years then
ended, in conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for postretirement benefits.

As discussed in Note 16 to the consolidated financial statements, GTE Mobilnet
of South Texas Limited Partnership and New York SMSA Limited Partnership,
equity investees of the Company, are involved in certain litigation, the
outcome of which cannot presently be determined. Accordingly, no provision for
any liability that may result upon adjudication has been made in the Company's
financial statements.

We have also audited the Selected Proportionate Operating Results for the
years ended December 31, 1994 and 1993, presented on Page 21, certain of which
data includes amounts derived from financial statements audited by other
auditors as stated above. As described on Page 21, the Selected Proportionate
Operating Results have been prepared by management to present relevant
financial information that is not provided by the consolidated financial
statements and is not intended to be a presentation in accordance with
generally accepted accounting principles. In our opinion, the Selected
Proportionate Operating Results referred to above presents fairly, in all
material respects, the information set forth therein on the basis of
accounting described on Page 21.

Chicago, Illinois
November 3, 1995, except
for Note 16, as to which the date is November 22, 1995
Ernst & Young LLP

F-8
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholder of
Sprint Cellular Company and Subsidiaries

We have audited the accompanying consolidated statements of operations,
shareholder's equity and cash flows of Sprint Cellular Company (a Delaware
corporation, and a wholly-owned subsidiary of Centel Corporation, a wholly-
owned subsidiary of Sprint Corporation) and Subsidiaries for the year ended
December 31, 1992. These consolidated financial statements and supplementary
data are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements and
supplementary data based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of operations,
shareholder's equity and cash flows are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statements of income, shareholder's equity and cash flows.
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 consolidated statements of operations, shareholder's
equity and cash flows referred to above present fairly, in all material
respects, the results of operations and cash flows of Sprint Cellular Company
and Subsidiaries for the year ended December 31, 1992, in conformity with
generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes as of January 1, 1992.

We have also audited the Selected Proportionate Operating Results for the year
ended December 31, 1992, presented on Page 21. As described on Page 21, the
Selected Proportionate Operating Results have been prepared by management to
present relevant financial information that is not provided by the
consolidated financial statements and is not intended to be a presentation in
accordance with generally accepted accounting principles. In our opinion, the
Selected Proportionate Operating Results presents fairly, in all material
respects, the information set forth therein on the basis of accounting as
described on Page 21.

ARTHUR ANDERSEN LLP

Chicago, Illinois
March 11, 1993

F-9
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ----------------------
ASSETS 1995 1994 1993
------ ------------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS
Cash..................................... $ 3,566 $ 5,527 $ 5,505
Accounts Receivable--net of allowances
for uncollectibles of $2,561, $2,043 and
$1,637, in 1995, 1994 and 1993,
respectively............................ 71,287 49,103 33,096
Other Receivables........................ 21,388 21,005 15,916
Unbilled Revenue......................... 21,844 21,855 14,751
Inventory................................ 17,974 28,661 13,312
Other.................................... 5,831 3,792 6,005
---------- ---------- ----------
Total Current Assets................. 141,890 129,943 88,585
---------- ---------- ----------
Property, Plant and Equipment............ 1,102,841 836,387 587,486
Less: Accumulated Depreciation........... 280,732 216,600 155,820
---------- ---------- ----------
Property, Plant and Equipment, net....... 822,109 619,787 431,666
---------- ---------- ----------
Investments in Unconsolidated Entities... 308,823 304,669 285,761
Intangibles, net......................... 636,712 648,920 677,829
Receivables From Affiliates.............. 19,043 21,716 18,321
Other Assets............................. 4,900 3,309 3,059
---------- ---------- ----------
Total Assets......................... $1,933,477 $1,728,344 $1,505,221
========== ========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts Payable......................... $ 76,849 $ 74,337 $ 36,044
Negative Cash Balances................... 23,891 38,826 22,743
Advance Billings......................... 18,821 14,297 9,619
Accrued Taxes............................ 17,335 20,180 11,679
Accrued Agent Commissions................ 9,525 15,435 11,460
Other.................................... 36,854 21,668 15,615
---------- ---------- ----------
Total Current Liabilities............ 183,275 184,743 107,160
---------- ---------- ----------
Advances From and Notes to Affiliates.... 1,520,259 1,354,116 1,246,822
---------- ---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred Income Taxes and Investment Tax
Credits................................. 78,117 62,901 42,255
Postretirement and Other Benefit
Obligations............................. 11,987 10,585 8,395
---------- ---------- ----------
Total Deferred Credits and Other
Liabilities......................... 90,104 73,486 50,650
---------- ---------- ----------
Minority Interests in Consolidated
Entities................................ 138,206 112,236 77,069
---------- ---------- ----------
SHAREHOLDER'S EQUITY
Common Stock (no par value; 10 shares
authorized; 10 shares issued; 10 shares
outstanding)............................ 11,541 11,541 11,541
Additional Paid-In Capital............... 360,978 360,978 360,978
Accumulated Deficit...................... (370,886) (368,756) (348,999)
---------- ---------- ----------
Total Shareholder's Equity........... 1,633 3,763 23,520
---------- ---------- ----------
Total Liabilities and Shareholder's
Equity.............................. $1,933,477 $1,728,344 $1,505,221
========== ========== ==========
</TABLE>

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-10
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE YEAR
SEPTEMBER 30, ENDED DECEMBER 31,
------------------ ----------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Cellular Service Revenues.... $572,028 $408,760 $569,793 $372,674 $253,593
Equipment Sales.............. 34,125 36,100 56,682 37,806 26,526
-------- -------- -------- -------- --------
Total Operating Revenues. 606,153 444,860 626,475 410,480 280,119
-------- -------- -------- -------- --------
OPERATING EXPENSES
Cost of Service.............. 50,489 37,001 51,071 37,912 29,689
Cost of Equipment Sales...... 67,520 45,893 76,913 42,635 30,402
Other Operations Expenses.... 28,527 22,014 30,905 20,767 16,835
Selling, General,
Administrative and Other
Expenses.................... 262,032 202,666 289,573 214,355 153,949
Depreciation and
Amortization................ 83,666 67,926 92,435 75,009 52,052
-------- -------- -------- -------- --------
Total Operating Expenses. 492,234 375,500 540,897 390,678 282,927
-------- -------- -------- -------- --------
OPERATING INCOME (LOSS)...... 113,919 69,360 85,578 19,802 (2,808)
Interest Expense............. (95,081) (70,183) (98,437) (85,409) (86,662)
Minority Interests in Net
Income of Consolidated
Entities.................... (26,218) (17,146) (22,110) (9,697) (4,467)
Equity in Net Income of
Unconsolidated Entities..... 23,566 16,740 26,390 19,646 13,251
Other Income (Expense)....... (1,188) (4,951) (5,481) (1,351) 1,157
-------- -------- -------- -------- --------
Income (Loss) Before Income
Taxes and Cumulative Effects
of Changes in Accounting
Principles.................. 14,998 (6,180) (14,060) (57,009) (79,529)
Income Tax Expense (Benefit). 17,128 5,355 5,697 (7,112) (17,309)
-------- -------- -------- -------- --------
Loss Before Cumulative
Effects of Changes in
Accounting Principles....... (2,130) (11,535) (19,757) (49,897) (62,220)
Cumulative Effects of Changes
in Accounting Principles,
net......................... -- -- -- (1,587) (3,302)
-------- -------- -------- -------- --------
Net Loss................. $ (2,130) $(11,535) $(19,757) $(51,484) $(65,522)
======== ======== ======== ======== ========
</TABLE>

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-11
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE YEAR
SEPTEMBER 30, ENDED DECEMBER 31,
-------------------- -------------------------------
1995 1994 1994 1993 1992
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
COMMON STOCK (10 SHARES
OUTSTANDING)
Balance at Beginning and
at End of Period....... $ 11,541 $ 11,541 $ 11,541 $ 11,541 $ 11,541
--------- --------- --------- --------- ---------
ADDITIONAL PAID-IN
CAPITAL
Balance at Beginning and
at End of Period....... 360,978 360,978 360,978 360,978 360,978
--------- --------- --------- --------- ---------
ACCUMULATED DEFICIT
Balance at Beginning of
Period................. (368,756) (348,999) (348,999) (297,515) (231,993)
Net Loss................ (2,130) (11,535) (19,757) (51,484) (65,522)
--------- --------- --------- --------- ---------
Balance at End of
Period............. (370,886) (360,534) (368,756) (348,999) (297,515)
--------- --------- --------- --------- ---------
Total Shareholder's
Equity................. $ 1,633 $ 11,985 $ 3,763 $ 23,520 $ 75,004
========= ========= ========= ========= =========
</TABLE>

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-12
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE YEAR ENDED DECEMBER
ENDED SEPTEMBER 30, 31,
-------------------- ------------------------------
1995 1994 1994 1993 1992
--------- --------- --------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss................ $ (2,130) $ (11,535) $ (19,757) $ (51,484) $(65,522)
Cumulative Effect of
Changes in Accounting
Principles, net........ -- -- -- 1,587 3,302
Adjustments to Reconcile
Net Loss to Net Cash
Provided (Used) by
Operating Activities
Depreciation and
Amortization......... 83,666 67,926 92,435 75,009 52,052
Deferred Income Taxes
and Investment Tax
Credits.............. 11,131 12,008 20,646 7,420 9,603
(Gains) Loss on Sale
of Cellular Property. -- 4,352 4,352 -- (4,751)
Equity in Net Income
of Unconsolidated
Entities, net of
distributions........ 2,462 (5,126) (10,899) (10,466) (5,319)
Minority Interests in
Net Income of
Consolidated
Entities............. 26,218 17,146 22,110 9,697 4,467
Changes in Operating
Assets and
Liabilities..........
Receivables, net.... (22,173) (10,787) (23,111) (15,494) (2,081)
Other Current
Assets............. 8,265 (1,121) (18,225) (7,672) (680)
Accounts Payable.... 2,512 (2,516) 38,293 1,408 66
Accrued Expenses and
Other Current
Liabilities........ 105 6,246 36,590 25,748 7,127
Noncurrent Assets
and Liabilities,
net 2,484 (6,455) (1,455) (13,800) (28,159)
Other, net............ (1,596) 366 834 1,873 5,971
--------- --------- --------- --------- --------
NET CASH PROVIDED (USED)
BY OPERATING
ACTIVITIES............. 110,944 70,504 141,813 23,826 (23,924)
--------- --------- --------- --------- --------
INVESTING ACTIVITIES
Capital Expenditures.... (270,027) (163,963) (264,333) (165,684) (120,428)
Investment in
Unconsolidated
Entities............... (3,642) (6,756) (8,009) (4,621) (4,087)
Proceeds from Sale of
Cellular Property...... -- 9,920 9,920 -- 2,877
--------- --------- --------- --------- --------
NET CASH USED BY
INVESTING ACTIVITIES... (273,669) (160,799) (262,422) (170,305) (121,638)
--------- --------- --------- --------- --------
FINANCING ACTIVITIES
Increase in Advances
from Affiliates........ 161,012 85,467 107,294 130,409 139,372
Contributions from
Minority Investors..... 6,093 13,255 17,742 19,906 10,386
Distributions to
Minority Investors..... (6,341) (3,228) (4,405) (1,250) (3,343)
--------- --------- --------- --------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES... 160,764 95,494 120,631 149,065 146,415
--------- --------- --------- --------- --------
INCREASE (DECREASE) IN
CASH................... (1,961) 5,199 22 2,586 853
CASH AT BEGINNING OF
PERIOD................. 5,527 5,505 5,505 2,919 2,066
--------- --------- --------- --------- --------
CASH AT END OF PERIOD... $ 3,566 $ 10,704 $ 5,527 $ 5,505 $ 2,919
========= ========= ========= ========= ========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION
Interest Paid........... $ 95,081 $ 70,183 $ 98,437 $ 85,409 $ 86,662
Income Taxes Paid
(Received)............. $ 1,715 $ (4,325) $ (13,915) $ 2,114 $(30,509)
NONCASH FINANCING
ACTIVITIES
Reduction in Advances
from Affiliates to
reflect reduction in
Receivable from
Affiliates............. $ -- $ -- $ -- $132,756 $ --
</TABLE>

The accompanying Notes are an integral part of the Consolidated Financial
Statements.

F-13
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in
the understanding of the accompanying consolidated financial statements.

Basis of Consolidation and Presentation

Sprint Cellular Company and its subsidiaries (the "Company") provide
wireless voice and data telecommunications services. The Company operates as a
general and limited partner and majority owner of cellular systems in various
metropolitan and rural service areas and as a limited minority partner or
manager in other cellular systems.

The Company is a wholly-owned subsidiary of Centel Corporation ("Centel").
In July 1995, Centel's parent company, Sprint Corporation ("Sprint") announced
that its Board of Directors had decided to pursue a tax-free spin-off of its
cellular operations to Sprint shareholders through a pro rata distribution of
all of the Common Stock of the Company (the "Spin-off"). For further
discussion of the Spin-off, see Note 2.

The assets, liabilities and results of operations of entities (both
corporations and partnerships) in which the Company has a controlling interest
have been consolidated. The ownership interests of noncontrolling owners in
such entities are reflected as minority interests. The Company accounts for
all other investees using the equity method of accounting. All significant
intercompany accounts and transactions have been eliminated.

The financial information as of September 30, 1995 and for the nine month
periods ended September 30, 1995 and 1994 is unaudited. The Company believes
that such information includes all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the consolidated financial
position, results of operations and cash flows.

Per Share Information

Note 2 describes the restructuring of Sprint that will result in the Spin-
off of the Company. The Spin-off will effectively separate the cellular
operations from Sprint's other telecommunications businesses. As part of the
restructuring, Sprint's management plans to change the capital structure of
the Company. For these reasons and others, per share information is not
presented within the consolidated financial statements.

