<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-3
(AMENDMENT NO. 2)
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
CONTEL CELLULAR INC.
(Name of Issuer)
GTE CORPORATION
CONTEL CORPORATION
CONTEL CELLULAR ACQUISITION CORPORATION
CONTEL CELLULAR INC.
(Name of Person(s) Filing Statement)
CLASS A COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
------------------------
210904108
(CUSIP Number of Class of Securities)
<TABLE>
<S> <C>
MARIANNE DROST, ESQ. LAURA E. BINION, ESQ.
GTE CORPORATION CONTEL CELLULAR INC.
ONE STAMFORD FORUM 245 PERIMETER CENTER PARKWAY
STAMFORD, CONNECTICUT 06904 ATLANTA, GEORGIA 30346
(203) 965-2000 (404) 804-3400
</TABLE>
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
Copies to:
JEFFREY J. ROSEN, ESQ.
O'MELVENY & MYERS
555 13TH STREET, N.W., SUITE 500 WEST
WASHINGTON, D.C. 20004-1109
(202) 383-5300
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
This Amendment No. 2 amends the Rule 13e-3 Transaction Statement (the
"Statement") filed jointly on January 30, 1995 by GTE Corporation, a New York
corporation ("GTE"), Contel Corporation, a Delaware corporation that has adopted
a plan of liquidation and is a wholly owned subsidiary of GTE ("Contel"), Contel
Cellular Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Contel ("CCI Acquisition"), and Contel Cellular Inc., a Delaware
corporation (the "Company"), which relates to the proposed merger (the "Merger")
of CCI Acquisition with and into the Company. In the Merger, (i) each
outstanding share of Class A Common Stock, par value $1.00 per share, of the
Company (each a "Class A Share") (other than Class A Shares as to which
appraisal rights have been properly exercised under the General Corporation Law
of the State of Delaware) will be converted into the right to receive $25.50 in
cash, without interest, subject to applicable back-up withholding taxes, (ii)
each Class A Share held by the Company and each outstanding share of the common
stock of CCI Acquisition will be cancelled, and no payment will be made with
respect thereto and (iii) each outstanding share of Class B Common Stock, par
value $1.00 per share, of the Company will remain outstanding. Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Statement.
Information contained in the Statement is hereby amended by the filing of a
preliminary Information Statement on Schedule 14C as a new Exhibit (d)(5) to the
Statement (the "Second Revised Preliminary Information Statement"). The
information contained in the Second Revised Preliminary Information Statement
restates the information contained in the Statement that was incorporated from
the preliminary Information Statements filed as Exhibits (d)(1) and (d)(4) to
the Statement. The following Cross Reference Sheet shows the location in the
Second Revised Preliminary Information Statement of items required by Schedule
13E-3. Information contained in such Second Revised Preliminary Information
Statement is incorporated herein by this reference, as indicated in the Cross
Reference Sheet.
CROSS REFERENCE SHEET
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) Cover Page.
(b) Cover Page; "MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE
COMPANY".
(c) "MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY".
(d) "MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY".
(e) Not applicable.
(f) Not applicable.
Item 2. Identity and Background.
This Schedule 13E-3 is being filed jointly by the Company, as the issuer of
the class of equity securities which is the subject of the Rule 13e-3
transaction, and GTE, Contel and CCI Acquisition, as affiliates of the Company
as defined in Rule 13e-3(a)(1).
(a) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION,
CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL
CELLULAR INC."
(b) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION,
CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL
CELLULAR INC."
1
<PAGE> 3
(c) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION,
CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL
CELLULAR INC."
(d) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION,
CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL
CELLULAR INC."
(e) Not applicable.
(f) Not applicable.
(g) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION,
CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL
CELLULAR INC."
Item 3. Past Contacts, Transactions or Negotiations.
(a)(1) "RELATED PARTY TRANSACTIONS -- Arrangements and Transactions with
Contel and GTE".
(a)(2) "SPECIAL FACTORS -- Background of the Merger"; "BUSINESS OF THE
COMPANY -- The Company's Cellular Operations -- Cellular Exchange
Transaction"; "RELATED PARTY TRANSACTIONS -- Arrangements and
Transactions with Contel and GTE -- Cellular Exchange Transaction".
(b) Not applicable.
Item 4. Terms of the Transaction.
(a) Cover Page, "SPECIAL FACTORS -- Introduction; The Merger"; "THE MERGER
AGREE-MENT".
(b) "RELATED PARTY TRANSACTIONS -- Payments to Optionholders"; "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Directors and
Executive Officers of the Company".
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL
FACTORS -- Plans for the Company; Certain Effects of the
Merger -- Plans for the Company".
(b) Not applicable.
(c) "RELATED PARTY TRANSACTIONS -- Transition Arrangements".
(d) None.
(e) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL
FACTORS -- Plans for the Company; Certain Effects of the
Merger -- Plans for the Company".
(f) "SPECIAL FACTORS -- Plans for the Company; Certain Effects of the
Merger -- Deregistration and Delisting".
(g) "SPECIAL FACTORS -- Plans for the Company; Certain Effects of the
Merger -- Deregistration and Delisting".
Item 6. Source and Amount of Funds or Other Consideration.
(a) "SPECIAL FACTORS -- Merger Consideration".
2
<PAGE> 4
(b) It is estimated that the expenses incurred in connection with the
Merger through the closing of the Merger will be approximately as set
forth below (all of which are payable by GTE or the Company):
<TABLE>
<S> <C>
Investment banking fees and expenses.......................... $1,850,000.00
Legal fees and expenses.......................................
Depositary fees and expenses.................................. $ 12,000.00
Filing fees................................................... $ 50,851.86
Printing and mailing fees..................................... $ 101,000.00
Miscellaneous................................................. $ 115,000.00
-------------
============
</TABLE>
(c) "SPECIAL FACTORS -- Merger Consideration".
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL
FACTORS -- Plans for the Company; Certain Effects of the
Merger -- Plans for the Company".
(b) "SPECIAL FACTORS -- Background of the Merger".
(c) "SPECIAL FACTORS -- Background of the Merger -- GTE's Determination to
Proceed and Discussions Regarding Structure".
(d) "SPECIAL FACTORS -- Introduction; The Merger"; "SPECIAL
FACTORS -- Background of the Merger -- Purpose of the Merger"; "SPECIAL
FACTORS -- Merger Consideration"; "SPECIAL FACTORS -- Accounting
Treatment of the Merger"; "SPECIAL FACTORS -- Certain Federal Income
Tax Consequences of the Merger"; "SPECIAL FACTORS -- Plans for the
Company; Certain Effects of the Merger".
Item 8. Fairness of the Transaction.
(a) "SPECIAL FACTORS -- Determination of the Special Committee and the
Board; Fairness of the Merger"; "SPECIAL FACTORS -- Determination of
the Fairness of the Merger by GTE, Contel and CCI Acquisition".
(b) "SPECIAL FACTORS -- Determination of the Special Committee and the
Board; Fairness of the Merger"; "SPECIAL FACTORS -- Opinion of
Financial Advisor to the Special Committee"; "SPECIAL
FACTORS -- Determination of the Fairness of the Merger by GTE, Contel
and CCI Acquisition".
(c) Cover Page; "SPECIAL FACTORS -- Written Consent"; "SPECIAL
FACTORS -- Determination of the Special Committee and the Board;
Fairness of the Merger".
(d) "SPECIAL FACTORS -- Background of the Merger -- Special Committee;
Negotiations with GTE Financial Advisors"; "SPECIAL
FACTORS -- Determination of the Special Committee and the Board;
Fairness of the Merger".
(e) "SPECIAL FACTORS -- Determination of the Special Committee and the
Board; Fairness of the Merger".
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a) "SPECIAL FACTORS -- Determination of the Special Committee and the
Board; Fairness of the Merger"; "SPECIAL FACTORS -- Opinion of
Financial Advisor to the Special Committee"; "SPECIAL
FACTORS -- Opinions of Financial Advisors to GTE".
3
<PAGE> 5
(b) "SPECIAL FACTORS -- Background of the Merger -- Special Committee;
Negotiations with GTE Financial Advisors"; "SPECIAL FACTORS -- Opinion
of Financial Advisor to the Special Committee"; "SPECIAL
FACTORS -- Opinions of Financial Advisors to GTE"; "RELATED PARTY
TRANSACTIONS -- Relationship between GTE Director and PaineWebber".
(c) "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special
Committee"; "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE".
Item 10. Interest in Securities of the Issuer.
(a) "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Directors and Executive Officers of the Company";
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Directors and Executive Officers of GTE, Contel and CCI
Acquisition".
(b) Not applicable.
Item 11. Contracts, Arrangements or Understandings With Respect to the Issuer's
Securities.
"THE MERGER AGREEMENT"; "RELATED PARTY TRANSACTIONS -- Payments to
Optionholders".
Item 12. Present Intention and Recommendation of Certain Persons With Regard to
the Transaction.
(a) "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Directors and Executive Officers of the Company".
(b) "SPECIAL FACTORS -- Determination of the Special Committee and the
Board; Fairness of the Merger".
Item 13. Other Provisions of the Transaction.
(a) "DISSENTERS' RIGHTS OF APPRAISAL".
(b) Not applicable.
(c) Not applicable.
Item 14. Financial Information.
(a) "SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY"; "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE".
(b) Not applicable.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) Not applicable.
(b) Not applicable.
Item 16. Additional Information.
(a) "PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY".
Item 17. Material To Be Filed As Exhibits.
(a) Not applicable.
(b)(1) Opinion of Lazard Freres & Co. dated December 30, 1994 included as
Exhibit B to the Second Revised Preliminary Information Statement
filed as Exhibit (d)(5) hereto.
4
<PAGE> 6
*(b)(2) Contel Cellular Inc. Valuation Analysis prepared by Lazard Freres &
Co. dated December 22, 1994.
*(b)(3) Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated dated
December 27, 1994 included as Exhibit C-1 to the Preliminary
Information Statement filed as Exhibit (d)(1) hereto.
*(b)(4) Opinion of PaineWebber Incorporated dated December 27, 1994 included
as Exhibit C-2 to the Preliminary Information Statement filed as
Exhibit (d)(1) hereto.
(b)(5) Contel Cellular Inc. Preliminary Valuation Analysis prepared by
Lazard Freres & Co. dated November 7, 1994.
**(b)(6) Contel Cellular Inc. Draft Preliminary Analysis prepared by the GTE
Financial Advisors.
(c)(1) Agreement and Plan of Merger dated as of December 27, 1994, as
amended, included as Exhibit A to the Second Revised Preliminary
Information Statement filed as Exhibit (d)(5) hereto.
*(c)(2) Letter Agreement dated , 1995 issued by the Company to
the holders of Options to acquire Class A Shares.
*(d)(1) Preliminary Information Statement on Schedule 14C relating to the
merger of Contel Cellular Acquisition Corporation with and into
Contel Cellular Inc.
*(d)(2) Letter of Transmittal.
*(d)(3) Form of Notice of Class Action to be sent to Class A Stockholders.
*(d)(4) Revised Preliminary Information Statement on Schedule 14C relating to
the merger of Contel Cellular Acquisition Corporation with and into
Contel Cellular Inc.
(d)(5) Second Revised Preliminary Information Statement on Schedule 14C
relating to the merger of Contel Cellular Acquisition Corporation
with and into Contel Cellular Inc.
(e)(1) Delaware General Corporation Law Section 262 included as Exhibit D
to the Second Revised Preliminary Information Statement filed as
Exhibit (d)(5) hereto.
(f) Not applicable.
- ---------------
* Previously filed.
** A portion of this exhibit is subject to a request for confidential treatment.
5
<PAGE> 7
SIGNATURE
After due inquiry and to the best of the knowledge and belief of the
undersigned, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Date: April 14, 1995 GTE CORPORATION
By: /s/ MARIANNE DROST
Title: Secretary
CONTEL CORPORATION
By: /s/ MARIANNE DROST
Title: Secretary
CONTEL CELLULAR ACQUISITION
CORPORATION
By: /s/ MARIANNE DROST
Title: Secretary
CONTEL CELLULAR INC.
By: /s/ THEODORE J. CARRIER
Title: Treasurer and Chief Financial
Officer
6
<PAGE> 8
EXHIBIT INDEX
--------------
Exhibit
No. Description
------ -----------
(a) Not applicable.
(b)(1) Opinion of Lazard Freres & Co. dated December 30, 1994 included
as Exhibit B to the Second Revised Preliminary Information
Statement filed as exhibit (d)(5) hereto.
*(b)(2) Contel Cellular Inc. Valuation Analysis prepared by Lazard Freres
& Co. dated December 22, 1994.
*(b)(3) Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
dated December 27, 1994 included as Exhibit C-1 to the
Preliminary Information Statement filed as Exhibit (d)(1) hereto.
*(b)(4) Opinion of PaineWebber Incorporated dated December 27, 1994
included as Exhibit C-2 to the Preliminary Information Statement
filed as Exhibit (d)(1) hereto.
(b)(5) Contel Cellular Inc. Preliminary Valuation Analysis prepared by
Lazard Freres & Co. dated November 7, 1994.
**(b)(6) Contel Cellular Inc. Draft Preliminary Analysis prepared by the
GTE Financial Advisors.
(c)(1) Agreement and Plan of Merger dated as of December 27, 1994, as
amended, included as Exhibit A to the Second Revised Preliminary
Information Statement filed as Exhibit (d)(5) hereto.
*(c)(2) Letter Agreement dated , 1995 issued by the Company to
the holders of Options to acquire Class A Shares.
*(d)(1) Preliminary Information Statement on Schedule 14C relating to the
merger of Contel Cellular Acquisition Corporation with and into
Contel Cellular Inc.
*(d)(2) Letter of Transmittal.
*(d)(3) Form of Notice of Class Action to be sent to Class A Stockholders.
*(d)(4) Revised Preliminary Information Statement on Schedule 14C relating
to the merger of Contel Cellular Acquisition Corporation with and
into Contel Cellular Inc.
(d)(5) Second Revised Preliminary Information Statement on Schedule 14C
relating to the merger of Contel Cellular Acquisition Corporation
with and into Contel Cellular Inc.
(e)(1) Delaware General Corporation Law Section 262 included as Exhibit D
to the Second Revised Preliminary Information Statement filed as
Exhibit (d)(5) hereto.
(f) Not applicable.
- ---------------
* Previously filed.
** A portion of this exhibit is subject to a request for confidential treatment.
5
<PAGE> 1
CONTEL CELLULAR INC.
PRELIMINARY VALUATION ANALYSIS
LAZARD FRERES & CO. NOVEMBER 7, 1994
<PAGE> 2
CONTEL CELLULAR INC.
TABLE OF CONTENTS
I. INTRODUCTION
II. BACKGROUND AND DESCRIPTION OF CURRENT OFFER
III. EXECUTIVE SUMMARY
A. Public Market vs. Private Market Valuations
B. GTE's Possible Rationale for the Current Offer
C. Justification for a Valuation in Excess of GTE's Offer
D. Comments on Merrill Lynch/PaineWebber Valuation
E. Alternatives Available to CCI Independent Board
IV. PRELIMINARY VALUATION SUMMARY
A. Analysis at Various Prices
B. Summary of CCI Valuation Analyses
-i-
<PAGE> 3
CONTEL CELLULAR INC.
TABLE OF CONTENTS
V. CCI VALUATION ANALYSES
A. Business Overview
1. Overview of CCI Strategic Plan
2. Overview of Management's Clustering Strategy
3. Demographic Overview of Tennessee, Virginia and Alabama
4. Management's Record in Meeting Budget
B. Relationships with GTE Mobilnet
C. Public Market Valuation
1. Summary Comparable Public Company Analysis
2. Trading Comparison of Selected Cellular Companies
D. Private Market Transaction and Discounted Cash Flow Analysis
1. Lazard Estimates of CCI Private Market Valuation
2. Summary of Valuations by MSA
3. Cash Flow Valuation of Minority Interest MSAs
4. Key Assumptions of Discounted Cash Flow Analyses
5. Summary Discounted Cash Flow Analyses
6. Summary International Asset Valuation
7. Summary Wireless Data Valuation
8. Summary of Research Analysts' Estimates of Private
Market Value
-ii-
<PAGE> 4
CONTEL CELLULAR INC.
INTRODUCTION
- - Lazard Freres & Co. ("Lazard") has been retained by the Special
Committee of the Board of Directors of Contel Cellular Inc. (the
"Special Committee") to render its opinion as to the fairness, from a
financial point of view, of the consideration offered to the holders of
the publicly traded shares of Contel Cellular Inc. ("CCI" or the
"Company") pursuant to the transaction proposed by its majority
shareholder, GTE Corporation ("GTE").
- - In analyzing the fairness of the proposed transaction to the minority
shareholders of CCI, Lazard has performed a number of financial analyses
in order to value the common shares of the Company and value the
consideration offered to the minority shareholders, including:
(i) Comparable Public Company Analysis: reviewing certain financial,
operating, and stock market trading information of selected
publicly traded companies comparable to CCI to estimate the
implied public market values (including market capitalization,
cellular asset value and cellular license value multiples) for
the CCI segments;
(ii) Private Market Transaction Analysis: reviewing publicly available
information on private market sale transactions of selected
companies and cellular markets comparable to the CCI systems to
determine the implied private market values for the CCI POP
segments using an adjusted regression analysis; and a
(iii) Discounted Cash Flow Analysis: to estimate the present value of
the future cash flows that the management of the Company expects
the CCI cellular markets to generate over varying future periods.
-1-
<PAGE> 5
CONTEL CELLULAR INC.
BACKGROUND AND DESCRIPTION OF CURRENT OFFER
- - On September 8, 1994, GTE Corporation ("GTE"), the majority shareholder
of CCI, proposed a transaction through which it would acquire the 10%
ownership of the Company currently held by the public for $224 million.
- - The offer price of $22.50 per share for each Class A common share
implies a value of approximately $195 of market capitalization per net
POP for CCI's 23.9 pro forma net POPs, $182 per net POP adjusting for
the value of other assets (excluding PCS) and $158 per net POP after
further adjusting for the value of net PP&E.
- - The "unaffected" market price one day prior to the announcement was
$17.75 per share and $160 of cellular license value per net POP, before
PP&E adjustment; thus, the initial offer represented a 27% premium over
the unaffected price.
- - The closing price on November 4 of $24.25 represents a further 7.8%
premium over GTE's offer.
- - Given CCI's position as a controlled subsidiary of GTE, the independent
Special Committee has been established to represent the interest of the
minority shareholders.
-2-
<PAGE> 6
CONTEL CELLULAR INC.
PUBLIC MARKET VS. PRIVATE MARKET VALUATIONS
- - Public market and private market valuations are the two primary methods
of valuing properties.
- - Public market value represents the economic benefit and voting rights
from holding the shares representing ownership of assets but does not
assume control of the enterprise.
- - Private market value includes all the benefits of public market value
and, in addition, includes a premium for control of the company. The
essence of this control includes operational decision-making, access to
cash flows of the business and the ability to dispose of assets.
- - Because consummation of the proposed transaction will provide GTE with
absolute control over CCI without the limitations inherent in the
existence of a minority interest, a hybrid valuation which is at a
premium to public market value of CCI, but at a discount to full private
market value of CCI is one appropriate manner of approaching valuation.
-3-
<PAGE> 7
CONTEL CELLULAR INC.
GTE'S POSSIBLE RATIONALE FOR THE CURRENT OFFER
- - GTE already owns 90% of the economic value and voting control of CCI.
Therefore, the minority shareholders are not giving up a controlling
interest in the proposed transaction.
- - The minority shareholders never had control of the enterprise, nor could
they have reasonably expected to eventually gain control of the Company
in the future. (However, their rights are similar to those of minority
shareholders in other public companies that paid those shareholders a
premium for their outstanding shares.)
- - A "squeeze-out" transaction may represent the public shareholders' only
chance to receive a premium for their shares over public market values
because other sophisticated investors will likely be unwilling to pay a
premium for a minority position with a large controlling shareholder.
- - Any theoretical third party offer for the minority shares of CCI would
require GTE cooperation, which we believe Merrill Lynch & Co. ("Merrill
Lynch") and PaineWebber Incorporated ("PaineWebber") would maintain
would be difficult to obtain.
- - The offer as made on September 8 represented a 27% premium to
the market price of the CCI Class A common shares one day prior to the
announcement.
- - Class A common shares have less than proportionate voting power (1 vote
versus 5 votes for Class B) and thus should be worth less than GTE's
holdings on a share-to-share basis. (Of late, however, low-vote
dual-class shareholders have often received the same payment as their
high-vote counterparts in takeover situations.)
- - The GTE offer's premium of 27% to the public trading price is
higher than other minority buyouts for comparable stakes of around 10%
(10-15% average premium).
- - Important closing prices include:
<TABLE>
<CAPTION>
CAGR TO GTE OFFER
DATE EVENT CLOSING PRICE(1) GTE OFFER PREMIUM
------- ------------------------------------ ---------------- --------- ---------
<S> <C> <C> <C> <C>
4/21/88 IPO of CCI $8.31 16.5% 170.7%
8/07/90 GTE and Contel Corp. agree to merge $16.00 8.4% 40.6%
3/14/91 Contel/GTE transaction completed $23.25 -0.9% -3.2%
9/08/94 GTE offers $22.50 cash for each
Class A common share $23.50 -25.9% -4.3%
11/4/94 Most recent close $24.25 NM -7.2%
</TABLE>
__________________________________
(1) Split adjusted. Source: FactSet Database.
-4-
<PAGE> 8
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER
VALUATION METHODOLOGY
- - Public market value of approximately $23.50 to $26.00 depending upon
publicly traded comparables. Based on comparable private market
transactions and discounted cash flow analysis, the intrinsic value of
the CCI operating assets is greater than the $22.50 per share offer.
- - Lazard has reviewed publicly available information on private market
sale transactions of selected companies and cellular markets comparable
to the CCI properties. Through this analysis, Lazard has derived a full
private market valuation for the controlled CCI MSAs of approximately
$2.7 billion as well as between approximately $1.6 billion and $2.1
billion for the CCI non-controlled MSAs. Applying similar techniques to
the CCI RSAs results in a value of $500+ million. The values are
summarized below:
<TABLE>
<CAPTION>
PRIVATE MARKET VALUE TOTAL EQUITY VALUE
PROPERTIES ($MM) PER TOTAL NET POP PER SHARE
- ------------------------------- -------------------- ----------------- ------------------
<S> <C> <C> <C>
MSAs (Controlled) $2,725 MM $211 $27.25
MSAs (Non-Controlled) $1,664 - $2,128 $280 - $357 $16.64 - $21.28
RSAs (Controlled/Clustered) $431 $130 $4.31
RSAs (Controlled/Non-Clustered) $52 $105 $0.52
RSAs (Non-Controlled) $89 $77 $0.89
Net Debt and Other Assets $(1,707) - $17.07
--------------- ----------- ---------------
Total Company (w/o PCS) $3,254 - $3,718 - $32.54 - $37.18
</TABLE>
- - Lazard has also performed a discounted cash flow analysis for CCI based
upon Management's forecasts and Alternative Cases with upside and
downside assumptions. The cases produce values as follows:
<TABLE>
<CAPTION>
DCF VALUE TOTAL CELLULAR ASSET VALUE TOTAL EQUITY VALUE
FOR PMV ($MM) PER NET POP PER SHARE
------------------ -------------------------- ------------------
<S> <C> <C> <C>
Upside Case $5,105 - $5,582 MM $200 - $220 $30.70 - $33.47
Management Case $4,866 - $5,344 $190 - $210 $28.31 - $33.08
Downside Case $4,627 - $5,105 $180 - $200 $25.92 - $30.70
</TABLE>
- - These valuations are before any value is assigned to elements of the
Competition Agreement. This would require further due diligence to ascertain
value.
-5-
<PAGE> 9
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
VALUE TO GTE
- - GTE would realize substantial benefits from the proposed consolidation
including elimination of:
(i) the limitations inherent in the existence of a minority interest,
including the restrictions on trading cellular assets with others
quickly and efficiently;
(ii) restrictive intercompany agreements including the Competition
Agreement;
(iii) potential conflicts of interest regarding connections to local
access companies (those belonging to GTE), international joint
ventures, PCS bidding and wireless data technology development;
and
(iv) procedural steps relating to the PCS division's ability to
approach the market with one brand (or fewer than the four used
today), which will be critical in the near future, when marketing
skills will be an important factor in successfully competing
against numerous other wireless competitors and in penetrating
larger segments of the population.
As a result, GTE should be willing to pay a premium for absolute control.
-6-
<PAGE> 10
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
TIMING ISSUES
- - Measuring the premium to public market value just prior to
the "squeeze-out" proposal is not definitive because of the
depressed level of the CCI share price prior to the transaction.
- The transaction proposed by GTE represents a 2.2% premium to the
highest public market trading value for the CCI Class A Common
Shares over the 52 weeks prior to announcement. (See page 8).
- - The Company's assets, due to trading and acquisitions, are worth more
per POP than when the Company went public. CCI has also sold off
various non-strategic properties, such as those in the Northeast, and
acquired various POPs, especially RSAs, that buttressed the Company's
clustering strategy and broadened its reach. Page 21 shows the
evolution and developing focus of the Company's domestic geographic
strategy.
- - The proposed transaction denies the minority shareholders a significant
potential upside on their CCI common shares after the minority
shareholders have borne the equity risk during the early and highest
risk phase of the Company's life cycle. By consolidating CCI in its
financials, GTE has enjoyed 100% of the benefit of the tax shield
generated by CCI's historical operating losses. GTE's offer to purchase
absolute control of CCI comes at the time when CCI is becoming
profitable (See Appendix II. G.) and is entering the growth phase of its
life cycle. CCI has among the highest growth prospects in the cellular
industry.
-7-
<PAGE> 11
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
STOCK PRICE PERFORMANCE: CCI VS. S&P 400
(Indexed Daily Close Price Comparison: 11/4/93 to 11/4/94)
[FIGURE 1]
-8-
<PAGE> 12
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
STOCK PRICE PERFORMANCE: CCI VS. CELLULAR INDEX(1)
(Indexed Weekly Close Price Comparison: 11/4/91 to 11/4/94)
[FIGURE 2]
__________________________________
(1) Cellular Index includes BCE Mobile, Commnet, Rogers Cantel, U.S. Cellular
and Vanguard.
-9-
<PAGE> 13
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
COMPARISON WITH PEERS
- - CCI management has continually demonstrated excellent performance
relative to that of its principal competitor, BellSouth. CCI compares
well to GTE Mobilnet and various other cellular providers and, adjusting
for differences in market dynamics, CCI's performance has been superior
in many respects.
<TABLE>
<CAPTION>
GTE SBC DLJ
STATISTIC CCI(1) MOBILNET(1) BELLSOUTH(1) COMM.(1) COMPOSITE(2)
- --------- ------ ----------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
- Avg. Cellular Service Rev.
Per Ave. Sub. Per Month $71 $69 $68 (3) NA $74
- Cellular Service Revenue Growth 53.1% 37.8% 29.8%(3) NA 24.2%
- OCF Margin 34.2% 41.2% 44.6% NA 47.1%
- Penetration 3.5% 4.1% 4.6%(4) 7.0%(5) 4.3%
- Subscriber Growth 59.6% 45.3% 39.0% 47.6% 29.3%
</TABLE>
- - That CCI's cellular service revenue growth and subscriber growth are high
relative to its peers while its OCF margin and penetration are low
underscores the fact that the Company's cellular markets are in an
earlier stage of their growth cycle than those of its peers. Thus, CCI's
total current private market value has a relatively high component of
present value of growth opportunities.
__________________________________
(1) Source: GTE Personal Communications Services. Data as of June 30, 1994.
(2) Source: Donaldson, Lufkin & Jenrette Wireless Communications Industry
report, dated Winter 1994. Data as of end of year-end 1994.
(3) Based on proportionate financial results.
(4) Subscribers used are proportionate.
(5) POPs from 1990 to 1993 restated to conform to Donaldson, Lufkin & Jenrette
Wireless Communications reports.
-10-
<PAGE> 14
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
"HIDDEN VALUE"
- - COMPETITION AND SERVICE AGREEMENTS
- CCI and GTE are parties to the Third Restated Competition Agreement
and a Service Agreement.
- Under the Service Agreement, CCI has funded approximately 40% of the
costs of GTE Mobilcom's international department--over $9 million
in contributions since 1991. Since that date, CCI has not separately
pursued any international wireless opportunities.
- In addition, CCI has funded approximately 40% of the costs of GTE
Mobilcom's PCS group, which is developing a bidding strategy for
GTE and its affiliates for the PCS auctions. CCI has not separately
pursued its own PCS strategy.
- Under the Third Restated Competition Agreement, CCI has a right to
acquire from GTE at GTE's cost any domestic or international assets
or operations acquired by GTE from any person or entity which relate
to the "Cellular Business". The right of first refusal is valuable
because, depending upon the business acquired, CCI can acquire all
or any portion of any Cellular Business acquired by GTE either for
CCI's own business or for possible resale to third parties.
- It is CCI's position that the right of first refusal applies to GTE
Mobilcom's pending international acquisitions, including those in
Argentina and Mexico, and to the PCS auctions, which would permit CCI
to "cherry pick" licenses won by GTE.
-11-
<PAGE> 15
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
"HIDDEN VALUE" (CONT'D)
- - The minority interests, well managed and spread throughout the country,
have been stellar performers for CCI and will continue to produce very
high levels of cash flow. For 1994, CCI's total minority interests
should produce at least $85 million(1) in cash flow. This value to CCI
to date has gone virtually unnoticed by the analyst community but will
become apparent shortly.
- - CCI has built a retail outlet distribution network that uniquely
positions the Company for market success in the coming years. It has
established 220 (by year-end 1994) outlet points in malls, kiosks, etc.
that directly interface with the customer, and which have provided CCI
with among the lowest average customer acquisition cost in the industry
($334 per "gross add" without promotions and $381 per "gross add" with
promotions versus $425 for the cellular industry(2) ). CCI has, when
possible, not committed itself to long-term contracts with independent
agent/dealers who normally would collect significant residual
commissions (based on a percentage of future revenues) from cellular
users.
- - The physical plant and network built by CCI is of very high quality and
will provide exceptional service for many years. Management initially
emphasized broad coverage and later added capacity as it was projected
to be needed. There will be a requirement, as all wireless carriers
have, to move to a fully digital system, but the basic network requires
little reconfiguration and represents an important competitive
advantage. Additionally, because the majority of its markets are still
in their high-growth stage and have sufficient capacity, Management
believes it is well positioned to wait out the industry-wide choice
between the two rival digital systems.
- - Management is of extremely high quality and has proven itself in the
marketplace, both domestically and, selectively, abroad. GTE, or any
other acquirer of CCI, will be the beneficiary of seasoned talent that
will be a critical factor in future wireless competition.
__________________________________
(1) This figure is an annualized nine-month number that does not take into
account the seasonal benefit of the fourth quarter.
(2) Management believes that estimates for the cellular industry range
from $350 to $500. Management reports that an industry-wide average is
difficult to measure due to industry-wide inconsistencies in accounting
method and disclosure.
-12-
<PAGE> 16
CONTEL CELLULAR INC.
COMMENTS ON MERRILL LYNCH/PAINEWEBBER VALUATION
MERRILL LYNCH/PAINEWEBBER ASSERTION
- - Summary Valuation (mid-point)
<TABLE>
<CAPTION> $ MM POP
---- ---
<S> <C> <C>
Total MSA Value $3,567 $188
Total RSA Value 382 90
------ ----
Total Value $3,950 $168
====== ====
</TABLE>
- - Transaction precedents date back two years.
- - CCI has relatively weak demographics (based on population density,
household income and traffic density).
- - High percentage of RSAs that will not realize MSA penetration.
COMMENTS
- - Reflects $250-350/POP value for best MSA markets versus $75-$125 for
poorest markets. Categorizes MSAs into seven groupings based on market
rank. 30% discount for lack of control.
- - Initial offer price of $22.50 is below high range of ML/PW analysis of
$24.38.
- - Does not differentiate by market for MSAs or by control/non-control for
RSAs.
- - No value for Competition Agreement rights.
- - Does not include GTE/Alltel Dallas transaction of $282 per POP for true
minority share holding
- - Does not take into account any demographic data predicting future growth.
- - Over 50% of CCI POPs are in Tennessee, Virginia and Alabama, all three of
which are expected to exhibit rapid economic growth.
- - Does not take into account the fact that many of CCI's RSAs were
purchased for the purpose of "connecting" MSAs for synergistic purposes.
-13-
<PAGE> 17
CONTEL CELLULAR INC.
COMMENTS ON MERRILL LYNCH/PAINEWEBBER VALUATION (CONT'D)
MERRILL LYNCH/PAINEWEBBER ASSERTION
- - Non-controlled MSA interests carry a 25-33% discount, and CCI has high
percentage of such interests relative to total CCI proportionate POPs.
- - CCI's current penetration is low.
- - CCI's POPs, as a whole "clearly have weaker standing than those of GTE."
They are "concentrated in areas with relatively weak demographics," "have
a relatively high percentage of RSAs" and non-control interests, and have
"relatively low" penetration.
- - CCI's operating results will slow significantly beyond 1999.
COMMENTS
- - Does not fully take into account the size, number and quality of CCI's
non-controlled MSA POPs.
- - SBC/CGE minority transaction valued 10% of Washington, D.C. and
Baltimore, MD at $323 per POP.
- - Alltel/GTE proposed transaction valued 10% of Dallas,TX at $282 per POP.
- - Does not give CCI's management well-deserved credit for front-loading
capital expenditures on many properties that were only recently built out
(sometimes 1-2 years later than most major MSAs). Many of CCI's
properties are still relatively early in their growth cycle.
- - GTE will not release detailed data to analyze.
- - Compared to other peers, CCI's controlled MSA interests are "valuable"
after taking into account the highly favorable growth-related demographic
statistics for stated markets.
- - Does not take into account CCI's "portfolio" of high-value,
non-controlled MSA interests.
- - Given the constant changes occurring in wireless communications (i.e.,
national consolidation/branding, telco alliances, PCS, wireless data,
etc.), how can one accurately predict the fate of a domestic cellular
provider more than five years into the future?
-14-
<PAGE> 18
CONTEL CELLULAR INC.
ALTERNATIVES AVAILABLE TO CCI INDEPENDENT BOARD AT TIME OF GTE'S INITIAL
OFFER
- - ACCEPT OFFER.
Issue: Initial offer is lower than figures indicated by initial valuation
methodologies and current stock price.
- - NEGOTIATE FOR HIGHER OFFER.
Issue: Must convince GTE and its bankers of appropriate valuation
parameters and of "hidden value."
- - PURSUE OTHER AVENUES SUCH AS SALE OF CCI OR CCI PURCHASE OF GTE MOBILNET.
Issue: Will involve cooperation of GTE, which may be difficult to
obtain, given strategic value of wireless and CCI to GTE. At the
same time, GTE's chief financial officer has indicated a
willingness to consider selling its Class B common shares if GTE
were to receive an offer that warranted consideration.
- - DO NOT ACCEPT OFFER.
Issue: When in the future will shareholders realize higher value and
what would happen to the share price in the interim?
-15-
<PAGE> 19
CONTEL CELLULAR INC.
ANALYSIS AT VARIOUS PRICES(1)
<TABLE>
<CAPTION>
PRICE @
GTE OFFER 11/04/94
--------- --------
<S> <C> <C> <C> <C> <C>
PRICE $22.50 $23.00 $24.25 $25.00 $27.00
-------- -------- -------- -------- --------
Number of Class A Common 10.0 10.0 10.0 10.0 10.0
Market Value of Class A Equity $223.9 $228.9 $241.3 $248.8 $268.7
Number of Class B Common 90.0 90.0 90.0 90.0 90.0
Market Value of Class B Equity $2,025.0 $2.070.0 $2,182.5 $2,250.0 $2,430.0
-------- -------- -------- -------- --------
Total Market Value Implied to Market $2,248.9 $2,298.9 $2,423.8 $2,498.8 $2,698.7
Actual Market Value (including Other Assets) $2,578.9 $2,628.9 $2,753.8 $2,828.8 $3,028.7
Notes Payable - Affiliates $1,985.8 $1,985.8 $1,985.8 $1,985.8 $1,985.8
Other 36.8 36.8 36.8 36.8 36.8
Minority Interests 14.8 14.8 14.8 14.8 14.8
Cash and Equivalents (0.7) (0.7) (0.7) (0.7) (0.7)
-------- -------- -------- -------- --------
Net Debt $2,037 $2,037 $2,037 $2,037 $2,037
International Assets $30.0 $30.0 $30.0 $30.0 $30.0
Wireless Data 300.0 300.0 300.0 300.0 300.0
-------- -------- -------- -------- --------
Other Assets (without PCS) $330.0 $330.0 $330.0 $330.0 $330.0
Market Capitalization $4,615.6 $4,665.5 $4,790.5 $4,865.4 $5,065.3
Other Assets (without PCS) ($330.0) ($330.0) ($330.0) ($330.0) ($330.0)
-------- -------- -------- -------- --------
Cellular Assets Value $4,285.6 $4,335.5 $4,460.5 $4,535.4 $4,735.3
Net PP&E (562.2) (562.2) (562.2) (562.2) (562.2)
-------- -------- -------- -------- --------
Cellular License Value $3,723.3 $3,773.3 $3,898.3 $3,973.2 $4,173.1
PCS [] [] [] [] []
MARKET CAPITALIZATION/
LTM Revenue of $461.5 10.0x 10.1x 10.4x 10.5x 11.0x
1994 Revenue of $374.0 12.3x 12.5x 12.8x 13.0x 13.5x
1995 Revenue of $603.3 (2) 7.7x 7.7x 7.9x 8.1x 8.4x
1996 Revenue $734.8 (2) 6.3x 6.3x 6.5x 6.6x 6.9x
LTM EBITDA of $106.7 43.3x 43.7x 44.9x 45.6x 47.5x
1994 EBITDA of $79.9 57.8x 58.4x 60.0x 60.9x 63.4x
1995 EBITDA of $221.1 (2) 20.9x 21.1x 21.7x 22.0x 22.9x
1996 EBITDA of $291.5 (2) 15.8x 16.0x 16.4x 16.7x 17.4x
LTM EBIT of $(7.4) NM NM NM NM NM
LTM EBIT of $(28.3) NM NM NM NM NM
1995 EBIT of $68.6 (2) 67.3x 68.0X 69.8x 70.9x 73.8x
1996 EBIT of $122.4 (2) 37.7x 38.1X 39.1x 39.7x 41.4x
PRICE (EXCLUDING OTHER ASSETS)/
LTM EPS of $(0.40) NM NM NM NM NM
1995 EPS of $0.04 (2) NM NM NM NM NM
1996 EPS of $0.41 (2) 54.9x 56.1x 59.1x 61.0x 65.9x
MARKET CAPITALIZATION/PROPORTIONATE POPS OF 23.9 $193 $195 $201 $204 $212
CELLULAR ASSET VALUE/PROPORTIONATE POPS OF 23.9 $180 $182 $187 $190 $198
CELLULAR LICENSE VALUE/PROPORTIONATE POPS OF 23.9 $156 $158 $163 $166 $175
<CAPTION>
<S> <C> <C> <C> <C> <C>
Mean of Eq.
PRICE $29.00 $31.00 $33.00 $35.00 Comps. (1)
-------- -------- -------- -------- ---------
Number of Class A Common 10.0 10.0 10.0 10.0
Market Value of Class A Equity $288.6 $308.5 $328.4 $348.3
Number of Class B Common 90.0 90.0 90.0 90.0
Market Value of Class B Equity $2,610.0 $2,790.0 $2,970.0 $3,150.0
-------- -------- -------- --------
Total Market Value Implied to Market $2,898.6 $3,098.5 $3,298.4 $3,498.3
Actual Market Value (including Other Assets) $3,228.6 $3,428.5 $3,628.4 $3,828.3
Notes Payable - Affiliates $1,985.8 $1,985.8 $1,985.8 $1,985.8
Other 36.8 36.8 36.8 36.8
Minority Interests 14.8 14.8 14.8 14.8
Cash and Equivalents (0.7) (0.7) (0.7) (0.7)
-------- -------- -------- --------
Net Debt $2,037 $2,037 $2,037 $2,037
International Assets $30.0 $30.0 $30.0 $30.0
Wireless Data 300.0 300.0 300.0 300.0
-------- -------- -------- --------
Other Assets (without PCS) $330.0 $330.0 $330.0 $330.0
Market Capitalization $5,265.2 $5,465.1 $5,665.0 $5,864.9
Other Assets (without PCS) ($330.0) ($330.0) ($330.0) ($330.0)
-------- -------- -------- --------
Cellular Assets Value $4,935.2 $5,135.1 $5,335.0 $5,534.9
Net PP&E (562.2) (562.2) (562.2) (562.2)
-------- -------- -------- --------
Cellular License Value $4,373.0 $4,572.9 $4,772.8 $4,972.7
PCS [] [] [] []
MARKET CAPITALIZATION/
LTM Revenue of $461.5 11.4x 11.8X 12.3 12.7x
1994 Revenue of $374.0 14.1x 14.6x 15.1x 15.7x
1995 Revenue of $603.3 (2) 8.7x 9.1x 9.4x 9.7x
1996 Revenue $734.8 (2) 7.2x 7.4x 7.7x 8.0x
LTM EBITDA of $106.7 49.4x 51.2x 53.1x 55.0x
1994 EBITDA of $79.9 65.9x 68.4x 70.9x 73.4x
1995 EBITDA of $221.1 (2) 23.8x 24.7x 25.6x 26.5x
1996 EBITDA of $291.5 (2) 18.1x 18.7x 19.4x 20.1x
LTM EBIT of $(7.4) NM NM NM NM
LTM EBIT of $(28.3) NM NM NM NM
1995 EBIT of $68.6 (2) 76.7x 79.7x 82.6x 85.5x
1996 EBIT of $122.4 (2) 43.0x 44.6x 46.3x 47.9x
PRICE (EXCLUDING OTHER ASSETS)/
LTM EPS of $(0.40) NM NM NM NM
1995 EPS of $0.04 (2) NM NM NM NM
1996 EPS of $0.41 (2) 70.7x 75.6x 80.5x 85.4x
MARKET CAPITALIZATION/PROPORTIONATE POPS OF 23.9 $221 $229 $237 $246 $188
CELLULAR ASSET VALUE/PROPORTIONATE POPS OF 23.9 $207 $215 $223 $232 $155
CELLULAR LICENSE VALUE/PROPORTIONATE POPS OF 23.9 $183 $192 $200 $208 $136
</TABLE>
- ---------------
(1) Includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers Cantel,
U.S. Cellular and Vanguard.
(2) Source for projections: Bear Stearns research report, dated January 19,
1994. Revenue numbers include immaterial amount of cellular equipment
revenue.
-16-
<PAGE> 20
CONTEL CELLULAR INC.
SUMMARY OF CCI VALUATION ANALYSES(1)
<TABLE>
<CAPTION>
TOTAL MARKET CAP VALUE TOTAL EQUITY VALUE(2) TOTAL EQUITY VALUE
PER NET POP ($MM) PER SHARE(3)
---------------------- --------------------- ------------------
<S> <C> <C> <C>
- Comparable Public Company Analysis $184 - $194 $2,352 - $2,591 $23.53 - $25.92
- Comparable Acquisition Transaction
Analysis(4)
- Full Private Market Value $222 - $241 $3,254 - $3,718 $32.56 - $37.20
ILLUSTRATIVE HYPOTHETICAL DISCOUNTS TO PRIVATE
MARKET VALUE
- 5% Discount to Private Market $211 - $229 $2,990 - $3,430 $29.91 - $34.32
Discount -5.0% - -5.0% -8.1% - -7.7% -8.1% - -7.7%
- 10% Discount to Private Market $199 - $217 $2,725 - $2,855 $27.27 - $31.44
Discount -10.0% - -10.0% -16.3% - -15.5% -16.3% - -15.5%
- 15% Discount to Private Market $188 - $205 $2,461 - $2,855 $24.62 - $28.56
Discount -15.0% - -15.0% -24.4% - -23.2% -24.4% - -23.2%
- Discounted Cash Flow Analysis
- Upside Case(5) $214 - $234 $3,068 - $3,546 $30.70 - $35.47
- Management Case $204 - $224 $2,829 - $3,307 $28.31 - $33.09
- Downside Case(6) $194 - $214 $2,591 - $3,068 $25.92 - $30.70
</TABLE>
- ----------------------------------
(1) Excludes any value for PCS.
(2) Based on 23.9 million pro forma 1994 MSA POPs.
(3) Based on 99,950,733 million shares.
(4) Per POP values are for MSA POPs. Excludes any premium for company-wide
clustering. Each Controlled/Clustered market RSA POP assumed to be
worth $130, each Controlled/Non Clustered RSA POP assumed to be worth
$105 and each Non-Controlled RSA POP assumed to be worth $77.
(5) Assumes 1.0% addition to Management Case in subscriber penetration, 1995
monthly cellular service per subscriber of $65 with a 0.1% annual
addition to Management Case and 0.5% addition to Management Case for
operating cash flow margin.
(6) Assumes 1.0% subtraction from Management Case in subscriber penetration,
1995 monthly cellular service per subscriber of $63 with a 0.1%
subtraction from Management Case and 0.5% substraction from Management
Case for operating cash flow margin.
-17-
<PAGE> 21
CONTEL CELLULAR INC.
SUMMARY OF CCI VALUATION ANALYSES (CONT'D)(1)
(Minority interest MSA s excluded from PMV discount)
<TABLE>
<CAPTION>
TOTAL MARKET CAP. VALUE TOTAL EQUITY VALUE(2) TOTAL EQUITY VALUE
PER NET POP ($MM) PER SHARE(3)
----------------------- --------------------- ------------------
<S> <C> <C> <C>
- Comparable Acquisition Transaction
Analysis(4)
- Full Private Market Value $222 - $241 $3,254 - $3,718 $32.56 - $37.20
ILLUSTRATIVE HYPOTHETICAL DISCOUNTS TO PRIVATE MARKET VALUE
- 5% Discount to Private Market $214 - $233 $3,073 - $3,537 $30.75 - $35.38
Discount -3.4% - -3.2% -5.6% - -4.9% -5.6% - -4.9%
- 10% Discount to Private Market $206 - $226 $2,892 - $3,355 $28.93 - $33.57
Discount -6.9% - -6.3% -11.1% - -9.8% -11.1% - -9.8%
- 15% Discount to Private Market $199 - $218 $2,710 - $3,174 $27.12 - $31.75
Discount -10.3% - -9.5% -16.7% - -14.6% -16.7% - -14.6%
</TABLE>
__________________________________
(1) Excludes any value for PCS.
(2) Based on 23.9 million pro forma 1994 MSA POPs.
(3) Based on 99,950,733 million shares.
(4) Per POP values are for MSA POPs. Excludes any premium for company-wide
clustering. Each Controlled/Clustered market RSA POP assumed to be
worth $130, each Controlled/Non Clustered RSA POP assumed to be worth
$105 and each Non-Controlled RSA POP assumed to be worth $77.
-18-
<PAGE> 22
CONTEL CELLULAR INC.
OVERVIEW OF CCI STRATEGIC PLAN
The following points summarize a hypothetical stand-alone strategic plan for
CCI prepared by Management:
- - NETWORK
- Continue to invest in CCI's cellular network and new technologies as
they become commercially available and cost-effective to implement.
- Remain a "fast-follower" in the adoption of new technologies as it is
not economical to fund independent research or beta testing and most
of the markets that CCI manages are not of a size or characteristic
that leading edge technology adoption would be a critical success
factor.
- Current networks are essentially 95+% digital ready and could
economically be brought to 100% if needed.
- Our networks will be at or above parity with competing cellular
carriers for the foreseeable future.
- - DISTRIBUTION
- Attract new subscribers through programs such as Residential Sales
(door-to-door contact and appointment setting), kiosks, retail
stores, customer direct, Sales Support, traditional agents and
national and regional power retailers are all channels that are and
will be used to sell new subscribers cellular service.
- As penetration rates increase and more subscribers are casual or
security users, reduce the costs associated with acquiring and
supporting those customers to increase operating margins. This
requirement is being carried out through the Company's volume
sensitive retail distribution strategy which leverages its fixed
costs.
-19-
<PAGE> 23
CONTEL CELLULAR INC.
OVERVIEW OF CCI STRATEGIC PLAN (CONT'D)
- - CUSTOMER SERVICE
- The Company currently has a tremendous investment in the customer
service side of its business; continue to support and advance the
capabilities, quality, timeliness and efficiency of this function at
a declining cost per average subscriber.
- Currently creating a centralized call center to maximize
efficiencies, increase customer service representative ("CSR")
productivity, reduce costs and enhance the quality of customer
service.
- Investment in interactive voice services to minimize personal
handling of routine questions and allow CSRs to handle more
complicated and involved questions on an individual basis.
- - BRANDING
- As a stand alone entity, would consider joining an alliance, e.g.
BAMS/NYNEX or AirTouch/US West, purchasing at a franchise fee the
AT&T logo for the "A side" markets, or some other configuration (to
include remaining as is) to be effective.
- With the probability of many new entrants in CCI's markets, the
current "goodwill" associated with the Contel Cellular and Cellular
One logos could well be sufficient to maintain market/name
recognition.
-20-
<PAGE> 24
CONTEL CELLULAR INC.
OVERVIEW OF CCI STRATEGIC PLAN (CONT'D)
- - INTERNATIONAL
- The Company has paid for approximately 40% of the cost of the GTE
International Department since the date of the merger to maintain
what CCI management believes is the right to participate in the
awarding of international cellular licenses.
- Pre-GTE international department was successful in obtaining a 10%
interest in a partnership in Mexico, was awarded the license (later
rescinded) in Hungary, was negotiating for licenses in Yugoslavia
(prior to the outbreak of internal conflict in that country), and was
looking at possible consortiums in other markets that would utilize
the CCI expertise in building and operating successful cellular
operations.
- On a stand alone basis, CCI would continue to pursue these efforts and
would continue to negotiate for small capital funding but large
ownership interests in exchange for technical and administrative
expertise.
- - PCS DEVELOPMENT
- The Company has paid for approximately 40% of the cost of the GTE PCS
development department since the date of the merger to maintain what
CCI management believes is the right to participate in the awarding of
PCS licenses.
- On a stand alone basis, the Company would fund its own PCS development
department and bid on those properties that would improve its wireless
footprint as either a stand-alone entity or as a partner in a larger
alliance.
- - WIRELESS DATA
- CCI has paid for approximately 40% of the cost of the GTE Wireless Data
Development Department since that department s inception.
- On a stand alone basis, the Company would form its own wireless data
development department and develop services to meet the needs of its
current and future business and individual customers.
-21-
<PAGE> 25
CONTEL CELLULAR INC.
OVERVIEW OF MANAGEMENT'S CLUSTERING STRATEGY(1)
- - CCI has long had a strategy of acquiring adjacent markets to form
"SuperSystems" to improve operating efficiencies, provide competitive
advantages in pricing, coverage and marketing programs, and enhance
networking capabilities. CCI currently operates various "SuperSystems"
including Virginia, California, Tennessee, El Paso, Louisville, MidWest
and Mobile.
- - The Company continues to acquire markets which enhance its contiguous
service capabilities and to dispose of markets that do not fit into
contiguous market clusters.
- - Prior to 1994 the Company was organized along the lines of two Regions,
with six Area locations. The South Region was located in Nashville and
was responsible for the Tennessee Area, Kentucky Area and Alabama Area.
The National Region was headquartered in Atlanta, and was responsible for
the Virginia Area, the California Area and the National Area (which
included all other markets).
- - In 1993 the Company completed an organization re-engineering analysis
with the recommendation that the Company be organized along the lines of
eight Areas, with separate Area Vice Presidents and staffs. The primary
objectives of the new organizational structure were to move operational
and support resources closer to the customers, position the organization
for future growth and to enhance the focus of management on their roles,
responsibilities and accountability to the customers within the markets
they served.
__________________________________
(1) Source: Management.
-22-
<PAGE> 26
CONTEL CELLULAR INC.
OVERVIEW OF MANAGEMENT'S CLUSTERING STRATEGY(1) (CONT'D)
(Total Controlled POPs)
<TABLE>
<CAPTION>
1989 1990 1991 1992
------------------- ------------------- ------------------- -------------------
NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT
AREA (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL
- ---- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama 0 0.0% 1,400 8.3% 1,362 7.7% 1,373 8.0%
Kentucky 87 0.9% 1,632 9.7% 1,655 9.4% 1,669 9.7%
Tennessee 0 0.0% 3,554 21.1% 4,494 25.5% 4,576 26.5%
Gulf Coast 740 7.7% 856 5.1% 828 4.7% 846 4.9%
Southwest 845 8.8% 936 5.6% 874 5.0% 892 5.2%
Virginia 2,577 26.7% 2,765 16.4% 2,764 15.7% 2,837 16.4%
California 1,814 18.8% 2,091 12.4% 2,171 12.3% 2,246 13.0%
Midwest 2,110 21.9% 2,096 12.4% 1,960 11.1% 1,774 10.3%
Arkansas 473 4.9% 505 3.0% 493 2.8% 0 0.0%
Northeast 990 10.3% 1,007 6.0% 1,052 6.0% 1,053 6.1%
----- ----- ------ ----- ------ ----- ------ -----
Subtotal
-- Southeast
Cluster 3,790 39.3% 9,080 53.9% 9,940 56.3% 9,630 55.8%
Total ----- ----- ------ ----- ------ ----- ------ -----
9,636 100.0% 16,842 100.0% 17,652 100.0% 17,265 100.0%
===== ===== ====== ===== ====== ===== ====== =====
<CAPTION>
1993 PF 1994
------------------ -------------------
NET POP PERCENT NET POPS PERCENT
AREA (000s) OF TOTAL (000s) OF TOTAL
- ---- ------- -------- -------- --------
<S> <C> <C> <C> <C>
Alabama 1,349 7.7% 1,860 11.1%
Kentucky 1,701 9.7% 1,445 8.7%
Tennessee 4,844 27.7% 5,030 30.1%
Gulf Coast 868 5.0% 868 5.2%
Southwest 912 5.2% 912 5.5%
Virginia 2,850 16.3% 2,850 17.1%
California 2,155 12.3% 1,866 11.2%
Midwest 1,688 9.6% 1,688 10.1%
Arkansas 0 0.0% 0 0.0%
Northeast 1,136 6.5% 168(2) 1.0%
------ ----- ------ -----
Subtotal
--Southeast
Cluster 9,911 56.6% 10,608 63.6%
Total ------ ----- ------ -----
17,503 100.0% 16,687 100.0%
====== ===== ====== =====
</TABLE>
- ---------------
(1) Source: Management.
(2) Pro forma for the sale of the Binghamton, Elmira, Burlington and Manchester
MSAs.
-23-
<PAGE> 27
CONTEL CELLULAR INC.
OVERVIEW OF MANAGEMENT'S CLUSTERING STRATEGY(1) (CONT'D)
(Total Controlled POPs)
<TABLE>
<CAPTION>
1989 1990 1991 1992
------------------- ------------------- ------------------- -------------------
NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT
AREA (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL
- ---- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama 0 0.0% 1,346 10.2% 1,307 9.9% 1,329 10.1%
Kentucky 0 0.0% 1,262 9.6% 1,249 9.5% 1,260 9.6%
Tennessee 0 0.0% 3,508 26.6% 3,497 26.5% 3,569 27.2%
Gulf Coast 740 10.8% 856 6.5% 828 6.3% 846 6.4%
Southwest 727 10.6% 739 5.6% 739 5.6% 766 5.8%
Virginia 2,233 32.6% 2,276 17.2% 2,278 17.3% 2,345 17.8%
California 1,325 19.4% 1,365 10.3% 1,427 10.8% 1,479 11.3%
Midwest 974 14.2% 961 7.3% 975 7.4% 983 7.5%
Arkansas 297 4.3% 327 2.5% 322 2.4% 0 0.0%
Northeast 548 8.0% 563 4.3% 562 4.3% 562 4.3%
----- ----- ------ ----- ------ ----- ------ -----
Subtotal --
Southeast
Cluster 3,270 47.8% 8,313 63.0% 8,232 62.4% 8,089 61.6%
----- ----- ------ ----- ------ ----- ------ -----
Total 6,844 100.0% 13,202 100.0% 13,183 100.0% 13,138 100.0%
===== ===== ====== ===== ====== ===== ====== =====
<CAPTION>
1993 PF 1994
------------------- -------------------
NET POPS PERCENT NET POPS PERCENT
AREA (000s) OF TOTAL (000s) OF TOTAL
- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Alabama 1,349 10.2% 1,734 13.3%
Kentucky 1,282 9.7% 1,282 9.8%
Tennessee 3,603 27.3% 3,603 27.6%
Gulf Coast 868 6.6% 868 6.7%
Southwest 786 5.9% 786 6.0%
Virginia 2,346 17.7% 2,346 18.0%
California 1,530 11.6% 1,530 11.7%
Midwest 895 6.8% 895 6.9%
Arkansas 0 0.0% 0 0.0%
Northeast 563 4.3% 0(2) 0.0%
------ ------ ------ -----
Subtotal --
Southeast
Cluster 8,166 61.8% 8,551 65.6%
------ ----- ------ -----
Total 13,221 100.0% 13,043 100.0%
====== ===== ====== =====
</TABLE>
- ---------------
(1) Source: Management.
(2) Pro forma for the sale of the Binghamton, Elmira, Burlington and Manchester
MSAs.
-24-
<PAGE> 28
CONTEL CELLULAR INC.
DEMOGRAPHIC OVERVIEW OF TENNESSEE, VIRGINIA AND ALABAMA(1)
- - 66% of CCI's Controlled MSA POPs are in the Southeast, including
Tennessee (28%), Virginia (18%) and Alabama (13%)(2). Given material
reliance of CCI's performance on the future prospects of these three
states, a demographic overview is helpful.
<TABLE>
<CAPTION>
STATISTIC U.S. TENNESSEE VIRGINIA ALABAMA
- ---------------------------------------- ------- --------- -------- -------
<S> <C> <C> <C> <C>
Expected CAGR of Population Growth: 1.1% 1.2% 1.1% 0.7%
1990-1995
Median Household Income $31,241 $34,882 $45,090 $34,930
% of Population Between 25 and 44 32.5% 31.8% 34.5% 30.5%
CAGR of Civilian Labor Force: 1990-1993 0.9% 0.9% 1.9% 1.6%
CAGR of Wholesale and Retail Trade: 3.17% 3.28% 3.10% 2.83%
1990-1995
1993 Unemployment Rate 6.8% 7.3% 6.5% 8.1%
</TABLE>
- - The above statistics support the fact that the majority of CCI's POPs are
in geographic locations that are ideal for the cellular business in that,
relative to the country as a whole (which will rely mostly on increases
in penetration), there is still tremendous growth to be expected in
number of total POPs as well as subscribers.
- --------------------
(1) Source: American Business Climate and Economic Profiles (1994).
(2) Source: Management.
-25-
<PAGE> 29
CONTEL CELLULAR INC.
MANAGEMENT'S RECORD IN MEETING BUDGET(1)
MANAGEMENT HAS LARGELY ACHIEVED OR SURPASSED PREDICTED RESULTS.
- - As shown below, Management has a clear understanding of CCI's business
and is able to skillfully and conservatively project the Company's
operating performance into the future. Unfavorable variances only occur
as a result of the trade-off between penetration growth and operating
cash flow margins typical of a cellular company in an earlier stage of
its growth cycle relative to many of its MSA peers.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPT 30,
--------------------------------------------------- ------------------------
1992 1993 1994
----------------------- ------------------------ ------------------------
STATISTIC BUD. ACT. VAR.(2) BUD. ACT. VAR.(2) Bud. Act. Var.(2)
- ------------------------------ ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - Annualized Subscriber Growth 39% 43% 10% 32% 59% 84% 44% 44% -1%(3)
- - Average Monthly Churn Rate 2.25% 2.28% -1% 2.17% 2.02% 7% 2.03% 2.17% -7%
- - Ending Penetration 1.74% 2.07% 19% 2.55% 3.18% 25% 3.74% 4.17% 11%
- - Service Rev. Per. Avg. Sub.
(Excl. Equip. & Promos.) $92 $79 -14% $79 $72 -9% $78 $74 -5%
- - MOU Per Avg. Subscriber 165 138 -16% 130 141 9% 124 142 14%
- - Operating Cash Flow Margin 37.0% 17.4% -53% 33.1% 25.2% -24% 34.0% 33.8% -1%
- - Cost Per Gross Add. (Excl.
Promos.) $381 $431 -13% $394 $363 8% $319 $345 -8%
- - Equity from L.P.'s ($MM) $19.8 $29.0 47% $32.3 $37.4 16% $32.2 $48.5 51%
</TABLE>
- --------------------
(1) Source of financial information: Management.
(2) Favorable variances from budget are positive while unfavorable variances
from budget are negative. For example, both a growth in subscribers and a
reduction in churn relative to budget will yield positive variances.
(3) Actual is 1% unfavorable relative to budget when additional decimal
places are shown.
-26-
<PAGE> 30
CONTEL CELLULAR INC.
RELATIONSHIPS WITH GTE MOBILNET
- - COMPETITION AGREEMENT
- Management maintains that CCI has a right of first refusal with
respect to future GTE acquisitions in the "Cellular Business" except
for (i) acquisitions of minority interests in cellular properties
held by GTE Mobilnet, and (ii) acquisitions contemplated at the time
of the merger which were specifically listed in the Competition
Agreement. This Agreement is not limited by geography.
- Management believes, for a variety of reasons, that the term
"Cellular Business" includes PCS.
- - SERVICES AGREEMENT
- In exchange for services including, or that have included,
accounting, finance, marketing, human resources, international
business development, engineering, network design and maintenance
services, CCI has reimbursed GTE for its expenses in accordance with
a cost allocation formula which allocates pools of costs to
operating units based on various factors.
- Under the Service Agreement, CCI's consolidated and unconsolidated
business units paid GTE approximately $45 million in fiscal year
1993, representing approximately 41% of GTE's total expenses during
that period.
-27-
<PAGE> 31
CONTEL CELLULAR INC.
RELATIONSHIPS WITH GTE MOBILNET (CONT'D)
- - INTER-COMPANY BORROWING
- The long-term borrowings by CCI from GTE are set forth in the table
in Appendix I.A. The weighted average annual interest rate (based
on note principal amount) of the notes equals 9.31%.
- As disclosed in CCI's proxy statement for the annual meeting of
stockholders held on June 1, 1994, CCI has borrowed approximately
$1.55 billion (as set forth above) from GTE in long-term debt as of
April 15, 1994.
- The fair market value of CCI shares is dependent upon these interest
rates being no worse than that which could be obtained from third
party sources.
- - SHARED OPERATIONS
- As mentioned above, CCI (which pays approximately 40% of costs) and
GTE Mobilnet share certain services for efficiency purposes as
governed by the Services Agreement. Among other functions, these
include a common International Department and PCS Development
Department.
- Management believes that a potential GTE acquisition of CCI would
allow GTE greater operating flexibility by allowing strategy in
these areas to be focused solely on potential benefits to GTE
Mobilnet and by removing CCI's right of first refusal for
acquisitions in these businesses.
-28-
<PAGE> 32
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES
(Amounts in millions, except per POP data)
<TABLE>
<CAPTION>
AIR TOUCH BCE MOBILE COMMNET CENTENNIAL
COMPANY COMMUNICATIONS COMMUNICATIONS(b1) CELLULAR CELLULAR
- ------- -------------- ------------------ ------------- ----------
<S> <C> <C> <C> <C>
Price @ 11/04/94 $ 27.88 $ 30.98 $ 28.00 $ 16.75
MV of Equity (Fully Diluted) $ 13,758.7 $2,145.9 $ 413.4 $ 417.8
Market Capitalization 13,480.0 2,422.4 554.7 774.8
Cellular Asset Value 6,197.2 2,285.4 532.2 772.0
Cellular License Value(1) 5,430.7 1,797.0 465.4 736.1
Total # of Pops 35.0 15.7 3.2 6.0
Market Capitalization per
Total Net POP $ 385 $ 154 $ 176 $ 129
Asset Value per Total Net POP 177 146 169 129
Cellular License Value per
Total Net POP(1) 155 114 147 123
</TABLE>
<TABLE>
<CAPTION>
CONTEL ROGERS UNITED STATES VANGUARD
COMPANY CELLULAR(e1) CANTEL(f1) CELLULAR CELLULAR
- ------- -------------- ------------------ ------------- ----------
<S> <C> <C> <C> <C>
Price @ 11/04/94 $ 24.25 $ 31.63 $ 32.25 $ 27.06
MV of Equity (Fully Diluted) $ 2,754.1 $2,969.5 $ 2,509.3 $1,051.5
Market Capitalization 4,790.8 3,738.2 2,594.2 1,337.5
Cellular Asset Value 4,460.8 3,645.2 2,575.7 1,316.0
Cellular License Value(1) 3,971.4 2,923.4 2,294.9 1,234.5
Total # of Pops 23.9 23.7 23.6 6.5
Market Capitalization per
Total Net POP $ 201 $ 158 $ 110 $ 207
Asset Value per Total Net POP 187 154 109 204
Cellular License Value per
Total Net POP(1) 166 123 97 191
</TABLE>
- ---------------
(1) Excludes working capital.
-29-
<PAGE> 33
CONTEL CELLULAR INC.
CCI and GTE vs. S&P 400
(Indexed Daily Close Price Comparison: 8/1/94 to 11/4/94)
[FIGURE 3]
-30-
<PAGE> 34
CONTEL CELLULAR INC.
CONTEL CELLULAR VS. S&P 400
(Indexed Weekly Close Price Comparison: 4/21/88 to 11/4/94)
[FIGURE 4]
-31-
<PAGE> 35
CONTEL CELLULAR INC.
CONTEL CELLULAR VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 11/4/93 to 11/4/94)
[FIGURE 5]
- --------------------
(1) Cellular Index includes BCE Mobile, Centennial, Commnet, Rogers Cantel,
U.S. Cellular and Vanguard.
-32-
<PAGE> 36
CONTEL CELLULAR INC.
CONTEL CELLULAR VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 5/4/94 to 11/4/94)
[FIGURE 6]
- --------------------
(1) Cellular Index includes AirTouch, BCE Mobile, Centennial, Commnet, Rogers
Cantel, U.S. Cellular and Vanguard.
-33-
<PAGE> 37
CONTEL CELLULAR INC.
CONTEL CELLULAR VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 9/7/94 to 11/4/94)
[FIGURE 7]
- --------------------
(1) Cellular Index includes AirTouch, BCE Mobile, Centennial, Commnet, Rogers
Cantel, U.S. Cellular and Vanguard.
-34-
<PAGE> 38
CONTEL CELLULAR INC.
CONTEL CELLULAR AND GTE VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 1/1/94 to 11/4/94)
[FIGURE 8]
- --------------------
(1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers
Cantel, U.S. Cellular and Vanguard.
-35-
<PAGE> 39
CONTEL CELLULAR INC.
AIRTOUCH COMMUNICATIONS AND BCE MOBILE COMMUNICATIONS VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 1/1/94 to 11/4/94)
[FIGURE 9]
- --------------------
(1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers
Cantel, U.S. Cellular and Vanguard.
-36-
<PAGE> 40
CONTEL CELLULAR INC.
COMMNET CELLULAR AND CENTENNIAL CELLULAR VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 1/1/94 to 11/4/94)
[FIGURE 10]
- --------------------
(1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers
Cantel, U.S. Cellular and Vanguard.
-37-
<PAGE> 41
CONTEL CELLULAR INC.
ROGERS CANTEL, U.S. CELLULAR AND VANGUARD CELLULAR VS. CELLULAR INDEX(1)
(Index Daily Close Price Comparison: 1/1/94 to 11/4/94)
[FIGURE 11]
- --------------------
(1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers
Cantel, U.S. Cellular and Vanguard.
-38-
<PAGE> 42
CONTEL CELLULAR INC.
HYPOTHETICAL PRE-TAX PRIVATE MARKET VALUATION
<TABLE>
<CAPTION>
PMV PER NET POP
---------------
ESTIMATED
PM
VALUATION
CCI ($000S,EXCEPT
(MM) $ POP $ POP PER SHARE)
----- ----- ----- -----------------
<S> <C> <C> <C> <C> <C>
CELLULAR OPERATIONS
1994 Net MSA POPs (Controlled) (1) 12.9 $211 $211 $2,725 $2,725
1994 Net MSA POPs (Non-Controlled)(1)(2) 5.9 $280 $357 1,664 2,128
1994 Net RSA POPs (Controlled/Clustered)(3) 3.3 $130 $130 431 431
1994 Net RSA POPs (Controlled/Non-Clustered)(4) 0.5 $105 $105 52 52
1994 Net RSA POPs (Non-Controlled)(5) 1.2 $77 $77 89 89
------ ------
TOTAL CELLULAR ASSET VALUE $4,961 $5,425
------ ------
International Assets 30 30
Wireless Data 300 300
------ ------
TOTAL ASSET VALUE $5,291 $5,755
Less Net Debt 2,037 (2,037)
------ ------
TOTAL EQUITY VALUE 3,254 3,718
------ ------
Fully Diluted Shares (MM) 100 100
------ ------
EQUITY VALUE PER SHARE $32.56 $37.20
====== ======
PCS Rights (Competition Agreement) ? ?
</TABLE>
- --------------------------------------
(1) Per POP valuation range based on adjusted regression of comparable
private market transactions.
(2) Top 100 non-controlled MSAs include no discount for lack of control.
(3) Controlled/Clustered market RSA POPs assumed to be worth $130 each.
(4) Controlled/Non-Clustered RSA POPs assumed to be worth $105 each.
(5) Non-Controlled RSA POPs assumed to be worth $77 each.
-39-
<PAGE> 43
CONTEL CELLULAR INC.
REGRESSION/DEMOGRAPHIC ANALYSIS OF CCI PRIVATE MARKET VALUE
- - The comparison of CCI demographics in Appendix I.C. illustrates the
attractiveness of the CCI cellular markets vis-a-vis a "U.S." composite
of all MSA cellular markets.
- Lazard has categorized CCI's market based on its view of how each
market rates according to these four binary criteria:
CRITERION BINARY TOGGLE (1/0)
--------------------------------- ----------------------------------
Expected Population Growth Greater or less than U.S. average
Median Household Income Greater or less than U.S. average
Average Number of Minutes to Work Greater or less than U.S. average
of 30+ minutes as percent of total
commuters
Contiguous to Other (CCI MSAs Contiguous or not(1)
or RSAs)
- For each of CCI's MSA markets, Lazard arrived at a total "valuation
adjustment score" for each market by applying a 5% premium for each
criterion for which each market achieved a "1" and applying a 5%
discount for each criterion for which said market achieved a "0".
- After performing a regression analysis (for which MSA rank was the
endogenous variable and private market value of MSA was the
exogenous variable) on all statistically relevant MSA transactions
since July 1993, Lazard assigned each CCI MSA market a base value
and, after taking into account CCI's ownership percentage, adjusted
that value for the particular market valuation adjustment
percentage.
- Each market was adjusted by its respective adjustment percentage and
then totaled. To this total was added the value of all CCI RSAs
(assuming $130 per Controlled/Clustered RSA POP, $105 per
Controlled/Non-Clustered RSA POP and $77 per Non-Controlled RSA POP)
and the value of all other assets, including CCI's international
holdings and its expected wireless data business. No value has been
attributed to PCS; Lazard is awaiting further information.
- Lazard arrived at the market value of equity by subtracting net debt
from this total and then calculated the accompanying equity value
per share.
- -------------------------------
(1) Always "1" for Non-controlled MSAs due to ownership value to majority
holder.
-40-
<PAGE> 44
CONTEL CELLULAR INC.
SUMMARY OF VALUATION BY METROPOLITAN STATISTICAL AREA(1)
(millions, except per POP)
<TABLE>
<CAPTION>
UNADJ. REG. ADJ. REG.
TOT. POPS NET POPS PER POP PER POP
MARKET MSAs NUM. RANK (000s) % OWNED (000s) VALUE ADJ. % VALUE MINORITY?
- ---------------- ---- ---- --------- ------- -------- ----------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Controlled
Memphis, TN 1 36 1,030 100.0% 1,030 $243 -10.0% $219 N
Louisville, KY 2 37 931 100.0% 931 $242 -10.0% $218 N
Birmingham, AL 3 41 904 100.0% 904 $240 0.0% $240 N
Norfolk, VA 4 43 1,021 95.0% 970 $239 20.0% $286 N
Nashville, TN 5 46 1,052 100.0% 1,052 $237 10.0% $261 N
Richmond, VA 6 59 798 95.0% 758 $229 10.0% $252 N
Fresno, CA 7 74 735 92.0% 677 $220 0.0% $220 N
Knoxville, TN 8 79 544 94.1% 512 $217 0.0% $217 N
El Paso, TX 9 81 653 100.0% 653 $215 -10.0% $194 N
Mobile, AL 10 83 511 100.0% 511 $214 -10.0% $193 N
Johnson City, TN 11 85 457 100.0% 457 $213 -10.0% $192 N
Chattanooga, TN 12 88 451 100.0% 451 $211 -10.0% $190 N
Bakersfield, CA 13 97 618 92.0% 569 $206 0.0% $206 N
Davenport, IA 14 98 362 100.0% 362 $205 -10.0% $185 N
Newport News, VA 15 104 475 95.0% 451 $201 10.0% $221 N
Lexington, KY 16 116 368 100.0% 368 $194 -10.0% $175 N
Evansville, IN 17 119 318 88.9% 283 $192 -10.0% $173 N
Pensacola, FL 18 127 375 100.0% 375 $187 0.0% $187 N
Rockford, IL 19 131 301 59.0% 178 $185 10.0% $203 N
Visalia, CA 20 150 348 92.0% 320 $173 0.0% $173 N
Roanoke, VA 21 157 240 40.0% 96 $169 -10.0% $152 N
Clarksville, TN 22 209 172 100.0% 172 $137 -10.0% $123 N
Tuscaloosa, AL 23 222 161 80.4% 130 $129 0.0% $129 N
Florence, AL 24 226 138 91.1% 126 $127 -10.0% $114 N
Petersburg, VA 25 235 131 95.0% 124 $121 -10.0% $109 N
Anniston, AL 26 249 116 100.0% 116 $113 -10.0% $101 N
Gladsen, AL 27 272 101 90.0% 91 $99 -10.0% $89 N
Las Cruces, NM 28 285 154 100.0% 154 $91 0.0% $91 N
Owensboro, KY 29 293 90 88.9% 80 $86 -10.0% $77 N
Total (Controlled) 13,556 12,899
ADJUSTMENT FOR OVERALL CLUSTERING STRATEGY OF 0.0%
<CAPTION>
MIN. ADJ. REG. PMV OF
PER POP MARKET
MARKET MSAs % DISCOUNT VALUE ($MM)
- ----------- ---------- -------------- ------
<S> <C> <C> <C>
Controlled
Memphis, TN 0.0% $219 $225
Louisville, KY 0.0% $218 $203
Birmingham, AL 0.0% $240 $217
Norfolk, VA 0.0% $286 $278
Nashville, TN 0.0% $261 $274
Richmond, VA 0.0% $252 $191
Fresno, CA 0.0% $220 $149
Knoxville, TN 0.0% $217 $111
El Paso, TX 0.0% $194 $127
Mobile, AL 0.0% $193 $98
Johnson City, TN 0.0% $192 $88
Chattanooga, TN 0.0% $190 $86
Bakersfield, CA 0.0% $206 $117
Davenport, IA 0.0% $185 $67
Newport News, VA 0.0% $221 $100
Lexington, KY 0.0% $175 $64
Evansville, IN 0.0% $173 $49
Pensacola, FL 0.0% $187 $70
Rockford, IL 0.0% $203 $36
Visalia, CA 0.0% $173 $55
Roanoke, VA 0.0% $152 $15
Clarksville, TN 0.0% $123 $21
Tuscaloosa, AL 0.0% $129 $17
Florence, AL 0.0% $114 $14
Petersburg, VA 0.0% $109 $14
Anniston, AL 0.0% $101 $12
Gladsen, AL 0.0% $89 $8
Las Cruces, NM 0.0% $91 $14
Owensboro, KY 0.0% $77 $6
Total (Controlled) $211 $2,725
==== ======
ADJUSTMENT FOR OVERALL
CLUSTERING STRATEGY OF 0.0% $211 $2,725
==== ======
</TABLE>
- ---------------
(1) Source: 1993 Donnelly Marketing Information Services.
-41-
<PAGE> 45
CONTEL CELLULAR INC.
SUMMARY OF VALUATION BY METROPOLITAN STATISICAL AREA(1) -- (CONT'D)
(MILLIONS, EXCEPT PER POP)
<TABLE>
<CAPTION>
UNADJ. REG. ADJ. REG.
TOT. POPS NET POPS PER POP PER POP
NON-CONTROLLED NUM. RANK (000s) % OWNED (000s) VALUE ADJ. % VALUE
- -------------- ---- ---- --------- ------- -------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles, CA 1 2 14,719 11.2% 1,648 $264 20.0% $316
San Francisco, CA 2 7 3,832 11.3% 431 $261 10.0% $287
Washington, DC 3 8 3,804 35.3% 1,342 $260 10.0% $286
Houston, TX 4 10 3,900 4.4% 172 $259 20.0% $311
Minneapolis, MN 5 15 2,569 30.0% 771 $256 10.0% $281
San Jose, CA 6 27 1,542 11.3% 173 $248 10.0% $273
San Antonio, TX 7 33 1,383 30.0% 415 $245 0.0% $245
Sacramento, CA 8 35 1,480 1.0% 15 $244 10.0% $268
Jacksonville, FL 9 51 1,004 14.2% 143 $234 10.0% $257
Greenville, SC 10 67 667 10.8% 72 $224 -10.0% $202
Oxnard, CA 11 73 697 11.2% 78 $220 10.0% $242
Austin, TX 12 75 874 3.0% 26 $219 0.0% $219
Albuquerque, NM 13 86 590 49.0% 289 $212 0.0% $212
Beaumont, TX 14 101 384 4.4% 17 $203 0.0% $203
Stockton, CA 15 107 517 1.0% 5 $200 10.0% $219
Vallejo, CA 16 111 489 11.3% 55 $197 20.0% $236
Santa Rosa, CA 17 123 411 11.3% 46 $190 20.0% $228
Santa Barbara, CA 18 124 378 39.0% 148 $189 0.0% $189
Salinas, CA 19 126 372 11.3% 42 $188 10.0% $207
Modesto, CA 20 142 415 1.0% 4 $178 0.0% $178
Galveston, TX 21 170 237 4.4% 10 $161 10.0% $177
Reno, NV 22 171 280 1.0% 3 $160 10.0% $176
Santa Cruz, CA 23 174 230 11.3% 26 $159 10.0% $174
Chico, CA 24 215 198 1.0% 2 $133 0.0% $133
Anderson, SC 25 227 147 10.8% 16 $126 -10.0% $113
Redding, CA 26 254 167 1.0% 2 $110 0.0% $110
Yuba City, CA 27 274 136 1.0% 1 $97 0.0% $97
Total (Non-Controlled) 41,423 5,952
Total (Non-Controlled)-Cash Flow Valuation
<CAPTION>
MIN. ADJ. REG. PMV OF
PER POP MARKET
NON-CONTROLLED MINORITY? % DISCOUNT VALUE ($MM)
- -------------- --------- ---------- -------------- -------
<S> <C> <C> <C> <C>
Los Angeles, CA Y 0.0% $316 $522
San Francisco, CA Y 0.0% $287 $124
Washington, DC Y 0.0% $286 $384
Houston, TX Y 0.0% $311 $53
Minneapolis, MN Y 0.0% $281 $217
San Jose, CA Y 0.0% $273 $47
San Antonio, TX Y 0.0% $245 $102
Sacramento, CA Y 0.0% $268 $4
Jacksonville, FL Y 0.0% $257 $37
Greenville, SC Y 0.0% $202 $15
Oxnard, CA Y 0.0% $242 $19
Austin, TX Y 0.0% $219 $6
Albuquerque, NM Y 0.0% $212 $61
Beaumont, TX Y 0.0% $203 $3
Stockton, CA Y 0.0% $219 $1
Vallejo, CA Y 0.0% $236 $13
Santa Rosa, CA Y 0.0% $228 $11
Santa Barbara, CA Y 0.0% $189 $28
Salinas, CA Y 0.0% $207 $9
Modesto, CA Y 0.0% $178 $1
Galveston, TX Y 0.0% $177 $2
Reno, NV Y 0.0% $176 $0
Santa Cruz, CA Y 0.0% $174 $5
Chico, CA Y 0.0% $133 $0
Anderson, SC Y 0.0% $113 $2
Redding, CA Y 0.0% $110 $0
Yuba City, CA Y 0.0% $97 $0
Total (Non-Controlled) $280 $1,664
Total (Non-Controlled)-Cash Flow Valuation $357 $2,128
</TABLE>
- ---------------
(1) Source: 1993 Donnelly Marketing Information Services.
-42-
<PAGE> 46
CONTEL CELLULAR INC.
CASH FLOW VALUATION OF MINORITY INTEREST MSAs
ANALYSIS OF MINORITY INTEREST CASH
FLOW MULTIPLES
(AMOUNTS IN MILLIONS)
MULTIPLE CALCULATIONS
<TABLE>
<CAPTION>
PROJECTED DOMESTIC
CELLULAR SERVICE REVENUE ($MM)
--------------------------------- STOCK CELLULAR
COMPANY 1994 1995 1996 PRICE ASSET VALUE
- ------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
AirTouch(1) $524.6 $673.6 $818.8 $27.88 $6,720
Growth -- 28.4% 21.6%
BCE Mobile Comm.(2) $151.7 $202.3 $255.1 $42.00 $3,125
Growth -- 33.4% 26.1%
Centennial Cellular(3) $23.1 $28.8 $37.0 $16.75 $774
Growth -- 24.7% 28.5%
Rogers Cantel(4) $191.7 $235.6 $291.7 $31.63 $3,678
Growth -- 22.9% 23.8%
U.S. Cellular(5) $80.0 $150.8 $237.0 $32.25 $2,581
Growth -- 88.5% 57.2%
Vanguard Cellular(6) $41.5 $70.6 $101.7 $27.06 $1,343
Growth -- 70.1% 44.1%
Mean of Comparables $168.8 $227.0 $290.2
Growth -- 34.5% 27.9%
CCI Projected OCF of Significant Minority Interests(7)
Growth -- 34.5% 27.9%
Cellular Asset Value of Significant Minority Interests
Net POPs
Cellular Asset Value per net POP
</TABLE>
<TABLE>
<CAPTION>
MARKET CAP/PROJECTED OCF
---------------------------------
COMPANY 1994 1995 1996
- ------- ------ ------ ------
<S> <C> <C> <C>
AirTouch(1) 12.8x 10.0x 8.2x
Growth
BCE Mobile Comm.(2) 20.6x 15.4x 12.2x
Growth
Centennial Cellular(3) 33.5x 26.9x 20.9x
Growth
Rogers Cantel(4) 19.2x 15.6x 12.6x
Growth
U.S. Cellular(5) 32.3x 17.1x 10.9x
Growth
Vanguard Cellular(6) 32.4x 19.0x 13.2x
------ ------ ------
Growth
Mean of Comparables 25.1x 17.3x 13.0x
Growth
CCI Projected OCF of Significant Minority Interests(7) $84.7 $113.9 $145.7
------ ------ ------
Growth -- 34.5% 27.9%
Cellular Asset Value of Significant Minority Interests $2,128 $1,975 $1,895
Net POPs 5,549 5,549 5,549
Cellular Asset Value per net POP $383 $356 $342
</TABLE>
- ---------------
(1) Source: Prudential Securities research report, dated May 16, 1994.
(2) Source: Salomon Brothers research report, dated August 31, 1994. Assumes
C$ = $0.74 $US.
(3) Source: Merrill Lynch Capital Markets research report, dated December 17,
1993.
(4) Source: Salomon Brothers research report, dated May 19, 1994. Assumes C$ =
$0.74 $US.
(5) Source: Salomon Brothers research report, dated August 31, 1994.
(6) Source: Salomon Brothers research report, dated August 31, 1994.
(7) For CCI, annualized 9 mos. ended 9/94 OCF is used. That number is grown
using the mean projected growth rates of the comparable companies.
-43-
<PAGE> 47
CONTEL CELLULAR, INC.
CASH FLOW VALUATION OF MINORITY INTEREST MSAs (CONT'D)
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 1992
PROJ. POP ------------------------
MSA RANK POPs GROW: 94-99 CCI% NET POPs OCF - 1992 CCI SHARE
--- ---- ---- ----------- ---- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Los Angeles, CA 2 14,719 7.1% 11.20% 1,648 $153.2 $17.2
Oxnard, CA 73 697 4.8% 11.20% 78
San Francisco, CA 7 3,832 4.3% 11.25% 431 66.0 7.4
San Jose, CA 27 1,542 3.4% 11.25%
Vallejo, CA 111 489 10.6% 11.25%
Santa Rosa, CA 123 411 6.7% 11.25%
Salinas, CA 126 372 5.7% 11.25%
Santa Cruz, CA 174 230 0.7% 11.25%
Washington, DC 8 3,804 4.3% 35.27% 1,342 25.3 8.9
Houston, TX 10 3,900 11.6% 4.40% 172 0.0 0.0
Beaumont, TX 101 384 6.1% 4.40%
Galveston, TX 170 237 8.7% 4.40%
Minneapolis, MN 15 2,569 5.4% 30.00% 771 17.9 5.4
San Antonio, TX 33 1,383 7.0% 30.00% 415 9.6 2.9
Sacramento, CA 35 1,480 10.5% 0.98% 15 10.7 0.1
Stockton, CA 107 517 8.5% 0.98%
Modesto, CA 142 415 12.7% 0.98%
Reno, NV 171 280 9.5% 0.98%
Chico, CA 215 198 9.1% 0.98%
Redding, CA 254 167 14.2% 0.98%
Yuba City, CA 274 136 11.8% 0.98%
Jacksonville, FL 51 1,004 9.1% 14.24% 143 0.0 0.0
Greenville, SC 67 667 4.7% 10.83% 72 2.7 0.3
Anderson, SC 227 147 1.8% 10.83%
Austin, TX 75 874 12.6% 3.00% 26 0.0 0.0
Albuquerque, NM 86 590 7.0% 49.00% 289 27.6 13.5
Santa Barbara, CA 124 378 3.0% 39.00% 148 2.9 1.1
------ --- ----- ------ -----
41,423 5,549 $315.9 $56.8
<CAPTION>
DECEMBER 1993 SEPTEMBER 1994
------------------------ -------------------------------------
MSA OCF - 1993 CCI SHARE OCF - 9/94 OCF ANN. CCI SHARE
--- ---------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Los Angeles, CA $199.2 $22.3 $209.2 $278.9 $31.2
Oxnard, CA
San Francisco, CA 63.7 7.2 60.8 81.1 9.1
San Jose, CA
Vallejo, CA
Santa Rosa, CA
Salinas, CA
Santa Cruz, CA
Washington, DC 37.7 13.3 46.1 61.5 21.7
Houston, TX 79.4 3.5 31.2 41.6 1.8
Beaumont, TX
Galveston, TX
Minneapolis, MN 2.1 0.6 14.6 19.5 5.8
San Antonio, TX 15.0 4.5 17.3 23.0 6.9
Sacramento, CA 18.4 0.2 6.0 8.0 0.1
Stockton, CA
Modesto, CA
Reno, NV
Chico, CA
Redding, CA
Yuba City, CA
Jacksonville, FL 10.1 1.4 9.8 13.1 1.9
Greenville, SC 1.2 0.1 3.7 5.0 0.5
Anderson, SC
Austin, TX 10.9 0.3 13.6 18.1 0.5
Albuquerque, NM 5.3 2.6 7.7 10.3 5.0
Santa Barbara, CA 3.2 1.3 0.0 0.0 0.0
------ ----- ------ ------ -----
$446.2 $57.3 $420.0 $560.0 $84.7
</TABLE>
-44-
<PAGE> 48
CONTEL CELLULAR INC.
KEY ASSUMPTIONS OF DISCOUNTED CASH FLOW ANALYSIS - VARIOUS CASES
<TABLE>
<CAPTION>
CCI ALTERNATIVE ALTERNATIVE
MANAGEMENT UPSIDE DOWNSIDE
CASE CASE CASE
--------------- ------------- -----------
<S> <C> <C> <C>
Subscriber Penetration
1995 - 2004 11.3% - 35.1% +1.0%(1) -1.0%(1)
CAGR to 2004 13.4% 14.4% 12.4%
Monthly Cellular Rev./Avg.
Subscriber
1995 - 2004 $64 - $49 $65 - $50 $63 - $48
1996 - 2004 Annual
Growth -8.2% - +0.4% +0.1%(1) -0.1%(1)
CAGR to 2004 -3.0% -2.9% -3.1%
Operating Cash Flow Margin
1995 - 2004 38.3% - 53.4% +0.5%(1) -0.5%(1)
CAGR to 2004 3.8% 3.7% 3.8%
Terminal Value OCF
Multiple 12.5x - 13.5x 12.5x - 13.5x 12.5x - 13.5x
Discount Rates 11% - 13% 11% - 13% 11% - 13%
</TABLE>
- --------------------
(1) Annual adjustment.
-45-
<PAGE> 49
CONTEL CELLULAR INC.
SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- CCI MANAGEMENT CASE
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999 2000
------- ------- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Cash Flow Total $251 $358 $453 $526 $644 $665
FCF Adj. for Int. $(58) $118 $240 $313 $365 $366
NPV of FCF $1,442
Terminal Value @ 13.0x OCF(1)
NPV of Terminal Value of OCF $3,009
------
Total NPV -- Cellular (w/o PCS) $4,451
International Assets $30
PCS Development $0
Wireless Data $300
Net Debt $(2,037)
-------
Equity Value $2,745
Number of Common Shares 100.0
Total POPs 23.9
Equity Value/Share
WACC 12.0%
<CAPTION>
2001 2002 2003 2004
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Cash Flow Total $673 $681 $702 $719
FCF Adj. for Int. $371 $412 $424 $467
NPV of FCF (Cellular w/o PCS)
Terminal Value @ 13.0x OCF(1) $9,347
NPV of Terminal Value of OCF
Total NPV -- Cellular (w/o PCS)
International Assets
PCS Development
Wireless Data
Net Debt
Equity Value
Number of Common Shares
Total POPs
Equity Value/Share
WACC
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
----------------------------
TOTAL NPV OF EQUITY 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $2,857 $2,513 $2,200
12.5x 2,984 2,629 2,305
TVM 13.0x 3,110 2,745 2,411
13.5x 3,237 2,860 2,517
14.0x 3,363 2,976 2,623
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
----------------------------
EQUITY VALUE/SHARE 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $28.57 $25.13 $22.00
12.5x 29.84 26.29 23.05
TVM 13.0x 31.10 27.45 24.11
13.5x 32.37 28.60 25.17
14.0x 33.63 29.76 26.23
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
----------------------------
NPV OF CELL. ASSETS 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $4,564 $4,220 $3,906
12.5x 4,690 4,336 4,012
TVM 13.0x 4,817 4,451 4,118
13.5x 4,943 4,567 4,224
14.0x 5,070 4,683 4,330
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
----------------------------
CELL. PMV/NET POP 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $191 $177 $164
12.5x 196 182 168
TVM 13.0x 202 186 172
13.5x 207 191 177
14.0x 212 196 181
</TABLE>
- ---------------
(1) EOY 2004.
-46-
<PAGE> 50
CONTEL CELLULAR INC.
SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- ALTERNATIVE UPSIDE CASE
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Cash Flow $260 $373 $476 $558 $689
FCF Adj. for Int. $(56) $145 $257 $335 $393
NPV of FCF $1,580
Terminal Value @ 13.0x OCF(1)
NPV of Terminal Value of FCF $3,390
------
Total NPV -- Cellular $4,969
International Assets $30
PCS Development $0
Wireless Data $300
Net Debt $(2,037)
-------
Equity Value $3,263
Number of Common Shares 100.0
Total POPs 23.9
Equity Value/Share
WACC 12.0%
<CAPTION>
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Cash Flow $719 $735 $751 $783 $810
FCF Adj. for Int. $397 $399 $444 $465 $514
NPV of FCF
Terminal Value @ 13.0x OCF(1) $10,528
NPV of Terminal Value of OCF
Total NPV -- Cellular (w/o PCS)
International Assets
PCS Development
Wireless Data
Net Debt
Equity Value
Number of Common Shares
Total POPs
Equity Value/Share
WACC
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
TOTAL NPV OF EQUITY 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $3,386 $3,002 $2,652
12.5x 3,529 3,132 2,771
TVM 13.0x 3,671 3,263 2,890
13.5x 3,814 3,393 3,009
14.0x 3,956 3,523 3,129
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
EQUITY VALUE/SHARE 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $33.86 $30.02 $26.52
12.5x 35.29 31.32 27.71
TVM 13.0x 36.71 32.63 28.90
13.5x 38.14 33.93 30.09
14.0x 39.56 35.23 31.29
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
NPV OF CELL. ASSETS 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $5,093 $4,709 $4,358
12.5x 5,235 4,839 4,477
TVM 13.0x 5,378 4,969 4,597
13.5x 5,520 5,100 4,716
14.0x 5,663 5,230 4,835
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
CELL. PMV/NET POP 11.0% 12.0% 13.0%
------ ------ ------
<S> <C> <C> <C>
12.0x $213 $197 $183
12.5x 219 203 188
TVM 13.0x 225 208 193
13.5x 231 214 198
14.0x 237 219 203
</TABLE>
- ---------------
(1) EOY 2004.
-47-
<PAGE> 51
CONTEL CELLULAR INC.
SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- ALTERNATIVE DOWNSIDE CASE
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Cash Flow $243 $345 $433 $498 $604 $618 $619 $620 $632 $ 641
FCF Adj. for Int. ($60) $ 94 $225 $294 $340 $339 $347 $383 $388 $ 426
NPV of FCF $1,322
Terminal Value @ 13.0x OCF(1)
NPV of Terminal Value of FCF $2,683 $8,332
-------
Total NPV - Cellular $4,004
International Assets $30
PCS Development $0
Wireless Data $300
Net Debt $(2,037)
--------
Equity Value $2,298
Number of Common Shares 100.0
Total POPs 23.9
Equity Value/Share
WACC 12.0%
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
TOTAL NPV OF EQUITY 11.0% 12.0% 13.0%
------ ------ ------
12.0x $2,401 $2,091 $1,809
12.5x 2,513 2,195 1,904
TVM 13.0x 2,626 2,298 1,998
13.5x 2,739 2,401 2,093
14.0x 2,852 2,504 2,187
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
EQUITY VALUE SHARE 11.0% 12.0% 13.0%
------ ------ ------
12.0x $24.01 $20.91 $18.09
12.5x 25.13 21.95 19.04
TVM 13.0x 26.26 22.98 19.98
13.5x 27.39 24.01 20.93
14.0x 28.52 25.04 21.87
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
NPV OF CELL. ASSETS 11.0% 12.0% 13.0%
------ ------ ------
12.0x $4,107 $3,798 $3,516
12.5x 4,220 3,901 3,610
TVM 13.0x 4,333 4,004 3,705
13.5x 4,446 4,108 3,799
14.0x 4,559 4,211 3,894
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
CELL. PMV/NET POP 11.0% 12.0% 13.0%
----- ----- -----
12.0x $172 $159 $147
12.5x 177 163 151
TVM 13.0x 181 168 155
13.5x 186 172 159
14.0x 191 176 163
</TABLE>
-48-
<PAGE> 52
CONTEL CELLULAR INC.
SUMMARY INTERNATIONAL ASSET VALUATION
- - MEXICO
- Own 10% of Region 2, which has 4.2 million total POPs.
- Other partners include Motorola, E.V.A. and McCaw.
- License acquired from Mexican government at approximately $1 per POP.
- Currently considering offer to participate in "ocean-to-ocean" (see
next page) consortium led by Motorola.