Revenue Recognition

The Company earns revenues by providing access to its cellular system
(access revenue), for usage of its cellular system (airtime revenue), for
long-distance calls placed by the Company's customers and those of other
carriers within the Company's service area (long-distance), and for providing
service to customers from other cellular systems who are traveling through the
service area (roaming revenue). Access revenue is billed one month in advance
and is recognized when earned. Airtime revenue, roaming revenue and long
distance revenue are recognized when the service is rendered. Other service
revenues are recognized after services are performed and include connection
and installation revenues. Equipment sales are recognized on delivery of the
equipment to the customer.

F-14
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
Cash

As part of its cash management program, the Company utilizes controlled
disbursement banking arrangements. As of December 31, 1994 and 1993,
outstanding checks in excess of cash balances are classified as Negative Cash
Balances. Sufficient funds were available to fund these outstanding checks
when they were presented for payment.

Inventory

Inventory consists of cellular telephone and certain accessory equipment
held for resale and is stated at the lower of cost (principally first in,
first out method) or market.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, including labor and
overhead expenses associated with construction. Construction work in progress
represents costs incurred to construct and enhance cell sites. Repairs and
maintenance costs are expensed as incurred. When property, plant and equipment
is sold, or otherwise disposed of, any resulting gains or losses are included
in the determination of results of operations.

Depreciation

Depreciation is computed by applying the straight-line method over the
estimated service lives for depreciable plant and equipment. Effective January
1, 1994, the estimated service life for tools and test equipment was changed
from 5 to 3 years. In addition, the estimated service lives for certain
switching and analog microwave equipment was reduced to reflect the remaining
service periods. These changes in depreciable lives resulted in additional
depreciation expense in 1994 of $2,403,000.

Effective January 1, 1993, the estimated service lives for capitalized
phones, cell site antennas and certain switches were changed from 3 to 2
years, 20 to 5 years and 10 to 3 years, respectively. These changes in
depreciable lives resulted in additional depreciation expense of $7,555,000 in
1993.

Investments in Unconsolidated Entities

Minority partnership investments include the excess of the purchase price
over the underlying net book value of cellular partnerships of $229,812,000
and $232,513,000 as of December 31, 1994 and 1993, respectively. Such excess,
which generally relates to Federal Communications Commission ("FCC") licenses,
is being amortized on a straight-line basis over 40 years; accumulated
amortization aggregated $34,728,000 and $29,125,000 as of December 31, 1994
and 1993, respectively.

Amortization expense for the years ended December 31, 1994, 1993 and 1992
was $5,769,000, $5,855,000 and $5,939,000, respectively, and is included in
Equity in Net Income of Unconsolidated Entities in the accompanying
Consolidated Statements of Operations.

Intangibles

The Company has acquired identifiable intangible assets, as well as
goodwill, through its acquisitions of interests in various cellular systems.
The cost of acquired entities is allocated to such assets at the date of the
acquisition and the excess of the total purchase price over the amounts
assigned to identifiable assets is recorded as goodwill. Intangible assets
related to the acquisition of entities in which the Company does not have a
controlling interest are included in Investments in Unconsolidated Entities.

F-15
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

The FCC issues licenses that enable cellular carriers to provide service in
specific cellular geographic service areas. The FCC grants licenses for terms
of up to ten years, and generally grants renewals if the licensee has complied
with its obligations under the Communications Act of 1934. In 1993, the FCC
adopted specific standards to apply to cellular renewals, concluding it will
award a renewal expectancy to a cellular licensee that meets certain standards
of past performance. Historically the FCC has granted license renewals
routinely. The Company believes that it has and will continue to meet all
requirements necessary to secure renewal of its cellular licenses.

Intangible assets are being amortized over 40 years. Accumulated
amortization related to acquisitions of controlling interests in cellular
systems aggregated $111,900,000 and $94,047,000 as of December 31, 1994 and
1993, respectively. Amortization expense for the years ended December 31,
1994, 1993 and 1992 was $19,381,000, $19,429,000 and $19,261,000,
respectively.

The ongoing value and remaining useful life of intangible assets are subject
to periodic evaluation, and the Company currently expects the carrying amounts
to be fully recoverable. When events and circumstances indicate that
intangible assets might be impaired, an undiscounted cash flow methodology
would be used to determine whether an impairment loss would be recognized.

Income Taxes and Tax Sharing Arrangement

Deferred income taxes are provided for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for tax purposes. Investment tax credits have been
deferred and are being amortized over the estimated useful lives of the
related assets.

The Company is included in the consolidated Federal income tax return of
Sprint (see Note 11). Under a tax sharing arrangement in effect prior to the
Spin-off, the Company was paid for the utilization of net operating losses and
investment tax credits included in the consolidated tax return, even if such
losses and credits could not have been used if the Company were to have filed
on a separate return basis. At December 31, 1994, the Company had been
credited for all net operating losses incurred and investment tax credits
utilized. Amounts not yet included in the consolidated tax return are
classified as Receivables from Affiliates in the Consolidated Balance Sheets.

Changes in Accounting Principle

Effective January 1, 1993, the Company modified its accrual method of
accounting for postretirement benefits by adopting Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The resulting nonrecurring, noncash charge of
$1,341,000, net of related income tax benefits, is reflected in the 1993
consolidated statement of operations as a cumulative effect of change in
accounting principle.

Effective January 1, 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." Upon adoption, the Company recognized
certain previously unrecorded obligations for benefits being provided to
former or inactive employees and their dependents, after employment but before
retirement. The resulting nonrecurring, noncash charge of $246,000, net of
related income tax benefits, is reflected in the 1993 consolidated statement
of operations as a cumulative effect of a change in accounting principle.

Effective January 1, 1992, the Company changed its method of accounting for
deferred income taxes by adopting SFAS No. 109, "Accounting for Income Taxes,"
which requires use of the liability method. The cumulative effect of this
change in accounting principle decreased 1992 net income by $3,302,000.

F-16
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

2. PLANNED SPIN-OFF

On July 26, 1995, Sprint announced that its Board of Directors had decided
to pursue a tax-free Spin-off of the Company to Sprint shareholders. In the
recent FCC auction of wireless Personal Communications Services ("PCS")
licenses, the Sprint Telecommunications Venture ("STV"), won the rights to
several markets which overlap service territories operated by the Company.
Under FCC rules, Sprint is required to divest or reduce its cellular holdings
in certain markets to clear conflicts with the PCS licenses awarded to STV.
For these reasons, Sprint and its Board of Directors have decided to pursue a
Spin-off of the cellular operations of Sprint.

The proposed Spin-off is subject to the satisfaction of several conditions,
including a favorable ruling by the Internal Revenue Service on the tax-free
nature of the Spin-off, receipt of required regulatory approvals and final
approval by the Sprint Board of Directors. If such conditions are satisfied
and final approval is received from the Sprint Board of Directors, it is
currently anticipated that the Spin-off will be completed during the first
quarter of 1996.

In anticipation of the Spin-off, a recapitalization of the Company's Common
Stock will be effected pursuant to which the Company will split the 10 shares
of issued and outstanding common stock into a sufficient number of new shares
of common stock to allow for the pro rata distribution of such stock to the
common shareholders of Sprint. This distribution would be effected as a tax-
free dividend.

Immediately prior to the Spin-off, the Company will repay approximately $1.4
billion of intercompany debt (see Note 6). Any remaining intercompany debt
will be contributed to the equity capital of the Company. Funding for such
repayment will be derived from proceeds from the offering of notes and
borrowings under a credit facility to be entered into with banks.

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
DEPRECIABLE -----------------
LIVES 1994 1993
----------- -------- --------
<S> <C> <C> <C>
Switching, base site controller and radio
frequency equipment...................... 10 years $442,311 $317,659
Cell site towers and shelters............. 5-20 years 220,238 161,203
Office furniture and other equipment...... 2-5 years 90,487 70,204
-------- --------
Plant in Service......................... 753,036 549,066
Construction work in progress............. 83,351 38,420
-------- --------
836,387 587,486
Less: Accumulated Depreciation............ 216,600 155,820
-------- --------
$619,787 $431,666
======== ========
</TABLE>

Depreciation expense charged to operations for the years ended December 31,
1994, 1993 and 1992 was $73,054,000, $55,580,000, and $32,791,000,
respectively.

F-17
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

4. INVESTMENTS IN UNCONSOLIDATED ENTITIES

Interests Owned

Interests owned in cellular systems of unconsolidated entities are as
follows:

<TABLE>
<CAPTION>
DECEMBER
31,
------------
1994 1993
----- -----
<S> <C> <C>
Omaha Cellular General Partnership and Subsidiary........... 50.00% 50.00%
Florida 9 RSA Limited Partnership........................... 49.00% 49.00%
Illinois Valley Cellular RSA 2-II Partnership............... 40.00% 40.00%
Pennsylvania 4 Wireline Settlement Partnership.............. 33.33% 33.33%
Virginia 10 RSA Limited Partnership......................... 33.00% 33.00%
Iowa RSA No. 13 Limited Partnership......................... 30.00% 30.00%
Texas RSA #11B Limited Partnership.......................... 28.00% 28.00%
Pennsylvania 3 Wireline Settlement Limited Partnership...... 27.78% 27.78%
RCTC Wholesale Company (Richmond)........................... 27.27% 27.27%
GTE Mobilnet of Fort Wayne Limited Partnership.............. 25.00% 25.00%
Texas RSA 7B1 Limited Partnership........................... 25.00% 25.00%
Georgia RSA No. 1 Limited Partnership....................... 20.00% 20.00%
GTE Mobilnet of Indiana RSA #3 Limited Partnership.......... 20.00% 20.00%
St. Joseph SMSA Limited Partnership......................... 20.00% 20.00%
Missouri RSA 9B1 Limited Partnership........................ 19.60% 19.60%
Kansas City SMSA Limited Partnership........................ 19.00% 20.00%
Illinois Independent RSA No. 3 General Partnership.......... 18.13% 18.13%
Allentown SMSA Limited Partnership.......................... 16.77% 16.77%
Orlando SMSA Limited Partnership............................ 15.00% 15.00%
Missouri 1--Atchison RSA Limited Partnership................ 14.28% 14.28%
RSA 11 Limited Partnership (IA)............................. 14.14% 14.14%
Missouri RSA 4 Partnership.................................. 12.50% 12.50%
New York SMSA Limited Partnership........................... 10.00% 10.00%
GTE Mobilnet of South Texas Limited Partnership............. 8.77% 8.77%
Iowa 16--Lyon Limited Partnership........................... 8.33% 8.33%
Iowa RSA 5 Limited Partnership.............................. 7.14% 7.14%
Iowa 15--Dickinson Limited Partnership...................... 6.67% 6.67%
Reading SMSA Limited Partnership............................ 5.85% 5.85%
Iowa RSA No. 14 Limited Partnership......................... 5.56% 5.56%
Chicago SMSA Limited Partnership............................ 5.00% 5.00%
RSA 1 Limited Partnership (IA).............................. 3.90% 3.90%
GTE Mobilnet of Ohio Limited Partnership.................... 3.50% 3.50%
Iowa 8--Monona Limited Partnership.......................... 2.30% 2.30%
Cincinnati SMSA Limited Partnership......................... 1.20% 1.20%
GTE Mobilnet of Austin Limited Partnership.................. .82% .82%
</TABLE>

F-18
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

Financial Information

Condensed combined financial information for investments in entities
accounted for under the equity method follows (in thousands):

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------
1994 1993 1992
---------- --------- ---------
<S> <C> <C> <C>
Results of Operations
Cellular Service Revenues............ $1,357,945 $930,778 $730,406
Equipment Sales and Other............ 67,945 40,193 25,563
---------- --------- ---------
Total Operating Revenues........... 1,425,890 970,971 755,969
Cost of Equipment Sales.............. 101,691 46,406 29,351
Operating, Selling, General,
Administrative and Other Expenses 824,049 544,328 413,239
Depreciation and Amortization........ 165,010 123,856 105,769
---------- --------- ---------
Operating Income..................... 335,140 256,381 207,610
Non-operating Income (Expenses)...... (725) 1,990 13,969
Minority Interests in Net (Income)
Loss of Consolidated Entities....... 1,958 (1,085) (570)
---------- --------- ---------
Cumulative Effects of Changes in
Accounting Principles............... 336,373 257,286 221,009
Cumulative Effects of Changes in
Accounting Principles, net.......... -- (263) (8,234)
---------- --------- ---------
Net Income........................... $ 336,373 $ 257,023 $ 212,775
========== ========= =========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1993
---------- ----------
<S> <C> <C>
Assets
Current Assets.................................... $ 349,078 $ 251,131
Noncurrent Assets................................. 1,174,475 966,705
---------- ----------
$1,523,553 $1,217,836
========== ==========
Liabilities and Equity
Current Liabilities............................... $ 238,682 $ 158,806
Long-term Liabilities............................. 56,017 43,240
Minority Interests................................ 4,573 5,187
Equity............................................ 1,224,281 1,010,603
---------- ----------
$1,523,553 $1,217,836
========== ==========
</TABLE>

Additional Disclosures

Accumulated deficit at December 31, 1994, includes $62,841,000 related to
undistributed earnings of unconsolidated entities.

The Company has guaranteed 50% of a discounted note held by Omaha Cellular
General Partnership and Subsidiary. At December 31, 1994, the carrying value
of the note was $33,703,000.