- - ARGENTINA
- GTE Mobilnet owns largest equity position (23%) in cellular consortium
named Compania de Telefonos del Interior S.A.
- CCI currently considering its rights to the property under the
Competition Agreement.
- - Total estimated value of CCI's international operations is $30 million.
-49-
<PAGE> 53
CONTEL CELLULAR INC.
SUMMARY INTERNATIONAL ASSET VALUATION (CONT'D)
[Map displaying cellular districts in Mexico (including
Region 2 - Sonora, 10% of which is owned by Contel
Cellular Inc.)]
-50-
<PAGE> 54
CONTEL CELLULAR INC.
SUMMARY WIRELESS DATA VALUATION
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
VALUED AT EOY 1994 1994 1995 1996 1997 1998 1999 2000
- ------------------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Wireless Data Revenue(1) $2 $12 $33 $55 $74 $79
Growth 524.09% 173.85% 64.94% 34.92% 6.25%
OCF(2) ($1) $5 $18 $31 $42 $45
Margin NM 37.5% 53.1% 55.9% 56.8% 56.8%
Systems Operatings (0.391) (0.455) (0.573) (0.598) (0.628)
Facilities (0.457) (0.917) (1.438) (2.707) (3.435)
Maintenance/Repair (0.379) (0.930) (2.308) (3.182) (3.970)
------ ------ ------ ------ ------
Total CAPEX(3) (1.227) (2.302) (4.319) (6.487) (8.033) (8.5)
% of Revenue 62.9% 18.9% 13.0% 11.8% 10.8% 10.8%
Taxes @ 38.0%(4) 0.0 (0.3) (4.8) (9.3) (13.2) (14.0)
Unlevered Free Cash Flow ($3) $2 $9 $15 $21 $22
NPV of Stream of Unlevered PCFs $69
Terminal Value of OCF @ 14.5x(5)
PV of Terminal Value $223 DISCOUNT RATE
------ -------------------
Total NPV of Wireless Data $293 12.0% 13.0%
------ ------
13.5x $326 $300
Discount Rate(5) 14.0% OCF 14.0x 335 309
Margin 14.5x 344 317
15.0x 354 326
15.5x 363 334
TAX CALCULATION
- ---------------
OCF ($1) $5 $18 $31 $42 $45
Depreciation (1.511) (3.725) (5.042) (6.286) (7.564) (8.0)
% of CAPEX 123.1% 161.8% 116.7% 96.9% 94.2% 94.2%
EBIT ($3) $1 $13 $24 $35 $37
------ ------ ------ ------ ------ ------
Taxes @ 38.0% 0.0 (0.3) (4.8) (9.3) (13.2) (14.0)
<CAPTION>
VALUED AT EOY 1994 2001 2002 2003 2004
- ------------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Wireless Data Revenue(1) $84 $89 $95 $100
Growth 6.25% 6.25% 6.25% 6.25%
OCF(2) $48 $51 $54 $57
Margin 56.8% 56.8% 56.8% 56.8%
Systems Operatings
Facilities
Maintenance/Repair
Total CAPEX(3) (9.1) (9.6) (10.2) (10.9)
% of Revenue 10.8% 10.8% 10.8% 10.8%
Taxes @ 38.0%(4) (14.8) (15.8) (16.8) (17.8)
Unlevered Free Cash Flow $24 $25 $27 $28
NPV of Stream of Unlevered PCFs
Terminal Value of OCF @ 14.5x(5) $828.2
PV of Terminal Value
DISCOUNT RATE
--------------------------------
Total NPV of Wireless Data 14.0% 15.0% 16.0%
------ ------ ------
$277 $256 $236
Discount Rate(5) 285 263 243
293 270 249
300 277 256
308 284 262
TAX CALCULATION
- ---------------
OCF $48 $51 $54 $57
Depreciation (8.5) (9.1) (9.6) (10.2)
% of CAPEX 94.2% 94.2% 94.2% 94.2%
EBIT $39 $42 $44 $47
------ ------ ------ ------
Taxes @ 38.0% (14.8) (15.8) (16.8) (17.8)
</TABLE>
- ---------------
(1) For 1994-1999, revenue from CCI Strategic Plan was used. Growth rate beyond
1999 was CAGR that would produce $100MM in revenue for 2004 (figure taken
from GTE PCS Division model for CCI.
(2) For 1994-1999, OCF from CCI Strategic Plan was used. OCF margin held
constant through 2004.
(3) For 1994-1999, assumed that CAPEX composed of systems operations, facilities
and maintenance/repair costs from CCI Strategic Plan. Ratio of CAPEX to
Revenue held constant through 2004.
(4) Taxes assumed to be 38.0% of EBIT. Depreciation to subtract from OCF to
arrive at EBIT taken from CCI Strategic Plan for 1994-1999. Ratio of
Depreciation to CAPEX held constant through 2004.
(5) Although Wireless Data is considered by Management to be an incremental
wireless service, growth rates and TV multiples were chosen to reflect the
slight growth cycle lag relative to wireless/cellular.
-51-
<PAGE> 55
CONTEL CELLULAR INC.
WALL STREET RESEARCH ESTIMATES OF CCI PRIVATE MARKET VALUES
<TABLE>
<CAPTION> TIME
RANGE OF PERIOD
PMV PER PMV PER FOR
DATE OF REPORT RESEARCH FIRM RESEARCH ANALYST SHARE NET POP ESTIMATE(S) RATING RATING EXPLANATION
------------------ ---------------- ---------------- ------- --------- ----------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
September 21, 1994 Smith Barney Christy Phillips $39.00 $240-$250(1) 1995E 3M Neutral, Med. Risk
September 8, 1994 Donaldson, Dennis $33.00 $220-$230(1) 1995E Neutral --
Lufkin Liebowitz
& Jenrette
September 8, 1994 Salomon Brothers Frederick Moran $32.00 $220-$230(1) 1995E Hold --
September 9, 1994 Smith Barney NA $34.00 $220-$230(1) 1994E 3M Neutral, Med. Risk
June 17, 1994 Smith Barney Christy Phillips $34.00 $220-$230(2) 1994E 1H Buy, High Risk
May 10, 1994 Cowen & Co. Susan Passoni -- -- -- 3 Neutral
May 9, 1994 Smith Barney Christy Phillips $34.00 $220-$230(2) 1994E 1H Buy,High Risk
Shearson
January 19, 1994 Bear Stearns David Freedman $26.46 $190-$200(2) 1994E Buy --
August 12, 1993 Equitable Christy Phillips $27.00 $190-$200(2) 1993E Buy --
Securities Corp.
February 25, 1993 Smith Barney Susan Passoni -- -- 1993E Hold --
January 6, 1993 Hanifen Imhoff Alf Humphries $31.78 $210-$220(2) 1993E 1-1 Outperform S&P 500
during immediate (6
mos.) and long-term
(18 mos.)
</TABLE>
- --------------------
(1) Assumes 23.9 million net POPs.
(2) Assumes 24.2 million net POPs.
-52-
<PAGE> 56
CONTEL CELLULAR INC.
APPENDICES
LAZARD FRERES & CO. NOVEMBER 7, 1994
<PAGE> 57
CONTEL CELLULAR INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
I. CCI EXHIBITS
A. Summary of CCI Cost of Debt
B. CCI Market Share by MSA
C. Demographic Profiles of CCI MSAs
D. Ownership Profiles of CCI MSAs
E. Shareholder Profile of CCI
F. Summary of Investor Opinions of Private and Fair Market Value
G. 1994 Management Letter
H. Trading Volume Summary
II. CELLULAR INDUSTRY EXHIBITS
A. Premia Paid in Selected Minority Interest Purchases
B. State of the Cellular Industry
C. Selected Equity Comparables
D. Summary of Selected MSA Cellular Transactions
E. Summary of Selected RSA Cellular Transactions
</TABLE>
-i-
<PAGE> 58
CONTEL CELLULAR INC.
SUMMARY OF CCI COST OF DEBT
- - The long-term borrowings by CCI from GTE are set forth in the table
below:
<TABLE>
<CAPTION>
NOTE ANNUAL
PRINCIPAL BORROWING MATURITY INTEREST
AMOUNT DATE DATE RATE
------------ ------------------ ------------------ --------
<S> <C> <C> <C>
$700 million April 5, 1991 March 1, 1998 10.47%
$150 million September 25, 1992 September 25, 1997 8.38%
$150 million September 25, 1992 September 27, 1999 8.97%
$200 million December 31, 1992 December 31, 1996 8.56%
$200 million December 31, 1992 December 31, 1995 8.08%
$150 million February 25, 1993 February 25,1997 7.71%
</TABLE>
- - The weighted average annual interest rate (based on note principal
amount) of the above notes equals 9.31%.
- - As disclosed in CCI'S proxy statement for the annual meeting of
stockholders held on June 1, 1994, CCI has borrowed approximately $1.55
billion (as set forth above) from GTE in long-term debt as of April 15,
1994.
- - In addition, CCI'S 10-Q for the quarter ended June 30, 1994 disclosed
that, at June 30, 1994, CCI had drawn approximately $422 million under
a line of credit arrangement with GTE. The interest rate at June 30,
1994 under this credit facility was not disclosed.
-1-
<PAGE> 59
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
CCI MARKET SHARE BY CONTROLLED MSA(1)
NUMBER OF SPRING FALL SPRING
SUBSCRIBERS 1993 1993 1994
----------- ------ ---- ------
<S> <C> <C> <C> <C>
CONTROLLED
Memphis, TN 93,807 37% 37% 36%
Louisville, KY 67,234 53% 52% 51%
Birmingham, AL 98,442 44% 43% 45%
Norfolk, VA 63,603 53% NA 58%
Nashville, TN 101,550 55% 56% 56%
Richmond, VA 63,684 58% 58% 60%
Fresno, CA 50,813 37% 36% 36%
Knoxville, TN 41,634 64% 66% 67%
El Paso, TX 22,875 67% 67% 66%
Mobile, AL 38,632 36% 38% 42%
Johnson city, TN 28,142 51% 51% 50%
Chattanooga, TN 40,218 59% 60% 64%
Bakersfield, CA 29,954 35% 40% 41%
Davenport, IA 20,521 48% 55% 63%
Newport News, VA 31,740 55% 55% 52%
Lexington, KY 26,866 53% 51% 49%
Evansville, IN 21,507 47% 47% 51%
Pensacola, FL 21,077 54% 52% 61%
Rockford, IL 21,126 50% 48% 52%
Visalia, CA 18,676 44% 42% 45%
Roanoke, VA 13,715 55% 54% 58%
Clarksville, TN 11,540 43% 46% 46%
Tuscaloosa, AL 13,046 39% 44% 46%
Florence, AL 7,205 67% 61% 66%
Petersburg, VA 8,310 88% 89% 88%
Anniston, AL 7,096 24% 31% 39%
Gadsen, AL 6,140 56% 62% 66%
Las Cruces, NM 4,568 72% 77% 75%
Owensboro, KY
</TABLE>
- -----------------------------------------------
(1) Source: Management
-2-
<PAGE> 60
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
DEMOGRAPHIC PROFILES OF CCI MSAs(1)
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS
-------------------------------------------------------------
UNITED MEMPHIS, LOUISVILLE, BIRMINGHAM, NORFOLK,
STATES TN KY AL VA
-------- -------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 36 37 41 43
Total population 1994E (000s) 260,738 1,030 931 904 1,021
Total population 1999E (000s) 273,774 1,074 959 936 1,077
Growth Since 1990 4.8% 5.0% 3.7% 4.1% 4.6%
Projected Growth: 1994-1999 5.0% 4.3% 2.9% 3.5% 5.5%
1994E population Age 25-44 Yrs.(000s) 81,138 328 292 279 349
Total Households 1994E (000s) 96,977 378 365 349 357
Average Household Income 1994E $44,075 $40,724 $40,514 $40,266 $42,144
Median Household Income 1994E $33,930 $31,268 $31,771 $30,426 $34,763
% National Average 100% 92% 94% 90% 102%
Total Time To Work 1994:
0-14 Minutes 32.4% 25.6% 26.6% 23.9% 25.4%
15-29 Minutes 37.1% 45.8% 48.1% 43.1% 42.8%
30-59 Minutes 24.4% 25.5% 22.2% 29.1% 28.2%
60+ Minutes 6.1% 3.1% 3.0% 3.9% 3.6%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. - 0 0 0 1
Median House. Inc. vs. U.S. - 0 0 0 1
30+ Minutes to Work vs. U.S. - 0 0 1 1
Contiguous - 1 1 1 1
------- ------- ------- ------- -------
Total Adjustment Score - 1 1 2 4
Total Adjustment Percentage - -10% -10% 0% +20%
<CAPTION>
NASHVILLE, RICHMOND, FRESNO, KNOXVILLE, EL PASO, MOBILE,
TN VA CA TN TX AL
----------- --------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1994 MSA RANK 46 59 74 79 81 83
Total population 1994E (000s) 1,052 798 735 544 653 511
Total population 1999E (000s) 1,117 860 812 583 715 545
Growth Since 1990 6.8% 7.9% 10.2% 8.0% 10.3% 7.1%
Projected Growth: 1994-1999 6.2% 7.7% 10.4% 7.1% 9.5% 6.8%
1994E population Age 25-44 Yrs. (000s) 346 265 224 169 198 149
Total Households 1994E (000s) 405 312 242 218 197 189
Average Household Income 1994E $42,962 $47,216 $40,312 $38,909 $33,523 $35,995
Median Household Income 1994E $33,799 $38,286 $30,130 $29,488 $25,205 $27,572
% National Average 100% 113% 89% 87% 74% 81%
Total Time To Work 1994:
0-14 Minutes 26.6% 24.1% 35.9% 28.4% 28.6% 27.5%
15-29 Minutes 41.5% 46.1% 44.2% 44.9% 48.6% 42.6%
30-59 Minutes 27.6% 27.0% 16.2% 23.5% 19.9% 25.7%
60+ Minutes 4.2% 2.7% 3.7% 3.2% 2.8% 4.2%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. 1 1 1 1 1 1
Median House. Inc. vs. U.S. 1 1 0 0 0 0
30+ Minutes to Work vs. U.S. 1 0 0 0 0 0
Contiguous 1 1 1 1 0 1
------- ------- ------- ------ ------- -------
Total Adjustment Score 4 3 2 2 1 2
Total Adjustment Percentage +20% +10% 0% 0% -10% 0%
</TABLE>
- ---------------------------------------------
(1) Source: Donnelly Marketing Information Services.
-3-
<PAGE> 61
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS
-------------------------------------------------------------
UNITED JOHNSON CHATTANOOGA, BAKERSFIELD, DAVENPORT,
STATES CITY, TN TN CA IA
--------- -------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
1994 MSA Rank - 85 88 97 98
Total Population 1994E (000s) 260,738 457 451 618 362
Total Population - 1999E (000s) 273,774 473 464 706 374
Growth Since 1990 4.8% 4.7% 4.1% 13.8% 3.2%
Projected Growth: 1994-1999 5.0% 3.5% 2.9% 14.2% 3.3%
1994E Population Age 25-44 Yrs. (000S) 81,138 133 135 192 106
Total Households 1994E (000s) 96,977 182 175 206 142
Average Household Income - 1994E $44,075 $33,451 $37,049 $41,514 $38,763
Median Household Income - 1994E $33,930 $25,700 $28,743 $33,120 $31,497
% National Average 100% 76% 85% 98% 93%
Total Time To Work 1994:
0-14 Minutes 32.4 35.6% 26.7% 41.7% 40.8%
15-29 Minutes 37.1 41.8% 43.2% 37.0% 44.1%
30-59 Minutes 24.4 19.4% 26.4% 15.2% 12.8%
60+ Minutes 6.1 3.2% 3.8% 6.1% 2.3%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 VS. U.S. - 0 0 1 0
Median House. Inc. vs. U.S. - 0 0 0 0
30+ Minutes To Work vs. U.S. - 0 0 0 0
Contiguous - 1 1 1 1
------- ------- ------- ------- -------
Total Adjustment Score - 1 1 2 1
Total Adjustment Percentage - -10% -10% 0% -10%
<CAPTION>
NEWP. NEWS, LEXINGTON, EVANSVILLE, PENSACOLA, ROCKFORD,
VA KY IL FL IL
----------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1994 MSA Rank 104 116 119 127 131
Total Population 1994E (000s) 475 368 318 375 301
Total Population - 1999E (000s) 518 384 326 409 319
Growth Since 1990 9.4% 5.5% 2.4% 8.9% 6.1%
Projected Growth: 1994-1999 9.2% 4.4% 2.3% 9.2% 6.1%
1994E Population Age 25-44 Yrs. (000S) 158 125 95 115 92
Total Households 1994E (000s) 177 143 125 142 115
Average Household Income - 1994E $41,156 $41,566 $38,223 $36,663 $42,515
Median Household Income - 1994E $34,104 $31,941 $30,808 $29,057 $34,967
% National Average 101% 94% 91% 86% 103%
Total Time To Work 1994:
0-14 Minutes 32.0% 37.0% 38.3% 31.6% 40.1%
15-29 Minutes 43.5% 43.8% 43.0% 43.9% 43.6%
30-59 Minutes 21.0% 16.7% 16.1% 21.4% 13.1%
60+ Minutes 3.5% 2.5% 2.5% 3.0% 3.2%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 VS. U.S. 1 0 0 1 1
Median House. Inc. vs. U.S. 1 0 0 0 1
30+ Minutes To Work vs. U.S. 0 0 0 0 0
Contiguous 1 1 1 1 1
------- ------- ------- ------- -------
Total Adjustment Score 3 1 1 2 3
Total Adjustment Percentage +10% -10% -10% 0% +10%
</TABLE>
- ---------------------------------------------
(1) Source: Donnelly Marketing Information Services.
-4-
<PAGE> 62
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS
------------------------------------------------------------------------
UNITED VISALIA, ROANOKE, CLARKSVILLE, TUSCALOOSA, FLORENCE,
STATES CA VA TN AL AL
-------- --------- --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
1994 MSA Rank - 150 157 209 222 226
Total Population 1994E (000s) 260,738 348 240 172 161 138
Total Population 1999E (000s) 273,774 389 248 175 172 144
Growth Since 1990 4.8% 11.5% 4.8% 1.8% 7.2% 5.1%
Projected Growth: 1994-1999 5.0% 12.0% 3.5% 1.7% 6.6% 4.4%
1994E Population Age 25-44 Yrs. (000S) 81,138 99 73 57 49 39
Total Households 1994E (000S) 96,977 109 97 58 60 55
Average Household Income 1994E $44,075 $36,376 $39,493 $32,626 $36,700 $34,825
Median Household Income 1994E $33,930 $27,437 $32,062 $27,149 $27,448 $26,782
% National Average 100% 81% 94% 80% 81% 79%
Total Time To Work 1994:
0-14 Minutes 32.4% 47.1% 33.9% 40.0% 37.5% 35.8%
15-29 Minutes 37.1% 32.2% 48.0% 39.2% 42.8% 37.0%
30-59 Minutes 24.4% 16.8% 15.6% 16.3% 16.9% 22.5%
60+ Minutes 6.1% 3.9% 2.5% 4.6% 3.3% 4.7%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. - 1 0 0 1 0
Median House. Inc. vs. U.S. - 0 0 0 0 0
30+ Minutes To Work vs. U.S. - 0 0 0 0 0
Contiguous - 1 1 1 1 1
------- ------- ------- ------- ------- -------
Total Adjustment Score - 2 1 1 2 1
Total Adjustment Percentage - 0% -10% -10% 0% -10%
<CAPTION>
PETERSBURG, ANNISTON, GADSDEN, LAS CRUCES, OWENSBORO,
VA AL IL NM KY
----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1994 MSA Rank 235 249 272 285 293
Total Population 1994E (000s) 130 116 101 154 90
Total Population 1999E (000s) 135 115 102 173 92
Growth Since 1990 3.7% 0.0% 1.3% 13.5% 3.2%
Projected Growth: 1994-1999 3.6% -0.9% 0.4% 12.2% 2.5%
1994E Population Age 25-44 Yrs. (000S) 41 34 28 47 26
Total Households 1994E (000S) 49 44 40 51 34
Average Household Income 1994E $36,813 $33,134 $32,154 $32,459 $34,248
Median Household Income 1994E $31,045 $27,641 $25,106 $25,293 $27,714
% National Average 91% 81% 74% 75% 82%
Total Time To Work 1994:
0-14 Minutes 32.3% 37.7% 34.5% 42.4% 49.3%
15-29 Minutes 38.4% 41.8% 44.6% 33.7% 34.1%
30-59 Minutes 25.8% 17.2% 16.9% 19.8% 12.9%
60+ Minutes 3.4% 3.3% 4.0% 4.0% 3.6%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. 0 0 0 1 0
Median House. Inc. vs. U.S. 0 0 0 0 0
30+ Minutes To Work vs. U.S. 0 0 0 0 0
Contiguous 1 1 1 1 1
------- ------- ------- ------- -------
Total Adjustment Score 1 1 1 2 1
Total Adjustment Percentage -10% -10% -10% 0% -10%
</TABLE>
- ---------------------------------------------
(1) Source: Donnelly Marketing Information Services.
-5-
<PAGE> 63
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS
-----------------------------------------------------------------------
UNITED LOS ANGELES, SAN FRANCISCO, WASHINGTON, HOUSTON,
STATES CA CA D.C. TX
--------- ------------ -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1994 MSA Rank - 2 7 8 10
Total Population 1994E (000s) 260,738 14,719 3,832 3,804 3,900
Total Population 1999E (000s) 273,774 15,764 3,996 3,969 4,354
Growth Since 1990 4.8% 6.2% 3.9% 3.9% 11.6%
Projected Growth: 1994-1999 5.0% 7.1% 4.3% 4.3% 11.6%
1994E Population Age 25-44 Yrs. (000s) 81,138 5,022 1,336 1,370 1,341
Total Households 1994E (000s) 96,977 4,925 1,473 1,430 1,398
Average Household Income 1994E $44,075 $54,120 $59,696 $64,832 $48,440
Median Household Income 1994E $33,930 $40,623 $46,134 $52,694 $36,661
% National Average 100% 120% 136% 155% 108%
Total Time To Work 1994:
0-14 Minutes 32.4% 24.1% 23.5% 17.5% 22.1%
15-29 Minutes 37.1% 35.4% 34.5% 32.1% 35.6%
30-59 Minutes 24.4% 31.0% 33.2% 40.0% 34.9%
60+ Minutes 6.1% 9.5% 8.8% 10.5% 7.4%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. - 1 0 0 1
Median House. Inc. vs. U.S. - 1 1 1 1
30+ Minutes to Work vs. U.S. - 1 1 1 1
Contiguous - 1 1 1 1
-------- -------- -------- -------- --------
Total Adjustment Score - 4 3 3 4
Total Adjustment Percentage - +20% +10% +10% +20%
<CAPTION>
MINNEAPOLIS, SAN JOSE, SAN ANTONIO, SACRAMENTO, JACKSONVILLE,
MN CA TX CA FL
------------ --------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
1994 MSA Rank 15 27 33 35 51
Total Population 1994E (000s) 2,569 1,542 1,383 1,480 1,004
Total Population 1999E (000s) 2,708 1,594 1,479 1,635 1,096
Growth Since 1990 5.4% 2.9% 6.2% 9.2% 8.5%
Projected Growth: 1994-1999 5.4% 3.4% 7.0% 10.5% 9.1%
1994E Population Age 25-44 Yrs. (000s) 887 554 430 489 328
Total Households 1994E (000s) 979 533 484 553 383
Average Household Income 1994E $50,260 $67,674 $38,226 $47,047 $41,548
Median Household Income 1994E $41,303 $55,453 $29,488 $37,552 $32,904
% National Average 122% 163% 87% 111% 97%
Total Time To Work 1994:
0-14 Minutes 29.2% 24.6% 26.0% 29.6% 25.2%
15-29 Minutes 44.3% 42.6% 45.3% 42.7% 41.6%
30-59 Minutes 23.9% 27.9% 24.9% 23.7% 29.5%
60+ Minutes 2.7% 5.0% 3.8% 3.9% 3.7%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. 1 0 1 1 1
Median House. Inc. vs. U.S. 1 1 0 1 0
30+ Minutes to Work vs. U.S. 0 1 0 0 1
Contiguous 1 1 1 1 1
-------- -------- -------- -------- --------
Total Adjustment Score 3 3 2 3 3
Total Adjustment Percentage +10% +10% 0% +10% +10%
</TABLE>
- ---------------------------------------------
(1) Source: Donnelly Marketing Information Services.
-6-
<PAGE> 64
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS
--------------------------------------------------------------
UNITED GREENVILLE, OXNARD, AUSTIN, ALBUQUERQUE,
STATES SC CA TX NM
--------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 67 73 75 86
Total Population 1994E (000s) 260,738 667 697 874 590
Total Population 1999E (000s) 273,774 698 731 985 631
Growth since 1990 4.8% 4.1% 4.2% 11.9% 8.5%
Projected Growth: 1994-1999 5.0% 4.7% 4.8% 12.6% 7.0%
1994E Population Age 25-44 Yrs. (000s) 81,138 202 226 313 194
Total Households 1994E (000s) 96,977 254 226 342 227
Average Household Income 1994E $44,075 $38,929 $60,784 $43,860 $39,891
Median Household Income 1994E $33,930 $31,624 $50,400 $33,803 $31,549
% National Average 100% 93% 149% 100% 93%
Total Time to Work 1994:
0-14 Minutes 32.4% 35.2% 31.4% 29.2% 30.6%
15-29 Minutes 37.1% 45.0% 34.8% 43.3% 48.2%
30-59 Minutes 24.4% 18.0% 24.6% 23.9% 18.0%
60+ Minutes 6.1% 1.9% 9.3% 3.5% 3.2%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. - 0 0 1 1
Median House. Inc. vs. U.S. - 0 1 0 0
30+ Minutes to Work vs. U.S. - 0 1 0 0
Contiguous - 1 1 1 1
------ ------ ------ ------ ------
Total Adjustment Score - 1 3 2 2
Total Adjustment Percentage - -10% +10% 0% 0%
<CAPTION>
BEAUMONT, STOCKTON, VALLEJO, SANTA ROSA, SANTA BARBARA,
TX CA CA CA CA
--------- --------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 101 107 111 123 124
Total Population 1994E (000s) 384 517 489 411 378
Total Population 1999E (000s) 408 561 541 439 390
Growth since 1990 6.3% 7.6% 8.4% 5.9% 2.4%
Projected Growth: 1994-1999 6.1% 8.5% 10.6% 6.7% 3.0%
1994E Population Age 25-44 Yrs. (000s) 111 158 160 131 122
Total Households 1994E (000s) 144 167 167 158 132
Average Household Income 1994E $37,571 $43,104 $51,499 $50,599 $54,811
Median Household Income 1994E $29,402 $34,611 $43,945 $40,674 $40,945
% National Average 87% 102% 130% 120% 121%
Total Time to Work 1994:
0-14 Minutes 36.2% 37.3% 34.0% 34.7% 46.7%
15-29 Minutes 41.5% 37.1% 28.6% 34.4% 35.45
30-59 Minutes 18.5% 17.7% 24.3% 20.8% 14.0%
60+ Minutes 3.8% 7.9% 13.1% 10.0% 4.0%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. 0 1 1 1 0
Median House. Inc. vs. U.S. 1 1 1 1 1
30+ Minutes to Work vs. U.S. 0 0 1 1 0
Contiguous 1 1 1 1 1
------ ------ ------ ------ ------
Total Adjustment Score 2 3 4 4 2
Total Adjustment Percentage 0% +10% +20% +20% 0%
</TABLE>
- ---------------------------------------------
(1) Source: Donnelly Marketing Information Services.
-7-
<PAGE> 65
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS
-----------------------------------------------------------
UNITED SALINAS, MODESTO, GALVESTON, RENO,
STATES CA CA TX NV
-------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 126 142 170 171
Total Population 1994E (000s) 260,738 372 415 237 280
Total Population 1999E (000s) 273,774 393 468 258 306
Growth Since 1990 4.8% 4.6% 12.1% 9.1% 9.8%
Projected Growth: 1994-1999 5.0% 5.7% 12.7% 8.7% 9.5%
1994E Population Age 25-44 Yrs. (000s) 81,138 124 127 74 96
Total Households 1994E (000s) 96,977 117 140 89 112
Average Household Income 1994E $44,075 $50,593 $42,629 $42,932 $44,421
Median Household Income 1994E $33,930 $38,832 $33,610 $33,810 $35,007
% National Average 100% 114% 99% 100% 103%
Total Time to Work 1994:
0-14 Minutes 32.4% 43.9% 39.1% 31.3% 41.5%
15-29 Minutes 37.1% 35.6% 36.4% 36.8% 45.1%
30-59 Minutes 24.4% 17.2% 15.6% 24.6% 10.4%
60+ Minutes 6.1% 3.3% 8.8% 7.3% 3.0%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. - 1 1 1 1
Median House. Inc. vs. U.S. - 1 0 0 1
30+ Minutes to Work vs. U.S. - 0 0 1 0
Contiguous - 1 1 1 1
------ ------ ------ ------ ------
Total Adjustment Score - 3 2 3 3
Total Adjustment Percentage - +10% 0% +10% +10%
<CAPTION>
SANTA CRUZ, CHICO, ANDERSON, REDDING, YUBA CITY,
CA CA SC CA CA
------------ ------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 174 215 227 254 274
Total Population 1994E (000s) 230 198 147 167 136
Total Population 1999E (000s) 232 216 149 191 152
Growth Since 1990 0.3% 8.5% 1.1% 13.8% 10.6%
Projected Growth: 1994-1999 0.7% 9.1% 1.8% 14.2% 11.8%
1994E Population Age 25-44 Yrs. (000s) 79 54 43 46 39
Total Households 1994E (000s) 83 78 57 64 48
Average Household Income 1994E $55,380 $34,942 $35,273 $37,637 $37,859
Median Household Income 1994E $43,425 $26,081 $28,948 $29,393 $28,165
% National Average 128% 77% 85% 87% 83%
Total Time to Work 1994:
0-14 Minutes 33.3% 52.6% 34.1% 44.9% 42.8%
15-29 Minutes 32.7% 28.4% 42.0% 40.2% 32.4%
30-59 Minutes 24.6% 15.0% 21.4% 11.3% 18.1%
60+ Minutes 9.4% 4.0% 2.5% 3.7% 6.7%
VALUATION CRITERIA:
Proj. Growth: 1994-1999 vs. U.S. 0 1 0 1 1
Median House. Inc. vs. U.S. 1 0 0 0 0
30+ Minutes to Work vs. U.S. 1 0 0 0 0
Contiguous 1 1 1 1 1
------- ------- ------- ------- -------
Total Adjustment Score 3 2 1 2 2
Total Adjustment Percentage +10% 0% -10% 0% 0%
</TABLE>
- ---------------------------------------------
(1) Source: Donnelly Marketing Information Services.
-8-
<PAGE> 66
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
OWNERSHIP PROFILES OF CCI MSAs(1)
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS
---------------------------------------------------------------------------------
UNITED MEMPHIS, LOUISVILLE, BIRMINGTON, NORFOLK, NASHVILLE,
STATES TN KY AL VA TN,
-------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1994 MSA RANK - 36 37 41 43 46
Wireline (A)/Non-Wireline (B) - B B B A B
% Owned by CCI - 100.0% 100.0% 100.0% 95.0% 100.0%
Other Holder of CCI Market - -- -- -- Bell Atlantic -
% Owned by Other Holder - 0.0% 0.0% 0.0% 5.0% 0.0%
Other Holder 1 - BellSouth BellSouth BellSouth Sprint BellSouth
% Owned - 75.0% 100.0% 100.0% 100.0% 51.0%
Other Holder 2 - NA -- -- -- NA
% Owned - 25.0% 0.0% 0.0% 0.0% 49.0%
<CAPTION>
RICHMOND, FRESNO, KNOXVILLE, EL PASO, MOBILE,
VA CA TN TX AL
------------- ------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 59 74 79 81 83
Wireline (A)/Non-Wireline (B) A A B A A
% Owned by CCI 95.0% 92.0% 94.1% 100.0% 100.0%
Other Holder of CCI Market Bell Atlantic Group(2) McDonald -- --
% Owned by Other Holder 5.0% 8.0% 5.9% 0.0% 0.0%
Other Holder 1 BellSouth McCaw U.S. Cellular Bell Atlantic BellSouth
% Owned 72.7% 100.0% 96.0% 100.0% 98.6%
Other Holder 2 NA -- NA -- NA
% Owned 27.3% 0.0% 4.0% 0.0% 1.4%
</TABLE>
- -----------------------------------------------
(1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management.
(2) Group including U.S. Cellular, GTE Mobilnet and AirTouch.
-9-
<PAGE> 67
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS
-----------------------------------------------------------------------------
UNITED JOHNSON CHATTANOOGA, BAKERSFIELD, DAVENPORT,
STATES CITY, TN TN CA IA
------- -------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 85 88 97 98
Wireline (A)/Non-wireline (B) - B B A A
% Owned by CCI - 100.0% 100.0% 92.0% 100.0%
Other Holder of CCI Market - -- -- Group(2) --
% Owned by Other Holder - 0.0% 0.0% 8.0% 0.0%
Other Holder 1 - Sprint BellSouth BellSouth U.S. Cellular
% Owned - 100.0% 62.5% 100.0% 97.4%
Other Holder 2 - -- NA -- NA
% Owned - 0.0% 37.5% 0.0% 2.6%
<CAPTION>
NEWP. NEWS, LEXINGTON, EVANSVILLE, PENSACOLA, ROCKFORD,
VA KY IL FL IL
------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 104 116 119 127 131
Wireline (A)/Non-wireline (B) A B A A A
% Owned by CCI 95.0% 100.0% 88.9% 100.0% 59.0%
Other Holder of CCI Market Bell Atlantic - Group(3) - Group(4)
% Owned by Other Holder 5.0% 0.0% 11.1% 0.0% 41.0%
Other Holder 1 Sprint BellSouth U.S. Cellular Vanguard BellSouth
% Owned 100.0% 100.0% 78.1% 100.0% 99.0%
Other Holder 2 - -- NA -- NA
% Owned 0.0% 0.0% 21.9% 0.0% 1.0%
</TABLE>
- -----------------------------------------------
(1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management.
(2) Group including U.S. Cellular, GTE Mobilnet and AirTouch.
(3) Group including Century Telephone and Smithville Telephone.
(4) Group including Leaf River Cellular Telephone Company, Central Cellular
Telephone and Ameritech.
-10-
<PAGE> 68
CONTEL CELLULAR INC.
<TABLE>
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D)
<CAPTION>
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS
-------------------------------------------------------------------------------------
UNITED VISALIA, ROANOKE, CLARKSVILLE, TUSCALOOSA FLORENCE,
STATES CA VA TN AL AL
------- -------- ---------- ------------ ---------- --------------------
<S> <C> <C> <C> <C> <C> <C>
1994 MSA RANK - 150 157 209 222 226
Wireline (A)/Non-wireline (B) - A A B B B
% Owned by CCI - 92.0% 40.0% 100.0% 80.4% 91.1%
Other Holder of CCI Market - Group(2) Group(3) -- Other(4) Other(4)
% Owned by Other Holder - 8.0% 60.0% 0.0% 19.6% 8.9%
Other Holder 1 - McCaw Centennial BellSouth BellSouth Cell. Info. Sys.
% Owned - 92.2% 100.0% 51.0% 100.0% 100.0%
Other Holder 2 - NA -- NA -- --
% Owned - 7.8% 0.0% 49.0% 0.0% 0.0%
<CAPTION>
PETERSBURG, ANNISTON, GADSDEN, LAS CRUCES, OWENSBORO,
VA AL IL NM KY
------------- --------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 235 249 272 285 293
Wireline (A)/Non-wireline (B) A B B A A
% Owned by CCI 95.0% 100.0% 90.0% 100.0% 88.9%
Other Holder of CCI Market Bell Atlantic -- Other(4) -- Group(5)
% Owned by Other Holder 5.0% 0.0% 10.0% 0.0% 11.1%
Other Holder 1 Sprint BellSouth BellSouth Bell Atlantic U.S. Cellular
% Owned 72.9% 100.0% 100.0% 71.5% 78.7%
Other Holder 2 NA -- -- NA NA
% Owned 27.1% 0.0% 0.0% 28.5% 21.3%
</TABLE>
- -----------------------------------------------
(1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management.
(2) Group including U.S. Cellular, GTE Mobilnet and AirTouch.
(3) Group including CFW Communications Company and Roanoke & Botetourt
Telephone Company.
(4) Additional general partners.
(5) Group including Century Telephone and Smithville Telephone Company.
-11-
<PAGE> 69
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS
--------------------------------------------------------------------
UNITED LOS ANGELES, SAN FRANCISCO, WASHINGTON, HOUSTON,
STATES CA CA D.C. TX
-------- ------------ -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 2 7 8 10
Wireline (A)/Non-wireline (B) - B B B B
% Owned by CCI - 11.20% 11.25% 35.27% 4.40%
Other Holder of CCI Market 1 - AirTouch GTE M-net Bell Atlantic GTE M-net
% Owned by Other Holder 1 - 84.00% 85.90% 64.73% 79.20%
Other Holder of CCI Market 2 - Group(2) NA - Group(4)
% Owned by Other Holder 2 - 4.80% 2.85% 0.00% 16.40%
Other Holder 1 - BellSouth Group(3) SBC LIN
% Owned - 60.00% 94.00% 100.0% 56.30%
Other Holder 2 - NA NA - NA
% Owned - 40.00% 6.00% 0.00% 43.70%
<CAPTION>
MINNEAPOLIS, SAN JOSE, SAN ANTONIO, SACRAMENTO, JACKSONVILLE,
MN CA TX CA FL
------------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 15 27 33 35 51
Wireline (A)/Non-wireline (B) B B B B B
% Owned by CCI 30.00% 11.25% 30.00% 0.98% 14.24%
Other Holder of CCI Market 1 US West GTE M-net SBC AirTouch BellSouth
% Owned by Other Holder 1 69.00% 85.90% 70.00% 49.90% 85.76%
Other Holder of CCI Market 2 Scott-Rice NA - Group(3) -
% Owned by Other Holder 2 1.00% 2.85% 0.00% 49.12% 0.00%
Other Holder 1 McCaw Group(3) McCaw McCaw McCaw
% Owned 100.00% 94.00% 100.00% 100.00% 100.00%
Other Holder 2 - NA - - -
% Owned 0.00% 6.00% 0.00% 0.00% 0.00%
</TABLE>
- -----------------------------------------------
(1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management.
(2) Group including U.S. Cellular and GTE Mobilnet.
(3) Group including AirTouch and McCaw.
(4) Group including Contel Cellular, Lufkin-Conroe, SLT Communications,
SBMS Cellular and Fort Bend Telephone.
-12-
<PAGE> 70
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS
------------------------------------------------------------------------
UNITED GREENVILLE, OXNARD, AUSTIN, ALBUQUERQUE,
STATES SC CA TX NM
--------- ------------- ------- -------- --------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 67 73 75 86
Wireline (A)/Non-wireline (B) - B B B B
% Owned by CCI - 10.83% 11.20% 3.00% 49.00%
Other Holder of CCI Market 1 - Sprint AirTouch GTE M-net US West
% Owned by Other Holder 1 - 89.17% 50.00% 58.70% 51.00%
Other Holder of CCI Market 2 - - Group(2) Group(3) -
% Owned by Other Holder 2 - 0.00% 38.80% 38.30% 0.00%
Other Holder 1 - Bell Atlantic McCaw McCaw Bell Atlantic
% Owned - 100.00% 100.00% 100.00% 100.00%
Other Holder 2 - - - - -
% Owned - 0.00% 0.00% 0.00% 0.00%
<CAPTION>
BEAUMONT, STOCKTON, VALLEJO, SANTA ROSA, SANTA BARBARA,
TX CA CA CA CA
---------- --------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 101 107 111 123 124
Wireline (A)/Non-wireline (B) B B B B B
% Owned by CCI 4.40% 0.98% 11.25% 11.25% 39.00%
Other Holder of CCI Market 1 GTE M-net AirTouch GTE M-net GTE M-net GTE M-net
% Owned by Other Holder 1 79.10% 49.90% 85.90% 85.90% 51.00%
Other Holder of CCI Market 2 Group(4) Group(5) Centennial Centennial AirTouch
% Owned by Other Holder 2 16.50% 49.12% 2.85% 2.85% 10.00%
Other Holder 1 Centennial McCaw ATI/McCaw ATI/McCaw McCaw
% Owned 100.00% 100.00% 100.00% 80.40% 84.10%
Other Holder 2 - - - NA NA
% Owned 0.00% 0.00% 0.00% 19.60% 15.90%
</TABLE>
- -----------------------------------------------
(1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management.
(2) Group including U.S. Cellular and GTE Mobilnet.
(3) Group including Telecar Cellular and Contel Cellular.
(4) Group including Contel Cellular, Lufkin-Conroe, SLT Communications, SBMS
Cellular and Fort Bend Telephone.
(5) Group including Centennial Cellular, Roseville Telephone and Evans
Cellular.
-13-
<PAGE> 71
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS
---------------------------------------------------------
UNITED SALINAS, MODESTO, GALVESTON, RENO,
STATES CA CA TX NV
------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK - 126 142 170 171
Wireline (A)/Non-wireline (B) - B B B B
% Owned by CCI - 11.25% 0.98% 4.40% 0.98%
Other Holder of CCI Market - GTE GTE
Mobilnet AirTouch Mobilnet AirTouch
% Owned by Other Holder - 85.90% 49.90% 79.10% 49.90%
Other HOlder of CCI Market 2 - NA NA NA NA
% Owned by Other Holder 2 - 28.85% 49.12% 16.50% 49.12%
Other Holder 1 - AirTouch/ Galveston
McCaw McCaw Mobile McCaw
% Owned - 85.90% 100.00% 78.60% 85.90%
Other Holder 2 - NA - NA NA
% Owned - 14.10% 0.00% 21.40% 11.40%
<CAPTION>
SANTA CRUZ, CHICO, ANDERSON, REDDING, YUBA CITY,
CA CA SC CA CA
----------- --------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C>
1994 MSA RANK 174 215 227 254 274
Wireline (A)/Non-wireline (B) B B B B B
% Owned by CCI 11.25% 0.98% 10.83% 0.98% 0.98%
Other Holder of CCI Market GTE
Mobilnet AirTouch Sprint AirTouch AirTouch
% Owned by Other Holder 85.90% 49.90% 89.17% 48.40% 49.90%
Other HOlder of CCI Market 2 NA NA NA NA NA
% Owned by Other Holder 2 2.85% 49.12% 0.00% 50.62% 49.12%
Other Holder 1
N. Patel McCaw Bell Atlantic McCaw McCaw
% Owned 77.60% 100.00% 77.00% 88.20% 94.40%
Other Holder 2 NA - NA NA NA
% Owned 22.40% 0.00% 23.00% 11.80% 5.60%
</TABLE>
- -----------------------------------------------
(1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management.
-14-
<PAGE> 72
CONTEL CELLULAR INC.
SHAREHOLDER PROFILE OF CCI(1)
<TABLE>
<CAPTION>
REPORTED LAST % OF CLASS A
INSTITUTION 13F TYPE HOLDING COMMON HELD DATE OF REPORT
-------------------------------------- ------------------ ------------- ------------ -----------------
<S> <C> <C> <C> <C>
Snyder Capital Management Inc. Investment Advisor 905,000 9.09% June 30, 1994
Capital Research & Management Investment Company 794,000 7.98% September 30,1994
Wells Fargo Inst. Trust, NA 13G 740,676 7.44% September 30,1994
College Retirement Equities 13G 519,200 5.22% September 30,1994
California Public Employees Retirement Other 496,900 4.99% June 30, 1994
Geocapital Corporation Investment Advisor 399,800 4.02% June 30, 1994
Mellon Bank Corporation Bank 349,846 3.52% June 30, 1994
Wilshire Associates Investment Advisor 233,000 2.34% June 30, 1994
Bankers Trust N.Y. Corp. Bank 225,188 2.26% June 30, 1994
Delphi Management Inc. Investment Advisor 215,000 2.16% June 30, 1994
California State Teachers Retirement Other 210,000 2.11% June 30, 1994
Eagle Asset Management Inc. Investment Advisor 200,000 2.01% June 30, 1994
</TABLE>
__________________________________
(1) Includes only those institutions holding more that 2% of the
outstanding 9,950,733 Class A Common Shares. Source: CDA/Spectrum
report.
-15-
<PAGE> 73
CONTEL CELLULAR INC.
SUMMARY OF INVESTOR OPINIONS(1)
<TABLE>
<CAPTION>
PRIVATE PRIVATE "FAIR"/TARGET
MARKET MARKET MARKET
VALUE VALUE VALUE PER
DATE OF REPORT INVESTMENT FIRM INVESTOR/ANALYST PER SHARE PER NET POP(2) SHARE
- ------------------ ------------------- ---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
September 22, 1994 Harvest Management, Inc. John Christ $31.00 215 $31.00
September 15, 1994 Snyder Capital Management Walter Niemasik, Jr. -- -- $30.00
September 13, 1994 Burnham Securities, Inc. I.W. Burnham II -- -- ($29.00 -
$34.00)
September 12, 1994 Private Investor Vernon E. Harmon -- -- ($28.50 -
$32.50)
September 9, 1994 Burhnam Securities, Inc. I.W. Burnham II -- -- >$30.00
September 9, 1994 Harvest Management, Inc. John Christ $32.00 (SB) $219 $22.40 (SB)
September 8, 1994 Harvest Management, Inc. John Christ $29.00 (DLJ) $207 --
$33.00 (DLJ) $223 --
$34.00 (SB) $228 --
September 6, 1994 Private Investor Vinnie Madrid -- -- --
</TABLE>
<TABLE>
<CAPTION>
TIME
"FAIR"/TARGET PERIOD
MARKET VALUE FOR
DATE OF REPORT PER NET POP(2) ESTIMATE(S) VALUATION EXPLANATION/OTHER
- ------------------ -------------- --------------- --------------------------------
<S> <C> <C> <C>
September 22, 1994 $215 1995E Sent Smith Barney research
report, dated September 22,
1994.
September 15, 1994 $211 Not specified "At GTE's proposed price of
$22.50, Control Cellular
remains substantially
undervalued in relation to its
asset value."
September 13, 1994 $207 - $228 Not specified "I think it is time to reassess
your offer..."; also, wants a
stock-for-stock transaction.
September 12, 1994 $205 - $221 Not specified GTE Federal Systems retiree
with "larger portion of my funds
invested in Contel Cellular
stock."
September 9, 1994 >$211 Not Specified Wants a stock-for-stock
transaction.
September 9, 1994 $179 1995E Sent Salomon Brothers research
report, dated September 8, 1994
and Wheat, First, Butcher &
Singer research report, dated
September 8, 1994.
September 8, 1994 -- 1994E Sent Donaldson, Lufkin &
-- 1995E Jenrette research report, dated
-- 1994E September 8, 1994 and Smith
Barney research report, dated
September 8, 1994.
September 6, 1994 -- -- "Please reconsider the terms of
the acquisition and the price of
the shares."
- ------------------------------------------
</TABLE>
(1) Sent or copied to one or more of the following: Leonard Jaffe, Robert
La Blanc, Charles Lee, Terry Parker, Irwin Schneiderman and Dennis
Whipple.
(2) Based on 23.9 million net POPs. (Cellular Asset Value per net POP).
-16-
<PAGE> 74
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER
CCI has had another excellent year, with key milestones achieved in financial
performance, subscriber growth, operational efficiencies, distribution strategy
and organization configuration. While undertaking the most significant
organization restructuring in the history of the Company, we have managed to
maintain our focus on subscriber growth, network construction, customer
service, financial performance and enhancing total quality of our service.
KEY MILESTONES
- - During the second quarter of 1994, the Company achieved "positive"
operating income for the first time in its history. Operating income
is expected to be $46 million, $15 million or 150% over Budget, and
$74 million over 1993.
- - Cash flow from operations, operating income before depreciation and
amortization, is expected to be $166 million, an increase of $86
million or 108% over 1993, and $2 million favorable to Budget.
- - Annual growth rate in 1994 is expected to be 53%, as compared to a
Budget growth rate of 41%, and follows 1993's growth rate of 59%.
- - Gross adds are projected to be 447 thousand, which is 37 thousand, or
9% favorable to Budget and 157 thousand, or 54% greater than 1993.
- - Cost per gross add declined from 1993 by $29, or 8%, while being only
$11, or 3% unfavorable to Budget.
- - Total service revenues increased $201 million, or 58% over 1993, and
$65 million or 113% over Budget.
- - Service revenue per subscriber was $69, a decrease of $3, or 4%, and
$1 unfavorable to Budget.
-17-
<PAGE> 75
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY MILESTONES (CONT'D)
- Completed capital projects totaling $222 million, the highest single
year level in the Company's history. Capital was used to expand
networks, provide capacity to maintain call quality standards while
exceeding year end Budget subscribers by 62 thousand, support the
TeleGo program, expand Company owned retail distribution and position
computer and internal communications networks for the introduction of
the Virtuoso customer billing system in early 1995. The Company
expects to add 148 new cells in service by the end of 1994, bringing
our total to 659. Additionally, all of our five year fill-in
requirements were met.
- Gross property plant and equipment per year end subscriber was $1,129,
a decrease of $227 or 17% from 1993, and $128 or 10% favorable to
Budget.
- Expanded Residential Sales into 15 markets, TeleGo into two markets,
PayGo is now being offered in 46 MSA and RSA markets, initiated sales
in over 70 WalMart locations in Tennessee, Alabama, Kentucky and
Virginia and launched the Sales Support program in all Area locations.
- Centralized routine customer service functions into a single,
consolidated Call Center in Atlanta to capitalize on technologies
(interactive voice response) and economies of scale.
- Implemented the Customer Connection recommendations with respect to
the organization revitalization plan by dissolving the two regions
(National and South) and creating eight separate Areas.
-18-
<PAGE> 76
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
SIGNIFICANT EVENTS
- In January, the Company initiated the implementation of the Customer
Connection organization revitalization plan. The National and South
Regions were dissolved and eight new Area organizations were created.
Each Area has an Area Vice President with local resources to support
marketing, distribution, network construction and support, finance,
human resources and IM. The reorganization has been carried out
within the 1994 Budget which did not reflect the costs associated with
relocations and staffing the new requirements. The 1994
reorganization was much more significant than the 1993 reorganization,
and encompassed every employee in the field and headquarters
organizations. The adverse impacts of such a large reorganization
have been essentially transparent to our customers, while the benefits
associated with moving critical operational and support resources
closer to the customer will be positively reflected in our current,
and prospective performance. Evidence of one of the reorganization's
successes is reflected in our Spring 1994 Market Share study, which
showed an overall Company share of 52%, up 3% points from the Fall of
1993.
- The Northeast Properties, which were intended to be sold to NYNEX at
the end of 1993, have closed in stages throughout 1994. These
properties were not in the operating Budget and have had an adverse
impact on operating results for the year due to many of the reasons
associated with our intentions to sell the properties. Support,
operations, and coordination with NYNEX in addition to the legal and
administrative efforts involved in consummating the partial sales has
adversely consumed the resources of PCS and Company Headquarters staff
throughout the year.
-19-
<PAGE> 77
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
SIGNIFICANT EVENTS (CONT'D)
- The 1994 Budget assumed that the Company complete the purchase of the
outstanding 79% interest in California RSA 4 early in the year, thus
consolidating the $3.2 million September year-to-date operating
income, versus the corresponding $400 thousand Budget. Partnership
issues and rights of first refusal have delayed the purchase of this
market to 1995, and it appears (based on one partner's exercise of its
rights of first refusal) that the Company will only be able to
purchase 29%, and still not be in a position to consolidate the
results of this RSA in 1995.
- In August, Company management obtained approval to acquire the
strategically significant non-wireline cellular license for the
Huntsville MSA. This market will significantly enhance our
competitive position in the Alabama Area and contribute positive
operating results immediately. This transaction is intended to be
closed in December. Support and coordination efforts of Company
Headquarters and Alabama Area resources will be required to complete
this transaction on time and in a smooth and orderly fashion as to not
adversely impact the existing 20 thousand Huntsville subscribers.
- On September 8, 1994, the GTE Board of Directors made an offer to
purchase the remaining 10%, Class A common shares of publicly traded
Company stock. On September 9, the Company's Board elected a Special
Committee to assess the fairness of the offer and negotiate a
definitive merger agreement on behalf of the Company's shareholders.
Since this announcement, there has been a great deal of time and
resources committed to assisting the Special Committee by the
Company's President, its Chief Financial Officer and its General
Counsel. All of the requested information and analysis requested by
GTE's and the Special Committee's investment bankers was provided on
schedule and in a thorough and complete manner.
-20-
<PAGE> 78
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY ACCOMPLISHMENTS
- In 1994, the Company added significantly more subscribers, at a lower
cost per gross add, than ever before. Acquisition costs would have
been $10 million higher using the 1994 volume at the 1993 cost per
add. At the same time, the Company recorded the smallest decline in
service revenue per subscriber, per month, both in absolute dollars
($3) and percentage (4%). It is apparent that the Company's strategy
to expand company controlled distribution channels has been successful
in reducing overall costs and allowing volume increases to drive costs
to the lowest incremental cost possible.
- Throughout the year, the Company has opened new retail stores and
kiosks staffed by "Sales Associates" to take advantage of volume
sensitive savings in subscriber acquisition costs. Additionally, in
the 4th quarter of 1994, the Company successfully negotiated
agreements with WalMart in Tennessee, Alabama, Kentucky and Virginia
to open Company staffed kiosks within the WalMart stores for a low
monthly fee. By the end of 1994, the Company expects to have over 70
locations within these four Area markets. Results from the initial
locations have been outstanding both in volume and cost per add.
- The Company has expanded its controlled distribution by adding
Residential Sales programs in 15 markets. The program has undergone
numerous changes and adjustments as we learn more about the
complexities and characteristics of this type of distribution.
Successes in this program include the addition of approximately 12
thousand net subscribers at an average cost per gross add of $280.
Revenue per subscriber is at $44, due to the fact that almost no
roaming revenue is attributed to this subscriber channel. Subscriber
churn continues to remain high in this channel due to the fact that
subscribers are not required to sign annual contracts. In summary, we
continue to be encouraged by the prospects and opportunities
associated with this channel.
-21-
<PAGE> 79
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY ACCOMPLISHMENTS (CONT'D)
- The expansion of PayGo into almost all company controlled markets (46)
has had a very positive impact on the Company's overall performance.
Through September, there were over 10 thousand subscribers on the
PayGo program, generating average revenues of over $83 per month (with
no roaming), and a net contribution of $2.3 million. This program
also has high subscriber churn, which is offset by lower acquisition
costs and higher subscriber revenues. This program is being adopted
by GTE Mobilnet for many of its markets in 1994-1995.
- With the expansion of Company-owned retail distribution we implemented
an automated, real-time, point of sale system to enhance our retail
image, improve the efficiency and productivity of our sales
associates, improve internal accounting controls and accountability
for phone inventory, accessories and cash, and provide management
reports on retail productivity, costs and performance. The point of
sale management team has developed training material, conducted
training classes in the markets, developed and implemented policies
and procedures, an on call support function [sic] and facilitated the
implementation and set-up of all point of sale retail locations.
- Sales Support is a program introduced in conjunction with the creation
of a centralized Call Center for Customer Service. The Sales Support
program is located and managed in each of the eight Area locations.
The objective of Sales Support is to maximize opportunities to convert
contacts with existing and prospective customers into revenue
generation. Primary functions of the Sales Support group will include
the sale of new or enhanced service and products, support of the
"Customer Direct" sales program, enhancement of sales representative
productivity through improved lead generation, customer retention and
resolution of market-specific customer issues that cannot be handled
by the centralized Call Center.
-22-
<PAGE> 80
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY ACCOMPLISHMENTS (CONT'D)
- The Company has continued to place a great deal of emphasis on
enhanced service revenues (e.g., voice mail, Mr. Rescue, etc.),
develop new services (e.g., voice activated dialing and extension
service plus) and introduce new rate plans to increase revenue per
minute of use. Roaming revenue has continued to be a bright spot with
a $39 million or 65% increase over 1993, and $36 million or 58%
favorable variance to Budget. Roaming revenue has increased as a
result of the strong growth in subscribers throughout the cellular
industry, within the Company's markets (home roaming within the
"SuperSystems" account for almost 14% of total roaming revenue), the
continuation of favorable roaming rates and the addition of new cells
which have increased our coverage and capacity for both home and
roaming customers.
- The Company has been developing a centralized Call Center designed to
take advantage of economies of scale and to capitalize on capabilities
through our technologies. The primary responsibilities of the Call
Center will be customer contact, billing inquiries and financial
services (e.g. collections) involving activities that are routine and
standardized within the scope of our customer care functional
activities. Market-related customer inquiries will be routed back to
the Sales Support groups in each applicable Area.
- Customer satisfaction and delivery of quality services remains a
priority throughout our markets. The creation of the eight Areas
allows the Company to move critical operational and support resources
away from the headquarters and region locations closer to the
customer. The development of personnel in leadership positions and
the staffing of key planning and operational resources better
positions the Company for future growth and enhances our ability to
stay abreast of new technologies. Key management personnel are now
better focused on their roles, responsibilities and accountabilities
to ensure that the Company's assets are safeguarded and that our
return on investments are maximized.
-23-
<PAGE> 81
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY ACCOMPLISHMENTS (CONT'D)
- A key element of customer service is network quality and coverage. In
1994, the Company increased the number of subscribers per cell site to
1,206, an increase of 18% over 1993, and a 53% increase over this
measure for 1992. The rapid increase in this measure has put
additional strain on our network quality measures particularly in
markets which have higher than budgeted growth rates. The accelerated
growth rates have been accommodated by the Network organization
through the necessary provisioning of switch, cell and radio additions
to prevent significant degradation of service levels. However, ending
subscribers are expected to exceed Budget by approximately 62
thousand, and capital which might have otherwise been directed to meet
capacity was deployed to meet five year fill-in deadlines and provide
improved coverage and quality to recently acquired RSA markets.
- During the first quarter of 1994, we completed the conversion of the
remaining Series I cell sites to Series II (digital ready) sites in
MSA markets. These change-outs improve the performance and
maintenance requirements of these markets as well as positions the
Company for deployment of Digital Radio and Cellular Digital Packet
Data (CDPD) technology. Additionally, the Company implemented network
technologies which facilitate seamless roaming and automatic call
delivery.
- The new Area configuration has allowed Network personnel to improve
their ability to plan and adjust network construction and support
requirements through close coordination with market managers and
marketing management. The long term planning process has been
improved with regular monitoring and control measures to stay abreast
of changing market conditions. The implementation of a site
acquisition and planning function has allowed the Company to better
plan and prepare for future growth and capacity requirements by
accelerating the acquisition and zoning process to ensure that site
locations are ready for construction when required.
-24-
<PAGE> 82
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY ACCOMPLISHMENTS (CONT'D)
- Our higher growth rate and rapid changes have continued to place a
great deal of pressure on our ability to maintain quality networks,
customer service, operational infrastructure and internal accounting
controls throughout our markets. Our subscriber churn rate has
increased from 2.0% per month in 1993 to 2.2% in 1994. The increase
is primarily attributed to the expansion of PayGo Residential Sales
and the TeleGo programs which have no contractual obligation, and
therefore no real commitment is required by the customer. Without
these programs the churn rate would have been at 2.0% in 1994.
- In 1994 the Company received "Good" reports from Internal Audit on
their follow-up audit of the Kentucky Area, initial audit of the
Alabama Area and initial audit of the internal and external financial
reporting and budget and planning processes. We continue to improve
our partnership relations and issued essentially all of the 1993
partnership audit reports on time in 1994. Total fraud expense
(clone, tumbling and subscription) is expected to be below $1.5
million, as compared to $1.6 million in 1993. As a percentage of
service revenue the 1994 fraud expense represents a 41% decline as
compared to the corresponding 1993 rate. In August, the Company
issued a three page financial and operational highlights report in
Research Magazine, with over 30 thousand copies of the reprint
requested by retail stock brokers throughout the country.
-25-
<PAGE> 83
CONTEL CELLULAR INC.
1994 MANAGEMENT LETTER (CONT'D)
KEY ACCOMPLISHMENTS (CONT'D)
- In summary, 1994 has been a year of outstanding achievements and
financial performance which exceeds Budget for the current period and
better positions the Company's markets for the future. The Company
substantially exceeded subscriber growth, while reducing acquisition
costs per subscriber which has significantly improved operating
income. The additional subscribers and improved market share better
positions the Company for future growth and emerging competition. The
successful reorganization into eight Areas better position the
Company's markets for future growth, improved financial performance
and enhances our ability to proactively or reactively respond to
competition in a timely manner. Management believes that it
positively influenced the favorable performances of the Company,
successfully carried out the reorganization within budgeted costs (the
costs of the reorganization and the resulting Area configuration were
not in the 1994 Budget), and made the necessary investments in
infrastructure and customers to position the Company for greater
success in the future.
-26-
<PAGE> 84
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
TRADING VOLUME SUMMARY
DATE DAILY HIGH DAILY LOW DAILY CLOSE VOLUME(MM)
- -------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
8/1/94 $18.00 $17.50 $17.75 6.6
8/2/94 18.00 17.50 18.00 23.7
8/3/94 18.50 18.00 18.25 51.5
8/4/94 19.00 18.25 19.00 36.2
8/5/94 19.00 18.25 18.75 24.3
8/8/94 19.00 18.25 18.25 4.6
8/9/94 19.25 18.25 19.25 38.1
8/10/94 19.38 18.75 19.25 52.3
8/11/94 19.25 18.75 18.75 7.2
8/12/94 19.25 18.50 18.50 9.5
8/15/94 19.25 18.50 18.50 8.8
8/16/94 19.25 18.50 18.50 11.4
8/17/94 18.75 18.00 18.25 23.1
8/18/94 18.75 18.00 18.00 11.6
8/19/94 18.75 18.00 18.75 2.3
8/22/94 18.72 17.75 18.25 24.2
8/23/94 18.25 17.50 18.25 97.7
8/24/94 18.75 18.00 18.50 63.1
8/25/94 18.75 18.00 18.00 13.3
8/26/94 18.50 18.00 18.00 17.2
8/29/94 18.50 17.75 17.75 1.4
8/30/94 18.50 17.75 18.13 6.0
8/31/94 18.50 17.75 17.75 1.6
9/1/94 18.50 17.75 18.50 5.5
9/2/94 18.50 18.00 18.00 12.2
9/6/94 18.50 18.00 18.00 12.9
9/7/94 18.25 17.75 17.75 9.4
-----------------------------------------------------------------
9/8/94 23.50 22.75 23.50 3,324.1
-----------------------------------------------------------------
9/9/94 23.63 23.13 23.13 1,452.4
9/12/94 23.50 23.13 23.25 225.4
9/13/94 23.50 23.25 23.25 132.8
9/14/94 23.63 23.25 23.50 70.6
9/15/94 23.75 23.38 23.50 28.8
9/16/94 24.00 23.50 23.88 147.5
9/19/94 23.88 23.75 23.88 22.6
9/20/94 23.88 23.50 23.50 160.0
9/21/94 23.63 23.50 23.50 35.4
9/22/94 23.75 23.50 23.50 118.2
9/23/94 23.75 23.50 23.75 154.1
9/26/94 23.88 23.50 23.63 18.0
9/27/94 23.75 23.50 23.75 27.7
9/28/94 23.75 23.50 23.75 11.1
9/29/94 23.75 23.50 23.50 28.0
9/30/94 23.75 23.50 23.63 74.8
10/3/94 23.75 23.50 23.75 128.0
10/4/94 23.75 23.50 23.75 15.8
10/5/94 23.88 23.50 23.63 43.5
10/6/94 23.88 23.50 23.88 14.8
10/7/94 23.88 23.50 23.50 7.4
10/10/94 23.69 23.50 23.63 2.5
10/11/94 23.88 23.63 23.63 5.4
<CAPTION>
DATE DAILY HIGH DAILY LOW DAILY CLOSE VOLUME(MM)
- -------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
10/12/94 23.88 23.63 23.75 21.8
10/13/94 24.00 23.75 23.75 6.8
10/14/94 24.00 23.75 23.75 22.4
10/17/94 24.00 23.75 23.75 38.7
10/18/94 24.00 23.75 23.75 52.5
10/19/94 24.13 23.75 24.00 204.6
10/20/94 24.13 23.88 24.00 15.2
10/21/94 24.13 23.88 24.00 8.0
10/24/94 24.25 23.88 23.88 12.6
10/25/94 24.13 24.00 24.06 120.4
10/26/94 24.13 24.00 24.06 253.7
10/27/94 24.25 24.00 24.25 255.2
10/28/94 24.38 24.00 24.13 32.1
10/31/94 24.25 24.13 24.13 13.5
11/1/94 24.38 24.13 24.13 10.3
11/2/94 24.25 24.13 24.13 7.2
11/3/94 24.38 24.13 24.13 7.7
11/4/94 24.25 24.00 24.25
</TABLE>
- -----------------------
(1) Source: FactSet database.
-27-
<PAGE> 85
CONTEL CELLULAR INC.
PREMIA PAID IN SELECTED MINORITY INTEREST PURCHASES(1)
(All Numbers Reflect Averages)
CELLULAR/TELECOMMUNICATIONS MINORITY BUYOUTS
(Transactions Greater Than $100 million)
<TABLE>
<CAPTION>
Premium
----------------------------------
Stake Purchased One Week One Month
--------------- -------- ---------
<S> <C> <C>
Less than 5% 0.6% 14.6%
5.0% to 9.9% 20.0% 42.9%
10.0% to 14.9% 11.7% 62.1%
15.0% to 19.9% 60.0% 100.0%
20.0% to 49.9% 59.8% 58.3%
</TABLE>
ALL MINORITY BUYOUTS
(Transactions Greater Than $25 million)
<TABLE>
<CAPTION>
Premium
----------------------------------
Stake Purchased One Week One Month
--------------- -------- ---------
<S> <C> <C>
Less than 5% 8.2% 10.2%
5.0% to 9.9% 11.8% 10.6%
10.0% to 14.9% 4.8% 4.5%
15.0% to 19.9% 10.9% 11.2%
20.0% to 49.9% 29.6% 31.7%
</TABLE>
__________________________________
(1) Source: Securities Data Corporation. Data covers all relevant
purchases of stakes less than 50% since January 1, 1989.
-28-
<PAGE> 86
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS IN THE CELLULAR INDUSTRY(1)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
VALUE OF % OF TO PREMIUM 4
DATE DEAL SHARES ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME ($MIL) ACQ. MENT DATE ANN. DATE
- ----------- ------------------------------ ----------------------------- -------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
10/07/94 Monor Communications Group Inc. United International Holdings NA 47.62 NA NA
08/09/94 Wiltek Inc. Investor Group NA 20.00 NA NA
06/24/94 WorldPartners (KDD/AT&T Corp) Unisource Satellite Services NA 20.00 NA NA
09/23/94 International Comm. Corp. NYNEX Corp. NA NA NA NA
06/13/94 Nationwide Cellular Services Investor Group 0.8 0.83 1.9 8.2
03/11/94 CommNet Cellular Inc. Investor Group 12.6 6.00 4.0 NA
01/24/94 Cellular Inc. Investor Group 11.6 4.80 0.6 20.9
12/03/93 Cellular Communications Intl. Kingdom Capital Management 5.9 3.45 11.2 28.6
11/09/93 Nextel Communications Inc. Nippon Telegraph & Telephone 75.0 1.84 -6.8 6.9
10/04/93 Metricom Inc. Vulcan Ventures 17.5 12.40 20.0 42.9
09/09/93 Internet Communications Corp. Investor 1.6 9.40 -0.8 101.4
06/14/93 OCOM Corp. Investor Group 9.6 9.63 29.8 64.9
01/12/93 LDDS Communications Inc. Investor 6.3 0.45 -2.9 2.4
09/29/92 Centel Corp. Eagle Asset Management Inc. 1.6 0.06 -11.9 -1.6
10/14/91 International Telecharge Inc. Investor 4.0 33.0 60 100.0
09/06/91 OCOM Corp. Goldman Sachs & Co. 0.6 2.01 8.0 54.3
04/05/91 US WEST New Vector Group Inc. Goldman Sachs & Co. 6.3 1.60 0.3 11.7
07/25/90 Cellular Communications Inc. PacTel Corp (Pacific Telesis) 87.0 5.00 13.9 20.0
03/08/90 McCaw Cellular Commun Inc. British Telecom USA Holdings 110.0 2.70 4.9 -0.1
01/19/89 McCaw Cellular Commun Inc. British Telecom USA Holdings 1,370.0 19.70 59.8 58.3
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-29-
<PAGE> 87
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS(1)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- ----------- ------------------------------ ------------------------ ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
10/25/94 Castle & Cooke Homes Inc. Dole Food Company 81.0 17.2 9.57 10.53
10/17/94 Chemical Waste Management WMX Technologies 369.1 21.4 13.84 12.38
10/18/94 National Gypsum Investor Group 35.1 5.0 1.10 -11.90
09/28/94 Ogden Projects Inc. Ogden Corp. 106.0 16.0 7.30 2.50
09/22/94 Santa Fe Pacific Corp. Alleghany Corp. 177.8 4.3 - 14.70
09/16/94 Salomon Inc. Investor Group 54.3 1.5 2.40 2.10
08/29/94 Columbia Gas System Inc. Investor Group 500.0 - 0.20 -3.80
08/09/94 Terra Industries Inc. Minorca SA 99.8 - 25.0 -4.80
07/25/94 Viacom Inc. (National Amusements) Tracinda Corp. 310.0 5.0 -15.10 -7.50
07/18/94 National Gypsum Investor Group 33.3 4.8 0.40 -
06/16/94 Baxter International Inc. Investor Group 122.2 1.7 0.50 2.00
06/16/94 Loral Corp. Loral Pension Plan 108.0 - -4.00 -
06/14/94 Sprint Corp. Investor Group 2,026.0 - 24.70 26.40
05/11/94 General Motors Corp. General Motors Pension 6,239.3 - -36.20 -33.20
Fund
05/06/94 Dreyer's Grand Ice Cream Inc. Nestle USA Inc. 96.0 - 26.70 32.00
(Nestle SA)
04/27/94 Policy Management Systems Corp. General Atlantic Partners 37.6 7.5 -8.70 -2.90
NY
04/22/94 Genentech Inc. Roche Holdings AG 139.7 16.1 12.40 9.90
04/12/94 Actava Group Inc. Renaissance Partners 28.7 - 14.80 12.70
04/05/94 Lehman Brothers Holdings Inc. Nippon Life Insurance Co. 89.2 3.2 -23.80 -18.00
04/01/94 TakeCare Inc. Investor Group 47.5 5.3 1.000 0.30
03/16/94 Kemper Corp. Southeastern Asset 108.9 8.1 0.80 -0.10
Management
02/18/94 Applebee's International Inc. Investor 27.5 5.3 13.3 -26.6
01/24/94 Geon Co. Investor Group 42.2 6.4 -0.3 4.4
01/24/94 Lehman Brothers Holdings Inc. Employee Stock Ownership 181.7 10.0 -44.8 -40.6
Plan
01/21/94 Video Lottery Technologies Inc. Electronic Data Systems 67.6 20.0 50.7 64.2
Corp.
01/13/94 Wells Fargo & Co. Investor 86.5 1.1 4.3 6.9
01/04/94 National Health Laboratories Investor Group 25.0 1.9 12.7 23.9
12/23/93 Dreyfus Corp. Investor Group 63.3 3.8 2.2 4.0
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-30-
<PAGE> 88
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- ----------- ------------------------------ ------------------------ ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
12/16/93 Time Warner Seagram Co. Ltd. 982.7 6.1 - -0.3
12/13/93 Salomon Inc. National Indemnity Co. 301.8 5.4 10.9 17.3
12/10/93 Wilcox & Gibbs Inc. Rextel (Pinault- 31.4 10.0 14.3 26.3
Printemps)
12/06/93 CellPro Inc. Corange Ltd. 50.0 8.0 55.3 58.1
12/06/93 CellPro Inc. Corange Ltd. 60.0 - 116.2 120.2
12/02/93 Jones Intercable Inc. BCE Telecom 55.0 13.0 20.5 25.7
International
11/10/93 Valley Fashions Corp. Investor 36.9 - 2.7 -
11/10/93 Wells Fargo & Co Investor Group 33.0 0.6 0.9 -16.9
11/09/93 Nextel Communications Inc. Nippon Telegraph & 75.0 1.8 -6.8 6.9
Telephone
10/29/93 Protein Design Labs Inc. Corange Ltd. 30.0 8.1 53.8 77.0
10/22/93 Rivervood Manville Corp. 50.0 1.0 12.0 8.9
International Corp.
10/21/93 MagneTek Inc. Singapore 25.6 6.7 19.6 13.3
10/18/93 Navistar International Investor Group 75.6 6.2 16.7 30.4
Corp.
08/20/93 Dr. Pepper/Seven-Up Cadbury Schweppes PLC 231.3 20.2 9.4 2.7
Cos. lnc.
08//19/93 Maxtor Corp. Hyundai Electronics 150.0 40.0 50.8 37.4
Industries
08/12/93 Permian Basin Royalty Burlington Resources 74.7 33.0 25.2 29.3
Trust Inc.
07/27/93 Legent Corp. Investor Group 59.4 8.5 107.9 2.5
07/22/93 North American Mortgage Co. Investor Group 34.7 7.5 24.7 48.8
06/18/93 C-TEC Corp. RCN Corp. (Peter 196.5 34.0 86.3 91.5
Kiewit Sons)
06/03/93 Applied Immune Science Inc. Rhone-Poulenc Rorer 113.0 37.0 48.1 59.3
Inc.
06/02/93 MCI Communications Corp. British 3,465.2 16.8 -28.1 -19.4
Telecommunications PLC
06/01/93 International Totalizator Sys. Berjaya Lottery 25.6 28.4 15.8 22.2
Management (HK)
05/26/93 Time Warner Seagram Co. Ltd. 1,189.0 8.1 27.9 38.4
05/25/93 Amax Gold Inc. (AMAX Inc.) Shareholders 160.6 28.0 -16.9 -6.3
05/07/93 Pet Inc. Investor Group 28.6 1.6 15.7 14.8
04/23/93 Newmont Mining Corp. Investor Group 268.6 10.0 -5.4 -8.7
04/23/93 Newmont Mining Corp. Investor Group 126.4 - -5.4 -8.7
04/20/93 Humana Inc. Investor 55.6 3.9 101.9 75.9
04/19/93 Home Shopping Network Inc. Liberty Media Corp. 114.0 16.4 40.0 19.1
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-31-
<PAGE> 89
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS (1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- -------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
03/22/93 Marvel Entertainment Group Inc. New Marvel Holdings Inc. 300.0 20.3 42.9 58.9
02/17/93 Doskocil Cos. Inc. Joseph Littlejohn & Levy 30.0 25.0 -2.4 -
02/11/93 American Express Co. Fund American Enterprise Hldgs. 125.0 1.0 0.5 -0.5
02/02/93 Wells Fargo & Co. Investor 49.5 0.9 -0.3 30.5
01/25/93 International Family Ent. Inc. Investor Group 38.7 11.9 4.1 13.4
01/22/93 Republic Pictures Corp. Blockbuster Entertainment Corp. 25.0 34.2 33.3 35.6
01/12/93 Squibb Howard Broadcasting Co. EW Scripps Co. 28.3 5.6 - -
01/08/93 Santa Fe Energy Resources Investor Group 91.6 11.4 -1.4 3.0
12/24/92 Santa Fe Energy Resources Sarlos Trading 82.7 10.9 3.0 4.6
12/23/92 Jefferson-Pilot Corp. Investor Group 109.1 1.7 2.8 12.2
12/10/92 QVC Network Inc. Arrow Investments Inc. 25.0 - - 29.0
12/08/92 Pittston Co. Employee Benefits Trust 54.5 9.8 -4.4 4.8
12/01/92 Chicago and North Western Hldg. Union Pacific Corp. 39.0 4.8 -0.6 -2.9
11/13/92 Tennecco Inc. Employee Stock Ownership Plan 432.0 8.6 4.3 2.1
11/02/92 Eastern Enterprises Investor Group 31.6 6.1 7.4 8.5
10/19/92 MNC Financial Inc. Fidelity Investments (FMR Corp.) 42.5 5.6 -29.2 -19.0
10/08/92 Wells Fargo & Co. National Indemnity Co. 37.8 1.0 2.7 1.7
10/07/92 DPL Inc. Employee Stock Ownership Plan 87.9 - -1.3 -32.6
10/06/92 MidSouth Corp. Kansas City Southern Inds. Inc. 67.8 33.8 85.1 83.0
09/21/92 Hartmarx Corp. Traco International NV 30.0 17.0 10.5 5.0
09/11/92 Berlitz International Inc. Investor Group 34.7 7.6 39.1 26.3
09/04/92 Carriage Industries Inc. Dixie Yarns Inc. 26.7 44.1 37.7 32.5
09/03/92 DWG Corp. Trian Group LP 71.8 23.1 14.3 33.3
08/14/92 Champion International Corp. Loews Corp. 67.6 3.0 -1.5 -3.9
07/23/92 General Dynamics Corp. Berkshire Hathaway Inc. 321.4 14.9 -0.7 3.5
07/22/92 Enron Corp. Electronic Data Systems Corp. 149.5 3.1 -2.7 0.8
07/22/92 Grow Group. Corimon CA SACA 56.3 26.0 28.8 32.7
07/17/92 MNC Financial Inc. NationsBank Corp. 200.0 16.0 -2.1 11.9
07/16/92 Centocor Inc. Eli Lilly & Co. 50.0 5.0 86.9 -9.5
</TABLE>
- ----------------------------------
(1) Source: Securities Data Corporation.
-32-
<PAGE> 90
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS (1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMIUM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- -------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
06/29/92 Fleet Call Inc. Comcast Corp. 100.0 - 43.6 13.1
06/25/92 TW Holdings Inc. Kohlberg Kravis Roberts & Co. 450.0 47.2 - -15.8
06/17/92 Southland Corp. C. Itoh & Co. Ltd. 30.6 - 6.7 4.3
05/12/92 Pilgrim's Pride Corp. Archer-Daniels-Midland Co. 30.0 18.0 14.3 2.1
04/07/92 Borden Inc. Merrill Lynch & Co. Inc. 224.0 4.7 -1.2 -1.5
03/16/92 Tektronix Inc. Investor Group 68.8 11.4 27.2 10.4
02/21/92 Blockbuster Entertainment Corp. Electris Finance SA 27.0 1.2 -1.8 -0.9
12/23/91 Roberts Pharmaceutical Corp. Yamanouchi Pharmaceutical Co. 95.4 28.7 -7.4 7.1
11/18/91 Blockbuster Entertainment Corp. Philips Electronics NV 66.0 3.8 -5.4 -7.4
10/31/91 American Television & Commun. Investor Group 39.8 3.7 6.1 11.2
10/25/91 Vons Cos. Inc. Investor Group 41.5 3.6 2.9 0.5
10/18/91 Salomon Inc. Investor Group 213.5 6.6 22.3 31.1
10/11/91 Kansas Gas & Electric Co. Alpine Associates LP 44.0 4.3 6.7 11.5
09/18/91 NL Industries Inc. Tremont Corp. 91.7 12.4 -29.3 -25.4
09/13/91 Enterra Corp. Undisclosed Acquiror 38.6 11.8 -21.9 -20.8
09/09/91 Carpenter Technology Corp. Employee Stock Ownership Plan 30.0 5.4 31.3 37.9
08/29/91 NCR Corp. Capital Group Inc. 647.0 9.3 87.7 112.4
08/22/91 American Medical Holdings Inc. Investor Group 90.1 - - -7.2
08/13/91 Emerson Radio Corp. Fidenas Investment Ltd. 32.5 - 24.4 6.7
08/13/91 Penn Central Corp. Investor Group 27.5 2.2 5.7 11.8
06/26/91 Triton Energy Corp. Investor Group 70.7 11.9 69.9 68.7
06/13/91 ARCO Chemical Co. (ARCO) Archer-Daniels-Midland Co. 211.9 5.0 6.3 4.8
06/12/91 Champion International Corp. Loews Corp. 87.3 3.4 -2.6 7.2
06/07/91 Stanley Works Employee Stock Ownership Plan 185.6 12.0 -0.7 4.6
06/04/91 Carolco Pictures Inc. RCS Video 25.0 1.1 100.0 100.0
05/24/91 Gulf Resources & Chemical Corp. Nycal Corp. 33.5 35.1 39.6 29.8
05/23/91 Square D Co. Investor Group 101.0 4.9 - 8.9
04/23/91 Office Depot Inc. Carrefour SA 40.0 9.3 -6.7 -0.9
04/05/91 Spelling Entertainment Inc. Charter Co. (American Financial) 65.3 31.6 19.0 22.0
</TABLE>
- ---------------------------------
(1) Source: Securities Data Corporation.
-33-
<PAGE> 91
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
04/04/91 Univar Corp. Dow Chemical Co. 30.1 9.7 7.4 15.2
03/28/91 ITEL Corp. TIG Partners L.P. 37.9 8.0 -2.9 -1.0
03/20/91 First Empire State Corp. National Indemnity Co. 40.0 7.6 20.5 25.8
03/18/91 First Fidelety Bancorporation Banco de Santander SA 242.4 11.6 10.3 15.9
03/18/91 First Fidelety Bancorporation Banco de Santander SA 221.1 11.8 0.5 5.7
03/14/91 California Energy Co. Peter Kiewit Sons Inc. 92.0 30.0 2.1 12.9
03/13/91 HJ Heinz Co. Investor 68.5 0.7 -1.4 4.3
02/21/91 Citicorp Investor 590.0 9.9 -4.5 18.5
02/08/91 Seagate Technology Inc. Salomon Brothers Inc. (Salomon) 143.0 16.8 0.8 14.9
02/06/91 Amgen Inc. Undisclosed Investor 207.5 6.2 12.4 42.2
01/09/91 CBS Inc. Undisclosed Acquiror 45.0 1.0 4.5 2.6
01/03/91 Travelers Corp. American General Corp. 61.2 3.6 - 9.9
12/31/90 Media General Inc. Investor Group 61.4 12.0 11.0 22.9
12/21/90 MCA Inc. Investor Group 272.7 5.3 2.4 4.9
12/18/90 New Plan REalty Trust Algemeen Burgerlijk Pensionen 67.0 13.0 -0.7 4.7
12/14/90 Ashland Oil Inc. JP Morgan & Co. Inc. 100.0 5.1 5.1 7.0
12/14/90 Chrysler Corp. Tracinda Corp. 270.0 9.8 4.3 8.9
12/05/90 UAL Corp. Reliance Group Holdings Inc. 73.5 2.0 71.8 67.8
11/23/90 NCNB Corp., Charlotte, NC Investor Group 110.5 7.8 2.0 39.8
11/08/90 Perkin-Elmer Corp. Investor Group 32.9 4.5 8.6 17.3
10/31/90 Unilab Corp. (Unilabs Holdings) MetPath Inc. (Corning Inc.) 49.2 23.0 120.1 111.4
10/29/90 Trinity Industries Inc. Investor Group 33.5 9.3 -1.4 -18.3
10/24/90 Wells Fargo & Co. Berkshire Hathaway Inc. 247.0 9.8 11.6 5.9
10/17/90 Echlin Inc. Investor Group 33.8 5.4 16.9 8.4
10/16/90 Newmont Mining Corp. Investor Group 1,300.0 49.0 0.3 -11.6
10/10/90 Houston Industries Inc. Employee Stock Ownership Plan 330.0 - 2.3 3.1
10/05/90 Whitman Corp. Investor Group 127.1 5.1 25.8 21.9
09/19/90 Ohio Edison Co. Employee Stock Ownership Plan 192.0 7.9 -2.3 -5.9
09/19/90 Time Warner Investor 39.3 0.3 11.1 17.1
</TABLE>
- --------------------------------
(1) Source: Securities Data Corporation.
-34-
<PAGE> 92
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS (1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- --------------------------------- ------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
09/17/90 Phillips Petroleum Co. Inc. Employee Stock Ownership Plan 400.0 4.0 -0.4 -4.6
09/11/90 ASK Computer Systems Inc. Electronic Data Systems Corp. 40.0 19.7 34.8 16.5
08/29/90 Ferro Corp. Investor Group 39.4 9.6 -4.3 -12.6
08/27/90 Champion International Corp. Loews Corp. 341.0 12.1 14.6 8.5
08/20/90 Holnam Inc. (Holdernam Inc.) Holdernam Inc. (Holderbank) 99.9 19.7 2.9 -7.7
08/15/90 Baker Hughes Inc. Investor Group 105.3 - 63.3 84.7
08/15/90 Fruit of the Loom Inc. Farley Inc. 57.9 6.1 38.8 18.8
08/15/90 Fruit of the Loom Inc. Land Free Investments 43.1 6.1 3.4 -11.5
08/09/90 Argonaut Group Inc. Investor Group 48.2 6.6 0.7 -
08/09/90 Paramount Communications Investor Group 269.6 6.0 -0.3 -7.0
08/08/90 Continental Airlines Hldgs. Inc. SAS 31.5 5.2 180.0 143.5
07/25/90 Cellular Communications Inc. PacTel Corp. (Pacific Telesis) 87.0 5.0 13.9 20.0
07/24/90 BellSouth Corp. Employee Stock Ownership Plan 195.0 - -2.1 -3.1
07/18/90 Great American Mgmt. & Invt. Inc. Investor Group 50.0 18.0 4.2 4.2
07/17/90 FPL Group Inc. Employee Stock Ownership Plan 360.0 9.4 -2.1 -6.8
07/16/90 Chevron Corp. Pennzoil Co. 89.6 0.5 0.9 -1.1
07/13/90 Cummins Engine Co. Inc. Tenneco Inc. 100.0 10.8 24.1 14.4
07/13/90 Cummins Engine Co. Inc. Ford Motor Co. 100.0 10.8 24.1 14.4
07/13/90 Cummins Engine Co. Inc. Kubota Ltd. 50.0 5.4 24.1 14.4
07/05/90 Avon Products Inc. Chartwell Associates L.P. 149.0 7.0 3.4 4.2
06/25/90 Rochester Telephone Corp. Investor Group 28.4 3.1 5.7 7.3
06/19/90 United Asset Management Corp. Investor Group 28.0 9.7 0.9 0.9
06/15/90 Gannett Co. Inc. Employee Stock Ownership Plan 50.0 0.7 -1.2 7.0
06/14/90 The Neiman-Marcus Group Inc. Investor Group 38.9 7.6 -3.0 3.0
06/12/90 American Express Co. Nippon Life Insurance Co. 300.0 2.4 -3.4 -1.1
06/01/90 Telephone and Data Systems Inc. Investor Group 145.8 16.2 1.2 14.9
05/31/90 Corning Inc. Market Street Trust Co. 270.8 5.8 -2.0 5.9
05/31/90 First Bank System Inc. Investor Group 175.0 16.7 -2.6 6.7
05/30/90 Armstrong World Industries Inc. Various Buyers 171.5 11.7 -3.4 7.5
</TABLE>
- ----------------------------------
(1) Source: Securities Data Corporation.
-35-
<PAGE> 93
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
05/30/90 Global Marine Inc. Howard Weill Labouisse 53.5 12.8 -7.9 -7.9
05/24/90 UJB Financial Corp. Chilmark Management Corp. 54.4 6.7 18.2 39.3
05/07/90 Norton Co. Investor Group 166.5 10.1 0.6 20.6
04/12/90 Marion Merrell Dow Inc. Dow Chemicals Co. 112.7 1.5 41.5 52.9
04/09/90 C-TEC Corp. Investor Group 28.3 9.1 23.5 10.5
04/04/90 Northrop Corp. Delaware Management Co. 43.5 6.3 - -11.8
04/04/90 Northrop Corp. Sanford C. Bernstein and Co. Inc. 57.0 8.1 - -11.8
03/28/90 United Artists Entertainment Investor Group 70.2 7.5 1.8 -7.4
03/21/90 The Black & Decker Corp. Employee Stock Ownership Plan 47.0 4.2 2.8 13.3
03/16/90 Coca-Cola Enterprises Inc. Investor Group 115.0 6.1 8.4 9.3
03/08/90 McCaw Cellular Commun. Inc. British Telecom USA Holdings 110.0 2.7 4.9 -0.1
03/07/90 Great Northern Nekoosa Corp. Investor Group 257.0 7.1 0.2 13.1
02/23/90 Media General Inc. Investor Group 131.5 17.8 -2.9 0.4
02/14/90 First Interstate Bancorp, CA Kohlberg Kravis Roberts & Co. 111.5 5.9 -8.3 -20.5
02/08/90 Cyprus Minerals Co. Employee Stock Ownership Plan 96.0 10.0 -6.3 -18.3
02/05/90 Aristech Chemical Corp. Investor Group 43.7 5.3 4.9 32.3
01/16/90 Southwest Airlines Co. Investor Group 35.3 - 12.2 12.2
12/28/89 Pacific Telesis Group Employee Stock Ownership Plan 691.3 - 1.5 7.6
12/26/28 Bank of Boston Corp. Investor Group 99.7 6.2 38.5 9.8
12/20/89 Blockbuster Entertainment Corp. Undisclosed Acquiror 115.0 12.0 -11.1 -20.9
12/13/89 Pacific Enterprises Inc. Employee Stock Ownership Plan 175.0 5.2 1.8 -2.5
12/11/89 AVX Corp. Goldman Sachs & Co. 31.6 8.0 -0.4 1.7
12/07/89 Chevron Corp. Pennzoil Co. 2,137.0 8.8 4.9 17.1
12/06/89 MBIA Inc. Credit Local de France SA 49.0 4.9 -12.2 -10.0
11/27/89 Chevron Corp. Employee Stock Ownership Plan 1,000.0 4.1 12.7 5.2
11/27/89 Standard Shares Inc. Investor Group 38.5 1.3 2.3 2.8
11/24/89 Vista Chemical Co. Harris Associates L.P. 68.2 17.0 4.5 4.9
11/21/89 Avon Products Inc. Investor Group 93.9 4.5 4.0 28.0
11/21/89 Lockheed Corp. Investor Group 199.0 7.4 -4.5 -9.3
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-36-
<PAGE> 94
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
11/13/89 Barnett Banks Inc. Employee Stock Ownership Plan 190.0 - 3.0 -3.1
11/10/89 Avon Products Inc. Chartwell Associates L.P. 310.8 16.0 21.7 30.3
11/08/89 US Trust Corp. Central Capital Corp. 35.3 - - -3.9
11/03/89 UAL Corp. Condor Partners L.P. 410.0 11.4 -7.0 -43.8
10/26/89 Delta Air Lines Inc. Singapore Airlines Ltd. 181.4 5.0 3.7 1.7
10/26/89 Media General Inc. Investor Group 34.1 4.2 12.3 2.6
10/05/89 AMR Corp. Investor 250.0 4.7 -0.9 0.5
09/22/89 Merrill Lynch & Co. Inc. Employee Sock Ownership Plan 384.9 12.0 - -7.3
09/18/89 Manufacturers Hanover Corp. Dai-Ichi Kangyo Bank Ltd. 148.5 4.9 5.9 10.1
09/11/89 Chubb Corp. Employee Stock Ownership Plan 150.0 5.0 -10.6 -7.5
08/15/89 American Television & Commun. Investor Group 87.1 9.1 -9.5 -10.2
08/11/89 USAir Group Inc. Employee Stock Ownership Plan 113.6 5.0 -0.7 10.8
08/09/89 Texas Air Corp. Loomis Sayles & Co. 87.0 12.6 7.3 7.3
08/03/89 Computer Associates Int'l Inc. Investor 76.7 1.0 -0.7 -5.3
08/02/89 Chris-Craft Industries Inc. Investor Group 56.0 9.8 4.0 5.6
07/31/89 Century Telephone Enterprises Investor Group 87.0 10.3 6.2 -
07/26/89 Cummins Engine Co. Inc. Industrial Equity (Pacific) Ltd. 51.8 8.3 5.7 -4.3
07/19/89 Beverly Enterprises Inc. Undisclosed Acquiror 29.1 6.5 -5.7 3.1
07/18/89 Arctic Alaska Fisheries Corp. Nippon Suisan USA Inc. 27.0 12.0 33.3 35.0
07/17/89 Cummins Engine Co. Inc. Investor Group 72.0 8.3 8.7 -1.1
07/17/89 Longview Fibre Co. Investor Group 34.3 4.2 9.1 11.8
07/14/89 GTE Corp. Employee Stock Ownership Plan 700.0 3.8 4.9 10.6
07/11/89 Cummins Engine Co. Inc. Employee Stock Ownership Plan 75.0 11.0 -0.4 -11.2
07/10/89 Delta Air Lines Inc. Swissair 193.4 6.0 13.1 13.8
07/07/89 General Re Corp. Employee Stock Ownership Plan 150.0 1.9 31.0 26.7
07/05/89 Armstrong World Industries Inc. First City Financial Corp. Ltd. 191.5 10.6 3.9 8.4
07/03/89 Georgia Gulf Corp. NL Industries Inc. 88.2 9.9 2.0 3.1
06/29/89 Salomon Inc. Instituto Bancario San Paolo 155.0 - 2.6 -2.0
06/28/89 Lukens Inc. Employee Stock Ownership Plan 33.0 - 13.2 17.6
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-37-
<PAGE> 95
SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
06/27/89 Western Publishing Group Inc. Investor Group 25.2 5.8 10.7 4.5
06/21/89 Travelers Corp. Employee Stock Ownership Plan 200.0 3.7 25.7 31.5
06/13/89 Maytag Corp. Employee Stock Ownership Plan 65.0 3.0 -3.1 8.7
06/12/89 Questar Corp. Employee Stock Ownership Plan 35.6 5.2 2.5 5.2
06/07/89 MA Hanna Co. Brascade Resources (Brascan) 178.0 28.0 20.6 18.8
06/06/89 Stanley Works Employee Stock Ownership Plan 101.6 6.8 -0.7 3.4
05/03/89 Avon Products Inc. A/J Partnership 150.8 10.3 20.1 31.8
05/03/89 Federal-Mogul Corp. Investor Group 55.4 9.3 -48.1 -50.1
04/25/89 Graphic Scanning Corp. Investor Group 56.6 15.1 28.4 31.9
04/21/89 Diamond Shamrock R&M Inc. Employee Stock Ownership Plan 30.0 5.2 -12.2 9.0
04/20/89 Dunkin' Donuts Inc. Employee Stock Ownership Plan 38.8 15.5 2.2 9.3
04/20/89 Dunkin' Donuts Inc. Kingsbridge Capital Group 63.8 23.0 30.4 39.5
04/19/89 USAir Group Inc. Investor Group 162.0 8.4 3.1 10.8
04/06/89 Vons Cos. Inc. Investor Group 76.9 14.0 36.1 30.6
04/05/89 Centel Cable Television Co. Investor Group 34.1 16.5 4.6 -2.2
04/05/89 National Data Corp. Salomon Brothers Inc. (Salomon) 28.3 9.0 3.3 8.4
04/04/89 Lockheed Corp. Employee Stock Ownership Plan 500.0 17.0 16.5 21.3
04/04/89 Trubune Co. Employee Stock Ownership Plan 350.0 8.5 33.3 44.7
03/31/89 Barris Industries Inc. Monile Ltd. 34.5 24.4 73.3 62.5
03/30/89 NWA Inc. NWA Co. 57.0 2.8 13.3 -
03/28/89 NWA Inc. Investor Group 91.3 4.9 -3.4 -12.0
03/24/89 Citizens Utilities Co. Century Communications Corp. 48.0 - 28.5 32.5
03/24/89 Lyondell Petrochemica Co. ARCO 29.0 1.2 2.5 0.4
03/20/89 Time Inc. Robert M Bass Group 129.0 2.0 9.3 3.6
03/15/89 Coca-Cola Co. Berkshire Hathaway Inc. 1,173.0 6.8 1.0 5.5
03/09/89 Westmoreland Coal Co. Penn Virginia Corp. 25.5 20.0 1.3 -3.4
03/06/89 SPX Corp. Employee Stock Ownership Plan 50.0 11.4 -22.3 -26.3
02/27/89 Polaroid Corp. Investor 118.7 4.0 -5.1 2.2
02/24/89 Heritage Media Corp. Hallmark Cards Inc. 30.0 37.8 4.8 15.8
01/30/89 Fairchild Industries Inc. Employee Stock Ownership Plan 25.7 11.2 -1.2 1.9
01/26/89 UAL Corp. Reliance Insurance Co. 165.7 6.9 9.7 14.7
01/19/89 McCaw Cellular Commun. Inc. British Telecom USA Holdings 1,370.0 19.7 59.8 58.3
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-38-
<PAGE> 96
CONTEL CELLULAR INC.
SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D)
(Transactions greater than $25 million)
<TABLE>
<CAPTION>
PREMIUM 1
WEEK PRIOR
TO PREMUIM 4
DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR
ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE
- --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
01/19/89 PPG Industries Inc. Employee Stock Ownership Plan 252.0 6.0 - 5.7
01/16/89 Illinois Central Trans Co. Archer-Daniels-Midland Co. 42.6 9.8 6.7 12.1
01/06/89 Gulf Resources & Chemical Corp. Inoco PLC 39.5 33.9 1.0 9.5
01/05/89 ISS International Service Sys. ISS International Service A/S 25.0 - 15.4 13.2
</TABLE>
__________________________________
(1) Source: Securities Data Corporation.
-39-
<PAGE> 97
CONTEL CELLULAR INC.
STATE OF THE CELLULAR INDUSTRY
- COMPANY DIFFERENTIATION
- In the current environment, cellular stocks are differentiated
by investors; however, instead of differentiating primarily on
the basis of a company's likelihood of being sold at private
market value, the differentiation now is driven by the perceived
overall attractiveness/"foot print" of the markets served by the
cellular operator and actual operating performance. Special
emphasis is being placed on gross and net additions, penetration
rates, revenue per subscriber, and cash flow margins.
- NEW ENTRANTS
- During the last year, a number of factors have either caused
or been a part of a great expansion in both the number of
participants in, as well as the number of forms of, wireless
communications systems.
- The following industries have included new or expanded
participants in the wireless business:
- RBOCs - all into wireless, with mergers and alliances
occurring
- Long distance phone companies - AT&T (McCaw), MCI
(Various discussions), Sprint (Centel/Cable)
- Regional long distance phone companies - All becoming
resellers or own wireless
- Cable companies - Comcast, Century, US West/Wometco
- Local exchange carriers - packaging cellular with
products or preparing to bid for PCS
- The following modes of wireless communication have emerged as
real or possible threats to cellular/PCS:
- SMR/ESMR - Nextel
- Various satellite systems - Globalstar, Iridium
- Other wireless, such as FHMA technology by Geotek
-40-
<PAGE> 98
CONTEL CELLULAR INC.
STATE OF THE CELLULAR INDUSTRY (CONT'D)
- - EMERGING EMPHASIS ON NATIONAL BRANDING
- There has been a lack of name recognition regarding wireless
communication providers by the general public. This will
cause strategic/operating changes including:
- Attempts to create national/regional geographic
communications networks (i.e., Bell
Atlantic/NYNEX/AirTouch/US West, etc.).
- Revitalization/upgrade of marketing strategies.
- Through both of the above, many firms are attempting to
create nationally known cellular/wireless brand names.
- - AT&T / MCCAW MERGER
- Acceleration of $1 billion conversion of network to digital
over next 18 months.
- After McCaw's network is converted to allow equal access to
all long distances carriers for its subscribers, the Company's
service will be sold as AT&T CellularOne, a quasi-national
branded cellular network. Eventually, AT&T will bundle
wireless and long distance service for the purpose of meeting
the total telecommunications needs of its customers.
- Currently in discussions with other wireless providers.
-41-
<PAGE> 99
CONTEL CELLULAR INC.
STATE OF THE CELLULAR INDUSTRY (CONT'D)
- - FCC DEFINES 1.8 GHZ MARKET STRUCTURE
- The licensed spectrum will be awarded according to MTAS (major
trading areas) and BTAs (basic trading areas), both of which are
significantly larger than MSA/RSA service areas.
- First to go will be the 30-MHz licenses (Blocks A and B) in each
of the 51 MTAs, followed by the two entrepreneurs' bands of one
30-MHz license (Block C) and one 10-MHz license (Block F) in each
of 492 BTAs. Last will be bidding for the two remaining 10-MHz
BTA licenses (Blocks D and E).
- Will alter the competitive structure (protected duopoly) enjoyed
to date by cellular, but will give Cellular providers opportunity
to grow/fill in systems.
- - THE DEBATE OVER WIRELESS DIGITAL TRANSMISSION
- Time-division multiple-access technology (TDMA) - works now but
less capacity than CDMA.
- Code-division multiple-access technology (CDMA) - not
technologically proven but potentially more capacity than TDMA.
- Bellsouth announced June 15 it will employ TDMA beginning in the
fourth quarter. It is expected to take two years to implement.
- GTE Mobilnet has announced support of, but not commitment to,
CDMA.
- 42 -
<PAGE> 100
CONTEL CELLULAR INC.
STATE OF THE CELLULAR INDUSTRY (CONT'D)
- - WIRELESS CONSOLIDATION; RBOCS PLANNED OR POTENTIAL JOINT VENTURES
INCLUDE:
- Bell Atlantic/NYNEX/AirTouch/USWEST (agreement)
- AT&T and SBC Communications are expected to form a marketing
alliance.
- - BREAKUP OF TELCO/CABLE TELEVISION TRANSACTIONS
- Bell Atlantic/TCI
- SBC Communications/Cox
- SBC Communications/Hauser (rumored)
- But Sprint/Cable MSO deal should be successful
- - THE ROLE FOR WIRELESS DATA
- High growth segment
- Little success to date by industry specialists (RAM, Ardis)
- CDPD standard being established
- Success requires understanding needs of business customers and
securing appropriate hardware for individuals.
- New providers (Geotek, eg.)
- 43 -
<PAGE> 101
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES
(amounts in millions, except per POP data)
AIR TOUCH BCE MOBILE COMMNET CENTENNIAL
COMPANY COMMUNICATIONS COMMUNICATIONS(b1) CELLULAR CELLULAR
- ------- -------------- ------------------ --------- --------
<S> <C> <C> <C> <C>
Price @ 11/04/94 $ 27.88 $ 30.98 $ 28.00 $ 16.75
MV of Equity (Fully Diluted) $ 13,758.7 $ 2,145.9 $ 413.4 $ 417.8
Market Capitalization 13,480.0 2,422.4 554.7 774.8
Cellular Asset Value 6,197.2 2,285.4 532.2 772.0
Cellular License Value (1) 5,430.7 1,797.0 465.4 736.1
Total # of Pops 35.0 15.7 3.2 6.0
Market Capitalization per Total
Net POP $ 385 $ 154 $ 176 $ 129
Asset Value per Toal Net POP 177 146 169 129
Cellular License Value per Total
Net POP (1) 155 114 147 123
</TABLE>
<TABLE>
<CAPTION>
UNITED
CONTEL ROGERS STATES VANGUARD
COMPANY CELLULAR(e1) CANTEL (G1) CELLULAR CELLULAR
- ------- ------------ ------------ ---------- --------
<S> <C> <C> <C> <C>
Price @ 11/04/94 $ 24.25 $ 31.63 $ 32.25 $ 27.06
MV of Equity (Fully Diluted) $ 2,754.1 $ 2,969.5 $ 2,509.3 $1,051.5
Market Capitalization 4,790.8 3,738.2 2,594.2 1,337.5
Cellular Asset Value 4,460.8 3,645.2 2,575.7 1,316.0
Cellular License Value (1) 3,971.4 2,923.4 2,294.9 1,234.5
Total # of Pops 23.9 23.7 23.6 6.5
Market Capitalization per Total
Net POP $ 201 $ 158 $ 110 $ 207
Asset Value per Total Net POP 187 154 109 204
Cellular License Value per Total
Net POP (1) 166 123 97 191
</TABLE>
- ---------------
(1) Excludes working capital.
-44-
<PAGE> 102
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
(amounts in millions, except per POP data)
<TABLE>
<CAPTION>
AIR TOUCH BCE MOBILE COMMNET CENTENNIAL
COMPANY COMMUNICATIONS COMMUNICATIONS CELLULAR CELLULAR
-------------- -------------- ---------- ----------
IN CANADIAN $
<S> <C> <C> <C> <C>
TICKER ATI BCX CELS CYCL
DATE OF FINANCIALS 6/30/94 12/31/93 6/30/94 8/31/94
DATE OF FISCAL YEAR 12/31/93 12/31/93 9/30/93 5/31/94
PRICE @ 11/04/94 $ 27.88 $ 42.00 $ 28.00 $ 16.75
UNADJUSTED SHARES OUTSTANDING 493.5 69.2 11.7 24.3
SHARES OUTSTANDING (FULLY DILUTED) 493.9 69.4 14.8 25.1
UNADJUSTED MARKET VALUE $ 13,756.7 $ 2,908.4 $ 328.0 $ 406.2
MARKET VALUE (FULLY DILUTED) $ 13,758.7 $ 2,909.6 $ 413.4 $ 417.8
PLUS:
Debt and Preferred 70.2 373.5 152.1 443.5
Minority Interest 141.7 2.3 3.5 0.0
LESS:
Cash & Equivalents 490.6 0.9 14.3 86.5
---------- ---------- -------- --------
MARKET CAPITALIZATION $ 13,480.0 $ 3,284.5 $ 554.7 $ 774.8
========== ========== ======== ========
LESS:
Market Investments 863.8 0.0 22.5 0.0
Other Assets 6,419.0 185.7 0.0 2.8
---------- ---------- -------- --------
CELLULAR ASSET VALUE (INC. PP&E & WC) $ 6,197.2 $ 3,098.7 $ 532.2 $ 772.0
========== ========== ======== ========
LESS:
PP&E 829.7 647.4 68.0 47.6
Working Capital (63.2) 14.8 (1.2) (11.7)
---------- ---------- -------- --------
CELLULAR LICENSE VALUE(1) $ 5,430.7 $ 2,436.5 $ 465.4 $ 736.1
========== ========== ======== ========
TOTAL ADJ POPS: 35.0 15.7 3.2 6.0
Net Debt per Total POP $ (8.0) $ 23.9 $ 44.8 $ 59.6
License Value per Total Net POP(1) 155.3 155.2 147.5 122.9
Asset Value per Total Net POP 177.2 197.4 168.6 129.0
OWNERSHIP STATISTICS:
MSA POPs in Majority-Owned Markets (mm) 27.4 NA 0.0 2.6
MSA POPs in 100%-Owned Markets (mm) 6.2 NA 0.0 2.1
MSA POPs in Top 100 Markets (mm) 32.0 NA 0.0 0.6
LTM EPS: $ 0.19 $ 0.06 $ (1.02) $ (3.06)
LFY+1 (3): 0.22 NA (1.55) (1.53)
LFY+2 (3): 0.38 NA (0.92) (1.44)
</TABLE>
-45-
<PAGE> 103
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
(amounts in millions, except per POP data)
<TABLE>
<CAPTION>
CONTEL ROGERS UNITED STATES VANGUARD
COMPANY CELLULAR(e1) CANTEL(f1) CELLULAR CELLULAR
- ------- --------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
TICKER CCXLA RCMIF USM VCELA
DATE OF FINANCIALS 6/30/94 12/31/93 6/30/94 6/30/94
DATE OF FISCAL YEAR 12/31/93 12/31/93 12/31/93 12/31/93
PRICE @ 11/04/94 $ 24.25 $ 31.63 $ 32.25 $ 27.06
UNADJUSTED SHARES OUTSTANDING 100.0 93.9 77.8 38.6
SHARES OUTSTANDING (FULLY DILUTED) 100.0 93.9 77.9 39.6
MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 2,423.8 $ 2,969.4 $ 2,509.4 $ 1,044.1
MARKET VALUE (FULLY DILUTED) $ 2,424.1 $ 2,969.5 $ 2,509.3 $ 1,051.5
ADJUSTMENT FOR CCI OTHER ASSETS 330.0
--------- --------- ---------- ---------
ADJUSTED MARKET VALUE $ 2,754.1(e1) $ 2,969.5 $ 2,509.3 $ 1,051.5
PLUS:
Debt and Preferred 2,022.6 768.7 75.7 286.7
Minority Interest 14.8 0.0 15.3 2.5
LESS:
Cash & Equivalents 0.7 0.0 6.2 3.1
--------- --------- ---------- ---------
MARKET CAPITALIZATION $ 4,790.8 $ 3,738.2 $ 2,594.2 $ 1,337.5
========= ========= ========== =========
LESS:
Market Investments 0.0 0.0 18.5 21.6
Other Assets 330.0 92.9 0.0 0.0
--------- --------- ---------- ---------
CELLULAR ASSET VALUE (INC. PP&E & WC) $ 4,460.8 $ 3,645.2 $ 2,575.7 $ 1,316.0
========= ========= ========== =========
LESS:
PP&E 562.2 715.3 292.3 91.3
Working Capital (72.9) 6.5 (11.4) (9.9)
--------- --------- ---------- ---------
CELLULAR LICENSE VALUE(1) $ 3,971.4 $ 2,923.4 $ 2,294.9 $ 1,234.5
========= ========= ========== =========
TOTAL ADJ POPS: 23.9 23.7 23.6 6.5
Net Debt per Total POP $ 85.3 $ 32.5 $ 3.6 $ 44.3
License Value per Total POP(1) 166.3 123.4 97.1 191.1
Asset Value per Total POP 186.8 153.9 109.0 203.7
OWNERSHIP STATISTICS:
MSA POPs in Majority-Owned Markets(mm) 12.9 NA 6.1 5.3
MSA POPs in 100%-Owned Markets(mm) 7.5 NA 2.4 4.5
MSA POPs in Top 100 Markets(mm) 15.4 NA 2.9 2.7
LTM EPS: $ (0.90) $ (0.82) $ (0.19) $ (0.46)
LFY+1(3): (0.61) NA 0.10 (0.14)
LFY+2(3): (0.24) NA 0.41 0.36
</TABLE>
-46-
<PAGE> 104
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
FOOTNOTES
<TABLE>
<S> <C>
GENERAL:
(1) Excludes working capital.
(2) Source: Donaldson, Lufkin & Jenrette Wireless Communications Industry research report,
Winter 1994.
(3) Source: I\B\E\S research estimates dated October 20, 1994.
AIRTOUCH COMMUNICATIONS
(a1) Excludes gain on sale of telecommunications interests. Marginal tax rate of 38%
assumed.
(a2) Portfolio consists principally of highly liquid debt instruments with contractual
maturities in excess of three months but less than one year. Carried at amortized cost,
which approximates fair market value.
(a3) Includes foreign paging subscribers.
(a4) Per POP valuation taken from Prudential Securities research report dated May 16, 1994.
(a5) Estimated value taken from Prudential Securities research report dated May 16, 1994,
less South Korean investment which is broken out separately.
(a6) May 1994 investment (11.3%) in consortium for digital cellular system in South Korea
valued at initial (June 1994) $20M contribution to consortium.
(a7) Values 21.6M German POPs at $175 per POP, 2.0M Portuguese POPs at $50 per POP, 10.4M
Japanese POPs at $100 per POP, 4.6M Swedish POPs at $50 per POP, 2.5M Belgian POPs at
$0 per POP, and 19.8M Italian POPs at $0 per POP. Per POP valuations taken from
Prudential Securities research report dated May 16, 1994. Report values Belgian and
Italian POPs at $50 and $30 per POP, respectively. However, total here excludes Belgian
and Italian investments because awards have not yet been finalized nor transactions
effected according to the Company's June 30, 1994 10-Q. There is insufficient
information to effectively "pro forma" these transactions.
BCE MOBILE COMMUNICATIONS
(b1) Market price, balance sheet items and operating statistics (listed in C$) are
translated here into US$ at 11/04/94 exchange rate of 0.74 US$/C$.
(b2) Depreciation and amortization not broken out on a quarterly basis in the Company's annual
report. Assumed that ratio of D&A to operating income remained constant throughout 1993.
(b3) Excludes loss on sale of paging business in western Canada as well as gain on sale of
Mexican cellular investment. Marginal tax rate of 38% assumed.
(b4) Priced to give typical value per subscriber translated into Canadian dollars.
(b5) Valued at 1.2x revenues of non-cellular operations of $124.2M (excluding paging
operations).
(b6) Book value of investment as of year-end 1993.
(b7) Prepayment on 50 million minutes of airtime on the MSAT
satelite. Valued at cost of converted $30M investment.
COMMNET
(c1) Excludes write down of cellular system equipment. Marginal tax rate of 38% assumed.
(c2) Excludes extraordinary charge related to early extinguishment of secured bank
financing.
(c3) Convertible subordinated debentures.
(c4) Reduction in debt from conversion of debentures.
(c5) Includes U.S. Treasury Bills, commercial paper and debt instruments issued by U.S.
government agencies having a maturity of more than three months. Carried at cost plus
accrued interest, which approximates fair market value.
CENTENNIAL CELLULAR
(d1) Excludes interest income.
(d2) Includes Clinton, IA market acquired on September 21, 1994 and Huntington, IN market
acquired on September 30, 1994.
</TABLE>
-47-
<PAGE> 105
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
FOOTNOTES (CONT'D)
<TABLE>
<S> <C>
CONTEL CELLULAR
(e1) It is assumed that the market is not aware of the "Other Asset" value
found in wireless data (for which Lazard was provided confidential
information) and PCS (for which Lazard is still awaiting information). It
is further assumed that the market is aware of CCI's Mexican POPs;
however, because the status of the talks relating to the Motorola-led
Mexican cellular consortium are not necessarily disseminated and it is
unclear that the market is fully aware of the Company's rights to GTE's
Argentinian properties, the Company's International Assets are treated in
the same manner.
(e2) Excludes gains on sales of partnership interests. Marginal tax rate of 38%
assumed.
(e3) Options exercisable at previous year end includes a number of 2/3 Tandem
Stock Appreciation Rights (SARs)--i.e., SARs with a provision requiring
that for every two shares of stock surrendered for the appreciation right
attached, one share of stock must be purchased at the option price. These
2/3 tandem SARs broken out separately here. However, due to lack of
documentation in the Company's December 31, 1993 10-K report, the
percentage of 2/3 tandem stock appreciation rights (SARs) included in
total options exercisable is assumed to be the same as among options
outstanding at year end.
(e4) The Company's 10-K does not indicate a price range for options or SARs
exercisable at year end. Therefore, the range was assumed to encompass the
price range for options granted in the last fiscal year as well as the
range for options outstanding at the previous year end.
(e5) Assumes 2/3 of SARs exercised are surrendered for cash payment from the
Company, while the remaining 1/3 are converted (as required by the 2/3
tandem provision) as options for shares.
(e6) Valuation detailed in other sections of CCI analysis.
(e7) Excludes value of PCS.
ROGERS CANTEL
(f1) Balance sheet items and operating statistics taken from Annual Report
(listed in C$) and translated into US$ at 11/04/94 exchange rate of 0.74
US$/C$.
(f2) Excludes provision for restructuring costs. Marginal tax rate of 38%
assumed.
(f3) Includes 62,000 new subscribers assumed in acquisition of MacLean Hunter's
paging subsidiary.
U.S. CELLULAR
(g1) Excludes gain on sale of cellular interests. Marginal tax rate of 38%
assumed.
(g2) Stock Appreciation Rights.
(g3) No further information or breakdown given on public documents.
VANGUARD CELLULAR
(h1) Figure taken from Prudential Securities research report dated April 12,
1994.
</TABLE>
-48-
<PAGE> 106
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
10/94 CGE/ 166 Washington, DC (8) 289 10% $310
SBC Communications Baltimore, MD (14) 245 10% 310
--- ----
Weighted Average Market Rank 534 $310
("WAMR"): 12.34 $323(2)
09/94 Contel Cellular/ 72 Huntsville, AL (120) 402 100% $180
Crowley Cellular
09/94 US Cellular/ N/A Portland, OR (30) 5 0.33% N/A
Metroplex Communications Olympia, WA (242) 8 4% N/A
--
13
09/94 Western Wireless/ N/A Pueblo, CO (241) 111 88% SWAP
McCaw Communications
08/94 Airtouch/ 2,400 WAMR: 64.15 7,900 100% $304
Cellular Communications, Inc. $315(2)
08/94 McCaw Communications/ 9,700 WAMR: 2.95 28,100 100% $345
LIN Broadcasting Group $348(2)
08/94 Vanguard Cellular/ 10 Elimira, NY (284) 95 100% $110
Crowley Cellular
07/94 Airtouch/ 13,531 Joint Venture 79 MSA's 56 RSA's 54,122 100% $250
US West
07/94 Vanguard Cellular/ 39 Binghamton, NY (122) 291 95% $135
Crowley Cellular
06/94 LIN/ 135 New York, NY (1) 785 5% $172
CSI et al
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-49-
<PAGE> 107
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/94 McCaw Communications/ 111 Springfield, MO (163) 257 100% $145
Crowley Cellular Jopin, MO (239) 139 100% 135
--- ----
396 $141
04/94 General Cellular/ 14 Sioux City, IA (253) 119 95% $120
Sprint Cellular
04/94 Independent Cellular/ 97 Northeast, PA (56) 498 76% $190
C-TEC Allentown, PA-NJ (58) 29 4% 130
Reading, PA (118) 35 10% 105
State College, PA (259) 128 100% 120
Iowa City, IA (296) 89 87% 120
--- ----
WAMR: 117.02 779 $164
$167(2)
02/94 Southwestern Bell/ 680 San Francisco, CA (7) 117 100% $244
Associated Communications Pittsburgh, PA (13) 734 100% 215
Buffalo, NY (25) 885 100% 188
San Jose (27) 47 100% 244
Rochester, NY (24) 867 100% 175
Albany (44) 850 100% 175
Glen Falls, NY (266) 123 100% 128
----- ----
WAMR: 43.39 3,623 $188
$189(2)
02/94 US Cellular/ N/A Hagerstown, MD (257) 124 100% N/A
Hagerstown Cell.
01/94 McCaw Comm/ N/A Lawton, OK (260) 199 100% $160
General Cellular
12/93 General Cellular/ 17 Abilene, TX (220) 150 100% $110
McCaw Comm.
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-50-
<PAGE> 108
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
12/93 McCaw Comm./ 32 Chico, CA (215) 199 100% $160
General Cellular
12/93 McCaw Comm./ 17 Abilene, TX (220) 150 100% $110
PriCellular
12/93 Vanguard/ 5 Altoona, PA (225) 94 72% $50
Horizon
12/93 Horizon/ 8 Altoona, PA (225) 94 72% $50
Cell. Info. Sys. Cumberland, MD (269) 81 80% 40
--- ----
175 $45
11/93 SW Bell/ 170 Syracuse, NY (53) 665 100% $185
Syracuse Tele. Utica-Rome, NY (115) 313 100% 150
--- ----
978 $174
11/93 ALLTEL/ 120 Dallas, TX (9) 431 10% $272
GTE Mobilnet Sherman-Denison, TX (292) 10 10% 272
--- ----
WAMR: 9.00 441 $272
$285(2)
10/93 McCaw Comm/ 15 Steubenville, OH (199) 140 100% $110
McLang Cellular
10/93 PriCellular/ N/A Duluth, MN (141) 234 100% N/A
CIS Op-2
10/93 PriCellular/ N/A Eau Claire, WI (232) 100 70% N/A
CIS Debtor in Poss
10/93 US Cellular/ N/A Rochester, MN (288) 34 30% N/A
Pine Island
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-51-
<PAGE> 109
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/93 Cellular Inc./ 11 Rapid City, SD (289) 111 100% $100
Contel
08/93 Century Telephone/ 145 Jackson, MS (106) 348 86% $140
Celutel McAllen, TX (128) 269 66% 135
Brownsvillle, TX (162) 206 76% 135
Biloxi-Gulfport, MS (173) 162 81% 135
Pascagoula, MS (252) 95 83% 111
----- ----
WAMR: 141.82 1,080 $135
$132(2)
08/93 LIN/ 8 Wichita Falls, TX (233) 65 49% $125
PriCellular
08/93 AT&T 16,668 McCaw 100% buyout 59,200 100% $280
McCaw Comm. WAMR: 46.31 $330(2)
07/93 General Cell./ 7 Odessa, TX (255) 75 65% $95
Cell. Info. Sys.
06/93 Intercel/ N/A Bangor, ME (224) 150 100% N/A
Unity Telephone
06/93 PriCellular/ N/A Abilene, TX (220) 150 100% N/A
Radiofone
06/93 US Cellular/ 5 Victoria, TX (300) 41 55% $130
Bawab, Richard
05/93 Texahoma Cell LP/ N/A Wichita Falls, TX (233) 133 100% N/A
Wichita Falls Cell.
05/93 Texahoma Cell LP/ N/A Lawton, OK (260) 113 100% N/A
US Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-52-
<PAGE> 110
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/93 US Cellular/ N/A Manchester-Nashua, NH (133) 87 25% N/A
Pelissier/Hashtroudi
02/93 Century Telephone/ 36 Biloxi/Gulfport, MS (173) 169 81% $136
Celutel Pascagoula, MS (252) 95 83% 136
--- ----
264 $136
01/93 WSW Fund/ 8 Amarillo, TX (188) 6 3% $32
PriCellular Wichita Falls, TX (233) 96 73% 77
--- ----
102 $74
01/93 GTE Corp./ 10 Burlington, NC (280) 87 79% $118
General Cellular
12/92 General Cellular/ 19 Lincoln, NE (172) 186 85% $100
Centennial Cellular
12/92 General Cellular/ 9 Sioux Falls, SD (267) 93 73% $95
Scott Reardon
12/92 Centennial Cellular/ 11 Alexandria, LA (205) 134 90% $84
General Cellular
12/92 Centennial Cellular/ 1 Lake Charles, LA (197) 21 12% $54
General Cellular
11/92 Cellular Inc./ 9 Sioux Falls, SD (267) 65 51% $73
US West NewVector Bismarck, ND (298) 59 70% 73
--- ---
124 $73
11/92 AT&T/ 3,800 Nationwide 42,500 33% $271
McCaw (33%)
11/92 U.S. Cellular/ 5 Cumberland, MD (269) 80 79% $62
General Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-53-
<PAGE> 111
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
10/92 ALLTEL-GTE/C/ 97 AR and OH 842 20% $115
GTE/C-ALLTEL
09/92 Century Telephone/ 41 Austin, TX (75) 280 35% $145
San Marcos Telephone
06/92 Centennial Cellular/ N/A Jackson, MI (207) 151 80% N/A
Jackson Cellular Partners
05/92 Rochester Telephone/ 30 Utica-Rome, NY (115) 221 70% $135
Oneida Cty Telephone
04/92 John Stanton/ 10 Billings, MT (268) 72 64% $35
Cellular Information Systems Rapid City, SD (289) 102 96 35
Great Falls, MT (297) 42 55 35
Bismark, ND (298) 75 84 35
--- ---
291 $35
03/92 John Stanton/ 3 Casper, WY (299) 60 100% $55
U.S. Cellular L.P.
03/92 US West NewVector/ 7 Colorado Springs, CO (117) 63 16% $104
Big Sandy Tele.
02/92 Cellular Comm. PR/ 23 San Juan, PR (91) 367 18% $64
Various Owners
02/92 Stanton, John/ 3 Grand Forks, ND (276) 104 100% $27
Crostel Cellular
01/92 LIN/BellSouth/ 14 Galveston, TX (170) 119 54% $115
Stewart, Jonathan
11/91 Lincoln Telecomm./ 28 Omaha, NE (65) 166 28% $144
Centel Corp.
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-54-
<PAGE> 112
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
10/91 Bellsouth 35 Honolulu, HI (50) 219 26% $160
RAM Broadcasting
09/91 Bell Atlantic/ 2,250 Various Markets 10,969 -- $205
Metro Mobile
08/91 PacTel/ 100 Wichita, KS (89) 463 100.0% $161
McCaw Cellular Comm. Topeka, KS (179) 157 78.0%
---
620
07/91 McCaw Cellular Comm./ 107 Daytona Beach, FL (146) 379 100.0% $209
Crowley Cellular Waco, TX (194) 207 100.0% 135
--- ----
586 $183
05/91 Ameritech/ 351 St. Louis, MO (11) 1,926 85.0% $204
Cybertel
05/91 Comcast Corp./ 1,000 Philadelphia, PA (4) 4,900 100.0% $193
Metromedia Co. New Brunswick, NJ (62) 243 37.0%
Long Branch, NJ (70) 47 8.0%
-----
5,190
05/91 US Cellular/ 21 Tyler, TX (237) 158 100.0% $135
Cellular Information Systems
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-55-
<PAGE> 113
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
04/91 BellSouth/ 393 Milwaukee, WI (21) 701 50.0% $200
McCaw Comm. Madison, WI (113) 318 93.0 160
Green Bay, WI (186) 180 93.0 160
Rockford, IL (131) 283 99.0 160
Appleton, WI (125) 306 100.0 160
Janesville, WI (216) 116 80.0 160
Kenosha, WI (244) 106 83.0 160
Sheboygan, WI (277) 90 86.0 160
Wausau, WI (263) 25 21.0 160
La Crosse, WI (290) 17 18.0 160
----- ----
2,142 $173
04/91 McCaw Comm./ 46 Rochester, NY (34) 286 29.0% $160
Bell South
03/91 ALLTEL/ 16 Springfield, MO (163) 114 48.0% $115
Missouri Tel. St. Joseph, MO (275) 30 29.0 80
--- ----
144 $108
03/91 BellSouth/ 99 Atlanta, GA (17) 560 21.0% $155
GTE Corp. Lexington, KY (116) 160 42.0 65
Athens, GA (234) 32 21.0 40
----
752 $131
02/91 Celutel/ 8 Pascagoula, MS (252) 66 50.0% $115
McCaw Comm.
01/91 Centel/ 13 23 mkt. minorities 230 -- $57
Rochester Telephone
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-56-
<PAGE> 114
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
12/90 BellSouth/ 131 Indianapolis (28) 621 100.0% $140
Graphic Scanning Corp. Terre Haute (185) 122 72.3 60
Anderson (217) 94 71.0 60
Elkhart-Goshen (223) 23 15.0 60
Muncie (236) 95 79.5 60
Lafayette (247) 125 100.0 60
Kokomo (271) 9 9.0 60
Bloomington (282) 83 79.4 60
Wisconsin Partnership 215 8.0 60
----- ---
1,387 $96
12/90 US WEST NewVector/ 11 Colorado Springs, CO (117) 62 74.4% $185
Cellular Inc.
12/90 Cellular Inc./ 6 Great Falls, MT (297) 77 100.0% $75
US West NewVector
11/90 Cont. IL Venture/ 88 58% Celutel recap 1,100 100.0% $80
Celutel
10/90 SW Bell/ 90 Springfield, IL (176) 170 89.0% $165
Crowley Cellular Champaign-Rantoul-Urbana (196) 160 92.5%
Decatur (230) 121 97.5%
Bloomington-Normal (250) 113 90.7%
-----
564
07/90 Pacific Telesis/ 86(a) Ohio 7,200 -- $225
Cellular Communications Puerto Rico 85
----
$185
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-57-
<PAGE> 115
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
07/90 GTE/ 3,700(b) Southeast 12,125 -- $171
Contel Pacific 4,695 --
Midwest 3,065 --
Southwest 1,679 --
Northeast 1,367 --
Mountain 928 --
------
23,859
05/90 LIN Broadcasting/ 60 New York (1) 257 91.8% $234
Minority Holders
05/90 Metromedia/ 15 Philadelphia (4) 49 91.0% $313
LIN Broadcasting
05/90 US Cellular Corp/ N/A Lawton, OK (260) 24 20.0% N/A
Undisclosed
04/90 GTE/ 710 Greensboro/Winston-Salem (47) 900(c) 100.0% $230(d)
Providence Journal Cellular Raleigh/Durham (71) 662(c) 100.0 245(d)
Charleston/North CharlesTON (90) 519(c) 100.0 210(d)
Fayetteville (149) 260(c) 100.0 170(d)
Savannah (155) 158(c) 100.0 190(d)
Lynchburg (203) 80(c) 100.0 150(d)
Danville (262) 100(c) 100.0 130(d)
Florence (264) 119(c) 100.0 145(d)
Augusta (108) 402(c) 100.0 155(d)
Wilmington (218) 70(c) 100.0 180(d)
Jacksonville (258) 55(c) 100.0 130(d)
----- ----
3,407 $208(e)
$213(f)
04/90 McCaw Communications/ N/A Richland, WA (214) 151 100.0% N/A
Mahaffey Patricia
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-58-
<PAGE> 116
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/90 PriCellular/ 35 Utica-Rome (120) 291 70.0% $160
Consortium
03/90 Cellular, Inc./ N/A Colorado Springs (117) 66 16.0% N/A
Big Sandy Telecom
03/90 Celutel/ 28 Jackson (106) 85 84.0% $125(g)
McCaw Cellular Communications Pascagoula (252) 29 72.0 200(g)
--- ----
114 $144
03/90 Celutel/ 13 Pascagoula (252) 131 50.1% $201
McCaw Cellular Communications
02/90 Time Warner/ 13 25% of PriCellular 430 25.0% $93(h)
PriCellular
01/90 McCaw Cellular Communications/ 61(i) Dallas (9) 218 66.0% $278
Cellular Communications, Inc.
11/89 ALLTEL/ 42 Augusta (108) 223 100.0% $190(j)
Pond Beach Telephone Co.
11/89 Radiophone/ 26 Houma (184) 163 86.2% $160(j)
McCaw Cellular Communications
11/89 General Cellular/ 6 Cumberland (269) 52 43.3% $123(j)
Alan Smuckler
11/89 C-TEC/ 8 Iowa City (296) 76 88.3% $99(j)
United Cellular L.P.
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-59-
<PAGE> 117
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/89 McCaw Cellular Communications/ 8,088(j) New York (1) 13,680 90.0% $321
LIN Broadcasting Los ANgeles (2) 4,499 40.0
Philadelphia (4) 2,475 51.0
Dallas (9) 2,349 60.4
Houston (10) 1,943 56.3
------
24,946
10/89 LIN Broadcasting/ 1,908 New York (1) 6,940 90.05 $275
Metromedia
10/89 Contel Cellular/ 1,250 Nashville (46) 975 100.0% $250
McCaw Cellular Communications Birmingham (41) 933 100.0 245
Louisville (37) 911 100.0 235
Memphis (36) 974 100.0 230
Knoxville (79) 474 94.0 215
Lexington (116) 338 100.0 185
Chattanooga (88) 435 100.0 180
Johnson City (85) 453 100.0 175
Tuscaloosa (222) 96 63.0 165
Clarksville (209) 159 100.0 155
Gadsden (272) 90 87.0 140
Florence (226) 111 79.0 130
Anniston (249) 125 100.0 130
----- ----
6,074 $217(k)
04/89 Century Communications & 74 Beaumont (101) 616 100.0% $120
Cellular Technology/ Cumberland (294) 55.0
Bauce Communications Altoona (225) 70.0
Rapid City (311) 85.0
04/89 McCaw Cellular Communications/ -- Santa Barbara (124) -- 67.2% $275
Partnership ("Squeeze Out")
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-60-
<PAGE> 118
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
02/89 Cellular Communications Inc./ 31 San Juan (91) 89 75.0% $75(v)
McCaw Cellular Communications Ponce (147) 272 100.0 40
Mayaguez (169) 217 100.0 40
Aguadilla (204) 131 85.0 40
--- ---
709 $44
02/89 Price Communications/ 16 Wichita Falls (233) 138 100.0% $119
Wichita Falls Cellular
01/89 British Telecommunications/ 1,542 20% Stake in McCaw Cellular 50,300 20.0% $140(o)
McCaw Cellular Communications 142(q)
11/88 Cellular Communications/ 15 Dayton (40) 138 82.7% $88
TA Associates Canton (87) 31 81.8
09/88 Vanguard Cellular Systems/ 35(r) Portsmouth (156) 174 67.2% $143
Palmer Communications Wilmington (218) 111 66.0 51
Jacksonville (258) 98 76.0 51
----- ----
383 93
05/88 Centel Corp./ 670(t) Toledo (48) 7,212 78.0% $93
United Telespectrum Youngstown (56) 72.0
Greenville-Spartanburg (67) 72.5
Harrisburg (84) 79.4
Johnson City-Kingsport (85) 100.0
Charleston (90) 51.7
York (99) 79.0
and 31 other markets
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-61-
<PAGE> 119
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
02/88 BellSouth Corp./ 529(n) Los Angeles (2) 5,568 60.0% $95(o)
Mobile Communications Houston (10) 43.7
Corporation of America Milwaukee (21) 50.0
Indianapolis (28) 50.0
Rochester (34) 28.6
Honolulu (50) 25.0
Gary/E. Chicago (54) 18.2
Richmond (58) 72.7
Mobile (83) 98.7
Bakersfield (57) 100.0
Jackson (106) 50.0
02/88 Comcast Corporation/ 201(u) New Brunswick (62) 1,709 57.9% $125
American Cellular Network Corp. Wilmington (69) 100.0
Asbury Park (78) 86.1
Harrisburg (64) 13.2
Trenton (321) 54.8
Atlantic City (134) 36.0
01/88 McCaw Cellular Communications/ -- Miami (12) -- 100.0% $82
Investors West Palm Beach (72) 100.0
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-62-
<PAGE> 120
CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
10/94 CGE/ 16 Kent, DE (359) 24 10% $180
SBC Communications Frederick, VA (690) 23 10% 170
Madison, VA (691) 25 10% 185
Caroline, VA (692) 17 10% 160
-- ----
89 $175
10/94 SBC/ 25 Jefferson, NY (559) 262 100% $95
US Cellular
09/94 BellSouth/ N/A Washington, AL (312) 118 100% N/A
Pro-Max Communications
09/94 CommNet Cellular/ N/A Carbon, MT (531) 4 13% N/A
Big Horn Cellular
09/94 CommNet Cellular/ N/A Custer, SD (638) 4 33% N/A
Black Hills Cellular
09/94 CommNet Cellular/ N/A Harding, SD (634) 5 13% N/A
Grand River Cellular
09/94 CommNet Cellular/ N/A Prairie, MT (532) 2 13% N/A
Powder River Cellular
09/94 CommNet Cellular/ N/A Daniels, MT (526) 4 10% N/A
Prairie Cellular
09/94 CommNet Cellular/ N/A Sheridan, WY (719) 12 17% N/A
Range Telephone
09/94 Contel Cellular/ 18 Jackson, AL (308) 127 100% $140
Crowley Cellular
09/94 McCaw Communications/ 8 Sharp, AR (326) 101 100% $80
MetaComm Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-63-
<PAGE> 121
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/94 McCaw Communications/ N/A Hood River, OR (607) 68 100% SWAP
Western Wireless Skamania, WA (699) 26 100% SWAP
---
94
09/94 US Cellular/ N/A Hood River, OR (607) 8 12% N/A
Metroplex Communications Skamania, WA (699) 3 12% N/A
---
11
09/94 US Cellular/ N/A Cherokee, NC (565) 88 50% N/A
Stancel
09/94 US Cellular/ N/A Yuma, AZ (321) 23 17% N/A
SW Telephone
09/94 Vanguard Cellular/ 51 Union, PA (619) 404 100% $125
Sunshine Cellular
09/94 US Cellular/ 4 Columbia, NY (564) 110 100% $36
MICEL/Sterling
08/94 US Cellular/ 19 Elliot, KY (451) 199 100% $55
Alpha Cellular Powell, KY (452) 150 100% 55
--- ---
349 $55
08/94 US Cellular/ 9 Clay, KY (453) 166 100% $55
Thomas Ward
07/94 Atlantic Cell/ 23 Franklin, NY-2 (560) 232 100% $100
Adirondack Cellular Telephone
07/94 Atlantic Cell/ 19 Franklin, VT-1 (679) 207 100% $90
PC Cellular et al
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-64-
<PAGE> 122
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
07/94 GTE/Contel/ N/A Owen, IN (409) 18 8% N/A
CommNet Cellular Brown, IN (410) 20 8% N/A
Decatur, IN (411) 12 8% N/A
---
50
07/94 McCaw Communications/ N/A Bethel, AK (316) 158 100% N/A
Excellence II
07/94 McCaw Communications/ 46 Marion, AR (325) 86 100% $95
Sterling Cellular Cross, AR (328) 117 100% 95
Cleburne, AR (329) 98 100% 95
Pope, AT (330) 112 100% 95
Franklin, AR (331) 66 100% 95
--- ---
479 $95
07/94 NYNEX/ N/A Carroll, NH-2 (549) 215 100% N/A
Contel et al
07/94 Palmer Communications/ 85 Hancock, GA (377) 131 100% $135
Sterling Cellular Warren, GA (378) 149 100% 135
Bleckley, GA (380) 145 100% 135
Liberty, GA (382) 202 100% 135
--- ---
627 $135
07/94 Sprint Cellular/ N/A Williams, OH (585) 96 75% N/A
US Cellular
07/94 Sterling Cellular/ 1 Mason, WV (701) 25 100% $50
Vanguard Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-65-
<PAGE> 123
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
07/94 Western Wireless/ 28 Marshall, KS (431) 137 100% $75
Sterling Cellular Morris, KS (436) 58 100% 75
Franklin, KS (437) 104 100% 75
Bates, MO (512) 76 100% 75
--- ---
375 $75
06/94 PriCellular N/A Purchased company 830 100% N/A
Cellular Info. Sys. (6 mkts.)
06/94 PriCellular/ N/A Bayfield, WI (709) 83 100% N/A
Cellular Info. Systems
06/94 PriCellular/ N/A Trempealeau, WI (713) 31 100% N/A
Cellular Info. Systems
06/94 PriCellular/ N/A Vilas, WI (710) 135 100% N/A
Cellular Info. Systems
06/94 US Cellular/ N/A Pacific, WA-6 (698) 90 51% N/A
McDaniel Telephone
05/94 Alaska-3 Cell/ 2 Haines, AK-3 (317) 75 100% $25
RJL Cellular
05/94 Bell Atlantic/ N/A Coconino, AZ (319) 230 100% $100
AZNEV Telecom
05/94 Centennial/ 19 Huntington, IN (405) 145 100% $130
MegaCommunications
05/94 General Cellular/ 7 Knox, NE (535) 114 100% $65
National Cellular
05/94 General Cellular/ N/A Boone, NE (537) 143 100% N/A
National Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-66-
<PAGE> 124
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/94 Horizon/ 33 Dawson, GA (372) 276 100% $120
Southern Cellular
05/94 McCaw Communications/ 3 Hubbard, MN-6 (487) 27 11% $100
PriCellular
05/94 McCaw Communications/ 12 Ouachita, AR (335) 188 100% $65
Arkansas-12 Cellular
05/94 No.Washington Partnerships/ N/A Okanogan, WA-2 (694)) 121 100% N/A
Delta Cellular
05/94 No. Washington Partnership/ N/A Ferry, WA-3 (695) 50 100% N/A
Radiofone
05/94 PriCellular/ 22 Hubbard, MN (487) 242 100 $89
Century Telephone
05/94 Ramcell 5 Cherokee, NC -1 (565) 88 50% $60
Contel Cellular
05/94 Rochester/ 25 LeSueur, MN-10 (491) 227 100% $110
Dowdy Cellular
05/94 Saipan Cellular/ N/A N. Mariana Islands (734) 63 100% N/A
RJL Cellular
05/94 Southern Cellular/ N/A Imperial, CA-7 (342) 129 100% N/A
Contel Cellular
05/94 Vanguard Cellular/ 7 Washington, ME (466) 83 100% 85
Sterling Cellular et al
05/94 Vanguard Cellular/ N/A Mason, WV (701) 75 100% N/A
Sterling Cellular et al
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-67-
<PAGE> 125
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
04/94 BellSouth/ 20 Vernon, WI (715) 226 100% $90
Plus Cellular
04/94 CommNet Cellular/ N/A Sheridan, WY (719) 12 17% N/A
Golden West Telecom
04/94 Indep. Cellular/ 55 Monroe, IA-3 (414) 89 100% $80
C-TEC Muscatine, IA-4 (415) 156 100% 80
Iowa, IA-6 (417) 155 100% 140
Hardin, IA-11 (422) 108 100% 86
Potter, PA-3 (614) 31 33% 50
Bradford, PA-4 (615) 18 19% 55
Wayne, PA-5 (616) 23 29% 60
--- ---
580 $94
03/94 Bell Atlantic/ 34 Laurens, SC-2 (626) 224 100% $150
Ally Inc.
03/94 Bristol Bay Cell./ N/A Bethel, AK-2 B2 (316) N/A N/A N/A
GTE Mobilnet
03/94 Cell. Comm. PR/ 1 St. Croix, VI-2 (731) 50 100% $27
Paradise Cell.
03/94 Centennial/ N/A Jackson, IA-5 (416) 106 100% N/A
Iowa East Cell.
03/94 Centennial/ 16 Iberville, LA-6 A1 (459) 160 100% $100
Iberia Cell. Tel.
03/94 Centennial/ 23 De Soto, LA-3 (456) 159 100% $100
Midsouth Cell. Caldwell, LA-4 (457) 71 100% 100
--- ---
230 $100
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-68-
<PAGE> 126
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/94 Centennial/ 15 Claiborne, MS-8 (500) 153 100% $100
Midsouth Cell.
03/94 Central OR Cell./ 7 Crook, OR-6 (611) 172 100% $40
Marco Comm.
03/94 Copper Val. Cell./ N/A Bethel, AK-2 B4 (316) N/A N/A N/A
GTE Mobilnet
02/94 Cell. Comm. PR/ 6 St. Thomas, VI-1 (730) 53 100% $106
Boatphone USVI
02/94 Centennial/ 12 Morehouse, LA-2 (455) 116 100% $100
Tri-Coastal Cell.
02/94 Centennial/ N/A Clay, AR-4 (327) 203 100% N/A
East AR Cell.
02/94 Centennial/ N/A Morehouse, LA-2 (455) 116 100% N/A
Tri-Coastal Cell.
02/94 Peninsula Cell./ N/A Bethel, AK-2 B4 (316) N/A N/A N/A
Matanuska-Kenai
01/94 Centennial/ 38 Beauregard, LA-5 (458) 376 100% $100
Cajun Cellular
01/94 Cellular Inc./ N/A Juab, UT-3 (675) 12 26% N/A
Sevier Cell.
01/94 Cellular Inc./ N/A Beaver, UT-4 (676) 21 26% N/A
SW Utah Cell.
01/94 Centennial/ N/A Beauregard, LA-5 (458) 376 100% N/A
Cajun Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-69-
<PAGE> 127
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/94 General Cellular/ N/A Kingsbury, SD-8 (641) 73 100% N/A
Greater SD Cell.
01/94 General Cellular/ 15 Parmer, TX-3 (654) 137 100% $52
McCaw Comm. Gaines, TX-8 (659) 129 100% 64
--- ---
266 $58
01/94 Litchfield Co. Cel./ N/A Clay, KY-11 (453) 164 100% N/A
GTE/Contel
01/94 Litchfield Co. Cel./ N/A Coos, OR-5 (610) 249 100% N/A
OR RSA 5 LP
01/94 McCaw Comm./ 7 Parmer, TX-3 (654) 137 100% $52
Parmer Comm. (MHF)
01/94 McCaw Comm./ 8 Gaines, TX-8 (659) 129 100% $64
Intermart Cell.
01/94 Miscellco Comm./ <1 Edwards, KS-13 (440) 29 100% $15
PC Cellular
01/94 Sterling Cell./ N/A Marion, AR-2 (325) 45 52% N/A
Razorback Cell. Cross, AR-5 (328) 61 52% N/A
Cleburne, AR-6 (329) 50 52% N/A
Pope, AR-7 (330) 57 52% N/A
Franklin, AR-8 (331) 34 52% N/A
---
247
12/93 Millry Tel./ N/A Bibb, AL-4 (312) 9 6.4% N/A
Pine Belt Tele. Washington, AL-6 (312) 8 6.4% N/A
---
17
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-70-
<PAGE> 128
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
12/93 Rochester Tele./ N/A Bibb, AL-4 (312) 26 19% N/A
Pine Belt Tele. Washington, AL-6 (312) 22 19% N/A
---
48
12/93 General Cellular/ 8 Gaines, TX-8 (659) 129 100% $64
James, Martin
12/93 Centennial Cellular/ 16 Ashe, NC-3 (567) 156 100% $101
Anderson Group et. al.
12/93 Vanguard/ 12 Bedford, PA-10 A2 (621) 140 100% $85
Horizon
12/93 Cellular Inc./ N/A Kiowa, CO-8 (355) 22 51% N/A
Two Butres Cellular
12/93 McCaw Communications/ 43 Fannin, TX-7 (658) 355 100% $120
KO Communications
12/93 MCTA (BLS/ALLTEL)/ N/A Leake, MS-7 B1 (499) 128 100% N/A
ALLTEL
12/93 MCTA (BLS/ALLTEL)/ N/A Claiborne, MS-8 B2 (500) 12 100% N/A
Cellular Holding
12/93 PriCellular/ N/A Iberville, LA-6 A2 (459) N/A N/A N/A
Iberia Cellular
Telecommunications
12/93 Radiofone/ N/A Iberville, LA-6 A2 (459) N/A N/A N/A
PriCellular
12/93 Triad Cellular/ 2 Juab, UT-3 (675) 49 100% $33
NCP Cellular LP
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-71-
<PAGE> 129
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
12/93 US Cellular/ 10 Copiah, MS-9 (501) 119 100% $80
MS-9 Cellular
11/93 General Cellular/ <1 White Pine, NV-5 (547) 14 100% $39
Mecury CelTel
11/93 SW Bell/ 43 Yates, NY-4 (562) 355 100% $120
Pegasus CelTel
11/93 Atlantic Cellular/ 9 Franklin, MA-1 (470) 72 100% $125
Franklin Co. Cellular
11/93 McCaw Communications/ 13 Kings, CA-12 (347) 110 100% $120
Kings Telecommunications
11/93 McCaw Communications/ 2 Roger Mills, OK-5 (600) 58 100% $40
Mobile Telenet
11/93 MCTA (BLS/ALLTEL)/ N/A Yalobusha, MS-4 (496) 34 100% N/A
BellSouth
11/93 OR-2 LP (USM)/ N/A Skamania, WA-7 (699) 25 100% N/A
Metroplex RSA-7
11/93 Triad Cellular/ N/A Beckham, OK-7 (602) 120 100% N/A
Sooner Cellular
11/93 Triad Cellular/ N/A Jackson, OK-8 (603) 94 100% N/A
Sooner Cellular
11/93 McCaw Communications/ 17 Kings, CA-12 (347) 110 100% $150
Kings Telecommunications
11/93 Triad Cellular/ 7 Beckham, OK-7 (602) 120 100% $55
Sooner Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-72-
<PAGE> 130
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/93 Triad Cellular/ 5 Jackson, OK-8 (603) 94 100% $55
Sooner Cellular
11/93 McCaw Communications/ 26 Litchfield, CT-1 (357) N/A N/A N/A
CT RSA #1
10/93 McCaw Communications/ 9 Storey, NV-3 (545) 100 100% $85
Walker Partnership
10/93 PriCellular/ N/A Burnett, WI-1 (708) 106 100% N/A
CIS Op-2
10/93 Hood River Cellular/ 1 Skamania, WA-7 (699) 25 100% $40
Gilcom Cell LP
10/93 US Cellular/ 13 Walton, FL-10 (369) 104 100% $120
Canton Cellular Corporation
10/93 Contel Cellular/ 14 Cannon, TN-2 (644) 155 100% $90
Nexus LP
10/93 Contel Cellular/ 6 Maury, TN-9 (651) 57 100% $105
Ten Woodland Rd.
10/93 US Cellular/ 38 Glades, FL-2 (361) 217 100% $175
TenTen GP
10/93 US Cellular/ 4 Calhoun, FL-9 (368) 38 100% 105
FL-9 Cellular Corporation
10/93 Horizon Cellular/ 44 Chautauqua, NY-3 (651) 478 100% $92
DiCroce Partnership
09/93 Centennial Cellular/ 18 Randolph, IN-6 (408) 216 100% $85
Florida Metro
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-73-
<PAGE> 131
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/93 Cellular Inc./ <1 Custer, SD-5 B2 (638) 4 33% $40
Contel
09/93 Cellular Inc./ <1 Haakon, SD-6 B2 (639) 2 114% $40
Contel
09/93 McCaw Communications/ 10 Kittitas, WA-5 (697) N/A N/A N/A
WA RSA #5
08/93 Contel Cellular/ 13 Macon, TN-3 (645) 164 51% $80
Macon RSA LP
08/93 US Cellular/ 12 Toombs, GA-11 (381) 146 100% $85
Cone, S.E.
08/93 US Cellular/ 11 Union, KY-2 (444) 124 100% $85
Mo-Tel Cellular
08/93 US West NewV./ N/A Conconino, AZ-2 (319) 56 25% N/A
Contel Cellular
08/93 US West NewV./ N/A Navajo, AZ-3 (320) 58 40% N/A
Contel Cellular
08/93 US West NewV./ N/A Lemhi, ID-3 (390) 5 33% N/A
Contel Cellular
08/93 US West NewV./ N/A Okanogan, WA-2 (694) 117 100% N/A
Contel/Pacific Telecom
08/93 US West NewV./ N/A Yuma, AZ-4 (321) 33 25% N/A
Contel Cellular
08/93 General Cellular/ 4 Adams, NE-9 (541) 81 100% $50
Harms, Daryl
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-74-
<PAGE> 132
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/93 General Cellular/ 4 Cass, NE-10 (542) 84 100% $50
Harms, Daryl
08/93 LIN/ 9 Jack, TX-6 (657) 81 100% $115
PriCellular
08/93 GMD Partnership/ 12 Pitt, NC-14 (578) 234 100% $50
US Cellular
08/93 US Cellular/ 12 Pitt, NC-14 (578) 234 100% $50
GMD Partnership
08/93 McCaw Communications/ 13 Alpine, CA-3 (338) N/A N/A N/A
CA RSA #3
08/93 McCaw Communications/ 28 Grant, OK-3 (598) N/A N/A N/A
OK RSA #3
08/93 McCaw Communications/ 34 Newton, TX-17 (668) N/A N/A N/A
TX RSA #17
08/93 McCaw Communications/ 50 Ocean, NJ-2 (551) N/A N/A N/A
NJ RSA #2
07/93 Bellsouth/ 11 Warren, IN-5 (407) 116 100% $95
BachTel/WK Cell
07/93 US Cellular/ 5 Washington, MO-13 (516) 90 100% $60
Sierra Cellular
07/93 Triad Cellular/ 2 Dallas, TX-1 (652) 50.4 100% $40
N.C.P.T. (in Bankruptcy)
07/93 Metroplex 7/ <1 Skamania, WA-7 (699) 19 75% $7
GTE Mobilnet
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-75-
<PAGE> 133
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
07/93 Triad Cellular/ 2 Dallam, TX-1 (652) 50 100% $40
N.C.P.T. (in Bkrtcy)
06/93 McCaw Communications/ 27 Grant, OK-3 (598) 201 100% $135
Stillwater Cellular
06/93 Stanton, John/ 2 Elbert, CO-5 (352) 24 100% $74
Market Member 352
06/93 Highland Cellular/ 5 Tazewell, VA-2 (682) 130 100% $40
JMW Inc.
06/93 InterCel/ N/A Somerset, ME-2 (464) 79 51% N/A
Unity Telephone
06/93 InterCel/ N/A Kennebec, ME-3 (465) 222 100% N/A
Unity Telephone
06/93 Highland Cellular/ 5 Tabwell, VA-2 (682) 130 100% $40
JMW Inc.
06/93 InterCel/ N/A Somerset, ME-2 (464) 79 51% N/A
Unity Telephone
06/93 InterCel/ N/A Kennebec, ME-3 (465) 222 100% N/A
Unity Telephone
06/93 McCaw Comm./ 27 Grant, OK-3 (598) 201 100% $135
Stillwater Cell.
06/93 Stanton, John 2 Elbert, CO-5 (352) 24 100% $74
Market Member 352
06/93 LIN/ 31 Newton, TX-17 (668) 232 100% $135
Eastex Cell. LP
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-76-
<PAGE> 134
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
06/93 McCaw Comm./ 52 Ocean, NJ-2 (551) 347 75% $150
Midland Comm.
06/93 Poka-Lambro Tele./ N/A Parmer, TX-3 B2 (654) 6 100% N/A
TX-3 LP
06/93 Radiofone/ N/A St. James, LA-8 (461) 107 100% N/A
PriCellular
05/93 LIN/McCaw/ 33 Litchfield, CT-1 (357) 181 100% $180
Litchfield Co. Cell
05/93 Texahoma Cell LP/ N/A Beckham, OK-7 B2 (602) 109 100% N/A
SW OK Cell. Sys.
05/93 Texahoma Cell LP/ N/A Jackson, OK-8 (603) 94 100% N/A
OK RSA #8 LP
05/93 Texahoma Cell LP/ N/A Briscoe, TX-4 B2 (655) 13 100% N/A
Texahoma Cell Corp
05/93 Texahoma Cell LP/ N/A Hardeman, TX-5 B1 (656) 43 100% N/A
TX RSA #5 (n) LP
05/93 BellSouth/ 8 Marinette, WI-4 (711) 117 100% $72
Mega-Tel Cell. III
05/93 Alltel Corp/ N/A Warren, GA-8 (378) 25 17% N/A
Statesboro Tel
(Rochester Tel)
05/93 Bell Atlantic/ 20 Gila, AZ-5 (322) 167 100% $121
Chronicle Publishing
05/93 LIN/McCaw/ 29 Litchfield, CT-1 (357) 181 100% $160
Connecticut One Partners
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-77-
<PAGE> 135
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/93 Triad Cellular/ 1 Lac Qui Parle, MN-8 (489) 67 100% $18
RCW Cell Partnership
05/93 US Cellular/ 22 Newton, IN-1 (403) 206 100% $107
Sunde Cellular
05/93 US Cellular/ 22 Newton, IN-1 (403) 206 100% $107
Sunde Cellular
04/93 HS Comm. Inc./ N/A Lake, TN-1 (643) 60 100% N/A
Magnolia Cell.
04/93 General Cellular/ 2 Sully, SD-7 (640) 66 100% $32
PriCellular
04/93 Triad Cellular/ <1 Piute, UT-6 (678) 27 100% $15
Cellcom Ptrs. LP
04/93 Vanguard/ 10 Lebanon, PA-12 (623) 118 100% $85
Hurlebaus, Carl
04/93 US Cellular/ 16 Mercer, IL-3 (396) 199 100% $80
Dial Two
04/93 Taylor Tele. Coop./ N/A Hardeman, TX-5 (656) 10 100% N/A
Brazos Tele. Coop.
04/93 Sterling Cellular/ N/A Hancock, GA-7 (377) 95 75% N/A
Hetafi, Inc.
03/93 US Cellular/ 16 Meade, KY-3 (445) 295 100% $55
Tsaconas Cell.
03/93 GTE/Contel/ 17 Giles, TN-6 (648) 147 100% $115
Mid-Tenn. Cell.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-78-
<PAGE> 136
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
02/93 BellSouth/ 1 Franklin, AL-1 (307) 55 100% $18
GTE/Contel
02/93 Eastern SD/Dakota/ N/A Hanson, SD-9 (642) 15 17% N/A
Cellular Inc.
02/93 McCaw Communications/ 7 Alpine, CA-3 (338) 71 54% $94
Sundin/RLW Development
02/93 US Cellular/ 4 De Kalb, MO-4 (507) 73 100% $55
Aegis Cell.
02/93 US Cellular/ 3 Madison, AR-1 (324) 67 100% $40
Fastcom, Inc.
02/93 US Cellular/ 10 Butte, ID-5 (392) 140 100% $74
Independent Cell. Tele.
02/93 Triad Cellular/ 2 Hardeman, TX-5 (656) 77 100% $30
TX 5 Corp./T. Ward
01/93 Triad Cellular/ 5 Pipestone, MN-9 (490) 134 100% $35
Greater MN Cell.
01/93 McCaw Communications/ N/A Kittitas, WA-5 (697) 84 80% N/A
Kitcell Group
01/93 Stanton, John/ 4 Wilkin, MN-5 (486) 199 100% $18
Otter Tail Cellular
01/93 Stanton, John/ 3 Kittson, MN-1 (482) 50 100% $25
Celltel Systems Lake of Woods, MN-2 (483) 60 100% 25
--- ---
110 $25
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-79-
<PAGE> 137
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/93 US Cellular/ 6 Union, IA-2 (413) 50 100% $35
Radiophone Pierce, WI-5 (712) 90 100% 45
--- ---
140 $41
01/93 US Cellular/ 2 Modoc, CA-2 (337) 41 70% $40
CA-2 Cell. Corp.
01/93 Palmer Communications/ 11 Lee, AL-8 (314) 166 100% $65
Dana Communictions
01/93 WSW Fund/ 18 Various markets 308 74% $58
PriCellular
01/93 Mercury Inc./ 7 Tunica, MS-1 (493) 164 100% $37
MS Cell. Corp. Bolivar, MS-3 (495) 20 13% 24
Yalobusha, MS-4 (496) 16 13% 24
--- ---
200 $35
01/93 Triad Cellular/ <1 Briscoe, TX-4 (655) 42 100% $12
General Cellular
12/92 U.S. Cellular/ 19 Worth, GA-14 (384) 387 54% $50
GMD Partnership Jefferson, NY-1 (559)
Pitt, NC-14 (578)
12/92 Bell Atlantic/ 15 Anson, NC-5 (569) 269 100% $55
SDK Enterprises Lee, VA-1 (681)
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-80-
<PAGE> 138
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/92 Horizon Cellular/ 44 Barren, KY-5 (447) 500 100% $87
Danbury Cellular Madison, KY-6 (448)
Mason, KY-8 (450)
11/92 General Cellular/ 15 Lincoln, NM-6 (558) 226 100% $65
Cell. Info. Sys.
11/92 Bell Atlantic/ 3 Oconee, SC-1 (625) 59 100% $55
Asset Mgmt. Corp.
10/92 ALLTEL/ 10 Madison, AR-1 (324) 170 51% $60
GTE/Contel Franklin, AR-8 (331)
Nowata, OK-4 (599)
10/92 John Stanton/ 2 Divide, ND-1 (580) 104 100% $24
Overland Cell.
10/92 John Stanton/ 1 McKenzie, ND-4 (583) 66 100% $19
Delta Cellular
10/92 US Cellular/ 17 Greene, NC-13 (577) 231 100% $75
RSA Partnership II
10/92 Horizon/ 12 Monongalia, WV-3 (703) 259 100% $45
Mountaineer Mobile
09/92 US Cellular/ 18 Owen, IN-7 (409) 214 100% $85
Cell. of IN
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-81-
<PAGE> 139
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/92 US Cellular/ 9 Sampson, NC-12 (576) 117 100% $75
First Fayette Cell.
09/92 Century Tel./ 2 Burleson, TX-16 (667) 29 10% $62
San Marco Tel.
09/92 John Stanton/ <1 Deer Lodge, MT-6 (528) 61 100% $21
MT-6 Corp.
08/92 Horizon Cellular/ 10 Crawford, PA-1 (612) 193 100% $52
Nationwide Cell.
07/92 MCP Cellular/ 2 Beaver, UT-4 (676) 78 100% $29
S. Utah Cell. Ptshp.
07/92 General Celluar/ <1 Briscoe, TX-4 (655) 42 100% $10
Mobile Teletalk
07/92 US Cellular/
Sterling Resources 14 Jo Daviess, IL-1 (394) 177 58% $80
07/92 Horizon Cellular/ 18 Spencer, KY-4 (446) 230 100% $78
Carale Cell. Ptnrs.
07/92 US Cellular/ 17 Clark, ID-6 (393) 266 100% $65
Mtn. View Cell.
07/92 Sterling Cell./ 5 Marshall, KS-4 (431) 136 100% $35
Stein Cell. Ptnrs.
06/92 General Cell./ <1 Corson, SD-2 (635) 23 100% $15
Calhoun Cellular
06/92 Stanton, John/ 1 Beaver, UT-4 (676) 78 100% $15
Farley, Fred
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-82-
<PAGE> 140
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
06/92 Media/Comm. Ptnrs./ 3 Hansford, TX-2 (653) 92 100% $33
Century Tele.
06/92 ALLTEL/ <1 Madison, AR-1 (324) 3 4% $60
Sugar Land Tele.
06/92 ALLTEL/ <1 Marion, AR-2 (325) 3 4% $60
Sugar Land Tele.
06/92 ALLTEL/ <1 Clay, AR-4 (327) 8 4% $60
Sugar Land Tele.
06/92 ALLTEL/ <1 Cross, AR-5 (328) 5 4% $60
Sugar Land Tele.
06/92 ALLTEL/ <1 Cleburne, AR-6 (329) 4 4% $60
Sugar Land Tele.
06/92 ALLTEL/ <1 Pope, AR-7 (330) 4 4% $60
Sugar Land Tele.
06/92 ALLTEL/ <1 Garland, AR-10 (333) 6 4% $60
Sugar Land Tele.
06/92 ALLTEL/ 4 Navarro, TX-10 B1-3 (661) 74 25% $60
Sugar Land Tele.
06/92 ALLTEL/ 3 Cherokee, TX-11 B1 (662) 51 18% $60
Sugar Land Tele.
06/92 ALLTEL/ 2 Burleson, TX-16 (667) 30 10% $60
Sugar Land Tele.
06/92 ALLTEL/ 2 Newton, TX-17 (668) 33 14% $60
Sugar Land Tele.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-83-
<PAGE> 141
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/92 US West/ 3 Garfield, CO-3 (350) 43 18% $72
Cellular Inc.
05/92 McCaw Cellular/ 5 Elmore, ID-4 (391) 120 100% $40
Chase, Derwood
05/92 Cellular Inc. 2 Ida, IA-9 (420) 63 100% $30
Logitrans Telecomm.
05/92 US Cellular/ 2 Coconino, AZ -2 (319) 36 17% $50
Arizona Telephone
05/92 US Cellular/ 1 Yuma, AZ-4 (321) 31 25% $45
Arizona Telephone
05/92 US Cellular/ 2 Gila, AZ-5 (322) 40 24% $55
Arizona Telephone
04/92 Cellular Inc./ 4 Clark, ID-6 (393) 57 21% $65
Teton Cell. Inc.
04/92 General Cell./ <1 Reeves, TX-13 (664) 31 100% $10
Cellmates LP
04/92 McCaw/ 70 Citrus, FL-4 (363) 399 100% $175
Gen. Comm. Sys.
04/92 General Cellular/ 2 Monona, IA-8 (419) 54 100% $44
Celutel
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-84-
<PAGE> 142
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
04/92 John Stanton/ 6 Toole, MT-2 (524) 179 100% $35
Cell. Info. Sys. Beaverhead, MT-8 (534)
Custer, SD-5 (638)
Haakon, SD-6 (639)
03/92 Sterling Resources/ 21 Jo Daviess, IL-1 305 100% $70
Nancy Wilson
02/92 Palmer Comm./ 6 Marion, GA-9 (379) 114 100% $57
Western Rural
02/92 SW Bell/ 30 Bureau, IL-2 (395) 250 100% $120
Minerich, Inc.
02/92 US Cellular/ 6 Addison, VT-2 (680) 80 74% $71
Block B. Cellular
02/92 US Cellular/ 12 Chesterfield, SC-4 (628) 204 100% $60
Dataphon SC Partnership
02/92 Public Service Cellular/ 2 Marion, GA-9 B1 (379) 18 100% $121
HTC Cellular
02/92 BellSouth/ 11 Door, WI-10 (717) 126 100% $88
Wisconsin 10 Corp.
02/92 BellSouth/ <1 Dawson, GA-2 B2 (372) 2 1% $72
GTE/Contel Jasper, GA-4 B3 (374)
01/92 BellSouth/ 2 Fayette, TN-5 B2 (647) 103 100% $23
Magnolia Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-85-
<PAGE> 143
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/92 BellSouth/ 4 Benton, MS-2 (494) 206 90% $20
Magnolia Cellular, et al
01/92 City of Fairbanks/ 2 Wade Hampton, AK-1 (315) 121 100% $19
Hermes Cellular
01/92 US West New Vector/ <1 Saguache, CO-7 (354) 9 20% $59
Pacific Telecom
01/92 US West New Vector/ 5 Colorado 3,4,6, 90 25% $59
Pacific Telecom (350,351,353)
12/91 U.S. Cellular/ 7 Jefferson, FL-8 (367) 51 100% $130
Hermes Cellular
12/91 Brantley/ 4 Liberty, GA-12 (382) 52 28% $65
Coastal Cellular
12/91 U.S. Cellular/ 1 Schuyler, MO-3 (506) 56 100% $20
Acme Partnerships
12/91 U.S. Cellular/ 15 Whitfield, GA-1 (371) 198 100% $75
Acme Partnerships
12/91 Century Cellular/ 14 Cass, MI-9 (480) 286 100% $49
Cellwave
12/91 Brantley/ 2 Tombs, GA-11 (381) 40 20% $40
Coastal Cellular
12/91 US Cellular/ 5 Somerset, ME-2 (464) 155 100% $35
Maine 2 Inc.
11/91 Pacific Telecom 16 Michigan (1-2), (472-473) 315 100% $50
Upper Peninsula
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-86-
<PAGE> 144
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/91 City of Fairbanks 4 Wade Hampton, AK-1 (375) 121 100% $50
Hermes Cellular
11/91 FL-9 Cellular Corporation/ <1 Calhoun, FL-9 (368) 37 100% $22
Mercury Cellular
11/91 Pacific NW Cell./ <1 Saguache, CO-7 (354) 43 100% $4
Dataphon CO Pship.
11/91 Alpha Cell. Tele./ 2 Powell, KY-10 (452) 148 100% $14
Metro Mobile
11/91 CCI/ 9 Ashtabula, OH-3 (587) 100 100% $85
PacTel
11/91 Anderson Cellular/ 2 Ashe, NC-3 (567) 52 34% $39
Celar Comm. Sys.
11/91 Anderson Cellular/ 6 Claiborne, MS-8 (500) 153 100% $41
CGH Cell. Ptrs.
10/91 Sacramento Valley LP/ 6 Sierra, CA-10 (345) 75 100% $84
GTE/Contel
10/91 Sacramento Valley LP/ 6 Storey, NV-3 (545) 94 100% $65
GTE/Contel & PacTel
10/91 US Cellular/ 11 Tuscarawas, OH-7 (591) 249 100% $45
Plateau Cellular
08/91 TDS/US Cellular/ 21 Coos, OR-5 (610) 252 100% $83
Max-Cell Comm.
08/91 Miscellco Comm./ <1 Hodgeman, KS-12 (439) 42 100% $10
Pinnacle Three
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-87-
<PAGE> 145
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
07/91 Radiofone/ 1 Plaquemines, LA-9 (462) 26 100% $45
Hyder, Ronald
07/91 US Cellular/ 1 Atchison, MO-1 (504) 44 100% $23
Cell-Ventures
06/91 Cellular Comm./ 14 Mercer, OH-4 (588) 212 100% $66
Marco Cellular
06/91 Vanguard Cell./ 4 Wayne, PA-5 (616) 71 100% $58
CGH Cell. Ptnrs.
06/91 Miscellco Comm./ <1 Wallace, KS-6 (433) 22 100% $10
Eagle Telecom
06/91 John Stanton/ <1 Costilla, CO-9 (356) 30 100% $9
Chesapeake Comcell
05/91 US Cellular/ 11 Bedford, VA-4 (684) 169 100% $65
Ken Tec Group Inc.
05/91 Horizon Cellular/ 23 Lawrence, PA-6 (617) 382 100% $60
Peterson, Raymond
05/91 Danbury Cell./ 6 Barren, KY-5 (447) 153 100% $40
S. Central KY Cell.
05/91 Mercury Comm./ 2 Ouachita, AR-12 (335) 192 100% $10
Namaqua LP
05/91 Ameritech/ 3 Kauai, HI-1 (385) 44 100% $65
CyberTel
05/91 Ameritech/ 11 Saline, MO-7 (510) 162 100% $70
CyberTel
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-88-
<PAGE> 146
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/91 Ameritech/ 10 Callaway, MO-8 (511) 96 100% $108
CyberTel
05/91 Ameritech/ 4 Benton, MO-10 (513) 88 100% $48
CyberTel
05/91 Ameritech/ 8 Perry, MO-18 (521) 114 100% $70
CyberTel
05/91 Ameritech/ 4 Stoddard, MO-19 (522) 205 100% $20
CyberTel
05/91 Ameritech/ 4 St. Thomas, VI-1 (730) 50 100% $80
CyberTel
05/91 Danbury Cell./ 6 Barren, KY-5 (447) 153 100% $40
S. Central KY Cell.
04/91 PacTel/ 12 Chattooga, GA-3 (373) 179 100% $65
Karl Eckel Cell.
04/91 PacTel/ 7 Jasper, GA-4 (374) 113 100% $58
Acad-Cell. Ptnrs.
04/91 Century Telephone/ 1 Hansford, TX-2 (653) 98 90% $14
Mobiltalk Partners
04/91 BellSouth/ 63 Columbia, WI-9 (716) 361 100% $175
McCaw Comm.
04/91 Grace, Oliver/ 1 Cladwell, LA-4 (457) 68 100% $20
Macro Cell. Ptr.
04/91 US Cellular/ 10 Edwards, TX-18 (669) 183 100% $55
Northern Comm.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-89-
<PAGE> 147
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
04/91 Contel Cellular/ 25 Fayette, TN-5 (647) 314 100% $80
Pinnacle Three Comm.
04/91 Contel Cellular/ 18 Bledsoe, TN-7 (649) 222 100% $80
Pinnacle Three Comm.
04/91 Contel Cellular/ 11 Macon, TN-3 (645) 146 49% $75
Pinnacle Three Comm.
03/91 Sterling Cell./ 9 Roscommon, MI-6 (477) 151 100% $58
MCI Comm.
03/91 Sterling Cell./ 3 Franklin, KS-10 (437) 112 100% $30
MCI Comm.
03/91 Sterling Cell./ 2 Morris, KS-9 (436) 64 100% $25
Personal Mobile Comm.
03/91 Century Tel./ 5 Hubbard, MN-6 (487) 263 100% $20
Cellcall
03/91 ALLTEL/ 7 Missouri RSAs 163 N/A $44
Missouri Tel.
03/91 Sterling Cellular/ 1 Marion, AR-2 (325) 33 37% $20
Gore, Sam T., Jr.
03/91 Sterling Cellular/ 2 Cross, AR-5 (328) 47 37% $39
Cross Comm. Inc.
03/91 Sterling Cellular/ 1 Cleburne, AR-6 (329) 34 37% $39
Air Comm. Cleburne
03/91 Sterling Cellular/ 2 Pope, AR-7 (330) 39 37% $39
Prairie Cellular AR
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-90-
<PAGE> 148
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/91 Sterling Cellular/ 1 Franklin, AR-8 (331) 23 37% $39
Campbell, Jerry D.
03/91 Metro Mobile/ 11 Newport, RI-1 88 100% $130
Highland Comm. Inc.
03/91 US Cellular/ 19 Northampton, NC-8 (572) 268 100% $70
Rural Telco Inc.
03/91 Metro Mobile/ 3 Powell, KY-10 (452) 153 100% $20
Highland Comm. Inc.
03/91 Horizon Cellular/ 19 Frederick, MD-3 (469) 146 100% $130
IFC Cellular Ptrs.
02/91 SW Bell/Comcast/ 5 Kent, DE-1 (359) 28 100% $162
First Cell. LP
02/91 Contel Cellular/ 9 Trimble, KY-7 (449) 171 100% $55
SAR Assoc.
02/91 Horizon Cellular/ 12 Bedford, PA-10 (621) 174 100% $69
Thomas, Paul
02/91 WKBN Bcstg/. 3 Columbiana, OH-11 107 100% $28
EZ Comm.
02/91 Contel Cellular/ 12 Trimble, KY-7 (449) 171 100% $70
SAR Assoc.
01/91 SW Bell/ 10 Mason, IL-5 (398) 102 100% $100
Muths, Sherman
01/91 US Cellular/ 16 Atascose, TX-19 (670) 183 100% $85
JEH Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-91-
<PAGE> 149
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/91 US Cellular/ 16 Kennebec, ME-3 (465) 212 100% $75
United Cellular. Assoc.
01/91 US Cellular/ 2 Bath, VA-5 (685) 65 100% $25
Steele-Edge Comm.
01/91 US Cellular/ 2 Buckingham, VA-7 (687) 85 100% $25
Chant LP
01/91 US Cellular/ 2 Dixie, FL-6 (365) 44 100% $48
Olympus TeleData
01/91 Cellular Comm./ 9 Clinton, OH-8 (592) 163 100% $56
Adler, Frederick
01/91 FGI/Sterling/ N/A Bates, MO-9 (512) N/A -- $35
Cell-Tech
01/91 US Cellular/ 12 Chatham, NC-6 (570) 134 100% $90
GSF Cellular
01/91 US Cellular/ 8 Putnam, FL-5 (364) 82 100% $100
LeFleur Cell. Ptnship.
12/90 Atlantic Cell./ 22 Coos, NH-1 (548) 221 100% $100
Skokos, Theodore
12/90 Liberty Cellular/ 5 Elk, KS-15 (442) 174 100% $30
WCC Cellular
12/90 US Cellular/ 27 Cherokee, TX-11 (662) 283 100% $95
Cherokee Cellular
12/90 Celltel Systems/ 2 Kittson, MN-1 (482) 52 100% $30
Prairie Cellular MN
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-92-
<PAGE> 150
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
12/90 Century Telephone/ 5 Various minorities 102 18% $50
GTE Mobilnet et al.
12/90 MS-6 Cellular/ 2 Montgomery, MS-6 (498) 173 100% $13
Montgomery Cellular
12/90 Century Comm./ 8 Miami, IN-4 (406) 180 100% $47
Intl. Mobile Machines
12/90 SW Bell/ 7 Grant, WV-4 (704) 149 100% $50
Cellular USA Inc.
12/90 Boston Cellular/ 6 Franklin, MA-1 (470) 67 100% $95
Templeton Inc.
12/90 Cellular Inc./ 5 Minority RSAs 173 100% $27
US WEST NewVector
11/90 SW Bell/ 30 Madison, VA-11 (691) 220 100% $135
H.H. White
11/90 SW Bell/ 25 Frederick, VA-10 (690) 212 100% $120
Tri-Coastal Cellular II
11/90 SW Bell/ 18 Caroline, VA-12 (692) 167 100% $110
Legg Mason Cellular
11/90 US Cellular/ 180 29 RSA Markets 2,649 100% $68
TDS
11/90 US WEST/ 23 19% of U S WEST 323 100% $72
US WEST NewVector NewVector
11/90 Cellular Inc./ 0 Piute, UT-6 (678) 6 20% $18
Contel Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-93-
<PAGE> 151
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/90 US Cellular/ 5 Stone, MO-15 (518) 92 100% $50
Sound Cellular Serv.
11/90 US Cellular/ 6 Laclede, MO-16 (519) 87 100% $67
Trinity
11/90 US Cellular/ 1 Shannon, MO-17 (520) 28 100% $36
Cross Valley Cellular
11/90 Atlantic Cellular/ N/A Addison, VT-2 (680) 228 100% N/A
Sunrise Communications
11/90 Bachtel Cellular/ 7 Hamblen, TN-4 (646) 121 49% $55
Loe, Larmar
11/90 Miscellco Comm./ 1 Cheyenne, KS-1 (428) 33 100% $25
Chesapeake Comcell
11/90 Mussman, Kyle/ 3 Whitman, WA-8 (700) 117 100% $29
Wilcom Cellular Corp.
11/90 General Cellular/ N/A Mineral, NV-4 (546) 22 100% N/A
GEM Cellular
10/90 Comcast/ATW Cellular 13 Hunterdon, NJ-1 (550) 104 100% $125
10/90 Sooner Cellular/ 9 Beckham, OK-7 (602) 134 100% $64
Cellcom Corporation
10/90 Price Communications/ 9 Jack, TX-6 (657) 85 100% $105
S. Hineline
10/90 Unnamed/ 9 Beckman, OK-7 (602) 134 100% $64
Cellcom Corporation
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-94-
<PAGE> 152
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/90 Cybertel/ 4 Stoddard, MO-19 (522) 207 100% $18
Formula 1 Cellular
09/90 Scarpa, John/ 2 San Miguel, CO-6 (353) 61 100% $30
Azeez, Michael
09/90 Liberty Cellular/ N/A Reno, KS-14(2) (441) 178 100% N/A
Kansas Cellular Telco.
09/90 Utilities, Inc./ 2 Oxford, ME-1 (463) 78 100% $30
B. Margetich
09/90 SW Bell/ 41 Barnstable, MA-2 (471) 207 100% $200+
Mass 2 Inc.
09/90 SW Bell/ 5 Washington, MO-13(2) 83 100% $63
Steelvill Telephone (516)
09/90 Centel Corp./ 8 Amelia, VA-8 (688) 77 100% $105
TG Associates
09/90 Centel Corp./ 10 Greensville, VA-9 (689) 81 100% $125
Cell-Ventures Ltd.
08/90 General Cellular/ N/A Midland, TX # (295) 65 56% SWAP
Vanguard Cellular
08/90 General Cellular/ N/A Marshall, SD-4 (637) 70 100% $40
Dacourt Communications
08/90 Palmer Communications/ 12 Ft. Myers, FL (164) 145 49% $80
Minority holders
08/90 Mobile Management Corp./ N/A Gulf of Mexico(2) (306) N/A 100% N/A
Roanoke Valley Cell.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-95-
<PAGE> 153
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/90 Cybertel/ 4 Benton, MO-10 (513) 84 100% $48
John Street Partnership
08/90 Steamboat Springs Cellular/ 2 Moffat, CO-1 (348) 44 100% $38
National Cellular Network
08/90 General Cellular/ 3 Marshal, SD-4 (637) 70 100% $40
Dacourt Communications
08/90 Independent Cellular/ N/A Collier, FL-1 (360) 163 100% N/A
Bauce Cellular
08/90 B. Goodwin/ 5 Pipestone, MN-9 (490) 140 100% $35
R. Steele
08/90 McCaw Communications/ N/A Maui, HI-2 (386) 97 100% SWAP
Cellular Information
Systems
08/90 Mobil Management Corp./ N/A Adams, IL-4 (397) N/A N/A N/A
Roanoke Valley Cellular
08/90 C-Tec/ 12 Muscatine, IA-4 (415) 159 100% $75
Douglas, Jean Ann
08/90 US Cellular/ 14 Humboldt, IA-10 (421) 181 100% $78
Larry Hudson Trustee
08/90 Southwestern Bell/ N/A Brown, KS-5(2) (432) N/A N/A N/A
Brown 432 CP, Inc.
08/90 MCI Communications/ N/A Franklin, KS-10 (437) 108 100% N/A
Teleconnect
08/90 Quantum Communications Group/ N/A Wilkin, MN-5 (486) 217 100% N/A
Calhoun Cellular Partners
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-96-
<PAGE> 154
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/90 Cellular Information Systems/ 1 Toole, MT-2 (524) 38 100% $25
N. American Rural Cellular
08/90 Cellular Upstate NY/ N/A Otsego, NY-5 (563) 382 100% N/A
Warren, Carolyn
08/90 US Cellular/ 19 Garvin, OK-9 (604) 209 100% $90
428 Cellular Association
08/90 WKBN Broadcasting/ 34 Lawrence, PA-6 (617) 380 100% $90
Peterson, Raymond W.
08/90 Vanguard Cellular/ 23 Georgetown, SC-5 (629) 232 100% $98
John Street Partners
08/90 WKBN Broadcasting/ 34 Lawrence, PA-6 (617) 380 100% $90
Peterson, Raymond W.
08/90 Vanguard Cellular/ 23 Georgetown, SC-5 (629) 232 100% $98
John Street Ptnrs.
08/90 S. Dakota 4 Cell./ N/A Marshall, SD-4 (637) 70 100% N/A
Dacourt Comm.
08/90 Cellular Inc./ N/A Carbon, UT-5(2) (677) 17 20% N/A
Carbon RSA LP
07/90 McCaw Cellular/ 24 Clallam, WA-1 (693) 207 $115
Steve Simmons
07/90 TDS/US Cellular 10 Wilson, TX-20 (671) 136 100% $75
Alpha Cellular
06/90 ALLTEL/ 18 Lake, TN-1 (643) 307 100% $59
Maxcell Telecom
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-97-
<PAGE> 155
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
06/90 General Cellular/ 1 Daniels, MT-4 (526) 45 100% $25
Shadowfax Cellular
06/90 General Cellular/ N/A Casper, WY (299) 65 100% N/A
US Cellular Co. LP
06/90 General Cellular/ N/A Hall, NE-7 (539) 88 100% N/A
Grand Island Cellular
06/90 Cybertel/ 11 Saline, MO-7 (510) 160 100% $70
Saline Cellular Partners
06/90 Century Communications/ 11 Imperial, CA-7 (342) 114 100% $100
Cellular Information
Systems
06/90 McCaw Cellular/ 16 Pacific, WA-6 (698) 160 100% $100
Centralia/Longview
06/90 US Cellular/ 8 Grays Harbor, WA-4 (696) 100 100% $80
Robert Haskins Inc
06/90 General Cellular/ 2 Lander, NV-2 (544) 30 100% $59
SQK Cellular Partners
06/90 General Cellular/ 5 Humboldt, NV-1 (543) 34 100% $53
Nevada One Cellular
06/90 Cellular Communications/ Culebra, PR-7 (729) 1 100% N/A
Universal Cellular
06/90 Cybertel N/A St. Thomas, VI-1 (730) 49 100% N/A
JPM Cellular
05/90 Cellular Information Systems/ 2 Haakon, SD-6 (639) 41 100% $39
Advanced Mobile
Communications
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-98-
<PAGE> 156
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/90 McCaw Cellular N/A Kittis, WA-5 (6970) N/A Min. N/A
Kitchell Group
05/90 Price Communications/ 4 Hardeman, TX-5 (656) 42 51 $95
Thomas Ward
05/90 Undisclosed/ 8 Beckman, OK-7 (602) 135 100% $59
Cellcom Corporation
05/90 C-TEC/ Undisclosed N/A IA-3 92 N/A $75
05/90 C-TEC/ Undisclosed N/A IA-4 157 N/A $87
05/90 US Cellular Corp/ 5 Mitchell, IA-13 70 100% $65
State Communications
Partners
05/90 US Cellular Corp/ 5 Audubon, IA-7 (418) 56 100% $90
Stoneman Inv. Partnership
05/90 Vanguard/ N/A Williamsport, PA (251) 59 50% N/A
Dawursk
04/90 C-TEC/ 21 Iowa, IA-6 (417) 153 100% $133
Oliver Grace, Jr.
04/90 General Cellular/ 21 Del Norte, CA-1 (336) 191 100% $110
Randolph Cellular
04/90 General Cellular/ 8 Loving, TX-14 (665) 130 100% $65
Telephone Partnership
04/90 General Cellular/ 1 Hudspeth, TX-12 (663) 22 100% $55
Ruth Steele
04/90 McCaw Cellular/ 9 Richland-Kenn, WA (214) 151 100% $75
Mahaffey, Patricia
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-99-
<PAGE> 157
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/90 N/A 5 Marshall, SD-4 (2) (637) 71 100% $76
Decourt Communications
03/90 Cellular Inc. 19 Iowa, IA-6 (2) (417) 154 100% $125
S. Slope Coop
Telecommunications
03/90 Cellular Information Systems/ 8 Vilas, WI-3 (710) 130 100% $65
Coastal Communications
Assoc.
03/90 Cellular Information Systems/ 4 McKenzie, ND-4 (583) 78 100% $55
Delta Cellular Partners
03/90 Cybertel/ 6 Washington, MO-13 (516) 83 100% $75
Sierra Cellular
03/90 Cybertel/ N/A Perry, MO-18 (521) 118 100% $75
Millicom Communications
03/90 General Cellular/ 5 Mendocino, CA-9 (344) 132 100% $110
Gardner Enterprises
03/90 General Cellular/ 1 Fergus, MT-7 (529) 28 100% $35
Wisconsin Cellular Group
03/90 General Cellular/ 23 Vernon, WI-8 (715) 226 100% $100
PLUS Cellular Corp.
03/90 McCaw Cellular Communications/ 11 Tehama, CA-8 (343) 86 100% $130
Westcell Services
03/90 McCaw Cellular Communications/ N/A Alexandria, LA (205) N/A N/A N/A
Charter, Richard
03/90 N/A N/A SD-4 70 N/A $76
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-100-
<PAGE> 158
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
02/90 Centel/ 55 Sante Fe, NM-4 (556) 229 100% $135
John Herklotz San Juan, NM-1 (553) 212 100% 85
Naresh Vashisht Grant, NM-5 (557) 52 100% 75
Sun Comm. Inc. Colfax, NM-2 (554) 24 100% 70
Ronald Hyder --- ---
517 $105
01/90 Undisclosed/ 9 Hardin, IA-11 (422) 113 100% $81
Cosas Communications
01/90 Cellular Inc./ 13 ID-5 145 100% $91
Sterling Communications
01/90 Cellular Information Systems/ 4 Beaverhead, MT-8 (530) 76 100% $49
Procell System
01/90 Cellular Information Systems/ 10 Burnett, WI-1 (708) 104 100% $95
S&F Partnership
01/90 C-TEC/ 9 IA-11 113 100% $81
Leon Rosenburg
01/90 General Cellular/ 6 Hanson, SD-9 (642) 89 100% $67
Collins & Assoc.
01/90 General Cellular/ 24 Clark, ID-6 (393) 269 100% $90
Mountain View Cellular
01/90 General Cellular/ 7 Divide, ND-1 (580) 116 100% $55
Tellesis Partners
01/90 General Cellular/ N/A NB-6 103 100% N/A
Namaqua LP
01/90 Wisconsin Cellular Systems/ 10 WI-6 112 100% $85
USCC
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-101-
<PAGE> 159
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/90 N/A N/A NV-4 24 N/A $42
12/89 Cybertel/ 9 MO-8 91 100% $100
M3P Corporation
11/89 General Cellular/ 2 Mono, CA-6 (341) 27 100% $56
Fairmont Cellular
11/89 General Cellular/ 16 WI-10 128 100% $123
Undisclosed
10/89 Atlantic Cellular/ 14 El Dorado, CA-11 (346) 119 100% $120
El Dorado Communications
10/89 Cellular Information System/ 16 NM-6 237 100% $65
Clover Cellular
10/89 General Cellular/ 5 WY-2 81 100% $57
Carter E. Page
10/89 General Cellular/ 5 Sheridan,WY-2 (719) 81 100% $57
Carter Page
10/89 McCaw Cellular Communications/ 63 WI-9 356 100% $175
Salem Cellular
09/89 Cellular Information Systems/ 8 Imperial, CA-7 (342) 113 100% $71
RSAC Inc.
09/89 Cellular Information Systems/ 9 CA-7 113 100% $71
RSA Inc.
09/89 General Cellular/ 26 CA-1 191 100% $135
Undisclosed
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-102-
<PAGE> 160
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/89 Cellular Information Systems/ 10 Miami, HI-2 (386) 93 100% $107
Cone Enterprises
08/89 Cellular Information Systems/ 10 HI-2 93 100% $107
Cone Enterprises
08/89 McCaw Cellular Communications/ N/A UT-1 109 100% SWAP
Price Communications
07/89 Century Communications/ 9 Yuma, AZ-4 (321) 114 100% $85
Bay Cellular Ltd.
07/89 McCaw Cellular Communications/ 25 Clallam, WA-1 (693) 210 100% $120
Steve Simmons
06/89 Robert Haskins/ 8 WA-4 100 100% $85
USCC
06/89 US Cellular Corporation/ 12 HI-3 119 100% $100
US Cell Inc.
06/89 Vanguard Cellular/ 8 Midland, TX (295) 119 100% $65
Geral Schaefers
02/89 Cellular Inc./ 9 WY-3 152 100% $60
EZ Communications
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-103-
<PAGE> 161
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
The following tables represent the plotting points used to create the 11
graphs shown in the printed document.