F-19
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
5. SIGNIFICANT EQUITY INVESTMENTS--INTERIM INFORMATION (UNAUDITED)

The Company's investments in the Kansas City SMSA Limited Partnership, Omaha
Cellular General Partnership and Subsidiary, New York SMSA Limited
Partnership, and GTE Mobilnet of South Texas Limited Partnership meet the
conditions prescribed by the Securities and Exchange Commission which require
interim financial statement disclosures for significant equity investments.
Separate combined financial statements of these entities as of December 31,
1994 and 1993 and for the three years in the period ended December 31, 1994
are included elsewhere herein. Selected unaudited combined interim financial
information follows (in thousands):

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Results of Operations
Cellular Service Revenues................... $ 669,445 $ 507,333
Equipment Sales and Other................... 29,143 16,491
------------ ------------
Total Operating Revenues.................... 698,588 523,824
Cost of Equipment Sales..................... 54,420 26,291
Operating, Selling, General, Administrative
and Other Expenses......................... 359,342 286,286
Depreciation and Amortization............... 67,717 60,264
------------ ------------
Operating Income............................ 217,109 150,983
Other Expense............................... 1,386 781
Minority Interest in Net (Income) Loss of
Consolidated Entity........................ 1,425 (2,269)
------------ ------------
Net Income.................................. $ 214,298 $152,471
============ ============
</TABLE>

6. ADVANCES FROM AND NOTES TO AFFILIATES

Advances from and Notes to Affiliates consist of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ---------------------
1995 1994 1993
------------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Advances from Affiliates, due on
demand.............................. $ 416,059 $ 249,916 $ 142,622
Subordinated Note to Centel Capital
Corporation, due 1996............... 950,000 950,000 950,000
Subordinated Note to Centel
Corporation, due 1998............... 154,200 154,200 154,200
---------- ---------- ----------
$1,520,259 $1,354,116 $1,246,822
========== ========== ==========
</TABLE>

The interest rate on the subordinated note due 1996 is based on prime plus 2
percent and for the year ended December 31, 1994 ranged from 8.0% to 10.5%.
The interest rate for the year ended December 31, 1993 remained a constant
8.0%. The interest rate for the nine months ended September 30, 1995 ranged
from 10.5% to 11.0%.

Interest on advances and the subordinated note due 1998 is based on a 30 day
commercial paper rate. The interest rate on these borrowings for the year
ended December 31, 1994 ranged from 3.1% to 6.1%. The interest rate for the
year ended December 31, 1993 ranged from 3.1% to 3.4%. The interest rate for
the nine months ended September 30, 1995 ranged from 5.8% to 6.1%.

Until the Spin-off, the Company will continue to borrow from Sprint to the
extent cash requirements are not met through cash flows from operations and
capital contributions from minority partners. Immediately prior to the Spin-
off, the Company will repay approximately $1.4 billion of intercompany debt.
Any remaining intercompany debt will be contributed to the equity capital of
the Company.

F-20
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

7. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plan

Substantially all of the Company's employees are covered by a
noncontributory defined benefit pension plan sponsored by Sprint which
provides benefits based upon years of service and participants' compensation.

The cost to the Company of its employees' participation in this plan is
actuarially determined by Sprint, and totaled $1,656,000, $1,307,000, and
$1,124,000 in 1994, 1993 and 1992, respectively. The Company's accrued pension
cost was $5,425,000 and $3,761,000 as of December 31, 1994 and 1993,
respectively.

Upon the Spin-off, the Company's employees are not expected to participate
in Sprint's defined benefit pension plan, nor does the Company expect to
establish its own defined benefit pension plan. Sprint would assume the
liability for certain benefits of the Company's employees under Sprint's plan.
The Company would not expect to recognize any significant curtailment gain or
loss upon discontinuance of its employees' participation in Sprint's plan.

Defined Contribution Plans

Substantially all employees of the Company are covered by defined
contribution employee savings plans sponsored by Sprint. Participants may
contribute portions of their compensation to the plans, and the Company makes
matching contributions up to specified levels. The Company's matching
contributions aggregated $1,736,000, $1,599,000 and $1,180,000 in 1994, 1993
and 1992, respectively.

Upon the Spin-off, the Company will discontinue its participation in
Sprint's defined contribution employee savings plans, and will establish its
own plan. The Company has not yet determined the terms and conditions of its
own plan and is not able to predict the ongoing level of matching
contributions. Balances held by Sprint on the behalf of the Company's
employees' will transfer to the Company upon Spin-off.

Postretirement Benefits

Sprint sponsors postretirement benefits (principally health care benefits)
arrangements covering substantially all employees of the Company. Employees
who retired before specified dates are eligible for these benefits at no cost
to the retirees. Employees retiring after specified dates are eligible for
these benefits on a shared cost basis. The Company funds the accrued costs as
benefits are paid.

The components of the net postretirement benefits cost are as follows (in
thousands):

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------
1994 1993
--------- ---------
<S> <C> <C>
Service cost--benefits earned during the period...... $ 291 $ 421
Interest on accumulated benefit obligation........... 192 180
Net amortization and deferral........................ 29 --
--------- ---------
Net postretirement benefits cost..................... $ 512 $ 601
========= =========
</TABLE>

F-21
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
For measurement purposes, a weighted average annual health care cost trend
rate of 12 percent was assumed for 1994, gradually decreasing to 6 percent by
2001 and remaining constant thereafter. The effect of a 1 percent increase in
the assumed trend rates would have increased the 1994 net postretirement
benefits cost by approximately $146,000. The discount rates for 1994 and 1993
were 7.5 percent and 8.0 percent, respectively.

The cost of providing postretirement benefits was $227,000 in 1992.

The amounts recognized in the consolidated balance sheets are as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1994 1993
------ ------
<S> <C> <C>
Accumulated postretirement benefits obligation
Retirees................................................. $ 363 $ 270
Active plan participants--fully eligible................. 350 343
Active plan participants--other.......................... 1,660 2,472
------ ------
2,373 3,085
Unrecognized prior service costs........................... 525 554
Unrecognized net gains (losses)............................ 1,185 (794)
------ ------
Accrued postretirement benefits cost....................... $4,083 $2,845
====== ======
</TABLE>

The accumulated benefits obligations as of December 31, 1994 and 1993 were
determined using discount rates of 8.5 percent and 7.5 percent, respectively.
An annual health care trend rate of 12 percent was assumed for 1995, gradually
decreasing to 6 percent by 2001 and remaining constant thereafter. The effect
of a 1 percent annual increase in the assumed health care cost trend rates
would have increased the accumulated benefits obligation as of December 31,
1994 by approximately $467,000.

Upon the Spin-off, the Company does not expect to participate in Sprint's
postretirement benefits arrangements, but will establish its own arrangements.
Terms and conditions of the Company's arrangements and related cost levels are
not expected to differ significantly from those under Sprint's arrangements.

Postemployment Benefits

Postemployment benefits offered by the Company include severance, disability
and workers compensation, including the continuation of other benefits such as
health care and life insurance coverage. Significant changes in postemployment
benefits offered by the Company or related expense levels are not expected
upon Spin-off.

8. STOCK BASED PLANS

Stock Options and Stock Appreciation Rights

Under various Sprint stock option plans, Company employees held options to
purchase approximately 372,386 shares of Sprint common stock at December 31,
1994. All options were

F-22
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
granted at a price equal to the market price of Sprint Common Stock at the
date of grant. Approximately 13% of these options outstanding provided for the
granting of stock appreciation rights ("SARs") as an alternate method of
settlement upon exercise.

Following the Spin-off, it is expected that outstanding options held by
Company employees under Sprint plans as of the record date for the Spin-off
will be replaced by Company options (the "Replacement Options"). It is
expected that the Replacement Options will cover the same aggregate fair
market values of stock underlying the options and continue the vesting
schedules and other conditions for exercise of the Sprint options they
replace. Aggregate fair market value will be maintained by adjusting the per
share exercise price of options as well as the number of shares under option.
The formula to determine per share exercise prices and the total number of
Replacement Options to be issued to Company employees is dependent on the
respective market values of Sprint and Company Common Stock during a specified
number of trading days before and after the record date associated with the
Spin-off. As such, the Company cannot currently determine the number of
Replacement Options that will be outstanding after the Spin-off date. The
number of Replacement Options outstanding will be determined by multiplying
the number of Sprint options outstanding by an adjustment factor, the
numerator of which is the pre-Spin-off value of Sprint Common Stock and the
denominator of which is the post-Spin-off value of the Company's Common Stock,
truncated to a whole number of shares. The per share exercise price of
Replacement Options will be determined by subtracting from the post-Spin-off
market value of the Company's Common Stock the product of (a) the excess of
the pre-Spin-off market value of Sprint's Common Stock over the unadjusted
exercise price of the Sprint options and (b) the ratio of the unadjusted
number of shares of Sprint Common Stock that could have been purchased by
exercise of the Sprint options over the number of shares of Company Common
Stock that can be purchased post-Spin-off as adjusted according to the
preceding sentence.

The Company also intends to adopt its own stock option plans which will
provide for the granting of stock options to employees at a price equal to the
fair market value of Company Common Stock at the date of grant. The Company
intends to authorize shares of its common stock for issuance under these and
other equity plans.

Employees Stock Purchase Plan

Under the 1994 offering of the Sprint Employees Stock Purchase Plan, Company
employees held elections to purchase 87,078 shares of Sprint's Common Stock as
of December 31, 1994. The purchase price under the offering cannot exceed
$32.35 per share, such price representing 85% of the average market price on
the offering date, or fall below $12.00 per share. The 1994 offering
terminates on June 30, 1996.

In connection with the Spin-off, it is expected that elections made by
employees of the Company to purchase shares of Sprint Common Stock will be
replaced by elections to purchase shares of Company Common Stock under the
same terms and conditions of the currently established Employees Stock
Purchase Plan. Aggregate fair market value of stock underlying the elections
will be maintained by adjusting the per share purchase price of elections as
well as the number of shares under election. The formula to determine the
total number of shares under elections and the per share purchase price is
dependent on the respective market values of Sprint and Company Common Stock
during a specified number of trading days before and after the record date
associated with the Spin-off. As

F-23
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
such, the Company cannot currently determine the number of shares under
election that will be outstanding after the Spin-off date. The per share
purchase price of shares under election will be determined by multiplying the
per share purchase price of Sprint Common Stock by an adjustment factor, the
numerator of which is the post-Spin-off value of the Company's Common Stock,
and the denominator of which is the pre-Spin-off value of Sprint Common Stock.
The number of shares under election will be determined by multiplying the
number of Sprint shares under election by the reciprocal of the adjustment
factor.

9. INCOME TAXES

The components of the income tax expense (benefit) are as follows (in
thousands):

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Current income tax expense (benefit)
Federal........................................ $(18,070) $(17,357) $(28,875)
State.......................................... 3,121 2,825 1,963
Deferred income tax expense (benefit)
Federal........................................ 20,705 7,474 9,661
Amortization of deferred investment tax
credits....................................... (59) (54) (58)
-------- -------- --------
Total income tax expense (benefit)........... $ 5,697 $ (7,112) $(17,309)
======== ======== ========
</TABLE>

On August 10, 1993, the Revenue Reconciliation Act of 1993 was enacted which,
among other changes, raised the federal income tax rate for corporations to 35
percent from 34 percent, retroactive to January 1, 1993. Accordingly, the
Company adjusted its deferred income tax assets and liabilities to reflect the
revised rate.

A reconciliation from the statutory income tax rate (35 percent in 1994 and
1993 and 34 percent in 1992) to the effective income tax rate (income tax
expense divided by income before income taxes) is as follows (in thousands):

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1994 1993 1992
------- -------- --------
<S> <C> <C> <C>
Income tax benefit at the statutory rate.......... $(4,921) $(19,953) $(27,040)
Less investment tax credits included in income.... (59) (54) (58)
------- -------- --------
Expected federal income tax benefit after
investment tax credits........................... (4,980) (20,007) (27,098)
Effect of
State income tax expense, net of federal income
tax effect..................................... 2,029 1,836 1,296
Amortization of intangibles..................... 8,796 8,849 8,568
Federal income tax rate increase................ -- 1,335 --
Other, net...................................... (148) 875 (75)
------- -------- --------
Income tax expense (benefit), including investment
tax credits...................................... $ 5,697 $ (7,112) $(17,309)
======= ======== ========
Effective income tax rate......................... (41)% 12% 22%
======= ======== ========
</TABLE>

The income tax expense allocated to other items for the year ended December
31, 1993 are as follows (in thousands):

<TABLE>
<S> <C>
Cumulative effects of changes in accounting principles
Postretirement benefits........................................... $724
Postemployment benefits........................................... $135
</TABLE>

F-24
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

Deferred income taxes are provided for the temporary differences between the
carrying amounts of the Company's assets and liabilities for financial
statement purposes and their tax bases. The sources of the differences that
give rise to the deferred income tax assets and liabilities as of December 31,
1994 and 1993, along with the income tax effect of each, are as follows (in
thousands):

<TABLE>
<CAPTION>
1994 DEFERRED 1993 DEFERRED
INCOME TAX INCOME TAX
-------------------- --------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Property, plant and equipment.. $ -- $65,072 $ -- $49,662
Postretirement and other
benefits...................... 3,300 -- 2,489 --
Intangibles.................... -- 10,512 -- 14,130
Operating loss carryforwards... 16,744 -- 14,608 --
Other, net..................... -- 2,976 7,291 --
Less: Valuation Allowance...... (4,385) -- (2,851) --
------- ------- ------- -------
Total...................... $15,659 $78,560 $21,537 $63,792
======= ======= ======= =======
</TABLE>

During 1994 and 1993, the valuation allowance related to deferred income tax
assets increased $1,534,000 and $233,000, respectively.

As of December 31, 1994, the Company has available tax benefits associated
with state operating loss carryforwards which expire in varying amounts
annually from 1995 through 2009.

10. COMMITMENTS AND CONTINGENCIES

Litigation, Claims and Assessments

Various suits arising in the ordinary course of business are pending against
the Company. Management cannot predict the ultimate outcome of these actions
but believes any asserted or pending litigation or claims will not result in a
material effect on the Company's consolidated financial statements.

Operating Leases

Minimum rental commitments as of December 31, 1994 for all non-cancelable
operating leases, consisting principally of leases for office space, real
estate and tower space, are as follows (in thousands):

<TABLE>
<S> <C>
1995............................. $13,442
1996............................. 9,936
1997............................. 6,238
1998............................. 5,423
1999............................. 4,198
Thereafter....................... 27,544
-------
Total........................ $66,781
=======
</TABLE>

Gross rental expense aggregated $12,344,000, $7,573,000 and $5,553,000 in
1994, 1993 and 1992, respectively. The amount of rental commitments applicable
to subleases, contingent rentals and executory costs is not significant.