Fig. 1
FIGURE 1
<TABLE>
<CAPTION>
Date Contel S&P 400
---- ------ -------
<S> <C> <C>
11/4/93 100 100
11/5/93 97 100
11/8/93 97 100
11/9/93 96 100
11/10/93 92 101
11/11/93 92 101
11/12/93 91 102
11/15/93 89 102
11/16/93 88 102
11/17/93 87 102
11/18/93 86 102
11/19/93 84 102
11/22/93 82 101
11/23/93 82 101
11/24/93 86 102
11/26/93 89 102
11/29/93 87 101
11/30/93 84 101
12/1/93 86 101
12/2/93 87 101
12/3/93 89 102
12/6/93 91 102
12/7/93 87 102
12/8/93 86 102
12/9/93 86 102
12/10/93 86 102
12/13/93 86 102
12/14/93 83 101
12/15/93 83 101
12/16/93 79 101
12/17/93 83 102
12/20/93 84 102
12/21/93 83 102
12/22/93 83 102
12/23/93 83 102
12/27/93 82 103
12/28/93 82 103
12/29/93 86 103
12/30/93 83 103
12/31/93 86 102
1/3/94 86 102
1/4/94 85 103
1/5/94 85 103
1/6/94 87 103
1/7/94 95 104
1/10/94 93 105
1/11/94 97 105
1/12/94 96 105
1/13/94 94 104
1/14/94 92 105
1/17/94 93 105
1/18/94 89 105
1/19/94 89 105
1/20/94 89 105
1/21/94 89 105
1/24/94 87 104
1/25/94 88 104
1/26/94 86 104
1/27/94 87 105
1/28/94 89 105
1/31/94 88 106
2/1/94 89 105
2/2/94 92 106
2/3/94 91 106
2/4/94 88 104
2/7/94 88 104
2/8/94 89 104
2/9/94 87 105
2/10/94 86 104
2/11/94 88 104
2/14/94 89 104
2/15/94 93 105
2/16/94 95 105
2/17/94 92 104
2/18/94 92 104
2/22/94 89 105
2/23/94 91 105
2/24/94 89 103
2/25/94 92 103
2/28/94 87 104
3/1/94 88 103
3/2/94 86 103
3/3/94 86 103
3/4/94 87 103
3/7/94 87 104
3/8/94 86 104
3/9/94 84 104
3/10/94 82 103
3/11/94 80 104
3/14/94 79 104
3/15/94 82 104
3/16/94 84 104
3/17/94 84 105
3/18/94 84 105
3/21/94 84 104
3/22/94 84 104
3/23/94 87 104
3/24/94 84 103
3/25/94 87 102
3/28/94 86 102
3/29/94 79 100
3/30/94 76 99
3/31/94 75 99
4/4/94 70 97
4/5/94 76 99
4/6/94 79 99
4/7/94 80 100
4/8/94 83 99
4/11/94 82 99
4/12/94 82 99
4/13/94 82 98
4/14/94 76 98
4/15/94 80 98
4/18/94 79 97
4/19/94 78 97
4/20/94 77 97
4/21/94 77 98
4/22/94 80 98
4/25/94 78 100
4/26/94 80 100
4/28/94 78 99
4/29/94 80 99
5/2/94 79 100
5/3/94 79 100
5/4/94 80 100
5/5/94 82 100
5/6/94 80 99
5/9/94 79 98
5/10/94 80 99
5/11/94 79 98
5/12/94 82 98
5/13/94 80 98
5/16/94 82 98
5/17/94 83 99
5/18/94 87 100
5/19/94 89 101
5/20/94 91 101
5/23/94 83 100
5/24/94 84 101
5/25/94 86 101
5/26/94 84 101
5/27/94 86 101
5/31/94 86 101
6/1/94 86 101
6/2/94 86 101
6/3/94 88 101
6/6/94 86 101
6/7/94 88 101
6/8/94 87 100
6/9/94 87 101
6/10/94 86 101
6/13/94 86 101
6/14/94 88 102
6/15/94 86 101
6/16/94 88 102
6/17/94 88 101
6/20/94 87 100
6/21/94 86 100
6/22/94 86 100
6/23/94 86 99
6/24/94 87 98
6/27/94 83 99
6/28/94 84 98
6/29/94 84 99
6/30/94 87 98
7/1/94 84 98
7/5/94 84 98
7/6/94 85 98
7/7/94 91 99
7/8/94 88 99
7/11/94 89 99
7/12/94 89 99
7/13/94 87 99
7/14/94 86 100
7/15/94 88 100
7/18/94 89 100
7/19/94 89 100
7/20/94 87 100
7/21/94 87 100
7/22/94 91 100
7/25/94 88 100
7/26/94 95 100
7/27/94 96 100
7/28/94 96 100
7/29/94 93 101
8/1/94 93 102
8/2/94 95 102
8/3/94 96 102
8/4/94 100 101
8/5/94 99 101
8/8/94 96 101
8/9/94 101 101
8/10/94 101 102
8/11/94 99 101
8/12/94 97 102
8/15/94 97 102
8/16/94 97 103
8/17/94 96 103
8/18/94 95 103
8/19/94 99 103
8/22/94 96 103
8/23/94 96 103
8/24/94 97 104
8/25/94 95 104
8/26/94 95 105
8/29/94 93 106
8/30/94 95 106
8/31/94 93 106
9/1/94 97 105
9/2/94 95 105
9/6/94 95 105
9/7/94 93 105
9/8/94 124 106
9/9/94 122 105
9/12/94 122 104
9/13/94 122 105
9/14/94 124 105
9/15/94 124 106
9/16/94 126 106
9/19/94 126 106
9/20/94 124 104
9/21/94 124 103
9/22/94 124 103
9/23/94 125 103
9/26/94 124 103
9/27/94 125 104
9/28/94 125 104
9/29/94 124 104
9/30/94 124 104
10/3/94 125 104
10/4/94 125 102
10/5/94 124 102
10/6/94 126 102
10/7/94 124 102
10/10/94 124 103
10/11/94 124 105
10/12/94 125 105
10/13/94 125 105
10/14/94 125 105
10/17/94 125 106
10/18/94 125 105
10/19/94 126 106
10/20/94 126 105
10/21/94 126 105
10/24/94 126 104
10/25/94 127 104
10/26/94 127 104
10/27/94 128 105
10/28/94 127 107
10/31/94 127 106
11/1/94 127 106
11/2/94 127 105
11/3/94 127 105
11/4/94 128 104
</TABLE>
<PAGE> 162
Fig. 2
FIGURE 2
<TABLE>
<CAPTION>
Date CCI S&P 400 Cellular
---- --- ------- --------
<S> <C> <C> <C>
11/8/91 100 100 100
11/15/91 94 97 96
11/22/91 96 96 95
11/29/91 89 96 95
12/6/91 90 97 95
12/13/91 89 98 94
12/20/91 91 99 92
12/27/91 92 104 95
1/3/92 101 107 100
1/10/92 94 106 103
1/17/92 89 108 108
1/24/92 93 107 104
1/31/92 90 105 101
2/7/92 90 106 102
2/14/92 89 106 102
2/21/92 89 106 103
2/28/92 88 106 105
3/6/92 88 104 105
3/13/92 84 104 104
3/20/92 87 106 105
3/27/92 80 104 100
4/3/92 76 104 98
4/10/92 80 104 98
4/16/92 82 107 98
4/24/92 80 105 97
5/1/92 79 106 92
5/8/92 78 106 92
5/15/92 78 105 91
5/22/92 76 106 92
5/29/92 70 106 86
6/5/92 71 106 86
6/12/92 69 105 86
6/19/92 65 103 83
6/26/92 61 103 83
7/2/92 65 105 84
7/10/92 74 105 85
7/17/92 72 106 84
7/24/92 71 104 84
7/31/92 67 108 89
8/7/92 72 106 88
8/14/92 69 106 88
8/21/92 70 105 87
8/28/92 70 105 83
9/4/92 69 106 85
9/11/92 69 107 86
9/18/92 71 108 87
9/25/92 65 105 84
10/2/92 63 104 81
10/9/92 63 102 82
10/16/92 63 104 82
10/23/92 61 105 82
10/30/92 62 106 83
11/6/92 73 106 90
11/13/92 78 107 91
11/20/92 78 108 92
11/27/92 76 109 94
12/4/92 80 110 94
12/11/92 82 110 94
12/18/92 81 111 95
12/24/92 76 111 94
12/31/92 80 110 95
1/8/93 76 108 94
1/15/93 82 110 98
1/22/93 69 109 97
1/29/93 66 110 91
2/5/93 66 112 92
2/12/93 70 111 92
2/19/93 71 108 92
2/26/93 71 110 94
3/5/93 72 111 99
3/12/93 76 112 98
3/19/93 71 112 103
3/26/93 67 111 102
4/2/93 64 110 101
4/8/93 63 108 99
4/16/93 62 110 98
4/23/93 61 108 100
4/30/93 63 109 100
5/7/93 67 110 103
5/14/93 63 110 101
5/21/93 71 112 102
5/28/93 69 113 103
6/4/93 67 112 106
6/11/93 65 111 106
6/18/93 64 110 106
6/25/93 71 111 107
7/2/93 73 110 107
7/9/93 75 110 110
7/16/93 73 109 111
7/23/93 72 110 106
7/30/93 74 110 109
8/6/93 75 110 112
8/13/93 76 110 115
8/20/93 82 112 123
8/27/93 82 113 123
9/3/93 83 113 127
9/10/93 83 112 123
9/17/93 81 111 120
9/24/93 78 112 119
10/1/93 78 112 121
10/8/93 82 112 123
10/15/93 93 115 136
10/22/93 89 114 137
10/29/93 86 116 135
11/5/93 83 114 128
11/12/93 78 116 129
11/19/93 72 116 125
11/26/93 76 116 120
12/3/93 76 116 122
12/10/93 74 116 123
12/17/93 71 116 121
12/23/93 71 117 122
12/31/93 74 117 126
1/7/94 81 118 128
1/14/94 79 119 130
1/21/94 76 120 125
1/28/94 76 120 123
2/4/94 75 118 123
2/11/94 75 119 124
2/18/94 79 119 124
2/25/94 79 118 121
3/4/94 74 118 118
3/11/94 69 118 118
3/18/94 72 120 115
3/25/94 74 117 115
3/31/94 64 113 109
4/8/94 71 113 107
4/15/94 69 112 108
4/22/94 69 112 109
4/29/94 69 113 112
5/6/94 68 113 111
5/13/94 69 112 110
5/20/94 78 115 113
5/27/94 73 115 116
6/3/94 75 116 116
6/10/94 73 115 117
6/17/94 75 115 116
6/24/94 74 111 115
7/1/94 72 112 112
7/8/94 75 113 113
7/15/94 75 114 118
7/22/94 78 114 119
7/29/94 80 115 122
8/5/94 84 115 122
8/12/94 83 116 127
8/19/94 84 117 128
8/26/94 81 120 133
9/2/94 81 120 134
9/9/94 104 119 134
9/16/94 107 120 141
9/23/94 107 118 136
9/30/94 106 118 133
10/7/94 106 117 134
10/14/94 107 120 137
10/21/94 108 119 140
10/28/94 108 122 143
11/4/94 109 119 145
</TABLE>
<PAGE> 163
Fig. 3
FIGURE 3
<TABLE>
<CAPTION>
Date Contel GTE S&P 400
---- ------ --- -------
<S> <C> <C> <C>
8/1/94 76 104 96
8/2/94 77 104 96
8/3/94 78 105 96
8/4/94 81 104 96
8/5/94 80 105 95
8/8/94 78 105 96
8/9/94 82 105 96
8/10/94 82 106 96
8/11/94 80 106 96
8/12/94 79 107 97
8/15/94 79 107 96
8/16/94 79 104 97
8/17/94 78 103 98
8/18/94 77 102 97
8/19/94 80 102 97
8/22/94 78 100 97
8/23/94 78 101 98
8/24/94 79 102 99
8/25/94 77 103 99
8/26/94 77 102 100
8/29/94 76 104 100
8/30/94 77 103 100
8/31/94 76 103 100
9/1/94 79 102 100
9/2/94 77 102 99
9/6/94 77 101 99
9/7/94 76 100 99
9/8/94 100 100 100
9/9/94 98 99 99
9/12/94 99 98 99
9/13/94 99 97 99
9/14/94 100 98 99
9/15/94 100 99 101
9/16/94 102 99 100
9/19/94 102 98 100
9/20/94 100 98 98
9/21/94 100 98 98
9/22/94 100 97 98
9/23/94 101 98 98
9/26/94 101 99 98
9/27/94 101 100 98
9/28/94 101 100 99
9/29/94 100 99 98
9/30/94 101 98 98
10/3/94 101 98 98
10/4/94 101 98 97
10/5/94 101 97 97
10/6/94 102 97 96
10/7/94 100 98 97
10/10/94 101 98 98
10/11/94 101 99 99
10/12/94 101 98 99
10/13/94 101 99 100
10/14/94 101 100 100
10/17/94 101 100 100
10/18/94 101 99 100
10/19/94 102 99 100
10/20/94 102 98 100
10/21/94 102 98 99
10/24/94 102 97 98
10/25/94 102 98 99
10/26/94 102 98 99
10/27/94 103 98 99
10/28/94 103 100 101
10/31/94 103 100 101
11/1/94 103 99 100
11/2/94 103 99 99
11/3/94 103 100 100
11/4/94 103 99 99
</TABLE>
<PAGE> 164
Fig. 4
FIGURE 4
<TABLE>
<CAPTION>
Date Contel S&P 400
---- ------ -------
<S> <C> <C>
4/22/88 100 100
4/29/88 96 101
5/6/88 99 99
5/13/88 92 98
5/20/88 88 97
5/27/88 90 97
6/3/88 99 102
6/10/88 112 104
6/17/88 113 103
6/24/88 111 104
7/1/88 108 104
7/8/88 107 103
7/15/88 106 104
7/22/88 104 100
7/29/88 103 104
8/5/88 110 103
8/12/88 102 100
8/19/88 101 99
8/26/88 100 98
9/2/88 100 100
9/9/88 99 101
9/16/88 98 103
9/23/88 106 102
9/30/88 110 103
10/7/88 112 105
10/14/88 116 105
10/21/88 116 108
10/28/88 116 106
11/4/88 122 105
11/11/88 133 102
11/18/88 133 101
11/25/88 131 102
12/2/88 134 103
12/9/88 128 105
12/16/88 137 105
12/23/88 141 106
12/30/88 143 106
1/6/89 143 107
1/13/89 160 109
1/20/89 183 109
1/27/89 187 112
2/3/89 192 114
2/10/89 179 111
2/17/89 187 113
2/24/89 210 109
3/3/89 216 111
3/10/89 219 112
3/17/89 225 112
3/23/89 223 110
3/31/89 228 112
4/7/89 234 113
4/14/89 238 115
4/21/89 251 118
4/28/89 291 118
5/5/89 285 117
5/12/89 278 119
5/19/89 282 122
5/26/89 288 122
6/2/89 297 123
6/9/89 301 123
6/16/89 269 121
6/23/89 304 124
6/30/89 257 120
7/7/89 266 122
7/14/89 251 125
7/21/89 260 127
7/28/89 242 129
8/4/89 245 130
8/11/89 273 130
8/18/89 278 131
8/25/89 278 133
9/1/89 301 134
9/8/89 307 132
9/15/89 316 130
9/22/89 301 131
9/29/89 303 131
10/6/89 303 135
10/13/89 275 125
10/20/89 293 131
10/27/89 254 126
11/3/89 263 127
11/10/89 257 128
11/17/89 254 129
11/24/89 245 130
12/1/89 266 132
12/8/89 281 132
12/15/89 272 132
12/22/89 284 131
12/29/89 301 133
1/5/90 287 133
1/12/90 272 129
1/19/90 257 129
1/26/90 209 124
2/2/90 209 126
2/9/90 221 127
2/16/90 221 127
2/23/90 209 123
3/2/90 231 128
3/9/90 275 129
3/16/90 257 131
3/23/90 233 129
3/30/90 242 130
4/6/90 236 131
4/12/90 227 132
4/20/90 197 129
4/27/90 185 127
5/4/90 173 130
5/11/90 191 135
5/18/90 218 136
5/25/90 227 137
6/1/90 225 140
6/8/90 233 138
6/15/90 233 140
6/22/90 231 138
6/29/90 221 139
7/6/90 218 139
7/13/90 257 144
7/20/90 227 142
7/27/90 209 138
8/3/90 188 134
8/10/90 200 131
8/17/90 188 128
8/24/90 146 122
8/31/90 158 126
9/7/90 164 126
9/14/90 148 124
9/21/90 116 121
9/28/90 139 119
10/5/90 167 121
10/12/90 140 116
10/19/90 161 121
10/26/90 155 118
11/2/90 148 120
11/9/90 152 121
11/16/90 185 123
11/23/90 188 122
11/30/90 203 125
12/7/90 218 127
12/14/90 230 126
12/21/90 224 128
12/28/90 230 127
1/4/91 218 124
1/11/91 203 122
1/18/91 224 129
1/25/91 239 131
2/1/91 239 134
2/8/91 242 140
2/15/91 233 144
2/22/91 239 143
3/1/91 251 145
3/8/91 266 147
3/15/91 278 147
3/22/91 275 144
3/28/91 297 147
4/5/91 272 147
4/12/91 272 149
4/19/91 272 151
4/26/91 275 149
5/3/91 261 149
5/10/91 269 148
5/17/91 254 146
5/24/91 251 149
5/31/91 254 153
6/7/91 254 149
6/14/91 236 150
6/21/91 233 149
6/28/91 230 146
7/5/91 215 147
7/12/91 224 150
7/19/91 224 151
7/26/91 222 150
8/2/91 242 152
8/9/91 233 152
8/16/91 239 151
8/23/91 224 155
8/30/91 233 155
9/6/91 227 153
9/13/91 215 150
9/20/91 212 152
9/27/91 218 151
10/4/91 248 149
10/11/91 239 149
10/18/91 257 153
10/25/91 257 150
11/1/91 254 152
11/8/91 266 153
11/15/91 251 149
11/22/91 254 147
11/29/91 236 146
12/6/91 239 147
12/13/91 236 149
12/20/91 242 151
12/27/91 245 158
1/3/92 269 164
1/10/92 251 162
1/17/92 236 164
1/24/92 246 163
1/31/92 239 160
2/7/92 240 162
2/14/92 236 162
2/21/92 236 162
2/28/92 233 162
3/6/92 233 159
3/13/92 224 159
3/20/92 230 161
3/27/92 212 159
4/3/92 203 158
4/10/92 212 159
4/16/92 218 164
4/24/92 212 160
5/1/92 209 161
5/8/92 206 163
5/15/92 206 160
5/22/92 203 162
5/29/92 185 163
6/5/92 188 162
6/12/92 182 160
6/19/92 173 157
6/26/92 161 157
7/2/92 173 160
7/10/92 197 160
7/17/92 191 161
7/24/92 188 159
7/31/92 179 164
8/7/92 191 162
8/14/92 182 163
8/21/92 185 161
8/28/92 185 161
9/4/92 182 162
9/11/92 182 164
9/18/92 188 165
9/25/92 173 161
10/2/92 167 159
10/9/92 167 156
10/16/92 167 159
10/23/92 161 160
10/30/92 164 162
11/6/92 194 162
11/13/92 206 164
11/20/92 206 165
11/27/92 203 166
12/4/92 212 167
12/11/92 218 168
12/18/92 215 170
12/24/92 203 169
12/31/92 212 168
1/8/93 203 165
1/15/93 218 167
1/22/93 182 167
1/29/93 176 168
2/5/93 176 171
2/12/93 185 169
2/19/93 188 165
2/26/93 188 168
3/5/93 191 169
3/12/93 203 171
3/19/93 188 171
3/26/93 179 169
4/2/93 170 168
4/8/93 167 166
4/16/93 166 168
4/23/93 161 165
4/30/93 167 167
5/7/93 179 168
5/14/93 167 168
5/21/93 188 170
5/28/93 182 172
6/4/93 179 172
6/11/93 173 170
6/18/93 170 169
6/25/93 188 169
7/2/93 194 168
7/9/93 199 168
7/16/93 194 167
7/23/93 191 167
7/30/93 197 167
8/6/93 200 168
8/13/93 203 168
8/20/93 218 171
8/27/93 218 172
9/3/93 221 172
9/10/93 219 171
9/17/93 215 170
9/24/93 206 170
10/1/93 206 172
10/8/93 218 172
10/15/93 248 176
10/22/93 236 175
10/29/93 228 177
11/5/93 221 175
11/12/93 206 178
11/19/93 191 177
11/26/93 203 177
12/3/93 201 177
12/10/93 196 177
12/17/93 188 178
12/23/93 188 178
12/31/93 196 178
1/7/94 215 181
1/14/94 209 182
1/21/94 203 183
1/28/94 203 183
2/4/94 200 181
2/11/94 200 181
2/18/94 209 181
2/25/94 209 180
3/4/94 197 180
3/11/94 182 181
3/18/94 191 183
3/25/94 197 178
3/31/94 170 172
4/8/94 188 172
4/15/94 182 171
4/22/94 182 171
4/29/94 182 173
5/6/94 181 173
5/13/94 182 172
5/20/94 206 175
5/27/94 194 176
6/3/94 199 177
6/10/94 194 176
6/17/94 200 176
6/24/94 197 170
7/1/94 191 171
7/8/94 200 173
7/15/94 200 175
7/22/94 206 174
7/29/94 212 176
8/5/94 224 176
8/12/94 221 178
8/19/94 224 179
8/26/94 215 184
9/2/94 215 183
9/9/94 276 182
9/16/94 285 184
9/23/94 284 180
9/30/94 282 181
10/7/94 281 178
10/14/94 284 184
10/21/94 287 182
10/28/94 288 186
11/4/94 290 181
</TABLE>
<PAGE> 165
Fig. 5
FIGURE 5
<TABLE>
<CAPTION>
Date CCI S&P 400 Cellular
---- --- ------- --------
<S> <C> <C> <C>
11/4/93 100 100 100
11/5/93 97 100 98
11/8/93 97 100 97
11/9/93 96 100 97
11/10/93 92 101 96
11/11/93 92 101 97
11/12/93 91 102 97
11/15/93 89 102 97
11/16/93 88 102 96
11/17/93 87 102 95
11/18/93 86 102 95
11/19/93 84 102 94
11/22/93 82 101 92
11/23/93 82 101 91
11/24/93 86 102 91
11/26/93 89 102 91
11/29/93 87 101 90
11/30/93 84 101 90
12/1/93 86 101 91
12/2/93 87 101 91
12/3/94 89 102 92
12/6/93 91 102 93
12/7/93 87 102 93
12/8/93 86 102 93
12/9/93 86 102 93
12/10/93 86 102 92
12/13/93 86 102 93
12/14/93 83 101 93
12/15/93 83 101 92
12/16/93 79 101 92
12/17/93 83 102 92
12/20/93 84 102 93
12/21/93 83 102 93
12/22/93 83 102 93
12/23/93 83 102 94
12/27/93 82 103 95
12/28/93 82 103 95
12/29/93 86 103 96
12/30/93 83 103 96
12/31/93 86 102 98
1/3/94 86 102 98
1/4/94 85 103 99
1/5/94 85 103 98
1/6/94 87 103 97
1/7/94 95 104 98
1/10/94 93 105 100
1/11/94 97 105 101
1/12/94 96 105 100
1/13/94 94 104 99
1/14/94 92 105 98
1/17/94 93 105 99
1/18/94 89 105 98
1/19/94 89 105 96
1/20/94 89 105 96
1/21/94 89 105 96
1/24/94 87 104 95
1/25/94 88 104 95
1/26/94 86 104 94
1/27/94 87 105 95
1/28/94 89 105 95
1/31/94 88 106 96
2/1/94 89 105 95
2/2/94 92 106 95
2/3/94 91 106 95
2/4/94 88 104 94
2/7/94 88 104 94
2/8/94 89 104 94
2/9/94 87 105 95
2/10/94 86 104 95
2/11/94 88 104 94
2/14/94 89 104 94
2/15/94 93 105 94
2/16/94 95 105 96
2/17/94 92 104 95
2/18/94 92 104 94
2/22/94 89 105 94
2/23/94 91 105 93
2/24/94 89 103 91
2/25/94 92 103 92
2/28/94 87 104 93
3/1/94 88 103 92
3/2/94 86 103 91
3/3/94 86 103 90
3/4/94 87 103 91
3/7/94 87 104 91
3/8/94 86 104 91
3/9/94 84 104 91
3/10/94 82 103 92
3/11/94 80 104 92
3/14/94 79 104 91
3/15/94 82 104 91
3/16/94 84 104 91
3/17/94 84 105 90
3/18/94 84 105 89
3/21/94 84 104 89
3/22/94 84 104 89
3/23/94 87 104 90
3/24/94 84 103 89
3/25/94 87 102 88
3/28/94 86 102 87
3/29/94 79 100 85
3/30/94 76 99 85
3/31/94 75 99 84
4/4/94 70 97 82
4/5/94 76 99 83
4/6/94 79 99 83
4/7/94 80 100 84
4/8/94 83 99 84
4/11/94 82 99 84
4/12/94 82 99 84
4/13/94 82 98 84
4/14/94 76 98 84
4/15/94 80 98 85
4/18/94 79 97 84
4/19/94 78 97 84
4/20/94 77 97 84
4/21/94 77 98 85
4/22/94 80 98 85
4/25/94 78 100 86
4/26/94 80 100 86
4/28/94 78 99 87
4/29/94 80 99 86
5/2/94 79 100 86
5/3/94 79 100 86
5/4/94 80 100 86
5/5/94 82 100 86
5/6/94 80 99 86
5/9/94 79 98 86
5/10/94 80 99 86
5/11/94 79 98 84
5/12/94 82 98 85
5/13/94 80 98 85
5/16/94 82 98 85
5/17/94 83 99 85
5/18/94 87 100 87
5/19/94 89 101 87
5/20/94 91 101 87
5/23/94 83 100 87
5/24/94 84 101 87
5/25/94 86 101 88
5/26/94 84 101 88
5/27/94 86 101 89
5/31/94 86 101 88
6/1/94 86 101 88
6/2/94 86 101 89
6/3/94 88 101 89
6/6/94 86 101 90
6/7/94 88 101 90
6/8/94 87 100 90
6/9/94 87 101 90
6/10/94 86 101 90
6/13/94 86 101 89
6/14/94 88 102 90
6/15/94 86 101 90
6/16/94 88 102 90
6/17/94 88 101 89
6/20/94 87 100 88
6/21/94 86 100 88
6/22/94 86 100 87
6/23/94 86 99 87
6/24/94 87 98 87
6/27/94 83 99 87
6/28/94 84 98 86
6/29/94 84 99 85
6/30/94 87 98 84
7/1/94 84 98 85
7/5/94 84 98 85
7/6/94 85 98 85
7/7/94 91 99 86
7/8/94 88 99 86
7/11/94 89 99 84
7/12/94 89 99 85
7/13/94 87 99 85
7/14/94 86 100 87
7/15/94 88 100 88
7/18/94 89 100 87
7/19/94 89 100 88
7/20/94 87 100 88
7/21/94 87 100 88
7/22/94 91 100 88
7/25/94 88 100 88
7/26/94 95 100 89
7/27/94 96 100 90
7/28/94 96 100 91
7/29/94 93 101 90
8/1/94 93 102 90
8/2/94 95 102 90
8/3/94 96 102 90
8/4/94 100 101 90
8/5/94 99 101 90
8/8/94 96 101 90
8/9/94 101 101 91
8/10/94 101 102 92
8/11/94 99 101 92
8/12/94 97 102 93
8/15/94 97 102 93
8/16/94 97 103 94
8/17/94 96 103 94
8/18/94 95 103 94
8/19/94 99 103 94
8/22/94 96 103 95
8/23/94 96 103 95
8/24/94 97 104 96
8/25/94 95 104 97
8/26/94 95 105 99
8/29/94 93 106 100
8/30/94 95 106 99
8/31/94 93 106 101
9/1/94 97 105 99
9/2/94 95 105 99
9/6/94 95 105 99
9/7/94 93 105 99
9/8/94 124 106 99
9/9/94 122 105 99
9/12/94 122 104 99
9/13/94 122 105 100
9/14/94 124 105 101
9/15/94 124 106 103
9/16/94 126 106 104
9/19/94 126 106 104
9/20/94 124 104 103
9/21/94 124 103 100
9/22/94 124 103 100
9/23/94 125 103 100
9/26/94 124 103 100
9/27/94 125 104 99
9/28/94 125 104 98
9/29/94 124 104 97
9/30/94 124 104 98
10/3/94 125 104 98
10/4/94 125 102 97
10/5/94 124 102 97
10/6/94 126 102 98
10/7/94 124 102 99
10/10/94 124 103 99
10/11/94 124 105 101
10/12/94 125 105 101
10/13/94 125 105 101
10/14/94 125 105 101
10/17/94 125 106 101
10/18/94 125 105 102
10/19/94 126 106 102
10/20/94 126 105 103
10/21/94 126 105 104
10/24/94 126 104 104
10/25/94 127 104 102
10/26/94 127 104 103
10/27/94 128 105 103
10/28/94 127 107 105
10/31/94 127 106 107
11/1/94 127 106 106
11/2/94 127 105 106
11/3/94 127 105 106
11/4/94 128 104 106
</TABLE>
<PAGE> 166
Fig. 6
FIGURE 6
<TABLE>
<CAPTION>
Date CCI S&P 400 Cellular
---- --- ------- --------
<S> <C> <C> <C>
5/4/94 100 100 100
5/5/94 102 100 100
5/6/94 99 99 99
5/9/94 98 98 99
5/10/94 100 99 99
5/11/94 98 98 98
5/12/94 102 99 99
5/13/94 100 99 98
5/16/94 102 99 99
5/17/94 103 100 98
5/18/94 108 100 100
5/19/94 111 101 101
5/20/94 113 101 101
5/23/94 103 100 101
5/24/94 105 101 101
5/25/94 107 101 101
5/26/94 105 101 102
5/27/94 107 101 102
5/31/94 107 101 102
6/1/94 107 101 102
6/2/94 107 101 103
6/3/94 109 102 104
6/6/94 107 101 105
6/7/94 110 101 104
6/8/94 108 101 104
6/9/94 108 101 104
6/10/94 107 101 104
6/13/94 107 101 103
6/14/94 109 102 103
6/15/94 107 102 103
6/16/94 110 102 103
6/17/94 110 101 102
6/20/94 108 101 101
6/21/94 107 100 101
6/22/94 107 100 101
6/23/94 107 99 101
6/24/94 108 98 101
6/27/94 103 99 100
6/28/94 105 99 99
6/29/94 105 99 98
6/30/94 108 98 97
7/1/94 105 98 98
7/5/94 105 99 99
7/6/94 105 98 99
7/7/94 113 99 100
7/8/94 110 99 100
7/11/94 111 99 98
7/12/94 111 99 99
7/13/94 108 99 99
7/14/94 107 100 101
7/15/94 110 100 101
7/18/94 111 101 101
7/19/94 111 100 102
7/20/94 108 100 102
7/21/94 108 100 103
7/22/94 113 100 102
7/25/94 110 101 103
7/26/94 118 100 104
7/27/94 120 100 105
7/28/94 120 101 105
7/29/94 116 101 105
8/1/94 116 102 105
8/2/94 118 102 105
8/3/94 120 102 105
8/4/94 125 101 104
8/5/94 123 101 104
8/8/94 120 101 104
8/9/94 126 101 105
8/10/94 126 102 106
8/11/94 123 102 107
8/12/94 121 102 108
8/15/94 121 102 108
8/16/94 121 103 109
8/17/94 120 103 108
8/18/94 118 103 109
8/19/94 123 103 109
8/22/94 120 103 109
8/23/94 120 103 110
8/24/94 121 104 111
8/25/94 118 104 112
8/26/94 118 106 114
8/29/94 116 106 115
8/30/94 119 106 115
8/31/94 116 106 116
9/1/94 121 106 115
9/2/94 118 105 115
9/6/94 118 105 115
9/7/94 116 105 115
9/8/94 154 106 115
9/9/94 152 105 115
9/12/94 152 104 115
9/13/94 152 105 115
9/14/94 154 105 117
9/15/94 154 106 119
9/16/94 157 106 120
9/19/94 157 106 120
9/20/94 154 104 118
9/21/94 154 104 116
9/22/94 154 104 116
9/23/94 156 103 115
9/26/94 155 104 115
9/27/94 156 104 115
9/28/94 156 104 114
9/29/94 154 104 113
9/30/94 155 104 114
10/3/94 156 104 114
10/4/94 156 102 113
10/5/94 155 102 112
10/6/94 157 102 113
10/7/94 154 102 114
10/10/94 155 103 115
10/11/94 155 105 117
10/12/94 156 105 117
10/13/94 156 106 118
10/14/94 156 106 118
10/17/94 156 106 117
10/18/94 156 106 118
10/19/94 157 106 118
10/20/94 157 105 119
10/21/94 157 105 120
10/24/94 157 104 120
10/25/94 158 104 118
10/26/94 158 105 119
10/27/94 159 105 119
10/28/94 158 107 122
10/31/94 158 107 124
11/1/94 158 106 123
11/2/94 158 105 122
11/3/94 158 106 122
11/4/94 159 104 121
</TABLE>
<PAGE> 167
FIGURE 7
<TABLE>
<CAPTION>
Cellular
Date Contel Index S&P 400
---- ------ -------- -------
<S> <C> <C> <C>
9/7/94 100 100 100
9/8/94 132 101 101
9/9/94 130 100 100
9/12/94 131 100 99
9/13/94 131 100 100
9/14/94 132 102 100
9/15/94 132 104 101
9/16/94 135 104 101
9/19/94 135 104 101
9/20/94 132 103 99
9/21/94 132 101 99
9/22/94 132 101 99
9/23/94 134 101 98
9/26/94 133 100 98
9/27/94 134 100 99
9/28/94 134 99 99
9/29/94 132 98 99
9/30/94 133 100 99
10/3/94 134 100 99
10/4/94 134 98 97
10/5/94 133 98 97
10/6/94 135 99 97
10/7/94 132 99 97
10/10/94 133 100 98
10/11/94 133 102 100
10/12/94 134 102 100
10/13/94 134 103 100
10/14/94 134 103 101
10/17/94 134 102 101
10/18/94 134 103 100
10/19/94 135 103 101
10/20/94 135 103 100
10/21/94 135 104 100
10/24/94 135 104 99
10/25/94 136 103 99
10/26/94 136 104 99
10/27/94 137 104 100
10/28/94 136 106 102
10/31/94 136 108 101
11/1/94 136 107 101
11/2/94 136 107 100
11/3/94 136 106 100
11/4/94 137 106 99
</TABLE>
<PAGE> 168
Fig. 8
FIGURE 8
<TABLE>
<CAPTION> Cellular
Date Contel GTE S&P 400 Index
---- ------ --- ------- --------
<S> <C> <C> <C> <C>
1/03/94 100 100 100 100
1/04/94 99 99 101 101
1/05/94 99 99 101 99
1/06/94 102 100 101 99
1/07/94 111 100 101 100
1/10/94 109 101 102 101
1/11/94 114 101 102 103
1/12/94 112 101 102 102
1/13/94 110 100 102 101
1/14/94 108 101 102 100
1/17/94 109 99 102 101
1/18/94 105 99 102 100
1/19/94 105 100 102 98
1/20/94 104 100 102 98
1/21/94 105 100 102 99
1/24/94 102 99 102 98
1/25/94 103 98 102 98
1/26/94 101 99 102 97
1/27/94 102 100 102 97
1/28/94 105 99 103 98
1/31/94 103 100 103 99
2/01/94 105 100 103 98
2/02/94 108 99 104 98
2/03/94 106 98 104 98
2/04/94 103 96 101 96
2/07/94 102 96 102 96
2/08/94 104 96 102 96
2/09/94 102 96 102 97
2/10/94 100 95 101 97
2/11/94 103 96 102 96
2/14/94 105 96 102 96
2/15/94 108 95 102 96
2/16/94 111 95 103 98
2/17/94 108 93 102 97
2/18/94 108 92 102 97
2/22/94 105 92 102 97
2/23/94 106 93 102 96
2/24/94 105 97 101 94
2/25/94 108 97 101 95
2/28/94 102 95 101 95
3/01/94 103 95 101 94
3/02/94 100 96 101 93
3/03/94 100 95 100 92
3/04/94 102 94 101 93
3/07/94 102 93 101 94
3/08/94 100 91 101 94
3/09/94 98 93 102 94
3/10/94 95 92 101 94
3/11/94 94 93 101 94
3/14/94 92 92 102 94
3/15/94 95 93 101 94
3/16/94 98 93 102 93
3/17/94 98 93 102 92
3/18/94 98 93 102 91
3/21/94 98 92 102 91
3/22/94 98 92 102 91
3/23/94 102 92 102 92
3/24/94 98 92 101 90
3/25/94 102 91 100 90
3/28/94 100 92 100 89
3/29/94 92 90 98 88
3/30/94 89 89 97 87
3/31/94 88 90 97 86
4/04/94 82 89 95 83
4/05/94 89 89 97 86
4/06/94 92 89 97 86
4/07/94 94 88 98 86
4/08/94 97 87 97 86
4/11/94 95 87 97 86
4/12/94 95 87 97 87
4/13/94 95 87 96 87
4/14/94 89 87 96 88
4/15/94 94 87 96 88
4/18/94 92 87 95 87
4/19/94 91 92 95 87
4/20/94 90 93 94 87
4/21/94 90 96 96 88
4/22/94 94 92 96 88
4/25/94 91 95 97 89
4/26/94 94 95 97 89
4/28/94 91 92 97 91
4/29/94 94 92 97 90
5/02/94 92 92 98 90
5/03/94 92 92 98 90
5/04/94 94 92 98 90
5/05/94 96 91 97 90
5/06/94 93 89 97 89
5/09/94 92 91 96 89
5/10/94 94 92 96 89
5/11/94 92 90 96 88
5/12/94 95 91 96 89
5/13/94 94 92 96 88
5/16/94 95 92 96 89
5/17/94 97 92 97 88
5/18/94 102 95 98 90
5/19/94 105 93 98 90
5/20/94 106 92 98 90
5/23/94 97 91 98 91
5/24/94 98 91 98 90
5/25/94 100 89 99 91
5/26/94 98 90 99 91
5/27/94 100 90 99 92
5/31/94 100 90 99 92
6/01/94 100 90 99 92
6/02/94 100 90 99 93
6/03/94 102 92 99 93
6/06/94 100 93 99 94
6/07/94 103 92 99 94
6/08/94 102 92 98 94
6/09/94 102 92 98 94
6/10/94 100 93 99 94
6/13/94 101 92 99 93
6/14/94 102 92 99 93
6/15/94 101 92 99 93
6/16/94 103 92 99 93
6/17/94 103 92 99 92
6/20/94 102 91 98 91
6/21/94 100 90 97 91
6/22/94 100 90 98 90
6/23/94 100 89 97 91
6/24/94 102 87 95 91
6/27/94 97 88 96 90
6/28/94 98 88 96 89
6/29/94 98 88 96 88
6/30/94 102 90 96 87
7/01/94 98 89 96 88
7/05/94 98 89 96 89
7/06/94 99 89 96 89
7/07/94 106 88 97 90
7/08/94 103 88 97 90
7/11/94 104 87 97 88
7/12/94 105 87 97 89
7/13/94 102 87 97 89
7/14/94 101 88 98 91
7/15/94 103 87 98 91
7/18/94 105 87 98 91
7/19/94 105 89 98 91
7/20/94 102 91 97 92
7/21/94 102 92 98 92
7/22/94 106 91 98 92
7/25/94 103 91 98 93
7/26/94 111 91 98 94
7/27/94 112 91 98 94
7/28/94 112 91 98 94
7/29/94 109 92 99 94
8/01/94 109 93 99 94
8/02/94 111 93 99 94
8/03/94 112 94 99 94
8/04/94 117 93 99 94
8/05/94 115 94 99 93
8/08/94 112 94 99 94
8/09/94 118 94 99 94
8/10/94 118 95 99 95
8/11/94 115 95 99 96
8/12/94 114 96 100 97
8/15/94 114 96 100 97
8/16/94 114 93 100 98
8/17/94 112 92 101 97
8/18/94 111 92 100 98
8/19/94 115 91 101 98
8/22/94 112 90 100 98
8/23/94 112 91 101 99
8/24/94 114 91 102 100
8/25/94 111 92 102 101
8/26/94 111 92 103 102
8/29/94 109 93 103 104
8/30/94 112 92 104 104
8/31/94 109 92 103 105
9/01/94 114 91 103 103
9/02/94 111 91 102 104
9/06/94 111 90 103 104
9/07/94 109 89 103 103
9/08/94 145 89 103 104
9/09/94 142 89 102 103
9/12/94 143 87 102 103
9/13/94 143 87 102 104
9/14/94 145 88 102 105
9/15/94 145 88 104 107
9/16/94 147 88 103 108
9/19/94 147 88 103 108
9/20/94 145 88 102 106
9/21/94 145 87 101 104
9/22/94 145 87 101 104
9/23/94 146 88 101 104
9/26/94 145 88 101 103
9/27/94 146 89 101 103
9/28/94 146 89 102 103
9/29/94 145 88 101 101
9/30/94 145 88 102 103
10/03/94 146 88 101 103
10/04/94 146 87 100 101
10/05/94 145 87 100 101
10/06/94 147 87 99 102
10/07/94 145 88 100 103
10/10/94 145 88 101 103
10/11/94 145 88 102 105
10/12/94 146 88 102 105
10/13/94 146 88 103 106
10/14/94 146 89 103 106
10/17/94 146 89 103 105
10/18/94 146 88 103 106
10/19/94 148 89 103 106
10/20/94 148 88 103 107
10/21/94 148 88 102 108
10/24/94 147 87 102 108
10/25/94 148 88 102 106
10/26/94 148 87 102 107
10/27/94 149 88 103 107
10/28/94 148 90 104 110
10/31/94 148 90 104 111
11/1/94 148 88 103 110
11/2/94 148 89 103 110
11/3/94 148 89 103 110
11/4/94 149 88 102 109
</TABLE>
<PAGE> 169
Fig. 9
FIGURE 9
<TABLE>
<CAPTION>
Date AirTouch BCE Mobile S&P 400 Cellular Index
---- -------- ---------- ------- --------------
<S> <C> <C> <C> <C>
1/03/94 100 100 100 100
1/04/94 99 101 101 101
1/05/94 99 102 101 99
1/06/94 101 101 101 99
1/07/94 101 102 101 100
1/10/94 100 102 102 101
1/11/94 100 102 102 103
1/12/94 100 102 102 102
1/13/94 98 100 102 101
1/14/94 100 100 102 100
1/17/94 100 101 102 101
1/18/94 101 101 102 100
1/19/94 101 99 102 98
1/20/94 103 99 102 98
1/21/94 106 98 102 99
1/24/94 103 98 102 98
1/25/94 103 97 102 98
1/26/94 99 96 102 97
1/27/94 98 100 102 97
1/28/94 102 101 103 98
1/31/94 104 101 103 99
2/01/94 104 100 103 98
2/02/94 104 101 104 98
2/03/94 102 100 104 98
2/04/94 97 98 101 96
2/07/94 98 98 102 96
2/08/94 98 99 102 96
2/09/94 98 99 102 97
2/10/94 98 98 101 97
2/11/94 98 96 102 96
2/14/94 98 95 102 96
2/15/94 99 95 102 96
2/16/94 100 96 103 98
2/17/94 99 97 102 97
2/18/94 99 98 102 97
2/22/94 101 96 102 97
2/23/94 100 96 102 96
2/24/94 96 94 101 94
2/25/94 97 94 101 95
2/28/94 97 94 101 95
3/01/94 96 94 101 94
3/02/94 93 94 101 93
3/03/94 89 94 100 92
3/04/94 96 94 101 93
3/07/94 98 94 101 94
3/08/94 99 93 101 94
3/09/94 99 94 102 94
3/10/94 98 94 101 94
3/11/94 99 94 101 94
3/14/94 101 95 102 94
3/15/94 99 95 101 94
3/16/94 98 95 102 93
3/17/94 94 94 102 92
3/18/94 94 92 102 91
3/21/94 92 93 102 91
3/22/94 93 92 102 91
3/23/94 94 93 102 92
3/24/94 90 89 101 90
3/25/94 90 89 100 90
3/28/94 93 89 100 89
3/29/94 90 87 98 88
3/30/94 89 86 97 87
3/31/94 86 86 97 86
4/04/94 84 81 95 83
4/05/94 93 83 97 86
4/06/94 92 82 97 86
4/07/94 89 84 98 86
4/08/94 90 84 97 86
4/11/94 90 82 97 86
4/12/94 93 82 97 87
4/13/94 95 84 96 87
4/14/94 96 84 96 88
4/15/94 97 82 96 88
4/18/94 99 83 95 87
4/19/94 97 83 95 87
4/20/94 93 82 94 87
4/21/94 96 84 96 88
4/22/94 94 86 96 88
4/25/94 95 87 97 89
4/26/94 98 89 97 89
4/28/94 102 88 97 91
4/29/94 102 88 97 90
5/02/94 101 88 98 90
5/03/94 101 88 98 90
5/04/94 102 87 98 90
5/05/94 102 87 97 90
5/06/94 99 87 97 89
5/09/94 96 87 96 89
5/10/94 99 87 96 89
5/11/94 97 86 96 88
5/12/94 100 85 96 89
5/13/94 100 87 96 88
5/16/94 99 86 96 89
5/17/94 99 85 97 88
5/18/94 101 86 98 90
5/19/94 101 86 98 90
5/20/94 102 85 98 90
5/23/94 99 85 98 91
5/24/94 99 85 98 90
5/25/94 96 86 99 91
5/26/94 99 86 99 91
5/27/94 99 88 99 92
5/31/94 101 88 99 92
6/01/94 106 87 99 92
6/02/94 106 87 99 93
6/03/94 106 88 99 93
6/06/94 109 89 99 94
6/07/94 106 89 99 94
6/08/94 106 87 98 94
6/09/94 106 87 98 94
6/10/94 104 87 99 94
6/13/94 104 86 99 93
6/14/94 103 86 99 93
6/15/94 102 85 99 93
6/16/94 102 86 99 93
6/17/94 99 85 99 92
6/20/94 99 82 98 91
6/21/94 98 83 97 91
6/22/94 101 83 98 90
6/23/94 100 84 97 91
6/24/94 99 83 95 91
6/27/94 102 84 96 90
6/28/94 101 84 96 89
6/29/94 98 83 96 88
6/30/94 97 83 96 87
7/01/94 99 83 96 88
7/05/94 98 84 96 89
7/06/94 99 84 96 89
7/07/94 101 83 97 90
7/08/94 102 83 97 90
7/11/94 99 83 97 88
7/12/94 100 84 97 89
7/13/94 102 84 97 89
7/14/94 103 84 98 91
7/15/94 102 84 98 91
7/18/94 103 85 98 91
7/19/94 104 85 98 91
7/20/94 104 85 97 92
7/21/94 107 86 98 92
7/22/94 107 86 98 92
7/25/94 107 86 98 93
7/26/94 109 86 98 94
7/27/94 107 85 98 94
7/28/94 107 86 98 94
7/29/94 107 85 99 94
8/01/94 108 84 99 94
8/02/94 109 85 99 94
8/03/94 108 85 99 94
8/04/94 105 85 99 94
8/05/94 103 84 99 93
8/08/94 104 85 99 94
8/09/94 104 85 99 94
8/10/94 106 86 99 95
8/11/94 106 85 99 96
8/12/94 110 86 100 97
8/15/94 112 85 100 97
8/16/94 110 87 100 98
8/17/94 109 87 101 97
8/18/94 109 87 100 98
8/19/94 110 87 101 98
8/22/94 107 87 100 98
8/23/94 109 88 101 99
8/24/94 110 90 102 100
8/25/94 110 90 102 101
8/26/94 112 90 103 102
8/29/94 116 90 103 104
8/30/94 118 89 104 104
8/31/94 116 89 103 105
9/01/94 115 90 103 103
9/02/94 117 90 102 104
9/06/94 118 91 103 104
9/07/94 116 90 103 103
9/08/94 120 90 103 104
9/09/94 116 90 102 103
9/12/94 116 90 102 103
9/13/94 114 91 102 104
9/14/94 118 91 102 105
9/15/94 120 91 104 107
9/16/94 118 93 103 108
9/19/94 118 93 103 108
9/20/94 115 92 102 106
9/21/94 115 91 101 104
9/22/94 115 90 101 104
9/23/94 114 91 101 104
9/26/94 113 91 101 103
9/27/94 115 91 101 103
9/28/94 119 92 102 103
9/29/94 116 91 101 101
9/30/94 118 92 102 103
10/03/94 118 92 101 103
10/04/94 115 92 100 101
10/05/94 113 92 100 101
10/06/94 115 92 99 102
10/07/94 113 92 100 103
10/10/94 114 92 101 103
10/11/94 120 93 102 105
10/12/94 120 93 102 105
10/13/94 123 94 103 106
10/14/94 121 94 103 106
10/17/94 120 94 103 105
10/18/94 119 94 103 106
10/19/94 121 94 103 106
10/20/94 119 94 103 107
10/21/94 120 95 102 108
10/24/94 118 95 102 108
10/25/94 120 96 102 106
10/26/94 120 97 102 107
10/27/94 121 98 103 107
10/28/94 124 98 104 110
10/31/94 123 99 104 111
11/1/94 121 99 103 110
11/2/94 120 99 103 110
11/3/94 118 100 103 110
11/4/94 115 99 102 109
</TABLE>
<PAGE> 170
Fig. 10
FIGURE 10
<TABLE>
<CAPTION>
Date Commnet Centennial S&P 400 Cellular Index
---- ------- ---------- ------- --------------
<S> <C> <C> <C> <C>
1/03/94 100 100 100 100
1/04/94 102 99 101 101
1/05/94 101 96 101 99
1/06/94 99 92 101 99
1/07/94 101 96 101 100
1/10/94 105 98 102 101
1/11/94 110 98 102 103
1/12/94 112 97 102 102
1/13/94 113 94 102 101
1/14/94 113 92 102 100
1/17/94 113 95 102 101
1/18/94 113 93 102 100
1/19/94 114 92 102 98
1/20/94 112 95 102 98
1/21/94 114 95 102 99
1/24/94 112 92 102 98
1/25/94 114 92 102 98
1/26/94 109 92 102 97
1/27/94 112 93 102 97
1/28/94 111 95 103 98
1/31/94 112 95 103 99
2/01/94 114 95 103 98
2/02/94 112 94 104 98
2/03/94 110 94 104 98
2/04/94 107 92 101 96
2/07/94 105 91 102 96
2/08/94 105 88 102 96
2/09/94 108 91 102 97
2/10/94 106 91 101 97
2/11/94 105 88 102 96
2/14/94 105 89 102 96
2/15/94 105 87 102 96
2/16/94 106 91 103 98
2/17/94 106 91 102 97
2/18/94 105 88 102 97
2/22/94 105 92 102 97
2/23/94 105 88 102 96
2/24/94 105 86 101 94
2/25/94 105 89 101 95
2/28/94 106 90 101 95
3/01/94 105 87 101 94
3/02/94 102 89 101 93
3/03/94 102 87 100 92
3/04/94 101 91 101 93
3/07/94 101 92 101 94
3/08/94 103 94 101 94
3/09/94 101 95 102 94
3/10/94 101 98 101 94
3/11/94 103 97 101 94
3/14/94 99 92 102 94
3/15/94 99 92 101 94
3/16/94 99 94 102 93
3/17/94 99 93 102 92
3/18/94 97 91 102 91
3/21/94 97 91 102 91
3/22/94 99 94 102 91
3/23/94 98 90 102 92
3/24/94 96 93 101 90
3/25/94 97 91 100 90
3/28/94 95 88 100 89
3/29/94 95 88 98 88
3/30/94 95 86 97 87
3/31/94 91 87 97 86
4/04/94 89 85 95 83
4/05/94 92 86 97 86
4/06/94 92 90 97 86
4/07/94 92 91 98 86
4/08/94 85 96 97 86
4/11/94 86 93 97 86
4/12/94 85 95 97 87
4/13/94 84 96 96 87
4/14/94 87 96 96 88
4/15/94 90 93 96 88
4/18/94 88 93 95 87
4/19/94 88 93 95 87
4/20/94 86 96 94 87
4/21/94 87 96 96 88
4/22/94 86 95 96 88
4/25/94 85 95 97 89
4/26/94 86 93 97 89
4/28/94 85 91 97 91
4/29/94 86 90 97 90
5/02/94 85 88 98 90
5/03/94 85 88 98 90
5/04/94 88 88 98 90
5/05/94 89 88 97 90
5/06/94 89 88 97 89
5/09/94 84 90 96 89
5/10/94 86 88 96 89
5/11/94 84 86 96 88
5/12/94 86 88 96 89
5/13/94 84 85 96 88
5/16/94 84 87 96 89
5/17/94 83 85 97 88
5/18/94 87 87 98 90
5/19/94 89 87 98 90
5/20/94 89 87 98 90
5/23/94 91 88 98 91
5/24/94 93 87 98 90
5/25/94 94 88 99 91
5/26/94 92 90 99 91
5/27/94 93 90 99 92
5/31/94 93 88 99 92
6/01/94 93 88 99 92
6/02/94 96 88 99 93
6/03/94 96 89 99 93
6/06/94 93 90 99 94
6/07/94 93 88 99 94
6/08/94 93 91 98 94
6/09/94 92 91 98 94
6/10/94 93 88 99 94
6/13/94 93 88 99 93
6/14/94 94 88 99 93
6/15/94 96 88 99 93
6/16/94 97 87 99 93
6/17/94 97 87 99 92
6/20/94 96 85 98 91
6/21/94 95 83 97 91
6/22/94 95 83 98 90
6/23/94 97 80 97 91
6/24/94 96 82 95 91
6/27/94 94 81 96 90
6/28/94 94 80 96 89
6/29/94 94 83 96 88
6/30/94 97 74 96 87
7/01/94 97 76 96 88
7/05/94 97 75 96 89
7/06/94 97 76 96 89
7/07/94 97 81 97 90
7/08/94 100 78 97 90
7/11/94 101 71 97 88
7/12/94 103 73 97 89
7/13/94 104 65 97 89
7/14/94 105 69 98 91
7/15/94 107 67 98 91
7/18/94 105 64 98 91
7/19/94 105 65 98 91
7/20/94 107 65 97 92
7/21/94 105 67 98 92
7/22/94 105 67 98 92
7/25/94 109 66 98 93
7/26/94 107 70 98 94
7/27/94 109 70 98 94
7/28/94 110 70 98 94
7/29/94 112 69 99 94
8/01/94 112 69 99 94
8/02/94 114 69 99 94
8/03/94 115 69 99 94
8/04/94 111 67 99 94
8/05/94 110 66 99 93
8/08/94 108 64 99 94
8/09/94 109 65 99 94
8/10/94 114 65 99 95
8/11/94 119 66 99 96
8/12/94 119 67 100 97
8/15/94 118 69 100 97
8/16/94 116 73 100 98
8/17/94 115 71 101 97
8/18/94 115 71 100 98
8/19/94 116 71 101 98
8/22/94 116 73 100 98
8/23/94 118 76 101 99
8/24/94 116 74 102 100
8/25/94 122 75 102 101
8/26/94 121 78 103 102
8/29/94 120 78 103 104
8/30/94 125 75 104 104
8/31/94 132 78 103 105
9/01/94 132 77 103 103
9/02/94 131 76 102 104
9/06/94 130 77 103 104
9/07/94 126 78 103 103
9/08/94 131 75 103 104
9/09/94 128 75 102 103
9/12/94 128 75 102 103
9/13/94 129 75 102 104
9/14/94 137 76 102 105
9/15/94 139 78 104 107
9/16/94 137 78 103 108
9/19/94 136 78 103 108
9/20/94 128 78 102 106
9/21/94 122 75 101 104
9/22/94 122 74 101 104
9/23/94 124 72 101 104
9/26/94 123 72 101 103
9/27/94 122 75 101 103
9/28/94 121 73 102 103
9/29/94 118 76 101 101
9/30/94 123 76 102 103
10/03/94 125 75 101 103
10/04/94 120 74 100 101
10/05/94 123 73 100 101
10/06/94 128 74 99 102
10/07/94 131 74 100 103
10/10/94 131 75 101 103
10/11/94 139 76 102 105
10/12/94 136 76 102 105
10/13/94 136 77 103 106
10/14/94 134 78 103 106
10/17/94 136 75 103 105
10/18/94 136 78 103 106
10/19/94 134 75 103 106
10/20/94 141 76 103 107
10/21/94 145 78 102 108
10/24/94 142 75 102 108
10/25/94 136 75 102 106
10/26/94 139 76 102 107
10/27/94 140 75 103 107
10/28/94 149 76 104 110
10/31/94 153 77 104 111
11/1/94 153 75 103 110
11/2/94 153 77 103 110
11/3/94 156 74 103 110
11/4/94 151 74 102 109
</TABLE>
<PAGE> 171
Fig. 11
FIGURE 11
<TABLE>
<CAPTION>
Date Rogers Cantel U.S. Cellular Vanguard S&P 400 Cellular Index
---- ------------- ------------- -------- ------- --------------
<S> <C> <C> <C> <C> <C>
1/03/94 100 100 100 100 100
1/04/94 101 100 103 101 101
1/05/94 104 96 99 101 99
1/06/94 108 95 100 101 99
1/07/94 108 93 104 101 100
1/10/94 110 92 107 102 101
1/11/94 110 94 110 102 103
1/12/94 108 93 108 102 102
1/13/94 107 92 108 102 101
1/14/94 106 91 108 102 100
1/17/94 106 90 108 102 101
1/18/94 105 89 107 102 100
1/19/94 99 89 103 102 98
1/20/94 100 86 104 102 98
1/21/94 101 84 105 102 99
1/24/94 100 86 104 102 98
1/25/94 100 85 103 102 98
1/26/94 100 82 107 102 97
1/27/94 99 80 108 102 97
1/28/94 98 80 109 103 98
1/31/94 99 83 106 103 99
2/01/94 98 81 107 103 98
2/02/94 100 80 106 104 98
2/03/94 100 81 110 104 98
2/04/94 100 81 110 101 96
2/07/94 100 81 111 102 96
2/08/94 100 81 111 102 96
2/09/94 106 80 110 102 97
2/10/94 106 81 108 101 97
2/11/94 108 80 107 102 96
2/14/94 108 81 107 102 96
2/15/94 108 82 108 102 96
2/16/94 109 84 108 103 98
2/17/94 108 84 105 102 97
2/18/94 106 83 104 102 97
2/22/94 104 84 104 102 97
2/23/94 104 83 102 102 96
2/24/94 104 80 99 101 94
2/25/94 103 80 103 101 95
2/28/94 104 80 104 101 95
3/01/94 102 80 105 101 94
3/02/94 101 79 100 101 93
3/03/94 101 79 97 100 92
3/04/94 101 79 97 101 93
3/07/94 100 79 102 101 94
3/08/94 99 78 102 101 94
3/09/94 99 78 101 102 94
3/10/94 100 77 101 101 94
3/11/94 100 76 100 101 94
3/14/94 100 77 100 102 94
3/15/94 100 79 98 101 94
3/16/94 101 78 96 102 93
3/17/94 100 77 97 102 92
3/18/94 100 77 96 102 91
3/21/94 99 76 96 102 91
3/22/94 99 76 95 102 91
3/23/94 99 77 101 102 92
3/24/94 96 77 101 101 90
3/25/94 96 77 101 100 90
3/28/94 95 76 95 100 89
3/29/94 93 75 94 98 88
3/30/94 94 73 96 97 87
3/31/94 91 73 97 97 86
4/04/94 88 71 95 95 83
4/05/94 88 72 98 97 86
4/06/94 85 74 98 97 86
4/07/94 87 71 98 98 86
4/08/94 87 74 99 97 86
4/11/94 86 74 101 97 86
4/12/94 85 76 100 97 87
4/13/94 85 75 101 96 87
4/14/94 84 74 102 96 88
4/15/94 84 74 106 96 88
4/18/94 84 74 104 95 87
4/19/94 82 74 104 95 87
4/20/94 83 74 103 94 87
4/21/94 84 74 103 96 88
4/22/94 86 74 103 96 88
4/25/94 87 76 104 97 89
4/26/94 88 72 108 97 89
4/28/94 91 75 112 97 91
4/29/94 91 73 110 97 90
5/02/94 90 73 112 98 90
5/03/94 88 75 113 98 90
5/04/94 88 74 113 98 90
5/05/94 88 75 113 97 90
5/06/94 87 74 110 97 89
5/09/94 88 74 110 96 89
5/10/94 86 75 111 96 89
5/11/94 84 75 110 96 88
5/12/94 86 75 112 96 89
5/13/94 85 75 111 96 88
5/16/94 87 76 111 96 89
5/17/94 88 77 112 97 88
5/18/94 88 78 115 98 90
5/19/94 89 78 114 98 90
5/20/94 90 79 112 98 90
5/23/94 90 79 112 98 91
5/24/94 90 78 111 98 90
5/25/94 91 79 114 99 91
5/26/94 93 80 110 99 91
5/27/94 94 80 109 99 92
5/31/94 94 79 108 99 92
6/01/94 93 80 107 99 92
6/02/94 93 80 109 99 93
6/03/94 93 80 113 99 93
6/06/94 93 82 113 99 94
6/07/94 93 83 115 99 94
6/08/94 94 81 115 98 94
6/09/94 94 83 114 98 94
6/10/94 94 85 113 99 94
6/13/94 94 83 112 99 93
6/14/94 93 83 114 99 93
6/15/94 92 83 115 99 93
6/16/94 92 83 115 99 93
6/17/94 89 82 115 99 92
6/20/94 88 81 115 98 91
6/21/94 88 81 117 97 91
6/22/94 88 80 115 98 90
6/23/94 88 79 118 97 91
6/24/94 89 80 116 95 91
6/27/94 88 78 117 96 90
6/28/94 88 78 113 96 89
6/29/94 89 75 108 96 88
6/30/94 90 71 110 96 87
7/01/94 91 72 111 96 88
7/05/94 91 75 114 96 89
7/06/94 92 71 116 96 89
7/07/94 92 71 120 97 90
7/08/94 92 69 120 97 90
7/11/94 93 66 120 97 88
7/12/94 93 69 118 97 89
7/13/94 96 70 119 97 89
7/14/94 99 74 118 98 91
7/15/94 99 74 120 98 91
7/18/94 99 74 122 98 91
7/19/94 99 74 123 98 91
7/20/94 98 76 121 97 92
7/21/94 98 76 122 98 92
7/22/94 97 76 120 98 92
7/25/94 98 76 120 98 93
7/26/94 97 79 124 98 94
7/27/94 97 80 126 98 94
7/28/94 96 80 128 98 94
7/29/94 96 80 126 99 94
8/01/94 95 80 126 99 94
8/02/94 96 81 122 99 94
8/03/94 95 82 120 99 94
8/04/94 95 83 123 99 94
8/05/94 96 84 125 99 93
8/08/94 97 84 126 99 94
8/09/94 100 84 126 99 94
8/10/94 101 83 127 99 95
8/11/94 102 82 128 99 96
8/12/94 102 83 130 100 97
8/15/94 102 83 127 100 97
8/16/94 102 83 129 100 98
8/17/94 104 82 131 101 97
8/18/94 104 83 132 100 98
8/19/94 106 83 131 101 98
8/22/94 107 83 131 100 98
8/23/94 108 83 129 101 99
8/24/94 108 86 129 102 100
8/25/94 107 86 131 102 101
8/26/94 108 88 137 103 102
8/29/94 107 89 145 103 104
8/30/94 107 90 141 104 104
8/31/94 109 89 141 103 105
9/01/94 106 87 136 103 103
9/02/94 106 89 136 102 104
9/06/94 106 89 137 103 104
9/07/94 104 88 139 103 103
9/08/94 103 90 138 103 104
9/09/94 104 91 136 102 103
9/12/94 103 92 137 102 103
9/13/94 105 91 137 102 104
9/14/94 106 93 138 102 105
9/15/94 107 92 146 104 107
9/16/94 112 94 144 103 108
9/19/94 112 95 143 103 108
9/20/94 113 94 141 102 106
9/21/94 111 91 139 101 104
9/22/94 111 91 141 101 104
9/23/94 111 91 141 101 104
9/26/94 111 90 141 101 103
9/27/94 111 89 132 101 103
9/28/94 109 88 132 102 103
9/29/94 107 88 128 101 101
9/30/94 107 87 132 102 103
10/03/94 108 87 134 101 103
10/04/94 106 88 127 100 101
10/05/94 106 89 127 100 101
10/06/94 106 89 126 99 102
10/07/94 106 89 131 100 103
10/10/94 107 89 132 101 103
10/11/94 107 88 133 102 105
10/12/94 107 90 136 102 105
10/13/94 106 90 137 103 106
10/14/94 105 91 137 103 106
10/17/94 104 91 138 103 105
10/18/94 104 93 137 103 106
10/19/94 105 95 138 103 106
10/20/94 105 94 138 103 107
10/21/94 106 93 139 102 108
10/24/94 114 92 139 102 108
10/25/94 112 91 134 102 106
10/26/94 111 91 134 102 107
10/27/94 112 91 133 103 107
10/28/94 112 94 136 104 110
10/31/94 113 94 146 104 111
11/1/94 115 93 140 103 110
11/2/94 115 93 136 103 110
11/3/94 115 92 136 103 110
11/4/94 117 92 136 102 109
</TABLE>
<PAGE> 1
Project Forest Background Analysis
- --------------------------------------------------
1) DCF Valuation
2) POP-based Valuation
3) Summary Data Points in Determining Private Market Value
4) Relevant Issues Relating to Acorn Valuation
5) Demographics of Acorn Markets
6) Comparable Analysis
a) Public Comparables
b) Acquisition Comparables
7) Premium in Minority Squeeze-Outs
8) Stock Price Performance
<PAGE> 2
DRAFT
CONTEL CELLULAR INC.
DISCOUNTED CASH FLOW ANALYSIS TO 1/1/95(a)
- --------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<TABLE>
<CAPTION>
Projected
-------------------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1995 1996 1997 1998 1999
-------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CASH FLOWS
EBITDA (Consolidated Ops.) & Other Income / (Expense) $652.9
Net Income Attributable to Minority Interest (b) 16.4
Equity in Uncon. Subs (b)(c) 25.0
FREE CASH FLOW ($99.6) $122.1 $254.1 $336.9 $399.3
======== ======= ======== ======== =======
<CAPTION>
Present Value of Terminal Value
NPV of as a Multiple of 1999 EBITDA
Discount Free Cash Flow -------------------------------
Rate 1995-1999 10.0x 11.0x 12.0x
-------- -------------- -------- -------- --------
<C> <C> <C> <C> <C>
12.0% $666.6 $3,704.5 $4,074.9 $4,445.4
13.0% 645.1 3,543.5 3,897.8 4,252.1
14.0% 624.5 3,390.7 3,729.8 4,068.9
15.0% 604.7 3,245.9 3,570.4 3,895.0
<CAPTION>
Incremental Present Value Adjustment for
Equity Investments & Minority Interest (Net)
Discount -------------------------------------------
Rate 18.0x 20.0x 22.0x
-------- ------- ------- -------
<C> <C> <C> <C>
12.0% $88.0 $97.8 $107.6
13.0% 84.2 93.5 102.9
14.0% 80.6 89.5 98.5
15.0% 77.1 85.7 94.3
<CAPTION>
Total Firm Value
Discount Mexican ---------------------------------------
Rate Properties(e) 10.0x/18.0x 11.0x/20.0x 12.0x/22.0x
-------- ------------- ----------- ----------- -----------
<C> <C> <C> <C> <C>
12.0% $20.0 $4,479.1 $4,859.4 $5,239.6
13.0% 20.0 4,292.8 4,656.5 5,020.2
14.0% 20.0 4,115.8 4,463.8 4,811.9
15.0% 20.0 3,947.7 4,280.8 4,614.0
<CAPTION>
Implied Equity Value
Discount Total ----------------------------------------
Rate Debt(d) 10.0x/18.0x 11.0x/20.0x 12.0x/22.0x
-------- -------- ----------- ----------- -----------
<C> <C> <C> <C> <C>
12.0% $2,114.5 $2,364.6 $2,744.9 $3,125.1
13.0% 2,114.5 2,178.3 2,542.0 2,905.7
14.0% 2,114.5 2,001.3 2,349.3 2,697.4
15.0% 2,114.5 1,833.2 2,166.3 2,499.5
<CAPTION>
---------------------------------------
Implied Equity Value per Share
Discount ---------------------------------------
Rate 10.0x/18.0x 11.0x/20.0x 12.0x/22.0x
-------- ----------- ----------- -----------
<C> <C> <C> <C>
12.0% $23.66 $27.46 $31.27
13.0% 21.79 25.43 29.07
14.0% 20.02 23.51 26.99
15.0% 18.34 21.67 25.01
---------------------------------------
</TABLE>
(a) Based on a mid-year discounting of Free Cash Flow and year-end 1999
discounting of Exit Value.
(b) Taxed at assumed 40% rate.
(c) Discounted by 30% due to minority position.
(d) Estimated balance at 1/1/95. (Current net debt balance as of 6/30/94 is
$2,021.9 mm.)
(e) Estimated; Represents $48 per net POP.
Page 1 of 8
<PAGE> 3
DRAFT
<TABLE>
CONTEL CELLULAR INC.
DISCOUNTED CASH FLOW ANALYSIS / ASSUMPTIONS
- --------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<CAPTION>
----------------------------------
Valuation Assumptions
----------------------------------
Total Debt (1/1/95) $2,114.5
Shares Outstanding (mm) 99.95
POP Growth Rate: 1.5%
Tax Rate: 40.0%
----------------------------------
Historical Outlook
---------------- -------
Dec 31 Dec 31 Dec 31
1992 1993 1994
------ ------ -------
<S> <C> <C> <C>
OPERATING ASSUMPTIONS
EBITDA Margin 17.4% 23.0% 28.7%
Consolidated Subscribers (thousands) 328 521 775
Consolidated POPs (mm) 16.2 16.7 16.6
Penetration 2.0% 3.1% 4.7%
Avg MOU's / Customer / Month -- 129 136
Svc Rev / Sub / Month $78.4 $71.7 $68.7
Churn 2.3% 2.0% 2.0%
Cost per Gross Add $430.4 $432.2 $375.9
INCOME STATEMENT
Total Revenues (Incl. Equip Revenue & Data) 287.0 374.0 550.8
EBITDA 49.8 86.1 158.2
Depreciation & Amortization (95.7) (108.2) (126.3)
------ ------ ------
EBIT (45.8) (22.1) 32.0
Minority Interest (pre-tax) 2.4 0.8 (6.5)
Other Income / (Expense) 56.0 44.2 101.6
Equity in Income of Uncnsl. Subs. (pre-tax) 29.0 37.4 50.9
Interest Expense (148.1) (162.9) (178.1)
------ ------ ------
Pre-Tax Income (106.5) (102.6) (0.0)
Income Tax (33.5) (27.7) 11.9
------ ------ ------
Net Income ($73.1) ($74.9) ($11.9)
FREE CASH FLOW
EBITDA (Consolidated Ops.) -- 86.1 158.2
Other Income / (Expense) -- 44.2 101.6
Dividend Related to Minority Interest -- 0.0 (1.2)
Cash Dividends from Uncnsl. Subs., net -- 1.9 22.1
Income Tax Expense (Net of Intr. Exp. Ded.) -- (37.4) (83.1)
Deferred Income Taxes -- 31.6 30.0
Capital Expenditures -- (152.1) (246.2)
Purchase of Cellular Interests -- 0.0 (125.8)
Working Capital -- 87.7 (13.8)
Other Sources / (Uses) -- 7.4 13.9
----------------------------------------------------------------------------
Free Cash Flow -- $69.4 ($144.1)
----------------------------------------------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Terminal Valuation Calculation (1999)
--------------------------------------------------------
EBITDA (Consolidated Ops.) (a) $652.9
Net Income Attributable to Minority Interest (b) 16.4
Equity in Uncon. Subs (b) 35.7
Discount for Uncon. Subs 30.0% (10.7)
--------------------------------------------------------
Projected
----------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1995 1996 1997 1998 1999
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
OPERATING ASSUMPTIONS
EBITDA Margin 37.2% 41.6% 44.5% 44.5% 48.7%
Consolidated Subscribers (thousands) 1,057 1,345 1,612 1,898 2,089
Consolidated POPs (mm) 16.9 17.1 17.4 17.6 17.9
Penetration 6.3% 7.9% 9.3% 10.8% 11.7%
Avg MOU's / Customer / Month 124 116 118 124 124
Svc Rev / Sub/ Month $63.1 $57.3 $53.9 $51.4 $50.1
Churn 2.1% 1.9% 2.0% 2.3% 2.4%
Cost per Gross Add $347.2 $346.5 $335.0 $324.8 $319.4
INCOME STATEMENT
Total Revenues (Incl. Equip Revenue & Data) 720.3 882.4 1,043.3 1,212.2 1,351.5
EBITDA 268.2 366.7 464.0 539.8 658.4
Depreciation & Amortization (152.4) (181.0) (201.4) (215.1) (227.6)
------ ------ ------- ------- -------
EBIT 115.9 185.7 262.6 324.7 430.8
Minority Interest (pre-tax) (9.1) (13.2) (17.6) (21.1) (27.3)
Other Income / (Expense) (5.2) (5.2) (5.2) (5.4) (5.6)
Equity in Income of Uncnsl. Subs. (pre-tax) 58.1 58.4 58.8 59.1 59.5
Interest Expense (204.6) (212.5) (217.1) (206.6) (189.9)
------ ------ ------- ------- -------
Pre-Tax Income (44.9) 13.2 81.5 150.8 267.6
Income Tax (8.6) 14.0 41.6 69.3 114.5
------ ------ ------- ------- -------
Net Income ($36.3) ($0.7) $39.9 $81.5 $153.1
FREE CASH FLOW
EBITDA (Consolidated Ops.) 268.2 366.7 464.0 539.8 658.4
Other Income / (Expense) (5.2) (5.2) (5.2) (5.4) (5.6)
Dividend Related to Minority Interest (3.0) (4.0) (5.0) (7.0) (10.0)
Cash Dividends from Uncnsl. Subs., net 20.1 47.7 50.0 58.1 53.5
Income Tax Expense (Net of Intr. Exp. Ded.) (73.3) (98.9) (128.4) (151.9) (190.4)
Deferred Income Taxes 40.9 44.4 46.8 48.2 49.7
Capital Expenditures (297.6) (220.2) (157.6) (135.5) (145.0)
Purchase of Cellular Interests (46.0) 0.0 0.0 0.0 0.0
Working Capital (28.0) (31.0) (37.7) (43.2) (49.6)
Other Sources / (Uses) 24.2 22.6 27.1 33.9 38.3
-----------------------------------------------------------------------------------------------------
Free Cash Flow ($99.6) $122.1 $254.1 $336.9 $399.3
-----------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes Other Income / (Expense).
(b) Based on a 40.0% tax rate.
Page 2 of 8
<PAGE> 5
DRAFT
<TABLE>
CONTEL CELLULAR INC.
DETAILS REGARDING REVENUE PROJECTIONS
- --------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<CAPTION>
Historical Outlook
------------------ -------
Dec 31 Dec 31 Dec 31
1992 1993 1994
------ ------ -------
<S> <C> <C> <C>
REVENUE
Access Revenue (Incl Promo Revenues) $85.6 $110.7 $178.2
Airtime Revenue (Incl Promo Revenues) 106.8 145.7 210.4
Roaming Revenue 45.2 59.9 77.5
Data Revenue 0.0 0.0 0.0
Less: Promotions Revenues 0.0 24.9 28.1
Other Revenue 23.3 27.8 46.4
Total Revenues (Excl. Equip & Promotions Revenue) (a) $260.9 $369.0 $540.7
Equipment Sales & Rental 26.1 29.9 38.2
Add-back of Promotions Revenues 0.0 (24.9) (28.1)
Total Revenues (Incl. Equip & Promo Revenue) (b) $287.0 $374.0 $550.8
AS A % OF TOTAL REVENUES
Access Revenue (Incl Promos) 29.8% 29.6% 32.4%
Airtime Revenue (Incl Promos) 37.2% 39.0% 38.2%
Roaming Revenue 15.8% 16.0% 14.1%
Data Revenue 0.0% 0.0% 0.0%
Equipment Sales & Rental 9.1% 8.0% 6.9%
Promotions Revenues 0.0% -6.7% -5.1%
Other Revenue 8.1% 7.4% 8.4%
------ ------ ------
Total Revenues (Incl. Equip Revenue) 100.0% 93.3% 94.9%
REVENUE GROWTH RATES
Access Revenue (Incl Promos) -- 29.4% 61.0%
Airtime Revenue (Incl Promos) -- 36.4% 44.4%
Roaming Revenue -- 32.4% 29.4%
Data Revenue -- -- --
Equipment Sales -- 14.5% 27.7%
Promotions Revenues -- -- NM
Other Revenue -- 19.4% 66.7%
Total Revenues (Incl. Equip Revenue) -- 30.3% 47.3%
REVENUES / SUBSCRIBER / MONTH
Access Cost / Avg Customer / Month -- $26.01 $26.25
Airtime Rate per Minute of Use -- $0.26 $0.22
Composite Access & Airtime Rate per Minute of Use -- $0.42 $0.39
- --------------------------------------------------------------------------------------------------
OPERATING MARGINS
Gross Margin 42.4% 45.9% 47.7%
EBITDA / Total Revenues 17.4% 23.0% 28.7%
EBIT / Total Revenues NM NM 5.8%
Net Income / Total Revenues NM NM NM
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Projected
------------------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1995 1996 1997 1998 1999
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE
Access Revenue (Incl Promo Revenues) $254.4 $336.0 $412.7 $488.5 $552.9
Airtime Revenue (Incl Promo Revenues) 269.2 319.9 353.9 386.4 423.3
Roaming Revenue 85.6 91.2 94.1 97.2 98.6
Data Revenue 1.8 11.6 31.7 52.2 70.5
Less: Promotions Revenues 29.2 31.6 33.4 39.2 36.8
Other Revenue 68.1 72.1 92.1 115.8 136.8
Total Revenues (Excl. Equip & Promotions Revenue) (a) $708.3 $862.4 $1,017.8 $1,179.4 $1,319.0
Equipment Sales & Rental 41.2 51.6 58.9 72.1 69.3
Add-back of Promotions Revenues (29.2) (31.6) (33.4) (39.2) (36.8)
Total Revenues (Incl. Equip & Promo Revenue) (b) $720.3 $882.4 $1,043.3 $1,212.2 $1,351.5
AS A % OF TOTAL REVENUES
Access Revenue (Incl Promos) 35.3% 38.1% 39.6% 40.3% 40.9%
Airtime Revenue (Incl Promos) 37.4% 36.2% 33.9% 31.9% 31.3%
Roaming Revenue 11.9% 10.3% 9.0% 8.0% 7.3%
Data Revenue 0.3% 1.3% 3.0% 4.3% 5.2%
Equipment Sales & Rental 5.7% 5.8% 5.6% 5.9% 5.1%
Promotions Revenues -4.1% -3.6% -3.2% -3.2% -2.7%
Other Revenue 9.5% 8.2% 8.8% 9.5% 10.1%
------ ------ -------- -------- --------
Total Revenues (Incl. Equip Revenue) 95.9% 96.4% 96.8% 96.8% 97.3%
REVENUE GROWTH RATES
Access Revenue (Incl Promos) 42.7% 32.1% 22.8% 18.4% 13.2%
Airtime Revenue (Incl Promos) 27.9% 18.8% 10.6% 9.2% 9.5%
Roaming Revenue 10.5% 6.5% 3.2% 3.3% 1.5%
Data Revenue -- 539.8% 173.9% 64.9% 34.9%
Equipment Sales 7.7% 25.4% 14.1% 22.4% -3.8%
Promotions Revenues NM NM NM NM NM
Other Revenue 46.9% 5.9% 27.6% 25.7% 18.1%
Total Revenues (Incl. Equip Revenue) 30.8% 22.5% 18.2% 16.2% 11.5%
REVENUES / SUBSCRIBER / MONTH
Access Cost / Avg Customer / Month $25.75 $25.37 $24.93 $24.70 $24.27
Airtime Rate per Minute of Use $0.21 $0.20 $0.17 $0.15 $0.14
Composite Access & Airtime Rate per Minute of Use $0.40 $0.40 $0.38 $0.34 $0.33
- -----------------------------------------------------------------------------------------------------------------------
OPERATING MARGINS
Gross Margin 52.5% 53.8% 54.1% 54.3% 57.0%
EBITDA / Total Revenues 37.2% 41.6% 44.5% 44.5% 48.7%
EBIT / Total Revenues 16.1% 21.0% 25.2% 26.8% 31.9%
Net Income / Total Revenues NM NM 3.8% 6.7% 11.3%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(a) Reflects revenues generated from total minutes used.
(b) Reflects revenues generated from equipment sales & rental and from total
minutes paid for. (i.e. the total is adjusted downward to reflect those
minutes paid for by the Company)
Page 3 of 8
<PAGE> 7
DRAFT
CONTEL CELLULAR INC.
DETAILS REGARDING CASH EXPENSE PROJECTIONS
- -------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<TABLE>
<CAPTION>
Historical Outlook
----------------- -------
Dec 31 Dec 31 Dec 31
1992 1993 1994
------ ------ -------
<S> <C> <C> <C>
CASH EXPENSES
Customer Acquisition Costs (Incl Promos & Equip Revenues) $76.4 $125.2 $155.4
Add-back of Equipment Revenues (a) 26.1 30.1 40.2
Less: Promo Revenues 0.0 (22.1) (23.5)
Less: Depreciation Rental Equipment 0.0 0.0 (0.9)
------ ------ -------
Total Customer - Cash Acquisition Costs Incl Promos & Excl Equip Rev 102.5 133.2 171.1
RETENTION COSTS (INCL PROMOS) 0.0 4.4 10.4
Add-back of Equipment Revenues 0.0 (0.2) (1.9)
Less: Promo Revenues 0.0 (2.8) (4.6)
------ ------ -------
Total Cash Retention Costs (Incl Promos & Excl Equip Rev) 0.0 1.4 3.9
COSTS OF SERVICE 44.6 44.7 69.0
Equipment Revenues 0.0 0.0 (0.0)
Less: Depreciation & Amortization (0.9) (0.9) (0.1)
------ ------ -------
Total Cash Costs of Service (Excl. Equip Rev ) 43.7 43.8 68.9
SYSTEMS COSTS 82.6 107.8 147.6
Less: Depreciation & Amortization (48.5) (61.7) (84.6)
------ ------ -------
Total Cash Systems Costs 34.1 46.1 63.0
REGION ADMIN EXPENSES 22.0 22.2 38.2
Less: Regional Depreciation (0.9) (1.0) (1.8)
------ ------ -------
Total Region Admin Cash Expenses 21.2 21.3 36.4
HEADQUARTERS EXPENSES 39.9 45.2 50.3
Less: HQ Depreciation (4.1) (3.1) (1.1)
------ ------ -------
Total Headquarters Cash Expenses 35.7 42.1 49.3
TOTAL DEPRECIATION (54.4) (66.6) (88.5)
- ---------------------------------------------------------------------------------------------------------------
Total Cash Expenses (Incl Equipment Revenues) $211.0 $258.0 $354.3
Equipment Revenue 26.1 29.9 38.2
------ ------ ------
Total Cash Expenses (Excl Equipment Revenues) $237.2 $287.9 $392.5
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
AS A % OF TOTAL CASH EXPENSES (EXCL EQUIPMENT REVENUES)
Total Customer Acquisition Costs (Incl Promos & Excl Equip Rev) 43.2% 46.3% 43.6%
Total Retention Costs (Incl Promos & Excl Equip Rev) 0.0% 0.5% 1.0%
Total Costs of Service (Excl. Equip Rev) 18.4% 15.2% 17.5%
Total Systems Costs 14.4% 16.0% 16.1%
Total Region Admin Expenses 8.9% 7.4% 9.3%
Total Headquarters Expenses 15.1% 14.6% 12.5%
----- ----- -----
Total Cash Expenses Excl Equipment Revenues 100.0% 100.0% 100.0%
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
CUSTOMER ACQUISITION COSTS
Total Customer Acquisition Costs (Incl Promos & Equip Rev) ($mm) $76.4 $125.2 $155.4
Net Loss on Equipment per Gross Add (Incl Depreciation) 68 68 76
Commissions per Gross Add 113 106 71
Other Sales Costs per Gross Add 189 140 138
Other Acquisition Costs per Gross Add 60 118 92
------ ------ ------
Total Acquisition Costs per Gross Add (Incl Depreciation) $430 $432 $376
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
TOTAL CASH COSTS & EXPENSES PLUS DEPRECIATION & AMORTIZATION
Cost of Services $44.6 $44.7 $69.0
Cost of Equipment Sales 38.3 49.8 71.5
Systems Costs 82.6 107.8 147.6
Selling, General & Administrative (b) 167.4 193.8 230.7
------ ------ ------
Total Expenses Excl Equip & Promo Revenues $332.8 $396.1 $518.8
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
OPERATING MARGINS
Gross Margin 42.4% 45.9% 47.7%
Cost of Services & Equipment Sales / Total Revenues 28.9% 25.3% 25.5%
Systems Costs / Total Revenues 28.8% 28.8% 26.8%
S,G&A / Total Revenues 58.3% 51.8% 41.9%
----- ----- -----
Operating Expenses / Total Revenues 116.0% 105.9% 94.2%
EBITDA / Total Revenues 17.4% 23.0% 28.7%
EBIT / Total Revenues NM NM 5.8%
Net Income / Total Revenues NM NM NM
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Projected
------------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1995 1996 1997 1998 1999
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CASH EXPENSES
Customer Acquisition Costs (Incl Promos & Equip Revenues) $173.7 $194.1 $208.2 $245.2 $239.0
Add-back of Equipment Revenues (a) 41.2 51.6 58.9 72.1 69.3
Less: Promo Revenues (24.7) (27.0) (29.1) (34.7) (33.8)
Less: Depreciation Rental Equipment (7.4) (11.4) (16.0) (20.0) (22.7)
------ ------- ------- ------- -------
Total Customer - Cash Acquisition Costs Incl Promos & Excl Equip Rev 182.7 207.4 222.1 262.7 251.8
RETENTION COSTS (INCL PROMOS) 11.5 14.4 15.5 20.2 14.1
Add-back of Equipment Revenues 0.0 0.0 0.0 0.0 0.0
Less: Promo Revenues (4.5) (4.6) (4.3) (4.6) (3.0)
------ ------- ------- ------- -------
Total Cash Retention Costs (Incl Promos & Excl Equip Rev) 7.0 9.8 11.2 15.7 11.0
COSTS OF SERVICE 96.3 102.0 127.2 154.2 173.0
Equipment Revenues 0.0 0.0 0.0 0.0 0.0
Less: Depreciation & Amortization 0.0 0.0 0.0 0.0 0.0
------ ------- ------- ------- -------
Total Cash Costs of Service (Excl. Equip Rev ) 96.3 102.0 127.2 154.2 173.0
SYSTEMS COSTS 184.9 230.4 263.3 288.6 309.8
Less: Depreciation & Amortization (101.7) (125.7) (141.1) (150.6) (159.9)
------ ------- ------- ------- -------
Total Cash Systems Costs 83.2 104.7 122.2 138.1 149.9
REGION ADMIN EXPENSES 31.5 39.3 42.1 45.1 47.7
Less: Regional Depreciation (1.7) (2.1) (2.4) (2.6) (2.9)
------ ------- ------- ------- -------
Total Region Admin Cash Expenses 29.8 37.1 39.7 42.4 44.8
HEADQUARTERS EXPENSES 54.1 56.0 58.5 61.3 64.5
Less: HQ Depreciation (1.0) (1.4) (1.6) (1.8) (2.0)
------ ------- ------- ------- -------
Total Headquarters Cash Expenses 53.1 54.6 56.9 59.5 62.5
TOTAL DEPRECIATION (111.9) (140.5) (161.0) (175.0) (187.5)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Cash Expenses (Incl Equipment Revenues) $410.9 $464.1 $520.4 $600.3 $623.7
Equipment Revenue 41.2 51.6 58.9 72.1 69.3
------ ------ ------ ------ ------
Total Cash Expenses (Excl Equipment Revenues) $452.1 $515.8 $579.3 $672.5 $693.0
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AS A % OF TOTAL CASH EXPENSES (EXCL EQUIPMENT REVENUES)
Total Customer Acquisition Costs (Incl Promos & Excl Equip Rev) 40.4% 40.2% 38.3% 39.1% 36.3%
Total Retention Costs (Incl Promos & Excl Equip Rev) 1.5% 1.9% 1.9% 2.3% 1.6%
Total Costs of Service (Excl. Equip Rev) 21.3% 19.8% 21.9% 22.9% 25.0%
Total Systems Costs 18.4% 20.3% 21.1% 20.5% 21.6%
Total Region Admin Expenses 6.6% 7.2% 6.9% 6.3% 6.5%
Total Headquarters Expenses 11.8% 10.6% 9.8% 8.8% 9.0%
----- ----- ----- ----- -----
Total Cash Expenses Excl Equipment Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
CUSTOMER ACQUISITION COSTS
Total Customer Acquisition Costs (Incl Promos & Equip Rev) ($mm) $173.7 $194.1 $208.2 $245.2 $239.0
Net Loss on Equipment per Gross Add (Incl Depreciation) 49 59 69 68 66
Commissions per Gross Add 71 79 61 36 23
Other Sales Costs per Gross Add 135 117 112 112 116
Other Acquisition Costs per Gross Add 92 92 93 108 115
------ ------ ------ ------ ------
Total Acquisition Costs per Gross Add (Incl Depreciation) $347 $347 $335 $325 $319
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CASH COSTS & EXPENSES PLUS DEPRECIATION & AMORTIZATION
Cost of Services $96.3 $102.0 $127.2 $154.2 $173.0
Cost of Equipment Sales 60.7 75.2 88.8 111.0 98.1
Systems Costs 184.9 230.4 263.3 288.6 309.8
Selling, General & Administrative (b) 262.5 289.1 301.4 333.8 339.8
------ ------ ------ ------ ------
Total Expenses Excl Equip & Promo Revenues $604.4 $696.8 $780.7 $887.5 $920.7
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING MARGINS
Gross Margin 52.5% 53.8% 54.1% 54.3% 57.0%
Cost of Services & Equipment Sales / Total Revenues 21.8% 20.1% 20.7% 21.9% 20.1%
Systems Costs / Total Revenues 25.7% 26.1% 25.2% 23.8% 22.9%
S, G&A / Total Revenues 36.4% 32.8% 28.9% 27.5% 25.1%
---- ---- ---- ---- ----
Operating Expenses / Total Revenues 83.9% 79.0% 74.8% 73.2% 68.1%
EBITDA / Total Revenues 37.2% 41.6% 44.5% 44.5% 48.7%
EBIT / Total Revenues 16.1% 21.0% 25.2% 26.8% 31.9%
Net Income / Total Revenues NM NM 3.8% 6.7% 11.3%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------
(a) Customer Acquisition Costs have been netted for equipment revenue; hence,
cash costs requires add-back of revenues.
(b) S,G&A includes: (1) headquarters expenses, (2) region admin expenses, (3)
retention costs, (4) customer acquisition costs excluding equip costs, (5)
some depreciation & amortization and (6) back out of promo revenues.
Page 4 of 8
<PAGE> 8
DRAFT
CONTEL CELLULAR INC.
DETAILS REGARDING CAPITAL EXPENDITURE PROJECTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Historical Outlook Projected
---------- ------- -----------------------
Dec 31 Dec 31 Dec 31 Dec 31
1993 1994 1995 1996
---------- ------- -------- --------
<S> <C> <C> <C> <C>
NETWORK EXPENDITURES
Infrastructure
Number of Cells 449 679 860 923
Incremental New Cells NA 214 181 63
Cost per Incremental Cell NA $369,173 $501,806 $528,991
Number of Voice Path Channels - Analog 10,822 16,926 24,380 24,458
Incremental New Voice Paths - Analog NA 5,804 7,454 78
Cost per Incremental Voice Path Channel - Analog NA $5,146 $9,628 $31,921
Number of Voice Path Channels - Digital 0 0 0 6,372
Incremental New Voice Paths - Digital NA 0 0 6,372
Cost per Incremental Voice Path Channel - Digital NA $0 $0 $6,098
Number of Switches 29 30 32 45
Incremental New Switches NA 1 2 13
Total cost of Incremental Switches (a) NA $600,000 $1,350,000 $3,484,880
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES ($mm)
Cell Sites (Coverage Cells) $0.0 $79.0 $90.8 $33.3
Voice Paths - Analog 0.0 29.9 71.8 2.5
Voice Paths - Digital 0.0 0.0 0.0 38.9
Switches 0.0 33.9 19.9 36.1
Microwave 0.0 21.4 20.2 6.8
Other Network Costs 0.0 51.0 46.6 64.2
Tele-GO 0.0 6.0 6.9 3.9
Capitalized Engineering 7.7 8.1 12.0 12.7
Other 144.4 17.0 29.5 21.8
------ ------ ------ ------
Total Capital Expenditures $152.1 $246.2 $297.6 $220.2
- -----------------------------------------------------------------------------------------------------------------------------------
AS A % OF CAPITAL EXPENDITURES
Cell Sites (Coverage Cells) 0.0% 32.1% 30.5% 15.1%
Voice Paths - Analog 0.0% 12.1% 24.1% 1.1%
Voice Paths - Digital 0.0% 0.0% 0.0% 17.6%
Switches 0.0% 13.8% 6.7% 16.4%
Microwave 0.0% 8.7% 6.8% 3.1%
Other Network Costs 0.0% 20.7% 15.7% 29.2%
Non-Network Costs (Tele-GO, Capitalized Engineering & Other) 94.9% 6.9% 9.9% 9.9%
------ ------ ------ ------
Total Capital Expenditures 94.9% 94.3% 93.6% 92.5%
<CAPTION>
Projected
------------------------------------------------
Dec 31 Dec 31 Dec 31
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
NETWORK EXPENDITURES
INFRASTRUCTURE
Number of Cells 945 960 969
Incremental New Cells 22 15 9
Cost per Incremental Cell $519,421 $503,037 $582,048
Number of Voice Path Channels - Analog 24,535 24,616 24,704
Incremental New Voice Paths - Analog 77 81 88
Cost per Incremental Voice Path Channel - Analog $10,404 $11,732 $11,732
Number of Voice Path Channels - Digital 11,942 17,147 20,119
Incremental New Voice Paths - Digital 5,570 5,205 2,972
Cost per Incremental Voice Path Channel - Digital $6,064 $5,598 $5,822
Number of Switches 47 49 49
Incremental New Switches 2 2 0
Total cost of Incremental Switches (a) $2,694,882 $2,640,985 $0
- --------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES ($mm)
Cell Sites (Coverage Cells) $11.4 $7.5 $5.2
Voice Paths - Analog 0.8 1.0 1.0
Voice Paths - Digital 33.8 29.1 17.3
Switches 20.4 18.3 8.6
Microwave 2.2 1.4 0.6
Other Network Costs 36.7 20.6 55.8
Tele-GO 10.4 17.9 18.8
Capitalized Engineering 13.4 14.1 15.0
Other 28.6 25.5 22.5
------ ------ ------
Total Capital Expenditures $157.6 $135.5 $145.0
- --------------------------------------------------------------------------------------------------------------------
AS A % OF CAPITAL EXPENDITURES
Cell Sites (Coverage Cells) 7.3% 5.6% 3.6%
Voice Paths - Analog 0.5% 0.7% 0.7%
Voice Paths - Digital 21.4% 21.5% 11.9%
Switches 13.0% 13.5% 5.9%
Microwave 1.4% 1.1% 0.4%
Other Network Costs 23.3% 15.2% 38.5%
Non-Network Costs (Tele-GO, Capitalized Engineering & Other) 18.1% 18.9% 15.5%
------ ------ ------
Total Capital Expenditures 84.9% 76.4% 76.7%
</TABLE>
- -------------------------------
(a) Detail Breakdown of Cost per Incremental Switch:
<TABLE>
<CAPTION>
Year # of Switches Cost per Switch Year # of Switches Cost per Switch
---- ------------- --------------- ---- ------------- ---------------
<S> <C> <C> <C> <C> <C>
1995 1 $600,000 1997 2 $2,694,882
1 $750,000
1996 1 $2,749,880 1998 2 $2,640,985
12 $735,000
</TABLE>
Page 5 of 8
<PAGE> 9
<TABLE>
DRAFT
CONTEL CELLULAR INC.
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<CAPTION>
Historical Outlook Projected
-------------------- ------- --------------------------------
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Access Revenue (Incl Promos) $85.6 $110.7 $178.2 $254.4 $336.0 $412.7
Airtime Revenue (Incl Promos) 106.8 145.7 210.4 269.2 319.9 353.9
Roaming Revenue 45.2 59.9 77.5 85.6 91.2 94.1
Other Network Features 8.3 13.0 25.1 40.5 58.4 75.8
Toll Revenue 12.1 12.3 18.0 20.1 0.0 0.0
------ ------ ------ ------ ------ --------
Service Revenue Excl Data 258.0 341.5 509.3 669.9 805.5 936.5
Data Revenue 0.0 0.0 0.0 1.8 11.6 31.7
------ ------ ------ ------ ------ --------
Service Revenue Incl Data 258.0 341.5 509.3 671.7 817.1 968.1
Promotions 0.0 24.9 28.1 29.2 31.6 33.4
------ ------ ------ ------ ------ --------
Service Revenue Excl Promos 258.0 366.4 537.5 700.8 848.7 1,001.6
Other Revenues 2.8 2.5 3.2 7.5 13.8 16.3
- -----------------------------------------------------------------------------------------------------------------------------------
Total Revenues (Excl. Equip Revenue) $260.9 $369.0 $540.7 $708.3 $862.4 $1,017.8
- -----------------------------------------------------------------------------------------------------------------------------------
Customer Acquisition Costs
Equipment Revenues (26.1) (29.5) (39.7) (35.5) (43.3) (47.6)
Equipment Costs 38.3 49.8 70.3 58.4 73.0 85.6
------ ------ ------ ------ ------ --------
Net Loss 12.1 20.3 30.6 22.9 29.8 38.0
Equipment Rental Revenues 0.0 (0.6) (0.5) (5.6) (8.4) (11.3)
Depreciation-Rental Equipment 0.0 0.0 0.9 7.4 11.4 16.0
Other Equipment Rental Costs 0.0 0.0 0.3 0.0 0.0 0.0
------ ------ ------ ------ ------ --------
Net Rental Loss 0.0 (0.5) 0.7 1.8 3.0 4.6
Commissions 20.1 30.8 29.1 35.6 44.4 37.9
Advertising 10.6 12.1 14.4 17.7 20.8 24.7
Sales - Direct 24.9 31.7 45.3 55.7 53.5 57.5
- Indirect 3.1 2.6 3.2 2.9 3.0 2.9
- Stores 5.5 6.2 8.4 8.9 9.1 9.2
Other Acquisition Costs 0.0 0.0 0.1 3.6 3.6 4.2
------ ------ ------ ------ ------ --------
Total Acquisition Costs Excl Promos 76.4 103.1 131.9 149.0 167.1 179.1
Promotions - Revenues 0.0 22.1 23.5 24.7 27.0 29.1
Total Acquisition Costs Incl Promos 76.4 125.2 155.4 173.7 194.1 208.2
Customer Retention Costs
Equipment Revenues (Excl Product Co.) 0.0 0.2 1.9 0.0 0.0 0.0
Equipment Costs (Excl Product Co.) 0.0 0.0 0.9 2.3 2.2 3.2
------ ------ ------ ------ ------ --------
Net Margin 0.0 0.2 2.9 2.3 2.2 3.2
Retention - Marketing 0.0 1.4 2.9 2.3 3.6 4.5
Customer Services - Customer Loyalty Only 0.0 0.0 0.0 0.0 0.0 0.0
Other Retention Costs 0.0 0.0 0.1 2.4 4.0 3.5
------ ------ ------ ------ ------ --------
Total Retention Costs Excl Promos 0.0 1.6 5.8 7.0 9.8 11.2
Promotions - Revenues 0.0 2.8 4.6 4.5 4.6 4.3
------ ------ ------ ------ ------ --------
Total Retention Costs Incl Promos 0.0 4.4 10.4 11.5 14.4 15.5
Other Costs of Service
Operating Tax 3.0 1.7 2.0 2.9 3.6 4.4
Customer Services (Excl Customer Loyalty) 7.0 7.3 11.8 17.8 24.1 30.1
Financial Services 0.0 2.9 4.8 7.2 8.2 10.2
Toll Cost of Sales 5.4 6.4 9.7 9.7 0.0 0.0
Customer Base Support 9.4 11.3 15.4 20.2 23.6 28.1
Roamer Administration 11.3 5.5 8.1 9.4 11.2 13.7
Bad Debt Expense 7.5 6.3 13.0 16.1 19.6 23.5
Depreciation & Amortization 0.9 0.9 0.1 0.0 0.0 0.0
Other Cost of service 0.0 2.3 4.0 13.1 11.7 17.0
------ ------ ------ ------ ------ --------
Total Cost of Service 44.6 44.7 69.0 96.3 102.0 127.2
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Dec 31 Dec 31
1998 1999
-------- --------
<S> <C> <C>
REVENUE
Access Revenue (Incl Promos) $488.5 $552.9
Airtime Revenue (Incl Promos) 386.4 423.3
Roaming Revenue 97.2 98.6
Other Network Features 95.0 112.0
Toll Revenue 0.0 0.0
-------- --------
Service Revenue Excl Data 1,067.1 1,186.9
Data Revenue 52.2 70.5
-------- --------
Service Revenue Incl Data 1,119.4 1,257.4
Promotions 39.2 36.8
-------- --------
Service Revenue Excl Promos 1,158.6 1,294.2
Other Revenues 20.8 24.7
- ------------------------------------------------------------------------------
Total Revenues (Excl. Equip Revenue) $1,179.4 $1,319.0
- ------------------------------------------------------------------------------
Customer Acquisition Costs
Equipment Revenues (57.1) (52.9)
Equipment Costs 103.6 95.7
-------- --------
Net Loss 46.5 42.8
Equipment Rental Revenues (15.0) (16.5)
Depreciation-Rental Equipment 20.0 22.7
Other Equipment Rental Costs 0.0 0.0
-------- --------
Net Rental Loss 5.0 6.2
Commissions 27.5 17.2
Advertising 40.1 44.9
Sales - Direct 72.8 75.6
- Indirect 2.6 2.1
- Stores 9.2 9.2
Other Acquisition Costs 6.9 7.1
-------- --------
Total Acquisition Costs Excl Promos 210.5 205.2
Promotions - Revenues 34.7 33.8
Total Acquisition Costs Incl Promos 245.2 239.0
Customer Retention Costs
Equipment Revenues (Excl Product Co.) 0.0 0.0
Equipment Costs (Excl Product Co.) 7.4 2.4
-------- --------
Net Margin 7.4 2.4
Retention - Marketing 5.3 6.0
Customer Services - Customer Loyalty Only 0.0 0.0
Other Retention Costs 3.0 2.7
-------- --------
Total Retention Costs Excl Promos 15.7 11.0
Promotions - Revenues 4.6 3.0
-------- --------
Total Retention Costs Incl Promos 20.2 14.1
Other Costs of Service
Operating Tax 5.1 5.9
Customer Services (Excl Customer Loyalty) 36.1 41.3
Financial Services 11.8 12.3
Toll Cost of Sales 0.0 0.0
Customer Base Support 33.7 34.7
Roamer Administration 15.4 18.1
Bad Debt Expense 29.8 33.4
Depreciation & Amortization 0.0 0.0
Other Cost of service 22.2 27.3
-------- --------
Total Cost of Service 154.2 173.0
</TABLE>
Page 6 of 8
<PAGE> 11
<TABLE>
DRAFT
CONTEL CELLULAR INC.
CONSOLIDATED STATEMENT OF OPERATIONS (CON'T)
- --------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<CAPTION>
Historical Outlook Projected
-------------------- ------- --------------------------------
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Systems Costs
Systems Operations 9.6 12.0 15.2 17.6 20.7 22.7
Facilities 12.1 15.3 23.6 34.3 42.3 50.6
Maintenance / Repair 3.9 4.7 7.6 12.2 14.9 18.1
Property Taxes 6.2 11.5 12.6 14.7 22.3 25.9
Leases 2.2 2.6 3.9 4.3 4.5 4.9
Depreciation & Amortization 48.5 61.7 84.6 101.7 125.7 141.1
------ ------ ------ ------ -------- --------
Total Systems Costs 82.6 107.8 147.6 184.9 230.4 263.3
Region Expenses
Engineering 5.2 7.0 7.7 10.6 11.5 12.2
Capitalized Engineering (4.9) (6.7) (6.8) (9.3) (10.1) (10.8)
Marketing 2.9 5.2 5.6 4.7 5.4 5.8
G & A 17.9 15.7 29.9 23.8 30.3 32.5
Regional Depreciation 0.9 1.0 1.8 1.7 2.1 2.4
------ ------ ------ ------ -------- --------
Total Regional Administration Expense 22.0 22.2 38.176 31.5 39.3 42.1
Headquarters Expenses
Engineering 3.6 3.9 6.0 7.5 7.5 7.6
Capitalized Engineering (2.0) (1.1) (1.3) (2.6) (2.6) (2.6)
Marketing 2.3 4.5 3.3 5.4 5.8 6.3
G & A 31.8 34.7 41.2 42.8 43.9 45.6
HQ Depreciation 4.1 3.1 1.1 1.0 1.4 1.6
------ ------ ------ ------ -------- --------
Total Headquarters Expenses 39.9 45.2 50.324 54.1 56.0 58.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (a) $265.4 $349.4 $470.9 $552.0 $636.3 $714.8
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income / (Loss) Before Amortization ($4.6) $19.5 $69.8 $156.3 $226.1 $303.0
Amortization of Franchise / Customers 37.0 36.6 30.6 34.4 34.4 34.3
Amortization of Goodwill 4.2 5.0 7.3 6.1 6.1 6.1
Operating Income / (Loss) ($45.8) ($22.1) $32.0 $115.9 $185.7 $262.6
Partnership Invest Income / (Loss) 29.0 37.4 50.9 58.1 58.4 58.8
Other Income / (Expense) 56.0 44.2 101.6 (5.2) (5.2) (5.2)
Interest Expenses 150.7 165.4 180.6 206.6 214.3 218.7
I.D.C. (2.6) (2.5) (2.5) (2.0) (1.8) (1.6)
------ ------ ------ ------ -------- --------
Net Interest 148.1 162.9 178.1 204.6 212.5 217.1
Partnership / Corp. Income / (Loss) (108.9) (103.5) 6.5 (35.8) 26.4 99.1
Partnership Minority Interest - Income / (Loss) 2.4 0.8 (6.5) (9.1) (13.2) (17.6)
------ ------ ------ ------ -------- --------
Pretax Income / (Loss) (106.5) (102.6) (0.0) (44.9) 13.2 81.5
State Income Taxes - Exp / (Cr.) 1.2 1.9 9.5 6.1 9.3 15.0
Fed Income Taxes - Exp / (Cr.) (34.7) (29.6) 2.4 (14.7) 4.7 26.6
------ ------ ------ ------ -------- --------
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCOME ($73.1) ($74.9) ($11.9) ($36.3) ($0.7) $39.9
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Revenues (Incl Equip) $287.0 $374.0 $550.8 $720.3 $882.4 $1,043.3
Total Operating Exp (Excl Equip Rev & Promos) 332.8 396.1 518.8 604.4 696.8 780.7
Operating Cash Flow 49.8 86.1 158.2 268.2 366.7 464.0
Operating Cash Flow Margin (% of Svc Rev Incl Promos) 19.3% 25.2% 31.1% 39.9% 44.9% 47.9%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Depreciation & Amortization
Depreciation - Network 48.5 61.7 84.6 101.7 125.7 141.1
Depreciation - Other 5.9 4.9 3.9 10.2 14.9 20.0
Amortization of Cust Purchase - Franchise 37.0 36.6 30.6 34.4 34.4 34.3
Amortization of Goodwill 4.2 5.0 7.3 6.1 6.1 6.1
------ ------ ------ ------ -------- --------
Total D&A $95.7 $108.2 $126.3 $152.4 $181.0 $201.4
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Dec 31 Dec 31
1998 1999
-------- --------
<S> <C> <C>
Systems Costs
Systems Operations 23.7 24.7
Facilities 61.3 68.3
Maintenance / Repair 19.5 20.7
Property Taxes 28.4 30.8
Leases 5.1 5.4
Depreciation & Amortization 150.6 159.9
-------- --------
Total Systems Costs 288.6 309.8
Region Expenses
Engineering 12.7 13.4
Capitalized Engineering (11.2) (11.8)
Marketing 6.2 6.6
G & A 34.7 36.6
Regional Depreciation 2.6 2.9
-------- --------
Total Regional Administration Expense 45.1 47.7
Headquarters Expenses
Engineering 8.4 9.4
Capitalized Engineering (2.9) (3.2)
Marketing 6.7 7.0
G & A 47.3 49.3
HQ Depreciation 1.8 2.0
-------- --------
Total Headquarters Expenses 61.3 64.5
- -------------------------------------------------------------------------------
Total Operating Expenses (a) $814.6 $848.1
- -------------------------------------------------------------------------------
Operating Income / (Loss) Before Amortization $364.8 $470.9
Amortization of Franchise / Customers 34.0 34.0
Amortization of Goodwill 6.1 6.1
Operating Income / (Loss) $324.7 $430.8
Partnership Invest Income / (Loss) 59.1 59.5
Other Income / (Expense) (5.4) (5.6)
Interest Expenses 207.6 190.9
I.D.C. (1.0) (1.0)
-------- --------
Net Interest 206.6 189.9
Partnership / Corp. Income / (Loss) 171.9 294.9
Partnership Minority Interest - Income / (Loss) (21.1) (27.3)
-------- --------
Pretax Income / (Loss) 150.8 267.6
State Income Taxes - Exp / (Cr.) 20.5 27.1
Fed Income Taxes - Exp / (Cr.) 48.8 87.4
-------- --------
- -------------------------------------------------------------------------------
NET INCOME $81.5 $153.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total Revenues (Incl Equip) $1,212.2 $1,351.5
Total Operating Exp (Excl Equip Rev & Promos) 887.5 920.7
Operating Cash Flow 539.8 658.4
Operating Cash Flow Margin (% of Svc Rev Incl Promos) 48.2% 52.4%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Depreciation & Amortization
Depreciation - Network 150.6 159.9
Depreciation - Other 24.4 27.6
Amortization of Cust Purchase - Franchise 34.0 34.0
Amortization of Goodwill 6.1 6.1
-------- --------
Total D&A $215.1 $227.6
- -------------------------------------------------------------------------------
</TABLE>
- ------------------------------------
(a) Netted for equipment revenues, excludes amortization and includes
promotional costs.
Page 7 of 8
<PAGE> 12
DRAFT
CONTEL CELLULAR INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
(dollars in millions except per share data and as otherwise stated)
<TABLE>
<CAPTION>
HISTORICAL OUTLOOK PROJECTED
---------- -------- ----------------------------------------------------
DEC 31 DEC 31 DEC 31 DEC 31 DEC 31 Dec 31 Dec 31
CASH FLOW FROM OPERATING ACTIVITIES 1993 1994 1995 1996 1997 1998 1999
---------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income ($74.9) ($11.9) ($36.3) ($0.7) $39.9 $81.5 $153.1
Total Depreciation 66.6 88.5 111.9 140.5 161.0 175.0 187.5
Total Amortization 41.6 37.8 40.5 40.5 40.4 40.1 40.1
Deferred Income Taxes 31.6 30.0 40.9 44.4 46.8 48.2 49.7
Provision for Losses on A/R (WC) 6.3 13.0 16.1 19.6 23.5 29.8 33.4
Gain on Sale of Investment , net 0.0 (112.6) 46.0 0.0 0.0 0.0 0.0
Income from Unconsolidated Partnerships (37.4) (50.9) (58.1) (58.4) (58.8) (59.1) (59.5)
Distribution from Unconsolidated Partnerships 13.3 25.9 30.1 57.7 61.5 70.5 65.6
Contributions to Limited Partnerships (5.0) (7.1) (6.2) (8.4) (10.0) (10.3) (9.1)
Contributions to Unconsolidated RSA's (6.4) 3.3 (3.8) (1.6) (1.5) (2.1) (3.0)
Minority Interest in Net Income (0.8) 6.5 9.1 13.2 17.6 21.1 27.3
Distributions to Minority Partners 0.0 (1.2) (3.0) (4.0) (5.0) (7.0) (10.0)
Interest Capitalized (IDC) (2.5) (2.5) (2.0) (1.8) (1.6) (1.0) (1.0)
Other Deferrals (Def Charges / Credits) 5.0 0.0 2.3 3.0 3.6 4.1 4.9
Other, net (Other Assets / Other) (3.9) 0.9 5.8 0.0 0.0 0.0 0.0
Change in Accounts Receivable (12.8) (26.2) (38.2) (39.1) (43.4) (50.2) (51.3)
Change in Inventory (3.6) 0.0 2.3 (1.8) (1.6) (2.7) 1.5
Change in Other Current Assets (1.9) (2.7) (0.8) (0.1) (0.1) (0.1) (0.1)
Change in Accrued Taxes 17.7 36.6 (19.6) 7.8 5.1 4.2 6.0
Change in Other Current Liabilities 88.4 (21.4) 28.3 2.1 2.4 5.5 (5.9)
------- ------- ------- ------- ------- ------- -------
Cash Flow from Operating Activity $121.2 $5.9 $165.3 $213.0 $279.8 $347.5 $429.3
CASH FLOW FROM INVESTING ACTIVITY
Capital Expenditures (165.1) (246.2) (297.6) (220.2) (157.6) (135.5) (145.0)
Capital Expenditures - Mega 13.0 0.0 0.0 0.0 0.0 0.0 0.0
Purchase of Cellular Interest 0.0 (125.8) (46.0) 0.0 0.0 0.0 0.0
Proceeds from Sale of Investment, Gross 0.0 159.0 0.0 0.0 0.0 0.0 0.0
Other, net (22.6) 0.0 (46.0) 0.0 0.0 0.0 0.0
------- ------- ------- ------- ------- ------- -------
Cash Flow From Investing Activity ($174.7) ($213.0) ($389.6) ($220.2) ($157.6) ($135.5) ($145.0)
</TABLE>
Page 8 of 8
<PAGE> 13
DRAFT
10 YEAR DCF
- --------------------------------------------------------------------------------
Summary Valuation (a)
Assuming Purchase 1/1/95, Exit 12/31/04
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
------ ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA (Consolidated Ops.) &
Other Income / (Expense) $710
Net Income Attributable to Minority
Interest (b) $ 17
Equity in Income of Uncnsl. Subs. (b) (c) $ 32
Free Cash Flow ($100) $122 $254 $337 $399 $365 $370 $396 $423 $467
</TABLE>
Present Value of Consolidated Operations -- Free Cash Flows
<TABLE>
<CAPTION>
12% 13% 14% 15%
------ ------ ------ ------
<S> <C> <C> <C>
$1,529 $1,452 $1,381 $1,314
</TABLE>
Present Value of Consolidated Operations -- Terminal Value
<TABLE>
<CAPTION>
12% 13% 14% 15%
------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
10 X $2,286 $2,092 $1,915 $1,755
EBITDA Multiple -- Consolidated Operations 11 X 2,515 2,301 2,107 1,931
12 X 2,743 2,510 2,298 2,106
</TABLE>
Incremental Present Value Adjustment
For Equity Investments and Minority Interests (Net)
<TABLE>
<CAPTION>
12% 13% 14% 15%
------ ----- ----- ------
<S> <C> <C> <C> <C> <C>
16 X $ 80 $ 73 $ 67 $ 61
P/E Multiple -- Equity and Minority Interests 18 X 90 82 75 69
20 X 100 92 84 77
</TABLE>
Mexican Interests
<TABLE>
<S> <C> <C> <C> <C>
10% Interest in 4.185 million gross POPs (d) $20 $20 $20 $20
</TABLE>
<TABLE>
<CAPTION>
Total Firm Value
-------------------------------------------------------------------------------------
12% 13% 14% 15%
------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
10X/16X $3,915 $3,637 $3,383 $3,151
EBITDA Multiple / P/E Multiple 11X/18X 4,153 3,856 3,583 3,334
12X/20X 4,392 4,074 3,783 3,517
Implied Equity Value Per Share
12% 13% 14% 15%
------ ------ ------ ------
10X/16X $18.01 $15.24 $12.69 $10.37
EBITDA Multiple / P/E Multiple 11X/18X 20.40 17.42 14.69 12.20
12X/20X 22.79 19.60 16.69 14.03
-------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------------------------------------
(a) Based on mid-year discounting of Free Cash Flow and year-end 2004
discounting of Exit Value.
(b) Taxed at assumed 40% rate.
(c) Discounted by 30% due to minority position.
(d) Value represents $48 per net POP.
(e) Based on 99.95 million shares and net debt of $2,114 million.
<PAGE> 14
DRAFT
10 YEAR DCF
- --------------------------------------------------------------------------------
Assumptions
<TABLE>
<CAPTION>
VALUATION ASSUMPTIONS TERMINAL VALUE CALCULATION (2004) -----
Net Debt (1/1/95): $2,114 EBITDA (Consolidated Ops.) (a) $710
Common Shares Outstanding: 99.95 Net Income Attributable to Minority Intr. (b) 17
Equity in Income of Uncnsl. Subs. (b) 46
Discount for Unc. Ops. (30%) (14)
-----
1995 1996 1997 1998 1999 2000 2001 2002
------ ----- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING ASSUMPTIONS
EBITDA Margin 37.9% 42.5% 45.6% 45.8% 49.9% 48.8% 48.7% 49.3%
Consolidated Subscribers (thousands) 1,057 1,345 1,612 1,898 2,089 2,160 2,231 2,276
Consolidated POPs 16.9 17.1 17.4 17.6 17.9 18.2 18.4 18.7
Penetration 6.3% 7.9% 9.3% 10.8% 11.7% 11.9% 12.1% 12.2%
Rev / Sub/ Month $63 $57 $54 $51 $50 $48 $47 $45
Churn 2.1% 1.9% 2.0% 2.3% 2.4% 2.0% 1.8% 1.7%
Cost per Gross Add $293 $298 $282 $269 $265 N/A N/A N/A
INCOME STATEMENT
Total Revenues $708 $862 $1,018 $1,179 $1,319 $1,364 $1,382 $1,380
EBITDA (Consolidated Ops.) $268 $367 $464 $540 $658 $665 $673 $681
Depreciation and Amortization (152) (181) (201) (215) (228) (233) (248) (270)
----- ----- ------ ------ ------ ------ ------ ------
EBIT (Consolidated Ops.) 116 186 263 325 431 432 425 411
Minority Interest (pre-tax) (9) (13) (18) (21) (27) (30) (30) (29)
Other Income / (Expense) (5) (5) (5) (5) (6) (6) (7) (7)
Equity in Income of Uncnsl. Subs. (pre-tax) 58 58 59 59 59 62 66 69
Interest Expense (205) (212) (217) (207) (190) (161) (130) (91)
----- ----- ------ ------ ------ ------ ------ ------
Pre-tax Income (44) 13 82 151 268 297 324 353
Income Tax 9 (14) (42) (69) (114) (116) (126) (138)
----- ----- ------ ------ ------ ------ ------ ------
Net Income ($36) ($1) $40 $81 $153 $181 $198 $215
FREE CASH FLOW
EBITDA (Consolidated Ops.) $268 $367 $464 $540 $658 $665 $673 $681
Other Income / (Expense) ($5) ($5) ($5) ($5) ($6) ($6) ($7) ($7)
Minority Interest (3) (4) (5) (7) (10) (15) (18) (20)
Cash Dividends from Uncnsl. Subs., net 20 48 50 58 54 32 39 45
Income Tax Expense (Net of Intr. Exp. Ded.) (73) (99) (128) (152) (190) (180) (178) (174)
Deferred Income Taxes 41 44 47 48 50 9 10 12
Capital Expenditures (298) (220) (158) (135) (145) (123) (135) (127)
Purchase of Cellular Interest (46) 0 0 0 0 0 0 0
Working Capital (28) (31) (38) (43) (50) (17) (14) (14)
Other Sources / (Uses) 24 23 27 34 38 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
Free Cash Flow ($100) $122 $254 $337 $399 $365 $370 $396
- --------------------------------------------------------------------------------------------------------------------------
SELECTED STATISTICS
Revenue Growth 21.8% 18.0% 15.9% 11.8% 3.4% 1.3% -0.2%
EBITDA Growth 36.7% 26.5% 16.3% 22.0% 1.0% 1.2% 1.2%
Free Cash Flow Growth 108.1% 32.6% 18.5% -8.7% 1.5% 6.9%
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
2003 2004
------ ------
<S> <C> <C>
OPERATING ASSUMPTIONS
EBITDA Margin 49.7% 49.7%
Consolidated Subscribers (thousands) 2,321 2,368
Consolidated POPs 19.0 19.3
Penetration 12.2% 12.3%
Rev / Sub/ Month $45 $45
Churn 1.6% 1.5%
Cost per Gross Add N/A N/A
INCOME STATEMENT
Total Revenues $1,412 $1,447
EBITDA (Consolidated Ops.) $702 $719
Depreciation and Amortization (294) (315)
------ ------
EBIT (Consolidated Ops.) 408 404
Minority Interest (pre-tax) (29) (28)
Other Income / (Expense) (8) (9)
Equity in Income of Uncnsl. Subs. (pre-tax) 73 77
Interest Expense (52) (8)
------ ------
Pre-tax Income 392 436
Income Tax (153) (170)
------ ------
Net Income $239 $266
FREE CASH FLOW
EBITDA (Consolidated Ops.) $702 $719
Other Income / (Expense) ($8) ($9)
Minority Interest (24) (30)
Cash Dividends from Uncnsl. Subs., net 52 59
Income Tax Expense (Net of Intr. Exp. Ded.) (174) (173)
Deferred Income Taxes 15 16
Capital Expenditures (126) (100)
Purchase of Cellular Interest 0 0
Working Capital (14) (15)
Other Sources / (Uses) 0 0
- --------------------------------------------------------------------
Free Cash Flow $423 $467
- --------------------------------------------------------------------
SELECTED STATISTICS
Revenue Growth 2.3% 2.4%
EBITDA Growth 3.1% 2.4%
Free Cash Flow Growth 7.0% 10.3%
</TABLE>
- --------------------------------------------------------
(a) Includes Other Income / (Expense).
(b) Based on 40% tax rate.
<PAGE> 16
<TABLE>
<CAPTION>
CONTEL CELLULAR INC.
Summary POP Valuation
Value per Controlled POP CCI POPs(thousands)
------------------------ -----------------------------
Non-
Rank Low High Controlled Controlled(a)
--------------- --- ---- ---------- -------------
<S> <C> <C> <C> <C> <C>
MSAs 1 to 25 $250 $350 0 4,319
MSAs 26 to 75 175 250 6,208 911
MSAs 76 to 125 150 200 4,909 552
MSAs 126 to 175 125 175 949 85
MSAs 176 to 225 125 150 299 2
MSAs 226 to 275 125 150 452 19
MSAs 276+ 75 125 227 0
------ -----
Total MSAs 13,044 5,887
RSAs 90 90 3,396 1,214(b)
------ -----
Total POPs 16,440 7,102
</TABLE>
<TABLE>
<CAPTION>
Total Value(millions)
---------------------------------------------------
Rank Low Mid High
--------------- ------- ------- ------
<S> <C> <C> <C> <C>
MSAs 1 to 25 $756 $907 $1,058
MSAs 26 to 75 1,198 1,455 1,711
MSAs 76 to 125 794 927 1,059
MSAs 126 to 175 126 151 177
MSAs 176 to 225 38 41 45
MSAs 226 to 275 58 64 70
MSAs 276+ 17 23 28
------- ------- -------
Total MSAs $2,987 $3,567 $4,148
RSAs 382 382 382
------- ------- -------
Total POPs $3,369 $3,950 $4,530
Mexico (10% interest in 4.185
million gross POPs)(c) $20 $20 $20
Net Debt as of 12/31/94(d) ($2,114) ($2,114) ($2,114)
------- ------- -------
Equity Value Per Share(e)
$12.76 $18.57 $24.38
======= ======= =======
</TABLE>
- ---------------------------------------------------------------------
(a) Non-Controlled POPs valued at a 30% discount to Controlled POPs.
(b) Includes Managed Non-Controlled RSA Interests.
(c) Value represents $48 per net POP.
(d) Net debt is based on projected notes payable to affiliates of $277.7
million and other long-term debt of $1,836.8 million. As of June 30,
1994, the net debt was $2,021.9 million. The increase during the second
half of 1994 includes additional acquisitions of cellular interests of
$104.1 million.
(e) Based on 99.95 million shares.
<PAGE> 17
CONTEL CELLULAR INC.
Controlled MSA Interests
<TABLE>
<CAPTION>
COMPANY 1993 COMPANY NET
MSA PERCENTAGE ESTIMATED POPULATION
MARKET RANK OWNERSHIP POPULATION EQUIVALENTS
- ------ ---- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Memphis, TN 36 100.00% 1,012,008 1,012,008
Louisville, KY 37 100.00% 920,274 920,274
Birmingham, AL 41 100.00% 892,251 892,251
Norfolk, VA 43 95.01% 1,002,659 952,626
Nashville, TN 46 100.00% 1,028,771 1,028,771
Richmond, VA 59 95.01% 777,882 739,066
Fresno, CA 74 92.00% 720,296 662,672
Knoxville, TN 79 94.12% 530,666 499,463
El Paso, TX 81 100.00% 637,347 637,347
Mobile, AL 83 100.00% 500,537 500,537
Johnson City, TN 85 100.00% 448,163 448,163
Chattanooga, TN 88 100.00% 443,405 443,405
Bakersfield, CA 97 92.00% 602,298 554,114
Davenport, IA 98 100.00% 359,895 359,895
Newport News, VA 104 95.01% 461,126 438,116
Huntsville, AL 115 100.00% 385,000 385,000
Lexington, KY 116 100.00% 361,754 361,754
Evansville, IN 119 88.87% 316,107 280,924
Pensacola, FL 127 100.00% 367,503 367,503
Rockford, IL 131 59.00% 296,872 175,154
Visalia, CA 150 92.00% 339,854 312,666
Roanoke, VA 157 40.00% 235,092 94,037
Clarksville, TN 209 100.00% 171,204 171,204
Tuscaloosa, AL 222 80.71% 158,062 127,580
Florence, AL 226 91.09% 135,917 123,807
Petersburg, VA 235 95.01% 128,356 121,951
Anniston, AL 249 100.00% 115,576 115,576
Gadaden, AL 272 90.00% 100,376 90,338
Las Cruces, NM 285 100.00% 148,349 148,349
Owensboro, KY 293 88.87% 88,897 79,003
----------
Total 13,043,554
</TABLE>
<PAGE> 18
CONTEL CELLULAR INC.
Non-Controlled MSA Interests
<TABLE>
<CAPTION>
COMPANY 1993 COMPANY NET
MSA PERCENTAGE ESTIMATED POPULATION
MARKET RANK OWNERSHIP POPULATION EQUIVALENTS
- ------ ---- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Los Angeles, CA 2 11.20% 14,588,139 1,633,872
San Francisco, CA 7 11.25% 3,796,944 427,278
Washington, DC 8 35.27% 3,761,200 1,326,575
Houston, TX 10 4.40% 3,811,914 167,724
Minneapolis, MN 15 30.00% 2,543,746 763,124
San Jose, CA 27 11.25% 1,535,755 172,772
San Antonio, TX 33 30.00% 1,359,688 407,906
Sacramento, CA 35 0.98% 1,474,137 14,417
Jacksonville, FL 51 14.24% 987,873 140,673
Greensville, SC 67 10.83% 665,263 72,048
Oxnard, CA 73 11.20% 693,427 77,664
Austin, TX 75 3.00% 850,163 25,505
Albuquerque, NM 86 49.00% 575,082 281,790
Beaumont, TX 101 4.40% 377,191 16,596
Stockton, CA 107 0.98% 513,887 5,026
Vallejo, CA 111 11.25% 489,403 55,058
Santa Rosa, CA 123 11.25% 408,734 45,983
Santa Barbara, CA 124 39.00% 379,225 147,898
Salina, CA 126 11.25% 371,326 41,774
Modesto, CA 142 0.98% 410,727 4,017
Galveston, TX 170 4.40% 231,790 10,199
Reno, NV 171 0.98% 276,787 2,713
Santa Cruz, CA 174 11.25% 230,629 25,946
Chico, CA 215 0.98% 194,127 1,899
Anderson, SC 227 10.83% 147,443 15,968
Redding, CA 254 0.98% 165,008 1,614
Uba City, CA 274 0.98% 132,827 1,299
---------
Total 5,887,338
</TABLE>
<PAGE> 19
CONTEL CELLULAR INC.
Controlled RSA Interests
<TABLE>
<CAPTION>
COMPANY 1993 COMPANY NET
PERCENTAGE ESTIMATED POPULATION
MARKET OWNERSHIP POPULATION EQUIVALENTS
- ------ ---------- ---------- -----------
<S> <C> <C> <C>
Alabama 1 100.00% 130,000 130,000
California 6 100.00% 28,461 28,461
California 7 100.00% 124,168 124,168
California 9 100.00% 139,220 139,220
Kentucky 2 100.00% 126,486 126,486
Kentucky 7 100.00% 163,006 163,006
Kentucky 11 100.00% 168,570 168,570
Tennessee 1 100.00% 293,481 293,481
Tennessee 2 100.00% 155,849 155,849
Tennessee 3 100.00% 323,052 323,052
Tennessee 5 100.00% 329,525 329,525
Tennessee 6 100.00% 152,984 152,984
Tennessee 7 100.00% 242,747 242,747
Tennessee 9 100.00% 64,034 64,034
Virginia 7 100.00% 38,037 38,037
Virginia 8 95.01% 82,763 78,633
Virginia 9 95.01% 84,841 80,607
Virginia 11 95.01% 107,777 102,399
Virginia 12 95.01% 32,445 30,826
California 12 92.00% 108,282 99,619
Illinois 1 91.50% 313,287 286,658
Virginia 5 77.00% 62,339 48,001
Texas 10 75.00% 29,089 21,817
New Mexico 6-1 71.43% 59,821 42,730
Virginia 3 51.00% 181,166 92,395
Virginia 4 51.00% 64,675 32,984
---------
Total 3,396,289
</TABLE>
<PAGE> 20
CONTEL CELLULAR INC.
Managed Non-Controlled RSA Interests
<TABLE>
<CAPTION>
COMPANY 1993 COMPANY NET
PERCENTAGE ESTIMATED POPULATION
MARKET OWNERSHIP POPULATION EQUIVALENTS
- ------ ---------- ---------- -----------
<S> <C> <C> <C>
Kentucky 1 50.00% 184,760 92,380
New Mexico 3 50.00% 76,635 38,318
New Mexico 5 43.00% 55,076 23,683
Iowa 4 38.10% 155,247 59,149
Indiana 7 38.09% 218,704 83,313
Indiana 8 38.09% 249,245 94,947
Indiana 9 38.09% 140,985 53,707
California 4 20.83% 333,324 69,431
Iowa 5 14.29% 108,129 15,452
-------
Total 530,380
</TABLE>
<PAGE> 21
CONTEL CELLULAR INC.
Non-Controlled RSA Interests
<TABLE>
<CAPTION>
COMPANY 1993 COMPANY NET
PERCENTAGE ESTIMATED POPULATION
MARKET OWNERSHIP POPULATION EQUIVALENTS
- ------ ---------- ---------- -----------
<S> <C> <C> <C>
New Mexico 1 44.44% 245,584 109,138
Illinois 8 41.13% 330,684 136,010
Illinois 9 41.13% 152,441 62,699
Illinois 2 40.00% 144,909 57,964
California 5 39.00% 222,879 86,923
California 3 27.73% 139,271 38,620
Alabama 1 33.33% 164,672 54,891
California 1 16.67% 209,466 34,918
New Mexico 6-II 12.50% 119,673 14,959
Illinois 3 11.77% 203,742 23,980
Virginia 6 10.00% 208,667 20,867
Minnesota 1 6.60% 50,623 3,341
Minnesota 2 6.60% 62,163 4,103
Minnesota 3 6.60% 57,287 3,781
Minnesota 5 6.60% 202,723 13,380
Minnesota 6 6.60% 241,382 15,931
Virginia 10 1.00% 225,479 2,255
Pennsylvania 3 0.10% 95,651 96
Pennsylvania 4 0.10% 96,721 97
-------
Total 683,953
</TABLE>
<PAGE> 22
CONTEL CELLULAR INC.
Adjustments to August 31, 1994 Summary of Interests in MSAs and RSAs
Divestiture of all interest in:
Binghamton, NY
Burlington, VT
Elmira, NY
Vermont RSAs 1 and 2
North Carolina RSA 1
New Hampshire RSA 2
New York RSA 2 and 3
Acquisition of interests in:
Huntsville, AL with net POPs of 515,000 (assumed to give control)
-- Assumed 385,000 POPs in MSA 115 and 130,000 in Alabama RSA 2
Does not include California RSA 4 acquisition since expenditures for this
acquisition are not expected until 1995.
<PAGE> 23
SUMMARY DATA POINTS IN DETERMINING PRIVATE MARKET VALUE RANGES
<TABLE>
<CAPTION>
----------------------------------------------------------------------
VALUE RANGES UTILIZED:
----------------------------------------------------------------------
Value per POP CCI POPs (thousands)
---------------- --------------------
MSA Rank Low High Control Minority
---------- --- ---- ------- --------
<S> <C> <C> <C> <C>
1 to 25 $250 $350 0 4,319
26 to 75 175 250 6,208 911
76 to 125 150 200 4,909 552
126 to 175 125 175 949 85
176 to 225 125 150 299 2
226 to 275 125 150 452 19
276+ 75 125 227 0
------ -----
Total MSA 13,044 5,888
RSAs 90 90 3,396 1,214
------ -----
Total POPs 16,440 7,102
</TABLE>
Ranges were derived using subjective determination of value by Merrill Lynch and
PaineWebber (including research analyst data), with such subjective valuation
reflective of recent data points related to value.
The boxes on the right hand side of this sheet represent empirical evidence
related to private market values.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
GENERAL M&A DATA POINTS (a)
- ----------------------------------------------------------------------------------------------
Target Market Cap/
Acquiror MSA POP (d) Markets - Total POPs
- ---------- ----------- --------------------
<S> <C> <C>
DC / Baltimore of SBC Comm. $321 Upper Tier (MSAs #10 and #16)
CGE
LIN Broadcasting $348 Upper Tier (98% in top 10 markets)
(Trading Value)(c)
McCaw Cellular $330 Upper & Middle Tier
(AT&T) (78% in top 75 MSA rank)
Cellular Communications $315 Upper & Middle Tier
(Trading Value)(c) (78% in top 75 MSA rank)
Dallas - GTE $285 Upper Tier (MSA #9)
Southwestern Bell
Associated Communications $189 Middle Tier
Southwestern Bell (97% in top 75 MSA rank)
C-Tec $167 Middle Tier
Crown (40% in 26-75 MSA rank; 43% RSAs)
Celutel Inc. $132 Lower Tier (56% in 76-125 MSA rank,
Century Telephone 44% in MSA ranks of 126 and above)
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
GTE/CCI M&A DATA POINTS(b)
- --------------------------------------------------------------------------
Market Cap/ Percent Ownership/
Market POP Acquired or Sold
- ------ ----------- ------------------
<S> <C> <C>
MSAs:
Manchester, NH. MSA 133 $187 60% - Sold
Fort Smith, AR. MSA 166 $194 60% - Sold
Fayetteville, AR. MSA 182 $183 90% - Sold
Burlington, NC. MSA 280 $113 100% - Acquired
RSAs:
Alaska -RSA 316 $102 50% - Sold
California - RSA 339 $180 79% - Acquired
Oregon - RSA 610 $103 67% - Sold
Tennessee - RSA 644 $67 100% - Acquired
Tennessee - RSA 645 $62 51% - Acquired
Tennessee - RSA 648 $118 100% - Acquired
Tennessee - RSA 651 $130 100% - Acquired
</TABLE>
- ----------------------------------------------------------------
(a) Represent M&A transactions over the last two years.
(b) Selected GTE/CCI M&A transactions, with data provided by GTE.
(c) Subject to a private market value guarantee.
(d) RSAs valued at $90 per POP.
<PAGE> 24
SUMMARY DATA POINTS IN DETERMINING PRIVATE MARKET VALUE RANGES
- --------------------------------------------------------------------------------
Ranges were derived using subjective determinations of value by
Merrill Lynch and PaineWebber (including input from research analysts),
with such subjective valuation reflective of recent data
points related to value.
<TABLE>
<CAPTION>
REPRESENTATIVE TRANSACTIONS
--------------------------------------------------------------------------------------
Celutel Inc. Associated Communications
--------------------------------------- ------------------------------------------
Value per POP POPs (thousands) Implied Value (MM$) POPs (thousands) Implied Value (MM$)
------------- ------------------ ------------------- ------------------- -------------------
MSA Rank Low High Control Mnrty.(a) Low High Control Mnrty.(a) Low High
---------- ---- ---- ------- --------- ---- ---- ------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 25 $250 $350 0 0 $0 $0 0 900 $157 $220
26 to 75 175 250 0 0 0 0 2,584 0 452 646
76 to 125 150 200 625 0 94 125 0 0 0 0
126 to 175 125 175 211 0 26 37 0 0 0 0
176 to 225 125 150 180 0 22 27 0 0 0 0
226 to 275 125 150 95 0 12 14 120 0 15 18
276+ 75 125 0 0 0 0 0 0 0 0
RSAs 90 90 0 0 0 0 0 0 0 0
---- ---- ---- ----
Total Implied Value $154 $203 $625 $884
Actual Transaction Value $147 $680
</TABLE>
<TABLE>
<CAPTION>
MobileNet / CCI Acquisitions and Dispositions C-TEC
--------------------------------------------- ---------------------------------------
Value per POP POPs (thousands) Implied Value (MM$) POPs (thousands) Implied Value (MM$)
------------- ------------------ ------------------------- ------------------ -------------------
MSA Rank Low High Control Mnrty.(a) Low High Control Mnrty.(a) Low High
---------- ---- ---- ------- --------- ---- ---- ------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 25 $250 $350 0 344 $60 $84 0 0 $0 $0
26 to 75 175 250 0 134 16 23 513 27 93 133
76 to 125 150 200 0 174 18 24 0 32 3 4
126 to 175 125 175 335 145 55 76 0 0 0 0
176 to 225 125 150 193 5 25 29 0 0 0 0
226 to 275 125 150 0 0 0 0 124 0 15 19
276+ 75 125 100 10 8 13 86 0 6 11
RSAs 90 90 1,259 817 165 165 558 19 51 51
---- ---- ---- ----
Total Implied Value $347 $416 $170 $218
Actual Transaction Value $403 $183
</TABLE>
- --------------------------------------------------------------------
(a) Minority POPs are valued at a 30% discount to Control POPs.
<PAGE> 25
CELLULAR TRANSACTION ANALYSIS
WASHINGTON, DC AND BALTIMORE AREA PROPERTIES OF SBC COMMUNICATIONS
Provides useful data point for valuation of Upper Tier MSAs.
<TABLE>
<CAPTION>
TRANSACTION NET TV PER TV PER
DATE ACQUIROR VALUE POPs POP MSA POP(a)
- --------- ---------------------------------- ----------- ------- ------ -----------
<S> <C> <C> <C> <C> <C>
COMPAGNIE GENERALE DES EAUX
10/11/94 (INDIRECTLY) $215 725,282 $296 $323
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE
OF
MSA NET TOTAL NET
RANK MARKET OWNERSHIP POPs POPs
- ------ ---------------------------------------- --------- ----------- ----------
<S> <C> <C> <C> <C>
10 Washington, DC 10.0% 391,334
16 Baltimore 10.0% 250,574
-------
SUBTOTAL MSA RANK 1-26 POPs 641,907
TOTAL MSA POPs 641,907 88.5%
Virginia RSA 10 10.0% 23,337
Virginia RSA 11 10.0% 25,314
Virginia RSA 12 10.0% 17,770
West Virginia RSA 4 10.0% 16,954
-------
TOTAL RSA POPs 83,375 11.5%
TOTAL POPs 725,282
</TABLE>
- ---------------
(a) Assumes $90 per RSA POP.
<PAGE> 26
CELLULAR TRANSACTION ANALYSIS
LIN BROADCASTING CORPORATION(a)
Provides useful data point for valuation of Upper Tier MSAs. Although LIN
Broadcasting information is based on public multiples,
such valuation should reflect private market valuation
as a result of McCaw's buyout option.
<TABLE>
<CAPTION>
PRICE PER SHARES OUTSTANDING MARKET MARKET CAP MARKET CAP
DATE SHARE (IN MILLIONS) CAPITALIZATION PER POP PER MSA POP(a)
- ------- --------- -------------------------------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
8/19/94 $129.00 52.4 $9,689 $344 $348
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
MSA RANK MARKET OWNERSHIP NET POPs TOTAL NET POPs
<S> <C> <C> <C> <C>
1 New York 98.33% 14,690,045
2 Los Angeles 39.97% 5,830,879
4 Philadelphia 49.99% 2,447,048
6 Dallas-Fort Worth 60.44% 2,539,650
8 Houston 56.25% 2,144,202
----------
SUBTOTAL MSA RANK 1-25 POPs 27,651,824 98.3%
168 Galveston-Texas City 34.30% 79,514
----------
SUBTOTAL MSA RANK 126-175 POPs 79,514 0.3%
TOTAL MSA POPs 27,731,338 98.6%
----------
Connecticut RSA 1 100.00% 177,241
Texas RSA 17 100.00% 230,209
TOTAL RSA POPs 407,450 1.4%
----------
TOTAL POPs 28,138,788 100.0%
----------
</TABLE>
- ---------------
(a) Assumes $90 per RSA POP.
<PAGE> 27
CELLULAR TRANSACTION ANALYSIS
MCCAW CELLULAR COMMUNICATIONS
Provides useful data point for valuation of Upper and Middle Tier MSAs
<TABLE>
<CAPTION>
TRANSACTION NET TV PER TV PER
DATE ACQUIROR VALUE POPS POP MSA POP(a)
- ---------- -------- ----------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C>
8/16/93 AT&T $19,482.2 59,826,710 $326 $330
(Pending)
</TABLE>
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
- -------- ----------------------------------- --------- ---------- --------------
<S> <C> <C> <C> <C>
1 New York, NY (b) 48.9% 7,318,004
2 Los Angeles, CA (b) 21.0% 3,061,838
4 Philadelphia, PA (b) 26.2% 1,288,008
6 Dallas, TX (b) 54.3% 2,289,687
9 San Francisco, CA 50.0% 1,881,654
10 Houston, TX (b) 29.5% 1,074,200
11 Miami, FL 100.0% 3,332,680
14 Minneapolis/St. Paul, MN/WI 100.0% 2,516,992
15 St. Louis, MO/IL 15.0% 367,816
18 Seattle/Everett, WA 100.0% 2,081,016
19 Pittsburgh, PA 64.3% 1,334,188
20 Tampa, FL 100.0% 2,063,801
21 Denver, CO 100.0% 1,927,888
24 San Jose, CA 50.0% 770,095
25 Kansas City, MO/KN 50.0% 739,426
----------
SUBTOTAL MSA RANK 1 - 25 POPs 32,047,294 53.6%
27 Portland, OR/WA 100.0% 1,473,434
29 Sacramento, CA 100.0% 1,437,441
30 San Antonio, TX 100.0% 1,358,318
33 Orlando, FL 100.0% 1,182,341
34 Buffalo, NY 25.0% 294,698
36 Salt Lake City, UT 100.0% 1,138,550
42 Jacksonville, FL 100.0% 972,985
43 Oklahoma City, OK 100.0% 956,362
45 West Palm Beach, FL 100.0% 927,926
49 Austin, TX 100.0% 850,714
52 Las Vegas, NV 100.0% 844,197
</TABLE>
<PAGE> 28
CELLULAR TRANSACTION ANALYSIS
MCCAW CELLULAR COMMUNICATIONS
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPs TOTAL NET POPs
- -------- ----------------------------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
59 Tulsa, OK 100.0% 756,223
61 Worcester, MA 9.4% 67,464
63 Fresno, CA 100.0% 702,820
66 Oxnard/Simi Valley, CA 97.6% 681,956
71 N.E. Pennsylvania 34.3% 221,807
73 Tacoma, WA 100.0% 616,272
----------
SUBTOTAL MSA RANK 26 - 75 POPs 14,483,508 24.2%
83 Little Rock, AR 89.7% 469,561
84 Stockton, CA 100.0% 514,449
92 Vallejo/Fairfield, CA 50.0% 240,217
99 Colorado Springs, CO 100.0% 436,133
100 Melbourne, FL 91.1% 395,600
103 Lakeland, FL 93.0% 394,252
106 Santa Rosa, CA 45.3% 184,700
109 Daytona Beach, FL 100.0% 402,992
110 Modesto, CA 95.7% 380,369
113 Santa Barbara, CA 81.7% 313,776
116 Shreveport, LA 97.5% 368,817
117 Salinas/Seaside, CA 49.4% 182,582
118 Spokane, WA 88.2% 324,826
123 Corpus Christi, TX 91.0% 322,537
----------
SUBTOTAL MSA RANK 76 - 125 POPs 4,930,811 8.2%
130 Visalia/Tulare, CA 92.2% 301,261
140 Sarasota, FL 83.5% 248,377
143 Salem, OR 91.5% 263,620
144 Eugene/Springfield, OR 100.0% 287,855
149 Erie, PA 88.3% 243,645
150 Fort Pierce, FL 100.0% 275,807
151 Provo/Orem, UT 92.6% 254,888
153 Reno, NV 88.3% 242,050
156 Killeen/Temple, TX 100.0% 265,517
159 Tallahasse, FL 100.0% 259,588
164 Anchorage, AK 87.2% 208,736
166 Johnstown, FL 100.0% 237,263
168 Bradenton, FL 90.1% 206,667
172 Fort Smith, AR/OK 100.0% 223,365
173 Galveston, TX (b) 18.2% 40,341
----------
SUBTOTAL MSA RANK 126 - 175 POPs 3,558,980 5.9%
</TABLE>
<PAGE> 29
CELLULAR TRANSACTION ANALYSIS
MCCAW CELLULAR COMMUNICATIONS
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPs TOTAL NET POPs
- -------- ----------------------------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
177 Fayetteville, AR 100.0% 219,210
178 Boise City, ID 88.0% 191,172
179 Lafeyette, LA 87.2% 186,635
182 Ocala, FL 87.3% 184,600
184 Bremerton, WA 95.7% 195,853
186 St. Cloud, MN 69.3% 136,963
187 Fort Collins, CO 89.9% 176,502
188 Yakima, WA 92.8% 180,191
190 Waco, WA 100.0% 193,303
191 Topeka, KS 10.2% 19,705
204 Olympia, WA 86.2% 148,356
208 Longview/Marshall, TX 100.0% 164,541
215 Wheeling, WV/OH 84.2% 131,621
219 Redding, CA 87.1% 133,403
220 Richland, WA 100.0% 152,226
222 Medford, OR 90.8% 137,195
----------
SUBTOTAL MSA RANK 176 - 225 POPs 2,551,476 4.3%
230 Monroe, LA 80.0% 115,006
239 Texarkana, AR/TX 89.3% 121,144
242 Greeley, CO 86.8% 116,431
245 Bellingham, WA 87.3% 116,803
252 Bryan/Col. St., TX 100.0% 129,576
255 Yuba City, CA 94.4% 119,457
259 Pueblo, CO 75.0% 92,076
----------
SUBTOTAL MSA RANK 226 - 275 POPs 810,493 1.4%
278 Rochester, MN 84.1% 92,114
289 St. Joseph, MO 45.5% 44,138
291 Sherman/Denison, TX 100.0% 95,957
296 Lawrence, KS 50.0% 42,618
297 Pine Bluff, AR 80.8% 68,500
----------
SUBTOTAL MSA RANK 275+ POPs 343,327 0.6%
TOTAL MSA POPs 58,725,889 98.2%
California RSA 4 25.0% 80,684
California RSA 8 100.0% 94,382
Colorado RSA 3 91.5% 222,777
</TABLE>
<PAGE> 30
CELLULAR TRANSACTION ANALYSIS
MCCAW CELLULAR COMMUNICATIONS
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MARKET OWNERSHIP POPS TOTAL NET POPS
- ----------------------------------------- --------- ----------- --------------
<S> <C> <C> <C>
Hawaii RSA 2 100.0% 108,675
Minnesota RSA 3 100.0% 56,179
Utah RSA 1 100.0% 112,515
Washington RSA 1 100.0% 238,251
Washington RSA 5 20.0% 21,286
Washington RSA 6 100.0% 166,072
TOTAL RSA POPs 1,100,821 1.8%
TOTAL POPs 59,826,710 100.0%
</TABLE>
- ---------------
(a) Assumes $90 per RSA POP.
(b) Represents McCaw's proportionate interest in a LIN Broadcasting POP, at the
time of announcement.
<PAGE> 31
CELLULAR TRANSACTION ANALYSIS
CELLULAR COMMUNICATIONS INC.
Provides useful data point for valuation of Upper and Middle Tier MSAs.
Although Cellular Communications information is based on public
multiples, such valuation should reflect private market
valuation as a result of AirTouch's 1997
private market guarantee.
<TABLE>
<CAPTION>
PRICE
PER SHARES OUTSTANDING MARKET MARKET CAP MARKET CAP
DATE SHARE (IN MILLIONS) CAPITALIZATION PER POP PER MSA POP(a)
- ------- -------- -------------------------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
8/19/94 $54.00 42.5 $2,422 $308 $315
<CAPTION>
PERCENTAGE OF
MSA RANK MARKET OWNERSHIP NET POPS TOTAL NET POPs
<S> <C> <C> <C> <C>
5 Detroit-Ann Arbor 50.00% 2,298,465
23 Cleveland 50.00% 923,303
----------
SUBTOTAL MSA RANK 1 - 25 POPs 3,221,768 41.0%
26 Cincinnati 50.00% 747,341
32 Columbus 50.00% 635,800
51 Dayton 50.00% 427,304
57 Toledo 50.00% 394,979
62 Grand Rapids 50.00% 359,345
69 Akron 50.00% 336,808
----------
SUBTOTAL MSA RANK 26 - 75 POPs 2,901,577 36.9%
87 Flint 50.00% 252,016
89 Lansing-East Lansing 50.00% 250,041
110 Saginaw-Bay City Midland 50.00% 201,166
111 Canton 50.00% 200,194
----------
SUBTOTAL MSA RANK 76 - 125 POPs 903,417 11.5%
136 Hamilton-Middletown 50.00% 154,378
152 Lorain-Elyria 50.00% 138,291
----------
SUBTOTAL MSA RANK 126 - 175 POPs 292,669 3.7%
178 Lima 50.00% 110,268
197 Muskegon 19.46% 36,153
198 Springfield 45.28% 83,824
----------
SUBTOTAL MSA RANK 176 - 225 POPs 230,245 2.9%
256 Mansfield 50.00% 63,295
----------
SUBTOTAL MSA RANK 226 - 275 POPs 63,295 0.8%
TOTAL MSA POPs 7,612,971 96.9%
----------
Ohio RSA 3 50.00% 50,725
Ohio RSA 4 50.00% 109,344
Ohio RSA 8 50.00% 83,485
TOTAL RSA POPs 243,554 3.1%
----------
TOTAL POPs 7,856,525 100.0%
----------
</TABLE>
- ---------------
(a) Assumes $90 per RSA POP.
<PAGE> 32
CELLULAR TRANSACTION ANALYSIS
DALLAS, TEXAS PROPERTIES OF GTE MOBILNET (MSA RANK 9)
Provides useful data point for valuation of Upper Tier MSAs.
<TABLE>
<CAPTION>
NET TRANSACTION TV PER
DATE ACQUIROR POPS VALUE POP
- ------- --------------------------------------------------- ------- ----------- ------
<S> <C> <C> <C> <C>
Dec-93 Southwestern Bell 421,744 $120 $285
</TABLE>
<PAGE> 33
CELLULAR TRANSACTION ANALYSIS
ASSOCIATED COMMUNICATIONS
Provides useful data point for valuation of Middle Tier MSAs (tax free
stock transaction)
<TABLE>
<CAPTION>
TRANSACTION NET TV PER
DATE ACQUIROR VALUE POPS POP
- -------- ------------------------------------------- ----------- --------- --------------
<S> <C> <C> <C> <C>
2/25/94 Southwestern Bell $ 680.0 3,604,062 $189
</TABLE>
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
- -------- ------------------------------------------- ----------- --------- --------------
<S> <C> <C> <C> <C>
9 San Francisco, CA 3.0% 112,899
19 Pittsburgh, PA 35.7% 740,754
24 San Jose, CA 3.0% 46,206
---------
SUBTOTAL MSA RANK 1-25 POPs 899,859 25.0%
34 Buffalo, NY 75.0% 884,093
40 Rochester, NY 85.7% 863,632
53 Albany, NY 100.0% 836,265
---------
SUBTOTAL MSA RANK 26-75 POPs 2,583,990 71.7%
260 Glen Falls, NY 100.0% 120,213
---------
SUBTOTAL MSA RANK 226-275 POPs 120,213 3.3%
TOTAl POPs 3,604,062 100.0%
---------
</TABLE>
<PAGE> 34
CELLULAR TRANSACTION ANALYSIS
C-TEC CORPORATION
Provides useful data point for valuation of Middle and Lower Tier MSAs and RSAs
<TABLE>
<CAPTION>
TRANSACTION NET TV PER TV PER
DATE ACQUIROR VALUE POPs POP MSA POP(a)
- ---------- ----------------------- ----------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
4/5/94 INDEPENDENT CELLULAR $ 182.5 1,359,148 $134 $167
(Pending)
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPs TOTAL NET POPs
-------- ---------------------------- --------- --------- --------------
<S> <C> <C> <C> <C>
56 NEPA Partnership 79.0% 513,000
58 Allentown, PA 4.0% 27,200
---------
SUBTOTAL MSA RANK 26-75 POPs 540,200 39.7%
118 Reading, PA 10.0% 32,000
---------
SUBTOTAL MSA RANK 76-125 POPs 32,000 2.4%
259 Center County, PA 100.0% 123,786
---------
SUBTOTAL MSA RANK 226-275 POPs 123,786 9.1%
296 Iowa City, IA 89.9% 85,500
---------
SUBTOTAL MSA RANK 275+ POPs 85,500 6.3%
TOTAL MSA POPs 781,486 57.5%
---------
Pennsylvania RSA 4 100.0% 28,076
Pennsylvania RSA 5 28.6% 19,354
Pennsylvania RSA 5 83.3% 28,000
Iowa RSAs 3, 4, 6 & 11 100.0% 502,232
TOTAL RSA POPs 577,662 42.5%
---------
TOTAL POPs 1,359,148 100.0%
---------
</TABLE>
- ---------------
(a) Assumes $90 per RSA POP.
<PAGE> 35
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
CELUTEL INC.
Provides useful data point for valuation of Lower Tier MSAs
<TABLE>
<CAPTION>
TRANSACTION NET TV PER
DATE ACQUIROR VALUE POPS POP
- -------- --------------------------------- ----------- --------- ----------
<S> <C> <C> <C> <C>
8/19/93 CENTURY TELEPHONE ENTERPRISES $146.8 1,110,687 $132
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
- -------- --------------------------------- ----------- --------- --------------
<S> <C> <C> <C> <C>
105 McAllen/Edinburg, TX 67.3% 276,491
108 Jackson, MS 86.1% 348,416
---------
SUBTOTAL MSA RANK 76 - 125 POPS 624,907 56.3%
154 Brownsville/Harlingen, TX 77.4% 211,142
---------
SUBTOTAL MSA RANK 126 - 175 POPS 211,142 19.0%
181 Biloxi/Gulfport, MS 84.8% 179,825
---------
SUBTOTAL MSA RANK 176 - 225 POPS 179,825 16.2%
272 Pascagoula, MS 82.6% 94,813
---------
SUBTOTAL MSA RANK 226 - 275 POPS 94,813 8.5%
--------------------------------
TOTAL POPS 1,110,687 100.0%
--------------------------------
</TABLE>
<PAGE> 36
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
MOBILENET / CCI ACQUISITIONS AND DISPOSITIONS
Provides useful data points for valuation of MSA and RSA
markets on a market by market basis.
<TABLE>
<CAPTION>
MSA / GTEM / Sold / Net Proceeds
Rank (a) RSA Market CCI Acq'd. Date Ownership POPs Per POP
- -------- ----- ----------------- ------ ------ ------ --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7 MSA SAN FRANCISCO, CA CCI Acq'd Mar-93 0.06% 2,378 *
16 MSA CLEVELAND, OH GTEM Acq'd 1992 10.00% 341,389 *
------------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) MSA RANK 1 - 25 POP VALUE *
MEDIAN (POP WEIGHTED) MSA RANK 1 - 25 POP VALUE *
------------------------------------------------------------------------------------------
30 MSA PORTLAND, OR GTEM Acq'd 1992 3.70% 95,000 *
61 MSA CHARLOTTE, NC GTEM Sold 1992 5.00% 39,014 *
------------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) MSA RANK 26 - 75 POP VALUE *
MEDIAN (POP WEIGHTED) MSA RANK 26 - 75 POP VALUE *
------------------------------------------------------------------------------------------
112 MSA CORPUS CHRISTI, TX GTEM Sold 1992 49.00% 174,312 *
------------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) MSA RANK 76 - 125 POP VALUE *
MEDIAN (POP WEIGHTED) MSA RANK 76 - 125 POP VALUE *
------------------------------------------------------------------------------------------
133 MSA MANCHESTER, NH CCI Sold Jan-94 60.00% 201,777 *
144/151 MSA ORANGE/POUGHKEEPSIE, NY CCI Sold Dec-93 25.00% 145,350 *
155 MSA SAVANNAH, GA GTEM Acq'd Mar-93 0.30% 794 *
166 MSA FORT SMITH, AR CCI Sold 1992 60.00% 133,184 *
------------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) MSA RANK 126 - 175 POP VALUE *
MEDIAN (POP WEIGHTED) MSA RANK 126 - 175 POP VALUE *
------------------------------------------------------------------------------------------
</TABLE>
- ------------
* Pursuant to 17 CFR 240. 24B-2, Confidential Information has been omitted
and has been filed separately with the Securities and Exchange Commission.
<PAGE> 37
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
MOBILENET / CCI ACQUISITIONS AND DISPOSITIONS
<TABLE>
<CAPTION>
MSA / GTEM / Sold / Net Proceeds
Rank (a) RSA Market CCI Acq'd. Date Ownership POPs Per POP
- --------- ----- --------------- ------ ------ ------ --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
182 MSA FAYETTEVILLE, AR CCI Sold 1992 89.90% 193,126 *
222 MSA TUSCALOOSA, AL CCI Acq'd Feb-93 0.35% 541 *
222 MSA TUSCALOOSA, AL CCI Acq'd Mar-93 1.74% 2,692 *
222 MSA TUSCALOOSA, AL CCI Acq'd Apr-93 0.71% 1,098 *
222 MSA TUSCALOOSA, AL CCI Acq'd Apr-94 0.35% 560 *
------------------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) MSA RANK 176 - 225 POP VALUE *
MEDIAN (POP WEIGHTED) MSA RANK 176 - 225 POP VALUE *
------------------------------------------------------------------------------------------------
280 MSA BURLINGTON, NC GTEM Acq'd Mar-93 90.98% 99,854 *
280 MSA BURLINGTON, NC GTEM Acq'd Sep-93 4.75% 5,213 *
280 MSA BURLINGTON, NC GTEM Acq'd Dec-93 4.27% 4,687 *
-----------------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) MSA RANK 275+ POP VALUE *
MEDIAN (POP WEIGHTED) MSA RANK 275+ POP VALUE *
-----------------------------------------------------------------------------------------------
307 RSA ALABAMA 1 CCI Acq'd Jun-94 8.33% 13,725 *
307 RSA Partition of ALABAMA RSA 1 CCI Sold Apr-93 52,130 *
313 RSA ALABAMA 7 (Butler cnty only) CCI Sold 1992 100.00% 22,113 *
316 RSA ALASKA (Matanuska) GTEM Sold Mar-93 50.00% 23,692 *
319 RSA ARIZONA 2 CCI Sold Dec-93 25.00% 54,025 *
320 RSA ARIZONA 3 CCI Sold Dec-93 39.47% 55,895 *
321 RSA ARIZONA 4 CCI Sold Dec-93 25.00% 31,700 *
323 RSA ARIZONA 6 CCI Sold Dec-93 30.00% 49,500 *
324 RSA ARKANSAS 1 CCI Sold 1992 57.22% 17,603 *
331 RSA ARKANSAS 8 CCI Sold 1992 57.22% 36,695 *
339 RSA CALIFORNIA 4 CCI Acq'd 79.20% 263,900 * (c)
389 RSA IDAHO 2 CCI Sold Sep-93 19.70% 11,978 *
390 RSA IDAHO 3 CCI Sold Sep-93 33.33% 4,917 *
391 RSA IDAHO 4 CCI Sold 1992 25.00% 30,267 *
392 RSA IDAHO 5 CCI Sold 1992 14.29% 20,713 *
409/10/11 RSAs INDIANA 7/8/9 (b) CCI Acq'd May-94 3.09% 18,840 *
</TABLE>
- ------------
* Pursuant to 17 CFR 240. 24B-2, Confidential Information has been omitted and
has been filed separately with the Securities and Exchange Commission.
<PAGE> 38
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
MOBILENET / CCI ACQUISITIONS AND DISPOSITIONS
<TABLE>
<CAPTION>
MSA / GTEM/ Sold / Net Proceeds
Rank (a) RSA Market CCI Acq'd. Date Ownership POPs Per POP
-------- ----- ---------------- ----- ------- ------ --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
412 RSA IOWA 1 CCI Sold Jan-94 7.07% 4,354 *
413 RSA IOWA 2 CCI Sold Sep-93 33.00% 16,665 *
415 RSA IOWA 4 (b) CCI Acq'd 21.00% 31,000 * (c)
416 RSA IOWA 5 (b) CCI Acq'd 79.00% 84,000 * (c)
418 RSA IOWA 7 CCI Sold Sep-93 6.67% 3,571 *
419 RSA IOWA 8 CCI Sold May-94 16.67% 9,110 *
421 RSA IOWA 10 CCI Sold Sep-93 5.25% 9,539 *
425 RSA IOWA 14 CCI Sold May-94 5.66% 6,028 *
425 RSA IOWA 14 GTEM Sold May-94 5.66% 6,028 *
485 RSA MINNESOTA 4 CCI Sold Sep-93 50.00% 6,850 *
488 RSA MINNESOTA 7 CCI Sold Aug-93 6.25% 10,992 *
489 RSA MINNESOTA 8 CCI Sold Aug-93 10.00% 8,780 *
490 RSA MINNESOTA 9 GTEM Sold Aug-93 6.67% 3,888 *
490 RSA MINNESOTA 9 CCI Sold Aug-93 6.67% 8,851 *
491 RSA MINNESOTA 10 GTEM Sold Aug-93 6.25% 14,041 *
491 RSA MINNESOTA 10 CCI Sold Aug-93 6.25% 14,044 *
492 RSA MINNESOTA 11 GTEM Sold Sep-93 4.78% 9,576 *
492 RSA MINNESOTA 11 CCI Sold Sep-93 7.34% 14,702 *
535-540 RSA NEBRASKA 3,5,6,8 GTEM Sold 1992 8.58% 36,854 *
561 RSA NEW YORK 3 CCI Acq'd Feb-93 2.50% 11,911 *
582 RSA NORTH DAKOTA 3 CCI Sold Sep-93 7.69% 7,075 *
599 RSA OKLAHOMA 4 CCI Sold 1992 66.67% 127,708 *
609 RSA OREGON 4 GTEM Sold Sep-93 20.00% 41,041 *
610 RSA OREGON 5 CCI Sold May-94 66.67% 164,764 *
638 RSA SOUTH DAKOTA 581 CCI Sold Dec-93 33.33% 4,301 *
639 RSA SOUTH DAKOTA 681 CCI Sold Dec-93 14.29% 5,079 *
644 RSA TENNESSEE 2 CCI Acq'd Jan-94 100.00% 155,849 *
645 RSA TENNESSEE 3 CCI Acq'd Jan-94 51.00% 164,757 *
648 RSA TENNESSEE 6 CCI Acq'd Jun-93 100.00% 146,237 *
651 RSA TENNESSEE 9 CCI Acq'd Dec-93 100.00% 56,182 *
668 RSA TEXAS 17 GTEM Acq'd Aug-93 4.94% 11,288 *
</TABLE>
- ---------------
* Pursuant to 17 CFR 240. 24B-2, Confidential Information has been omitted and
has been filed separately with the Securities and Exchange Commission.
<PAGE> 39
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
MOBILENET / CCI ACQUISITIONS AND DISPOSITIONS
<TABLE>
<CAPTION>
MSA / GTEM / Sold / Net Proceeds
Rank (a) RSA Market CCI Acq'd. Date Ownership POPs Per POP
- -------- ----- ------------ ------ ------- ------ --------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
693 RSA WASHINGTON 1 CCI Sold Sep-93 20.00% 47,660 *
694 RSA WASHINGTON 2 CCI Sold Sep-93 33.33% 38,629 *
695 RSA WASHINGTON 3 CCI Sold Sep-93 33.33% 15,665 *
696 RSA WASHINGTON 4 CCI Sold Nov-93 20.00% 52,200 *
699 RSA WASHINGTON 7 GTEM Sold Sep-93 75.00% 19,009 *
------------------------------------------------------------------------------------
MEAN (POP WEIGHTED) RSA POP VALUE *
MEDIAN (POP WEIGHTED) RSA POP VALUE *
------------------------------------------------------------------------------------
OTHER TRANSACTIONS
CALIFORNIA (San Fran) GTEM Acq'd Apr-93 0.36% 24,481 *
Acq'd Nov-93 0.13% 8,840 *
120 MSA HUNTSVILLE, AL CCI Acq'd 100.00% 390,000
308 RSA ALABAMA 2 CCI Acq'd 100.00% 125,000
------- ----
515,000 * (c)
289 MSA RAPID CITY, SD CCI Sold Dec-93 100.00%
638 RSA SOUTH DAKOTA 582 CCI Sold Dec-93 33.33%
639 RSA SOUTH DAKOTA 682 CCI Sold Dec-93 14.29% ------- ----
119,890 *
</TABLE>
- ----------------------------------------------------------------------------
(a) SOURCE: 1993 CELLULAR TELEPHONE ATLAS, PAUL KAGAN ASSOCIATES, INC.
(b) PART OF RAPID CITY SWAP TRANSACTION.
(c) PRICE/POP IS MAXIMUM ACQUISITION PRICE INCLUDED IN STRATEGIC REQUISITION.
* Pursuant to 17 CFR 240. 24B-2, Confidential Information has been omitted
and has been filed separately with the Securities and Exchange Commission.
<PAGE> 40
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
U S WEST NEW VECTOR
<TABLE>
<CAPTION>
TRANSACTION NET TV PER TV PER
DATE ACQUIROR VALUE POPS POP MSA POP (a)
- -------- -------------------------------- ----------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C>
11/20/90 U S West $ 2,388.1 16,845,900 $142 $146
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
- -------- -------------------------------- ----------- ---------- --------------
15 Minneapolis, MN 69.0% 1,673,500
18 San Diego, CA 100.0% 2,512,300
19 Denver, CO 100.0% 1,896,700
20 Seattle, WA 44.6% 1,427,600
----------
SUBTOTAL MSA RANK 1 - 25 POPS 7,510,100 44.6%
26 Phoenix, AZ 100.0% 2,118,500
30 Portland, OR 7.6% 106,200
39 Salt Lake City, UT 100.0% 1,115,800
65 Omaha, NE 93.8% 590,600
----------
SUBTOTAL MSA RANK 26 - 75 POPS 3,931,100 23.3%
77 Tucson, AZ 70.6% 463,000
82 Tacoma, WA 73.6% 423,400
86 Albuquerque, NM 51.0% 290,300
102 Des Moines, IA 76.0% 303,800
109 Spokane, WA 100.0% 360,300
117 Colorado Springs, CO 69.5% 289,800
----------
SUBTOTAL MSA RANK 76 - 125 POPS 2,130,600 12.6%
135 Eugene, OR 70.5% 193,800
141 Duluth, MN 51.0% 122,500
148 Salem, OR 7.6% 21,000
159 Provo, UT 100.0% 245,100
----------
SUBTOTAL MSA RANK 126 - 175 POPS 582,400 3.5%
</TABLE>
<PAGE> 41
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
U S WEST NEW VECTOR
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
- -------- -------------------------------- --------- ---------- --------------
<S> <C> <C> <C> <C>
176 Springfield, IL 12.7% 24,500
190 Boise, ID 100.0% 205,900
196 Champaign-Urbana, IL 12.7% 21,800
210 Fort Collins, CO 90.0% 167,100
212 Bremerton, WA 73.6% 141,500
221 Fargo, ND 51.0% 76,400
----------
SUBTOTAL MSA RANK 176 - 225 POPS 637,200 3.8%
230 Decatur, IL 12.7% 15,500
241 Pueblo, CO 34.0% 43,400
242 Olympia, WA 63.8% 104,400
243 Greely, CO 67.5% 92,800
250 Bloomington, IL 12.7% 15,900
267 Sioux Falls, SD 51.0% 65,500
270 Bellingham, WA 100.0% 123,400
----------
SUBTOTAL MSA RANK 226 - 275 POPS 460,900 2.7%
276 Grand Forks, ND 51.0% 53,200
297 Great Falls, MI 70.0% 54,200
298 Bismark, ND 80.0% 69,200
299 Casper, WY 100.0% 63,300
----------
SUBTOTAL MSA RANK 275+ POPS 239,900 1.4%
----------------------------------
TOTAL MSA POPS 15,492,200 92.0%
----------------------------------
Arizona 2 16.7% 33,200
Arizona 3 25.0% 35,000
Arizona 4 25.0% 27,900
Arizona 5 14.0% 12,900
Arizona 6 30.0% 48,100
Colorado 3 38.5% 86,500
Idaho 1 50.0% 100,500
Idaho 2 16.7% 9,800
Idaho 3 33.3% 4,800
Idaho 4 25.0% 30,300
Idaho 5 14.3% 20,700
Idaho 6 16.7% 44,900
</TABLE>
<PAGE> 42
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
U S WEST NEW VECTOR
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
- -------- --------------- --------- ------ --------------
<S> <C> <C> <C> <C>
Illinois 2 2.5% 6,400
Illinois 4 0.1% 200
Illinois 5 12.7% 12,100
Illinois 6 7.7% 15,700
Illinois 7 7.7% 18,600
Iowa 1 7.2% 4,600
Iowa 2 33.2% 17,300
Iowa 7 13.3% 7,300
Iowa 8 8.3% 4,900
Iowa 10 22.6% 41,100
Iowa 11 7.2% 8,100
Iowa 14 5.6% 6,300
Iowa 15 6.7% 5,700
Iowa 16 8.3% 8,700
Minnesota 1 25.0% 12,700
Minnesota 2 11.1% 6,700
Minnesota 3 11.1% 6,300
Minnesota 4 50.0% 7,400
Minnesota 5 4.4% 9,200
Minnesota 6 5.9% 14,100
Minnesota 7 6.3% 10,600
Minnesota 8 10.0% 7,200
Minnesota 9 6.7% 9,300
Minnesota 10 6.3% 13,900
Minnesota 11 7.1% 14,400
Nebraska 1 8.1% 7,700
Nebraska 2 8.1% 2,700
Nebraska 3 6.0% 7,200
Nebraska 4 8.1% 3,100
Nebraska 5 7.4% 10,700
Nebraska 6 5.1% 5,300
Nebraska 7 9.0% 8,000
Nebraska 8 4.9% 3,000
Nebraska 9 1.7% 1,500
Nebraska 10 1.7% 1,500
New Mexico 4 W 57.1% 66,000
New Mexico 4 E 14.3% 16,100
New Mexico 6 II 12.5% 14,800
</TABLE>
<PAGE> 43
CELLULAR TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
U S WEST NEW VECTOR
<TABLE>
<CAPTION>
NET PERCENTAGE OF
MSA RANK MARKET OWNERSHIP POPS TOTAL NET POPS
-------- ---------------- ---------- ------ --------------
<S> <C> <C> <C> <C>
North Dakota 3 7.7% 7,700
North Dakota 4 16.7% 12,900
North Dakota 5 25.0% 13,800
Oregon 2 W 16.7% 8,600
Oregon 2 E 16.7% 1,700
Oregon 3 11.1% 15,700
Oregon 4 12.0% 23,600
Oregon 6 25.0% 39,600
South Dakota 1 14.0% 8,600
South Dakota 2 14.3% 3,600
South Dakota 3 16.7% 9,400
South Dakota 5 A 33.3% 3,800
South Dakota 5 B 33.3% 5,000
South Dakota 6 A 14.3% 700
South Dakota 6 B 14.3% 5,000
South Dakota 7 14.3% 9,600
South Dakota 8 12.5% 9,000
South Dakota 9 16.7% 15,000
Utah 1 25.0% 27,500
Utah 2 50.0% 15,100
Utah 3 16.7% 8,400
Utah 4 50.0% 35,100
Utah 6 20.0% 4,900
Washington 1 29.4% 64,500
Washington 3 33.3% 15,900
Washington 4 20.0% 20,400
Washington 8 20.0% 21,400
Wyoming 4 50.0% 64,200
Wyoming 5 100.0% 12,000
----------------------------
TOTAL RSA POPS 1,353,700 8.0%
----------------------------
----------------------------
TOTAL POPS 16,845,900 100.0%
----------------------------
</TABLE>
- ---------------------------------------
(a) Assumes $90 per RSA POP.
<PAGE> 44
RELEVANT ISSUES RELATING TO ACORN VALUATION
- - Acorn's markets are concentrated in areas with relatively weak
demographics.
<TABLE>
<CAPTION>
CONTROLLED MSAs
----------------------------------------
# OF MARKETS Above # OF MARKETS BELOW
U.S. AVERAGE U.S. AVERAGE
------------------ ------------------
<S> <C> <C>
Population Density 8 26
Household Income 3 31
Traffic Density 5 29
</TABLE>
- - Acorn's markets have a relatively high percentage of RSAs, which will
in general not achieve the penetration of larger MSA markets, and
hence have reduced value.
<TABLE>
<CAPTION>
COMPANY % RSA POPs
----------------------- ----------
<S> <C>
LIN Broadcasting 1%
Cellular Communications 3%
McCaw Cellular 3%
GTE Mobilnet 7%
Vanguard Cellular 11%
Centennial Cellular 16%
ACORN 20%
U.S. Cellular 64%
</TABLE>
<PAGE> 45
RELEVANT ISSUES RELATING TO ACORN VALUATION
- - Acorn's holdings of non-control interests, which typically carry a
valuation discount of approximately 25 to 33%, are relatively high.
<TABLE>
<CAPTION>
MINORITY INTEREST POPs
AS A PERCENTAGE OF NET POPs
---------------------------
<S> <C>
Cellular Communications 0.5%(1)
McCaw Cellular 3.8%(2)
Vanguard Cellular 7.2%
GTE Mobilnet 8.0%
U.S. Cellular 15.8%
Centennial Cellular 19.2%
LIN Broadcasting 29.7%
ACORN 30.2%
</TABLE>
- --------------------
(1) Includes as control POPs all Air Touch/CCI Joint Venture control POPs.
(2) Includes as control POPs all Air Touch/McCaw Joint Venture control POPs.
<PAGE> 46
RELEVANT ISSUES RELATING TO ACORN VALUATION
- -------------------------------------------------------------------------------
- - Given its portfolio of properties, Acorn's current penetration is
relatively low.
<TABLE>
<CAPTION>
REVENUE/SUBSCRIBER/ OPERATING CASH FLOW
COMPANY PENETRATION MONTH MARGIN
----------------------- ----------- ------------------- -------------------
<S> <C> <C> <C>
GTE Mobilnet 4.2% NA NA
Cellular Communications 3.4% $65 NA
LIN Broadcasting 3.4% $80 48%
McCaw Cellular 3.3% $78 41%
ACORN 2.4% $65 38%
Vanguard Cellular 2.3% $63 24%
U.S. Cellular 1.2% $72 23%
Centennial Cellular 0.9% $78 51%
</TABLE>
- - Acorn's POPs clearly have weaker standing than those of GTE.
<TABLE>
<CAPTION>
ACORN GTE MOBILNET
------------------------------------- ---------------------------------------
MSA RANK MAJORITY % MINORITY % MAJORITY % MINORITY %
---------- -------- ----- -------- ----- -------- ----- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 25 0 0.0% 4,319 18.3% 12,704 44.0% 1,463 5.1%
26 to 75 6,208 26.4% 911 3.9% 4,590 15.9% 159 0.6%
76 to 125 4,909 20.9% 552 2.3% 3,998 13.9% 55 0.2%
126 to 175 949 4.0% 85 0.4% 2,220 7.7% 17 0.1%
176 to 225 299 1.3% 2 0.0% 424 1.5% 61 0.2%
226 to 275 452 1.9% 19 0.1% 623 2.2% 64 0.2%
276+ 227 1.0% 0 0.0% 327 1.1% 17 0.1%
------ ---- ----- ---- ------ ---- ----- ---
Total MSA POPs 13,044 55.4% 5,887 25.0% 24,886 86.2% 1,834 6.4%
RSAs 3,396 14.4% 1,214 5.2% 1,678 5.8% 462 1.6%
------ ---- ----- ---- ------ ---- ----- ---
Total POPs 16,440 69.8% 7,102 30.2% 26,564 92.0% 2,296 8.0%
</TABLE>
<PAGE> 47
RELEVANT ISSUES RELATING TO ACORN VALUATION
- -------------------------------------------------------------------------------
- - Looking out into the future, the wireless industry is expected to
undergo significant changes related to increased competition. Due to
these factors, as well as a general maturation of the business,
Acorn's growth in operating results is expected to slow significantly
beyond 1999.
-- PCS buildout by late 1997/early 1998.
-- ESMR ubiquitous coverage by 1999.
-- Growth in importance of national brand names.
- - Because of the characteristics of Acorn's POPs, when examining per POP
valuation parameters, it is imperative that its properties be valued on
a market by market basis. We find no market evidence to rebut the
following ranges:
<TABLE>
<CAPTION>
VALUE PER POP
-----------------------
MSA RANK LOW HIGH
---------- ---- ----
<S> <C> <C>
1 to 25 $250 $350
26 to 75 175 250
76 to 125 150 200
126 to 175 125 175
176 to 225 125 150
226 to 275 125 150
276+ 75 125
RSAs 90 90
</TABLE>
<PAGE> 48
PRELIMINARY CONTEL CELLULAR VALUATION FRAMEWORK
- -------------------------------------------------------------------------------
MSA MARKET REVEIW
<TABLE>
<CAPTION>
MAJORITY MSA POPs MINORITY MSA POPs
--------------------- -----------------------
NET POPs % OF TOTAL NET POPs % OF TOTAL
MSA RANKING (000s) MAJORITY (000s) MINORITY
------------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
1-25 0 0.0% 4,484 74.6%
26-75 6,793 51.7 729 12.1
76-125 3,870 29.5 592 9.8
126-175 1,167 8.9 185 3.1
176-225 296 2.2 3 0.1
226-275 638 4.9 17 0.3
276-300 369 2.8 0 0.0
------ ---- ----- ----
Total 13,133 100% 6,010 100%
====== ==== ===== ====
% of Total MSA POPs 68.6% 31.4%
</TABLE>
<PAGE> 49
PRELIMINARY CONTEL CELLULAR VALUATION FRAMEWORK
- -------------------------------------------------------------------------------
MSA MARKET REVEIW
<TABLE>
<CAPTION>
MARKET PROFILE
------------------------------------------------
MAJORITY MSA POPs MINORITY MSA POPs
---------------------- ----------------------
# MARKETS # MARKETS # MARKETS # MARKETS
ABOVE U.S. BELOW U.S. ABOVE U.S. BELOW U.S.
STATISTIC AVERAGE AVERAGE AVERAGE AVERAGE
------------------------------------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1992 POPs/Square Mile 8 26 14 15
1990-1995 POP Growth 13 21 25 4
% of Household Income in Excess of $50,000 3 31 14 15
High Profile POPs as % of Employee Base 13 21 15 14
Local Interstate Traffic Density 5 29 12 17
--- --- --- ---
Total 42 128 80 65
=== === === ===
</TABLE>
<PAGE> 50
PRELIMINARY CONTEL CELLULAR VALUATION FRAMEWORK
- -------------------------------------------------------------------------------
MSA MARKET REVIEW (13.1mm MAJORITY MSA POPs)
<TABLE>
<CAPTION>
1992 1990-1995 HIGH LOCAL
POPs/ ---------------------- % HH PROFILE INTERSTATE
CCXLA MSA 1992 SQUARE POP RETAIL SALES INC. MEDIAN POPs % TRAFFIC
MARKET NET POPs RANK TOTAL POPs MILE GROWTH GROWTH >$50K HH INC. EMP BASE DENSITY
- -------------------- -------- ---- ---------- ------- ------ ------------ ----- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(000's) (000's)
Nashville, TN 1,030 38 1,030 250 1.45% 3.71% 21.7% $28,799 21.0% 37,446
Norfolk, VA 975 39 1,015 755 1.99% 6.32% 20.0% $28,442 25.4% 68,673
Memphis, TN 1,006 41 1,006 434 1.04% 2.92% 18.3% $24,901 21.3% 37,240
Louisville, KS 903 47 903 641 0.04% 7.32% 16.2% $25,998 18.1% 40,050
Birmingham, AL 884 48 884 260 0.45% 6.44% 16.7% $24,633 25.7% 33,973
Richmond, VA 731 58 762 357 1.49% 3.95% 25.7% $32,912 25.8% 35,892
Fresno, CA 647 63 702 117 2.58% 6.62% 21.9% $27,326 24.6% 22,411
El Paso, TX 619 72 619 610 2.25% 7.38% 12.2% $20,884 17.9% 19,142
Bakersfield, CA 532 78 575 71 2.95% 6.19% 22.9% $28,797 22.2% 24,986
Knoxville, TN 483 85 510 314 0.59% 3.17% 17.1% $24,356 13.6% 45,378
Mobile, AL 488 89 488 171 0.68% 6.69% 15.8% $24,007 22.2% 25,499
Newport News, VA 429 95 448 712 1.60% 4.69% 18.0% $27,191 15.3% 43,572
Johnson City, TN 438 97 438 152 0.09% 3.28% 12.8% $22,887 12.0% 19,667
Chattanooga, TN 437 98 437 208 0.57% 2.59% 14.2% $23,845 17.4% 31,009
Lexington, KY 358 120 358 239 0.93% 8.22% 17.3% $24,886 17.3% 24,441
Pensacola, FL 357 122 357 210 1.48% 7.06% 18.8% $26,150 20.9% 30,529
Davenport, LA 348 124 348 203 (0.69%) 7.96% 20.7% $30,615 15.5% 13,304
Manchester, NH 201 127 348 397 1.80% 3.51% 36.4% $39,598 17.2% 42,295
Visalia, CA 301 130 327 68 2.45% 4.10% 13.6% $22,105 20.4% 0
Evansville, IN 279 134 311 158 0.06% 5.36% 15.1% $25,809 14.9% 5,910
Binghamton, NY 125 136 305 149 0.10% 4.30% 22.3% $29,430 12.8% 16,311
Rockford, IL 169 145 285 358 0.28% 6.21% 20.5% $31,185 10.9% 21,151
Roanoke, VA 92 169 230 194 0.15% 6.94% 15.3% $25,773 22.8% 29,056
Clarksville, TN 176 202 176 137 0.95% 3.98% 11.0% $21,086 15.9% 12,514
Tuscaloosa, AL 120 216 153 114 0.79% 5.39% 11.9% $20,449 19.1% 20,139
Las Cruces, NM 146 228 146 37 2.76% 5.08% 10.8% $18,273 21.5% 8,984
Burlington, VT 141 232 141 224 1.40% 2.39% 26.4% $31,921 17.6% 17,507
Florence, AL 120 248 131 105 (0.12%) 6.44% 12.2% $22,411 13.3% 0
Petersburg, VA 116 257 126 155 0.16% 6.04% 16.9% $26,669 15.9% 19,579
Anniston, AL 116 267 116 191 0.17% 6.67% 9.6% $20,765 10.7% 20,302
Rapid City, SD 107 280 107 17 1.54% 9.28% 15.6% $24,273 20.6% 7,620
Gadsden, AL 90 288 100 184 (0.12%) 5.13% 8.0% $18,290 13.3% 9,940
Elmira, NY 95 293 95 233 0.25% 2.16% 14.5% $24,953 13.8% 0
Owensboro, KY 78 294 87 188 0.00% 7.28% 11.6% $22,824 18.5% 0
- -----------------------------------------------------------------------------------------------------------------------------------
CCXLA weighted avg.
based on total pops 229 0.98% 4.27% 15.7% $22,486 16.6% 23,304
% Above/(Below) Avg. (30.5%) (14.4%) (27.5%) (36.4%) (27.0%) (17.6%) (40.6%)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 51
PRELIMINARY CONTEL CELLULAR VALUATION FRAMEWORK
- -------------------------------------------------------------------------------
MSA MARKET REVIEW (6.0mm MINORITY MSA POPs)
<TABLE>
<CAPTION>
1992 1990-1995 HIGH LOCAL
POPs/ ---------------------- % HH PROFILE INTERSTATE
CCXLA MSA 1992 SQUARE POP RETAIL SALES INC. MEDIAN POPs % TRAFFIC
MARKET NET POPs RANK TOTAL POPs MILE GROWTH GROWTH >$50K HH INC. EMP BASE DENSITY
- -------------------- -------- ---- ---------- ------- ------ ------------ ----- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(000's) (000's)
Los Angeles, CA 1,634 2 14,438 449 2.07% 6.54% 30.8% $33,853 18.5% 81,298
Washington, DC 1,341 8 3,791 1,350 1.78% 3.62% 44.0% $45,118 23.0% 102,876
San Francisco, CA 421 9 3,772 1,520 1.16% 6.42% 36.6% $38,443 27.9% 125,423
Houston, TX 160 10 3,572 529 1.12% 6.18% 22.9% $30,631 23.4% 91,974
Minneapolis, MN 755 14 2,519 546 1.66% 7.91% 26.7% $33,800 18.1% 43,187
San Jose, CA 172 24 1,536 1,188 1.28% 4.64% 44.9% $45,662 11.8% 128,258
Sacramento, CA 14 29 1,432 421 2.83% 6.23% 27.6% $32,012 22.6% 42,237
San Antonio, TX 408 30 1,352 537 1.92% 7.97% 15.5% $23,888 22.3% 40,760
Jacksonville, FL 132 42 970 301 2.40% 6.08% 21.5% $27,623 26.1% 37,165
Austin, TX 26 49 818 292 2.36% 8.53% 20.9% $26,784 22.5% 46,600
Oxnard, CA 78 65 696 374 2.03% 6.99% 38.1% $40,320 19.6% 0
Greenville, SC 72 69 656 311 1.16% 4.35% 14.0% $24,709 25.2% 26,315
Albuquerque, NM 277 79 572 117 2.57% 7.11% 15.9% $24,392 21.5% 32,423
Stockton, CA 5 84 503 356 2.33% 6.28% 21.4% $27,627 22.5% 33,585
Vallejo, CA 54 92 479 304 3.08% 5.59% 25.6% $32,781 19.6% 61,191
Santa Rosa, CA 46 106 408 254 2.57% 7.43% 29.3% $33,505 22.6% 0
Modesto, CA 4 110 395 262 3.32% 5.24% 19.1% $26,446 18.0% 22,047
Santa Barbara, CA 150 113 379 138 1.28% 5.22% 29.3% $32,650 19.0% 0
Salinas, CA 41 117 373 113 2.41% 6.14% 26.1% $31,878 19.6% 0
Beaumont, TX 16 121 357 162 -0.60% 6.40% 20.1% $29,410 18.7% 29,858
Orange County, NY 80 132 319 386 1.86% 4.04% 26.7% $33,407 18.9% 29,872
Reno, NV 3 153 266 42 2.27% 9.13% 24.1% $30,460 21.1% 25,472
Poughkeepsie, NY 66 158 266 330 1.18% 6.43% 35.1% $38,897 13.3% 39,558
Santa Cruz, CA 27 165 237 532 1.68% 7.42% 31.0% $33,294 15.1% 0
Galveston, TX 10 173 220 551 0.61% 6.10% 21.0% $29,177 20.3% 40,689
Chico, CA 2 195 189 115 1.82% 6.03% 11.9% $20,435 16.4% 0
Redding, CA 2 219 156 41 2.95% 4.42% 15.1% $23,280 22.3% 18,814
Anderson, SC 16 226 148 205 0.81% 5.25% 12.3% $24,627 11.6% 24,136
Yuba City, CA 1 255 127 102 1.69% 6.01% 16.4% $23,312 20.7% 0
- ----------------------------------------------------------------------------------------------------------------------------------
CCXLA weighted avg.
based on total pops 743 1.82% 6.38% 31.0% $34,938 21.6% 76,100
% Above/(Below) Avg. 125.8% 59.4% 8.2% 25.6% 13.4% 7.4% 85.4%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 52
GTE MOBILE COMMUNICATIONS BENCHMARKING
CUSTOMERS
(000s)
<TABLE>
<CAPTION>
McCaw NYNEX AirTouch Sprint BellSouth USWest Bell Atlantic SW Bell Ameritech GTE PCS GTE MN CCI
----- ----- ------- ------ --------- ------ ------------- ------- --------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1Q93 1,439 410 774 428 1,524 435 753 1,513 646 1,156 804 352
2Q93 1,558 445 857 484 1,650 475 821 1,643 698 1,254 865 389
3Q93 1,695 486 934 539 1,769 517 893 1,777 755 1,364 930 434
4Q93 1,934 575 1,046 652 1,990 601 1,039 2,049 860 1,585 1,064 521
1Q94 2,117 644 1,131 725 2,144 665 1,148 2,206 949 1,718 1,150 568
2Q94 2,259 736 1,221 811 2,292 738 1,300 2,425 1,039 1,878 1,256 622
</TABLE>
<PAGE> 53
GTE MOBILE COMMUNICATIONS BENCHMARKING
ANNUAL CUSTOMER GROWTH (%)
<TABLE>
<CAPTION>
McCaw NYNEX AirTouch Sprint BellSouth USWest Bell Atlantic SW Bell Ameritech GTE PCS GTE MN CCI
----- ----- -------- ------ --------- ------ ------------- ------- --------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1Q93 30.8% 26.9% 34.4% 53.2% 43.2% 32.9% 40.1% 47.9% 30.8% 33.9% 31.8% 38.8%
2Q93 34.0% 29.2% 38.7% 52.3% 37.2% 33.3% 42.3% 47.6% 38.8% 36.3% 33.2% 43.4%
3Q93 35.4% 34.7% 42.4% 57.8% 37.1% 35.9% 44.7% 45.5% 44.9% 39.7% 35.7% 49.3%
4Q93 41.6% 47.0% 44.7% 66.5% 39.2% 45.0% 48.8% 45.0% 46.8% 45.4% 39.6% 59.0%
1Q94 47.1% 57.3% 46.1% 69.4% 40.7% 53.0% 52.5% 45.8% 46.9% 48.6% 43.1% 61.3%
2Q94 45.0% 65.4% 42.5% 67.5% 39.0% 55.4% 58.3% 47.6% 48.9% 49.7% 45.3% 59.6%
</TABLE>
<PAGE> 54
GTE MOBILE COMMUNICATIONS BENCHMARKING
PENETRATION (%)
<TABLE>
<CAPTION>
McCaw NYNEX AirTouch Sprint BellSouth USWest Bell Atlantic SW Bell Ameritech GTE PCS GTE MN CCI
----- ----- -------- ------ --------- ------ ------------- ------- --------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1Q93 2.4% 2.1% 2.4% 2.3% 3.2% 2.2% 2.2% 4.2% 3.0% 2.4% 2.3% 2.0%
2Q93 2.6% 2.4% 2.6% 2.6% 3.3% 2.4% 2.4% 4.6% 3.2% 2.6% 2.9% 2.2%
3Q93 2.8% 2.5% 2.8% 2.9% 3.6% 3.0% 2.6% 4.9% 3.4% 2.9% 3.1% 2.5%
4Q93 3.1% 2.8% 3.1% 3.1% 4.0% 3.3% 2.9% 5.9% 3.9% 3.3% 3.5% 2.9%
1Q94 3.4% 3.3% 3.2% 3.5% 4.3% 3.6% 3.3% 6.4% 4.3% 3.5% 3.8% 3.2%
2Q94 3.7% 3.6% 3.5% 3.9% 4.6% 4.1% 3.7% 6.9% 4.7% 3.9% 4.1% 3.5%
</TABLE>
<PAGE> 55
GTE MOBILE COMMUNICATIONS BENCHMARKING
REV/COST/MONTH
<TABLE>
<CAPTION>
McCaw NYNEX AirTouch Sprint BellSouth USWest GTE PCS GTE MN CCI
----- ----- -------- ------ --------- ------ ------- ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1Q93 84 75 88 70 75 74 70 70 70
2Q93 89 83 90 77 76 79 72 72 74
3Q93 87 83 86 74 73 78 71 70 73
4Q93 84 81 85 68 71 74 68 68 68
1Q94 81 77 79 69 68 70 67 68 67
2Q94 83 86 81 74 70 73 70 69 71
</TABLE>
<PAGE> 56
GTE MOBILE COMMUNICATIONS BENCHMARKING
OPERATING CASH FLOW MARGIN
<TABLE>
<CAPTION>
McCaw NYNEX AirTouch Sprint BellSouth USWEST GTE PCS GTE MN CCI
----- ----- -------- ------ --------- ------ ------- ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1Q93 45.1% 31.4% 41.0% 21.8% 40.8% 27.4% 35.1% 39.8% 24.2%
2Q93 47.0% 33.1% 44.9% 24.7% 41.6% 26.8% 38.0% 40.6% 32.5%
3Q93 47.6% 32.6% 46.5% 27.2% 41.4% 30.6% 38.5% 41.4% 32.2%
4Q93 40.6% 21.5% 38.2% 19.4% 40.9% 20.1% 23.8% 28.8% 13.3%
1Q94 40.8% 20.9% 46.1% 24.5% 42.8% 25.4% 33.7% 37.4% 26.2%
2Q94 41.5% 19.2% 46.7% 27.5% 44.6% 30.7% 38.9% 41.2% 34.2%
</TABLE>
<PAGE> 57
CONTEL CELLULAR
- -------------------------------------------------------------------------------
COMPARISON OF MARKET CLUSTERS
<TABLE>
<CAPTION>
PEN OCF >200K 100-200K 50-100K 20-50K 10-20K <10K
---- --- ----- -------- ------- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIN 2.3% 48% 75% 25% -- -- -- --
McCaw (w/o LIN) 2.1% 43% 26% 33% 35% 5% -- 1%
PacTel 2.1% 41% 77% 11% 8% 4% -- --
NYNEX 1.5% 36% 78% -- 22% -- -- --
Bell South 2.7% 40% 78% 10% 8% 4% -- --
Centel 2.4% 24% -- 58% -- 19% 23% --
CCI 1.6% 22% -- 41% 21% 17% 9% 12%
Vanguard 1.5% 16% -- -- -- 63% -- 37%
US Cellular 2.1% 14% -- -- -- 21% 15% 65%
</TABLE>
<PAGE> 58
CONTEL CELLULAR
- -------------------------------------------------------------------------------
BENCHMARKING
SEPTEMBER 1992 YTD
<TABLE>
<CAPTION>
BELL MCCAW U.S.