Capital Expenditures

Property, plant, and equipment capital expenditures for 1995 are expected to
total $323,000,000.

F-25
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

11. RELATED PARTY TRANSACTIONS

Management believes that the consolidated financial statements of the
Company, presented herein, reasonably reflect the historical relationships
with Sprint and its affiliates and reflect all of the Company's costs of doing
business. Management believes that there would not have been any material
difference from the amounts presented in the historical financial statements
had the Company operated on a stand-alone basis. However, the historical
financial statements are not necessarily indicative of future financial
condition, results of operations or cash flows.

The Company reimburses Sprint for certain data processing services, other
data-related costs and certain management and administrative support services
which are incurred for the Company's benefit. Total charges aggregated
$16,287,000, $16,686,000 and $13,771,000, in 1994, 1993 and 1992,
respectively. The terms of the arrangements determining such charges by Sprint
are reasonable, although there can be no assurance that these terms are
comparable to those which would be obtained from unaffiliated third parties or
on a stand-alone basis. Sprint will provide administrative support services
for a period of time after the Spin-off to assure an orderly transition.

Charges for long distance telecommunications and operator services provided
by interexchange carriers to cellular customers are based on terms and
conditions negotiated with Sprint. The Company is not required to offer its
customers options on the selection of long distance carriers. As a result,
Sprint long distance service is offered on an exclusive basis, unless Sprint
does not provide such service in the Company's operating service area. The
charges incurred are based on terms and conditions of the current contract
which is currently scheduled to expire in 1997 but which may be extended prior
to the Spin-off for a period of up to five years. The Company believes that
the terms and conditions of the current contract governing long distance and
operator services are reasonable and based on fair market value, although
there can be no assurance that these terms are comparable to those which could
be obtained from unaffiliated third parties.

The Company receives local telephone, interconnection and toll services from
subsidiaries of Sprint pursuant to agreements between the subsidiaries and the
Company. During 1994, 1993 and 1992, related payments amounted to $27,766,000,
$19,164,000 and $11,442,000, respectively. Payables to Affiliates totaled
$2,440,000 and $1,202,000 at December 31, 1994 and 1993, respectively.

The Company enters into cash advance and borrowing transactions with Sprint
and certain affiliates as described in Note 6.

The Company advances funds to unconsolidated entities to which it provides
management services for use in these entities' current operations and
construction activity. In turn, these entities advance excess cash to the
Company for cash management and investment. Minority Investments Receivable
totaled $906,000, $4,221,000 and $1,811,000 at December 31, 1994 and 1993 and
at September 30, 1995, respectively. Minority Investments Payable totaled
$117,000 and $1,057,000 and $791,000 at December 31, 1994 and 1993 and at
September 30, 1995, respectively.

Tax Sharing Agreement

In connection with the Spin-off, Sprint and the Company will enter into a
Tax Sharing and Indemnification Agreement (the "Tax Sharing Agreement") that
will allocate the responsibility for taxes

F-26
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
between Sprint and the Company. In the event that the Spin-off fails to
constitute a tax-free distribution under Section 355 of the Internal Revenue
Code of 1986, the Tax Sharing Agreement will provide that any taxes resulting
from such failure will be allocated between Sprint and the Company in a manner
that will take into account the extent to which each may have contributed to
such failure. If neither party is determined to have contributed to such
failure, such taxes will be allocated based upon each company's relative
market capitalization during the twenty day period following the Spin-off.

The Tax Sharing Agreement will also allocate to the Company the tax
liability in excess of $25 million, if any, arising from recognition of gain
on the distribution of Company Common Stock to non-U.S. persons or arising
from the transfer of assets and liabilities by Sprint to the Company in
connection with the Spin-off. Absent the acquisition of Sprint stock by non-
U.S. persons, Sprint and the Company believe the possibility of incurring a
liability in either case in excess of $25 million is remote.

The Tax Sharing Agreement also provides that the Company will indemnify
Sprint for any tax liability relating to the Company for all periods. The
Company will continue to join in filing consolidated federal income tax
returns with Sprint up to the time of the Spin-off. The Tax Sharing Agreement
generally provides that the Company's share of the tax liability reflected on
such consolidated federal income tax returns, as originally filed and amended,
is equal to the amount of tax which the Company would have incurred on its
separate taxable income computed as if it filed a separate tax return. It also
provides that if the Company incurs a net operating loss in any year in which
it joins with Sprint in filing a consolidated federal income tax return, as
originally filed and amended, Sprint will pay an amount equal to the reduction
in its tax liability attributable to such loss. Similar provisions apply in
the case of state tax returns filed on a consolidated basis. In addition, the
Tax Sharing Agreement generally provides that Sprint agrees to indemnify the
Company against liability for any taxes relating to Sprint or its affiliates,
other than the Company, for periods up to and including the Spin-off date or
for periods after that date if imposed on the Company by any taxing authority.

Tax Assurance Agreement

In connection with the Spin-off, Sprint and the Company will enter into an
agreement (the "Tax Assurance Agreement") pursuant to which certain
limitations designed to preserve the tax-free status of the Spin-off will be
imposed on the Company for a period of two years after the commencement of the
Spin-off. Such limitations may prohibit the Company from exchanging,
contributing or otherwise transferring or disposing of cellular properties. In
addition, such limitations may limit the amount of equity securities the
Company could issue following the Spin-off, including the issuance of Common
Stock by the Company. If the Company were to breach its obligations under the
Tax Assurance Agreement and as a direct result the Spin-off is not treated as
a tax-free distribution under the Code, the Company would be required to
indemnify Sprint pursuant to the Tax Sharing Agreement for any taxes assessed
in respect to the Spin-off.

Distribution Agreement

In contemplation of the Spin-off, the Company and Sprint have entered into a
Distribution Agreement that provides for complete separation of all properties
after the Spin-off as well as transition agreements that disengage the affairs
of the Company and Sprint in an orderly manner.

F-27
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)

12. SPRINT/CENTEL MERGER

Effective March 9, 1993, Sprint consummated its merger with Centel. The
transaction costs associated with the merger (consisting primarily of
investment banking and legal fees) and the expenses of integrating and
restructuring the operations of the two companies (consisting primarily of
employees severance and relocation expenses and costs of eliminating
duplicative facilities) resulted in nonrecurring charges to Sprint during
1993. The portion of such charges attributable to the Company was $4,733,000.

13. ADDITIONAL FINANCIAL INFORMATION

Concentrations of Credit Risk

To the extent the Company's customers become delinquent, collection
activities commence. No single customer is large enough to pose a significant
financial risk to the Company. The Company maintains an allowance for losses
based on the expected collectibility of accounts receivable. (Credit losses
have been within management's expectations.)

Financial Instruments

All of the Company's financial instruments, including trade payables and
receivables and intercompany advances, are short-term in nature. Accordingly,
the balance sheet amounts approximate the fair value of the Company's
financial instruments.

The Company has not invested in derivative financial instruments.

14. DIVESTITURE OF CELLULAR PROPERTY

In August 1994, the Company sold all of the assets associated with the
cellular communications system in Sioux City, Iowa, to a wholly owned
subsidiary of McCaw Cellular Communications, Inc. The purchase price received
was approximately $9,920,000, and a loss of $4,352,000 was realized on this
divestiture. The effect of this divestiture on the operating results of the
Company was not significant.

15. SUBSEQUENT EVENTS (UNAUDITED)

Proposed Acquisitions

On May 24, 1995, the Company signed a binding letter of intent to purchase a
50% interest in South Carolina RSA No. 4 Cellular General Partnership, a 50%
interest in South Carolina RSA No. 5 Cellular General Partnership and a 50%
interest in South Carolina RSA No. 6 Cellular General Partnership. In
addition, the Company recently announced an agreement to acquire a 100%
interest in the cellular license and network of the North Carolina RSA No. 14
Cellular General Partnership. The Company also expects to acquire a 100%
interest in Ohio RSA No. 1 Cellular General Partnership and additional
partnership interests in Centel Cellular Company of Ft. Walton Beach Limited
Partnership and Centel Cellular Company of Tallahassee Limited Partnership.
The aggregate purchase price of these acquisitions is approximately
$107,000,000.

Impact of Recently Issued Accounting Pronouncements

In March 1995, SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," was issued. SFAS No. 121
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets
carrying

F-28
<PAGE>

SPRINT CELLULAR COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

(UNAUDITED WITH RESPECT TO THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994)
amount. The Company will adopt SFAS No. 121 in the first quarter of 1996 and,
based on current circumstances, does not believe the effect of adoption will
be material.

Effective January 1, 1995, the Company adopted SOP 93-7, "Reporting on
Advertising Costs" which requires that all costs of advertising be expensed in
the period the costs are incurred or the first time the advertising takes
place, except for certain "direct-response" advertising costs which are to be
reported as an asset and amortized over the future benefit period. The
adoption of SOP 93-7 has not impacted the financial statements of the Company
except for including certain disclosures required by SOP 93-7. The Company
expenses the costs of advertising as incurred. Advertising expense charged to
operations for the nine months ended September 30, 1995 was $18,214,000.

16. CONTINGENCIES OF UNCONSOLIDATED ENTITIES

The GTE Mobilnet of South Texas Limited Partnership, (the "South Texas
partnership"), an equity investee of the Company, filed suit in 1994 against a
former agent and its principals alleging that the former agent continued to
hold itself out as an agent of the South Texas partnership after its contract
expired. The former agent and its principals subsequently filed a counterclaim
against the South Texas partnership, claiming the South Texas partnership
falsely represented to them that all agent agreements were identical and that
all agents were paid the same amount. The complaint against the South Texas
partnership alleges fraud, breach of covenant of good faith and fair dealing,
tortuous interference with plaintiffs' business relations, violation of the
Texas Deceptive Trade Practices Act, and defamation. The plaintiff is seeking
unspecified damages.

On July 7, 1995 a suit which purports to be a class action was filed on
behalf of the cellular users of GTE Mobilnet Inc. nationwide. The complaint
alleges that GTE Mobilnet Inc.'s termination fee (including the fee charged by
the South Texas partnership) in its customer contracts represents an invalid
penalty. The plaintiffs are seeking unspecified damages.

On April 12, 1995 a suit which purports to be a class action was filed
alleging that the defendants (including the South Texas partnership) violated
the Telephone Consumer Protection Act ("TCPA") and invaded the plaintiff's
privacy be sending unauthorized facsimiles to the plaintiffs. The complaint
seeks $500 in damages for each alleged violation of the TCPA, plus treble
damages, or in the alternative, punitive damages. In addition, the plaintiffs
seek interest, cost and attorney's fees. The defendants filed a motion to
dismiss for want of subject matter jurisdiction and for failure to state a
proper claim. At a recent hearing, the court ruled that the TCPA applied only
to interstate faxing, and not to intrastate faxing, such as those allegedly
associated with the South Texas partnership. The action is stayed pending the
parties appeal.

On November 14, 1995 a suit was filed against the South Texas partnership by
the widow and children of a cellular phone subscriber who died of brain
cancer. The plaintiffs allege that the deceased was a cellular subscriber of
the South Texas partnership's and that the electromagnetic radiation produced
by the South Texas partnership's cellular system caused the deceased's cancer.
The suit also names several other cellular carriers and phone manufacturers
and seeks unspecified damages.

The ultimate outcome of these four matters cannot presently be determined.
Accordingly, no provision for any liability that might result from these
matters has been made in the financial statements of the South Texas
partnership and the accompanying financial statements.

On July 26, 1995, a partnership which is a general partner in the New York
SMSA Limited Partnership (the "New York partnership"), an equity investee of
the Company, was named as a

F-29
<PAGE>

defendant in a class action lawsuit brought by a subscriber, Mr. Daniel J.
Mandell. The plaintiffs have alleged that the partnership's cellular
operations are engaged in fraudulent, misleading, and deceptive practices by
concealing the practice of rounding up airtime usage to bill in full minute
increments. The plaintiffs seek an accounting of monies received as a result
of the above conduct by the defendant, compensatory damages, punitive damages,
treble damages pursuant to the New Jersey Consumer Fraud Act, and injunctive
relief. Although the defendant has informed the New York partnership that it
believes that it has meritorious defenses to the claims asserted against it,
and intends to defend itself vigorously, the ultimate outcome of this matter
cannot be determined at the present time. The New York partnership may be
allocated a portion of the damages that may result upon adjudication of this
matter if the plaintiffs prevail in their action. If an adverse judgement is
entered, the potential effect on the financial condition and the results of
operations of the general partner, the New York partnership and the Company
cannot be ascertained at this time but may be material.

A general partner in the New York partnership was named as a defendant in a
class action lawsuit brought on behalf of New York retail customers. The
plaintiffs have alleged that the general partner has overcharged customers who
experienced an involuntary disconnection ("dropped calls") of their mobile
service calls during the period June 1985 through September 1994. Further, the
plaintiffs allege that the amount of credit given for a dropped call, the
general partner's policy of requiring customers to specifically request such
credits, and the absence of sufficient notice advising customers to actively
request such credits constitutes a breach of contract and deceptive practice.
Discovery is ongoing at this time. The New York partnership is not a defendant
in this matter having been dismissed from the case in the early stages of the
litigation. The New York partnership has been informed that the defendant
intends to defend itself vigorously but that the ultimate outcome of the
matter cannot be determined. The New York partnership may be allocated a
portion of the damages that may result upon adjudication of this matter if the
plaintiffs prevail in their action. If an adverse judgment is entered, the
potential effect on the financial condition and the results of operations of
the general partner, the Partnership and the Company may be material.

F-30
<PAGE>

[Intentionally Left Blank]

F-31
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS ON COMPILATION OF COMBINED FINANCIAL
STATEMENTS

The Board of Directors and Stockholder
Sprint Cellular Company and Subsidiaries

In connection with our audit of the financial statements of Sprint Cellular
Company and Subsidiaries included in this registration statement, we have
compiled the accompanying combined financial statements of the Kansas City
SMSA Limited Partnership, the New York SMSA Limited Partnership, the GTE
Mobilnet of South Texas Limited Partnership and the Omaha Cellular General
Partnership and Subsidiary as of December 31, 1994 and 1993, and for each of
the three years in the period ended December 31, 1994. These combined
financial statements have been prepared from the audited separate financial
statements of these three limited partnerships and general partnership as
described in Note 1 to the combined financial statements. The combined
financial statements are presented for purposes of complying with the rules
and regulations of the Securities and Exchange Commission and are not
otherwise a required part of the basic financial statements of Sprint Cellular
Company and Subsidiaries. We have audited the financial statements (not
separately presented herein) of the Kansas City SMSA Limited Partnership as
set forth in our accompanying report included herein. We did not audit the
financial statements (not separately presented herein) of the New York SMSA
Limited Partnership, the GTE Mobilnet of South Texas Limited Partnership and
the Omaha Cellular General Partnership and Subsidiary, which statements
reflect assets and revenues of 91% and 89%, respectively, of the related
combined 1994 totals. These statements were audited by other auditors, as set
forth in their accompanying reports included herein.

Because of the significance of the components of the combined financial
statements that have been audited by other auditors, we are unable to express
an opinion regarding the fairness of the presentation of the accompanying
combined financial statements. However, we have checked, for compilation only,
the accompanying combined financial statements and, in our opinion, those
statements have been properly compiled from the separate financial statements
of the Kansas City SMSA Limited Partnership, the New York SMSA Limited
Partnership, the GTE Mobilnet of South Texas Limited Partnership and the Omaha
Cellular General Partnership and Subsidiary on the basis described in Note 1
to the Combined Financial Statements.

Ernst & Young LLP

Kansas City, Missouri
November 22, 1995

F-32
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Partners
Kansas City SMSA Limited Partnership

We have audited the accompanying balance sheets of Kansas City SMSA Limited
Partnership as of December 31, 1994 and 1993, and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kansas City SMSA Limited
Partnership at December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

Ernst & Young LLP

Dallas, Texas
February 10, 1995

F-33
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Partners
Kansas City SMSA Limited Partnership

We have audited the accompanying balance sheets of Kansas City SMSA Limited
Partnership as of December 31, 1993 and 1992, and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kansas City SMSA Limited
Partnership at December 31, 1993 and 1992, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

Ernst & Young LLP

Dallas, Texas
February 11, 1994

F-34
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
New York SMSA Limited Partnership:

We have audited the accompanying balance sheets of New York SMSA Limited
Partnership (the "Partnership") as of December 31, 1994 and 1993, and the
related statements of operations, changes in partners' capital and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New York SMSA Limited
Partnership as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Our report on our audit of such financial statements was issued originally
under date of March 10, 1995.
Such report was based upon the facts and circumstances as they existed at that
time. Subsequent to that date of issuance of our original report, certain
uncertainties which may be material have arisen as described in Note 7. As
discussed in Note 7 to the financial statements, general partners of the
Partnership have been named as defendants in two class action lawsuits and the
Partnership may also be allocated a portion of the damages if the plaintiffs
prevail in their actions. The ultimate outcome of these class action lawsuits
cannot presently be determined. Accordingly, no provision for any liability
that may result upon adjudication has been made in the accompanying financial
statements.

Coopers & Lybrand L.L.P.

New York, New York
March 10, 1995, except for Note 7
as to which the date is November 22, 1995

F-35
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
New York SMSA Limited Partnership:

We have audited the accompanying balance sheets of New York SMSA Limited
Partnership (the "Partnership") as of December 31, 1993 and 1992, and the
related statements of operations, changes in partners' capital and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted audited
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New York SMSA Limited
Partnership as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Coopers & Lybrand L.L.P.

New York, New York
March 21, 1994

F-36
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of GTE Mobilnet of
South Texas Limited Partnership:

We have audited the accompanying balance sheets of GTE MOBILNET OF SOUTH
TEXAS LIMITED PARTNERSHIP (a Delaware limited partnership) as of December 31,
1994 and 1993 and the related statements of operations, changes in partners'
capital, and cash flows for the years then ended (not presented separately
herein). These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GTE Mobilnet of South
Texas Limited Partnership as of December 31, 1994 and 1993 and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

As discussed in Note 3 to the financial statements, the Partnership is
involved in certain litigation, the outcome of which cannot presently be
determined. Accordingly, no provision for any liability that may result from
these matters has been made in the Partnership's financial statements.

Arthur Andersen LLP

Atlanta, Georgia
February 13, 1995
(except with respect to the contingencies
section of Note 3, as to which the date is
November 17, 1995)

F-37
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of GTE Mobilnet of
South Texas Limited Partnership:

We have audited the accompanying balance sheets of GTE MOBILNET OF SOUTH
TEXAS LIMITED PARTNERSHIP (a Delaware limited partnership) as of December 31,
1993 and 1992 and the related statements of operations, changes in partners'
capital, and cash flows for the years then ended (not presented separately
herein). These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GTE Mobilnet of South
Texas Limited Partnership as of December 31, 1993 and 1992 and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

Atlanta, Georgia
March 15, 1994

F-38
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners of
Omaha Cellular General Partnership:

We have audited the accompanying consolidated balance sheets of Omaha
Cellular General Partnership and subsidiary as of December 31, 1994 and 1993,
and the related consolidated statements of operations, changes in partners'
capital and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Omaha
Cellular General Partnership and subsidiary as of December 31, 1994 and 1993,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

January 27, 1995

F-39
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners of
Omaha Cellular General Partnership:

We have audited the accompanying consolidated balance sheets of Omaha
Cellular General Partnership and subsidiary as of December 31, 1993 and 1992,
and the related consolidated statements of operations, changes in partners'
equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Omaha
Cellular General Partnership and subsidiary as of December 31, 1993 and 1992,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

January 26, 1994

F-40
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash..................................................... $ 1,074 $ 68
Accounts receivable--net of allowance for uncollectibles
of $23,517 in 1994 and $4,747 in 1993, respectively..... 104,875 66,263
Unbilled revenue......................................... 17,428 11,654
Other receivables........................................ 439 422
Due from general partners................................ 76,127 65,615
Inventory................................................ 7,724 1,554
Deferred commissions..................................... 7,049 4,707
Prepaids and other current assets........................ 2,595 1,425
-------- --------
Total current assets................................. 217,311 151,708
Property, plant and equipment, at cost..................... 780,602 605,544
Less accumulated depreciation.............................. (216,443) (157,539)
-------- --------
Property, plant and equipment, net......................... 564,159 448,005
Other assets............................................... 23,629 21,177
-------- --------
Total assets......................................... $805,099 $620,890
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable......................................... $ 69,566 $ 29,064
Accounts payable--affiliates............................. 2,447 1,271
Customer deposits and advance billings................... 19,037 13,166
Accrued agent commissions................................ 10,865 9,216
Equipment accruals....................................... 2,626 1,833
Accrued taxes............................................ 9,029 3,679
Other.................................................... 10,362 8,636
-------- --------
Total current liabilities............................ 123,932 66,865
Long-term debt and other liabilities:
Note payable............................................. 4,000 --
Note payable to general partner, including accrued
interest of $9,903 and $6,213 in 1994 and 1993,
respectively............................................ 33,704 30,013
Postretirement benefit obligation........................ 1,996 1,915
Other deferred credits................................... 53 53
-------- --------
Total long-term debt and other liabilities........... 39,753 31,981
Minority interest in consolidated subsidiary............... 4,573 5,187
Partners' capital:
General partners:
Sprint Cellular Company................................ (14,406) (12,164)
Others................................................. 422,606 342,522
Limited partners:
Sprint Cellular Company................................ 67,634 54,532
Others................................................. 161,007 131,967
-------- --------
Total partners' capital.............................. 636,841 516,857
-------- --------
Total liabilities and partners' capital.............. $805,099 $620,890
======== ========
</TABLE>

See accompanying notes.

F-41
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Operating revenues:
Cellular services revenues..................... $718,070 $454,910 $359,410
Equipment sales................................ 23,862 9,519 7,726
Other revenue.................................. 4,368 1,420 2,621
-------- -------- --------
Total operating revenues..................... 746,300 465,849 369,757
Operating expenses:
Cost of services............................... 42,177 30,596 29,694
Cost of equipment sales........................ 47,712 11,312 8,389
Other operating expenses....................... 76,952 33,970 16,842
Selling, general, administrative and other
expenses...................................... 289,537 157,905 116,103
Depreciation and amortization.................. 79,281 55,072 55,591
-------- -------- --------
Total operating expenses..................... 535,659 288,855 226,619
-------- -------- --------
Income from operations........................... 210,641 176,994 143,138
Other income (expense):
Interest expense............................... (4,571) (3,708) (3,260)
Minority interests in net (income) loss of
consolidated subsidiary....................... 1,958 (1,085) (536)
Miscellaneous income........................... 3,706 2,613 11,013
-------- -------- --------
Income before cumulative effect of accounting
change.......................................... 211,734 174,814 150,355
Cumulative effect of change in accounting
principle....................................... -- -- (1,189)
-------- -------- --------
Net income................................... $211,734 $174,814 $149,166
======== ======== ========
</TABLE>

See accompanying notes.

F-42
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
------------------ ------------------
SPRINT SPRINT
CELLULAR CELLULAR
COMPANY OTHERS COMPANY OTHERS TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991... $(10,064) $203,716 $30,927 $ 72,704 $297,283
Capital distributions........ -- (39,874) (5,417) (6,775) (52,066)
Capital contributions........ -- 8,313 1,773 3,139 13,225
Net income (loss)............ (1,113) 99,839 15,901 34,539 149,166
-------- -------- ------- -------- --------
Balance at December 31, 1992... (11,177) 271,994 43,184 103,607 407,608
Capital distributions........ -- (45,706) (7,280) (12,579) (65,565)
Net income (loss)............ (987) 116,234 18,628 40,939 174,814
-------- -------- ------- -------- --------
Balance at December 31, 1993... (12,164) 342,522 54,532 131,967 516,857
Capital distributions........ -- (76,401) (11,156) (18,245) (105,802)
Capital contributions........ 837 10,367 1,266 1,582 14,052
Net income (loss)............ (3,079) 146,118 22,992 45,703 211,734
-------- -------- ------- -------- --------
Balance at December 31, 1994... $(14,406) $422,606 $67,634 $161,007 $636,841
======== ======== ======= ======== ========
</TABLE>

See accompanying notes.

F-43
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income...................................... $211,734 $174,814 $149,166
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 79,281 55,072 55,591
Effect of change in accounting for
postretirement benefits...................... -- -- 1,504
Provision for loss on inventory............... 403 -- --
Provision for losses on disposal of fixed
assets....................................... 1,121 966 463
Provision for losses on accounts receivable... 48,846 1,770 1,270
Minority interest............................. (1,958) 1,085 536
Non-cash accrued interest on note payable..... 3,691 3,286 2,927
Changes in operating assets and liabilities:
Customer accounts receivable................ (93,232) (32,358) 1,749
Inventory................................... (6,573) (480) (227)
Deferred commissions........................ (2,342) (2,004) (34)
Other current assets........................ (5,027) 785 (1,595)
Accounts payable............................ 22,404 6,091 (6,676)
Other current liabilities................... 28,093 17,247 2,421
-------- -------- --------
Net cash provided by operating activities. 286,441 226,274 207,095
INVESTING ACTIVITIES
Capital expenditures............................ (188,506) (128,474) (171,323)
Proceeds from sale of fixed assets.............. 4,708 6,121 10,393
Capital contribution to RSA investments......... (110) (185) (122)
Other, net...................................... -- (280) 1,195
-------- -------- --------
Net cash used in investing activities..... (183,908) (122,818) (159,857)
FINANCING ACTIVITIES
Partner capital contributions................... 10,552 -- 13,225
Partner capital distributions................... (105,802) (65,565) (52,066)
Change in due from general partner.............. (10,512) (38,332) (8,544)
Capital contribution by minority interest....... 1,344 -- 550
Proceeds from note payable...................... 4,000 -- --
Other, net...................................... (1,109) 420 (324)
-------- -------- --------
Net cash used in financing activities..... (101,527) (103,477) (47,159)
-------- -------- --------
Net change in cash........................ 1,006 (21) 79
Cash at beginning of year................. 68 89 10
-------- -------- --------
Cash at end of year....................... $ 1,074 $ 68 $ 89
======== ======== ========
</TABLE>

See accompanying notes.

F-44
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992

1. ORGANIZATION AND BASIS OF COMBINATION

The accompanying combined financial statements represent a combination of
the financial statements of the Kansas City SMSA Limited Partnership (the
Kansas City partnership), the New York SMSA Limited Partnership (the New York
partnership), the GTE Mobilnet of South Texas Limited Partnership (the South
Texas partnership), and the Omaha Cellular General Partnership and Subsidiary
(the Omaha partnership), collectively referred to as the Partnerships. Sprint
Cellular Company (Sprint Cellular or the Company), through certain of its
subsidiaries, is a partner in each of the Partnerships, and accounts for its
investment in the Partnerships on the equity method of accounting. These
combined financial statements have been prepared to present the combined
financial position, results of operations and cash flows of the Partnerships
and the aggregate limited and general partnership interests of the Company in
the Partnerships and to comply with certain significant unconsolidated
investee disclosures required by the rules and regulations of the Securities
and Exchange Commission.

Each of the Partnerships was formed to fund, establish and provide cellular
telephone service in their respective metropolitan statistical areas (MSAs).
The Kansas City partnership services the Kansas City and Lawrence, Kansas
metropolitan areas. The New York partnership services the New York
metropolitan area including Northern New Jersey. The South Texas partnership
services Brazoria, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty,
Montgomery, Orange and Waller counties, Texas. The Omaha partnership, through
its 55.18% partnership interest in Omaha Cellular Limited Partnership OCLP,
services Douglas and Sarpy counties in Nebraska and Pottawattamie county in
Iowa.