SOUTH CENTEL W/LIN PACTEL CELLULAR CCI NYNEX VANGUARD
----- ------ ----- ------ -------- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Cash Flow % 40.3% 24.5% 44.7% 41.0% 13.8% 21.7% 35.7% 16.3%
% Top 30 POPs 50.1% 0.0% 58.8% 76.8% 0.0% 0.0% 72.4% 0.0%
Penetration 2.7% 2.4% 2.1% 2.1% 2.1% 1.6% 1.5% 1.5%
R/C/M $71 $77 $91 $93 $106 $79 $88 $89
</TABLE>
<PAGE> 59
CONTEL CELLULAR INC.
- --------------------------------------------------------------------------------
Margins and Market Cluster Size
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MARKET SEPT. YTD OPERATING
CLUSTER SIZE (000) CASH FLOW MARGIN
----------------------- -------------------
<S> <C> <C>
Vanguard 33 16%
US Cellular 11 14
CCI 65 22
Centel 105 24
McCaw 129 44
LIN 237 48
NYNEX 224 36
PacTel 299 41
BellSouth 252 40
</TABLE>
<PAGE> 60
ANALYSIS OF SELECTED PUBLICLY TRADED CELLULAR TELEPHONE COMPANIES
SUMMARY INFORMATION
(DOLLARS IN MILLIONS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
FULLY
DILUTED FULLY LTM
CURRENT FULLY MARKET DILUTED TOTAL LTM REPORTED
MARKET PRICE DILUTED VALUE OF MARKET LTM NET REPORTED LTM EBITDA
UNITED STATES CELLULAR COMPARABLES 10/17/94 SHARES EQUITY (a) CAP. (b) REVENUES EBITDA EBITDA (c) MARGIN
- ---------------------------------- ------------ ------- ---------- ------------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) $ 29.00 493.6 $14,314 $13,231 $1,096 $304 $425 28%
CELLULAR COMMUNICATIONS, INC. 53.00 42.5 2,200 2,383 NA NA NA NA
CELLULAR COMM. OF PUERTO RICO 37.12 13.3 492 532 49 5 5 10%
CENTENNIAL CELLULAR CORP. 17.00 12.3 209 550 43 17 27 39%
COMMNET CELLULAR (CELLULAR, INC.) 25.12 11.9 299 493 53 7 2 13%
CONTEL CELLULAR INC. 23.75 100.2 2,380 4,416 461 107 186 23%
INTERCEL, INC. 10.25 10.1 104 116 17 4 4 25%
LIN BROADCASTING CORPORATION 136.75 52.5 7,177 8,989 777 307 430 40%
UNITED STATES CELLULAR
CORPORATION 32.00 80.7 2,582 2,862 302 54 84 18%
VANGUARD CELLULAR SYSTEMS, INC. 27.25 39.9 1,092 1,378 150 30 30 20%
</TABLE>
<TABLE>
<CAPTION>
5 YEAR 1994
OCF GROWTH ESTIMATED
UNITED STATES CELLULAR COMPARABLES RATE (d) 1995 EBITDA (e)
- ---------------------------------- ------------ ---------------
<S> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) 18.8 $505
CELLULAR COMMUNICATIONS, INC. 21.0 NA
CELLULAR COMM. OF PUERTO RICO 57.0 8
CENTENNIAL CELLULAR CORP. 24.1 34
COMMNET CELLULAR (CELLULAR, INC.) 44.0 3
CONTEL CELLULAR INC. 28.8 240
INTERCEL, INC. NA NA
LIN BROADCASTING CORPORATION 13.5 489
UNITED STATES CELLULAR
CORPORATION 43.9 120
VANGUARD CELLULAR SYSTEMS, INC. 33.6 40
- ------------------------------------------------------------------------------------------------------------------------------
UNITED STATES SUMMARY INFORMATION:
Maximum: 40%
Mean: 24%
Median: 23%
Minimum: 10%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
(a) Fully diluted, assuming the conversion of exercisable in-the-money stock
options and warrants.
(b) Market Capitalization = Fully Diluted Market Value + Total Debt + Preferred
Stock + Minority Interest - Cash & Equivalents.
(c) Reported EBITDA plus tax-effected earnings from unconsolidated subsidiaries
less tax-effected minority interests.
(d) Source: Merrill Lynch Research.
(e) Merrill Lynch estimated EBITDA growth rate multiplied by EBITDA (including
tax effected unconsolidated earnings and tax effected minority interest).
<PAGE> 61
MERRILL LYNCH & CO.
ANALYSIS OF SELECTED PUBLICLY -- TRADED CELLULAR TELEPHONE COMPANIES
<TABLE>
<CAPTION>
STOCK PRICE INFORMATION
------------------------------------------
PRICE AS MSA POPS
52 WEEK 52 WEEK A % OF 52 TICKER/ NET POPS AS A % OF
UNITED STATES CELLULAR COMPARABLES 10/17/94 LOW HIGH WEEK HIGH EXCHANGE (MM) NET POPS (a)
- ---------------------------------- -------- ------- ------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) $ 29.00 $ 19.88 $ 28.25 102.7% ATI/NYSE 35.0 98%(c)
CELLULAR COMMUNICATIONS, INC. 53.00 40.25 54.50 97.2% COMMA/OTC 7.9 97%
CELLULAR COMM. OF PUERTO RICO 37.12 18.25 31.00 119.7% CCPR/OTC 3.0 91%
CENTENNIAL CELLULAR CORP. 17.00 14.00 24.25 70.1% CYCL/OTC 4.2 84%
COMMNET CELLULAR (CELLULAR, INC.) 25.12 15.25 24.50 102.5% CELS/OTC 3.2 20%
CONTEL CELLULAR INC. 23.75 13.00 22.00 108.0% CCXLA/OTC 23.2 80%
INTERCEL, INC. 10.25 7.75 10.25 100.0% ICEL/OTC 0.8 33%
LIN BROADCASTING CORPORATION 136.75 102.75 135.25 101.1% LINB/OTC 25.7 99%
UNITED STATES CELLULAR CORPORATION 32.00 23.38 39.25 81.5% USM/AMEX 24.3 38%
VANGUARD CELLULAR SYSTEMS, INC. 27.25 26.50 39.75 68.6% VCELA/OTC 6.5 90%
Averages: 13.9 60%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE
AVERAGE MONTHLY AVERAGE
MONTHLY CELLULAR MONTHLY
CELLULAR OPERATING CELLULAR
SERVICE CASH FLOW OPERATING
MARKETS REVENUE/ (b)/ CASH FLOW
UNITED STATES CELLULAR COMPARABLES SERVED SUBSCRIBERS PENETRATION SUBSCRIBER SUBSCRIBER MARGIN
- ---------------------------------- ------- ----------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) 61 1,221,000 3.49% $74 $34 46%
CELLULAR COMMUNICATIONS, INC. 21 289,500 3.68% 66 NA NA
CELLULAR COMM. OF PUERTO RICO 12 47,800 1.59% 86 9 10%
CENTENNIAL CELLULAR COPR. 15 57,830 1.38% 78 39 51%
COMMNET CELLULAR (CELLULAR, INC.) 80 88,686 2.81% 44 2* 5%
CONTEL CELLULAR INC. 108 621,600 2.68% 64 25 39%
INTERCEL, INC. 7 23,783 3.03% 57 14 24%
LIN BROADCASTING CORPORATION 6 918,000 3.57% 86 39 46%
UNITED STATES CELLULAR CORPORATION 208 331,000 1.36% 71 21 30%
VANGUARD CELLULAR SYSTEMS, INC. 36 169,000 2.61% 63 15 23%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
UNITED STATES SUMMARY INFORMATION:
<S> <C> <C> <C> <C> <C>
MAXIMUM: 1,221,000 3.68% $86 39 51%
MEAN: 376,820 2.62% $69 24 34%
MEDIAN: 289,500 2.77% 71 26 40%
MINIMUM: 23,783 1.36% 44 9 10%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RBOC & GTE CELLULAR COMPARABLES (d)
- -----------------------------------
<S> <C> <C>
AMERITECH 4.31% $64
BELL ATLANTIC 3.30% 74
BELLSOUTH 4.29% 66
NYNEX 3.19% 73
SOUTHWESTERN BELL 5.78% 63
US WEST 3.59% 72
GTE 3.45% 70
</TABLE>
- --------------------------------
* Excluded from summary statistics
(b) Cellular Operating Cash Flow = Estimated Cellular Service Revenue - Cost of
Cellular Service + Depreciation.
(c) % MSA POPs represent domestic only.
(d) Source: Merrill Lynch Research; DLJ Wireless Communications, Summer 1994.
<PAGE> 62
MERRILL LYNCH & CO.
ANALYSIS OF SELECTED PUBLICLY TRADED CELLULAR TELEPHONE COMPANIES
SUMMARY INFORMATION
(DOLLARS IN MILLIONS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
FULLY FULLY
DILUTED DILUTED MARKET MARKET TOTAL TOTAL
MARKET TOTAL CAP. OF CAP. OF MARKET MARKET
VALUE OF MARKET CELLULAR CELLULAR CAP./ CAP./
EQUITY CAP. ASSETS FRANCHISE LTM NET LTM
UNITED STATES CELLULAR COMPARABLES (MM) (a) (MM) (b) (MM) (c) (MM) (d) REVENUE EBITDA
- ---------------------------------- -------- -------- -------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) $14,314 $13,231 $7,949 (g) $6,989 (g) 12.1x 31.1x
CELLULAR COMMUNICATIONS, INC. 2,200 2,383 2,326 (i) 2,313 (i) NA NA
CELLULAR COMM. OF PUERTO RICO 492 532 532 485 10.8 106.4*
CENTENNIAL CELLULAR CORP. 209 550 551 517 12.7 20.2
COMMNET CELLULAR (CELLULAR, INC.) 299 493 489 419 9.2 NM
CONTEL CELLULAR INC. 2,380 4,416 4,402 3,858 9.6 23.7
INTERCEL, INC. 104 116 114 101 6.8 30.0
LIN BROADCASTING CORPORATION 7,177 8,989 8,127 (f) 7,695 (f) 11.6 20.9
UNITED STATES CELLULAR
CORPORATION 2,582 2,862 2,847 2,562 9.5 34.2
VANGUARD CELLULAR SYSTEMS, INC. 1,092 1,378 1,348 (j) 1,266 (j) 9.2 45.9
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
UNITED STATES SUMMARY INFORMATION:
<S> <C> <C>
MAXIMUM: 12.7x 45.9x
MEAN: 10.2 29.4
MEDIAN: 9.6 30.0
MINIMUM: 6.8 20.2
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET MARKET MARKET
CAP. OF CAP. OF CAP. OF
CELLULAR MSA CELLULAR CELLULAR
ASSETS/ ASSETS/NET FRANCHISE/
UNITED STATES CELLULAR COMPARABLES NET POPS MSA POPS (e) NET POPS
- ---------------------------------- --------- ------------ ----------
<S> <C> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) $227 $231 $200
CELLULAR COMMUNICATIONS, INC. 296 303 294
CELLULAR COMM. OF PUERTO RICO 177 186 161
CENTENNIAL CELLULAR CORP. 131 139 123
COMMNET CELLULAR (CELLULAR, INC.) 155 412 133
CONTEL CELLULAR INC. 189 215 166
INTERCEL, INC. 145 256 129
LIN BROADCASTING CORPORATION 316 320 300
UNITED STATES CELLULAR
CORPORATION 117 161 105
VANGUARD CELLULAR SYSTEMS, INC. 208 222 196
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
UNITED STATES SUMMARY INFORMATION:
<S> <C> <C> <C>
MAXIMUM: $316 $412 300
MEAN: 196 244 181
MEDIAN: 199 227 181
MINIMUM: 117 139 105
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED
PRIVATE PUBLIC MKT. LTM OCF TOT. MKT.
TOTAL MSA POPS MARKET (PREMIUM) MULTIPLE/ CAP./1995
DEBT/ AS A % OF VALUE/ DISCOUNT TO 1993 GROWTH ESTIMATED
UNITED STATES CELLULAR COMPARABLES NET POPS NET POPS POP (h) PMV RATE EBITDA
- ---------------------------------- -------- --------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
AIRTOUCH COMMUNICATIONS (PACTEL) $2 98% $165 -38% 1.65 26.2x
CELLULAR COMMUNICATIONS, INC. NA 97% 269 -10% NA NA
CELLULAR COMM. OF PUERTO RICO 19 91% 112 -58% 1.87 67.8
CENTENNIAL CELLULAR CORP. 60 84% 173 24% 0.84 16.2
COMMNET CELLULAR (CELLULAR, INC.) 72 20% 130 -19% NM 156.3*
CONTEL CELLULAR INC. 87 80% 177 -7% 0.82 18.4
INTERCEL, INC. 14 33% 185 22% NA NA
LIN BROADCASTING CORPORATION 72 99% 273 -16% 1.55 18.4
UNITED STATES CELLULAR
CORPORATION 11 38% 157 25% 0.78 23.8
VANGUARD CELLULAR SYSTEMS, INC. 44 90% 191 -9% 1.36 34.3
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
UNITED STATES SUMMARY INFORMATION:
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM: $87 99% $273 25% 1.87 67.8x
MEAN: $42 72% $183 -9% 1.27 29.3
MEDIAN: $44 89% $169 -13% 1.36 23.8
MINIMUM: $2 20% $112 -58% 0.78 16.2
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
* Excluded from summary statistics
(a) Fully Diluted Market Value assumes the proceeds from exercisable in-the-
money stock options and warrants are used to repurchase shares.
(b) Market Capitalization = Fully Diluted Market Value + Total Debt + Preferred
Stock + Minority Interest - Cash & Equivalents.
(c) Market Capitalization of Cellular Assets = Total Market Capitalization -
Minority Interest - Estimated Public Market Value of Non-Cellular Assets.
(d) Market Capitalization of Cellular Franchise = Market Capitalization of
Cellular Assets - Net Working Capital - Net PP&E.
(e) Market Capitalization of MSA Cellular Franchise = Market Capitalization of
Cellular Assets - RSA Cellular Assets at 90$ per POP.
(f) Assumes non-cellular assets, consisting of seven network affiliated
television stations and a specialty publishing operation, trade at 9.0x
trailing cash flow of $87.0 million.
(g) Excludes international cellular assets consisting of 54.7 million POPs at
$80.00 per POP, non-cellular assets consisting of 1,167,000 paging units at
$550 per unit and AirTouch's investment in Qualcomm at market.
(h) Source: Merrill Lynch Research, except Intercel (Kagan).
(i) Excludes Note receivable from Cellular Communications of Puerto Rico at
$55.3 million.
(j) Excludes 2.5 million Geotek shares at market.
<PAGE> 63
<TABLE>
<CAPTION>
MERRILL LYNCH & CO.
COMPARISON OF SELECTED PUBLICLY -- TRADED CELLULAR TELEPHONE COMPANIES
- -----------------------------------------------------------------------------------------------
SUMMARY DATA RANKINGS
MARKET VALUE OF EQUITY ($MM) TOTAL MARKET CAPITALIZATION ($MM)
- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C>
1 AIRTOUCH CORPORATION (PACTEL) $14,314 1 AIRTOUCH CORPORATION (PACTEL) 13,231
2 LIN BROADCASTING CORPORATION 7,177 2 LIN BROADCASTING CORPORATION 8,989
3 UNITED STATES CELLULAR CORPORATION 2,582 3 CONTEL CELLULAR INC. 4,416
4 CONTEL CELLULAR INC. 2,380 4 UNITED STATES CELLULAR CORPORATION 2,862
5 CELLULAR COMMUNICATIONS, INC. 2,200 5 CELLULAR COMMUNICATIONS, INC. 2,383
6 VANGUARD CELLULAR SYSTEMS, INC. 1,092 6 VANGUARD CELLULAR SYSTEMS, INC. 1,378
7 CELLULAR COMM. OF PUERTO RICO 492 7 CENTENNIAL CELLULAR CORP. 550
8 COMMNET CELLULAR (CELLULAR, INC.) 299 8 CELLULAR COMM. OF PUERTO RICO 532
9 CENTENNIAL CELLULAR CORP. 209 9 COMMNET CELLULAR (CELLULAR, INC.) 493
10 INTERCEL 104 10 INTERCEL 116
AVERAGE: $ 3,085 AVERAGE: $ 3,495
</TABLE>
<TABLE>
<CAPTION>
MARKET CAPITALIZATION OF CELLULAR FRANCHISE ($MM)
- -------------------------------------------------
<S> <C>
1 LIN BROADCASTING CORPORATION 7,695
2 AIRTOUCH CORPORATION (PACTEL) 6,989
3 CONTEL CELLULAR INC. 3,858
4 UNITED STATES CELLULAR CORPORATION 2,562
5 CELLULAR COMMUNICATIONS, INC. 2,313
6 VANGUARD CELLULAR SYSTEMS, INC. 1,266
7 CENTENNIAL CELLULAR CORP. 517
8 CELLULAR COMM. OF PUERTO RICO 485
9 COMMNET CELLULAR (CELLULAR, INC.) 419
10 INTERCEL 101
AVERAGE: $2,620
</TABLE>
<TABLE>
<CAPTION>
MARKET CAPITALIZATION / NET POPS MARKET CAPITALIZATION OF CELLULAR ASSETS / NET POPS
- ------------------------------------------------- ---------------------------------------------------
<S> <C> <C> <C>
1 AIRTOUCH CORPORATION (PACTEL) $378 1 LIN BROADCASTING CORPORATION $316
2 LIN BROADCASTING CORPORATION 350 2 CELLULAR COMMUNICATIONS, INC. 296
3 CELLULAR COMMUNICATIONS, INC. 303 3 AIRTOUCH CORPORATION (PACTEL) 227
4 VANGUARD CELLULAR SYSTEMS, INC. 213 4 VANGUARD CELLULAR SYSTEMS, INC. 208
5 CONTEL CELLULAR INC. 190 5 CONTEL CELLULAR INC. 189
6 CELLULAR COMM. OF PUERTO RICO 177 6 CELLULAR COMM. OF PUERTO RICO 177
7 COMMNET CELLULAR (CELLULAR, INC.) 156 7 COMMNET CELLULAR (CELLULAR, INC.) 155
8 INTERCEL 148 8 INTERCEL 145
9 CENTENNIAL CELLULAR CORP. 131 9 CENTENNIAL CELLULAR CORP. 131
10 UNITED STATES CELLULAR CORPORATION 118 10 UNITED STATES CELLULAR CORPORATION 117
AVERAGE: $216 AVERAGE: $196
</TABLE>
<TABLE>
<CAPTION>
MARKET CAPITALIZATION OF CELLULAR FRANCHISE / NET POPS
- -------------------------------------------------------
<S> <C>
1 LIN BROADCASTING CORPORATION $300
2 CELLULAR COMMUNICATIONS, INC. 294
3 AIRTOUCH CORPORATION (PACTEL) 200
4 VANGUARD CELLULAR SYSTEMS, INC. 196
5 CONTEL CELLULAR INC. 166
6 CELLULAR COMM. OF PUERTO RICO 161
7 COMMNET CELLULAR (CELLULAR, INC.) 133
8 INTERCEL 129
9 CENTENNIAL CELLULAR CORP. 123
10 UNITED STATES CELLULAR CORPORATION 105
AVERAGE: $181
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
MSA POPS AS A % OF NET POPS PENETRATION
- ------------------------------------------- --------------------------------------------
<S> <C> <C> <C>
1 LIN BROADCASTING CORPORATION 99% 1 CELLULAR COMMUNICATIONS, INC. 3.68%
2 AIRTOUCH CORPORATION (PACTEL) 98% 2 LIN BROADCASTING CORPORATION 3.57%
3 CELLULAR COMMUNICATIONS, INC. 97% 3 AIRTOUCH CORPORATION (PACTEL) 3.49%
4 CELLULAR COMM. OF PUERTO RICO 91% 4 INTERCEL 3.03%
5 VANGUARD CELLULAR SYSTEMS, INC. 90% 5 COMMNET CELLULAR (CELLULAR, INC.) 2.81%
6 CENTENNIAL CELLULAR CORP. 84% 6 CONTEL CELLULAR INC. 2.68%
7 CONTEL CELLULAR INC. 80% 7 VANGUARD CELLULAR SYSTEMS, INC. 2.61%
8 UNITED STATES CELLULAR CORPORATION 38% 8 CELLULAR COMM. OF PUERTO RICO 1.59%
9 INTERCEL 33% 9 CENTENNIAL CELLULAR CORP. 1.38%
10 COMMNET CELLULAR (CELLULAR, INC.) 20% 10 UNITED STATES CELLULAR CORPORATION 1.36%
AVERAGE: 73% AVERAGE: 2.62%
</TABLE>
<TABLE>
<CAPTION>
LTM EBITDA MARGIN
- --------------------------------------------
<S> <C>
1 LIN BROADCASTING CORPORATION 40%
2 CENTENNIAL CELLULAR CORP. 39%
3 AIRTOUCH CORPORATION (PACTEL) 28%
4 INTERCEL 24%
5 CONTEL CELLULAR INC. 23%
6 VANGUARD CELLULAR SYSTEMS, INC. 20%
7 UNITED STATES CELLULAR CORPORATION 18%
8 CELLULAR COMM. OF PUERTO RICO 10%
9 COMMNET CELLULAR (CELLULAR, INC.) 5% *
AVERAGE: 25%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE MONTHLY CELLULAR SERVICE REVENUE / SUBSCRIBER AVERAGE MONTHLY CELLULAR OPERATING CASH FLOW / SUBSCRIBER
- ------------------------------------------------------ ---------------------------------------------------------
<S> <C> <C> <C>
1 CELLULAR COMM. OF PUERTO RICO $86 1 CENTENNIAL CELLULAR CORP. $39
2 LIN BROADCASTING CORPORATION 86 2 LIN BROADCASTING CORPORATION 39
3 CENTENNIAL CELLULAR CORP. 78 3 AIRTOUCH CORPORATION (PACTEL) 34
4 AIRTOUCH CORPORATION (PACTEL) 74 4 CONTEL CELLULAR INC. 25
5 UNITED STATES CELLULAR CORPORATION 71 5 UNITED STATES CELLULAR CORPORATION 21
6 CONTEL CELLULAR INC. 64 6 VANGUARD CELLULAR SYSTEMS, INC. 15
7 VANGUARD CELLULAR SYSTEMS, INC. 63 7 INTERCEL 14
8 INTERCEL 57 8 CELLULAR COMM. OF PUERTO RICO 9
9 COMMNET CELLULAR (CELLULAR, INC.) 44 9 COMMNET CELLULAR (CELLULAR, INC.) 2 *
AVERAGE: $69 AVERAGE: $24
</TABLE>
<TABLE>
<CAPTION>
AVERAGE MONTHLY CELLULAR OPERATING CASH FLOW MARGIN
- ---------------------------------------------------
<S> <C>
1 CENTENNIAL CELLULAR CORP. 51%
2 AIRTOUCH CORPORATION (PACTEL) 46%
3 LIN BROADCASTING CORPORATION 46%
4 CONTEL CELLULAR INC. 39%
5 UNITED STATES CELLULAR CORPORATION 30%
6 INTERCEL 24%
7 VANGUARD CELLULAR SYSTEMS INC. 23%
8 CELLULAR COMM. OF PUERTO RICO 10%
9 COMMNET CELLULAR (CELLULAR, INC.) 5%
AVERAGE: 34% *
</TABLE>
<PAGE> 65
Merrill Lynch & Co.
<TABLE>
<CAPTION>
CELLULAR ACQUISITION COMPARABLES
Comparison of Selected Cellular Telephone Company Acquisitions
- ------------------------------------------------------------------------------------------------------------------------------------
(in millions, except per POP data)
Aggregate Price Paid
--------------------------
Acquiror Transaction Adj. Trans. Adjusted
Date Target Target Business Description Value(a) Value(b) POPs
- ---- --------------------------------- ------------------------------------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
10/11/94* Compagnie Generale des Eaux An indirect 10% stake in SBC's
SBC Communications Washington / Baltimore operating region. $215.0 $215.0 0.73
4/5/94* Independent Cellular Network Interests in Pennsylvania and Iowa. $182.5 $182.5 1.40
C-TEC Corporation
2/25/94* Southwestern Bell Interests in Buffalo, Rochester, Albany
Associated Communications Corp. and Glens Falls, New York. 680.0 648.5 3.60
11/26/93 Southwestern Bell A 10% stake in the Dallas SMSA Limited
GTE Mobilnet Inc. Partnership for $120 mm. 1,200.0(l) 1,200.0(l) 4.20
11/11/93* Southwestern Bell Interests in Syracuse, Utica, Ithaca,
Syracuse Telephone Cortland and Auburn, New York. 150 - 250(p) 150 - 250 1.30
Utica Telephone
Finger Lakes Telephone
8/19/93* Century Telephone Enterprises Non-wireline operator in Texas and
Celutel Inc. Mississippi. 143.3 127.1 1.11
8/16/93* AT&T
(Pending) McCaw Cellular Communications McCaw is the largest non-wireline
operator in the United States. 19,248.2(o) 15,454.8 60.44
8/12/93* InterCel, Inc. Wireline interests in the Bangor,
Unity Cellular Systems, Inc. Maine MSA and Maine RSA 2
& Maine RSA 3 (Augusta) 35.2 28.1 0.45
12/31/92* ALLTEL Corporation Interests in MSAs serving Fort Smith
Contel Cellular and Fayetteville, Arkansas and
Arkansas RSA 1 and 8 and Oklahoma RSA 4. 71.3 71.3 0.53
8/03/92 Associated Communications Interests in Albany, Glen Falls, and
McCaw Cellular Communications Rochester, New York. 85.6 85.6 0.68
6/08/92* ALLTEL Corporation Interests in Houston/ Galveston/ Beaumont,
STL Communications, Inc.(m) Texas MSA; Little Rock, Arkansas MSA and
several RSA interests in Arkansas and
Texas. 34.3 - 58.0 34.3 - 58.0 0.33
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
Price Paid Per POP
--------------------------
Transaction Adjusted
Acquiror Value per Trans. Value
Date Target Target Business Description POP(a) per POP(b) % MSA
- ---- --------------------------------- ----------------------------------------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
10/11/94* Compagnie Generale des Eaux An indirect 10% stake in SBC's
SBC Communications Washington / Baltimore operating region. $295 $295 88.5%
4/5/94* Independent Cellular Network Interests in Pennsylvania and Iowa. $130 $130 65.0%
C-TEC Corporation
2/25/94* Southwestern Bell Interests in Buffalo, Rochester, Albany
Associated Communications Corp. and Glens Falls, New York. 189 180 60.0%
11/26/93 Southwestern Bell A 10% stake in the Dallas SMSA Limited
GTE Mobilnet Inc. Partnership for $120 mm. 286 286 93.1%
11/11/93* Southwestern Bell Interests in Syracuse, Utica, Ithaca,
Syracuse Telephone Cortland and Auburn, New York. 115 - 192** 115 - 192** NA
Utica Telephone
Finger Lakes Telephone
8/19/93* Century Telephone Enterprises Non-wireline operator in Texas and
Celutel Inc. Mississippi. 129 115 100.0%
8/16/93* AT&T
(Pending) McCaw Cellular Communications McCaw is the largest non-wireline
operator in the United States. 318 256 94.9%
8/12/93* InterCel, Inc. Wireline interests in the Bangor,
Unity Cellular Systems, Inc. Maine MSA and Maine RSA 2
& Maine RSA 3 (Augusta) 79 63 33.2%
12/31/92* ALLTEL Corporation Interests in MSAs serving Fort Smith
Contel Cellular and Fayetteville, Arkansas and
Arkansas RSA 1 and 8 and Oklahoma RSA 4. 134 134 58.0%
8/03/92 Associated Communications Interests in Albany, Glen Falls, and
McCaw Cellular Communications Rochester, New York. 126 126 100.0%
6/08/92* ALLTEL Corporation Interests in Houston/ Galveston/ Beaumont,
STL Communications, Inc.(m) Texas MSA; Little Rock, Arkansas MSA and
several RSA interests in Arkansas and
Texas. 104.0 - 177.0** 104.0 - 177.0** NA
</TABLE>
<PAGE> 67
Merrill Lynch & Co.
<TABLE>
<CAPTION>
CELLULAR ACQUISITION COMPARABILES
COMPARISON OF SELECTED CELLULAR TELEPHONE COMPANY ACQUISITIONS
-----------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER POP DATA)
AGGREGATE PRICE PAID
---------------------------------
ACQUIROR TRANSACTION ADJ. TRANS.
DATE TARGET TARGET BUSINESS DESCRIPTION VALUE (a) VALUE (b)
- ---- ---------------------------- -------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C>
5/27/92* Sprint Corporation Majority Interests in 42 MSA and 21 1267.2-2187.8 1267.2-2187.8
Centel Corporation (n) RSA markets and minority interests
in 34 MSA and 22 RSA markets located
predominantly in the Midwest and South.
9/24/91* Bell Atlantic Corporation Interests in Connecticut, Rhode Island, 2,317.1 2,102.4
Metro Mobile CTS, Inc. (d) Massachusetts, North Carolina, Arizona,
New Mexico and Texas.
7/18/91* McCaw Cellular Communications Interests in Daytona Beach, Florida 107.0 107.0
Crowley Cellular Telecomm. and Waco, Texas.
5/28/91* Ameritech Interests in St. Louis, Illinois, Missouri, 512.0 512.0
CyberTel Financial Corp./ Minneapolis, Hawaii and in the United States
CyberTel RSA Cellular LP/ and British Virgin Islands.
5/07/91* Comcast Corp. Interests in New Jersey and Pennsylvania, 1,129.6 1,065.9
Metromedia Co. (e) including the Philadelphia metropolitan area,
New Brunswick and Long Branch, NJ.
4/11/91* BellSouth Interests in 18 midwest cellular telephone 454.8 454.8
McCaw Cellular markets: 7 in Indiana, 10 in Wisconsin and
Communications (f) 1 in Illinois.
11/12/90 US WEST (g) Interests in the Northwest and Southwest 2,388.1 2,071.1
US WEST NewVector (California, Colorado, Arizona, Washington,
Utah, Idaho, Montana, and Oregon).
7/25/90 Pacific Telesis (h) Interests in MI and all major Ohio markets, 1,822.8 1,750.7
Cellular Communications except Toledo, and 5 markets in Puerto Rico,
including San Juan-Caguas, Mayaguez, and
Arecibo.
4/20/90* GTE Corporation Interests in 12 Southeastern markets, 710.0 661.4 (i)
Providence Journal including Greensboro-Winston-Salem and
Raleigh-Durham, North Carolina, Charleston,
South Carolina; Savannah, Georgia and
Lynchburg, Virginia.
1/11/90 McCaw Cellular Communications A 5.56% stake in the Dallas non-wireline 1,093.5 (r) 1,093.5
Cellular Communications partnership for $60.8 mm.
11/20/89* McCaw Cellular Communications Interests in top MSA markets, including 6,676.0 6,639.7
Lin Broadcasting Corp. New York, Los Angeles, Philadelphia,
Dallas and Houston. Also involved in
broadcasting.
</TABLE>
<TABLE>
<CAPTION>
ACQUIROR ADJUSTED
DATE TARGET TARGET BUSINESS DESCRIPTION POPs
- ---- --------------------- -------------------------------------------- --------
<S> <C> <C> <C>
5/27/92* Sprint Corporation Majority Interests in 42 MSA and 21 16.69
Centel Corporation (n) RSA markets and minority interests
in 34 MSA and 22 RSA markets located
predominantly in the Midwest and South.
9/24/91* Bell Atlantic Corporation Interests in Connecticut, Rhode Island, 11.52
Metro Mobile CTS, Inc. (d) Massachusetts, North Carolina, Arizona,
New Mexico and Texas.
7/18/91* McCaw Cellular Communications Interests in Daytona Beach, Florida 0.61
Crowley Cellular Telecomm. and Waco, Texas.
5/28/91* Ameritech Interests in St. Louis, Illinois, Missouri, 2.80
CyberTel Financial Corp./ Minneapolis, Hawaii and in the United States
CyberTel RSA Cellular LP/ and British Virgin Islands.
5/07/91* Comcast Corp. Interests in New Jersey and Pennsylvania, 5.19
Metromedia Co. (e) including the Philadelphia metropolitan area
New Brunswick and Long Branch, NJ.
4/11/91* BellSouth Interests in 18 midwest cellular telephone 2.53
McCaw Cellular markets: 7 in Indiana, 10 in Wisconsin and
Communications (f) 1 in Illinois.
11/12/90 US WEST (g) Interests in the Northwest and Southwest 16.90
US WEST NewVector (California, Colorado, Arizona, Washington,
Utah, Idaho, Montana, and Oregon).
7/25/90 Pacific Telesis (h) Interests in MI and all major Ohio markets, 9.71
Cellular Communications except Toledo, and 5 markets in Puerto Rico,
including San Juan-Caguas, Mayaguez, and
Arecibo.
4/20/90* GTE Corporation Interests in 12 Southeastern markets, 3.50
Providence Journal including Greensboro-Winston-Salem and
Raleigh-Durham, North Carolina, Charleston,
South Carolina; Savannah, Georgia and
Lynchburg, Virginia.
1/11/90 McCaw Cellular Communications A 5.56% stake in the Dallas non-wireline 3.88
Cellular Communications partnership for $60.8 mm.
11/20/89* McCaw Cellular Communications Interests in top MSA markets, including 18.90
Lin Broadcasting Corp. New York, Los Angeles, Philadelphia,
Dallas and Houston. Also involved in
broadcasting.
</TABLE>
<TABLE>
<CAPTION>
PRICE PAID PER POP
-------------------------------
TRANSACTION ADJUSTED
ACQUIROR VALUE PER TRANS. VALUE
DATE TARGET TARGET BUSINESS DESCRIPTION POP (a) PER POP (b)
- ---- -------- ----------------------------------------------- ------------ --------------
<S> <C> <C> <C> <C>
5/27/92* Sprint Corporation Majority Interests in 42 MSA and 21 76.0-131.0** 76.0-131.0**
Centel Corporation(n) RSA markets and minority interests
in 34 MSA and 22 RSA markets located
predominantly in the Midwest and South.
9/24/91* Bell Atlantic Corporation Interests in Connecticut, Rhode Island, 201 183
Metro Mobile CTS, Inc. (d) Massachusetts, North Carolina, Arizona,
New Mexico and Texas.
7/18/91* McCaw Cellular Communications Interests in Daytona Beach, Florida 175 175
Crowley Cellular Telecomm. and Waco, Texas.
5/28/91* Ameritech Interests in St. Louis, Illinois, Missouri, 183 183
CyberTel Financial Corp./ Minneapolis, Hawaii and in the United States
CyberTel RSA Cellular LP/ and British Virgin Islands.
5/07/91* Comcast Corp. Interests in New Jersey and Pennsylvania, 218 205
Metromedia Co. (e) including the Philadelphia metropolitan area,
New Brunswick and Long Branch, NJ.
4/11/91* BellSouth Interests in 18 midwest cellular telephone 180 180
McCaw Cellular markets: 7 in Indiana, 10 in Wisconsin and
Communications (f) 1 in Illinois.
11/12/90 US WEST (g) Interests in the Northwest and Southwest 141 123
US WEST NewVector (California, Colorado, Arizona, Washington,
Utah, Idaho, Montana, and Oregon).
7/25/90 Pacific Telesis (h) Interests in MI and all major Ohio markets, 188 180
Cellular Communications except Toledo, and 5 markets in Puerto Rico,
including San Juan-Caguas, Mayaguez, and
Arecibo.
4/20/90* GTE Corporation Interests in 12 Southeastern markets, 203 189 (i)
Providence Journal including Greensboro-Winston-Salem and
Raleigh-Durham, North Carolina, Charleston,
South Carolina; Savannah, Georgia and
Lynchburg, Virginia.
1/11/90 McCaw Cellular Communications A 5.56% stake in the Dallas non-wireline 282 282
Cellular Communications partnership for $60.8 mm.
11/20/89* McCaw Cellular Communications Interests in top MSA markets, including 353 351
Lin Broadcasting Corp. New York, Los Angeles, Philadelphia,
Dallas and Houston. Also involved in
broadcasting.
</TABLE>
<TABLE>
<CAPTION>
ACQUIROR
DATE TARGET TARGET BUSINESS DESCRIPTION % MSA
- ---- -------- ----------------------------------------------- -----
<S> <C> <C> <C>
5/27/92* Sprint Corporation Majority Interests in 42 MSA and 21 87.4%
Centel Corporation (n) RSA markets and minority interests
in 34 MSA and 22 RSA markets located
predominantly in the Midwest and South.
9/24/91* Bell Atlantic Corporation Interests in Connecticut, Rhode Island, NA
Metro Mobile CTS, Inc. (d) Massachusetts, North Carolina, Arizona,
New Mexico and Texas.
7/18/91* McCaw Cellular Communications Interests in Daytona Beach, Florida 90.3%
Crowley Cellular Telecomm. and Waco, Texas.
5/28/91* Ameritech Interests in St. Louis, Illinois, Missouri, NA
CyberTel Financial Corp./ Minneapolis, Hawaii and in the United States
CyberTel RSA Cellular LP/ and British Virgin Islands.
5/07/91* Comcast Corp. Interests in New Jersey and Pennsylvania, NA
Metromedia Co. (e) including the Philadelphia metropolitan area,
New Brunswick and Long Branch, NJ.
4/11/91* BellSouth Interests in 18 midwest cellular telephone 96.7%
McCaw Cellular markets: 7 in Indiana, 10 in Wisconsin and
Communications (f) 1 in Illinois.
11/12/90 US WEST (g) Interests in the Northwest and Southwest NA
US WEST NewVector (California, Colorado, Arizona, Washington,
Utah, Idaho, Montana, and Oregon).
7/25/90 Pacific Telesis (h) Interests in MI and all major Ohio markets, 94.9%
Cellular Communications except Toledo, and 5 markets in Puerto Rico,
including San Juan-Caguas, Mayaguez, and
Arecibo.
4/20/90* GTE Corporation Interests in 12 Southeastern markets, NA
Providence Journal including Greensboro-Winston-Salem and
Raleigh-Durham, North Carolina, Charleston,
South Carolina; Savannah, Georgia and
Lynchburg, Virginia.
1/11/90 McCaw Cellular Communications A 5.56% stake in the Dallas non-wireline 100.0%
Cellular Communications partnership for $60.8 mm.
11/20/89* McCaw Cellular Communications Interests in top MSA markets, including 100.0%
Lin Broadcasting Corp. New York, Los Angeles, Philadelphia,
Dallas and Houston. Also involved in
broadcasting.
</TABLE>
<PAGE> 68
Merrill Lynch & Co.
<TABLE>
<CAPTION>
CELLULAR ACQUISITION COMPARABLES
Comparison of Selected Cellular Telephone Company Acquisitions
-----------------------------------------------------------------------------------------------------------------------------------
(in millions, except per POP data)
AGGREGATE PRICE PAID
------------------------------
ACQUIROR TRANSACTION ADJ. TRANS.
DATE TARGET TARGET BUSINESS DESCRIPTION VALUE(a) VALUE(b)
- ---- --------------------------------- --------------------------------- ------------- ------------
<S> <C> <C> <C> <C>
10/27/89* LIN Broadcasting Corp.(k) 46.3% interest in New York City 1,941.0 1,941.0
Metromedia Co. cellular market.
10/3/89* Contel Cellular Interest in 13 markets, including 1,299.3 1,233.7
McCaw Cellular Communications Birmingham, Alabama, Louisville,
(Southeastern POPs) Kentucky, Memphis and Nashville,
Tennessee.
1/9/89 British Telecom plc(l) British Telecom acquired a 22% 7,100.2 6,694.0
McCaw Cellular Communications stake in the largest cellular
telephone company in the United
States.
</TABLE>
<TABLE>
<CAPTION>
ACQUIROR ADJUSTED
DATE TARGET TARGET BUSINESS DESCRIPTION POPs
- ---- --------------------------------- --------------------------------- --------
<S> <C> <C> <C>
10/27/89* LIN Broadcasting Corp. (k) 46.3% interest in New York City 7.22
Metromedia Co. cellular market.
10/3/89* Contel Cellular Interest in 13 markets, including 6.10
McCaw Cellular Communications Birmingham, Alabama, Louisville,
(Southeastern POPs) Kentucky, Memphis and Nashville,
Tennessee.
1/9/89 British Telecom plc (l) British Telecom acquired a 22% 50.30
McCaw Cellular Communications stake in the largest cellular
telephone company in the United
States.
</TABLE>
<TABLE>
<CAPTION>
PRICE PAID PER POP
--------------------------
TRANSACTION ADJUSTED
ACQUIROR VALUE PER TRANS. VALUE
DATE TARGET TARGET BUSINESS DESCRIPTION POP(a) PER POP(b) % MSA
- ---- --------------------------------- --------------------------------- ----------- ------------ ----
<S> <C> <C> <C> <C> <C>
10/27/89* LIN Broadcasting Corp. (k) 46.3% interest in New York City 269 269 NA
Metromedia Co. cellular market.
10/3/89* Contel Cellular Interest in 13 markets, including 213 202 NA
McCaw Cellular Communications Birmingham, Alabama, Louisville,
(Southeastern POPs) Kentucky, Memphis and Nashville,
Tennessee.
1/9/89 British Telecom plc (l) British Telecom acquired a 22% 141 133 96.7%
McCaw Cellular Communications stake in the largest cellular
telephone company in the United
States.
</TABLE>
<TABLE>
All Transactions:
<S> <C> <C>
Maximum $353 $351
Mean 193 185
Minimum 79 63
- ----------------------------------------------
Change of Control
Transactions*:
Maximum $353 $351
Mean 187 178
Minimum 79 63
- ----------------------------------------------
Non-Change of Control
Transactions:
Maximum $295 $295
Mean 208 203
Minimum 126 123
- ----------------------------------------------
</TABLE>
<PAGE> 69
Merrill Lynch & Co.
CELLULAR ACQUISITION COMPARABLES
Comparison of Selected Cellular Telephone Company Acquisitions
- --------------------------------------------------------------------------------
(in millions, except per POP data)
- ------------------------------------
* Change of control transaction.
** Midpoint of range used in summary multiples.
*** Excluded from summary multiples.
(a) Transaction value is defined as market value of equity on a
fully-diluted basis plus preferred stock plus debt less cash less
estimated value of non-cellular operations.
(b) Adjusted transaction value represents transaction value less property,
plant and equipment and net working capital. Adjusted transaction value
is meant to represent the value of the license itself, as opposed to the
value of the ongoing business.
(c) Adjusted population or POPs equals the total population of a market
multiplied by the percentage interest held by the target; no distinction
is made between RSA and MSA POPs.
(d) Assumes $215 million value for distribution properties.
(e) Assumes $64 million value for media properties.
(f) Value based on $360 million purchase price plus $50 million of debt
forgiven by BellSouth plus 35% interest in Rochester mobile phone system
(280,000 POPs @ $160 per POP).
(g) US WEST acquired the remaining 19% interest in US WEST New Vector for US
WEST stock. The transaction value and adjusted transaction are
calculated on a price per share of $36.25 for US WEST and assumes 100%
was acquired at this price.
(h) Assumes market value of assets and licenses contributed by PacTel and
Cellular Communications to joint venture are equal and that PacTel paid
$87 million for 5% of Cellular Communications after the spinoff of
certain operations.
(i) Based on GTE press release in 8-K filing dated 4/20/90, excluding PP&E
but not net working capital.
(j) Post-offer, McCaw owns approximately 52% of LIN shares outstanding;
transaction values are calculated as if 100% acquired and assume LIN's
media properties valued at $1.26 billion.
(k) Offer represented exercise of LIN's right of first refusal in response
to McCaw's bid for NYC market on 10/3/89 and acquisition of 2.1%
minority interests. Assumes market value of $850 million preferred
stock issued is equal to fair market value and that no debt was assumed.
Balance sheet information not disclosed.
(l) Transaction and adjusted transaction values are calculated as if 100% of
the equity was acquired.
(m) Assumes a $2,500-$3,000 per access line valuation for telephone company
segment, a $2,000 per subscriber valuation for cable television segment,
and a $550 per pager valuation for paging segment; also includes $20
million valuation for STL's interest in NYNEX / DPI, a joint venture.
(n) Assumes a $1,200-$1,800 per access line valuation for telephone company
segment. Adjusted to exclude 63,000 access lines sold to Century
Telephone in April, 1992, and Century's assumption of $15 million in
preferred stock. $120 million in cash is used in the calculation to
reflect this transaction.
(o) Assumes a merger price of $60.125 at announcement.
(p) Industry analyst estimates. Midpoint of $153 per POP used in change of
control analysis.
<PAGE> 70
SUMMARY OF SELECTED MINORITY CLOSEOUTS FROM 1/14/88 - 10/14/94
STOCK OR CASH TRANSACTIONS
<TABLE>
<CAPTION>
PREMIUMS PAID OVER PRICE PER SHARE
% Change of -----------------------------------------------------------
Initial to 6 Months 1 Month 1 Day 1 Day LTM LTM
Final Offer Prior Prior Prior After High Low
----------- -------- ------- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
All Deals
- ---------
Mean 11.7% 40.0% 43.4% 31.7% 10.9% 1.8% 85.9%
Median 4.6 33.3 33.3 21.3 7.4 2.2 60.7
High 240.8 480.0 533.3 322.2 137.5 123.5 660.0
Low (10.7) (66.2) (8.4) (19.3) (15.6) (47.9) (20.5)
Deals Under $250 Million
- ------------------------
Mean 7.6% 41.1% 45.7% 33.0% 9.6% 0.5% 86.4%
Median 4.5 33.7 34.7 23.2 7.7 0.0 66.9
High 50.0 480.0 533.3 322.2 137.5 123.5 660.0
Low (9.3) (66.2) (8.4) (19.3) (15.6) (47.9) (20.5)
Deals Over $250 Million
- -----------------------
Mean 24.0% 36.3% 35.5% 25.4% 15.4% 6.5% 84.1%
Median 8.5 33.3 32.5 18.9 7.4 5.3 57.0
High 240.8 130.8 87.5 66.7 57.9 62.2 350.0
Low (10.7) (43.9) (2.5) 1.8 (3.2) (46.3) 21.3
</TABLE>
<PAGE> 71
SUMMARY OF SELECTED MINORITY CLOSEOUTS FROM 1/14/88 - 10/14/94
<TABLE>
<CAPTION>
STOCK AND OTHER NON-CASH TRANSACTIONS
-----------------------------------------------------------------------
PREMIUMS PAID OVER PRICE PER SHARE
----------------------------------------------------
% Change of
Initial to 6 Months 1 Month 1 Day 1 Day
All Deals Final Offer Prior Prior Prior After
- --------- ----------- -------- ------- ------ -----
<S> <C> <C> <C> <C> <C>
Mean 5.7% 34.7% 46.9% 30.9% 11.4%
Median 0.0 34.0 33.3 19.4 34.9
High 240.8 245.5 533.3 322.2 533.3
Low (10.7) (66.2) (2.5) (9.0) 7.9
Deals Under $250 Million
- ------------------------
Mean 6.2% 36.5% 51.0% 33.5% 9.9%
Median 4.2 34.7 33.3 20.1 6.2
High 26.7 245.5 533.3 322.2 137.5
Low (9.3) (66.2) 7.9 (9.0) (15.1)
Deals Over $250 Million
- -----------------------
Mean 5.4% 30.0% 36.8% 24.4% 15.4%
Median 0.0 28.3 32.9 18.8 7.4
High 240.8 106.0 87.5 66.7 57.9
Low (10.7) (43.9) (2.5) 1.8 (3.2)
</TABLE>
<TABLE>
<CAPTION>
CASH TRANSACTIONS
-------------------------------------------------------------------------
PREMIUMS PAID OVER PRICE PER SHARE
-----------------------------------------------------
% Change of
Initial to 6 Months 1 Month 1 Day 1 Day
All Deals Final Offer Prior Prior Prior After
- --------- ----------- -------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Mean 10.4% 50.2% 36.8% 31.9% 9.8%
Median 4.9 30.4 34.7 24.6 9.5
High 50.0 480.0 120.0 120.0 42.9
Low 0.0 (29.7) (8.4) (19.3) (15.6)
Deals Under $250 Million
- ------------------------
Mean 11.7% 48.2% 37.7% 32.2% 9.1%
Median 5.3 29.8 36.0 26.8 9.8
High 50.0 480.0 120.0 120.0 38.8
Low 0.0 (29.7) (8.4) (19.3) (15.6)
Deals Over $250 Million
- -----------------------
Mean 5.7% 65.6% 29.5% 29.8% 15.8%
Median 4.5 36.4 23.3 22.4 2.3
High 12.5 130.8 61.4 62.2 42.9
Low 0.0 29.6 3.7 4.9 2.2
</TABLE>
<PAGE> 72
ANALYSIS OF SELECTED MINORITY CLOSE OUT TRANSACTIONS
<TABLE>
<CAPTION> % OWNED BY EQUITY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE ------------------
ANNOUCEMENT ACQUIROR/ ANNOUCEMENT ----------------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
----------- -------- ----------- -------- ---- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
09/13/94 Investor Group 69.0% N/A $5.50 NA $10 $3
LDB Corp
08/24/94 Dole Food Co Inc. 83.0% N/A $14.00 NA $426 $72
Castle & Cooke Homes Inc.
07/28/94 WMX Technologies Inc. 78.6% $7.86 $8.85 12.6% $1,639 $397
Chemical Waste Management
06/30/94 Parkway Co. 51.3% $14.59 $17.25 18.2% $25 $12
EB Inc.
06/09/94 Investor Group 53.8% N/A $1.43 NA $2 $1
S & M Co.
04/26/94 Burlington Resources Inc. 87.1% N/A $4.48 NA $330 $43
Diamond Shamrock Offshore
03/15/94 MFS Communications Co. 7.0% N/A $11.00 NA $201 $187
Centex Telemanagement Inc.
03/14/94 Sea Containers Ltd. 41.9% N/A $2.68 NA $129 $75
Orient Express Hotels Inc.
01/07/94 Holderbank Financiere Glaris 95.0% $7.65 $7.65 0.0% $1,034 $52
Holnam Inc.
10/18/93 La Quinta Motor Inns Inc. 11.4% N/A $13.00 NA $52 $46
La Quinta Motor Inns LP
10/14/93 Valero Energy Corp. 49.0% N/A $12.10 NA $230 $117
Valero Natural Gas
Partners LP
10/13/93 Medco Containment 54.2% $25.00 $27.25 9.0% $267 $123
Services Inc.
Medical Marketing
Group Inc.
09/22/93 Primerica Corp. 27.0% N/A $36.99 NA $5,419 $3,956
Travelers Corp.
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
------------------------------------------------------
ANNOUCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
----------- -------- -------- ------- ----- ----- ---- --- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/13/94 Investor Group 37.5% 22.2% 22.2% 15.8% (4.3%) 57.1% Cash
LDB Corp
08/24/94 Dole Food Co Inc. 3.7% 33.3% 20.4% (1.8%) (11.1%) 47.4% Cash
Castle & Cooke Homes Inc.
07/28/94 WMX Technologies Inc. (17.7%) 1.1% 10.6% 7.3% (22.2%) 26.4% Common Stock
Chemical Waste Management
06/30/94 Parkway Co. 56.8% 50.0% 43.8% 1.5% 0.0% 56.8% Common Stock
EB Inc. & Cash
06/09/94 Investor Group 90.7% 52.5% 20.4% 20.4% (4.7%) 90.7% Cash
S & M Co.
04/26/94 Burlington Resources Inc. (29.7%) 8.6% (3.1%) (0.4%) (33.6%) 12.0% Cash
Diamond Shamrock Offshore Tender Offer
03/15/94 MFS Communications Co. 63.0% 120.0% 120.0% 4.8% (2.2%) 144.4% Cash
Centex Telemanagement Inc. Tender Offer
03/14/94 Sea Containers Ltd. 34.0% 78.7% 114.4% (6.8%) (14.2%) 114.4% Common Stock
Orient Express Hotels Inc. Tender Offer
01/07/94 Holderbank Financiere Glaris 61.1% 5.5% 13.3% 0.3% (1.3%) 80.0% Cash
Holnam Inc.
10/18/93 La Quinta Motor Inns Inc. 44.4% 33.3% 33.3% 14.3% (1.9%) 36.8% Cash
La Quinta Motor Inns LP Tender Offer
10/14/93 Valero Energy Corp. 51.3% 36.3% 18.0% 11.3% (1.2%) 38.3% Cash
Valero Natural Gas Merger
Partners LP
10/13/93 Medco Containment 29.8% (8.4%) (19.3%) 4.3% (19.9%) 13.5% Cash
Services Inc. Merger
Medical Marketing
Group Inc.
09/22/93 Primerica Corp. 33.3% 15.1% 2.8% (2.0%) (4.8%) 21.3% Common Stock
Travelers Corp. Tender Offer
</TABLE>
<PAGE> 73
ANALYSIS OF SELECTED MINORITY CLOSE OUT TRANSACTIONS
<TABLE>
<CAPTION> EQUITY
% OWNED BY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE ----------------
ANNOUNCEMENT ACQUIROR/ ANNOUNCEMENT ---------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
- ------------ ------------------------------- ------------ -------- ------ ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
09/20/93 Valley Fashions Corp. 95.0% N/A $46.00 NA $1,288 $64
West Point-Pepperrell
(Valley Fashions)
08/26/93 McGraw-Hill Inc 50.0% N/A N/A NA $338 $169
Macmillan/McGraw-Hill School
08/17/93 Time Warner Entertainment Co. 50.0% N/A N/A NA $70 $35
Six Flags Entertainment Corp.
02/19/93 National Mutual Insurance Co. 55.0% N/A $5.80 NA $4 $2
Celina Financial Corp.
01/04/93 Investor Group 52.0% N/A $9.50 NA $25 $12
United Medical Corp.
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
--------------------------------------------------------------
ANNOUNCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
- ----------- ------------------------------ -------- ------- ----- ----- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/20/93 Valley Fashions Corp. -4.7% -5.4% -7.8% -15.6% 11.5% -20.5% Cash
West Point-Pepperrell
(Valley Fashions)
08/26/93 McGraw-Hill Inc N/A N/A N/A N/A N/A N/A Cash
Macmillan/McGraw-Hill School Tender Offer
08/17/93 Time Warner Entertainment Co. N/A N/A N/A N/A N/A N/A Cash
Six Flags Entertainment Corp. Tender Offer
02/19/93 National Mutual Insurance Co. 480.0% 36.5% 36.5% 16.0% -10.8% 480.0% Cash
Celina Financial Corp. Tender Offer
01/04/93 Investor Group 31.0% 49.0% 49.0% 4.1% -2.6% 55.1% Cash
United Medical Corp. Tender Offer
</TABLE>
<TABLE>
<CAPTION> EQUITY
% OWNED BY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE ----------------
ANNOUNCEMENT ACQUIROR/ ANNOUNCEMENT ---------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
- ------------ ------------------------------- ------------ -------- ------ ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
11/13/92 Rust International Corp. 55.8% N/A $18.75 NA $419 $185
Brand Cos Inc.
03/02/92 WR Grace & Co 83.4% N/A $19.00 NA $464 $77
Grace Energy Corp
02/24/92 Unocal Corp 96.0% N/A $11.68 NA $2,925 $117
Unocal Exploration Corp
02/06/92 Charter Co. 82.3% N/A $7.25 NA $239 $42
Spelling Entertainment Inc.
10/16/91 Time Warner Inc. 82.0% N/A $82.50 NA $8,994 $1,619
American Television & Comm.
05/01/91 Tele-Communications Inc. 53.2% $4.75 $16.19 240.8% $2,327 $1,089
United Artists Entertainment
03/01/91 Air & Water Technologies Corp. 82.0% $18.27 $18.92 3.6% $272 $49
Metcalf & Eddy Cos. Inc.
01/31/91 Murphy Oil Corp 61.1% $19.39 $17.31 -10.7% $985 $383
Odeco
02/06/91 BHP Holdings 50.1% $40.00 NA NA $1,055 $528
Hamilton Oil
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
--------------------------------------------------------------
ANNOUNCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
- ----------- ------------------------------ -------- ------- ----- ----- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/13/92 Rust International Corp. -4.5% 10.3% 4.9% -6.3% -21.5% 33.9% Common Stock
Brand Cos Inc. Merger
03/02/92 WR Grace & Co 13.4% 61.7% 31.0% 10.9% 0.0% 0.7% Cash
Grace Energy Corp Tender Offer
02/24/92 Unocal Corp 2.7% 19.8% 18.3% 1.6% N/A N/A Common Stock
Unocal Exploration Corp Merger
02/06/92 Charter Co. 34.9% 48.7% 52.6% 20.8% -3.3% 7.4% Common Stock
Spelling Entertainment Inc. Merger
10/16/91 Time Warner Inc. 82.3% 87.5% 66.7% 57.9% 32.3% 32.8% Con. Pfd.
American Television & Comm. Exchange
Stock Merger
05/01/91 Tele-Communications Inc. 61.9% 29.5% 19.9% 8.8% N/A N/A Common Stock
United Artists Entertainment Merger
03/01/91 Air & Water Technologies Corp. 42.8% 22.1% 20.1% 0.9% N/A N/A Common Stock
Metcalf & Eddy Cos. Inc. Merger
01/31/91 Murphy Oil Corp -12.4% -2.5% 1.8% -3.2% N/A N/A Common Stock
Odeco Tender
02/06/91 BHP Holdings 18.5% 16.8% 25.0% 26.0% 11.9% 58.4% Cash
Hamilton Oil Tender Offer
</TABLE>
<PAGE> 74
ANALYSIS OF SELECTED MINORITY CLOSE OUT TRANSACTIONS
<TABLE>
<CAPTION>
% OWNED BY EQUITY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE -------------------
ANNOUCEMENT ACQUIROR/ ANNOUCEMENT ------------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
- ----------- -------------------------------- ----------- -------- ------ ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
11/12/90 U.S. West Inc. 81.0% $36.00 $44.00 22.2% $1,850 $350
U.S. West NewVector Group
9/26/90 Pier 1 Imports 54.0% $12.00 $12.00 0.0% $42 $19
Sunbelt Nursery Group
7/31/90 Freeport-McMoran Inc. 81.5% $10.50 $11.00 4.8% $1,292 $239
Freeport-McMoran Oil & Gas Co.
7/6/90 Renault Vehicles 44.5% $6.00 $6.25 4.2% $186 $103
Mack Trucks
5/17/90 Kansas City Southern Industries 87.1% $14.00 $15.85 13.2% $270 $35
DST Systems
5/9/90 Primerica Corp. 82.8% $11.06 $11.80 6.7% $285 $49
American Capital Mgmt.
& Research
3/19/90 De Georges 51.0% $24.00 $25.00 4.2% $78 $38
LPL Technologies
2/26/90 American Express 68.4% $11.45 $12.90 12.7% $1,245 $394
Shearson Lehman Hutton
1/24/90 Imetal SA 65.6% $15.50 $17.00 9.7% $151 $52
Copperweld Corp.
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
---------------------------------------------------------
ANNOUCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
- ----------- -------------------------------- -------- ------- ----- ----- ---- ----- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/12/90 U.S. West Inc. 47.9% 74.3% 44.3% 28.0% 2.9% 122.8% Common Stock
U.S. West NewVector Group Merger
9/26/90 Pier 1 Imports 84.6% 41.2% 37.1% 2.1% 0.0% 128.6% Cash
Sunbelt Nursery Group Tender Offer
7/31/90 Freeport-McMoran Inc. 15.8% 49.2% 37.5% 8.6% (15.4%) 54.4% Common Stock
Freeport-McMoran Oil & Gas Co. Merger
7/6/90 Renault Vehicles 13.6% 22.0% 19.0% (3.8%) (47.9%) 35.1% Cash
Mack Trucks Tender Offer
5/17/90 Kansas City Southern Industries 47.4% 54.6% 24.3% 7.5% 4.8% 76.1% Cash
DST Systems Tender Offer
5/9/90 Primerica Corp. 36.8% 36.8% 40.9% 29.3% 18.0% 43.0% Common Stock
American Capital Mgmt. Merger
& Research
3/19/90 De Georges 42.9% 44.9% 28.2% 11.1% 0.0% 163.2% Cash & Preferred
LPL Technologies Tender
2/26/90 American Express (43.9%) 18.6% 18.6% 7.4% (46.3%) 27.4% Common Stock
Shearson Lehman Hutton Merger
1/24/90 Imetal SA 23.6% 31.4% 7.8% 7.9% 6.3% 51.1% Cash
Copperweld Corp. Tender Offer
</TABLE>
<PAGE> 75
ANALYSIS OF SELECTED MINORITY CLOSE OUT TRANSACTIONS
<TABLE>
<CAPTION>
% OWNED BY EQUITY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE -------------------
ANNOUNCEMENT ACQUIROR/ ANNOUCEMENT ------------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
- ------------ ------------------------------- ----------- -------- ------ ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1/15/91 Fuji Heavy Industries 49.5% $6.00 $8.50 41.7% $420 $208
Subaru of America
4/9/90 Canadian Pacific Ltd. 55.8% $21.50 $19.50 -9.3% $185 $82
Soo Line Corp.
12/20/89 National Intergroup 44.1% $4.00 $4.43 10.8% $106 $59
Permian Partners
10/5/89 Ogden Corp. 68.3% $14.75 $15.13 2.6% $114 $36
ERC Environmental
10/3/89 Esselte AB 78.0% $40.00 $46.50 16.3% $956 $210
Esselte Business Systems Inc.
9/22/89 Dow Jones & Co. 67.0% $18.00 $21.00 16.7% $1,993 $658
Telerate, Inc.
8/4/89 Jefferson Smurfit Group 78.0% $38.00 $43.00 13.2% $497 $109
PLC/Morgan Stanley Leveraged
Equity Fund II L.P.
Jefferson Smurfit Corporation
7/31/89 Montedison S.p.A. 72.0% $37.00 $37.00 0.0% $1,639 $459
Erbamont NV
7/31/89 Montedison S.p.A. 81.0% $49.00 $51.00 4.1% $3,306 $628
Himont Incorporated
6/9/89 Primerica 69.0% $20.50 $20.50 0.0% $1,385 $429
A.L. Williams corp.
6/9/89 Henley Group, Inc. 80.0% $20.50 $22.25 8.5% $815 $163
Fisher Scientific Group Inc.
5/24/89 Tele-Communications Inc. 75.0% $32.25 $32.25 0.0% $401 $100
WestMarc Communications Inc.
5/19/89 Carlson Hospitality Group 80.0% $14.50 $14.88 2.6% $165 $33
TGI Fridays Inc.
1/17/89 Paramount Communications 74.8% $7.50 $9.50 26.7% $187 $47
TVX Broadcast Group
12/14/88 Ingram Industries 59.0% $12.50 $12.50 0.0% $90 $37
Micro D
12/6/88 General Electric 54.0% $22.50 $22.50 0.0% $602 $277
FGIC Corp
12/6/88 Investor (Amini) 69.0% $5.87 $5.87 0.0% $65 $20
Sage Energy
12/1/88 RTZ Corp. 60.5% $11.79 $12.63 7.1% $619 $244
Indal Ltd.
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
--------------------------------------------------------
ANNOUNCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
---- ------ ----- ----- ----- ----- ---- --- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/15/91 Fuji Heavy Industries 47.8% 44.7% 61.9% 38.8% 0.0% 70.0% Cash
Subaru of America Merger
4/9/90 Canadian Pacific Ltd. 3.3% 12.2% 11.4% (3.7%) (24.6%) 14.7% Cash
Soo Line Corp. Tender Offer
12/20/89 National Intergroup (21.2%) 26.6% 26.6% 14.3% (36.7%) 86.5% Cash
Permian Partners Tender Offer
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/5/89 Ogden Corp. 89.0% 78.0% 61.4% 23.5% 15.3% 108.7% Cash
ERC Environmental Tender Offer
10/3/89 Esselte AB 36.8% 38.8% 24.2% 8.1% 22.8% 69.1% Cash
Esselte Business Systems Inc. Tender Offer
9/22/89 Dow Jones & Co. 52.7% 37.7% 3.0% 5.0% 3.1% 57.0% Cash
Telerate, Inc. Tender Offer
8/4/89 Jefferson Smurfit Group 20.3% 62.3% 38.7% 12.4% 13.5% 74.6% Cash
PLC/Morgan Stanley Leveraged Tender Offer
Equity Fund II L.P.
Jefferson Smurfit Corporation
7/31/89 Montedison S.p. A. 23.3% 33.3% 18.9% 1.0% 2.4% 45.1% Cash/Warrents
Erbamont NV Tender Offer
7/31/89 Montedison S.p. A. 22.5% 32.5% 15.6% 7.4% 6.8% 54.5% Cash/Warrents
Himont Incorporated Tender Offer
6/9/89 Primerica 41.4% 33.3% 14.7% 13.9% 13.1% 34.3% Common Stock
A.L. Williams corp. Merger
6/9/89 Henley Group, Inc. 36.9% 14.1% 15.6% 9.9% 7.2% 58.9% Cash
Fisher Scientific Group Inc. Tender Offer
5/24/89 Tele-Communications Inc. 79.2% 55.4% 19.4% 6.2% 7.1% 98.5% Cash or Pfd
WestMarc Communications Inc. Tender Offer
5/19/89 Carlson Hospitality Group 29.3% 14.4% 12.3% 0.0% 8.2% 95.1% Cash
TGI Fridays Inc. Tender Offer
1/17/89 Paramount Communications 245.5% 533.3% 322.2% 137.5% 123.5% 660.0% Cash
TVX Broadcast Group Tender Offer
12/14/88 Ingram Industries 33.3% 33.3% 19.0% 2.0% 5.3% 88.7% Cash
Micro D Tender Offer
12/6/88 General Electric 36.4% 23.3% 22.4% 2.3% 14.6% 60.7% Cash
FGIC Corp Merger
12/6/88 Investor (Amini) (7.9%) 9.2% 11.8% 11.8% (9.7%) 11.8% Cash
Sage Energy Merger
12/1/88 RTZ Corp. 34.7% 20.3% (9.0%) (15.1%) (15.1%) (9.0%) Cash
Indal Ltd. Tender Offer
</TABLE>
<PAGE> 77
ANALYSIS OF SELECTED MINORITY CLOSE OUT TRANSACTIONS
<TABLE>
<CAPTION>
% OWNED BY EQUITY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE -------------------
ANNOUNCEMENT ACQUIROR/ ANNOUCEMENT ------------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
- ------------ -------------------------------- ----------- -------- ------ ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
12/1/88 Network Security Corporation 56.0% $14.50 $17.38 19.9% $69 $30
Interactive Technologies, Inc.
11/18/88 Management 51.0% $80.00 $90.00 12.5% $991 $486
Henely Manufacturing Corp.
10/6/88 Bally Manufacturing Corp. 71.0% $5.34 $5.34 0.0% $84 $24
U.S. Health Inc.
10/4/88 Qintex Australia Limited 53.0% $15.50 $15.50 0.0% $150 $71
Princeville Corporation
9/28/88 Nontedison SpA 72.7% $33.50 $35.00 4.5% $1,019 $278
Ausimont NV
9/16/88 Investors (Warburg) 63.0% $8.50 $8.50 0.0% $89 $33
Coast America
8/15/88 MGC Merger Company (a) 75.0% $10.25 $11.13 8.6% $94 $24
Malrite Communications
6/15/88 Albert Energy Co. Ltd. (b) 57.0% $11.48 $11.48 0.0% $231 $100
Chieftain Development
5/2/88 Management Group 70.0% $15.00 $22.50 50.0% $168 $50
Thompson Medical Co.
4/26/88 S.H. Holdings 77.0% $10.50 $11.75 11.9% $96 $22
Gruen Marketing
4/25/88 DC Holdings Inc. 76.0% $35.00 $35.00 0.0% $90 $22
Diamond Crystal Salt
4/22/88 Carl C. Ichan (c) 77.0% $39.50 $41.19 4.3% $1,257 $289
Trans World Airlines
4/13/88 Curtis Squire Inc. 70.0% $16.25 $17.70 8.9% $146 $44
Regis Corp.
3/18/88 Management 80.0% $29.50 $29.50 0.0% $80 $16
Meyers Parking Systems, Inc.
3/18/88 Dyson-Kissner-Moran Corp. 53.8% $17.00 $19.35 13.8% $110 $51
Kearney-National Inc.
3/17/88 ESOP (d) 70.0% $57.00 $60.00 5.3% $152 $46
Arthur D. Little Inc.
3/10/88 ISSC Holdings 55.0% $12.00 $12.00 0.0% $49 $22
Ideal School Supply
2/25/88 Compagnie de Saint-Gobain 57.0% $41.00 $47.50 15.9% $902 $388
Certain Teed Corporation
2/25/88 L'Air Liquid S.A. 94.1% $37.00 $37.00 0.0% $466 $27
Liquid Air Corporation
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
--------------------------------------------------------
ANNOUCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
- ----------- -------------------------------- -------- ------- ----- ----- ---- --- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/1/88 Network Security Corporation 61.7% 22.0% 24.1% 5.3% 8.6% 275.8% Cash
Interactive Technologies, Inc. Tender Offer
11/18/88 Management 130.8% 61.4% 62.2% 42.9% 62.2% 350.0% Cash
Henely Manufacturing Corp. Merger
10/6/88 Bally Manufacturing Corp. 6.8% 8.1% 6.8% 4.2% 6.8% 151.3% Cash
U.S. Health Inc. Merger
10/4/88 Qintex Australia Limited 36.3% 27.8% 7.8% 5.1% 6.0% 87.9% Cash
Princeville Corporation Tender Offer
9/28/88 Nontedison SpA 29.6% 3.7% 4.9% 2.2% (2.4%) 164.2% Cash
Ausimont NV Merger
9/16/88 Investors (Warburg) 13.3% 36.0% 30.8% 7.9% 3.0% 38.8% Cash
Coast America Merger
8/15/88 MGC Merger Company (a) 68.0% 29.0% 39.1% 9.9% (12.7%) 93.6% Cash/Notes
Malrite Communications Tender Offer
6/15/88 Albert Energy Co. Ltd. (b) 64.0% 21.6% (0.2%) (1.2%) (1.2%) 70.1% Cash
Chieftain Development Tender Offer
5/2/88 Management Group 56.5% 78.2% 59.3% 17.6% (4.3%) 93.5% Cash
Thompson Medical Co. Merger
4/26/88 S.H. Holdings 67.9% 16.0% 17.5% 19.0% 2.2% 91.8% Cash
Gruen Marketing Tender Offer
4/25/88 DC Holdings Inc. 9.4% 12.9% (1.4%) (1.4%) (10.3%) 40.0% Cash
Diamond Crystal Salt Tender Offer
4/22/88 Carl C. Ichan (c) 106.0% 51.2% 49.8% 53.3% 18.1% 115.4% Merger for
Trans World Airlines Cash/Notes
4/13/88 Curtis Squire Inc. 18.0% 22.1% 8.9% 9.8% 8.9% 64.7% Cash
Regis Corp. Merger
3/18/88 Management 25.5% 73.5% 68.6% 18.0% 15.7% 84.4% Cash
Meyers Parking Systems, Inc. Merger
3/18/88 Dyson-Kissner-Moran Corp. 17.7% 56.4% 50.3% 9.8% 9.8% 54.8% Cash
Kearney-National Inc. Merger
3/17/88 ESOP (d) 20.0% 71.4% 81.8% 9.1% 15.4% 81.8% Cash
Arthur D. Little Inc. Merger
3/10/88 ISSC Holdings 3.2% 7.9% 14.3% 11.6% (12.7%) 54.8% Cash
Ideal School Supply Tender Offer
2/25/88 Compagnie de Saint-Gobain 4.4% 86.3% 50.2% 4.4% 5.3% 91.9% Cash
Certain Teed Corporation Tender Offer
2/25/88 L'Air Liquid S.A. 10.4% 52.6% 31.0% 2.8% 8.8% 60.9% Cash
Liquid Air Corporation Tender Offer
</TABLE>
<PAGE> 78
MERRILL LYNCH & CO.
ANALYSIS OF SELECTED MINORITY CLOSE OUT TRANSACTIONS
<TABLE>
<CAPTION>
% OWNED BY EQUITY VALUE ($MIL)
ACQUIROR ON OFFER PER SHARE -------------------
ANNOUNCEMENT ACQUIROR/ ANNOUCEMENT ------------------------------- MINORITY
DATE TARGET DATE ORIGINAL LAST CHANGE (%) TOTAL POSITION
- ------------ ---------------------------------------- ----------- -------- ------ ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
2/17/88 Minstar Inc. 83.5% $11.50 $12.50 8.7% $362 $60
Genmar Industries
2/1/88 Donald J. Trump (e) 0.0% $22.00 $22.00 0.0% $125 $125
Resorts International (Class A shares)
1/14/88 Kinburn Corp. 51.8% $9.31 $9.31 0.0% $112 $54
Paperboard Industries Corp.
</TABLE>
<TABLE>
<CAPTION>
PREMIUM PAID OVER PER SHARE PRICE
--------------------------------------------------------
ANNOUCEMENT ACQUIROR/ 6 MONTHS 1 MONTH 1 DAY 1 DAY LTM LTM FORM OF
DATE TARGET PRIOR PRIOR PRIOR AFTER HIGH LOW TRANSACTION
- ----------- ---------------------------------------- -------- ------- ----- ----- ---- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/17/88 Minstar Inc. 19.0% 51.5% 37.0% 16.3% 17.6% 127.3% Cash
Genmar Industries Tender Offer
2/1/88 Donald J. Trump (e) (66.2%) 67.6% 12.1% 6.7% 8.6% 12.1% Cash
Resorts International (Class A shares) Tender Offer
1/14/88 Kinburn Corp. (13.9%) 77.3% 2.0% 4.9% 55.2% Cash
Paperboard Industries Corp. Tender Offer
</TABLE>
<PAGE> 79
CONTEL CELLULAR INC. (CLASS A)
HISTORICAL PRICE PERFOMANCE
SUMMARY: APRIL 21, 1988 TO OCTOBER 14, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Calendar 1988 Stock Trading Summary:
High: $ 12.00 30-Dec-88 High Close: $ 12.00 30-Dec-88 Average Close: $ 9.28
Low: 7.06 23-May-88 Low Close: 7.06 23-May-88 Average Volume: 153,331
Calendar 1989 Stock Trading Summary:
High: $ 27.25 13-Sep-89 High Close: $ 26.75 13-Sep-89 Average Close: $ 21.20
Low: 11.75 04-Jan-89 Low Close: 11.81 03-Jan-89 Average Volume: 92,956
Calendar 1990 Stock Trading Summary:
High: $ 25.50 02-Jan-90 High Close: $ 25.25 01-Jan-90 Average Close: $ 17.26
Low: 9.38 21-Sep-90 Low Close: 9.75 21-Sep-90 Average Volume: 53,509
Calendar 1991 Stock Trading Summary:
High: $ 25.00 28-Mar-91 High Close: $ 24.88 28-Mar-91 Average Close: $ 20.40
Low: 16.00 14-Jan-91 Low Close: 16.50 14-Jan-91 Average Volume: 31,984
Calendar 1992 Stock Trading Summary:
High: $ 23.25 03-Jan-92 High Close: $ 22.50 01-Jan-92 Average Close: $ 16.97
Low: 13.00 23-Jun-92 Low Close: 13.25 25-Jun-92 Average Volume: 33,592
Calendar 1993 Stock Trading Summary:
High: $ 22.00 15-Oct-93 High Close: $ 22.00 14-Oct-93 Average Close: $ 16.35
Low: 13.25 08-Feb-93 Low Close: 13.50 19-Apr-93 Average Volume: 59,577
Calendar 1994YTD Stock Trading Summary:
High: $ 24.00 13-Oct-94 High Close: $ 23.88 05-Oct-94 Average Close: $ 17.51
Low: 13.00 04-Apr-94 Low Close: 13.25 04-Apr-94 Average Volume: 63,263
- --------------------------------------------------------------------------------------------------
Stock Trading Summary Since IPO:
High: $ 27.25 13-Sep-89 High Close: $ 26.75 13-Sep-89 Average Close: $ 17.34
Low: 7.06 23-May-88 Low Close: 7.06 23-May-88 Average Volume: 63,481
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Stock Trading Summary Since GTE/Contel Merger Annoucement (7/11/90):
High: $ 25.00 28-Mar-91 High Close: $ 24.88 28-Mar-91 Average Close: $ 17.54
Low: 9.38 21-Sep-90 Low Close: 9.75 21-Sep-90 Average Volume: 46,575
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Stock Trading Summary Since GTE Minority Buyback Announcement (9/8/94):
High: $ 24.00 13-Oct-94 High Close: $ 23.88 05-Oct-94 Average Close: $ 23.61
Low: 22.75 08-Sep-94 Low Close: 23.13 09-Sep-94 Average Volume: 233,289
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 80
OVERVIEW OF CONTEL CELLULAR
- --------------------------------------------------------------------------------
STOCK PRICE PERFORMANCE
<TABLE>
<CAPTION>
PRIOR TO MERGER
AT IPO ANNOUNCEMENT CURRENT PRICE
21-APR-88 11-JUL-90 17-OCT-94
--------- --------------- -------------
<S> <C> <C> <C>
Contel Cellular Stock Price $8.500 $17.625 $23.750
RETURNS SINCE IPO:
Contel Cellular Compound Annual Return 17.1% --
Composite Cellular Index Annual Return
April 21, 1988 to October 17, 1994(a) 14.1% --
Adjusted Composite Cellular Index Annual Return
April 21, 1988 to October 17, 1994(b) 12.2% --
RETURNS SINCE MERGER ANNOUNCEMENT
Contel Cellular Compound Annual Return -- 7.2%
Composite Cellular Index Annual Return
July 11, 1990 to October 17, 1994(a) -- 11.4%
Adjusted Composite Cellular Index Annual Return
July 11, 1990 to October 17, 1994(b) -- 6.5%
</TABLE>
- ---------------------------
(a) Cellular Composite: LIN Broadcasting, McCaw Cellular, Vanguard Cellular &
U.S. Cellular
(b) Adjusted Cellular Composite excludes McCaw Cellular & LIN Broadcasting
<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REVISED PRELIMINARY COPY DATED APRIL 14, 1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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
/ / DEFINITIVE INFORMATION STATEMENT
CONTEL CELLULAR INC.
(NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
CONTEL CELLULAR INC.
(NAME OF PERSON FILING THE INFORMATION STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/ / $125 PER EXCHANGE ACT RULE 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH PER UNIT PRICE OR OTHER
CLASS OF SECURITIES AGGREGATE NUMBER OF UNDERLYING VALUE OF TRANSACTION PROPOSED MAXIMUM
TO WHICH SECURITIES TO WHICH COMPUTED PURSUANT TO AGGREGATE VALUE AMOUNT OF
TRANSACTION APPLIES TRANSACTION APPLIES EXCHANGE ACT RULE 0-11 OF TRANSACTION FILING FEE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Class A Common Stock, par
value $1.00 per share....... 9,970,953 $25.50 $254,259,301.50 $50,851.86
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/X/ 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.
<TABLE>
<S> <C>
Amount Previously Paid: $50,851.86 Filing Party: Contel Cellular Inc.
Form, Schedule or Registration
Statement No.: 14C Date Filed: January 30, 1995
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION STATEMENT
------------------------
CONCERNING THE MERGER OF
CONTEL CELLULAR ACQUISITION CORPORATION,
A SUBSIDIARY OF CONTEL CORPORATION,
WITH AND INTO
CONTEL CELLULAR INC.,
AT A PRICE OF $25.50 PER CLASS A SHARE
------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
------------------------
This Information Statement is being furnished to the holders of outstanding
shares of the Class A Common Stock (the "Class A Stockholders") of Contel
Cellular Inc., a Delaware corporation (the "Company"), as of the Record Date (as
defined below) in connection with the proposed merger (the "Merger") of Contel
Cellular Acquisition Corporation, a Delaware corporation ("CCI Acquisition"),
with and into the Company. The Company will be the corporation that survives the
Merger (the "Surviving Corporation"). The Merger will be effected pursuant to an
Agreement and Plan of Merger dated as of December 27, 1994, as amended (the
"Merger Agreement"), among the Company, GTE Corporation, a New York corporation
("GTE"), Contel Corporation, a Delaware corporation in liquidation and a wholly
owned subsidiary of GTE ("Contel"), and CCI Acquisition, which is a wholly owned
subsidiary of Contel. In the Merger, (i) each outstanding share of the Class A
Common Stock, par value $1.00 per share, of the Company (a "Class A Share")
(other than Class A Shares as to which appraisal rights have been properly
exercised under the General Corporation Law of the State of Delaware (the
"DGCL")) will be converted into the right to receive $25.50 in cash, without
interest, subject to applicable back-up withholding taxes (the "Merger
Consideration"), (ii) each Class A Share held by the Company and each
outstanding share of the common stock of CCI Acquisition will be cancelled, and
no payment will be made with respect thereto and (iii) each outstanding share of
the Class B Common Stock, par value $1.00 per share, of the Company (a "Class B
Share") will continue to be outstanding. After the effective date of the Merger,
the Class A Shares will cease to be quoted on the Nasdaq National Market.
YOU ARE URGED TO REVIEW THIS INFORMATION STATEMENT CAREFULLY TO DECIDE
WHETHER TO ACCEPT THE MERGER CONSIDERATION OR TO EXERCISE APPRAISAL RIGHTS
PURSUANT TO THE DGCL. IF YOU WISH TO ACCEPT THE MERGER CONSIDERATION, PLEASE
COMPLETE, EXECUTE AND SEND THE ENCLOSED LETTER OF TRANSMITTAL, TOGETHER WITH
CERTIFICATES REPRESENTING YOUR CLASS A SHARES, TO CHEMICAL BANK, AS DISBURSING
AGENT FOR THE MERGER (THE "DISBURSING AGENT"), IN ACCORDANCE WITH THE
INSTRUCTIONS SET FORTH IN THE LETTER OF TRANSMITTAL. IF YOU WISH TO EXERCISE
APPRAISAL RIGHTS PURSUANT TO THE DGCL, YOU MUST, WITHIN 20 DAYS OF THE DATE OF
THE MAILING OF THIS INFORMATION STATEMENT, DELIVER TO THE COMPANY A WRITTEN
DEMAND FOR A JUDICIAL APPRAISAL OF THE FAIR VALUE OF YOUR CLASS A SHARES AND
OTHERWISE COMPLY WITH THE APPLICABLE PROVISIONS OF THE DGCL. SEE "DISSENTERS'
RIGHTS OF APPRAISAL" AND THE TEXT OF SECTION 262 OF THE DGCL ATTACHED AS EXHIBIT
D TO THIS INFORMATION STATEMENT.
The record date for stockholders entitled to notice of or entitled to give
consent to the Merger was March 16, 1995 (the "Record Date"). As of the Record
Date there were issued and outstanding 9,970,953 Class A Shares and 90,000,000
Class B Shares. Each Class A Share is entitled to one vote per share and each
Class B Share is entitled to five votes per share. On the Record Date, Contel
owned 90,000,000 Class B Shares, which accounted for approximately 98% of the
combined voting power of the outstanding Class A Shares and Class B Shares.
Pursuant to the DGCL, Contel, as the owner of more than 50% of the combined
voting power of the Class A Shares and Class B Shares, approved the Merger by
written consent on April 10, 1995. Other than such written consent, no further
action by the stockholders of the Company is necessary to approve or consummate
the Merger and no such approval will be sought. The Company will not hold a
meeting of the stockholders of the Company in connection with the Merger. The
Merger will be consummated on May , 1995.
This Information Statement is being mailed on April , 1995 to Class A
Stockholders of record on the Record Date, and constitutes the notice of
appraisal rights required by Section 262 of the DGCL and the notice of corporate
action without meeting required by Section 228(d) of the DGCL.
The principal executive offices of the Company are located at 245 Perimeter
Center Parkway, Atlanta, Georgia 30346 and its telephone number is (404)
804-3400.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE DISBURSING AGENT FOR THE MERGER IS:
CHEMICAL BANK
The date of this Information Statement is April , 1995
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY.............................................................................. 4
SPECIAL FACTORS...................................................................... 10
Introduction; The Merger........................................................... 10
Background of the Merger........................................................... 10
Determination of the Special Committee and the Board; Fairness of the Merger....... 13
Opinion of Financial Advisor to the Special Committee.............................. 15
Determination of the Fairness of the Merger by GTE, Contel and CCI Acquisition..... 19
Opinions of Financial Advisors to GTE.............................................. 20
Certain Litigation................................................................. 28
Written Consent.................................................................... 29
Merger Consideration............................................................... 29
Accounting Treatment of the Merger................................................. 29
Certain Federal Income Tax Consequences of the Merger.............................. 30
Plans for the Company; Certain Effects of the Merger............................... 30
THE MERGER AGREEMENT................................................................. 32
General............................................................................ 32
Designation of Directors; Certificate of Incorporation and By-laws................. 32
Representations and Warranties..................................................... 32
Indemnification and Other Covenants................................................ 32
Conditions to the Merger........................................................... 33
Termination........................................................................ 33
Amendment.......................................................................... 33
Extension; Waiver.................................................................. 33
PAYMENT OF THE MERGER CONSIDERATION.................................................. 34
DISSENTERS' RIGHTS OF APPRAISAL...................................................... 35
MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK
OF THE COMPANY..................................................................... 37
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY.................................. 38
PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY................................. 39
BUSINESS OF THE COMPANY.............................................................. 41
Overview........................................................................... 41
Cellular Interests................................................................. 41
The Cellular Telephone Industry.................................................... 44
The Company's Cellular Operations.................................................. 45
Non-Controlled Systems............................................................. 49
International Interests............................................................ 50
Competition........................................................................ 50
Regulation......................................................................... 50
RELATED PARTY TRANSACTIONS........................................................... 51
Arrangements and Transactions with Contel and GTE.................................. 51
Payments to Optionholders.......................................................... 53
Relationship between GTE Director and PaineWebber.................................. 53
Transition Arrangements............................................................ 54
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT......................................................................... 55
Certain Beneficial Owners.......................................................... 55
Directors and Executive Officers of the Company.................................... 55
Directors and Executive Officers of GTE, Contel and CCI Acquisition................ 56
</TABLE>
2
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 57
GLOSSARY............................................................................. 58
EXHIBIT A -- AGREEMENT AND PLAN OF MERGER, AS AMENDED.............................. A-1
EXHIBIT B -- OPINION OF LAZARD FRERES & CO......................................... B-1
EXHIBIT C-1 -- OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED...................................................... C-1-1
EXHIBIT C-2 -- OPINION OF PAINEWEBBER INCORPORATED................................... C-2-1
EXHIBIT D -- DELAWARE GENERAL CORPORATION LAW SECTION 262.......................... D-1
EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL
CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL
CELLULAR INC.......................................................... E-1
</TABLE>
3
<PAGE> 5
SUMMARY
The following is a summary of certain information contained elsewhere in
this Information Statement. This Summary does not purport to be complete and is
qualified in its entirety by the more detailed information contained elsewhere
in this Information Statement and the Exhibits hereto. Unless defined in this
Summary, capitalized terms used herein have the meanings ascribed to them
elsewhere in this Information Statement. STOCKHOLDERS ARE URGED TO READ THIS
INFORMATION STATEMENT AND THE EXHIBITS HERETO IN THEIR ENTIRETY IN ORDER TO
DECIDE WHETHER TO ACCEPT THE MERGER CONSIDERATION OR TO EXERCISE APPRAISAL
RIGHTS PURSUANT TO THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE (THE
"DGCL"). WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
SPECIAL FACTORS
Introduction; The Merger. This Information Statement is being furnished to
the holders of outstanding shares of the Class A Common Stock (the "Class A
Stockholders") of Contel Cellular Inc., a Delaware corporation (the "Company"),
in connection with the proposed merger (the "Merger") of Contel Cellular
Acquisition Corporation, a Delaware corporation ("CCI Acquisition"), with and
into the Company. The Company will be the corporation that survives the Merger
(the "Surviving Corporation"). The Merger will be effected pursuant to an
Agreement and Plan of Merger dated as of December 27, 1994, as amended (the
"Merger Agreement"), among the Company, GTE Corporation, a New York corporation
("GTE"), Contel Corporation, a Delaware corporation in liquidation and a wholly
owned subsidiary of GTE ("Contel"), and CCI Acquisition, which is a wholly owned
subsidiary of Contel. Certain additional information relating to GTE, Contel,
CCI Acquisition and the Company and each of their respective directors and
executive officers is included in Exhibit E to this Information Statement.
In the Merger, (i) each outstanding share of the Class A Common Stock of
the Company, par value $1.00 per share (each a "Class A Share") (other than
Class A Shares as to which appraisal rights have been properly exercised under
the DGCL), will be converted into the right to receive $25.50 in cash, without
interest, subject to back-up withholding taxes (the "Merger Consideration"),
(ii) each Class A Share held by the Company and each outstanding share of the
common stock of CCI Acquisition will be cancelled, and no payment will be made
with respect thereto and (iii) each outstanding share of the Class B Common
Stock of the Company, par value $1.00 per share (each a "Class B Share"), will
continue to be outstanding.
The Merger is subject to the satisfaction of certain conditions. See "THE
MERGER AGREEMENT -- Conditions to the Merger". Assuming the satisfaction of such
conditions, the Merger will be consummated on May , 1995.
Background of the Merger. GTE, through its wholly owned subsidiary Contel,
owns all of the outstanding Class B Shares of the Company, which constitute 90%
of the Company's outstanding common stock and approximately 98% of the combined
voting power of the capital stock of the Company. The outstanding Class A
Shares, which constitute 10% of the Company's outstanding common stock and
approximately 2% of the combined voting power of the capital stock of the
Company, are held by the public. GTE believes that the cellular communications
businesses conducted by the Company and another wholly owned subsidiary of GTE,
GTE Mobilnet Incorporated ("GTE Mobilnet"), can be conducted more effectively by
acquiring the outstanding minority interest in the Company and consolidating
GTE's cellular operations. GTE's decision is based on its belief that such
consolidation will permit GTE to implement a unified marketing strategy for its
cellular operations, provide increased flexibility in pursuing future
opportunities, generate efficiencies in the combined cellular communications
business and eliminate the complexities of operating two cellular businesses
with overlapping but not identical ownership. For a discussion of GTE's reasons
for acquiring the minority interest see "SPECIAL FACTORS -- Background of the
Merger" and "SPECIAL FACTORS -- Plans for the Company; Certain Effects of the
Merger". GTE believes that the most efficient way to effect the acquisition of
the shares held by the public and to provide Class A Stockholders with cash for
their Class A Shares is through the merger of a wholly owned subsidiary of
Contel into the Company. At the time the Company received GTE's initial proposal
to acquire the Class A Shares, nine of the Company's twelve directors were
executive officers or directors of GTE or the Company.
4
<PAGE> 6
Accordingly, the Board of Directors of the Company (the "Board") appointed a
special committee of the three independent directors (the "Special Committee")
to negotiate the Merger on behalf of Class A Stockholders and make a
recommendation to the Board of Directors in connection with the transaction.
Record Date; No Action Required by Class A Stockholders to Consummate the
Merger. The Record Date for stockholders entitled to notice of or entitled to
give consent to the Merger was March 16, 1995. As of the Record Date, there were
issued and outstanding 9,970,953 Class A Shares, each of which has one vote per
share, and 90,000,000 Class B Shares, each of which has five votes per share. On
the Record Date, Contel owned 90,000,000 Class B Shares, which accounted for
approximately 98% of the combined voting power of the outstanding Class A Shares
and Class B Shares. Pursuant to the DGCL, Contel, as holder of record of more
than 50% of the combined voting power of the Class A Shares and Class B Shares,
approved the Merger by written consent on April 10, 1995. Under the DGCL, no
action on the part of any other stockholder of the Company is necessary to
authorize or to consummate the Merger. The Company will not hold a meeting of
stockholders in connection with the Merger.
Determination of the Special Committee and the Board; Fairness of the
Merger. On December 27, 1994, the Special Committee concluded that the
acquisition of Class A Shares pursuant to the Merger was substantively and
procedurally fair to the holders of the outstanding Class A Shares, including
from a financial point of view, and unanimously recommended that the Board of
Directors approve the Merger Agreement and approve the Merger at a price of
$25.50 per Class A Share. Based on the recommendation of the Special Committee,
the Board unanimously approved the Merger and the Merger Agreement. For a
discussion of the factors the Special Committee considered in reaching its
decision, see "SPECIAL FACTORS -- Determination of the Special Committee and the
Board; Fairness of the Merger".
Opinion of Financial Advisor to the Special Committee. At a meeting on
December 22, 1994 (the "December 22 Special Committee Meeting"), Lazard Freres &
Co. ("Lazard Freres"), financial advisor to the Special Committee, informed the
Special Committee that it would be prepared to deliver a written opinion to the
effect that the proposed price of $25.50 per Class A Share to be received by the
Class A Stockholders in the Merger would be fair to such holders from a
financial point of view. Subsequently, on December 30, 1994, Lazard Freres
delivered its written opinion to the Special Committee that, as of such date,
the consideration to be received by the holders of the Class A Shares in the
Merger (other than GTE, Contel or any of their affiliates) is fair to such
holders from a financial point of view. A copy of such written opinion, setting
forth the assumptions made, matters considered and the review undertaken, is
attached to this Information Statement as Exhibit B. Class A Stockholders are
urged to read this opinion in its entirety. No limitations were imposed by the
Special Committee upon Lazard Freres with respect to the investigation made or
the procedures followed by Lazard Freres in rendering its opinion. For a
discussion of the matters Lazard Freres considered in reaching its opinion, see
"SPECIAL FACTORS -- Opinion of Financial Advisor to the Special Committee".
Determination of Fairness of the Merger by GTE, Contel and CCI
Acquisition. GTE, Contel and CCI Acquisition believe that the transaction is
fair to the Class A Stockholders. GTE, Contel and CCI Acquisition did not retain
financial advisors to evaluate the fairness of the transaction to the Class A
Stockholders. See "SPECIAL FACTORS -- Determination of the Fairness of the
Merger by GTE, Contel and CCI Acquisition".
Opinions of Financial Advisors to GTE. GTE retained Merrill Lynch, Pierce,
Fenner & Smith Incorporated and PaineWebber Incorporated (the "GTE Financial
Advisors") in connection with the transaction. The GTE Financial Advisors
assisted GTE in its negotiations with the Special Committee and Lazard Freres.
In connection with the transaction, the GTE Financial Advisors rendered opinions
to GTE to the effect that the price to be paid for the Class A Shares in the
Merger is fair to GTE from a financial point of view. A copy of the fairness
opinions of the GTE Financial Advisors setting forth the assumptions made,
matters considered and review undertaken, are attached to this Information
Statement as Exhibits C-1 and C-2 and incorporated herein by reference. For a
discussion of the matters the GTE Financial Advisors considered in reaching
their respective opinions, see "SPECIAL FACTORS -- Opinions of Financial
Advisors to GTE".