The partners' ownership interest in each of the Partnerships are as follows
(the general partners' interests include the limited partnership interest if
the general partner also participates as a limited partner):

<TABLE>
<CAPTION>
KANSAS CITY NEW YORK SOUTH TEXAS OMAHA
----------- -------- ----------- -----
<S> <C> <C> <C> <C>
General partners:
Others........................... 81% 54% 79% 50%
Sprint Cellular Company.......... -- -- -- 50
Limited partners:
Sprint Cellular Company.......... 19 10 9 --
Others........................... -- 36 12 --
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>

The general partners in the Kansas City, New York, South Texas and Omaha
partnerships are Southwestern Bell Mobile Systems, Inc. (SBMS), New York
Cellular Geographic Service Area Inc. (NYCGSA), a subsidiary of NYNEX Mobile
Communications Company (NMCC), a wholly-owned subsidiary of NYNEX Corporation,
GTE Mobilnet of Houston, Inc. and Prairie Communications, Inc. (Prairie), a
wholly-owned subsidiary of Lincoln Telecommunications Company (LTEC),
respectively.

F-45
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

1. ORGANIZATION AND BASIS OF COMBINATION (CONTINUED)

During 1994, the Company elected not to fund a capital call request made by
SBMS on behalf of the Kansas City partnership. Accordingly, the Company's
ownership in the Kansas City partnership was reduced from 20% to 19%.

The general partners are responsible for managing and operating the
Partnerships. Profits, losses and distributable cash are allocated to the
individual partners based on the respective partnership interests of each of
the partners, except for amortization of goodwill and other intangibles by the
Omaha partnership which is allocated 100% to Prairie as agreed to by the
partners.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Partnerships earn service revenues by providing access to its cellular
system (access revenue) and for usage of its cellular system (airtime
revenue). Access revenue is recognized when earned. Airtime revenue, including
roaming revenue and long distance revenue, is recognized when the service is
rendered. Equipment sales are recognized upon delivery of the equipment. Other
service revenues are recognized after services are performed and include
activation and custom calling feature revenues.

The billing system for the South Texas partnership provides data on a
billing company basis. The billing company consists of an MSA and surrounding
MSA and rural statistical areas (RSAs) markets. Revenues recorded by the South
Texas partnership are determined using an allocation methodology which
incorporates the South Texas partnership's proportionate share of switched
minutes, billed minutes, and average revenue per minute of the billing company
containing the markets of the South Texas partnership.

The South Texas partnership also earns revenue by leasing its switches to
affiliates. These revenues are based on a charge per port and are included in
other revenues. See Note 4 for additional discussion of affiliated
transactions.

Customer Accounts Receivable

Customer accounts receivable are unsecured and are generally due within 30
days. Credit losses relating to these customers consistently have been within
management's expectations. Expected credit losses are recorded as an allowance
for doubtful accounts in the combined balance sheets.

Inventory

Inventory, consisting primarily of cellular mobile telephone equipment, is
valued at the lower of cost or market. Cost is determined using the first-in,
first-out or weighted average cost method.

Deferred Commissions

Certain partnerships defer commissions paid to agents for obtaining
subscribers and amortize the deferred commissions over periods up to one year.
Other partnerships expense such commissions as paid. Effective January 1,
1994, one partnership, which previously deferred commissions,
adopted the practice of expensing agent commissions as paid. The effect of
this change in accounting was not material to the combined financial
statements.

F-46
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant and Equipment

At December 31, 1994 and 1993, the components of net property, plant and
equipment were as follows:

<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Cell site and towers.................................... $241,201 $215,364
Switching, cell site, radio and electronic equipment.... 437,771 342,415
Office furniture and other equipment.................... 25,115 15,117
-------- --------
Plant in service 704,087 572,896
-------- --------
Plant under construction................................ 76,515 32,648
-------- --------
780,602 605,544
Less: accumulated depreciation.......................... 216,443 157,539
-------- --------
$564,159 $448,005
======== ========
</TABLE>

Property, plant and equipment are stated at cost and are depreciated on a
straight-line basis over the estimated useful lives of the assets. During
1993, certain of the Partnerships changed the estimated useful lives of
various assets, resulting in a net decrease to depreciation expense of
$1,714,000.

Major improvements to existing plant equipment are capitalized. Expenditures
for maintenance and repairs which do not extend the life of the assets are
charged to expense as incurred. The costs of properties retired or otherwise
disposed and any related accumulated depreciation are removed from the
accounts, and the resulting gain or loss is reflected in income currently.

Plant under construction primarily represents costs incurred to construct
and enhance cell sites for future system expansion. Commencing with the
placing of completed assets in service, such capitalized construction costs
are depreciated on a straight-line basis consistent with the associated
assets.

As a result of the South Texas partnership changing out certain cell and
switching equipment in a like-kind exchange transaction in 1992, retirements
of $87,769,000 of cost and $30,264,000 of accumulated depreciation were
recorded. The supplier of this equipment installed and placed in service the
new equipment in 1993 and took title to the existing equipment at net book
value as of December 31, 1992. The net book value of the retired equipment and
progress payments for the new equipment are included in assets under
construction in the accompanying balance sheets. The previous equipment was
leased back from the supplier from January 1993 until the new equipment was
placed in service at conversion in June 1993. As a result of a delay in the
installation of the new equipment, the supplier reimbursed the South Texas
partnership for certain expenses incurred. These reimbursements resulted in
expense reductions of $1,647,000 and $2,673,000 in 1993 and 1992,
respectively, and are reflected in the selling, general and administrative and
other expense line in the accompanying combined statements of income. In
addition, the supplier reimbursed $1,918,000 and $6,174,000 in 1993 and 1992,
respectively, as liquidated damages for the delay. This amount is included in
other income in the accompanying combined statements of income.

F-47
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Due to changes in technology, customer growth, and usage demand for cellular
services in their respective markets, the Omaha partnership entered into an
agreement to purchase digital cellular telephone systems to replace certain
existing analog systems serving these markets. These digital systems are
expected to increase capacity and performance in these markets. The Omaha
partnership system became operational in April 1994. The implementation of
these system upgrades caused the early retirement of certain existing analog
equipment prior to the expiration of its anticipated useful life. As a result,
in the first quarter of 1994, the Omaha partnership wrote down the carrying
value of these assets by approximately $9,208,000. The Omaha partnership
subsequently sold the analog equipment for approximately $1,524,000. The net
effect of these two items resulted in recognizing additional nonrecurring
depreciation of approximately $7,684,000.

Taxes

The Partnerships are not taxable entities, and the results of their
operations are included in the tax returns of the partners. Accordingly,
income taxes are not reflected in the accompanying combined financial
statements. Accrued taxes represent the Partnership's obligations for property
and sales taxes.

Other Assets

Other assets include goodwill, other intangibles and other noncurrent
assets. Goodwill represents the excess of the purchase price over the fair
value of the net assets of the acquired entity and is being amortized on a
straight-line method over 40 years. The franchise rights and customer lists
are being amortized on a straight-line method over 25 and 14 years,
respectively.

The ongoing value and remaining useful life of goodwill and other intangible
assets are subject to periodic evaluation and the carrying amounts are
expected to be fully recoverable. When events and circumstances indicate that
intangible assets might be impaired, an undiscounted cash flow methodology
would be used to determine whether an impairment loss would be recognized.

Supplemental Disclosures of Cash Flow Information

The following net noncash items of $3,501,000, relating to the contribution
of retail assets by the New York partnership, were excluded from the 1994
statement of cash flows (see Note 8): inventory $2,778,000; prepaid expenses
$550,000; property, plant and equipment $2,684,000; deferred charges and other
assets $878,000; accounts payable $(733,000); and deferred revenue and other
liabilities $(2,656,000).

Interest paid during 1994, 1993 and 1992 was approximately $942,000,
$422,000 and $334,000, respectively.

3. LEASE COMMITMENTS

Future minimum rental payments required under operating leases that have
initial or remaining lease terms in excess of one year as of December 31, 1994
are as follows:

<TABLE>
<S> <C>
1995.......................................................... $12,412,100
1996.......................................................... 10,638,600
1997.......................................................... 8,340,900
1998.......................................................... 6,292,100
1999.......................................................... 4,120,200
Thereafter.................................................... 10,423,300
-----------
$52,227,200
===========
</TABLE>

F-48
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

3. LEASE COMMITMENTS (CONTINUED)

Certain leases contain renewal options that may be exercised from time to
time and are excluded from the above amounts. Rental expense for operating
leases amounted to approximately $11,733,000, $13,531,000 and $7,922,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.

4. RELATED-PARTY TRANSACTIONS

Kansas City Partnership

The Kansas City partnership's short-term cash surplus held in reserve for
asset acquisitions and operations is advanced to the general partner and is
reflected in due from general partner in the accompanying combined balance
sheets. The Kansas City partnership's cash needs in excess of its cash
reserves are met through short-term loans from the general partner. Interest
on this net investment/payable is credited/charged on a monthly basis at SBMS'
current borrowing rate, which approximates prime. Net interest expense related
to this arrangement for the years ended December 31, 1994, 1993 and 1992 was
approximately $512,000, $347,000 and $252,000, respectively.

The services performed on behalf of the Kansas City partnership by the
general partner are provided by the employees of SBMS. These employees are not
employees of the Kansas City partnership; therefore, allocations are made to
charge the Kansas City partnership, at cost, including employee benefit costs,
for the services provided. In addition, certain other costs are incurred by
SBMS, including charges from SBC Communications Inc. (the ultimate parent
company of SBMS), and allocated to the Kansas City partnership. The combined
statements of income for 1994, 1993 and 1992 include selling, general and
administrative expenses of approximately $8,386,000, $6,632,000 and
$4,775,000, respectively, and cost of services of approximately $1,220,000,
$1,075,000 and $870,000, respectively, allocated from SBMS.

Airtime revenues are allocated among the Kansas City partnership and other
affiliates based on cell usage.

The combined statements of income for 1994, 1993 and 1992 include cost of
services of approximately $2,335,000, $1,809,000 and $1,523,000, respectively,
and selling, general and administrative expenses of approximately $174,000,
$148,000 and $110,000, respectively, related to services provided by
Southwestern Bell Telephone Company, an affiliate of SBMS.

New York Partnership

At December 31, 1994 and 1993, accounts receivable include approximately $0
and $24,991,000, respectively, due from the general partner of the New York
partnership as a reseller. Also included in accounts receivable at December
31, 1994 and 1993 is $0 and $10,673,000, respectively, due from Bell Atlantic
Mobile Systems of Northern New Jersey, Inc. (BAMS), a limited partner of the
New York partnership. Operating revenues for the years ended December 31,
1994, 1993 and 1992 include $46,715,000, $120,346,000 and $99,131,000,
respectively, related to the general partner of the New York partnership.
Operating revenues related to BAMS for the years ended December 31, 1994, 1993
and 1992 were $33,354,079, $48,264,200 and $35,828,000, respectively. Other
current liabilities at December 31, 1994 and 1993 include $0 and $3,655,000,
respectively, relating to partners.

F-49
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

4. RELATED-PARTY TRANSACTIONS (CONTINUED)

NMCC and BAMS (commencing May 1, 1994) incur certain administrative costs
related to the management of its operations and other partnerships such as
finance, information systems, human resources, legal, marketing, technical
services and research and development costs. In accordance with the New York
Partnership Agreement, these costs are allocated from NMCC and BAMS to the New
York partnership. These costs include overhead and other expenses charged to
NMCC by NYNEX Corporation and to BAMS by Bell Atlantic Corporation. The
allocation methodology is based on relative assets and revenues and other
specific criteria which include square footage, head count and certain direct
expense categories. For the years ended December 31, 1994, 1993 and 1992,
included in selling, general and administrative expenses are approximately
$47,521,000, $30,444,000 and $23,390,000, respectively, allocated from NMCC to
the New York partnership and $12,211,000, $0 and $0, respectively, allocated
from BAMS to the New York partnership. Included in the amounts allocated from
NMCC are research and development costs of $1,858,400, $3,135,000 and
$2,263,000 for the years ended December 31, 1994, 1993 and 1992, respectively.

During 1992, the New York partnership received a credit of $4,193,000
related to a previous charge for research and development which has been
included in other income.

NMCC and BAMS employ personnel who directly or indirectly render services to
the New York partnership. Payroll costs and related fringes associated with
these employees totaling approximately $33,865,000, $9,722,000 and $9,188,000
for the years ended December 31, 1994, 1993 and 1992, respectively, were
charged to the New York partnership. The liability for these costs is the
responsibility of the New York partnership's general partner (including
vacation pay, retirement benefits, etc.).

During the first quarter of 1993, NYNEX Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which requires the expected cost
of postretirement health care and life insurance benefits to be recognized
during the years in which employees render service. Prior to adoption, the
cost of these benefits was recognized on a pay-as-you-go basis. Consistent
with the provisions of SFAS No. 106, postretirement benefit costs are being
recognized on a prospective basis over the plan participants' future service
periods. Also during 1993, NYNEX Corporation adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112 requires the expected
cost of other postemployment benefits to be recognized during the years
employees render service. Prior to adoption, the cost of these benefits were
recognized on a pay-as-you-go basis. Consistent with the provisions of SFAS
No. 112, postemployment benefit costs are being allocated to the New York
partnership on an accrual basis. In connection with NYNEX Corporation's
adoption of SFAS No. 106 and No. 112, the New York partnership has reflected
those charges allocated to it of $475,400 and $102,900, respectively, which
have been allocated based on relative head count and are included in selling,
general and administrative expenses.

For the year ended December 31, 1994, the New York partnership has reflected
those charges allocated to it from NMCC of $1,697,000 and $(5,000) related to
SFAS No. 106 and No. 112, respectively. Additionally, for the year ended
December 31, 1994, the New York partnership has reflected those charges
allocated to it from BAMS totaling $197,000 related to SFAS No. 106 and No.

F-50
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
4. RELATED-PARTY TRANSACTIONS (CONTINUED)

112. The New York partnership has not reflected any additional liabilities
relating to these benefits, as they are the responsibility of NMCC and BAMS.

Interest is charged or credited to the New York partnership on the basis of
monthly balances due from or owed to NYCGSA. The rates in effect at December
31, 1994, 1993 and 1992, which are adjustable based on prevailing market
interest rates, were 5.35%, 3.12% and 3.25%, respectively. Net interest income
for 1994, 1993 and 1992 under this arrangement was approximately $2,559,000,
$880,000 and $177,000, respectively.

For the years ended December 31, 1994, 1993 and 1992, selling, general and
administrative expense included approximately $1,015,000, $2,072,000 and $0,
respectively, paid to B-Side Carriers Limited Partnership (BSCLP), a limited
partnership in which NMCC owns approximately a 12% interest. In addition, NMCC
owns approximately 12% of B-Side Corporation, the general partner of BSCLP.
This partnership was established for the purposes of developing, licensing and
marketing the MobiLink brand.

South Texas Partnership

All transactions of the South Texas partnership are authorized by the
general partner. Many management and administrative services are performed by
an affiliated service corporation (the Service Corporation) and GTE Mobilnet
Incorporated. Services provided to the South Texas partnership include support
in major functional areas such as accounting, information and cash management,
human resources, legal, marketing, billing, and technology planning. Costs
attributable to these support functions are included in cost of services and
regional and headquarters expenses. These costs, along with services provided
by the general partner, are allocated to the South Texas partnership based on
various methodologies. Costs allocated to the South Texas partnership for
these services were $30,971,000, $24,598,000 and $20,482,000 in 1994, 1993 and
1992, respectively.

During 1993, the Service Corporation and GTE Mobilnet Incorporated adopted
SFAS No. 112 on the immediate recognition basis. The amount is immaterial to
the South Texas partnership.

During the fourth quarter of 1992, the Service Corporation and GTE Mobilnet
Incorporated adopted SFAS No. 106 retroactive to January 1, 1992. SFAS No. 106
was adopted on the immediate recognition basis. As a result, a cumulative,
noncash charge of $1,189,000 was recorded to give effect to past service costs
attributed to periods through December 31, 1991. The current year effect of
this change in accounting reduced net income by $315,000. The charge was
allocated to the South Texas partnership based on the number of subscribers in
the South Texas partnership as a percentage of subscribers in all markets
managed by the general partner and its affiliates. The general partner of the
South Texas partnership believes that this methodology closely attributes the
cost incurred by the South Texas partnership to services received.

Amounts paid by the South Texas partnership to the Service Corporation for
inventory purchases amounted to $19,711,000, $4,334,00 and $3,115,000 in 1994,
1993 and 1992, respectively.

The South Texas general partner either advances funds to or borrows funds
from the South Texas partnership. Funds advanced to the South Texas
partnership are used to cover construction and

F-51
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
4. RELATED-PARTY TRANSACTION (CONTINUED)

working capital requirements. The advance and borrowings are netted and are
reflected in due from general partner in the accompanying combined balance
sheets. The interest rate of funds advanced to or from the South Texas
partnership is equivalent to the general partner's incremental borrowing rate
which fluctuated between 3.32% and 5.47% during 1994, between 3.33% and 4.21%
during 1993 and between 3.48% and 5.15% during 1992.

The South Texas partnership records revenue from several affiliated
partnerships for use of its switches. This revenue amounted to $931,000,
$848,000 and $642,000 in 1994, 1993 and 1992, respectively.

The South Texas partnership makes payments to an affiliate of the South
Texas general partner for construction of cell sites and other system
property. Amounts paid or payable to this affiliate were $2,906,000, $603,000
and $0 in 1994, 1993 and 1992, respectively, and are included in assets under
construction and other property and equipment placed in service.

The South Texas partnership purchases roamer administration, facilities,
switching and other operating services from affiliates whose business is the
provision of such services. The South Texas general partner believes the cost
of these services to the South Texas partnership of $12,403,000, $10,511,000
and $9,596,000 in 1994, 1993 and 1992, respectively, was equivalent to the
cost charged by the affiliate to any of its customers.

Omaha Partnership

The Omaha partnership had total advances from LTEC of $85,000 and $1,195,000
at December 31, 1994 and 1993, respectively. LTEC also has incurred costs
related to construction activity and administrative services provided on
behalf of the Omaha partnership. The amount of these costs for construction
activities were approximately $4,299,000, $4,036,000 and $3,422,000 for 1994,
1993 and 1992, respectively. The amount of these costs for administrative
services for 1994, 1993 and 1992 were $791,000, $523,000 and $555,000,
respectively. Included in accounts payable at December 31, 1994 and 1993 are
amounts due to LTEC of approximately $902,000 and $1,051,000, respectively.

5. NOTE PAYABLE TO GENERAL PARTNER AND PURCHASE OPTION

Prairie purchased and holds a discounted note from the Omaha partnership in
the face amount of approximately $54 million for which the purchase price was
$23.8 million. The note had a carrying value of $33,704,000 and $30,013,000 at
December 31, 1994 and 1993, respectively. This note has a stated interest rate
of 11.94% and is due December 31, 1998. The Company has guaranteed 50% of the
note payable.

Commencing on December 31, 1996, and for the two year period thereafter,
Prairie has the option to purchase from the Company its 50% interest in the
Omaha Partnership.

6. NOTE PAYABLE

The Omaha partnership has a $15,000,000 line of credit with a bank to fund
future construction and operations. The line bears interest at the 30-day
LIBOR plus 175 basis points (7.75% at December 31, 1994) on funds advanced and
matures on December 31, 1997. The line is secured by the Omaha partnership's
assets and assignment of revenues. The balance outstanding at December 31,
1994 was $4,000,000.

F-52
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

7. CONTINGENCIES

In 1992, an agent of the South Texas partnership brought suit against the
South Texas partnership alleging that the South Texas partnership is in
violation of its agency contract. The agent alleges that the South Texas
partnership failed to comply with a provision contained in the agent contract
which allegedly requires the South Texas partnership to offer to the
plaintiffs commission payments offered to any other South Texas partnership
agents which are substantially and materially better than the commission
payments set forth in the plaintiff's contract.

In early 1994, after a jury trial, a judgment was entered in favor of the
plaintiff for approximately $6.6 million plus interest. The South Texas
partnership filed an appeal of the judgment with the Texas Court of Appeals
which overturned the judgment, ruled in the South Texas partnership's favor on
numerous points and remanded the case for retrial. Plaintiff has filed a
motion of reconsideration and rehearing of this Texas Court of Appeals'
ruling. The South Texas partnership has reserved its best estimate of the
potential exposure in this case. The ultimate outcome of this litigation is
unknown at the present time; however, in management's opinion, the final
outcome will not have a material adverse effect on the South Texas
partnership's financial statements.

In addition to the above matter, the South Texas partnership has been named
as a defendant in four lawsuits for which the potential exposure to the South
Texas partnership cannot presently be determined. These suits are discussed
below.

The South Texas partnership filed suit in 1994 against a former agent and
its principals alleging that the former agent continued to hold itself out as
an agent of the South Texas partnership after its contract expired. The former
agent and its principals subsequently filed a counterclaim against the South
Texas partnership, claiming the South Texas partnership falsely represented to
them that all agent agreements were identical and that all agents were paid
the same amount. The complaint against the South Texas partnership alleges
fraud, breach of covenant of good faith and fair dealing, tortuous
interference with plaintiffs' business relations, violation of the Texas
Deceptive Trade Practices Act, and defamation. The plaintiff is seeking
unspecified damages.

F-53
<PAGE>

KANSAS CITY SMSA LIMITED PARTNERSHIP,
NEW YORK SMSA LIMITED PARTNERSHIP,
GTE MOBILNET OF SOUTH TEXAS LIMITED PARTNERSHIP AND
OMAHA CELLULAR GENERAL PARTNERSHIP AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)
radiation produced by the South Texas partnership's cellular system caused the
deceased's cancer. The suit also names several other cellular carriers and
phone manufacturers and seeks unspecified damages.

The ultimate outcome of these four matters cannot presently be determined.
Accordingly, no provision for any liability that might result from these
matters has been made in the accompanying financial statements.

On July 26, 1995, a partnership which is a general partner in the New York
partnership was named as a defendant in a class action lawsuit brought by a
subscriber, Mr. Daniel J. Mandell. The plaintiffs have alleged that the
partnership's cellular operations are engaged in fraudulent, misleading, and
deceptive practices by concealing the practice of rounding up airtime usage to
bill in full minute increments. The plaintiffs seek an accounting of monies
received as a result of the above conduct by the defendant, compensatory
damages, punitive damages, treble damages pursuant to the New Jersey Consumer
Fraud Act, and injunctive relief. Although the defendant has informed the New
York partnership that it believes that it has meritorious defenses to the
claims asserted against it, and intends to defend itself vigorously, the
ultimate outcome of this matter cannot be determined at the present time. The
New York partnership may be allocated a portion of the damages that may result
upon adjudication of this matter if the plaintiffs prevail in their action. If
an adverse judgment is entered, the potential effect on the financial
condition and the results of operations of the general partner and the New
York partnership cannot be ascertained at this time but may be material.

8. RESTRUCTURING OF THE NEW YORK PARTNERSHIP

The New York partnership, which had provided cellular service on the
wholesale level only, was restructured by the New York partners effective May
1, 1994. Under the restructuring, NYCGSA and BAMS contributed their retail
customers and other retail assets to the New York partnership, and the New
York partnership began providing services on an integrated wholesale/retail
basis. The amount of net assets contributed by NYCGSA and BAMS was $2,168,000
and $1,613,000, respectively. Additionally, to ensure consistency of the
partnership interest, the Company made a cash contribution of $378,000 to the
New York partnership. This contribution was subsequently distributed to NYCGSA

F-54
<PAGE>

and BAMS in the amount of $126,000 and $252,000, respectively. These
contributions were recorded by the New York partnership on an historical basis.

Also, pursuant to the restructuring, operational responsibility for the
partnership network and retail operations was geographically assigned. In New
York these responsibilities reside with NYCGSA, while in New Jersey, BAMS has
operational responsibility. As a result, NYCGSA transferred net wholesale
assets of $84,256,000 and net retail assets of $253,000 physically located in
Northern New Jersey to BAMS for operational responsibility only. These assets
will remain in the New York partnership and were comprised primarily of fixed
assets.

The retail integration included an accounts receivable collection services
agreement. The collection services agreement stipulated that the New York
partnership provide collection and payment processing services on behalf of
NMCC and BAMS for all accounts receivable balances as of April 30, 1994, which
amounted to $57,416,000. A reconciliation was performed, at the end of the
agreement term in November 1994, of the actual payments received for these
receivables, and the New York partnership paid the partners the actual cash
amounts received on their behalf.

F-55
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
South Carolina RSA No. 4
Cellular General Partnership, South Carolina RSA No. 5 Cellular General
Partnership and South Carolina RSA No. 6 Cellular General Partnership

We have audited the accompanying combined balance sheet of the South Carolina
RSA No. 4 Cellular General Partnership, South Carolina RSA No. 5 Cellular
General Partnership and South Carolina RSA No. 6 Cellular General Partnership
as of December 31, 1994, and the related combined statements of income,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnerships' 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. 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 combined financial position of the South Carolina
RSA No. 4 Cellular General Partnership, South Carolina RSA No. 5 Cellular
General Partnership and South Carolina RSA No. 6 Cellular General Partnership
as of December 31, 1994, and the combined results of their operations and
their combined cash flows for the year then ended in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Atlanta, Georgia
February 10, 1995, except Note 1
as to which the date is November 10, 1995

F-56
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED BALANCE SHEET

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1994
------ ------------
<S> <C>
CURRENT ASSETS
Accounts Receivable--net of allowance for uncollectibles of $196... $ 2,289
Receivable From Related Party...................................... 769
Unbilled Revenue................................................... 402
Inventory.......................................................... 535
Other.............................................................. 18
-------
Total Current Assets........................................... 4,013
-------
Property, Plant and Equipment...................................... 14,104
Less: Accumulated Depreciation..................................... (4,824)
-------
Property, Plant and Equipment, net............................... 9,280
-------
Deferred Charges, net of accumulated amortization of $218.......... 253
-------
Total Assets................................................... $13,546
=======
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
<CAPTION>
<S> <C>
CURRENT LIABILITIES
Accounts Payable................................................... $ 189
Customer Deposits.................................................. 219
Advance Billings................................................... 303
Accrued Taxes...................................................... 265
Accrued Payroll.................................................... 103
Other.............................................................. 45
-------
Total Current Liabilities...................................... 1,124
-------
PARTNERS' CAPITAL
BellSouth Mobility Inc........................................... 6,211
Palmetto MobileNet, L.P.......................................... 6,211
-------
Total Partners' Capital........................................ 12,422
-------
Total Liabilities and Partners' Capital........................ $13,546
=======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-57
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED STATEMENT OF INCOME

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
1994
------------------
<S> <C>
OPERATING REVENUES
Cellular Service Revenues.................................... $19,081
Equipment Sales.............................................. 1,073
-------
Total Operating Revenues................................. 20,154
-------
OPERATING EXPENSES
Cost of Service.............................................. 1,678
Cost of Equipment Sales...................................... 1,364
Other Operations Expenses.................................... 367
Selling, General, Administrative and Other Expenses.......... 8,447
Depreciation and Amortization................................ 1,949
-------
Total Operating Expenses................................. 13,805
-------
OPERATING INCOME............................................. 6,349
Interest Expense............................................. (4)
Other Income................................................. 419
-------
Net Income............................................... $ 6,764
=======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-58
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED STATEMENT OF CHANGES IN PARTNERS' CAPITAL