5
<PAGE> 7
Certain Litigation. Following the public announcement of the proposed
Merger four stockholders of the Company filed separate lawsuits in the Court of
Chancery of the State of Delaware in and for New Castle County (the "Court")
against the Company on behalf of the Class A Stockholders alleging that the
initially announced purchase price was inadequate. After negotiations involving
plaintiffs' counsel and counsel for GTE, Contel and CCI Acquisition and counsel
for the Special Committee, a tentative settlement agreement was reached with
plaintiffs on December 23, 1994, subject to confirmatory discovery. The
tentative settlement approves the price of $25.50 per Class A Share and the
payment of $525,000 in plaintiffs' counsel fees and expenses. The confirmatory
discovery has been completed by plaintiffs' counsel and all documentation
necessary to effect the settlement has been submitted to the Court. The Court
has scheduled a hearing on June 8, 1995 to approve the settlement. The tentative
settlement agreement does not limit the ability of Class A Stockholders to
otherwise challenge corporate actions or to exercise appraisal rights pursuant
to the DGCL. See "SPECIAL FACTORS -- Certain Litigation".
Plans for the Company; Certain Effects of the Merger. As a result of the
transaction, the Class A Stockholders will no longer have an equity interest in
the Company and, accordingly, will not continue to participate in the results of
the Company as an equity holder. However, they will receive cash for their
interest. The receipt of cash for the Class A Shares is a taxable transaction
under federal and certain state laws. Generally, each Class A Stockholder will
be required to recognize a gain or loss equal to the difference between the
stockholder's basis in the Class A Shares and the amount of cash received
pursuant to the Merger. See "SPECIAL FACTORS -- Certain Federal Income Tax
Consequences of the Merger"; "SPECIAL FACTORS -- Plans for the Company; Certain
Effects of the Merger". Also, as a result of the transaction the Class A Shares
will cease to be registered under the federal securities laws and cease to be
publicly traded.
It is expected that the operations of the Company and GTE's other cellular
subsidiary will be consolidated over time into a single business unit. For a
discussion of the effects of the Merger on GTE, Contel and the Company see
"SPECIAL FACTORS -- Certain Federal Income Tax Consequences of the Merger" and
"SPECIAL FACTORS -- Plans for the Company; Certain Effects of the Merger".
PAYMENT OF THE MERGER CONSIDERATION
CCI Acquisition will make available to Chemical Bank, as disbursing agent
in connection with the Merger (the "Disbursing Agent"), the aggregate amount of
cash to be paid in respect of the Class A Shares pursuant to the Merger. In
order to receive the Merger Consideration, Class A Stockholders must send their
certificates representing Class A Shares to the Disbursing Agent along with a
Letter of Transmittal. All certificates so surrendered will be cancelled. A
Letter of Transmittal setting forth the procedures for surrendering to the
Disbursing Agent certificates representing Class A Shares in exchange for cash
is enclosed with this Information Statement.
Upon surrender of a certificate representing Class A Shares together with a
duly executed Letter of Transmittal, the Class A Stockholder will receive $25.50
in cash in exchange for each Class A Share, without interest, subject to
applicable back-up withholding taxes. Any cash held by the Disbursing Agent that
remains unclaimed by stockholders for 180 days after the effective time of the
Merger will be returned to the Surviving Corporation. After that time, Class A
Stockholders may look only to the Surviving Corporation for payment of the
Merger Consideration without interest and subject to applicable abandoned
property, escheat and other similar laws.
ALL QUESTIONS AND REQUESTS FOR INFORMATION RELATING TO THE PROCEDURE FOR
PAYMENT OF THE MERGER CONSIDERATION FOR THE CLASS A SHARES SHOULD BE DIRECTED TO
THE DISBURSING AGENT. SEE "PAYMENT OF THE MERGER CONSIDERATION".
DISSENTERS' RIGHTS OF APPRAISAL
By following the procedures prescribed by the DGCL, Class A Stockholders
have the right to dissent from the Merger and to receive cash equal to the fair
value of their Class A Shares as determined pursuant to appraisal proceedings in
the Delaware courts. A WRITTEN DEMAND FOR APPRAISAL OF CLASS A SHARES MUST BE
6
<PAGE> 8
DELIVERED TO THE GENERAL COUNSEL OF THE COMPANY WITHIN 20 DAYS AFTER THE DATE OF
THE MAILING OF THIS INFORMATION STATEMENT. Because of the complexity of the
procedures for exercising the right to dissent, the Company believes that Class
A Stockholders who consider exercising such right should seek the advice of
counsel. Failure to take any step in connection with the exercise of dissenters'
right of appraisal may result in the termination or waiver of such rights. See
"DISSENTERS' RIGHTS OF APPRAISAL" and Exhibit D.
MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY
The Class A Shares are publicly traded in the over the counter market and
quoted on the Nasdaq National Market under the symbol "CCXLA". There is no
established trading market for the Class B Shares. The Company has not paid any
dividends on its Class A Shares or Class B Shares and does not anticipate that
it will do so in the foreseeable future.
The following table indicates the high and low sales prices for the Class A
Shares during the designated periods:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
1994
High.......................... $ 18.75 $ 17.25 $ 24.00 $ 25.25
Low........................... 14.00 13.00 16.00 23.50
1993
High.......................... $ 18.63 $ 16.25 $ 18.75 $ 22.00
Low........................... 13.25 13.50 15.50 15.00
1992
High.......................... $ 23.25 $ 18.50 $ 16.50 $ 19.00
Low........................... 17.25 13.00 13.50 13.25
</TABLE>
On September 7, 1994, the last full day of trading prior to the
announcement of GTE's intention to acquire the Class A Shares, the high, low and
closing sales prices per Class A Share quoted on the Nasdaq National Market were
$18.25, $17.75 and $17.75, respectively.
For the first quarter of 1995, the high and low sales prices per Class A
Share quoted on the Nasdaq National Market were $25.375 and $24.875,
respectively. For the second quarter of 1995 through April , 1995, the high
and low sales prices per Class A Share quoted on the Nasdaq National Market were
$ and $ , respectively.
BUSINESS OF THE COMPANY
The Company, through its subsidiaries and through partnerships, provides or
participates in the provision of cellular telephone service in various
metropolitan statistical areas ("MSAs") and rural service areas ("RSAs")
throughout the United States. As of December 31, 1994, the Company had interests
in cellular telephone systems in the United States representing approximately
23.9 million "POPs". ("POPs" refer to the population of a market area multiplied
by the Company's percentage ownership in the cellular system serving that
market.)
The Company's 23.9 million POPs include cellular systems which the Company
controls or manages and cellular systems operated by partnerships in which the
Company is not the controlling partner. As of December 31, 1994, approximately
19.5 million of the Company's 23.9 million POPs were located in 59 MSAs. The
Company owned a controlling interest in and/or managed cellular systems
servicing 32 of these 59 MSAs (representing approximately 69% of the Company's
MSA POPs). The Company owned a non-controlling interest in cellular systems
servicing the remaining 27 MSAs.
The remaining 4.4 million of the Company's 23.9 million POPs were located
in 52 RSAs. As of December 31, 1994, the Company owned controlling interests in
entities licensed to provide cellular service in 24 RSAs, owned non-controlling
interests in and managed 10 RSA markets and held non-controlling interests
7
<PAGE> 9
in 18 RSAs. Most of the Company's RSA POPs are in areas adjacent to MSAs
currently served by the Company. See "BUSINESS OF THE COMPANY".
RELATED PARTY TRANSACTIONS
The Company, Contel and GTE have a number of financial, operating and other
arrangements believed to be of mutual benefit. Those arrangements include,
without limitation, a Third Restated Competition Agreement dated March 14, 1991
among Contel, GTE and the Company (the "Competition Agreement") which, among
other things, allocates cellular business opportunities among GTE's cellular
businesses and a Services Agreement dated May 1, 1991, as amended, between GTE
Mobile Communications Service Corporation ("GTE Mobile") and the Company (the
"Services Agreement"). The terms of these arrangements have been established by
Contel and GTE in consultation with the Company but are not the result of
arms-length negotiations. See "RELATED PARTY TRANSACTIONS -- Arrangements and
Transactions with Contel and GTE".
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues and sales................................. $ 167,178 $ 235,107 $ 286,999 $ 374,014 $ 562,955
Operating income (loss)(1)......................... (38,143) (68,577) (50,113) (28,305) 41,011
Loss from consolidated operations.................. (158,865) (223,726) (196,347) (188,011) (143,332)
Equity in earnings of unconsolidated
partnerships..................................... 19,069 15,687 29,027 37,351 62,792
Gains on sales of partnership interests............ -- 18,387 60,806 48,023 96,607
Net income (loss) before cumulative effect of
change in accounting principles.................. (102,794) (118,900) (73,061) (74,918) 1,871
Cumulative effect of change in accounting
principles(2).................................... -- -- (2,080) (241) --
Net income (loss).................................. (102,794) (118,900) (75,141) (75,159) 1,871
Net income (loss) per share before cumulative
effect of change in accounting principles........ (1.03) (1.19) (0.73) (0.75) 0.02
Net income (loss) per share........................ (1.03) (1.19) (0.75) (0.75) 0.02
Number of weighted average shares outstanding (in
thousands)....................................... 99,931 99,942 99,943 99,948 99,953
OTHER OPERATING DATA:
Capital expenditures............................... 70,841 107,792 183,504 130,042 255,174
Number of ending subscribers....................... 155,285 236,282 327,645 521,226 789,580
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets....................................... $1,665,395 $1,870,669 $1,930,469 $2,052,984 $2,346,466
Long-term obligations:
Notes payable -- affiliates...................... 1,540,000 1,735,034 1,814,327 1,901,726 2,136,263
Other............................................ 14,280 42,280 36,280 36,792 30,792
Stockholders' equity (deficit)..................... 27,525 (91,085) (166,084) (241,221) (238,920)
Book value per share............................... 0.28 (0.91) (1.66) (2.41) (2.39)
</TABLE>
- ---------------
(1) The operating loss in 1991 includes approximately $12 million of integration
costs associated with the merger of Contel with a wholly owned subsidiary of
GTE.
(2) In 1993, the Company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits." In 1992, the
Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and
No. 109, "Accounting for Income Taxes."
Earnings were not adequate to cover fixed charges in 1992, 1993 or 1994.
The amount of such deficiency was $128 million, $129 million and $19 million for
the years ended December 31, 1992, 1993 and 1994, respectively.
8
<PAGE> 10
PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The Company does not, as a matter of course, publicly disclose projections
as to future revenues or earnings. As part of its normal planning process, the
Company has prepared certain five year projected financial data for internal
purposes. Additionally, the Company prepared ten year projected financial data
which was based on an earlier version of the five year projected financial data.
Differences between the ten and the five year projected data are attributable to
the inclusion or exclusion of certain acquisitions which occurred subsequent to
the preparation of the ten year projected data. These five year and ten year
financial projections have been included in this Information Statement because
such projections were made available to the Special Committee's financial
advisor, GTE and the GTE Financial Advisors. See "PROJECTED CONSOLIDATED
FINANCIAL DATA OF THE COMPANY". There can be no assurance that the projections
will be realized and actual results may vary materially from the projections.
9
<PAGE> 11
SPECIAL FACTORS
INTRODUCTION; THE MERGER
This Information Statement is being furnished to the holders of outstanding
shares of the Class A Common Stock (the "Class A Stockholders") of Contel
Cellular Inc., a Delaware corporation (the "Company"), in connection with the
proposed merger (the "Merger") of Contel Cellular Acquisition Corporation, a
Delaware corporation ("CCI Acquisition"), with and into the Company. The Company
will be the corporation that survives the Merger (the "Surviving Corporation").
The Merger will be effected pursuant to an Agreement and Plan of Merger dated as
of December 27, 1994, as amended (the "Merger Agreement"), among the Company,
GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware
corporation in liquidation and a wholly owned subsidiary of GTE ("Contel"), and
CCI Acquisition, which is a wholly owned subsidiary of Contel. Certain
additional information relating to GTE, Contel, CCI Acquisition and the Company
and each of their respective directors and executive officers is included in
Exhibit E to this Information Statement.
In the Merger, (i) each outstanding Class A Share (other than Class A
Shares as to which appraisal rights have been properly exercised under the DGCL)
will be converted into the right to receive $25.50 in cash, without interest,
subject to backup withholding of taxes (the "Merger Consideration"), (ii) each
Class A Share held by the Company and each outstanding share of the common stock
of CCI Acquisition will be cancelled, and no payment will be made with respect
thereto and (iii) each outstanding Class B Share will continue to be
outstanding.
The Merger is subject to the satisfaction of certain conditions. See "THE
MERGER AGREEMENT -- Conditions to the Merger". The Merger will require notice
filings in a number of states, but the approval of regulatory authorities will
not be required in any jurisdiction. Assuming the satisfaction of such
conditions, the Merger will be consummated on May , 1995. For a discussion of
the effects of the Merger on each of the Class A Stockholders, the Company, GTE,
Contel and CCI Acquisition, see "-- Certain Federal Income Tax Consequences of
the Merger" and "-- Plans for the Company; Certain Effects of the Merger" below.
BACKGROUND OF THE MERGER
Existing Ownership. The outstanding stock of the Company consists of
9,970,953 Class A Shares, which represent approximately 2% of the voting power
of the combined capital stock of the Company, and 90,000,000 Class B Shares,
which represent approximately 98% of the voting power of the combined capital
stock of the Company. GTE, through its wholly owned subsidiary Contel, owns all
of the outstanding Class B Shares. The outstanding Class A Shares are held by
the public and trade in the over the counter market with prices quoted on the
Nasdaq National Market under the symbol "CCXLA".
The Company was originally formed as a wholly owned subsidiary of Contel.
In April 1988, a portion of the Company's stock was sold to the public in a
public offering. In March 1991, a wholly owned subsidiary of GTE merged into
Contel and Contel became a wholly owned subsidiary of GTE (the "GTE/Contel
Merger"). As a result of this merger, the Company became an indirectly held
subsidiary of GTE. GTE also provided and continues to provide cellular mobile
services through another wholly owned subsidiary, GTE Mobilnet.
GTE/Contel Merger; California Proceeding. At the time of the GTE/Contel
Merger, both GTE and Contel had telephone and cellular operations in California
subject to the jurisdiction of the California Public Utilities Commission (the
"CPUC"). The CPUC asserted jurisdiction over the GTE/Contel Merger. Under
California law, the CPUC is required to approve the merger of the California
telephone operations of GTE and Contel (the "California Proceeding"). In order
to complete the GTE/Contel Merger in jurisdictions other than California, the
companies entered into a stipulation that was approved by the CPUC (the
"Stipulation"). The Stipulation resulted in the approval of the GTE/Contel
Merger on an interim basis.
The Stipulation provided that the GTE and Contel telephone and cellular
companies located in California would be operated as separate entities until the
CPUC could conduct a detailed review of the GTE/Contel Merger under the
provisions of California law. As of this date, the GTE/Contel Merger and the
merger of the GTE and Contel regulated operations in California have not yet
received final approval.
10
<PAGE> 12
In April 1994, GTE received a proposed final decision with respect to the
California Proceeding. As a result of concerns with certain provisions in the
order with respect to the distribution of the GTE/Contel Merger benefits, GTE
requested that the evidentiary record be reopened. That request was granted. The
CPUC, however, has not yet acted based upon the additional evidence that has
been submitted.
GTE's Determination to Proceed and Discussions Regarding Structure. Since
the date of the GTE/Contel Merger, GTE's management has, from time to time,
discussed the concept of acquiring the publicly held shares of the Company. The
discussions were held among GTE's management on a limited and confidential basis
and no decision was made to proceed. In early 1994, GTE anticipated receiving an
order in the California Proceeding which would approve the GTE/Contel Merger and
clarify certain issues relating to the California operations and began to
seriously consider acquiring the publicly held shares of the Company. As a
result of the continuing delays in the CPUC proceeding described in the
preceding paragraph, GTE's management concluded in early August 1994 that
issuance of the final order in the California Proceeding would be delayed and
that it would be advisable to proceed at that time to acquire the publicly held
shares of the Company.
GTE management met with its legal and financial advisors to discuss
structuring the transaction and decided that the most efficient way to effect
the acquisition of the public minority would be through a merger of a wholly
owned subsidiary of Contel into the Company. This structure would ensure that
GTE acquired all of the Class A Shares in a single step. GTE's management
considered using GTE Common Stock to effect the Merger. However, GTE's
management believed that its Common Stock was undervalued and elected to use
cash. If a stock for stock transaction had been used to effect the Merger, the
number of shares of GTE Common Stock that holders of the Class A Shares would
have received would have been determined by reference to the market value of
shares of GTE Common Stock. Since GTE believed that shares of GTE Common Stock
were undervalued in the market, GTE felt that in a stock for stock transaction
GTE would either (a) effectively pay more for the Class A Shares than the $25.50
per share price or (b) have to offer shares of GTE Common Stock with a lower
current market value than $25.50 per Class A Share in order to give the holders
of Class A Shares what GTE considered to be of equal value to its cash offer.
Accordingly, GTE determined that payment of the purchase price in cash was
preferable from the standpoint of both GTE and its stockholders and, except with
respect to tax treatment, the Class A Stockholders.
GTE's management further considered two alternatives: whether the Company
should merge with and into a subsidiary of Contel that would be created to
accomplish the merger (the "New Subsidiary"), with the New Subsidiary being the
survivor of the merger; or whether the New Subsidiary should merge with the
Company, with the Company being the survivor of the merger. GTE's management
elected to structure the transaction so that the Company would be the survivor
of the Merger. The Company holds licenses to operate cellular systems in its
name and, under applicable rules and regulations of the Federal Communications
Commission (the "FCC"), if the Company was not the surviving company in the
merger, the merger would be considered to be a transfer of the licenses. The
Company would be required to obtain FCC approval for the transfer of the
licenses before effecting such merger. The approval process could take up to six
months and could delay the completion of the Merger and the payment of Merger
Consideration to the Class A Stockholders. The tax consequences and other
effects of a merger would be the same to the Class A Stockholders regardless of
whether the Company or the New Subsidiary was the survivor of a merger.
Approval by GTE Board. On September 8, 1994, the Board of Directors of GTE
approved a proposal to acquire the Class A Shares for $22.50 per share and also
authorized negotiations with the Company. On the same date, GTE notified the
Board of Directors of the Company of its proposal to acquire the Class A Shares
for $22.50 per Class A Share, or approximately $224 million.
Purpose of the Merger. At the present time, the Company is operated
separately from GTE's other cellular interests. The Company has retained its own
name and own brand identity. Decisions regarding opportunities for the Company
and the decisions on various actions to be taken by the Company have been made
by its Board of Directors based upon the best interests of the Company, not the
best interests of GTE's combined operations. The Merger will permit GTE to
operate its cellular operations as a single unit; enable GTE to implement a
unified marketing strategy for its cellular operations; provide increased
flexibility to
11
<PAGE> 13
pursue joint ventures and other combinations and new business opportunities;
generate efficiencies and reduce overhead in the combined cellular
communications business; and eliminate the complexities raised by operating two
cellular businesses under overlapping but not identical ownership. After the
Merger, GTE plans to operate its combined cellular operations as a single
business unit and to maximize the use of the GTE brand name for all of its
cellular operations. These actions will expand the area covered by service that
can be readily identified as being provided by GTE and increase recognition of
the GTE brand name among consumers that are served by GTE's cellular operations.
GTE acquired its majority equity position in the Company as part of the
GTE/Contel Merger. From time to time, GTE has attempted to align its legal
entities and simplify its corporate structure. In January 1993, Contel adopted a
plan of liquidation to facilitate the realignment of GTE and Contel entities and
is in the process of distributing its assets to GTE. Contel will continue to
wind up its affairs and to distribute its assets to GTE. When the distributions
have been completed, Contel will be completely liquidated. Contel is the parent
of the Company and, accordingly, is a party to the Merger. Contel is a wholly
owned subsidiary of GTE and is not engaged in operations or making business
determinations that are separate from GTE. The Merger and the consolidation of
the cellular operations of the Company and GTE's other cellular subsidiary are a
part of this process.
Special Committee; Negotiations with GTE Financial Advisors. At the time
GTE informed the Company of its offer to acquire the publicly held Class A
Shares, nine of the Company's twelve directors were executive officers or
directors of GTE or the Company. Accordingly, the Board of Directors of the
Company at a meeting on September 9, 1994 appointed the three independent
directors, Messrs. Irwin Schneiderman, Leo Jaffe and Robert LaBlanc, to a
special committee (the "Special Committee") to review the fairness of and
negotiate the material terms of the proposed Merger on behalf of the Class A
Stockholders. Members of the Special Committee each received a fee of $35,000
and the Chairman of the Special Committee received a fee of $45,000. As part of
the Stipulation entered into in the California Proceeding, at least three of the
Company's directors are required to be independent directors who are not
otherwise officers, directors or employees of GTE until the CPUC approval has
been received. GTE has not at this time determined whether or not Messrs.
Schneiderman, Jaffe and LaBlanc will remain as independent directors after the
Merger.
The Special Committee met for the first time on September 17, 1994 and
authorized the retention of Cahill Gordon & Reindel ("Cahill") as legal counsel
to the Special Committee. On September 17 and September 22, 1994, the Special
Committee interviewed seven investment banking firms for possible engagement as
a financial advisor to the Special Committee in its evaluation of the proposed
Merger. On September 22, 1994, the Special Committee retained Lazard Freres &
Co. ("Lazard Freres") as its financial advisor. Lazard Freres has not had any
material relationship with GTE or any of its subsidiaries including the Company.
Between September 28 and December 22, 1994, the Special Committee and
Lazard Freres held thirteen meetings either in person or by telephone conference
call to discuss the proposed Merger. During each of such meetings, members of
the Special Committee asked questions of the representatives of Lazard Freres
regarding numerous topics, including the experience of Lazard Freres in
transactions of this type, the experience of Lazard Freres in transactions in
this industry, and the methodology that Lazard Freres intended to use in valuing
the Class A Shares from a financial point of view. The methodology Lazard Freres
used and the various details of their analyses are set forth below under
"-- Opinion of Financial Advisor to the Special Committee". Beginning on October
17, 1994, the Special Committee (acting through Lazard Freres) entered into
negotiations with GTE's financial advisors, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and PaineWebber Incorporated (individually, "Merrill Lynch"
and "PaineWebber", respectively, and, collectively, the "GTE Financial
Advisors") relating to the proposed price to be paid in the Merger, which
process continued for several weeks. During the course of such negotiations in
October 1994, the GTE Financial Advisors furnished to GTE's management a
preliminary draft of their background analysis and furnished to Lazard Freres a
portion of such preliminary draft. A final version of such preliminary draft
background analysis was never furnished to GTE or Lazard Freres by the GTE
Financial Advisors. See "-- Opinions of Financial Advisors to GTE -- Draft
Preliminary Analysis of GTE Financial Advisors". The GTE Financial Advisors
based their fairness opinions to GTE on the analyses described below in
"-- Opinions of Financial Advisors to GTE -- Summary of PaineWebber's Opinion to
the Board of GTE Corporation" and "-- Opin-
12
<PAGE> 14
ions of Financial Advisors to GTE -- Summary of Merrill Lynch's Opinion to the
Board of GTE Corporation".
On November 7, 1994 Lazard Freres furnished to the GTE Financial Advisors a
preliminary draft of the Lazard Freres Report referred to below under
"-- Opinion of Financial Advisor to the Special Committee". On November 10, 1994
the GTE Financial Advisors and Lazard Freres met to review their respective
preliminary analyses. Thereafter, in November 1994, GTE indicated that it might
be willing to increase its offer to $25.00 per Class A Share. As a result of
continued negotiations between Lazard Freres and the GTE Financial Advisors, and
negotiations with counsel for certain stockholders who brought suit against the
Company and certain of its affiliates in connection with the proposed
transaction described below under "-- Certain Litigation", the price per Class A
Share proposed to be given in the Merger was increased by GTE to $25.50.
In December 1994, counsel for the Special Committee requested several
changes to the draft Merger Agreement. Counsel for the Special Committee
indicated that because GTE controlled the Company, it would be appropriate to
add GTE as a party to the agreement and delete a covenant that the Company
conduct its business in the ordinary course until the date of the Merger. GTE
agreed to those changes. After discussions with counsel for the Special
Committee, GTE, in recognition of the fact that it controlled the Company and
did not intend to delay or avoid closing the Merger, also agreed to delete
certain conditions to the closing of the Merger, relating to material adverse
changes in the business, properties or conditions or prospects of the Company,
third party consents and litigation in connection with the Merger. GTE also
agreed to remove a provision allowing termination of the agreement for breach of
covenants or representations and warranties. Certain other non-material changes
were also made as a result of these discussions.
DETERMINATION OF THE SPECIAL COMMITTEE AND THE BOARD; FAIRNESS OF THE MERGER
At a meeting on December 22, 1994 (the "December 22 Special Committee
Meeting"), Lazard Freres informed the Special Committee that it would be
prepared to deliver a written opinion to the effect that the proposed price of
$25.50 per Class A Share to be received by the holders of the Class A Shares
(other than GTE, Contel or any of their affiliates) in the Merger would be fair
to such holders from a financial point of view. Subsequently, on December 30,
1994, Lazard Freres delivered its written opinion to the Special Committee that,
as of such date, the consideration to be received by the holders of the Class A
Shares (other than GTE, Contel or any of their affiliates) in the Merger is fair
to such holders from a financial point of view. On December 22, 1994 the Special
Committee reviewed a draft of the Merger Agreement, pursuant to which (i) each
outstanding Class A Share (other than Class A Shares as to which appraisal
rights have been properly exercised under the DGCL) would be converted into the
right to receive the Merger Consideration, (ii) each Class A Share held by the
Company and each outstanding share of the common stock of CCI Acquisition would
be cancelled, and no payment would be made with respect thereto and (iii) each
outstanding Class B Share would continue to be outstanding. At a meeting held on
December 27, 1994, the Special Committee unanimously decided that the
acquisition of Class A Shares pursuant to the Merger was substantively and
procedurally fair to the holders of the outstanding Class A Shares, including
from a financial point of view, and, therefore, unanimously recommended to the
Board of Directors of the Company that it approve the Merger at a price of
$25.50 per Class A Share. Based on the recommendation of the Special Committee,
the Company's Board of Directors unanimously found that the Merger was
substantively and procedurally fair to the Class A Stockholders, including from
a financial point of view and approved the Merger Agreement and approved the
Merger at a price of $25.50 per Class A Share. In finding that the Merger was
substantively and procedurally fair to the Class A Stockholders, the Board of
the Company relied on the factors relied on by the Special Committee and the
determinations of the Special Committee.
In determining to recommend to the Board of Directors of the Company that
it approve the Merger and the Merger Agreement, the Special Committee considered
a number of factors. The material factors considered by the Special Committee
were:
(a) the Special Committee's evaluation of the Company's business,
properties and future prospects (which evaluation was substantially the
same as the evaluation by Lazard Freres summarized hereinafter under the
caption "-- Opinion of Financial Advisor to the Special Committee");
13
<PAGE> 15
(b) that the price of $25.50 per Class A Share represents (i) a
premium of 43.7% over the closing sales price of the Class A Shares on the
Nasdaq National Market on September 7, 1994, the last trading day prior to
the public announcement of the proposed Merger, (ii) a premium of 37.8%
over the closing sales price of the Class A Shares on the Nasdaq National
Market one week prior to September 8, 1994, and (iii) a premium of 39.7%
over the closing sales price of the Class A Shares on the Nasdaq National
Market one month prior to September 8, 1994;
(c) that the sales price of the Class A Shares on the Nasdaq National
Market had not exceeded the price of $25.50 per Class A Share since October
10, 1989;
(d) presentations by Lazard Freres regarding the financial condition,
results of operations, business and prospects of the Company, including the
possible dislocation and competitive uncertainty that could result from
major changes in the cellular communication industry;
(e) presentations by Lazard Freres regarding the industry in which the
Company operates and the financial, operating and stock price history of
the Company in comparison to certain companies operating in the Company's
industry, including the Company's competitors as summarized below in
"-- Opinion of Financial Advisor to the Special Committee";
(f) statements by Lazard Freres at the December 22 Special Committee
Meeting that it would be prepared to deliver to the Special Committee a
written opinion to the effect that the price of $25.50 per Class A Share
was fair to the Class A Stockholders (other than GTE, Contel or any of
their affiliates) from a financial point of view, which written opinion
dated December 30, 1994 was in fact delivered to the Special Committee by
Lazard Freres; and
(g) the Special Committee's belief that GTE would not increase the
price above $25.50 per Class A Share.
In view of the variety and nature of the factors considered by the Special
Committee, the Special Committee did not attempt to assign relative weights to
the specific factors considered in reaching its determination, except that the
Special Committee placed particular emphasis on the opinion of Lazard Freres and
the fact that the price of $25.50 per Class A Share represented a substantial
premium over the price at which the Class A Shares had recently and historically
traded. The Special Committee did not consider book value to be a material
factor as it believed that the financial analysis by Lazard Freres provided more
accurate implied values of the Class A Shares. The Special Committee did not
consider liquidation value as the holders of Class A Shares do not have the
power to liquidate the Company. GTE had not purchased any Class A Shares and
there were no firm offers of which the Special Committee was aware made by any
unaffiliated person, so the Special Committee did not consider such factors.
Moreover, the quantifiable per share value of the factors considered did
not exceed the price being offered except to the extent that Lazard Freres'
financial analyses produced estimated ranges of values that in some cases
partially exceeded or exceeded $25.50. The Special Committee determined that the
Merger is fair despite such higher values for two reasons. First, in the case of
the private market transaction analysis summarized below under "-- Opinion of
Financial Advisor to the Special Committee" which produced an estimated range of
implied full private market valuations of the Class A Shares higher than $25.50,
Lazard Freres advised the Special Committee that, in acquisition transactions
where an acquiror already owned a controlling position in the company to be
acquired (as in the case of GTE's existing ownership of the Company), the public
stockholders would not obtain the full private market valuation for their shares
since full private market valuation would only be paid in order to obtain
control of a company. Second, the price of $25.50 exceeded the mid-point and
approached the high end of those other ranges that included a higher value.
The approval of the Merger by a majority of the Class A Stockholders is not
required and is not being sought. Notwithstanding this fact, the Special
Committee believed that the acquisition of Class A Shares pursuant to the Merger
is substantively and procedurally fair to the holders of Class A Shares because
the Special Committee of independent directors of the Company was established to
evaluate the transaction and
14
<PAGE> 16
because GTE and its financial advisors negotiated in good faith with the Special
Committee and its financial advisor. Moreover, the Special Committee,
unanimously approved the Merger.
With the exception of the members of the Special Committee and the Board of
Directors of the Company, no director, executive officer or affiliate of the
Company, GTE, Contel or CCI Acquisition has made a recommendation in support of
or opposed to the Merger.
OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE
General. Lazard Freres delivered its written opinion to the Special
Committee that, as of December 30, 1994, the consideration to be received by the
holders of the Class A Shares (other than GTE, Contel or any of their
affiliates) in the Merger is fair to such holders from a financial point of
view.
The full text of the written opinion of Lazard Freres, dated December 30,
1994, which sets forth the assumptions made, matters considered and the review
undertaken with regard to such opinion, is attached to this Information
Statement as Exhibit B. The summary of the opinion of Lazard Freres set forth
below is qualified in its entirety by reference to the full text of the opinion.
Class A Stockholders are urged to read this opinion in its entirety. Additional
copies of such opinion are available for inspection and copying at the principal
executive offices of GTE during regular business hours and are also available
upon request directed to GTE Corporation, One Stamford Forum, Stamford, CT
06904, Attention: Ronald J. Tuccillo, Assistant Secretary.
In rendering its opinion on December 30, 1994, Lazard Freres, among other
things, (i) reviewed the terms and conditions of a December 29, 1994 draft of
the Merger Agreement (the "Draft Merger Agreement"); (ii) analyzed certain
historical business and financial information relating to the Company, including
the Annual Report to Stockholders and Annual Reports on Form 10-K of the Company
for each of the fiscal years ended December 31, 1991 through 1993, and Quarterly
Reports on Form 10-Q of the Company for the quarters ended March 31, June 30 and
September 30, 1994; (iii) reviewed certain financial forecasts and other data
provided by the Company relating to the Company; (iv) held discussions with
members of the senior managements of the Company and GTE with respect to the
businesses and prospects of the Company and its strategic objectives; (v)
reviewed public information with respect to certain other companies in lines of
business Lazard Freres believes to be generally comparable to the businesses of
the Company; (vi) reviewed the financial terms of certain recent business
combinations involving companies in lines of businesses Lazard Freres believes
to be generally comparable to those of the Company, and in other industries
generally; (vii) reviewed the financial terms of certain recent business
combinations Lazard Freres believes to be comparable in certain respects to the
proposed Merger; (viii) reviewed the historical stock prices and trading volumes
of the Class A Shares; and (ix) conducted such other financial studies, analyses
and investigations as Lazard Freres deemed appropriate.
In arriving at its opinion and making its presentation to the Special
Committee at the December 22 Special Committee Meeting, Lazard Freres was
advised that the Company and an affiliate of GTE propose to exchange certain
cellular assets owned by each of them for certain cellular assets owned by a
publicly held company (the "Cellular Exchange"). Lazard Freres received a copy
of a letter dated December 19, 1994 from GTE's Senior Vice President - Finance
addressed to the GTE Financial Advisors regarding the Cellular Exchange to the
effect that it is an exchange of equivalent assets and, accordingly, is value
neutral to the Company. Lazard Freres has neither received nor reviewed any
other information regarding the Cellular Exchange, including any financial
projections or any other non-public financial information prepared by GTE or the
Company. With the consent of the Special Committee, Lazard Freres has assumed
that the Cellular Exchange involves the exchange of assets with substantially
equivalent value and, accordingly, would have an immaterial effect, if any, on
the Company. For a discussion of the agreement entered into in February 1995 by
the Company and certain affiliates of GTE relating to the Cellular Exchange, see
"BUSINESS OF THE COMPANY -- The Company's Cellular Operations -- Cellular
Exchange Transaction".
For purposes of its opinion, Lazard Freres, with the Special Committee's
concurrence, has ascribed no value to the Company's rights under either (i) the
Competition Agreement or (ii) the Services Agreement.
15
<PAGE> 17
In rendering its opinion, Lazard Freres did not review this Information
Statement or any similar document that may be prepared for use in connection
with the proposed Merger. In addition, Lazard Freres was not asked by the
Special Committee to solicit third party indications of interest in acquiring
all or any part of the Company, nor did Lazard Freres seek any such offers.
In connection with its review, Lazard Freres relied upon the accuracy and
completeness of the financial and other information concerning the Company
received by Lazard Freres and did not assume any responsibility for any
independent verification of such information or any independent valuation or
appraisal of any of the assets of the Company. With respect to the financial
forecasts provided to it by the Company, Lazard Freres assumed that such
financial forecasts were reasonably prepared on bases reflecting the best
currently available estimates and judgments of management of the Company as to
the future financial performance of the Company. Lazard Freres assumed no
responsibility for and expressed no view as to such forecasts or the assumptions
upon which they were based. Lazard Freres' opinion was based on economic,
monetary, market and other conditions as in effect on, and information made
available to it as of, the date of the opinion.
In rendering its opinion, Lazard Freres assumed that the Merger Agreement
entered into among the parties thereto would be identical in all material
respects to the Draft Merger Agreement, and that the Merger would be consummated
on the terms described in the Draft Merger Agreement, without any waiver of any
material terms or conditions by the Company. Lazard Freres also assumed that
obtaining any necessary regulatory approvals for the Merger would not have an
adverse effect on the Company. Lazard Freres has since advised the Special
Committee that the changes included in the Merger Agreement from the Draft
Merger Agreement on which its opinion was based would not have effected Lazard
Freres' ability to deliver its opinion set forth therein.
In arriving at its opinion and making its presentation at the December 22
Special Committee Meeting, Lazard Freres considered and discussed certain
financial analyses and other factors. In connection with its presentation,
Lazard Freres presented the Special Committee with a summary of its analyses
(the "Lazard Freres Report"), which had been discussed in preliminary form at
prior meetings of the Special Committee. The following is a brief summary of the
analyses performed by Lazard Freres in connection with rendering its opinion and
discussed with the Special Committee at the December 22 Special Committee
Meeting.
In reviewing the background of GTE's initial offer to acquire the Class A
Shares at $22.50 per share (the "GTE Initial Offer") and GTE's revised offer of
$25.50 per share (the "GTE Revised Offer"), Lazard Freres noted the GTE Initial
Offer implied a value for the Company's approximately 23.9 million POPs of
approximately $194 of market capitalization (defined as the total market value
of the Company's equity plus its net debt) per net POP, $181 of cellular asset
value per net POP (which excludes from market capitalization the value of the
Company's non-cellular assets), and $156 of cellular license value per net POP
(which excludes from cellular asset value the value of the Company's net
cellular property, plant and equipment and working capital). Lazard Freres
explained that the GTE Initial Offer also represented a 26.8% premium over the
closing price per share of the Class A Shares on September 7, 1994, one day
prior to GTE's announcement of the GTE Initial Offer, on which date the closing
price per share of the Class A Shares was $17.75. In addition, Lazard Freres
noted that the Revised GTE Offer recommended by the Special Committee implied a
value of approximately $207 of market capitalization per net POP, $193 of
cellular asset value per net POP, and $169 of cellular license value per net
POP; the GTE Revised Offer also represented a 43.7% premium over the closing
price per share of the Class A Shares one day prior to GTE's announcement of the
GTE Initial Offer, and a 13.3% increase over the GTE Initial Offer.
Lazard Freres explained that in arriving at its opinion, Lazard Freres
performed a number of financial analyses, including: (i) a private market
transaction analysis, in which Lazard Freres reviewed publicly available
information on twenty-six private market sale transactions announced since July
1993, involving cellular operations in MSAs; (ii) a comparable public company
analysis, in which Lazard Freres reviewed certain financial, operating, and
stock market trading information of selected publicly traded companies engaged
primarily in the cellular business; and (iii) a discounted cash flow analysis,
in which Lazard Freres
16
<PAGE> 18
estimated the present value of the future cash flows that the management of the
Company expects its businesses to generate.
The material portions of the foregoing analyses (which are all of the
material valuation methodologies performed by Lazard Freres) are summarized
below.
Private Market Transaction Analysis. Lazard Freres reviewed publicly
available information on twenty-six private market sale transactions that were
announced and consummated since July 1993, involving cellular operations in MSAs
(the "Comparable Transactions"). Using regression analysis, private market value
for cellular properties in the Comparable Transactions were estimated as a
function of MSA ranking (e.g., New York City, as the largest MSA, ranked number
1). These results were then applied to the Company's MSA net POPs, with
adjustments made to the resulting valuations depending upon whether (i)
population growth in each such MSA is expected to increase at a faster rate than
average population growth expected for the United States, as a whole; (ii)
median household income in each such MSA is greater than median household income
for the United States, as a whole; (iii) average commuting time for each such
MSA is greater than average commuting time for the United States, as a whole;
and (iv) each such MSA is contiguous to other MSAs or RSAs serviced by the
Company. Such adjustments were calculated by applying to the valuation of each
of the Company's MSA markets a 5% premium for each of the foregoing factors
which applied to such MSA market, and a 5% discount for each of the foregoing
factors which did not apply to such MSA market. Utilizing this methodology, the
implied values of the Company's controlled MSA net POPs and non-controlled MSA
net POPs were estimated at $211 per POP and $280 per POP, respectively.
In view of the Company's substantial holdings of non-controlled MSA net
POPs in large MSA markets, including non-controlling interests in four of the
country's ten largest MSA markets (Los Angeles, San Francisco, Washington, D.C.
and Houston), implied private market values for the Company's non-controlled MSA
net POPs were also estimated utilizing a cash flow based comparable public
company analysis to estimate the value of such non-controlled MSA net POPs as if
such interests were held by a stand-alone company. In this analysis, which
Lazard Freres analyzed for selected publicly traded companies in the cellular
communications business (the "Comparable Companies") the stock prices, market
capitalizations, cellular asset values and publicly available estimates of
projected operating cash flows for 1994 through 1996. This analysis showed an
average ratio of market capitalization to projected cash flow in 1994 for the
Comparable Companies of 23.9. Applying this multiple to the projected 1994
operating cash flow of the Company's non-controlled MSA net POPs provided by
management, the implied value of such non-controlled MSA net POPs was estimated
at $341 per POP. The Comparable Companies reviewed by Lazard Freres in this
analysis included AirTouch Communications Inc., BCE Mobile Communications, Inc.,
Centennial Cellular Corp., Rogers Cantel Mobile Communications, Inc., United
States Cellular Corporation, and Vanguard Cellular Systems, Inc.
Implied private market valuations for the Company's net MSA POPs were then
calculated for the Company's approximately 12.9 million controlled MSA net POPs
(estimated at $211 per MSA net POP utilizing the regression analysis referred to
above) and the Company's approximately 5.9 million non-controlled MSA net POPs
(estimated ranging from $280 per MSA net POP utilizing the regression analysis
referred to above to $341 per MSA net POP utilizing the comparable public
company analysis referred to above). After adding (i) an assumed value of $130
per net POP for each of the Company's approximately 3.3 million controlled and
clustered RSA net POPs (where "clustered RSA net POPs" refers to the POPs
serviced by the Company in RSAs that are contiguous to other MSAs or RSAs
serviced by the Company), (ii) an assumed value of $105 per net POP for each of
the Company's approximately 0.5 million controlled and non-clustered RSA net
POPs (where "non-clustered RSA net POPs" refers to the POPs that are not
clustered RSA net POPs), (iii) an assumed value of $77 per net POP for each of
the Company's approximately 1.2 million non-controlled RSA net POPs, (iv) an
implied value of $300 million for the Company's wireless data business,
estimated utilizing a discounted cash flow analysis described below, and (v) an
assumed value of $30 million for the Company's international assets, and
subtracting net debt, Lazard Freres arrived at estimated ranges of value for the
common equity of the Company, including the Class A Shares. The assumed values
referred to in clauses (i), (ii), (iii) and (v) above were derived based on
consultations with management of the Company and Lazard Freres' experience with
similar properties in
17
<PAGE> 19
other transactions. Utilizing this methodology, the implied full private market
valuation of the Class A Shares was estimated at between $32.36 and $36.00 per
share. While the estimated range of implied full private market valuations of
the Class A Shares utilizing this methodology was higher than the GTE Revised
Offer, the Lazard Freres Report noted that in acquisition transactions where an
acquiror already owned a controlling position in the company to be acquired (as
in the case of GTE's existing equity ownership of the Company), public
stockholders would not obtain full private market valuation as a result of such
acquisitions.
Comparable Public Company Analysis. Lazard Freres compared certain
publicly available financial data of selected publicly traded companies in the
cellular communications business with the historical financial performance of
the Company. Lazard Freres analyzed on a per net POP basis for each of the
Company and such selected publicly traded companies, among other things, the
market values (defined as the total market value of a company's equity), market
capitalizations, cellular asset values and cellular license values. This
analysis showed that the cellular asset values per net POP for such publicly
traded companies ranged from an estimated low of $117 to an estimated high of
$194, which compared to an implied value in the GTE Revised Offer of
approximately $193 of cellular asset value per net POP. The publicly traded
companies reviewed by Lazard Freres in this analysis included the Comparable
Companies, Commnet Cellular, Inc. and PriCellular Corp. Utilizing this
methodology, the implied value of the Class A Shares was estimated at between
$23.29 and $25.68 per share, compared to $25.50 in the GTE Revised Offer.
Discounted Cash Flow Analysis. Lazard Freres performed a discounted cash
flow analysis of the Company based upon estimates of financial performance of
the Company provided by management. Utilizing these projections, Lazard Freres
discounted to the present (i) the projected stream of the Company's unlevered
cash flows for its cellular business through the year 2004, and (ii) the
projected terminal value of the Company's cellular business at such year based
upon a range of multiples of cash flow in year 2004. Lazard applied several
discount rates (ranging from 11% to 13%) and multiples of cash flow in year 2004
(ranging from 12.0 to 14.0). Similarly, for the Company's wireless data
business, Lazard Freres discounted to the present projected streams of the
Company's cash flows for its wireless data business and arrived at an estimated
valuation by applying several discount rates (ranging from 12.0% to 16.0%) and
multiples of cash flow in year 2004 (ranging from 13.5 to 15.5).
After adding an assumed value of $30 million for the Company's
international assets and subtracting net debt, Lazard Freres arrived at
estimated ranges of value for the common equity of the Company, including the
Class A Shares. Utilizing this methodology, the implied value of the Class A
Shares was estimated at between $19.99 and $28.60 per share, compared to $25.50
in the GTE Revised Offer.
The analyses contained in the preliminary draft of the Lazard Freres Report
presented to the Special Committee on November 7, 1994 did not materially differ
from the final Lazard Freres Report presented to the Special Committee at the
December 22 Special Committee Meeting, except that the final Lazard Freres
Report included: (i) an updated summary of the negotiations with the GTE
Financial Advisors and an analysis of the GTE Revised Offer of $25.50 per Class
A Share, (ii) a revised private market transaction analysis and comparable
public company analysis of the Company that took into account (A) the sale by
the Company of certain POPs during the period following the date of the
preliminary draft of the Lazard Freres Report, and (B) the then-current publicly
available financial data of the publicly traded companies reviewed by Lazard
Freres in such analyses, and (iii) a discounted cash flow analysis of the
Company based upon a revised projected stream of the Company's unlevered cash
flow for its cellular business. Such revised cash flow projections excluded
projected unlevered cash flows for the Company's wireless data business, since a
separate discounted cash flow analysis was performed for such business in both
the preliminary draft of and in the final Lazard Freres Report.
In the preliminary draft of the Lazard Freres Report, the implied full
private market valuation of the Class A Shares utilizing a private market
transaction analysis was estimated at between $32.56 and $37.20 per share
(compared to an estimated range of $32.36 and $36.00 per share set forth in the
final Lazard Freres Report), the implied value of the Class A Shares utilizing a
comparable public company analysis was estimated at between $23.53 and $25.92
per share (compared to an estimated range of $23.29 and $25.68 per share set
forth in the final Lazard Freres Report), and the implied value of the Class A
Shares utilizing a
18
<PAGE> 20
discounted cash flow analysis was estimated at between $23.05 and $32.37 per
share (compared to an estimated range of $19.99 and $28.60 per share set forth
in the final Lazard Freres Report).
In arriving at its written opinion and in presenting the Lazard Freres
Report to the Special Committee, Lazard Freres performed various financial
analyses, portions of which are summarized above. The summary set forth above
does not purport to be a complete description of Lazard Freres' analyses. Lazard
Freres believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering all such analyses, could
create an incomplete view of the process underlying its analyses set forth in
the opinion and the Lazard Freres Report. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to partial analysis or
summary description. However, the Lazard Freres Report noted that the GTE
Revised Offer fell within the range of implied values of the Class A Shares for
each of the analyses performed and described above other than the private market
transaction analysis, for which the Lazard Freres Report noted that since GTE
already held a controlling position in the Company through its existing equity
ownership, the Company's public stockholders would not obtain full private
market valuation for the Class A Shares. With regard to the private market
transaction analysis and the comparable public company analyses summarized
above, Lazard Freres selected comparable public companies on the basis of
various factors, including the size of the public company and similarity of the
line of business; however, no public company utilized as a comparison is
identical to the Company. Accordingly, an analysis of the foregoing is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
comparable companies and other factors that could affect the acquisition or
public trading value of the comparable companies to which the Company is being
compared. In performing its analyses, Lazard Freres made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of the Company.
The analyses performed by Lazard Freres are not necessarily indicative of
actual past or future results or values, which may be significantly more or less
than such estimates. Additionally, analyses relating to the values of businesses
do not purport to be appraisals or to reflect the price at which such companies
may actually be sold, and such estimates are inherently subject to uncertainty.
Lazard Freres regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions and for other purposes.
The Special Committee selected Lazard Freres to act as its financial advisor on
the basis of Lazard Freres' qualifications, expertise and reputation in
investment banking, in general, and mergers and acquisitions, specifically.
The Company has paid Lazard Freres a retainer fee of $250,000 and an
additional fee of $500,000 upon delivery of its written opinion. The Company has
also agreed to reimburse Lazard Freres for its out-of-pocket expenses, including
reasonable fees and disbursements of counsel, and to indemnify Lazard Freres and
its partners, employees, agents, affiliates and controlling persons against
certain liabilities under the federal securities laws, relating to or arising
out of its engagement.
DETERMINATION OF THE FAIRNESS OF THE MERGER BY GTE, CONTEL AND CCI ACQUISITION
GTE, Contel and CCI Acquisition reasonably believe that the Merger is fair
to the Class A Stockholders. GTE, Contel and CCI Acquisition have concluded that
the price to be paid to the Class A Stockholders is fair based solely on the
previously described determinations of the Special Committee. The material
factors considered in making such a determination are those that were considered
by the Special Committee. See " -- Determination of the Special Committee and
the Board; Fairness of the Merger". GTE, Contel and CCI Acquisition also believe
that the Merger is procedurally fair because, in addition to the appraisal
rights granted to the Class A Stockholders under the DGCL described below in
"DISSENTERS' RIGHTS OF APPRAISAL", the final price and terms were negotiated in
good faith by GTE and its financial advisors and the Special Committee and the
Merger was unanimously approved by the Company's Board including the independent
directors of the Company. GTE retained its financial advisors to assist in the
negotiation and determine whether the transaction was fair to GTE's
shareholders.
19
<PAGE> 21
OPINIONS OF FINANCIAL ADVISORS TO GTE
GTE was assisted in its negotiations with the Special Committee and Lazard
Freres by its financial advisors, Merrill Lynch and PaineWebber. Merrill Lynch
and PaineWebber regularly value businesses and their securities and provide
advice in connection with merger and acquisition transactions. Merrill Lynch and
PaineWebber previously served as financial advisors to GTE in connection with
the merger of a wholly owned subsidiary of GTE with and into Contel. As part of
the agreements with Merrill Lynch and PaineWebber with respect to that
transaction, GTE agreed to retain Merrill Lynch and PaineWebber as financial
advisors in connection with any related restructuring. Based upon that agreement
and the expertise of both Merrill Lynch and PaineWebber in evaluating
transactions similar to the Merger, GTE decided to retain Merrill Lynch and
PaineWebber as its financial advisors in connection with the Merger.
PaineWebber has provided investment banking and other services to GTE from
time to time, including serving as underwriter in connection with the issuance
of GTE's debt and equity financings. During the last two years, PaineWebber has
earned compensation with respect to all such services, other than fees in
connection with the Merger, of approximately $5.0 million. In the future, GTE
may retain PaineWebber from time to time for similar services. In the ordinary
course of its business, PaineWebber actively trades debt and equity securities
of GTE for its own account and the accounts of its customers, and PaineWebber
therefore may, from time to time, hold a long or short position in such
securities. A director of GTE is engaged as a consultant to PaineWebber. See
"RELATED PARTY TRANSACTIONS -- Relationship between GTE Director and
PaineWebber."
Merrill Lynch has also provided investment banking and other services to
GTE from time to time, including serving as a dealer in connection with the
issuance of GTE's commercial paper and as an underwriter in connection with its
issuance of its debt and equity financings. During the last two years, Merrill
Lynch has earned compensation with respect to all such services, other than fees
in connection with the Merger, of approximately $7.4 million. Merrill Lynch is
presently providing GTE with financial and strategic advice in connection with a
matter other than the Merger, for which it is receiving a fee of $150,000 per
month which commenced in August 1994 and will continue until such matter is
completed. In the future, GTE may retain Merrill Lynch from time to time for
similar services. In the ordinary course of its business, Merrill Lynch actively
trades debt and equity securities of GTE for its own account and the accounts of
its customers, and Merrill Lynch therefore may, from time to time, hold a long
or short position in such securities.
In connection with the transaction, the GTE Financial Advisors rendered
opinions to GTE to the effect that the price to be paid for the Class A Shares
in the Merger is fair to GTE from a financial point of view. A copy of the
fairness opinions of the GTE Financial Advisors are attached to this Information
Statement as Exhibits C-1 and C-2. Additional copies of such opinions are
available for inspection and copying at the principal executive offices of GTE
during regular business hours and are also available upon request directed to
GTE, One Stamford Forum, Stamford, CT 06904, Attention: Ronald J. Tuccillo,
Assistant Secretary.
The GTE Financial Advisors believe that their analyses must be considered
as a whole and that selecting portions of their analyses and of the factors
considered by them without considering all factors and analyses, could create an
incomplete view of the processes underlying their analyses and opinion. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analyses or summary descriptions.
In rendering their opinions, the GTE Financial Advisors did not make or
seek to obtain appraisals of the Company's assets in connection with their
analyses of the valuation of the Company and did not determine the amount of
consideration to be paid in the Merger. In addition, the GTE Financial Advisors
were not requested to and did not solicit third parties who might be interested
in acquiring all or any part of the Company. In their respective analyses, the
GTE Financial Advisors made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the Company's control. Any estimates of value contained therein
are not necessarily indicative of actual values, which may be significantly more
or less favorable than as set forth therein. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the prices at which
companies may actually be sold.
20
<PAGE> 22
Because such estimates are inherently subject to uncertainty, none of the
Company, GTE or the GTE Financial Advisors or any other person assumes
responsibility for their accuracy.
In arriving at their opinions, the GTE Financial Advisors (a) reviewed the
Company's Annual Reports, Forms 10-K and related financial information for the
five fiscal years ended December 31, 1993 and the Company's Forms 10-Q and the
related unaudited financial information for the quarterly periods ending March
31, June 30, and September 30, 1994; (b) reviewed certain information, including
financial forecasts, relating to the business, earnings, cash flow, assets and
prospects of the Company, furnished to them by the Company; (c) conducted
discussions with members of senior management of the Company concerning its
businesses and prospects; (d) reviewed the historical market prices and trading
activity for the Class A Shares and compared them with that of certain publicly
traded companies which they deemed to be reasonably similar to the Company; (e)
compared the results of operations of the Company with that of certain companies
which they deemed to be reasonably similar to the Company; (f) compared the
proposed financial terms of the transactions contemplated by the Merger
Agreement with the financial terms of certain other mergers and acquisitions
which they deemed to be relevant; (g) considered the pro forma effect of the
Merger on GTE's capitalization ratios, earnings and cash flow; (h) considered a
discounted cash flow analysis on future cash flows that management of the
Company expects the Company to generate; (i) reviewed a draft of the Merger
Agreement; and (j) reviewed such other financial studies and analyses and
performed such other investigations and took into account such other matters as
they deemed necessary, including their assessments of general economic, market
and monetary conditions.
The GTE Financial Advisors will each receive an aggregate fee of $500,000
in connection with the transaction. A retention fee of $50,000 each was paid at
the time the GTE Financial Advisors were retained and a fee of $450,000 each
will be paid at the time of the Merger. In addition, GTE has agreed to reimburse
the GTE Financial Advisors for all of their reasonable out-of-pocket expenses,
including but not limited to, legal fees and travel expenses. GTE also agreed to
indemnify and hold harmless the GTE Financial Advisors against certain
liabilities, including liabilities under the federal securities laws or arising
out of or in connection with their rendering of services.
In preparing their opinions, the GTE Financial Advisors relied on the
accuracy and completeness of all information supplied or otherwise made
available to them by the Company, and the GTE Financial Advisors have not
assumed any responsibility to independently verify such information. With
respect to the financial forecasts furnished by the Company, the GTE Financial
Advisors assumed that they have been reasonably prepared and reflect the best
currently available estimates and judgment of the Company's management as to the
expected future performance of the Company. The opinions of the GTE Financial
Advisors do not address the relative merits of the Merger and any other
transactions or business strategies which may have been discussed by the Board
of Directors of GTE as alternatives to the Merger or the decision of the Board
of Directors of GTE to proceed with the Merger. In rendering their opinions, the
GTE Financial Advisors were not engaged to act as an agent or fiduciary of GTE's
equity holders or any other third party.
The opinions rendered by each of the GTE Financial Advisors contain the
following provision: "In rendering this opinion, we have not been engaged to act
as an agent or fiduciary of . . . [GTE's] equity holders or any other third
party." This language was included by each GTE Financial Advisor to make it
clear that with respect to their respective opinions, they were each engaged to
advise only the GTE Board of Directors and that they were not acting on behalf
of GTE's stockholders or any other third party (including, without limitation,
the Company's stockholders or the Special Committee). If any person other than
the addressee of such an opinion (including, without limitation, any stockholder
of the Company) were to bring any action against either of the GTE Financial
Advisors based on its opinion, such GTE Financial Advisor might seek to cite
such language as a defense to such action, although the law in this area is
unsettled.
21
<PAGE> 23
Summary of PaineWebber's Opinion to the Board of GTE Corporation
The following paragraphs summarize the material financial and comparative
analyses performed by PaineWebber in arriving at the PaineWebber opinion. The
following does not purport to be a complete description of the analyses
performed, or the matters considered by PaineWebber in arriving at the
PaineWebber opinion.
PaineWebber delivered its December 1994 Opinion Letter (the "PaineWebber
Opinion Letter") to the Board of Directors of GTE at a meeting held on December
27, 1994. The PaineWebber Opinion Letter relied on the valuation methods
described below to determine a range of values for the Company.
Discounted Cash Flow Analysis. PaineWebber prepared and reviewed the
results of an unlevered discounted cash flow analysis of the Company based on
certain operating and financial assumptions. The assumptions were based on two
sets of financial projections provided to PaineWebber by the management of the
Company: a five year strategic plan and a ten year projection. For a discussion
of these projections, see "PROJECTED CONSOLIDATED FINANCIAL DATA OF THE
COMPANY".
The purpose of the discounted cash flow analysis was to determine the
present value of each of the Company's unlevered after-tax free cash flows over
the projected periods. To calculate the value of a business using a discounted
cash flow analysis, the projected cash flows for each year together with the
estimated value of the business in the final year of the projected period
("Terminal Value") are discounted to the present using various assumed discount
rates. PaineWebber estimated the Terminal Value for the Company in two
components. First, PaineWebber applied an earnings before interest, taxes,
depreciation and amortization ("EBITDA") multiple to the Company's EBITDA,
before minority interest and equity in unconsolidated affiliates, in the final
year of the projected period. PaineWebber then applied a price/earnings multiple
("P/E multiple") to the net tax-affected amount of minority interests and equity
in earnings of unconsolidated affiliates (discounted by 30% to reflect a
minority interest). After discounting the projected cash flows and the Terminal
Value, PaineWebber added the value of the Company's 10% interest in licenses in
the states of Sonora and Sinaloa, Mexico, calculated as $48 per POP for the
Company's approximately 0.4 million POPs. The sum of these components derived
the implied total market capitalization of the Company at December 31, 1994.
PaineWebber then subtracted the Company's estimated net debt at December 31,
1994 of $2,114.5 million and divided by the number of shares outstanding at
December 31, 1994 of 100.0 million to determine the implied equity value per
Class A Share.
PaineWebber considered exit EBITDA multiples ranging from 10.5x to 12.5x
for both sets of projections and exit P/E multiples ranging from 18.0x to 22.0x
for the five year projections and 16.0x to 20.0x for the ten year projections.
For the purposes of determining the appropriate discount rate to be applied in
the discounted cash flow analyses, PaineWebber considered weighted average costs
of capital ranging from 13.0% to 15.0% to discount all values from December 31,
1999 to January 1, 1995 and 10.0% to 12.0% to discount all values from December
31, 2004 to January 1, 2000.
This analysis resulted in a range of equity values per share for the Class
A Shares of between $19.56 to $30.46 using the five year projections and $13.57
to $24.31 using the ten year projections. PaineWebber noted that the per share
price of $25.50 fell within the range implied by the five year projections. Due
to the inherently less certain nature of the ten year projections, and the fact
that the Company had advised PaineWebber that it had not prepared the ten year
projections as part of its normal planning process, PaineWebber relied more
heavily on the analysis derived from the five year projections.
Comparable Transaction Analysis. PaineWebber reviewed several publicly
announced merger and acquisition transactions in the cellular communications
industry, together with information regarding certain transactions that GTE
furnished to PaineWebber. The publicly announced transactions examined by
PaineWebber included the following: McCaw Cellular Communications Inc.'s private
market value guarantee of LIN Broadcasting Corp.; AirTouch Communications Inc.'s
private market value guarantee of Cellular Communications Inc.; Compagnie
Generale des Eaux's indirect acquisition of cellular properties from SBC
Communications Inc.; Independent Cellular Network, Inc.'s acquisition of
cellular properties from C-TEC Corp.; Southwestern Bell Corp.'s acquisition of
Associated Communications Corp.; Southwestern Bell Corp.'s
22
<PAGE> 24
acquisition of cellular properties from GTE Mobilnet; Southwestern Bell Corp.'s
acquisition of cellular properties from Syracuse Telephone, Utica Telephone and
Finger Lakes Telephone; Century Telephone Enterprises Inc.'s acquisition of
Celutel Inc.; AT&T Corp.'s then pending acquisition of McCaw Cellular
Communications Inc.; InterCel Inc.'s acquisition of cellular properties from
Unity Cellular Systems, Inc.; ALLTEL Corp.'s acquisition of cellular properties
from Contel Cellular Inc.; Associated Communications Corp.'s acquisition of
cellular properties from McCaw Cellular Communications Inc.; ALLTEL Corp.'s
acquisition of cellular properties from SLT Communications Inc.; Sprint Corp.'s
acquisition of cellular properties from Centel Corp.; Bell Atlantic Corp.'s
acquisition of cellular properties from Metro Mobile CTS Inc.; McCaw Cellular
Communications Inc.'s acquisition of cellular properties from Crowley Cellular
Telecommunications Inc.; Ameritech Corp.'s acquisition of cellular properties
from Cybertel Financial and Cybertel RSA Cellular L.P.; Comcast Corporation's
acquisition of cellular properties from Metromedia Inc.; BellSouth Corp.'s
acquisition of cellular properties from McCaw Cellular Communications Inc.; and
US WEST, Inc.'s acquisition of the minority interest in US WEST NewVector Group,
Inc.
Using information regarding the MSA market rank of the target's POPs in the
comparable transactions, PaineWebber developed ranges of assumed private market
values for the various categories of MSA market rank. These value ranges were:
MSA markets ranked 1 to 25: $250 per POP to $350 per POP; MSA markets ranked 26
to 75: $175 per POP to $250 per POP; MSA markets ranked 76 to 125: $150 per POP
to $200 per POP; MSA markets ranked 126 to 175: $125 per POP to $175 per POP;
MSA markets ranked 176 to 275: $125 per POP to $150 per POP; and MSA markets
ranked 276 and above: $75 per POP to $125 per POP. Based on the RSA transactions
examined, PaineWebber developed a valuation assumption for RSA POPs of $90 per
POP. PaineWebber then applied these per POP valuation ranges to the Company's
POPs. PaineWebber applied a range of discounts between 0% and 30% to the
Company's non-controlled POPs. PaineWebber selected this range of discounts
based on its experience with similar transactions and its analysis of publicly
disclosed information regarding other transactions. This methodology resulted in
a range of values per Class A Share of $12.75 to $30.30. PaineWebber noted that
the per share price of $25.50 fell within this range.
Comparable Public Companies Analysis. PaineWebber compared selected
historical stock and earnings data and financial ratios for the Company to the
corresponding data and ratios of certain publicly-traded companies which
PaineWebber deemed to be comparable to the Company. For the purposes of the
PaineWebber Opinion Letter, the set of companies which PaineWebber deemed
comparable to the Company was comprised of AirTouch Communications Inc.,
Cellular Communications, Inc., Cellular Communications of Puerto Rico, Inc.,
Centennial Cellular Corporation, Commnet Cellular, Inc., InterCel Inc., LIN
Broadcasting Corporation, United States Cellular Corporation and Vanguard
Cellular Systems, Inc. (the "Comparable Group").
This analysis resulted in a range of market capitalization of cellular
assets (defined as total market capitalization, less minority interests, less
estimated public market value of non-cellular assets) per POP of $330 to $111
with a median of $170 and a range of market capitalization of MSA cellular
assets (defined as market capitalization of cellular assets less the value of
RSA cellular assets at $90 per RSA POP) per POP from $451 to $133 with a median
of $212. PaineWebber noted that the proposed price of $25.50 implied a market
capitalization of cellular assets per POP for the Company of $198 and a market
capitalization of MSA cellular assets per POP of $224.
Minority Buy Out Analysis. PaineWebber examined the seventy-seven minority
buy out transactions since January 1, 1988 for which PaineWebber was able to
find adequate public information. Due to the limited information available
regarding minority buy out transactions in the cellular communications industry,
the analysis of transactions was not limited to those in the cellular
communications industry. PaineWebber examined the transactions on the basis of
percentage change from initial offer price to final offer price and percentage
premium of the offer price to the trading price per share at six months prior to
announcement, one month prior to announcement, one day prior to announcement,
one day after announcement, the latest twelve months ("LTM") high and the LTM
low. This analysis resulted in average premiums of 11.7% (percent change from
initial offer price to final offer price) and 39.8%, 43.3%, 31.5%, 10.9%, 1.8%
and 85.4%, respectively and resulted in median premiums of 4.6% (percent change
from initial offer price to final offer
23
<PAGE> 25
price) and 33.3%, 33.3%, 20.4%, 7.4%, 2.2% and 58.9%, respectively. PaineWebber
examined the premiums paid in the only minority buy out in the cellular
communications industry included as one of the seventy-seven minority buy out
transactions since January 1, 1988 for which PaineWebber was able to find
adequate public information, US WEST, Inc.'s purchase of the minority interest
in US WEST NewVector Group, Inc. on November 12, 1990, which resulted in
premiums of 22.2% (percent change from initial offer price to final offer price)
and 47.9%, 74.3%, 44.3%, 28.0%, 2.9% and 122.8%, respectively. PaineWebber noted
that the per share price of $25.50 implied premiums to the trading price per
share of the Class A Shares of 13.3% (percent change from initial offer price to
final offer price) and 56.9%, 39.7%, 43.7%, 10.3%, 6.3% and 96.2%, respectively.
PaineWebber noted that these implied premiums were within the range of
transactions examined.
Historical Market Valuation and Ownership Analysis. PaineWebber reviewed
the daily performance of the intra-day and closing market prices per share and
trading volumes of the Class A Shares from April 21, 1988 to December 2, 1994.
This analysis was utilized to provide historical background for the manner in
which the public trading market had valued the Class A Shares since their
initial public offering. PaineWebber also reviewed the volume of the Class A
Shares which traded and the prices at which the Class A Shares traded for the
period January 1, 1994 to December 5, 1994 and since the announcement of the
Merger on September 8, 1994 to December 5, 1994. The implied premiums to the
market price of the Class A Shares at specified intervals is set forth above in
"SPECIAL FACTORS -- Opinions of Financial Advisors to GTE -- Summary of
PaineWebber's Opinion to the Board of GTE Corporation -- Minority Buy Out
Analysis".
Summary of Merrill Lynch's Opinion to the Board of GTE Corporation
The following paragraphs summarize the material financial and comparative
analyses performed by Merrill Lynch in arriving at the Merrill Lynch Opinion.
The following does not purport to be a complete description of the analyses
performed, or the matters considered by Merrill Lynch in arriving at the Merrill
Lynch Opinion.
Merrill Lynch delivered its December 1994 Opinion Letter (the "Merrill
Opinion Letter") to the Board of Directors of GTE at a meeting held on December
27, 1994. The Merrill Opinion Letter relied primarily upon two valuation methods
to determine a range of values for the Company: a discounted cash flow analysis
and a private market transaction analysis. In addition, the Merrill Opinion
Letter relied upon analysis of comparable public companies, premiums paid in
similar transactions, pro forma merger consequences, and historical market
valuation and ownership.
Discounted Cash Flow Analysis. Merrill Lynch performed a discounted cash
flow analysis based upon forecasts provided by the Company's management. The
Company's management provided Merrill Lynch with two sets of financial
forecasts: a five year strategic plan projection and a ten year projection. For
a discussion of these projections, see "PROJECTED CONSOLIDATED FINANCIAL DATA OF
THE COMPANY". Due to the inherently less certain nature of the ten year
projections, and the fact that the Company had advised Merrill Lynch that it had
not prepared the ten year projections as part of its normal planning process,
Merrill Lynch relied more heavily on the analysis derived from the five year
projections. The following assumptions were made in the discounted cash flow
analysis: (1) a range of discount rates from 12.0% to 14.0% was used to discount
all values from December 31, 1999 to January 1, 1995 and in the case of the ten
year discounted cash flow analysis, a range of discounted rates from 10.0% to
12.0% was used to discount all values from December 31, 2004 to January 1, 2000;
and (2) a range of EBITDA exit multiples from 10.0x to 12.0x was used to
determine the terminal value using the EBITDA exit methodology. Merrill Lynch
discounted to present value the projected five year and ten year streams of free
cash flow, the year 1999 terminal value and the year 2004 terminal value based
upon the ranges of discount rates and EBITDA multiples described above. Total
enterprise value was adjusted for the Company's minority interest obligations
and unconsolidated equity investments. Based on the exit multiple methodology, a
P/E multiple of 16.0x to 20.0x was applied to the net amount of the minority
interest obligations and the tax-affected equity income in unconsolidated
subsidiaries (discounted 30% for the minority position) in the terminal year.
Total enterprise value was also adjusted upward by the value of the Company's
10% interest in licenses in the states of Sonora and Sinaloa, Mexico, calculated
as $48 per POP for the Company's approximately 0.4 million POPs.
24
<PAGE> 26
Utilizing the five year projections Merrill Lynch arrived at a range of
values per Class A Share of approximately $19.63-$30.90 per share, and utilizing
the ten year projections Merrill Lynch arrived at a range of values per Class A
Share of approximately $14.93-$25.97 per share.
Comparable Transaction Analysis. Merrill Lynch reviewed several publicly
announced merger and acquisition transactions in the cellular communications
industry, together with information regarding certain transactions that GTE
furnished to Merrill Lynch. The publicly announced transactions examined by
Merrill Lynch included the following: McCaw Cellular Communications Inc.'s
private market value guarantee of LIN Broadcasting Corp.; AirTouch
Communications Inc.'s private market value guarantee of Cellular Communications
Inc.; Southern New England Telecommunications Corp.'s acquisition of cellular
properties from Bell Atlantic Corp. and NYNEX; Compagnie Generale des Eaux's
indirect acquisition of cellular properties from SBC Communications Inc.;
Independent Cellular Network, Inc.'s acquisition of cellular properties from
C-TEC Corp.; Southwestern Bell Corp.'s acquisition of Associated Communications
Corp.; Southwestern Bell Corp.'s acquisition of cellular properties from GTE
Mobilnet; Southwestern Bell Corp.'s acquisition of cellular properties from
Syracuse Telephone, Utica Telephone and Finger Lakes Telephone; Century
Telephone Enterprises Inc.'s acquisition of Celutel Inc.; AT&T Corp.'s then
pending acquisition of McCaw Cellular Communications Inc.; InterCel Inc.'s
acquisition of cellular properties from Unity Cellular Systems, Inc.; ALLTEL
Corp.'s acquisition of cellular properties from Contel Cellular Inc.; Associated
Communications Corp.'s acquisition of cellular properties from McCaw Cellular
Communications Inc.; ALLTEL Corp.'s acquisition of cellular properties from SLT
Communications Inc.; Sprint Corp.'s acquisition of cellular properties from
Centel Corp.; Bell Atlantic Corp.'s acquisition of cellular properties from
Metro Mobile CTS Inc.; McCaw Cellular Communications Inc.'s acquisition of
cellular properties from Crowley Cellular Telecommunications Inc.; Ameritech
Corp.'s acquisition of cellular properties from Cybertel Financial and Cybertel
RSA Cellular L.P.; Comcast Corporation's acquisition of cellular properties from
Metromedia Inc.; BellSouth Corp.'s acquisition of cellular properties from McCaw
Cellular Communications Inc.; US WEST, Inc.'s acquisition of the minority
interest in US WEST NewVector Group, Inc.; Pacific Telesis Group's acquisition
of cellular properties from Cellular Communications Inc.; GTE Corporation's
acquisition of cellular properties from Providence Journal Co.; McCaw Cellular
Communications Inc.'s acquisition of cellular properties from Cellular
Communications Inc.; McCaw Cellular Communications Inc.'s acquisition of
cellular properties from LIN Broadcasting Corp.; LIN Broadcasting Corp.'s
acquisition of cellular properties from Metromedia Inc.; Contel Cellular Inc.'s
acquisition of cellular properties from McCaw Cellular Communications Inc.; and
British Telecom plc's acquisition of an interest in McCaw Cellular
Communications Inc.
Using information regarding the MSA market rank of the target's POPs in the
comparable transactions, Merrill Lynch developed ranges of assumed private
market values for the various categories of MSA market rank. These value ranges
were: MSA markets ranked 1 to 25: $250 per POP to $350 per POP; MSA markets
ranked 26 to 75: $175 per POP to $250 per POP; MSA markets ranked 76 to 125:
$150 per POP to $200 per POP; MSA markets ranked 126 to 175: $125 per POP to
$175 per POP; MSA markets ranked 176 to 275: $125 per POP to $150 per POP; and
MSA markets ranked 276 and above: $75 per POP to $125 per POP. Based on the RSA
transactions examined, Merrill Lynch developed a valuation assumption for RSA
POPs of $90 per POP. Merrill Lynch applied a range of discounts between 0% and
30% to the Company's non-controlled POPs to reflect reduced value based on
absence of control. Merrill Lynch selected this range of discounts based on its
experience with similar transactions and its analysis of publicly-disclosed
information regarding other transactions. This methodology resulted in a range
of values per Class A Share of $12.76 to $30.31 per share.
Comparable Public Companies Analysis. Merrill Lynch compared selected
historical stock and earnings data and financial ratios for the Company to the
corresponding data and ratios of certain publicly traded companies which Merrill
Lynch deemed to be comparable to the Company. For the purposes of the Merrill
Opinion Letter, the set of companies which Merrill Lynch deemed comparable to
the Company was the Comparable Group.
This analysis resulted in a range of market capitalization of cellular
assets (defined as total market capitalization, less minority interests, less
estimated public market value of non-cellular assets) per POP of
25
<PAGE> 27
$331 to $115 with a median of $169 and a range of market capitalization of MSA
cellular assets (defined as market capitalization of cellular assets, less value
of RSA assets at $90 per POP) per POP from $343 to $133 with a median of $215.
Merrill Lynch noted that the price of $25.50 per Class A Share implied a market
capitalization of cellular assets per POP for the Company of $198 and a market
capitalization of MSA cellular assets per POP of $224.
Premiums Paid in Selected Minority Buy Outs; Minority Buy Out
Analysis. Merrill Lynch examined the seventy-seven minority buy out
transactions since January 1, 1988 for which Merrill Lynch was able to find
adequate public information. Due to lack of available information regarding
minority buy out transactions in the cellular communications industry, these
transactions were not limited to the cellular communications industry. Merrill
Lynch examined these transactions on the basis of percentage change from initial
offer price to the final offer price and percentage premium of the offer price
to the trading price per share at six months prior to announcement, one month
prior to announcement, one day prior to announcement, one day after
announcement, the LTM high and the LTM low. This analysis resulted in average
premiums of 11.7% (% change from initial offer price to final offer price) and
39.8%, 43.3%, 31.5%, 10.9%, 1.8% and 85.4%, respectively, and resulted in median
premiums of 4.6% (percent change from initial offer price to final offer price)
and 33.3%, 33.3%, 20.4%, 7.4%, 2.2%, and 58.9%, respectively. Merrill Lynch
examined the premiums paid in the only minority buy out in the cellular
communications industry included as one of the seventy-seven minority buy out
transactions since January 1, 1988 for which Merrill Lynch was able to find
adequate public information, US WEST, Inc.'s purchase of the minority interest
in US WEST NewVector Group, Inc. on November 12, 1990, which resulted in
premiums of 22.2% (percent change from initial offer price to final offer price)
and 47.9%, 74.3%, 44.3%, 28.0%, 2.9% and 122.8%, respectively. Merrill Lynch
noted that the price of $25.50 per Class A Share implied premiums to the trading
price per share of the Class A Shares of 13.3% (percent change from initial
offer price to final offer price) and 56.9%, 39.7%, 43.7%, 10.3%, 6.3% and
96.2%, respectively. Merrill Lynch noted that these implied premiums were within
the range of transactions examined.
Pro Forma Merger Consequences. Merrill Lynch examined the potential impact
of the Merger on the financial results and capitalization of GTE and found it to
be immaterial.
Historical Market Valuation and Ownership Analysis. Merrill Lynch reviewed
the daily performance of the intra-day and closing market prices per share and
trading volumes of the Class A Shares from April 21, 1988 to December 2, 1994.
This analysis was utilized to provide historical background for the manner in
which the public trading market had valued the Class A Shares since their
initial public offering. Merrill Lynch also reviewed the volume of the Class A
Shares which traded and the prices at which the Class A Shares traded for the
period January 1, 1994 to December 5, 1994 and since the announcement of the
Merger on September 8, 1994 to December 5, 1994. The implied premiums to the
market price of the Class A Shares at specified intervals is set forth above in
"-- Opinions of Financial Advisors to GTE -- Summary of Merrill Lynch's Opinion
to the Board of GTE Corporation -- Premiums Paid in Selected Minority Buy Outs;
Minority Buy Out Analysis".
Draft Preliminary Analysis of GTE Financial Advisors
In advising GTE management in connection with the proposed Merger, the GTE
Financial Advisors performed certain financial and comparative analyses which
were summarized in a draft preliminary report furnished to GTE's management. A
portion of the draft preliminary report was also provided to Lazard Freres in
connection with the negotiations with the Special Committee described above in
"SPECIAL FACTORS -- Background of the Merger -- Special Committee; Negotiations
with GTE Financial Advisors". A final version of such draft preliminary report
was never furnished to GTE or Lazard Freres by the GTE Financial Advisors. The
draft preliminary report was a draft, was preliminary and was intended to be
used as an information document for GTE management which could be used to
establish negotiating strategies, and as such is not necessarily complete,
contains numerous factual and other assumptions which may differ from, and in
the view of the GTE Financial Advisors may not be as appropriate, complete, or
up to date as, those used in the final analyses carried out in connection with
the delivery of their opinions. Thus, the information, assumptions and analyses
contained in such draft preliminary report could be misleading. The opinions
issued
26
<PAGE> 28
by each of the GTE Financial Advisors were based on the final, completed
analyses carried out by each of the GTE Financial Advisors, descriptions of
which are set forth above under "SPECIAL FACTORS -- Opinions of the Financial
Advisors to GTE -- Summary of PaineWebber's Opinion to the Board of GTE
Corporation" and "SPECIAL FACTORS -- Opinions of the Financial Advisors to
GTE -- Summary of Merrill Lynch's Opinion to the Board of GTE Corporation".
The analyses performed by the GTE Financial Advisors and summarized in the
draft preliminary report were substantially similar to the analyses ultimately
relied upon by the GTE Financial Advisors in rendering their opinions described
above in "SPECIAL FACTORS -- Opinions of the Financial Advisors to GTE --
Summary of PaineWebber's Opinion to the Board of GTE Corporation" and "SPECIAL
FACTORS -- Opinions of the Financial Advisors to GTE -- Summary of Merrill
Lynch's Opinion to the Board of GTE Corporation". The range of equity values per
share for the Class A Shares generated by the analyses summarized in the draft
preliminary report did not materially differ from the ranges generated by the
analyses ultimately relied upon by the GTE Financial Advisors in rendering their
opinions, except to the extent described below. In the draft preliminary report,
the range of equity values per share for the Class A Shares utilizing a
discounted cash flow analysis was between $18.34 to $31.27 using the five year
strategic plan and $10.37 to $22.79 using the ten year projections (compared to
the ranges in the analyses ultimately relied upon by each of the GTE Financial
Advisors in rendering their opinions, which were $19.56 to $30.46 using the five
year strategic plan and $13.57 to $24.31 using the ten year projections for
PaineWebber and $19.63 to $30.90 using the five year strategic plan and $14.93
to $25.97 using the ten year projections for Merrill Lynch). The difference in
ranges is attributable to both GTE Financial Advisors using the same range of
discount rates and both using those rates over both the five year and ten year
horizons in the discounted cash flow analysis underlying the draft preliminary
report. On further reflection, the GTE Financial Advisors each determined that
differing rates should be used for year 0 to year 5 and year 5 to year 10, and
each selected its own set of rates. Such determinations were reflected in the
analyses ultimately used by the GTE Financial Advisors in rendering their
respective opinions. In addition, the GTE Financial Advisors determined that a
different methodology should be used in determining the exit multiples. The
different methodology, which considered exit multiples in the context of implied
perpetual growth rates, resulted in the use of different and differing exit
multiples in the analyses relied upon by the GTE Financial Advisors in rendering
their respective opinions.
Utilizing the comparable transaction analysis in the draft preliminary
report, the range of equity values per share for the Class A Shares was between
$12.76 and $24.38 (compared to the ranges in the analyses ultimately relied upon
by each of the GTE Financial Advisors in rendering their opinions, which were
$12.75 to $30.30 for PaineWebber and $12.76 to $30.31 for Merrill Lynch). The
difference in ranges is attributable to the GTE Financial Advisors' use of a
single percentage discount for the Company's non-controlled POPs in the analysis
underlying the draft preliminary report. Subsequent to the preparation of the
draft preliminary report, the GTE Financial Advisors determined that a range of
discounts should be applied to the Company's non-controlled POPs. Additionally,
PaineWebber decided, for purposes of comparability, to further limit the time
period in which comparable transactions would be examined. In the analyses
relied upon by PaineWebber in rendering its opinion, PaineWebber determined to
exclude certain transactions which occurred before January 1, 1991 (with the
exception of US WEST Inc.'s acquisition of the minority interest in US WEST
NewVector Group, Inc. due to the availability of detailed per POP information).
Those transactions which were included in the analysis in the preliminary draft
report, but were not included in the analysis relied upon by PaineWebber in
rendering its opinion were Pacific Telesis Group's acquisition of cellular
properties from Cellular Communications Inc.; GTE Corporation's acquisition of
cellular properties from Providence Journal Co.; McCaw Cellular Communications
Inc.'s acquisition of cellular properties from Cellular Communications Inc.;
McCaw Cellular Communications Inc.'s acquisition of cellular properties from LIN
Broadcasting Corp.; LIN Broadcasting Corp.'s acquisition of cellular properties
from Metromedia Inc.; Contel Cellular Inc.'s acquisition of cellular properties
from McCaw Cellular Communications Inc.; and British Telecom plc's acquisition
of an interest in McCaw Cellular Communications Inc. In the comparable
transaction analysis relied upon by Merrill Lynch in rendering its opinion,
Merrill Lynch examined an additional transaction, Southern New England
Telecommunications Corp.'s acquisition of cellular properties from Bell Atlantic
Corp. and NYNEX.
27
<PAGE> 29
The comparable public company analysis and historical market valuation
analysis presented in the draft preliminary report utilized stock prices for the
Comparable Group and the Company up to and/or including October 17, 1994. The
comparable public company analysis used in the draft preliminary report resulted
in a range of market capitalization of cellular assets per POP of $316 to $117
with a median of $177 (compared to the ranges in the analyses ultimately relied
upon by each of the GTE Financial Advisors in rendering their opinions, which
were $330 to $111 with a median of $170 for PaineWebber and $331 to $115 with a
median of $169 for Merrill Lynch) and a range of market capitalization of MSA
cellular assets per POP from $412 to $139 with a median of $231 (compared to the
ranges in the analyses ultimately relied upon by each of the GTE Financial
Advisors in rendering their opinions, which were $451 to $133 with a median of
$212 for PaineWebber and $343 to $133 with a median of $215 for Merrill Lynch).
In the draft preliminary report, the minority buy out analysis resulted in
average premiums of 11.7% (percent change from initial offer price to final
offer price) and 40.0%, 43.4%, 31.7%, 10.9%, 1.8% and 85.9%, respectively on the
basis of percentage change from initial offer price to final offer price and
percentage premium of the offer price to the trading price per share at six
months prior to announcement, one month prior to announcement, one day prior to
announcement, one day after announcement, the LTM high and the LTM low (compared
to the average premiums in the analyses ultimately relied upon by the GTE
Financial Advisors in rendering their opinions, which were 11.7% (percent change
from initial offer price to final offer price) and 39.8%, 43.3%, 31.5%, 10.9%,
1.8% and 85.4%, respectively) and resulted in median premiums of 4.6% (percent
change from initial offer price to final offer price) and 33.3%, 33.3%, 21.3%,
7.4%, 2.2% and 60.7%, respectively (compared to the average premiums in the
analyses ultimately relied upon by the GTE Financial Advisors in rendering their
opinions, which were 4.6% (percent change from initial offer price to final
offer price) and 33.3%, 33.3%, 20.4%, 7.4%, 2.2% and 58.9%, respectively). The
difference is attributable to the GTE Financial Advisors' examination of one
additional transaction in the analyses relied upon by the GTE Financial Advisors
in rendering their opinions, PacifiCorp's pending buy out of the minority
holders of Pacific Telecom, Inc.
CERTAIN LITIGATION
Following the public announcement of the proposed Merger on September 8,
1994, four stockholders of the Company filed separate lawsuits in the Court of
Chancery of the State of Delaware in and for New Castle County (the "Court")
against the Company on behalf of the Class A Stockholders alleging that the
announced purchase price of $22.50 per Class A Share was inadequate. On November
16, 1994 the Court entered an order consolidating the actions for all purposes
as In re Contel Cellular Inc. Shareholders' Litigation. On November 29, 1994
counsel for GTE, Contel and CCI Acquisition began discussions with plaintiffs'
counsel regarding the lawsuits. At a subsequent meeting, counsel for GTE, Contel
and CCI Acquisition suggested that plaintiffs' counsel meet with counsel for the
Special Committee and discuss the status and substance of negotiations between
GTE and the Special Committee.
On December 2, 1994 counsel for the Special Committee reviewed at length
with plaintiffs' counsel the steps taken up to that date by the Special
Committee since its formation on September 9, 1994 to determine the fairness of
the proposed Merger on behalf of the Class A Stockholders. In furtherance of
such discussion, counsel for the Special Committee forwarded to plaintiffs'
counsel on December 5, 1995 certain information on a confidential basis that had
been considered by the Special Committee up to that date, including the press
release of GTE and the Company dated September 8, 1994 announcing the Merger,
minutes of the Company's September 9, 1994 meeting of the Board, the Lazard
Freres engagement letter, correspondence received by the Special Committee and a
preliminary draft of the Lazard Freres Report. Subsequent to additional brief
telephone discussions with counsel for the Special Committee, counsel for Lazard
Freres (at the request of counsel for the Special Committee) delivered certain
additional information on a confidential basis to plaintiffs' counsel on
December 14, 1995, including detailed historical financial information of the
Company and the five year and ten year projections prepared by the Company and
summarized below in "PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY".
Plaintiffs' counsel subsequently reviewed the Lazard Freres Report and met with
counsel for the Special Committee, counsel for Lazard Freres and representatives
of Lazard Freres immediately prior to the Special Committee Meeting on
28
<PAGE> 30
December 22, 1994, at which time plaintiffs' counsel discussed with Lazard
Freres the Lazard Freres Report. Plaintiffs' counsel also was present at the
Special Committee Meeting and discussed with the Special Committee the factors
considered by the Special Committee in its negotiation of the price to be paid
for the Class A Shares. After the Special Committee Meeting, plaintiffs' counsel
contacted counsel for GTE, Contel and CCI Acquisition to negotiate the terms of
a settlement.
On December 23, 1994 a tentative settlement agreement was reached with
plaintiffs, subject to confirmatory discovery. The tentative settlement approves
an increased price of $25.50 per Class A Share and the payment of $525,000 in
plaintiffs' counsel fees and expenses. The tentative settlement agreement is
binding on all Class A Stockholders and does not include provisions permitting
Class A Stockholders to opt out of the settlement agreement. The tentative
settlement agreement does not, however, limit the ability of Class A
Stockholders to otherwise challenge corporate actions or to exercise appraisal
rights pursuant to the DGCL. See "DISSENTERS' RIGHTS OF APPRAISAL".
The confirmatory discovery has been completed by plaintiffs' counsel and
all documentation necessary to effect the settlement has been submitted to the
Court. The Court has scheduled a hearing on June 8, 1995 to approve the
settlement.
WRITTEN CONSENT
The Record Date for stockholders entitled to notice of or entitled to give
consent to the Merger was March 16, 1995. As of the Record Date there were
issued and outstanding 9,970,953 Class A Shares and 90,000,000 Class B Shares.
Each Class A Share is entitled to one vote per share and each Class B Share is
entitled to five votes per share. On the Record Date, Contel owned 90,000,000
Class B Shares, which accounted for approximately 98% of the combined voting
power of the outstanding Class A Shares and Class B Shares. Pursuant to the
DGCL, Contel, as holder of record of more than 50% of the combined voting power
of the Class A Shares and Class B Shares, approved the Merger by written consent
on April 10, 1995. Consequently, no action on the part of any other stockholder
of the Company is necessary to authorize or to consummate the Merger and no
meeting of stockholders of the Company will be held in connection with the
Merger.
MERGER CONSIDERATION
The aggregate consideration to be paid to Class A Stockholders in
connection with the Merger is approximately $254 million. The acquisition of the
minority interest in the Company will be financed through equity contributions
from GTE. GTE will make an equity contribution to Contel and Contel will in turn
make an equity contribution to CCI Acquisition. GTE will finance such equity
contributions through cash, the issuance of short term debt or a combination of
cash and short term debt. Any short term debt required to fund the transaction
is expected to be issued prior to the Effective Time with terms comparable to
those pursuant to which GTE periodically issues short term debt in the ordinary
course of its business.
GTE plans to issue commercial paper to the extent any short term debt is
required to fund the payment of the Merger Consideration. No specific plans have
been made to refinance or repay the short term debt. Such short term debt will
be either retired through internally generated funds or will remain outstanding
until such time as GTE's total short term debt balance is replaced with long
term funding in accordance with GTE's internal policies.
ACCOUNTING TREATMENT OF THE MERGER
The purchase method of accounting will be used to account for the Merger.
After the Merger, GTE, through its ownership of Contel, will increase its
interest in the Company from 90% to 100%. Because the Company's accumulated
losses exceed the amount attributable to the 10% minority ownership interest,
GTE currently is required to record 100% of the net book value and net income or
net loss of the Company in its financial statements. Accordingly, the Merger
will not alter GTE's present interest in such net book value or net income or
loss of the Company.
29
<PAGE> 31
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The receipt of cash for Class A Shares purchased pursuant to the Merger
will be a taxable transaction for federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and may also be a taxable
transaction under applicable state, local, foreign or other tax laws.
Generally, a Class A Stockholder will recognize a gain or loss equal to the
difference between such holder's basis in the Class A Shares held by such holder
and the amount of cash received in exchange therefor pursuant to the Merger.
The gain or loss will be treated as a capital gain or loss if the Class A
Shares are held as capital assets. The gain or loss will be considered to be a
long-term capital gain or loss if, on the date the stockholder receives cash for
the Class A Shares, those shares have been held by such stockholder for more
than one year. For 1995, the maximum federal income tax rate for individuals on
net long-term capital gains is 28%, and the maximum individual marginal tax rate
on net short-term capital gains and on ordinary income is 39.6%. The maximum
federal income tax rate for corporations is 35% on all capital gains and
ordinary income. If a Class A Stockholder recognizes a capital loss as a result
of receiving cash for the Class A Shares pursuant to the Merger, such loss will
only be deductible to the extent of other capital gains, plus, in the case of an
individual Class A Stockholder, $3,000 per year.
The federal income tax consequences described in the preceding paragraph
may not apply to (i) Class A Shares acquired upon exercise of incentive stock
options, non-qualified stock options, or otherwise as compensation, (ii) certain
tax-exempt stockholders, (iii) stockholders that are subject to special tax
provisions, such as banks and insurance companies and (iv) certain nonresident
aliens and foreign corporations.
THE DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY AND IS BASED ON EXISTING LAW AS OF THE DATE OF THIS
INFORMATION STATEMENT. EACH CLASS A STOCKHOLDER IS URGED TO CONSULT HIS OR HER
TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE
MERGER (INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS).
The Merger will not cause additional federal tax liability for the Company,
GTE, Contel or CCI Acquisition.
PLANS FOR THE COMPANY; CERTAIN EFFECTS OF THE MERGER
Plans for the Company. Over time GTE intends to combine the operations of
the Company and its other cellular subsidiary, GTE Mobilnet. A merger transition
team has been formed to develop plans for the consolidation. The merger
transition team has recommended that certain functions be centralized in Atlanta
and that area operations focus on tactical operational issues, network planning,
construction/maintenance, revenue goals and sales activities. The merger
transition team is continuing to examine both the nature of GTE's cellular
communications business and the structure of the cellular communications market.
As part of the consolidation process most of the intercompany arrangements
between GTE, Contel and the Company will be restructured or eliminated. For a
description of the material intercompany arrangements see "RELATED PARTY
TRANSACTIONS". It is expected that the Competition Agreement will be terminated
immediately. The details of how other intercompany arrangements will be treated
in the consolidation have not been determined at this time.
Terry S. Parker who served as Chairman of the Company as well as Senior
Vice President of GTE and President of Personal Communications Services -- GTE
Service Corporation, will retire from GTE and resigned from those offices
effective March 1, 1995. GTE plans to consolidate its cellular businesses under
Personal Communications Services -- GTE Service Corporation. Mark S. Feighner
has been named President of Personal Communications Services -- GTE Service
Corporation.
30
<PAGE> 32
Certain Effects of the Merger on the Class A Stockholders. As a result of
the transaction, the Class A Stockholders will no longer have an equity interest
in the Company and, accordingly, will not continue to participate in the results
of the Company as an equity holder. However, they will receive cash for their
interest. For a discussion of the tax consequences of the Merger on the Class A
Stockholders see "-- Certain Federal Income Tax Consequences of the Merger".
Certain Effects of the Merger on GTE, Contel and the Company. As a result
of the Merger, CCI Acquisition will merge into the Company and cease to exist
and the Company will become wholly owned by Contel. The Merger will permit GTE
to consolidate and realign its cellular businesses over time as described above
under "-- Plans for the Company". The Company's Class A Shares will be
deregistered and delisted as described below. The Merger will permit GTE and
Contel to obtain certain operating efficiencies but will otherwise have no
material effect on the operations of GTE, Contel or the Company.
Deregistration and Delisting. The Company is currently subject to the
informational filing requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), and is required to file reports and other information with the
Securities and Exchange Commission (the "Commission") relating to its business,
financial statements and other matters. As a result of the Merger, there will
cease to be any public market for the Class A Shares, and after the Effective
Time (as defined below), the Class A Shares will cease to be quoted on the
Nasdaq National Market. When the Merger occurs, the Surviving Corporation is
expected to file with the Commission a Certification and Notice of Termination
of Registration of the Class A Shares under the Exchange Act (the
"Certification"). Upon filing of the Certification, the Surviving Corporation
will no longer be required to file reports and other information under the
Exchange Act. Once the Certification has been filed, the Exchange Act (including
the proxy solicitation provisions of Section 14(a), the periodic reporting
requirements of Section 13 and the short swing trading provisions of Section
16(b)) will no longer apply to the Surviving Corporation. Additionally, upon the
termination of the registration of the Class A Shares, the shares will no longer
constitute "margin securities" under the regulations of the Board of Governors
of the Federal Reserve System.
31
<PAGE> 33
THE MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in its entirety
by reference to the provisions of the Merger Agreement, the full text of which
is attached hereto as Exhibit A and incorporated by reference herein.
GENERAL
CCI Acquisition is a wholly owned subsidiary of Contel formed for the
purpose of the Merger. Contel, a wholly owned subsidiary of GTE, has adopted a
plan of liquidation. The Merger Agreement provides, upon the terms and subject
to the conditions set forth therein, that CCI Acquisition will be merged with
and into the Company and that the Company will be the Surviving Corporation.