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
BELLSOUTH PALMETTO
MOBILITY MOBILENET,
TOTAL INC L.P.
------- --------- ----------
<S> <C> <C> <C>
Balance, December 31, 1993........................ $11,208 $ 5,604 $ 5,604
Net Income........................................ 6,764 3,382 3,382
Capital Distributions............................. (5,550) (2,775) (2,775)
------- ------- -------
Balance, December 31, 1994........................ $12,422 $ 6,211 $ 6,211
======= ======= =======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-59
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED STATEMENT OF CASH FLOWS

(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1994
------------------
<S> <C>
OPERATING ACTIVITIES
Net Income................................................. $ 6,764
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Loss on Asset Disposition................................ 2
Depreciation and Amortization............................ 1,949
Changes in Operating Assets and Liabilities
Accounts Receivable, net............................... (838)
Other Receivables...................................... --
Unbilled Revenues...................................... (52)
Inventory.............................................. (535)
Other Current Assets................................... (6)
Accounts Payable....................................... 69
Customer Deposits...................................... 219
Advance Billings....................................... 115
Accrued Taxes.......................................... 85
Accrued Payroll........................................ 103
Other Current Liabilities.............................. (59)
-------
Net Cash Provided by Operating Activities............ 7,816
-------
INVESTING ACTIVITIES
Capital Expenditures....................................... (2,222)
Deferred Charges........................................... (124)
-------
Net Cash Used for Investing Activities................. (2,346)
-------
FINANCING ACTIVITIES
Decrease in Receivable from Related Party.................. 80
Partners' Capital Distributions............................ (5,550)
-------
Net Cash Used for Financing Activities................. (5,470)
-------
Increase in Cash........................................... 0
Cash at Beginning of Year.................................. 0
-------
Cash at End of Year........................................ $ 0
=======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-60
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION/BASIS OF PRESENTATION:

The combined financial statements include the accounts of South Carolina RSA
No. 4 Cellular General Partnership, South Carolina RSA No. 5 Cellular General
Partnership and South Carolina RSA No. 6 Cellular General Partnership (the
"Partnerships"). The Partnerships were each formed on January 23, 1990 to
fund, develop and offer cellular technology in portions of the Rural Service
Area (RSA) designated by the FCC as South Carolina RSA Nos. 4, 5 and 6.

BellSouth Mobility Inc ("BMI") and Palmetto MobileNet, L.P. ("PMN") each
owned 50% of the Partnerships until August 31, 1995. On August 31, 1995,
affiliates of PMN (SC RSA Nos. 4, 5 and 6 Partnerships), purchased BMI's 50%
general partnership interest in each of the South Carolina RSA Nos. 4, 5 and 6
Cellular General Partnerships. Effective with the sale of the Partnerships,
PMN appointed Sprint Cellular Company ("SCC") the managing agent for these
Partnerships. PMN is currently negotiating to sell a 50% interest in each of
the Partnerships to SCC.

Profits, losses, capital contributions and distributable cash were allocated
to the individual Partners based upon their respective percentages as defined
in the Partnership Agreements (the "Agreements").

2. SIGNIFICANT ACCOUNTING POLICIES:

Inventory consists primarily of cellular phones and accessories held for
resale stated at average cost. Consistent with industry practice, losses on
sales of cellular phones are recognized in the period in which sales are made
as a cost of acquiring subscribers.

Property, plant and equipment represents the costs incurred to construct a
cellular mobile telephone system. Depreciation is provided using the straight-
line method over the estimated useful lives of the assets. The estimated
useful life for leasehold improvements and furniture and fixtures is 10 years
and cell site equipment is 7 years.

Deferred charges consist primarily of costs associated with the acquisition
of options to lease or purchase real estate.

Revenues are recognized when earned. Access service and bundled service
packages are billed monthly in advance and are recognized the following month
when services are provided. Revenues for airtime usage are recognized monthly
as services are provided.

No provision for income taxes has been made since all income, losses and tax
credits are allocated to the Partners for inclusion in their respective
returns.

F-61
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY, PLANT AND EQUIPMENT:

The components of property, plant and equipment as of December 31, 1994 are
as follows:

<TABLE>
<S> <C>
Equipment.................... $ 8,767,000
Leasehold improvements....... 4,320,000
Furniture and fixtures....... 606,000
Plant under construction..... 411,000
-----------
14,104,000
Less: Accumulated
depreciation................ (4,824,000)
-----------
$ 9,280,000
===========
</TABLE>

4. RELATED PARTY TRANSACTIONS:

BMI provided all services necessary for the operation, management and
administration of the Partnerships' businesses until August 31, 1995. In
accordance with the terms of the Partnership Agreements, BMI was reimbursed
for its costs incurred on behalf of the Partnerships in providing these
services.

All BMI markets are geographically grouped into regions and districts which
provide certain network and customer related services directly to those
markets. BMI also centrally provides certain legal, financial and other
administrative services for all markets under its management. The costs of
these services are allocated to the benefited markets. The partnerships were
charged the following allocated costs and made the following payments to
related parties for services received for the year ended December 31, 1994:

<TABLE>
<S> <C>
Costs:
Regional/District Costs..... $1,691,000
Allocated costs............. 944,000
Payments to an affiliate of
BMI:
Interconnect charges........ 329,000
Switch rental............... 261,000
Payments to an affiliate of
PMN:
Interconnect charges........ 486,000
Commissions................. 179,000
</TABLE>

BMI established a credit facility with the Partnerships. The purpose of the
credit facility was to provide funds for construction and working capital to
the Partnerships. Outstanding obligations bore interest at the daily weighted
average composite cost of funds borrowed by BellSouth Enterprises, Inc. to
finance working capital requirements to its subsidiaries. The interest rate on
December 31, 1994 was 5.7%. Any excess cash was loaned by the Partnerships to
BMI and earned interest at the same rate. The receivable from related party,
interest income of $79,000 included in Other Income (Expense), and interest
expense are a result of this credit facility.

F-62
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

5. LEASE COMMITMENTS:

Future minimum rental payments required under operating leases for primarily
real estate that have initial or remaining noncancelable lease terms in excess
of one year as of December 31, 1994 are as follows:

<TABLE>
<S> <C>
1995............................ $213,000
1996............................ 148,000
1997............................ 80,000
1998............................ 53,000
1999............................ 25,000
--------
Total....................... $519,000
========
</TABLE>

The real estate leases permit renewals at various intervals with provision
for increased rentals at each renewal.

Rental expense for operating leases amounted to $489,000 for the year ended
December 31, 1994.

6. CONCENTRATION OF CREDIT RISK:

The Partnerships provide cellular service and sell cellular telephones to a
diversified group of consumers within a concentrated geographical area.
Receivables are generally due within 30 days. Credit losses related to
customers have been within management's expectations.

F-63
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED BALANCE SHEET

(THOUSANDS OF DOLLARS)
(UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 30,
ASSETS 1995
------ -------------
<S> <C>
CURRENT ASSETS
Cash.............................................................. $ 52
Accounts Receivable--net of allowances for uncollectibles of $164. 6,738
Receivables From Related Parties.................................. 530
Other Receivables................................................. 84
Unbilled Revenue.................................................. 71
Inventory......................................................... 629
Other............................................................. 85
-------
Total Current Assets.......................................... 8,189
-------
Property, Plant and Equipment..................................... 17,781
Less: Accumulated Depreciation.................................... 6,464
-------
Property, Plant and Equipment, net.............................. 11,317
-------
Intangibles, less accumulated amortization of $58................. 27,904
Deferred Charges, net of accumulated amortization of $278......... 263
-------
TOTAL ASSETS.................................................. $47,673
=======
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
<S> <C>
CURRENT LIABILITIES
Accounts Payable.................................................. $ 322
Customer Deposits................................................. 175
Advance Billings.................................................. 439
Accrued Taxes..................................................... 193
Accrued Payroll................................................... 23
Other............................................................. 541
-------
Total Current Liabilities..................................... 1,693
-------
PARTNERS' CAPITAL
Palmetto MobileNet, L.P........................................... 9,038
SC RSA Nos. 4, 5 and 6 Partnerships............................... 36,942
-------
Total Partners' Capital....................................... 45,980
-------
Total Liabilities and Partners' Capital....................... $47,673
=======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-64
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED STATEMENTS OF INCOME
(THOUSANDS OF DOLLARS)

(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
---------------- ---
1995 1994
------- -------
<S> <C> <C> <C>
OPERATING REVENUES
Cellular Service Revenues................................. $19,231 $13,739
Equipment Sales........................................... 546 752
------- -------
Total Operating Revenues................................ 19,777 14,491
------- -------
OPERATING EXPENSES
Cost of Service........................................... 1,462 1,217
Cost of Equipment Sales................................... 1,095 896
Other Operations Expenses................................. 266 231
Selling, General, Administrative and Other Expenses....... 6,044 5,796
Depreciation and Amortization............................. 1,781 1,367
------- -------
Total Operating Expenses................................ 10,648 9,507
------- -------
OPERATING INCOME.......................................... 9,129 4,984
Interest Expense.......................................... -- (2)
Other Income (Expense).................................... (1) 334
------- -------
NET INCOME.............................................. $ 9,128 $ 5,316
======= =======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-65
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED STATEMENT OF CHANGES IN PARTNERS' CAPITAL

(THOUSANDS OF DOLLARS)
(UNAUDITED)

<TABLE>
<CAPTION>
SC RSA NOS.
BELLSOUTH PALMETTO 4, 5 AND 6
TOTAL MOBILITY INC. MOBILENET, L.P. PARTNERSHIPS
------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Balance, December 31,
1993..................... $11,208 $ 5,604 $ 5,604 --
Net Income................ 5,316 2,658 2,658 --
Capital Distributions..... (3,254) (1,627) (1,627) --
------- ------- ------- -------
Balance, September 30,
1994..................... $13,270 $ 6,635 $6,635 $ --
======= ======= ======= =======
Balance, December 31,
1994..................... $12,422 $ 6,211 $ 6,211 $ --
Net Income................ 9,128 3,980 4,593 555
Capital Contributions..... 510 255 255 --
Capital Distributions..... (4,042) (2,021) (2,021) --
Transfer of Ownership..... -- (8,425) -- 8,425
Recognition of Partnership
Interest at Fair Value 27,962 -- -- 27,962
------- ------- ------- -------
Balance, September 30,
1995..................... $45,980 $ -- $ 9,038 $36,942
======= ======= ======= =======
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-66
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

COMBINED STATEMENTS OF CASH FLOWS

(THOUSANDS OF DOLLARS)
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income................................................ $ 9,128 $ 5,316
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization........................... 1,781 1,367
Changes in Operating Assets and Liabilities
Accounts Receivable, net.............................. (4,449) (676)
Other Receivables..................................... (84) --
Unbilled Revenues..................................... 331 (3)
Inventory............................................. (94) (325)
Other Current Assets.................................. (67) (15)
Accounts Payable...................................... 133 33
Customer Deposits..................................... (44) 211
Advance Billings...................................... 136 97
Accrued Taxes......................................... (72) 55
Accrued Payroll....................................... (80) 41
Other Current Liabilities............................. 496 (9)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES........... 7,115 6,092
--------- ---------
INVESTING ACTIVITIES
Capital Expenditures...................................... (3,700) (1,330)
Deferred Charges.......................................... (70) (59)
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES.............. (3,770) (1,389)
--------- ---------
FINANCING ACTIVITIES
Decrease (Increase) in Receivables From Related Parties... 239 (1,449)
Partners' Capital Distributions........................... (4,042) (3,254)
Partners' Capital Contributions........................... 510 --
--------- ---------
NET CASH USED FOR FINANCING ACTIVITIES.............. (3,293) (4,703)
--------- ---------
INCREASE IN CASH.......................................... 52 0
CASH AT THE BEGINNING OF YEAR............................. 0 0
--------- ---------
CASH AT END OF YEAR....................................... $ 52 $ 0
========= =========
</TABLE>

The accompanying Notes are an integral part of the Combined Financial
Statements.

F-67
<PAGE>

SOUTH CAROLINA RSA NO. 4 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 5 CELLULAR GENERAL PARTNERSHIP
SOUTH CAROLINA RSA NO. 6 CELLULAR GENERAL PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

1. ORGANIZATION/BASIS OF PRESENTATION:

The financial information as of September 30, 1995 and for the nine month
periods ended September 30, 1995 and 1994 is unaudited. The information
presented includes all adjustments (consisting only of normal recurring
adjustments, except for the purchase accounting adjustments described below)
necessary to present fairly the combined financial position, results of
operations and cash flows.

2. CHANGE IN PARTNER OWNERSHIP

BellSouth Mobility Inc. ("BMI") and Palmetto MobileNet, L.P. ("PMN") each
owned 50% of the Partnerships until August 31, 1995. On August 31, 1995,
affiliates of PMN (SC RSA Nos. 4, 5 and 6 Partnerships), purchased BMI's 50%
general partnership interest in each of the South Carolina RSA Nos. 4, 5 and 6
Cellular General Partnerships for $37 million. In conjunction with a final
determination of purchase price an examination of certain Partnerships'
accounts as of August 31, 1995 is in process. The outcome of this examination
may result in purchase price adjustments. Effective with the sale of the
Partnerships, PMN appointed Sprint Cellular Company ("SCC") the managing agent
for these Partnerships. PMN is currently negotiating to sell a 50% interest in
each of the Partnerships to SCC.

As a result of this transaction, the Partnerships recorded goodwill and
other intangible assets of approximately $28 million. The Partnerships are
engaged in a valuation process to determine the fair value of the assets
acquired and liabilities assumed. Such a valuation may result in a
reallocation of intangibles.

3. SUPPLEMENTAL DISCLOSURE--NONCASH FINANCING ACTIVITY

Goodwill and other intangibles of $27,962,000 were recognized as a result of
the acquisition of BMI's 50% general partnership interest in each of the
Partnerships by affiliates of PMN.

F-68