Pursuant to the Merger, (i) each Class A Share outstanding immediately prior to
the time of the filing of a certificate of merger with the Secretary of State of
the State of Delaware (the "Effective Time"), other than any Class A Shares as
to which appraisal rights have been properly exercised under the DGCL, will be
converted into the right to receive the Merger Consideration, (ii) each Class A
Share held by the Company and each share of common stock of CCI Acquisition
outstanding immediately prior to the Effective Time will be cancelled, and no
payment will be made with respect thereto and (iii) each outstanding Class B
Share will continue to be outstanding.
DESIGNATION OF DIRECTORS; CERTIFICATE OF INCORPORATION AND BY-LAWS
The Merger Agreement provides that the directors of the Company at the
Effective Time will be the directors of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the certificate of
incorporation and by-laws of the Surviving Corporation. The certificate of
incorporation and by-laws of the Company shall be the certificate of
incorporation and by-laws of the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains standard representations and warranties on
the part of GTE, Contel, CCI Acquisition and the Company relating to, among
other things, due organization and qualification and authority to enter into and
perform the respective obligations of the parties under the Merger Agreement. In
addition, CCI Acquisition represents in the Merger Agreement that it has not
engaged in any business activities other than those related to the acquisition
of the Company.
INDEMNIFICATION AND OTHER COVENANTS
Pursuant to the Merger Agreement, the Company has agreed that it will
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation and GTE will indemnify and hold harmless, each present and former
director and officer of the Company (each an "Indemnified Party") against any
losses, claims, damages, liabilities, costs, expenses, judgments and amounts
paid in settlement arising out of or pertaining to any action or omission
occurring prior to the Effective Time (including without limitation, any actions
or omissions which arise out of or relate to the transactions contemplated by
the Merger Agreement) to the full extent permitted under the DGCL, provided that
any determination required to be made with respect to whether an Indemnified
Party's conduct complied with the standards set forth in the DGCL shall be made
in accordance with the DGCL. GTE has agreed to maintain in place the current
policy of insurance covering officers and directors of the Company (or an
equivalent policy) for a period of three years after the Effective Time.
The Company also covenants that, from the date of the Merger Agreement to
the Effective Time, the Company will conduct its business in the ordinary
course.
The Company and CCI Acquisition each covenant that, promptly after the
execution of the Merger Agreement, they will cooperate in the preparation of all
materials necessary to be filed with the Commission in connection with the
Merger. Additionally, each of the parties to the Merger Agreement agrees to use
its commercially reasonable efforts to take all action and to do all things
necessary to consummate the
32
<PAGE> 34
transactions contemplated by the Merger Agreement, including using commercially
reasonable efforts to (i) obtain all necessary contractual waivers and consents,
(ii) obtain all necessary consents and authorizations as are required to be
obtained under any federal, state or foreign law or regulations, (iii) defend
all lawsuits or other legal proceedings challenging the Merger Agreement or the
consummation of the transactions contemplated thereby, (iv) lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated by the Merger
Agreement and (v) effect all registrations and filings necessary to consummate
the transactions contemplated by the Merger Agreement.
Pursuant to the Merger Agreement, Contel agreed to execute a written
consent as majority stockholder of the Company approving the Merger and the
Merger Agreement.
CONDITIONS TO THE MERGER
The respective obligations of CCI Acquisition, the Company, Contel and GTE
to effect the Merger are subject to the satisfaction at or prior to the
Effective Time of the following conditions: (i) the Merger Agreement and the
transactions contemplated by the Merger Agreement shall have been approved by
any necessary vote of the stockholders of the Company and CCI Acquisition in
accordance with applicable law and the terms of the Merger Agreement; (ii) no
statute, rule, regulation, executive order, decree or injunction (preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by any
federal or state court of competent jurisdiction in the United States or other
governmental authority which prohibits the consummation of the Merger remains in
effect after GTE, CCI Acquisition and the Company shall have used all
commercially reasonable efforts to lift any injunction; (iii) no consents of or
filings with any governmental entity shall be required for consummation of the
Merger which have not been obtained or filed and (iv) the Special Committee
shall not have modified or rescinded its recommendation with respect to the
Merger.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company: (i) by mutual written consent of each of the
Company and CCI Acquisition, (ii) by the Company or CCI Acquisition if any court
of competent jurisdiction in the United States or other United States
governmental body has issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the Merger
and such order, decree, judgment, injunction, ruling or other action has become
final and nonappealable or (iii) by the Company or CCI Acquisition if the Merger
does not occur within 120 days of the date of the Merger Agreement unless such
delay is caused by regulatory review of required filings.
AMENDMENT
The Merger Agreement provides that any provision of the Merger Agreement
may be amended by action taken by the Company and CCI Acquisition at any time
prior to the Effective Time, provided that following approval of the Merger
Agreement by the stockholders of the Company or CCI Acquisition any amendment of
the Merger Agreement will be subject to compliance with Section 251(d) of the
DGCL. The prior approval of a majority of the members of the Special Committee
shall also be required in connection with any amendment or modification of the
Merger Agreement by or on behalf of the Company. The Merger Agreement may not be
amended, modified or supplemented except by an instrument in writing signed on
behalf of the party against whom enforcement is sought.
EXTENSION; WAIVER
The Merger Agreement provides that at any time prior to the Effective Time,
the Company, CCI Acquisition, GTE and Contel may (i) extend the time for the
performance of any of the obligations or other acts of the other parties, (ii)
waive any inaccuracies in the representations and warranties of the other
parties contained therein or in any document, certificate or writing delivered
pursuant to the Merger Agreement or (iii) waive compliance by the other parties
with any of the agreements or conditions contained in the Merger Agreement other
than those relating to indemnification. Any agreement on the part of any party
to any such
33
<PAGE> 35
extension or waiver shall be valid only if set forth in writing and signed on
behalf of such party, and, in the case of an extension or waiver by the Company,
if such extension or waiver has been approved by a majority of the members of
the Special Committee.
PAYMENT OF THE MERGER CONSIDERATION
In order to receive $25.50 per Class A Share (less any applicable
withholding taxes) (the "Merger Consideration"), Class A Stockholders must
complete and return certificates representing their Class A Shares with the
Letter of Transmittal that is being mailed to the Class A Stockholders with this
Information Statement. These documents are being mailed to the Class A
Stockholders with the Information Statement on April , 1995. After the Merger
has been consummated, the Disbursing Agent will issue payment of the Merger
Consideration when it receives a holder's Class A Shares and a validly completed
Letter of Transmittal for those shares. Class A Stockholders should not send
their Class A Shares without a completed Letter of Transmittal. Class A
Stockholders who wish to exercise appraisal rights must not surrender their
certificates representing Class A Shares pursuant to the Letter of Transmittal
and must comply with the provisions of Section 262 of the DGCL. See "DISSENTERS'
RIGHTS OF APPRAISAL".
When a Class A Stockholder properly surrenders certificates for Class A
Shares to the Disbursing Agent, those shares will be canceled and the Class A
Stockholder will receive the Merger Consideration. No interest will be paid with
respect to the Merger Consideration. Class A Stockholders who wish to receive
the Merger Consideration promptly after the Merger should send their Class A
Shares along with a properly completed and executed Letter of Transmittal to the
Disbursing Agent as soon as possible.
If the Merger is not consummated within 120 days of the date of this
Information Statement, the Disbursing Agent will return all certificates
representing Class A Shares to the Class A Stockholders.
Any Class A Stockholder who has lost certificates representing their Class
A Shares should make arrangements (which may include the posting of a bond or
other satisfactory indemnification) to replace lost certificates. These
arrangements should be made with the Disbursing Agent, which is also the
transfer agent for the Class A Shares.
The method of delivery of all required documents is at the option and risk
of the Class A Stockholder. If a Class A Stockholder elects to mail certificates
representing Class A Shares, the Company recommends properly insuring such
certificates and sending them by registered mail with return receipt requested.
Under Federal Income Tax Backup and Withholding Rules, unless an exception
applies under applicable laws and regulations, the Disbursing Agent will be
required to withhold and remit to the United States Treasury 31% of the cash
payment for Class A Shares made to a stockholder, a dissenting stockholder or
any other payee pursuant to the Merger, unless such stockholder or other payee
provides his taxpayer identification number (employer identification number or
social security number) and certifies that such number is correct. THEREFORE,
EACH CLASS A STOCKHOLDER SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM, AND
IF APPLICABLE, EACH PAYEE SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9
INCLUDED AS PART OF THE LETTER OF TRANSMITTAL, IN ORDER TO PROVIDE THE
INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP WITHHOLDING. FOREIGN
STOCKHOLDERS MAY BE REQUIRED TO SUBMIT A FORM W-8 AND A FURTHER CERTIFICATION IN
ORDER TO AVOID BACKUP WITHHOLDING.
All questions as to the form of all documents and the validity, form and
acceptance of any certificates representing Class A Shares for payment will be
determined by the Disbursing Agent and the Company, whose determination will be
final and binding.
ALL QUESTIONS AND REQUESTS FOR INFORMATION RELATING TO THE PROCEDURE FOR
PAYMENT OF THE MERGER CONSIDERATION FOR THE CLASS A SHARES SHOULD BE DIRECTED TO
THE DISBURSING AGENT -- CHEMICAL BANK, REORGANIZATION DEPARTMENT, P.O. BOX 1916,
GPO STATION, NEW YORK, NY 10116-1916.
34
<PAGE> 36
DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 of the DGCL ("Section 262"), Class A Stockholders who do
not wish to accept the Merger Consideration have the right to seek appraisal of
the fair value of their Class A Shares in the Delaware Court of Chancery.
Section 262 is set forth in its entirely as Exhibit D to this Information
Statement and incorporated by reference herein. The following discussion is not
a complete statement of the law relating to appraisal rights and is qualified in
its entirety by reference to Exhibit D. This discussion and Exhibit D should be
reviewed carefully by any holder who wishes to exercise statutory appraisal
rights or who wishes to preserve the right to do so, as failure to comply with
the procedures set forth therein will result in the loss of appraisal rights.
Moreover, because of the complexity of the procedures for exercising the right
to dissent and seek appraisal rights, the Company believes that Class A
Stockholders who consider exercising such rights should seek the advice of
counsel. CLASS A STOCKHOLDERS WHO DESIRE TO EXERCISE THEIR APPRAISAL RIGHTS MUST
NOT SURRENDER THEIR CERTIFICATES REPRESENTING CLASS A SHARES PURSUANT TO THE
LETTER OF TRANSMITTAL AND MUST SATISFY ALL THE CONDITIONS SET FORTH IN THE
FOLLOWING PARAGRAPHS.
In order to exercise appraisal rights, a holder must deliver a written
demand for appraisal of Class A Shares to the General Counsel of the Company
within 20 days after the date of the mailing of this Information Statement. This
Information Statement is being mailed on April , 1995. The address of the
General Counsel of the Company is Contel Cellular Inc., 245 Perimeter Center
Parkway, Atlanta, Georgia 30346, Attention: General Counsel. The telephone
number of the General Counsel is (404) 804-3400.
A demand for appraisal must be executed by or for the Class A Stockholder
of record, fully and correctly, as such Class A Stockholder's name appears on
the certificate or certificates evidencing such stockholder's Class A Shares. If
the Class A Shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, such demand must be executed by the fiduciary.
If the Class A Shares are owned of record by more than one person, as in a joint
tenancy or tenancy in common, such demand must be executed by all record owners.
An authorized agent, including an agent for two or more record owners, may
execute the demand for appraisal for a Class A Stockholder of record; however,
the agent must identify the record owner and expressly disclose the fact that,
in exercising the demand, such person is acting as agent for the owner.
A record owner, such as a broker, who holds Class A Shares as a nominee for
others, may exercise appraisal rights with respect to the Class A Shares held
for all or less than all beneficial owners of Class A Shares as to which such
person is the record owner. In such case the written demand must set forth the
number of Class A Shares covered by such demand. Where the number of Class A
Shares is not expressly stated, the demand will be presumed to cover all Class A
Shares outstanding in the name of such record owner. Beneficial owners who are
not record owners and who intend to exercise appraisal rights should instruct
their record owners to comply strictly with the statutory requirements with
respect to the exercise of appraisal rights.
The Effective Time of the Merger shall be May , 1995. From and after the
Effective Time, dissenters may not vote their Class A Shares or receive
distributions on such Class A Shares declared after the Effective Time.
Within 120 days after the Effective Time, but not thereafter, either the
Surviving Corporation or any Class A Stockholder entitled to appraisal rights
under Section 262 (who has notified the Company as described above within 20
days after the date of the mailing of this Information Statement) may file a
petition in the Delaware Court of Chancery demanding a determination of the
value of the Class A Shares of all Class A Stockholders entitled to appraisal,
provided that during the first 60 days after the Effective Time any Class A
Stockholder has the right to withdraw his demand for appraisal and accept the
cash payment of the Merger Consideration provided for in the Merger Agreement.
Within such 120 day period, any dissenting shareholder who has perfected his or
her rights may, by written request to the Surviving Corporation, obtain a list
of the aggregate number of holders of Class A Shares for which appraisal demands
have been received. Such list must be delivered by the Surviving Corporation to
the requesting Stockholder within 10 days of the date on which the request is
received by the Surviving Corporation or the expiration of the period for
delivery of demands under Section 262(d) of the DGCL, whichever is later.
35
<PAGE> 37
Within 20 days after the service upon the Surviving Corporation of a copy
of a petition filed in the Delaware Court of Chancery demanding an appraisal,
the Surviving Corporation is obligated to file in the office of the Register in
Chancery a verified list of all Class A Stockholders who have demanded appraisal
and have not reached agreement as to the value of their Class A Shares with the
Surviving Corporation or withdrawn the demand for appraisal of their Class A
Shares. After notice to such Class A Stockholders, the Court of Chancery is
empowered to conduct a hearing upon the petition of any such Class A
Stockholder. The court shall then determine those Class A Stockholders entitled
to appraisal and appraise the fair value of the Class A Shares held by them,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest to be paid, if any, upon
the amount determined to be the fair value. In determining fair value, the Court
of Chancery is to take into account all relevant factors. In Weinberger v. UOP
Inc., et al., decided February 1, 1983, the Delaware Supreme Court discussed the
considerations that could be considered in determining fair value in an
appraisal proceeding, stating the "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered and that "fair price
obviously requires consideration of all relevant factors involving the value of
a company". The Delaware Supreme Court stated that in making this determination
of fair value the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other facts which could
be ascertained as of the date of the merger which throw any light on future
prospects of the corporation. Section 262 provides that fair value is to be
"exclusive of any element of value arising from the accomplishment or
expectation of the merger". In Weinberger, the Delaware Supreme Court construed
Section 262 to mean that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation, may be considered".
Class A Stockholders considering seeking appraisal should bear in mind that
the fair value of their Class A Shares determined under Section 262 could be
more than, the same as or less than the consideration they are to receive
pursuant to the Merger Agreement if they do not seek appraisal of their Class A
Shares, and that an opinion of an investment banking firm as to fairness is not
an opinion as to fair value under Section 262. Costs of the appraisal proceeding
may be taxed upon the parties thereto by the court as the court deems equitable
in the circumstances. Upon application of a dissenting stockholder, the Delaware
Court of Chancery may order that all or a portion of the expenses incurred by
any dissenting Class A Stockholder in connection with the appraisal proceeding,
including without limitation reasonable attorney's fees and the fees and
expenses of experts, be charged pro rata against the value of all Class A Shares
entitled to appraisal.
If a Class A Stockholder does not file a petition for an appraisal within
120 days after the Effective Time, then the right of such Class A Stockholder to
an appraisal shall cease. In addition, if any Class A Stockholder shall deliver
to the Surviving Corporation a written withdrawal of such holder's demand for an
appraisal and an acceptance of the Merger Consideration, either within 60 days
after the Effective Time or thereafter with the written approval of the
Surviving Corporation, then the right of such Class A Stockholder to an
appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in
the Delaware Court of Chancery shall be dismissed as to any Class A Stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.
The class action suits brought on behalf of the Class A Stockholders
described in "SPECIAL FACTORS -- Certain Litigation" do not affect the appraisal
rights summarized above.
36
<PAGE> 38
MARKET PRICES AND DIVIDENDS
ON THE COMMON STOCK OF THE COMPANY
The Class A Shares are publicly traded in the over the counter market and
quoted on the Nasdaq National Market under the symbol "CCXLA". There is no
established trading market for the Class B Shares. As of April , 1995, the
Company had 378 Class A Stockholders of record. The Company has not paid any
cash dividends on the Class A Shares or Class B Shares, and it is not
anticipated that the Company will pay any cash dividends in the foreseeable
future.
The following table indicates the high and low sales prices for the Class A
Shares during the designated periods:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------ --------
<S> <C> <C> <C> <C>
1994
High.............................. $ 18.75 $ 17.25 $24.00 $ 25.25
Low............................... 14.00 13.00 16.00 23.50
1993
High.............................. $ 18.63 $ 16.25 $18.75 $ 22.00
Low............................... 13.25 13.50 15.50 15.00
1992
High.............................. $ 23.25 $ 18.50 $16.50 $ 19.00
Low............................... 17.25 13.00 13.50 13.25
</TABLE>
On September 7, 1994, the last full day of trading prior to the
announcement of GTE's intention to acquire the Class A Shares, the high, low and
closing sales prices per Class A Share on the Nasdaq National Market were
$18.25, $17.75 and $17.75, respectively.
For the first quarter of 1995, the high and low sales prices per Class A
Share quoted on the Nasdaq National Market were $25.375 and $24.875,
respectively. For the second quarter of 1995 through April , 1995, the high
and low sales prices per Class A Share quoted on the Nsadaq National Market were
$ and $ , respectively.
37
<PAGE> 39
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The selected consolidated financial data presented below as of December 31,
1990-1994 and for each of the years then ended have been derived from the
audited consolidated financial statements of the Company. The consolidated
financial statements as of December 31, 1994 and 1993, and for each of the years
in the three-year period ended December 31, 1994, have been incorporated by
reference into this Information Statement. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE". This financial information should be read in
conjunction with such financial statements and notes thereto.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues and sales................................. $ 167,178 $ 235,107 $ 286,999 $ 374,014 $ 562,955
Operating income (loss)(1)......................... (38,143) (68,577) (50,113) (28,305) 41,011
Loss from consolidated operations.................. (158,865) (223,726) (196,347) (188,011) (143,332)
Equity in earnings of unconsolidated
partnerships..................................... 19,069 15,687 29,027 37,351 62,792
Gains on sales of partnership interests............ -- 18,387 60,806 48,023 96,607
Net income (loss) before cumulative effect of
change in accounting principles.................. (102,794) (118,900) (73,061) (74,918) 1,871
Cumulative effect of change in accounting
principles(2).................................... -- -- (2,080) (241) --
Net income (loss).................................. (102,794) (118,900) (75,141) (75,159) 1,871
Net income (loss) per share before cumulative
effect of change in accounting principles........ (1.03) (1.19) (0.73) (0.75) 0.02
Net income (loss) per share........................ (1.03) (1.19) (0.75) (0.75) 0.02
Number of weighted average shares outstanding (in
thousands)....................................... 99,931 99,942 99,943 99,948 99,953
OTHER OPERATING DATA:
Capital expenditures............................... 70,841 107,792 183,504 130,042 255,174
Number of ending subscribers....................... 155,285 236,282 327,645 521,226 789,580
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets....................................... $1,665,395 $1,870,669 $1,930,469 $2,052,984 $2,346,466
Long-term obligations
Notes payable -- affiliates...................... 1,540,000 1,735,034 1,814,327 1,901,726 2,136,263
Other............................................ 14,280 42,280 36,280 36,792 30,792
Stockholders' equity (deficit)..................... 27,525 (91,085) (166,084) (241,221) (238,920)
Book value per share............................... 0.28 (0.91) (1.66) (2.41) (2.39)
</TABLE>
- ---------------
(1) The operating loss in 1991 includes approximately $12 million of integration
costs associated with the merger of Contel with a wholly owned subsidiary of
GTE.
(2) In 1993, the Company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits." In 1992, the
Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and
No. 109, "Accounting for Income Taxes."
Earnings were not adequate to cover fixed charges in 1992, 1993 or 1994.
The amount of such deficiency was $128 million, $129 million and $19 million for
the years ended December 31, 1992, 1993 and 1994, respectively.
38
<PAGE> 40
PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY(1)
The Company does not, as a matter of course, publicly disclose projections
as to future revenues or earnings. The following five year projections for the
period 1995-1999 were prepared by management for GTE and internal planning
purposes. These five year projections are included in this Information Statement
because such projections were made available to the Special Committee's
financial advisor and the GTE Financial Advisors. These projections, while
presented with numerical specificity, are based upon a variety of estimates and
assumptions. Such estimates and assumptions, some of which are described below,
involve judgments with respect to, among other things, future economic and
competitive conditions, the ability of the Company to continue operations, and
future business decisions. These judgments, though considered reasonable by the
Company at the time, may not be realized, and are inherently subject to
significant business, economic and competitive uncertainties, many of which are
beyond the control of the Company.
There can be no assurance that the results of operations set forth in such
projections will be realized. Actual results may vary materially from those
shown. In light of the uncertainties inherent in projections of any kind, the
inclusion of projections herein should not be regarded as a representation by
the Company or any other person that the projections will be achieved. The
Company's independent auditors have not examined or compiled the projections
presented herein and accordingly, assume no responsibility for them. Class A
Stockholders are cautioned not to place undue reliance on these projections.
Management has not and does not intend to update or otherwise revise the
projections to reflect changing circumstances existing after the preparation of
the projections included herein or to reflect the occurrence of unanticipated
events that may have occurred.
The significant assumptions underlying these projections are described in
the footnotes following the projections. The projections provided to the Special
Committee's financial advisor and the GTE Financial Advisors were based on
forecasted results for 1994 since actual 1994 results were not available at the
time.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,(1)
------------------------------------------
1995 1996 1997 1998 1999
------ ------ ------ ------ ------
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Service revenues(2)................................... $ 679 $ 831 $ 984 $1,140 $1,282
Depreciation and amortization(3)(4)(6)................ 152 181 201 215 228
Operating income...................................... 116 186 263 325 431
Net income (loss)(5).................................. (36) (1) 40 81 153
OTHER OPERATING DATA:
Capital expenditures(3)(6)............................ 298 220 158 135 145
Operating cash flow(6)................................ 268 367 464 540 659
Return on investment(7)............................... 5.4% 7.3% 9.7% 12.1% 16.5%
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,(1)
------------------------------------------
1995 1996 1997 1998 1999
------ ------ ------ ------ ------
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................................... $2,541 $2,614 $2,602 $2,548 $2,488
Long-term liabilities(8).............................. 2,135 2,183 2,233 2,185 1,983
Stockholders' deficit(9).............................. (289) (290) (250) (169) (16)
</TABLE>
- ---------------
(1) Basis of presentation: The five year projections do not include the effect
of the proposed Merger. The five year projections include the effect of the
1994 acquisitions of 100% of the cellular system serving the Huntsville,
Alabama MSA and Alabama RSA 2, a controlling interest in a company with
interim operating authority to provide cellular service in Alabama RSA 1 and
the acquisition of a controlling interest in California RSA 4. Prior to
completion of these five year projections, ten year projections were
prepared that did not include the effects of the acquisitions referred to
above. These ten year projections were prepared outside of the Company's
normal planning process and therefore, in addition to being inherently less
certain, they received less management review than the five year
projections. The ten year projections, as presented below, were made
available to the Special Committee's financial advisor, GTE
39
<PAGE> 41
and the GTE Financial Advisors. Both the ten year and five year projections
include the effect of the proposed sales in 1994 of certain properties to
NYNEX Mobile Communications Company, including the Company's cellular
interests in the MSAs of Binghamton and Elmira, New York, and New York RSA
3. These sales are expected to close sometime in 1995. Additionally, the
California RSA 4 acquisition is not expected to close until sometime in
1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Service revenues......... $ 656 $ 799 $ 945 $1,092 $1,228 $1,270 $1,287 $1,285 $1,315 $1,347
Depreciation and
amortization........... 148 176 196 210 223 233 248 270 294 315
Operating income......... 103 182 257 316 421 432 425 411 408 404
Net income (loss)........ (37) 4 43 83 154 181 198 216 239 266
OTHER OPERATING DATA:
Capital expenditures..... 298 214 156 134 143 123 135 127 126 100
Operating cash flow...... 251 358 453 526 644 665 673 681 702 719
Return on investment..... 5.4% 7.9% 10.4% 12.8% 17.3% 19.0% 19.7% 20.5% 22.4% 25.6%
</TABLE>
(2) Service revenues: Service revenues include airtime, access, roaming,
long-distance and other service revenues, but do not include revenues for
the sale or rental of cellular equipment. The projections generally assume
that service revenues will increase over prior years due to increasing
volumes; however, revenue per subscriber will continue to decline as an
increasing number of casual users are added to the base and as new entrants
in the wireless communication market compete for subscribers.
(3) Capital expenditures/depreciation: The projections assume that increased
capital will be required to provide high quality, portable network coverage,
to accommodate volume and provide for economies of scale.
(4) Amortization: The five year projections include the amortization of
intangibles related to the acquisitions described in Note 1 above.
(5) Net income: The projections assume a federal income tax rate of 35% for all
periods presented.
(6) Wireless data business: The business plan for the Company's wireless data
business was approved during the process of preparation of the five year
projections. As a result, the parties who received the five year projections
also received data that backed out the wireless data business from the five
year projections. Excluding the wireless data business, projected operating
cash flow is $270, $362, $446, $509 and $616 in 1995-1999, respectively,
projected capital expenditures are $284, $215, $153, $130 and $139 in
1995-1999, respectively, and projected depreciation and amortization is
$151, $177, $196, $209 and $220 in 1995-1999, respectively.
(7) Return on investment: Represents net income (loss) plus interest expense,
net of tax benefit, and minority interest, divided by average investment.
(8) Long term liabilities: The projections assume increases in long-term debt
between 1995 and 1997 reflecting the expected increase in required capital
as described in Note 3. Thereafter, the projections assume that operating
cash flow will be sufficient to satisfy operating requirements and capital
expenditures and enable the Company to gradually repay outstanding debt.
(9) Stockholders' deficit: Stockholders' deficit includes the par value of the
Class A Shares and Class B Shares, additional paid-in capital, the cost of
the Class A treasury stock and the accumulated deficit all as of December
31, 1993, adjusted for the projected net results for the year ended December
31, 1994 and for each of the years included in the above projections.
40
<PAGE> 42
BUSINESS OF THE COMPANY
OVERVIEW
The Company, through its subsidiaries and through partnerships, provides or
participates in the provision of cellular telephone service in various MSAs and
RSAs throughout the United States. As of December 31, 1994, the Company had
interests in cellular telephone systems in the United States representing
approximately 23.9 million "POPs". ("POPs" refer to the population of a market
area multiplied by the Company's percentage ownership in the cellular system
serving that market.)
The Company's 23.9 million POPs include cellular systems which the Company
controls or manages and cellular systems operated by partnerships in which the
Company is not the controlling partner. As of December 31, 1994, approximately
19.5 million of the Company's 23.9 million POPs were located in 59 MSAs. The
Company owned a controlling interest in and managed cellular systems servicing
32 of these 59 MSAs (representing approximately 69% of the Company's MSA POPs).
The Company owned a non-controlling interest in cellular systems servicing the
remaining 27 MSAs.
The remaining 4.4 million of the Company's 23.9 million POPs were located
in 52 RSAs. As of December 31, 1994, the Company owned controlling interests in
entities licensed to provide cellular service in 24 RSAs, owned non-controlling
interests in and managed 10 RSA markets and held non-controlling interests in 18
RSAs. Most of the Company's RSA POPs are in areas adjacent to MSAs currently
served by the Company.
CELLULAR INTERESTS
The Company's controlled MSA interests, non-controlled MSA interests,
controlled RSA interests, managed, non-controlled RSA interests and
non-controlled RSA interests, are set forth below.
<TABLE>
<CAPTION>
COMPANY COMPANY
PERCENTAGE 1994 ESTIMATED POPULATION
MARKET MSA RANK OWNERSHIP POPULATION(1) EQUIVALENTS
- ------------------------------------------- -------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
CONTROLLED MSA INTERESTS
Memphis, TN................................ 36 100.00% 1,030,496 1,030,496
Louisville, KY............................. 37 100.00% 931,413 931,413
Birmingham, AL............................. 41 100.00% 904,436 904,436
Norfolk, VA................................ 43 95.01% 1,020,794 969,856
Nashville, TN.............................. 46 100.00% 1,051,872 1,051,872
Richmond, VA............................... 59 95.01% 797,942 758,125
Fresno, CA................................. 74 92.00% 735,494 676,654
Knoxville, TN.............................. 79 94.12% 544,045 512,055
El Paso, TX................................ 81 100.00% 652,655 652,655
Mobile, AL................................. 83 100.00% 510,599 510,599
Johnson City, TN........................... 85 100.00% 452,809 452,809
Chattanooga, TN............................ 88 100.00% 451,120 451,120
Bakersfield, CA............................ 97 92.00% 618,209 568,752
Davenport, IA.............................. 98 100.00% 362,249 362,249
Newport News, VA........................... 104 95.01% 474,518 450,840
Huntsville, AL............................. 115 100.00% 393,160 393,160
Lexington, KY.............................. 116 100.00% 367,623 367,623
Evansville, IN............................. 119 88.87% 318,396 282,959
Binghamton, NY............................. 122 41.00% 309,418 126,861
Pensacola, FL.............................. 127 100.00% 374,969 374,969
Rockford, IL............................... 131 59.00% 301,026 177,605
Visalia, CA................................ 150 92.00% 347,899 320,067
Roanoke, VA................................ 157 40.00% 239,829 95,932
Clarksville, TN............................ 209 100.00% 172,410 172,410
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
COMPANY COMPANY
PERCENTAGE 1994 ESTIMATED POPULATION
MARKET MSA RANK OWNERSHIP POPULATION(1) EQUIVALENTS
- ------------------------------------------- -------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Tuscaloosa, AL............................. 222 80.40% 161,333 129,705
Florence, AL............................... 226 91.09% 138,073 125,771
Petersburg, VA............................. 235 95.01% 130,585 124,069
Anniston, AL............................... 249 100.00% 116,063 116,063
Gadsden, AL................................ 272 90.00% 101,153 91,038
Elmira, NY................................. 284 100.00% 95,612 95,612
Las Cruces, NM............................. 285 100.00% 153,838 153,838
Owensboro, KY.............................. 293 88.87% 89,993 79,977
-------------- -----------
32 TOTAL CONTROLLED MSAs.................................. 14,350,031 13,511,590
=========== =========
NON-CONTROLLED MSA INTERESTS
Los Angeles, CA............................ 2 11.20% 14,718,542 1,648,477
San Francisco, CA.......................... 7 11.25% 3,832,050 431,106
Washington, DC............................. 8 35.27% 3,783,479 1,334,433
Houston, TX................................ 10 4.40% 3,897,637 171,496
Minneapolis, MN............................ 15 30.00% 2,569,391 770,817
San Jose, CA............................... 27 11.25% 1,541,573 173,427
San Antonio, TX............................ 33 30.00% 1,382,982 414,895
Sacramento, CA............................. 35 0.98% 1,479,697 14,501
Jacksonville, FL........................... 51 14.24% 1,003,832 142,946
Greenville, SC............................. 67 10.83% 667,011 72,237
Oxnard, CA................................. 73 11.20% 697,369 78,105
Austin, TX................................. 75 3.00% 874,277 26,228
Albuquerque, NM............................ 86 49.00% 590,335 289,264
Beaumont, TX............................... 101 4.40% 384,136 16,902
Stockton, CA............................... 107 0.98% 517,135 5,068
Vallejo, CA................................ 111 11.25% 489,096 55,023
Santa Rosa, CA............................. 123 11.25% 411,058 46,244
Santa Barbara, CA.......................... 124 39.00% 378,431 147,588
Salinas, CA................................ 126 11.25% 372,027 41,853
Modesto, CA................................ 142 0.98% 415,482 4,072
Galveston, TX.............................. 170 4.40% 237,243 10,439
Reno, NV................................... 171 0.98% 279,735 2,741
Santa Cruz, CA............................. 174 11.25% 230,417 25,922
Chico, CA.................................. 215 0.98% 197,623 1,937
Anderson, SC............................... 227 10.83% 146,845 15,903
Redding, CA................................ 254 0.98% 167,321 1,640
Yuba City, CA.............................. 274 0.98% 135,636 1,329
-------------- -----------
27 TOTAL NON-CONTROLLED MSAs.............................. 41,400,360 5,944,593
=========== =========
59 TOTAL MSAs............................................. 55,750,391 19,456,183
=========== =========
</TABLE>
42
<PAGE> 44
<TABLE>
<CAPTION>
COMPANY COMPANY
PERCENTAGE 1994 ESTIMATED POPULATION
MARKET OWNERSHIP POPULATION(1) EQUIVALENTS
- ------------------------------------------------------- ---------- -------------- -----------
<S> <C> <C> <C>
CONTROLLED RSA INTERESTS
Alabama 2.............................................. 100.00% 127,611 127,611
California 6........................................... 100.00% 28,183 28,183
California 9........................................... 100.00% 140,612 140,612
Kentucky 2............................................. 100.00% 127,813 127,813
Kentucky 7............................................. 100.00% 166,424 166,424
Tennessee 1............................................ 100.00% 297,449 297,449
Tennessee 2............................................ 100.00% 159,071 159,071
Tennessee 3............................................ 100.00% 329,746 329,746
Tennessee 5............................................ 100.00% 336,480 336,480
Tennessee 6............................................ 100.00% 156,906 156,906
Tennessee 7............................................ 100.00% 248,005 248,005
Tennessee 9............................................ 100.00% 67,581 67,581
Virginia 7............................................. 100.00% 38,853 38,853
Virginia 8............................................. 95.01% 84,513 80,296
Virginia 9............................................. 95.01% 87,028 82,685
Virginia 11............................................ 95.01% 111,650 106,079
Virginia 12............................................ 95.01% 33,536 31,863
California 12.......................................... 92.00% 110,515 101,674
Illinois 1............................................. 91.50% 316,168 289,294
Virginia 5............................................. 77.00% 63,347 48,777
Texas 10............................................... 75.00% 29,489 22,117
New Mexico 6-I......................................... 71.43% 60,988 43,564
Virginia 3............................................. 51.00% 183,153 93,408
Virginia 4............................................. 51.00% 66,772 34,054
-------------- -----------
24 TOTAL CONTROLLED RSAs................................. 3,371,893 3,158,545
=========== =========
MANAGED, NON-CONTROLLED RSA INTERESTS
Kentucky 1............................................. 50.00% 187,079 93,540
New Mexico 3........................................... 50.00% 78,980 39,490
New Mexico 5........................................... 43.00% 56,850 24,446
Iowa 4................................................. 38.10% 155,924 59,407
Indiana 7.............................................. 38.09% 220,819 84,119
Indiana 8.............................................. 38.09% 252,283 96,105
Indiana 9.............................................. 38.09% 142,859 54,421
New York 3............................................. 22.50% 492,406 110,791
California 4........................................... 20.83% 338,983 70,610
Iowa 5................................................. 14.29% 108,063 15,442
-------------- -----------
10 TOTAL MANAGED RSAs.................................... 2,034,246 648,371
=========== =========
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
COMPANY COMPANY
PERCENTAGE 1994 ESTIMATED POPULATION
MARKET OWNERSHIP POPULATION(1) EQUIVALENTS
- ------------------------------------------------------- ---------- -------------- -----------
<S> <C> <C> <C>
NON-CONTROLLED RSA INTERESTS
New Mexico 1........................................... 44.44% 251,919 111,953
Illinois 8............................................. 41.13% 331,629 136,399
Illinois 9............................................. 41.13% 152,791 62,843
Illinois 2............................................. 40.00% 145,844 58,338
California 5........................................... 39.00% 218,249 85,117
California 3........................................... 27.73% 143,187 39,706
California 1........................................... 16.67% 212,401 35,407
New Mexico 6-II........................................ 12.50% 123,267 15,408
Illinois 3............................................. 11.77% 204,375 24,055
Virginia 6............................................. 10.00% 213,307 21,331
Minnesota 1............................................ 6.60% 51,014 3,367
Minnesota 2............................................ 6.60% 62,994 4,158
Minnesota 3............................................ 6.60% 57,315 3,783
Minnesota 5............................................ 6.60% 203,906 13,458
Minnesota 6............................................ 6.60% 244,817 16,158
Virginia 10............................................ 1.00% 231,404 2,314
Pennsylvania 3......................................... 0.10% 95,755 96
Pennsylvania 4......................................... 0.10% 97,172 97
-------------- -----------
18 TOTAL NON-CONTROLLED RSAs............................. 3,041,346 633,988
=========== =========
52 TOTAL RSAs............................................ 8,447,485 4,440,904
=========== =========
111 TOTAL MSAs and RSAs.................................. 64,197,876 23,897,087
=========== =========
</TABLE>
- ---------------
(1) Population figures are derived from the 1994 Donnelly marketing population
estimates for counties comprising FCC defined MSAs and RSAs. POP figures
discussed in "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special
Committee" and "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE"
are based on 1993 population estimates which differ, although not materially
in the aggregate, from the figures set forth in the table above.
THE CELLULAR TELEPHONE INDUSTRY
Background. In 1983, the FCC issued the first license to provide cellular
telephone service in the United States. Since that time, cellular telephone
service has become available to all 305 MSAs and 428 RSAs and is available to
most of the population of the United States.
Cellular telephone service was developed as a response to the shortcomings
of conventional mobile telephone systems. By providing high quality, high
capacity communication to and from vehicle-mounted telephones ("mobiles") and
hand-held radio telephones ("portables"), the cellular telephone industry has
grown at a very rapid pace and, as of year-end 1994, exceeded 22 million
subscribers. In 1994, the cellular telephone industry recorded an overall growth
rate of approximately 37%.
Technology. Cellular telephone service achieves its high quality and
capacity capability by dividing the radio spectrum allocated to it by the FCC
into smaller groups or "sets" of frequencies and re-using those frequencies many
times in geographically distant parts of the network. Each set of frequencies is
allocated to a specific geographic area called a "cell." Adjacent cells must use
a different set of frequencies to avoid cell-to-cell frequency interference.
Cells which are sufficiently distant from one another may use the same
frequencies because the radio signals naturally decay over distance until they
reach a low enough level that does not cause interference. Therefore, by use of
frequency planning techniques, the radio spectrum allocated to a cellular
44
<PAGE> 46
provider can be re-used many times in various parts of the system to achieve
high overall call capacities and very low call interference rates.
The cells in a system are connected to a computer-controlled switch called
a mobile telephone switching office ("MTSO"). The MTSO monitors all calls to all
cell sites within the system and routes them to their intended destinations.
Once a call request is received, it is directed to the cell site where the
signal strength is greatest, and is then continuously monitored for quality
signal strength. If the signal strength begins to decline as a vehicle travels
through the radio coverage area of one cell, the MTSO recognizes the cell which
is getting weaker in signal strength and which is the next cell in the path of
the vehicle where signal strength is increasing. At the appropriate point in
time, the MTSO instructs the new cell to take over the call and the original
cell to release the call. This allows an in-process call to achieve a
cell-to-cell handoff with no interruption in the conversation. The MTSO is
capable of achieving this handoff as many times as necessary for each call.
Today's cellular systems utilize digital switching equipment, digital
connections between the switch and the cells, and analog radio frequency ("RF")
technology between the cells and the mobile units. The analog RF technology is
limited because a finite number of channels can be used at any one cell within a
system without causing system problems. The capacity of the system can be
increased in areas with heavy call traffic by either cell splitting or cell
sectoring. Cell splitting involves constructing numerous cells to serve the
coverage area of the original cell. If a large cell is split into four smaller
cells, the total channels available within the original coverage area is
increased up to four times. Cell sectoring is accomplished by replacing a cell's
omni-directional antennas with either three or six directional antennas. This
allows for different sets of channels to be used in each sector. The advantage
of this method is that capacity can be increased in the cell without increasing
system interference and that the same frequency sets can be reused at closer
spacing.
The cellular telephone industry is moving toward implementing digital RF
technology in existing cellular systems. Two technologies are currently under
consideration by major cellular providers -- Time Division Multiple Access
("TDMA") and Code Division Multiple Access ("CDMA"). Either technology will
offer a considerable capacity increase over today's technology.
Market Structure. Historically, FCC regulations provided that licenses
would be granted to two cellular service providers in each MSA and RSA; a
wireline licensee and a non-wireline licensee. Each of the two licensees has 25
MHz of radio spectrum allocated to it, and each further subdivides this spectrum
into 415 two-way channels. Each license is granted for a period of ten years and
is subject to renewal at the end of that period. FCC rules require all cellular
system operators to provide, on a nondiscriminatory basis, cellular service to
resellers who may purchase blocks of numbers at a wholesale rate and resell such
service to the public.
The FCC is in the process of auctioning additional licenses for the
provision of personal communications services in the 1.8 GHz to 1.99 GHz
frequency band. These auctions will not be completed until later this year and
will result in new licensees in each of the Company's service areas. The first
part of the auction was completed on March 13 and resulted in the purchase of 99
licenses by 18 entities. A GTE subsidiary, GTE Macro Communications Corporation,
purchased four licenses (Atlanta, Seattle, Cincinnati and Denver).
THE COMPANY'S CELLULAR OPERATIONS
General. The Company, or partnerships which the Company controls or
manages, provides cellular service in 32 MSAs and 34 RSAs ("Company Controlled
Systems" or "Company Controlled Markets"). Company Controlled Systems represent
approximately 72% of the Company's total POPs. The information provided below
with respect to the Company's cellular operations applies only to the Company
Controlled Systems because these are the only systems whose operations the
Company controls. The Company's non-controlled cellular interests are described
below in "BUSINESS OF THE COMPANY -- Non-Controlled Systems".
The Company obtained the right to provide cellular service in the Company
Controlled Markets either (i) as the result of the FCC's licensing process, or
(ii) through an acquisition program. Since the Company
45
<PAGE> 47
was an affiliate of a wireline telephone company, it had the right to apply for
the wireline cellular license in any area served by its landline affiliate. As a
result of this licensing process, the Company is the wireline licensee in 43
Company Controlled Markets (approximately 8.7 million POPs). As a result of its
acquisition program, the Company is the non-wireline licensee in 23 Company
Controlled Markets (approximately 8.6 million POPs).
In acquiring and developing these cellular telephone systems, the Company
has utilized a strategy of focusing on coastal and sun belt areas where the
Company believes the demographics and business climate are favorable to the
development of cellular systems. In addition, the Company has attempted to
develop cellular systems in regional clusters of significant size.
The cellular telephone systems originally licensed to the Company as part
of the FCC licensing process for MSAs and RSAs are generally located in 5
geographic areas: Virginia, California, the Midwest, Texas/New Mexico, and the
Gulf of Mexico. The cellular telephone systems acquired by the Company are
located in Tennessee, Alabama and Kentucky.
Acquisitions and Divestitures. To further its strategy of acquiring and
developing large regional clusters in economically strong areas, the Company has
developed and followed a program of selling certain properties which are not
strategically located and purchasing certain other properties which are
strategic.
In 1994, the Company purchased 100% of the cellular system serving
Tennessee RSA 2, the remaining 51% interest in the cellular system serving
Tennessee RSA 3, and 100% of the cellular systems serving the Huntsville,
Alabama MSA and Alabama RSA 2, representing an aggregate increase of
approximately 831,000 POPs. Through the purchase of the Huntsville, Alabama MSA,
the Company gained an 80% interest in the partnership that currently operates
the cellular system in Alabama RSA 1A pursuant to an interim operating license.
Additionally, the Company increased its ownership interests in the cellular
systems serving the Tuscaloosa, Alabama MSA, Indiana RSAs 7, 8 and 9, and
Alabama RSA 1B, representing an aggregate increase of approximately 33,000 POPs.
Also during 1994, the Company sold its interest in several northeastern
cellular properties (the "Northeast Properties"), pursuant to the agreement
signed in December 1993 with NYNEX Mobile Communications Company ("NYNEX"),
including the cellular systems serving Manchester, New Hampshire and Burlington,
Vermont MSAs; New Hampshire RSA 2, Vermont RSAs 1 and 2A, and New York RSA 2.
Additional sales completed during 1994 include the Company's interest in Iowa
RSAs 1, 8 and 14, Oregon RSA 5, South Dakota RSAs 5B1 and 6B1, North Carolina
RSA 1, Kentucky RSA 11, California RSA 7 and Alabama RSA 1B. The Company
recognized an aggregated pretax gain of approximately $94.3 million with respect
to the 1994 sales, representing approximately 1,445,000 POPs.
Additionally, as part of the agreement, NYNEX will purchase the Company's
interests in the Binghamton and Elmira, New York MSAs, Pennsylvania RSAs 3A and
4A, and New York RSA 3 pending certain regulatory approvals, which are expected
to be completed in 1995.
After the acquisitions and dispositions described above and the cellular
exchange transaction described below, the Company will provide or participate in
the provision of cellular services in 56 MSA markets and 49 RSA markets with
total combined POPs of approximately 23.3 million.
Cellular Exchange Transaction. The Company, GTE Mobilnet Incorporated, GTE
Mobilnet of Oregon Limited Partnership, GTE Mobilnet of Northwest Oregon Limited
Partnership and GTE Mobile Communications Service Corporation (the "GTE
Parties") have entered into an Asset Exchange Agreement dated February 3, 1995
(the "Asset Exchange Agreement") with US WEST NewVector Group, Inc.
("NewVector"). Pursuant to the Asset Exchange Agreement, the GTE Parties will
exchange certain cellular assets currently owned by them for 100% of the assets,
including the non-wireline cellular license, currently owned by NewVector in San
Diego, California. The Company's assets included in the exchange are its 49%
interest in the cellular assets, including the wireline cellular license, in
Albuquerque, New Mexico, and its 30% interest in the cellular assets, including
the wireline cellular license, in Minneapolis, Minnesota. The assets of the
other GTE Parties consist of (i) 91.4% of the assets of the cellular system
serving the MSAs of Portland
46
<PAGE> 48
and Salem, Oregon, (ii) 100% of the assets of the cellular system serving Oregon
RSA 1, and (iii) either a 10% partnership interest in the partnership providing
cellular service in Seattle, Bremerton and Tacoma, Washington or a 10% interest
in the assets of that system. The Company will acquire a 28% interest, as a
tenant-in-common, in the San Diego assets received from NewVector, representing
the equivalent market value of assets exchanged, and will operate the system
pursuant to a management agreement with the other GTE Parties.
Operations
Partnerships. A substantial number of the Company's cellular systems in
MSAs are owned by limited partnerships in which the Company is a general partner
("MSA Partnerships"). Most of these partnerships are governed by partnership
agreements with similar terms, including, among other things, customary
provisions concerning capital contributions, sharing of profits and losses, and
dissolution and termination of the partnership. Most of these partnership
agreements vest complete operational control of the partnership with the general
partner. The general partner typically has the power to manage, supervise and
conduct the affairs of the partnership, make all decisions appropriate in
connection with the business purposes of the partnership, and incur obligations
and execute agreements on behalf of the partnership. The general partner also
may make decisions regarding the timing and amount of cash contributions and
distributions, and the nature, timing and extent of construction, without the
consent of the other partners. The Company owns more than fifty percent (50%) of
almost all of the MSA Partnerships.
A substantial number of the Company's cellular systems in RSAs are also
owned by limited or general partnerships in which the Company is either the
general or managing partner (the "RSA Partnerships"). These partnerships are
governed by partnership agreements with varying terms and provisions. In many of
these partnerships, the noncontrolling partners have the right to vote on major
issues such as the annual budget and system design. In addition, in certain of
these partnerships, the partners have the right to build, under certain
circumstances, independent cells in areas of the RSA not served by the
partnership. Finally, in a few of these partnerships, the Company's management
position is for a limited term (similar to a management contract) and the other
partners in the partnership have the right to change managers, with or without
cause. The Company owns less than fifty percent (50%) of many of the RSA
Partnerships.
The partnership agreements for both the MSA Partnerships and RSA
Partnerships generally contain provisions granting all partners a right of first
refusal in the event a partner desires to transfer a partnership interest. This
restriction on transfer can make these partnership interests difficult to sell
to a third party.
Provision of Services by GTE Personal Communications Services. During
1993, the Company maintained a headquarters staff and two regional staffs which
provided strategic as well as day-to-day operational support to the Company's
operations in its 66 Company Controlled Markets. In 1994, the Company
implemented a new organizational structure pursuant to which the two regional
staffs were replaced with eight area staffs which are located in the Company's
eight clusters of MSAs and RSAs. These eight areas are Virginia, Tennessee,
Kentucky, Alabama, the Midwest, Texas/New Mexico, the Gulf of Mexico and
California. The purpose of this reorganization was to move essential, customer
impacting resources closer to the marketplace to enhance the Company's
competitive advantage and position the Company for future growth.
The Company also receives general and administrative as well as functional
support from GTE Personal Communications Services ("GTE PCS"), a division of
GTE. Pursuant to the Services Agreement, GTE PCS provides finance, accounting,
tax, human resources, legal, regulatory and information management services to
the Company. The Services Agreement provides that the Company is allocated a
portion of GTE PCS expenses based on a two-step process. The first step is the
designation of GTE PCS expenses as cellular or non-cellular. The second step is
the allocation of cellular expenses between the Company and GTE Mobilnet (a GTE
subsidiary also engaged in the cellular communications business) based on a
cost-causative allocation methodology. Under this methodology, pools of costs
are allocated to operating units based on one of several factors. The factors
were developed and applied to cost categories in an effort to allocate the cost
to areas in proportion to the use and benefit of the cost. Under this Services
Agreement, the Company was allocated
47
<PAGE> 49
approximately 34% of GTE PCS's cellular expenses for the twelve months ended
December 31, 1994. See "RELATED PARTY TRANSACTIONS -- Arrangements and
Transactions with Contel and GTE".
Construction and Maintenance. The construction and maintenance of cellular
systems is capital intensive. Although all of the Company's MSA and RSA systems
were operational in 1994, the Company continually adds cells to increase
coverage, provide additional capacity and improve the quality of these systems.
In 1994, the Company completed construction of 153 new cells in Company
Controlled Systems. In addition the Company completed a replacement program for
most of its older technology cell site equipment. The newer technology equipment
provides higher quality and increased flexibility in providing analog services,
as well as positions a platform that supports deployment of future digital
technologies. Total capital expenditures related to Company Controlled Systems
were approximately $253 million in 1994 and are anticipated to be approximately
$315 million in 1995.
Marketing
General. The Company markets its cellular telephone services through
several distribution channels, including independent agents, its direct sales
force and retail outlets. Agents are independent contractors who solicit
customers on a commission basis exclusively for the Company. The Company's
agents are diverse in size and type of business. Most are agents for the Company
within a limited geographic area, while a few agents sell the Company's cellular
service regionally or nationally. Some of the Company's agents sell cellular
products and services exclusively, while others sell a variety of products (such
as radio and electronics equipment). Finally, some of the Company's agents are
small shops, while others are large retail stores. The Company's agents
generally receive a commission payment for each cellular subscriber they add to
the Company's systems.
The Company's direct sales force is made up of sales people who are
employees of the Company and are compensated on an incentive basis. These
employees earn a portion of their compensation as a guaranteed salary and
receive additional payments for each subscriber added. These employees are
required to meet certain quotas set by the Company. Another distribution channel
utilized by the Company is retail outlets, including kiosks and retail stores.
The retail outlets are staffed by salaried employees, part-time employees and
temporary employees who receive a base salary and incentive compensation for
each unit sold. Finally, the Company is constantly attempting to develop new
distribution channels, including telemarketing, co-promotions with various other
industry leaders and door-to-door sales.
National Industry Alliance. During the past several years, cellular
providers have been forming industry alliances to market cellular service
nationwide. Many cellular providers holding non-wireline licenses have become
Cellular One(R) franchisees. Many cellular providers holding wireline licenses
have joined a consortium to market under the brand name, MobiLink(R), a
registered mark of B-Side Carriers L.P. Because the Company holds both wireline
and non-wireline licenses, it participates in both of these alliances. GTE
Mobile is an equity owner in B-Side Carriers L.P. See "RELATED PARTY
TRANSACTIONS".
Subscribers
Total Number. The Company had 789,580 subscribers at December 31, 1994, an
increase of 51.5% over its subscribers at December 31, 1993. The Company's
subscribers at December 31, 1994 were distributed as follows: 33% in Tennessee,
21% in Virginia and 46% in all other markets combined.
Cost of Acquisition. The sales and marketing costs of obtaining new
subscribers are substantial. The Company not only has to pay for advertising,
but also incurs a direct expense for most new subscribers, either in the form of
a commission payment to an agent or a salary/incentive payment to a direct sales
person. In addition, the Company periodically runs promotions which discount the
cost of cellular telephone equipment, or provide some amount of initial access
or airtime free to new subscribers. Each of these promotions results in costs to
the Company. Although the Company has continued to lower the cost of acquisition
per subscriber, it remains one of the Company's single largest expenses.
48
<PAGE> 50
Churn. A factor common throughout the cellular industry is that many
subscribers either completely discontinue cellular service or switch from one
cellular provider to another. In 1994, this monthly turnover or "churn" in the
Company's subscribers averaged 2.7% of all subscribers per month.
Subscriber Revenue. The Company charges its subscribers for access to its
systems, for minutes of use and for enhanced services, such as voice mail and
Mr. RescueSM. A subscriber may purchase each of these services separately for a
set price or may purchase any number of rate plans which bundle these services
in different ways. For example, a high usage subscriber may purchase a
pre-determined number of minutes of use per month for a set fee rather than pay
a fixed amount per minute. Similarly, a user who purchases cellular service for
security reasons may choose a plan with a low monthly access fee but higher per
minute usage fees. Rates charged by the Company and the number and type of rate
plans vary from market to market.
The average monthly revenue the Company receives per subscriber has been
declining over the last several years. The Company believes that this industry
trend is caused in part by an increase in the number of casual and security
cellular users. The Company expects this trend to continue in 1995 and future
years.
Roaming
Roamers. The Company also provides cellular service to cellular users who
are customers of other carriers but who are visiting and wish to use their
cellular phone in the Company's service area ("roamers"). When roamers enter the
Company's service area and attempt to use their cellular phones, the Company,
through participation in an industry clearinghouse, establishes the identity and
validity of the roamer and provides cellular service. The Company then bills the
roamer's home cellular carrier for the service. Likewise, subscribers of the
Company use their cellular phones in areas outside the Company's service areas.
Roaming Revenue. The charges applicable to roamers are determined by
agreements between the Company and other carriers in the industry and vary among
markets and carriers. Roaming revenue has increased over the last several years
and for the year ending December 31, 1994 represented approximately 18.6% of the
Company's total service revenues. This increase is a result of the higher number
of cellular subscribers nationwide and the Company's larger service areas due to
an increasing number of cell sites. The Company believes that roaming will
become more frequent in future years due to advances in intelligent networking
which will simplify roaming procedures and make roaming transparent to the
roamer.
Roamer Fraud. Roamer fraud remains a cellular industry problem. Roamer
fraud occurs when cellular telephone equipment is programmed to conceal the true
identity and location of the user. While the Company and the industry have
implemented an extensive fraud control process, they have not been able to
eliminate fraud altogether.
Employees
At December 31, 1994, the Company had 2,387 employees. Of these, 230 were
employed in the Company's headquarters offices in Atlanta and the remaining
2,157 were employed throughout the Company's Controlled Markets.
NON-CONTROLLED SYSTEMS
The Company participates as a non-controlling general or limited partner in
27 MSAs and 18 RSAs. These interests represent approximately 28% of the
Company's total POPs and are typically limited partnership interests in
partnerships providing cellular service to the larger MSAs, such as Los Angeles,
San Francisco, Washington D.C., Minneapolis and Houston. The partnership
agreements which govern these partnerships are similar to those described under
the heading, "BUSINESS OF THE COMPANY -- Operations -- Partnerships". Since
these partnership agreements vest the power to manage, supervise and conduct the
affairs of the partnership with someone other than the Company, there can be no
assurance that decisions made by these partnerships would be the same as those
made by the Company under similar circumstances.
49
<PAGE> 51
INTERNATIONAL INTERESTS
The Company owns a 10% interest in a corporation which provides cellular
service in the Sonora and Sinaloa regions of Mexico. The Company currently
receives services related to international ventures from GTE PCS.
COMPETITION
The cellular telephone industry is part of the much broader
telecommunications industry. Direct competition is in the form of the other
cellular licensee in any given market. Competition between the two cellular
licensees is principally on the basis of service quality, price and coverage
area. In addition to the direct cellular competitor in each market, there will
also be competition from newly emerging Enhanced Specialized Mobile Radio
("ESMR") operators who generally provide dispatch and other private radio
systems. With new digital technology it may be possible for ESMR operators to
provide services in the future that may be difficult to distinguish from
traditional cellular service.
In 1993 the FCC announced that it would license additional frequencies in
the 1.8 GHz to 1.99 GHz frequency band to enable up to six additional wireless
competitors to enter each market. These new licenses consist of two licenses in
each of 51 large, often multi-state, geographical areas known as Major Trading
Areas ("MTAs") and four licenses in each of 492 smaller geographical areas known
as Basic Trading Areas ("BTAs"). Auctions for such licenses began in 1994 and
will continue in 1995. The first part of the auction was completed on March 13
and resulted in the purchase of 99 licenses by 18 entities. A GTE subsidiary,
GTE Macro Communications Corporation, purchased four licenses (Atlanta, Seattle,
Cincinnati and Denver).
REGULATION
General. The FCC regulates the licensing, construction, operation, sale
and acquisition of cellular carriers as well as interconnection arrangements
between cellular carriers. In addition, certain aspects of cellular system
operation, also may be subject to public utility regulation in the state in
which service is provided. Changes in federal or state regulation of the
Company's and its competitors' activities, such as increased rate regulation or
deregulation of interconnection arrangements, could adversely affect the
Company's results. A brief summary of federal and applicable state regulation of
cellular service is set forth below.
Federal Regulation. The FCC initially authorized cellular telephone
service in 1981 by allocating 40 MHz of spectrum for two competing cellular
systems in each market. A 20 MHz block of spectrum was given to each carrier.
Due to cellular's rapid growth, the FCC allocated to each carrier an additional
5 MHz of spectrum in 1986.
The initial cellular licenses granted by the FCC expire ten years from
their date of issuance and are renewable upon application to, and approval by,
the FCC. The FCC has established the criteria under which existing licensees may
have their cellular licenses renewed. Basically, a comparative preference will
be given to any current cellular licensee who can prove that it substantially
used its spectrum for its intended purpose, complied with applicable FCC rules,
and did not engage in substantial relevant misconduct. This preference will be
the most important factor to be considered by the FCC during its hearing on each
license renewal request in comparing the current licensee's application with any
competing applications. Failure to comply with FCC rules can be raised as an
issue during the license renewal proceedings and could result in termination of
the license.
The first of the Company's cellular licenses came up for renewal in October
1994. The Company filed renewal applications for its licenses in Mobile,
Alabama, El Paso, Texas and Richmond and Norfork, Virginia in August 1994. No
entity filed competing applications or oppositions to any of those renewal
applications. The remainder of the Company's licenses will expire over the next
several years, including two which expire in 1995, seven which expire in 1996
and eleven which expire in 1997. All of the licenses expiring between 1995
50
<PAGE> 52
and 1997 are MSA licenses. The Company expects to file renewal applications for
such licenses upon their expiration.
The FCC is currently in the process of auctioning additional licenses in
the 1.8 GHz to 1.99 GHz range for the provision of personal communications
services. Existing cellular companies are eligible to bid at auction for new
licenses. Existing cellular companies may bid for an MTA license where they have
no current substantial cellular holdings and one BTA license in all BTA's,
including areas where they are currently the cellular provider. The first part
of the auction was completed on March 13 and resulted in the purchase of 99
licenses by 18 entities. A GTE subsidiary, GTE Macro Communications Corporation,
purchased four licenses (Atlanta, Seattle, Cincinnati and Denver).
In addition to regulating cellular service, the FCC also regulates
point-to-point microwave facilities which are often utilized by cellular
providers to link base stations to each other and to the MTSO. The Company holds
certain microwave licenses for these purposes. Such licenses, which are issued
for a ten year period, were all renewed by the Company in 1991 for an additional
ten year period. The FCC has issued regulations pursuant to which a significant
portion of the Company's microwave licenses may have to be relocated to a higher
spectrum at the request of a party receiving a license to use such spectrum for
a new technology. The regulations currently provide that incumbent microwave
licensees will be reimbursed for expenses associated with this relocation by the
new licensee.
State Regulation. In 1981, the FCC preempted the states from exercising
jurisdiction in the areas of cellular technical standards and market structure.
Under the Communications Act of 1934, as amended, however, certain aspects of
the economic regulation of common carriers were reserved to the states. The
states had exclusive jurisdiction with respect to charges, classifications,
practices and service or facilities for or in connection with intrastate
communications. Although many states have deregulated cellular service, some
still require the filing of tariffs and operational reports pursuant to statutes
governing public utilities.
In August 1994, certain provisions of the Omnibus Budget Reconciliation Act
of 1993 (the "Omnibus Act") became effective. These provisions prohibited the
states from continuing to exercise jurisdiction over rates and entry into the
wireless telecommunications business. The Omnibus Act did, however, provide that
states could file a petition with the FCC to continue rate jurisdiction. Only
two states in which the Company provides service, California and New York, filed
to continue such regulation. All states may continue to regulate other aspects
of cellular service not preempted by federal law, although it is unclear at this
time the extent to which the other states will continue to do so.
RELATED PARTY TRANSACTIONS
ARRANGEMENTS AND TRANSACTIONS WITH CONTEL AND GTE
The Company, Contel and GTE have a number of financial, operating and other
arrangements and have engaged in certain transactions believed to be of mutual
benefit. The terms of these arrangements have been established by Contel and GTE
in consultation with the Company but are not the result of arms-length
negotiations. The following is a summary of the principal arrangements and
transactions among the Company, Contel and GTE.
Taxes. The Company and GTE have a tax sharing arrangement under which the
Company and its subsidiaries are included in the consolidated federal income tax
returns and in certain state income and franchise tax returns of GTE. Tax
payments, if applicable, are made by the Company to GTE on a quarterly basis
using methods prescribed by GTE. When the Company and its subsidiaries generate
a federal tax loss or excess credits (credits exceeding tax liability), the
Company is reimbursed by GTE on a quarterly basis based on the actual loss or
credit which may be utilized in the consolidated GTE federal tax returns.
With respect to states permitting unitary or combined tax filings, GTE
includes the Company and its subsidiaries in its unitary or combined tax filing.
The Company pays to GTE an amount equal to the state income or franchise tax
that would have been payable by the Company or its subsidiaries if a separate
tax return had been filed.
51
<PAGE> 53
Financing and Cash Management. During 1994, the Company relied on GTE for
its short term and long term cash needs. The Company's long term cash needs are
mainly the result of its acquisition in February 1990 of the cellular telephone
properties previously owned by McCaw Cellular Communications, Inc. in Kentucky,
Alabama and Tennessee (the "Southeast Properties") for approximately $1.3
billion and subsequent borrowings to pay interest on such amount. The $1.3
billion was originally funded by a loan from Contel Capital Corporation, which
at that time was a wholly owned subsidiary of Contel, which became due in July
1991. This original loan was replaced in 1991 with (i) a $700 million loan from
GTE to the Company bearing interest at 10.47% and maturing on March 1, 1998,
(ii) a $150 million loan from GTE Finance Corporation ("GTE Finance"), a wholly
owned subsidiary of GTE, bearing interest at 9.22% and maturing on February 15,
1993 (subsequently refinanced as set forth below), and (iii) a variable rate
note from GTE bearing interest at one and one-half percentage points above GTE's
external cost of borrowing these funds. The interest rate on the notes described
in (i) and (ii) above include an additional one and one-half percentage point of
interest in excess of the interest paid by GTE for these funds.
During 1992, the Company began a program of converting a portion of its
variable rate debt, including a portion of the debt incurred in connection with
the acquisition of the Southeast Properties, to fixed rate debt. As a result of
this program, the Company entered into the following loans in 1992, 1993 and
1994: (i) a $150 million loan from GTE Finance to the Company bearing interest
at 8.38% and maturing on September 25, 1997, (ii) a $150 million loan from GTE
Finance to the Company bearing interest at 8.97% and maturing on September 27,
1999, (iii) a $200 million loan from GTE to the Company bearing interest at
8.56% and maturing on December 31, 1996, (iv) a $200 million loan from GTE to
the Company bearing interest at 8.08% and maturing on December 31, 1995, (v) a
$150 million loan from GTE Finance to the Company bearing interest at 7.71% and
maturing on February 25, 1997 and (vi) a $75 million loan from GTE Finance to
the Company bearing interest at 9.90% and maturing on August 17, 2000. The
interest rates on these loans were comparable to rates for United States
Treasury securities of similar maturity plus 3% per annum at the time such loans
were entered into and are the rates which GTE believes approximate the interest
rates the Company could have obtained in the marketplace from nonaffiliated
lenders. These rates exceed the interest paid by GTE for these funds. As of
December 31, 1994, the Company has borrowed approximately $1.63 billion from GTE
and GTE Finance in fixed rate debt.
The Company fulfills its immediate cash needs with an intercompany note
from GTE (the "ICN"). The amount borrowed and the rate of interest on the ICN
fluctuate daily. As of December 31, 1994 the amount of the ICN was approximately
$495 million. During 1994, the interest rate on the ICN was the daily Prime Rate
quoted in The Wall Street Journal plus .75%, which is the interest rate which
GTE believes approximates the interest rate the Company could have obtained in
the marketplace from nonaffiliated lenders and exceeds the interest paid by GTE
for these funds.
During 1994, the Company also received cash management services from GTE.
Trademark License Agreement. The Company and Contel have entered into an
agreement under which the Company has been granted a non-exclusive,
non-transferrable license and right to use the trademark, service mark and
design "CONTEL CELLULAR". This grant may be terminated at the sole discretion of
Contel and will automatically terminate if Contel no longer owns a majority of
the outstanding common stock of the Company.
General Services. During 1994, the Company received numerous services,
both primary and supplemental, from GTE PCS pursuant to the Services Agreement
between the Company and GTE Mobile. These services were also provided to GTE's
wholly owned cellular subsidiary, GTE Mobilnet, and included accounting,
finance, marketing, human resources, legal, regulatory, governmental relations,
international, engineering, network design and maintenance services. In exchange
for these services, the Company reimbursed GTE PCS for its expenses in
accordance with a cost causative allocation formula which allocated pools of
costs to operating units based on one of several factors. These factors were
developed and applied to cost categories in an effort to allocate expenses to
operating units in proportion to the use and benefit of the underlying cost.
Under this Services Agreement, the Company paid GTE PCS approximately $49.8
million in 1994, which was approximately 34% of all of the expenses of GTE PCS.
52
<PAGE> 54
Insurance. The Company and its officers, directors and employees are
insured under a master contract negotiated by GTE with a private insurance
carrier. The premium due the insurance carrier under this master policy is
allocated among all GTE subsidiaries based on the loss history, total payroll
and total number of vehicles owned by each subsidiary. The premium is paid
directly to the private insurance carrier by each subsidiary.
Competition. The Company, Contel and GTE have entered into the Competition
Agreement pursuant to which Contel and GTE have agreed that they will not engage
in the cellular business except in accordance with the terms of the Competition
Agreement. Under the Competition Agreement, GTE Mobilnet may continue to engage
in the cellular business. However, the Company has a right of first refusal with
respect to future acquisitions by GTE of cellular businesses except for (i)
acquisitions of minority interests in cellular properties held by GTE Mobilnet
and (ii) acquisitions contemplated at the time of the Contel Merger which were
specifically listed in the Competition Agreement. After the Merger is effective,
the Competition Agreement will be terminated.
Equity Ownership in B-Side Carriers L.P. GTE Mobile, an affiliate of GTE,
is an equity owner in B-Side Carriers L.P., a consortium of cellular providers
who market under the brand name MobiLink(R). The Company has an agreement with
B-Side Carriers L.P. to market its wireline properties as MobiLink providers.
See "BUSINESS OF THE COMPANY -- The Company's Cellular Operations -- Marketing".
Government Systems Contract. In 1994 the Company entered into an agreement
with GTE Government Systems Corporation ("GTE Systems") pursuant to which GTE
Systems will construct not less than 40 cell sites for the Company in 1994 and
50 cell sites in 1995. The cost to be charged the Company in 1994 will consist
of (i) an administrative fixed fee of $3.1 million, (ii) reimbursement of
materials and equipment estimated to be $7.8 million and (iii) reimbursement of
external labor costs estimated to be $3.0 million. Contract pricing in 1995 will
be agreed upon by the parties.
Cellular Exchange Transaction. The Company and the GTE Parties entered
into an Asset Exchange Agreement dated February 3, 1995. Under the terms of the
Asset Exchange Agreement the Company will receive a 28% interest in the San
Diego MSA in exchange for certain cellular assets in Albuquerque, New Mexico and
Minneapolis, Minnesota. The Company will operate the San Diego system pursuant
to a management agreement with the other GTE Parties. See "BUSINESS OF THE
COMPANY -- The Company's Cellular Operations".
PAYMENTS TO OPTIONHOLDERS
Certain officers and employees of the Company are participants under the
1987 Key Employee Stock Plan of the Company (the "Option Plan"). Options were
granted under the Option Plan at prices ranging from $15.00 to $22.81. In
connection with the Merger, the Company has offered to make cash payments to
those holders of options to purchase Class A Shares issued pursuant to the
Option Plan who agree to surrender all of their options. Each optionholder who
agrees to surrender all of his or her options will receive a cash payment for
each option cancelled, whether or not currently vested (so long as the exercise
period has not lapsed), equal to $25.50 multiplied by the number of Class A
Shares subject to such options, less the exercise price for such option. If the
vesting of the options is accelerated and if all of the options are surrendered
as described above, the largest payment any single optionholder will receive is
$168,388. See footnote 8 to the table in "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT -- Directors and Executive Officers of the
Company".
RELATIONSHIP BETWEEN GTE DIRECTOR AND PAINEWEBBER
Pursuant to a long standing agreement, Mr. Richard W. Jones, a director of
GTE, has been engaged as a consultant to PaineWebber, one of the GTE Financial
Advisors in connection with the Merger. Mr. Jones is entitled to receive from
PaineWebber an annual retainer of $480,000 for the fiscal year ended July 1,
1995 and an annual retainer of $300,000 for each of the following two fiscal
years.
53
<PAGE> 55
TRANSITION ARRANGEMENTS
In order to provide a degree of continuity during the merger transition
process GTE has entered into a Transition Bonus Agreement with two executives,
Dennis L. Whipple, President and Chief Executive Officer of the Company, and
Theodore J. Carrier, Treasurer and Chief Financial Officer of the Company. If
Mr. Whipple agrees to remain with GTE from the date of the Merger until December
31, 1995 or such earlier date as the parties may determine, he will be eligible
for a transition bonus equal to 100% of the sum of his final GTE annual base
rate of pay and the average of his GTE Executive Incentive Plan ("EIP") awards
for the 1993 and 1994 plan years. If Mr. Carrier agrees to remain with GTE
through December 31, 1995, he will be eligible for a transition bonus equal to
100% of the sum of his final GTE annual base rate of pay and the average of his
EIP awards for the 1992, 1993, and 1994 plan years. In addition, Mr. Whipple
will receive an initial bonus of $20,000. In 1995, Mr. Whipple will participate
in the 1994-1995 and 1994-1996 GTE Long-Term Incentive Plan performance bonus
award cycles and the 1995-1997 cycle. If Mr. Whipple remains on the payroll to
the end of the agreed upon period then, in lieu of an award for the 1995-1997
bonus award cycle, he will receive an equivalent bonus award prorated to
December 31, 1995.
Any executive officer whose employment is involuntarily terminated will
receive an enhanced retirement benefit paid out of GTE's qualified pension
assets pursuant to the terms of the GTE's Involuntary Separation Plan ("ISEP").
ISEP provides for a benefit based on length of service and/or grade level and
the benefit will not exceed 120% of one year's salary. Mr. Whipple's and Mr.
Carrier's ISEP benefits also include a non-qualified benefit attributable to
their EIP award for the three previous years.
54
<PAGE> 56
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
The following table contains certain information regarding the only persons
known to the Company as of the date of this Information Statement to be
beneficial owners of more than 5% of any class of the Company's voting
securities:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
----------------------------- ----------------------------- ---------- ----------
<S> <C> <C> <C>
Class A Common Stock......... CS First Boston, Inc. 551,480(2) 5.54%
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055(1)
Class B Common Stock......... GTE Corporation 90,000,000(4) 100%
One Stamford Forum
Stamford, CT 06904(3)
</TABLE>
- ---------------
(1) This information was obtained from a Schedule 13G filed with the SEC on
February 13, 1995 by CS First Boston, Inc.
(2) The Schedule 13G filed by CS First Boston, Inc. discloses that CS First
Boston, Inc. exercises sole voting power and sole dispositive power over
these shares.
(3) GTE acquired beneficial ownership of these shares as a result of the merger
of a subsidiary of GTE into Contel. Contel remains the holder of record of
these shares. The address of Contel is One Stamford Forum, Stamford,
Connecticut 06904.
(4) GTE, through Contel, exercises sole voting power and sole dispositive power
over these shares.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The number of Class A Shares and shares of GTE Common Stock owned by each
director and executive officer of the Company as of February 13, 1995 is set
forth in the table below. Unless otherwise indicated, all persons shown in the
table have sole voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CLASS A COMMON
STOCK NUMBER OF SHARES OF
BENEFICIALLY GTE COMMON STOCK
NAME OF DIRECTOR OWNED(1) BENEFICIALLY OWNED(2)
------------------------------------------------ ----------------- ---------------------
<S> <C> <C>
Leo Jaffe....................................... 2,000 0
James L. Johnson................................ 0 722,085(3)(4)
Robert E. LaBlanc............................... 4,000 0
Charles R. Lee.................................. 0 634,148(3)(4)
Michael T. Masin................................ 0 75,291(3)(5)
Russell E. Palmer............................... 0 2,000(6)
Irwin Schneiderman.............................. 0 0
Nicholas L. Trivisonno.......................... 0 181,956(3)(4)
James W. Walter................................. 0 12,000(7)
Dennis L. Whipple............................... 18,650(8) 9,724(3)(4)
Charles Wohlstetter............................. 0 232,655
</TABLE>
55
<PAGE> 57
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
CLASS A COMMON STOCK NUMBER OF SHARES OF
BENEFICIALLY GTE COMMON STOCK
NAME OF EXECUTIVE OFFICER OWNED(1) BENEFICIALLY OWNED(2)
---------------------------------------------- -------------------- ---------------------
<S> <C> <C>
Dennis L. Whipple............................. 18,650(8) 9,724(3)(4)
Randall L. Crouse............................. 3,100(8) 5,505(4)
Pamela F. Lopez............................... 1,700(8) 2,585(4)
Laura E. Binion............................... 1,700(8) 1,905(3)(4)
Theodore J. Carrier........................... 15,000(8) 216(4)
Jay M. Rosen.................................. 0 47,995(3)
All directors and officers as a group (the
"Executive Group").......................... 46,150 1,928,065(3)(4)
</TABLE>
- ---------------
(1) Each of these amounts, and all of them in the aggregate, represented less
than 1% of the outstanding Class A Shares as of January 31, 1995. Each
director and executive officer is expected to accept the Merger
Consideration and not exercise appraisal rights.
(2) Each of these amounts, and all of them in the aggregate, represented less
than 1% of the outstanding shares of GTE Common Stock as of January 31,
1995.
(3) Included in the number of shares beneficially owned by Messrs. Johnson, Lee,
Masin, Trivisonno, Whipple, and Rosen and Ms. Binion and the Executive Group
are: 633,300; 553,399; 72,599; 170,233; 5,300; 25,632; 816; and 1,461,279
shares, respectively, which such persons have the right to acquire within 60
days pursuant to stock options.
(4) This amount includes shares acquired through participation in GTE's
Consolidated Employee Stock Ownership Plan and/or Savings Plan.
(5) In addition to the shares of GTE Common Stock shown above, Mr. Masin owns
10,088 GTE Common Stock Units, which are payable in cash under the Deferred
Compensation Plan and Phantom Stock Plan for Non-employee Members of the
Board of Directors of GTE Corporation (the "Deferred Compensation Plan").
Mr. Masin was a non-employee director of GTE prior to joining GTE as Vice
Chairman in 1993.
(6) In addition to the shares of GTE Common Stock shown above, Mr. Palmer owns
1,294 GTE Common Stock Units, which are payable in cash under the Deferred
Compensation Plan.
(7) In addition to the shares of GTE Common Stock shown above, Mr. Walter owns
121,116 GTE Common Stock Units, which are payable in cash under the Deferred
Compensation Plan.
(8) Included in the number of shares beneficially owned by Messrs. Whipple,
Crouse and Carrier and Ms. Lopez and Ms. Binion and the Executive Group are
18,650, 3,100, 15,000, 1,700, 1,700 and 40,150 shares, respectively, which
such persons have the right to acquire upon the exercise of certain stock
options. Pursuant to an offer made by the Company in connection with the
Merger, such options, whether or not currently vested, may be surrendered
for a cash payment equal to $25.50 times the number of shares issuable upon
exercise thereof, less the exercise price applicable thereto. See "RELATED
PARTY TRANSACTIONS -- Payments to Optionholders". If Messrs. Whipple, Crouse
and Carrier and Ms. Lopez and Ms. Binion and the Executive Group agree to
surrender the options they hold, the maximum amount payable to those
individuals and the Executive Group is $168,388, $30,425, $59,760, $15,725,
$16,600 and $290,898, respectively.
DIRECTORS AND EXECUTIVE OFFICERS OF GTE, CONTEL AND CCI ACQUISITION
As set forth in Exhibit E, certain directors and executive officers of the
Company are also directors or executive officers of GTE, Contel or CCI
Acquisition. With the exception of the ownership of Class A Shares by certain of
such persons set forth in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Directors and Executive Officers of the Company", no director or
executive officer of GTE, Contel or CCI Acquisition owns any Class A Shares.
56
<PAGE> 58
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document which has been filed by the Company with the
Securities and Exchange Commission is incorporated by reference into this
Information Statement: Annual Report on Form 10-K for the fiscal year ended
December 31, 1994. The File Number for the above referenced document is
Commission File No. 0-16714. All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, and prior to the date the written consent is used to effect the Merger,
shall be deemed to be incorporated by reference into this Information Statement.
Any statement contained herein or in any document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Information Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Information Statement, except as so modified or
superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Information Statement is delivered,
upon written or oral request of such person and by first class mail or other
equally prompt means within one business day of receipt of such request, a copy
of any and all of the information that has been incorporated by reference in
this Information Statement (not including exhibits to such information unless
such exhibits are specifically incorporated by reference into such information),
including information contained in documents filed subsequent to April , 1995.
Such requests for information should be directed to Contel Cellular Inc., 245
Perimeter Parkway, Atlanta, Georgia 30346, Attention: General Counsel. The
telephone number of the General Counsel is (404) 804-3400.
By Order of the Board of Directors
/s/ JAY M. ROSEN
Secretary
Atlanta, Georgia
April , 1995
57
<PAGE> 59
GLOSSARY
"Asset Exchange Agreement" means the agreement between the GTE Parties and
NewVector pursuant to which the GTE Parties will exchange certain cellular
assets currently owned by them for 100% of the assets, including the
non-wireline cellular license, currently owned by NewVector in San Diego,
California.
"Board" means the board of directors of the Company.
"BTAs" means Basic Trading Areas.
"Cahill" means Cahill Gordon & Reindel.
"California Proceeding" means the proceeding pursuant to which the CPUC is
considering the approval of the merger of the California telephone operations of
GTE and Contel in connection with the GTE/Contel Merger.
"CCI Acquisition" means Contel Cellular Acquisition Corporation, a Delaware
corporation.
"CDMA" means Code Division Multiple Access.
"cellular asset value" means market capitalization less the value of the
Company's non-cellular assets.
"Cellular Exchange" means the exchange contemplated by the Asset Exchange
Agreement.
"cellular license value" means cellular asset value less the value of the
Company's net cellular property, plant and equipment and working capital.
"Certification" means the Certification and Notice of Termination of
Registration of the Class A Shares under the Exchange Act.
"Class A Share" means a share of the Class A Common Stock of the Company,
par value $1.00 per share.
"Class A Stockholders" means the holders of outstanding Class A Shares.
"Class B Share" means a share of the Class B Common Stock of the Company,
par value $1.00 per share.
"clustered RSA net POPs" means POPs serviced by the Company in RSAs that
are contiguous to other MSAs or RSAs serviced by the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Company" means Contel Cellular Inc., a Delaware corporation.
"Company Controlled Markets" means the 32 MSAs and 34 RSAs in which the
Company, or partnerships which the Company controls or manages, provides
cellular service.
"Company Controlled Systems" has the same meaning as Company Controlled
Markets.
"Comparable Companies" means selected publicly traded companies in the
cellular communications business which Lazard Freres analyzed in connection with
the opinion rendered by Lazard Freres to the Special Committee.
"Comparable Group" means the set of companies which PaineWebber and Merrill
Lynch deemed comparable to the Company for the purpose of comparing selected
historical stock and earnings data and financial ratios for the Company to the
corresponding data and ratios of such companies in connection with the opinions
rendered by PaineWebber and Merrill Lynch to the board of directors of GTE.
"Comparable Transactions" means the twenty-six private market sale
transactions about which Lazard Freres reviewed publicly available information
in connection with the opinion rendered by Lazard Freres to the Special
Committee.
58
<PAGE> 60
"Competition Agreement" means the Third Restated Competition Agreement
dated March 14, 1991 among Contel, GTE and the Company which, among other
things, allocates cellular business opportunities among GTE's cellular
businesses.
"Court" means the Court of Chancery of the State of Delaware in and for New
Castle County.
"Contel" means Contel Corporation, a Delaware corporation.
"CPUC" means the California Public Utilities Commission.
"December 22 Special Committee Meeting" means the meeting of the Special
Committee on December 22, 1994.
"Deferred Compensation Plan" means the Deferred Compensation Plan and
Phantom Stock Plan for Nonemployee Members of the Board of Directors of GTE.
"DGCL" means the General Corporation Law of the State of Delaware.
"Disbursing Agent" means Chemical Bank, as disbursing agent in connection
with the Merger.
"Draft Merger Agreement" means the December 29, 1994 draft of the Merger
Agreement.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"Effective Time" means May , 1995.
"EIP" means the GTE Executive Incentive Plan.
"ESMR" means Enhanced Specialized Mobile Radio.
"Exchange Act" means the Securities Exchange Act of 1934.
"FCC" means the Federal Communications Commission.
"GTE" means GTE Corporation, a New York corporation.
"GTE/Contel Merger" means the March 1991 merger of a wholly owned
subsidiary of GTE into Contel, pursuant to which Contel became a wholly owned
subsidiary of GTE.
"GTE Finance" means GTE Finance Corporation, a Delaware corporation.
"GTE Financial Advisors" means Merrill Lynch and PaineWebber.
"GTE Initial Offer" means GTE's initial offer to acquire the Class A Shares
at $22.50 per share.
"GTE Mobile" means GTE Mobile Communications Service Corporation, a
Delaware corporation.
"GTE Mobilnet" means GTE Mobilnet Incorporated, a Delaware corporation.
"GTE Parties" means, in connection with the Asset Exchange Agreement, the
Company, GTE Mobilnet, GTE Mobilnet of Oregon Limited Partnership, GTE Mobilnet
of Northwest Oregon Limited Partnership and GTE Mobile.
"GTE PCS" means GTE Personal Communications Services, a division of GTE.
"GTE Revised Offer" means GTE's revised offer to acquire the Class A Shares
at $25.50 per share.
"GTE Systems" means GTE Government Systems Corporation.
"ICN" means the intercompany note from GTE with which the Company fulfills
its immediate cash needs.
"Indemnified Party" means, in connection with the Merger Agreement, each
present and former director and officer of the Company.
"ISEP" means GTE's Involuntary Separation Plan.
"Lazard Freres" means Lazard Freres & Co.
"Lazard Freres Report" means the report of Lazard Freres presented by
Lazard Freres to the Special Committee at the December 22 Special Committee
Meeting summarizing the analyses performed by Lazard Freres in rendering its
opinion to the Special Committee.
59
<PAGE> 61
"LTM" means the latest twelve months.
"market capitalization" means the total market value of the Company's
equity plus its net debt.
"market capitalization of cellular assets" means total market
capitalization, less minority interests, less estimated public market value of
non-cellular assets.
"market capitalization of MSA cellular assets" means market capitalization
of cellular assets less the value of RSA assets at $90 per POP.
"market values" means the total market value of a company's equity.
"Merger" means the merger of CCI Acquisition with and into the Company.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
December 27, 1994, as amended, among the Company, GTE, Contel, and CCI
Acquisition.
"Merger Consideration" means $25.50 per Class A Share in cash, without
interest, subject to backup withholding taxes.
"Merrill Lynch" means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Merrill Opinion Letter" means the opinion letter of Merrill Lynch
presented to the board of directors of GTE on December 27, 1994.
"mobiles" means vehicle-mounted telephones.
"MSAs" means metropolitan statistical areas.
"MSA Partnerships" means limited partnerships of which the Company is a
general partner, which limited partnerships own cellular systems.
"MTAs" means Major Trading Areas.
"MTSO" means a mobile telephone switching office.
"NewVector" means US WEST NewVector Group, Inc.
"New Subsidiary" means, in connection with alternatives considered by GTE
to effectuate a merger of the Company and a subsidiary of Contel, a subsidiary
of Contel into which the Company would merge.
"non-clustered RSA net POPs" means POPs that are not clustered RSA net
POPs.
"NYNEX" means NYNEX Mobile Communications Company.
"Omnibus Act" means the Omnibus Budget Reconciliation Act of 1993.
"Option Plan" means the 1987 Key Employee Stock Plan of the Company.
"PaineWebber" means PaineWebber Incorporated.
"PaineWebber Opinion Letter" means the opinion letter of PaineWebber
presented to the board of directors of GTE on December 27, 1994.
"P/E multiple" means a price/earnings multiple.
"POPs" means the population of a market area multiplied by the Company's
percentage ownership in the cellular system serving that market.
"portables" means hand-held radio telephones.
"Record Date" means March 16, 1995.
"RF" means analog radio frequency.
"roamers" means cellular users who are customers of other carriers but who
are visiting and wish to use their cellular phone in the Company's service area.
60
<PAGE> 62
"RSAs" means rural service areas.
"RSA Partnerships" means limited or general partnerships of which the
Company is either the general or managing partner, which partnerships own
cellular systems in RSAs.
"SEC" means the Securities and Exchange Commission.
"Section 262" means Section 262 of the DGCL.
"Services Agreement" means the agreement dated May 1, 1991, as amended,
between GTE Mobile and the Company.
"Southeast Properties" means the cellular telephone properties previously
owned by McCaw Cellular Communications, Inc. in Kentucky, Alabama and Tennessee.
"Special Committee" means a special committee of three independent
directors of the Company appointed by the Board to negotiate the Merger on
behalf of Class A Stockholders and make a recommendation to the Board in
connection with the transaction.
"Stipulation" means the stipulation entered into by GTE and Contel and
approved by the CPUC which resulted in the approval of the GTE/Contel Merger on
an interim basis.
"Surviving Corporation" means the Company, the corporation that will
survive the Merger.
"TDMA" means Time Division Multiple Access.
"Terminal Value" means the estimated value of a business beyond the final
year of a projected period.
61
<PAGE> 63
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ---------------- ------------------------------------------------------------------ ------------
<S> <C> <C>
EXHIBIT A -- AGREEMENT AND PLAN OF MERGER, AS AMENDED.......................... A-1
EXHIBIT B -- OPINION OF LAZARD FRERES & CO..................................... B-1
EXHIBIT C-1 -- OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED..... C-1-1
EXHIBIT C-2 -- OPINION OF PAINEWEBBER INCORPORATED............................... C-2-1
EXHIBIT D -- DELAWARE GENERAL CORPORATION LAW SECTION 262...................... D-1
EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE
CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR
ACQUISITION CORPORATION AND CONTEL
CELLULAR INC...................................................... E-1
</TABLE>
<PAGE> 64
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 27, 1994 (the
"Agreement") among GTE Corporation, a New York corporation ("GTE"), Contel
Corporation, a Delaware corporation and a wholly-owned subsidiary of GTE
("Contel"), Contel Cellular Acquisition Corporation, a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of Contel, and Contel Cellular Inc.,
a Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, Contel has adopted a plan of liquidation;
WHEREAS, GTE, through its wholly-owned subsidiary, Contel, is presently the
beneficial owner of all of the outstanding shares of Class B Common Stock of the
Company (as defined below);
WHEREAS, Contel desires to acquire beneficial ownership of the remaining
equity interest in the Company (the "Acquisition"), and has caused Purchaser to
be formed to accomplish such purpose;
WHEREAS, Contel and Purchaser intend to accomplish the Acquisition through
a merger of Purchaser with and into the Company (the "Merger"), upon the terms
and subject to the conditions set forth herein; and
WHEREAS, the respective Boards of Directors of Purchaser and the Company
and the Special Committee appointed by the Board of Directors of the Company to
consider the Acquisition have approved the Merger upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" has the meaning set forth in the recitals hereto.
"Actions" has the meaning set forth in Section 6.2 hereof.
"Certificates" has the meaning set forth in Section 3.2(b) hereof.
"Class A Common Stock" means the Class A Common Stock of the Company, par
value $1.00 per share.
"Class B Common Stock" means the Class B Common Stock of the Company, par
value $1.00 per share.
"Commission" means the Securities and Exchange Commission and/or any other
governmental entity which administers either the Securities Act or the Exchange
Act.
"Common Stock" means the Class A Common Stock and Class B Common Stock.
"Company" has the meaning set forth in the preamble hereto.
"Constituent Corporations" has the meaning set forth in Section 2.1 hereof.
"Contel" has the meaning set forth in the preamble hereto.
"Depositary" has the meaning set forth in Section 3.2 hereof.
"DGCL" means the Delaware General Corporation Law.
"Dissenting Shares" has the meaning set forth in Section 3.1 hereof.
"Effective Time" has the meaning set forth in Section 2.2 hereof.
A-1
<PAGE> 65
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"GTE" has the meaning set forth in the preamble hereto.
"Indemnified Parties" has the meaning set forth in Section 6.2 hereof.
"Indemnitor" has the meaning set forth in Section 6.2 hereof.
"Information Statement" means the information statement on Form 14C
relating to the Merger, as amended or supplemented, to be prepared and
circulated as contemplated by Section 6.3 hereof.
"Merger" has the meaning set forth in the recitals hereto.
"Merger Consideration" has the meaning set forth in Section 2.4 hereof.
"Permitted Investments" has the meaning set forth in Section 3.2 hereof.
"Purchaser" has the meaning set forth in the preamble hereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Stockholder Materials" has the meaning set forth in Section 6.3 hereof.
"Surviving Corporation" has the meaning set forth in Section 2.1 hereof.
"Transaction Statement" means the transaction statement on Form 13e-3
relating to the Merger, as amended or supplemented, to be prepared and
circulated as provided in Section 6.3 hereof.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the applicable provisions of the DGCL, Purchaser
shall be merged with and into the Company. The Company shall continue as the
surviving corporation (the "Surviving Corporation") in the Merger and the
separate corporate existence of Purchaser shall cease (Purchaser and the Company
are sometimes referred to herein as the "Constituent Corporations"). From and
after the Effective Time, the Surviving Corporation shall possess all of the
rights, privileges, immunities and franchises, and shall be responsible and
liable for all of the liabilities and obligations, of each of the Constituent
Corporations, all as set forth in Section 259 of the DGCL.
SECTION 2.2 Effective Time. The Merger shall be consummated by filing with
the Secretary of State of Delaware a Certificate of Merger executed in
accordance with the relevant provisions of the DGCL. The Merger shall become
effective at the time of filing with the Secretary of State of Delaware of a
Certificate of Merger. The date and time when the Merger shall become effective
is herein referred to as the "Effective Time."
SECTION 2.3 Closing. Upon the terms and subject to the conditions hereof,
as soon as practicable after the execution of the written consents of
shareholders contemplated by Sections 6.3(b) and (c) hereof, the Company and
Purchaser shall file the Certificate of Merger in accordance with Section 2.2
hereof, and the Company and Purchaser shall take all such other and further
actions as may be required by law to make the Merger effective.
SECTION 2.4 Conversion of Shares of Common Stock. (a) Each share of Class
A Common Stock issued and outstanding immediately prior to the Effective Time
(other than Dissenting Shares, if any, and shares of Class A Common Stock held
by the Company, Purchaser, Contel or GTE) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be cancelled and shall
cease to exist and shall be converted into the right to receive cash in the
amount of $25.50 in accordance with Section 3.2 hereof. The
A-2
<PAGE> 66
consideration to be paid in respect of each share of Class A Common Stock in
accordance with the foregoing is hereinafter referred to as the "Merger
Consideration."
(b) Each share of Class A Common Stock held by the Company, Purchaser,
Contel or GTE immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be cancelled
and cease to exist, without any conversion thereof and without any Merger
Consideration being paid with respect thereto.
(c) Each share of Class B Common Stock issued and outstanding immediately
prior to the Effective Time shall by virtue of the Merger, and without any
action on the part of the holder thereof, be converted into one newly issued
share of the Class B Common Stock of the Surviving Corporation.
SECTION 2.5 Cancellation of Purchaser Capital Stock. Each share of common
stock of Purchaser issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger, and without any action on the part of the
holder thereof, be cancelled and cease to exist, without any conversion thereof
and without any Merger Consideration being paid with respect thereto.
SECTION 2.6 Certificate of Incorporation. The Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation, until thereafter
amended.
SECTION 2.7 By-Laws. The By-Laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation,
until thereafter amended.
SECTION 2.8 Directors. The directors of the Company at the Effective Time
shall be the directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided
by law.
SECTION 2.9 Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, all such officers to
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided
by law.
SECTION 2.10 Further Assistance. If at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or thing are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, properties or assets of the Constituent Corporations acquired or to
be acquired as a result of the Merger, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of the Constituent Corporations, all such deeds, bills of
sale, assignments and assurances and do, in the name and on behalf of the
Constituent Corporations, all such other acts and things necessary, desirable or
proper to vest, perfect or confirm its right, title or interest in, to or under
any of the rights, properties or assets of the Constituent Corporations acquired
or to be acquired as a result of the Merger and otherwise to carry out the
purposes of this Agreement.
ARTICLE III
DISSENTING SHARES; EXCHANGE AND PAYMENT FOR SHARES
SECTION 3.1 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Class A Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by a stockholder who
has the right (to the extent such right is available by law) to demand and
receive payment of the fair value of such holder's stock pursuant to Section 262
of the DGCL (the "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration provided for in Section 2.4(a) of this
Agreement (unless and until such holder shall have failed to perfect or shall
have effectively withdrawn or lost such right under the DGCL, as the case may
be), but the holder thereof shall
A-3
<PAGE> 67
only be entitled to such rights as are granted by Delaware law. If such holder
shall have so failed to perfect or shall have effectively withdrawn or lost such
right, such holder's shares of Class A Common Stock shall thereupon be deemed to
have been converted at the Effective Time into the right to receive the Merger
Consideration without any interest thereon. If the holder of any shares of Class
A Common Stock shall become entitled to receive payment for such shares pursuant
to Section 262 of the DGCL, such payment shall be made by the Surviving
Corporation.
SECTION 3.2 Payment for Shares. Prior to the Effective Time, Purchaser
shall or, in the event Purchaser shall fail to do so, GTE shall:
(a) designate a bank or trust company to act as Depositary in the Merger
(the "Depositary") and Purchaser or GTE shall enter into a mutually acceptable
agreement with the Depositary pursuant to which, after the Effective Time, the
Depositary will distribute the Merger Consideration on a timely basis and (b)
according to the terms of the agreement with Depositary, deposit or cause to be
deposited with the Depositary cash in the aggregate amount required with respect
to the conversion of shares of Class A Common Stock at the Effective Time
pursuant to Section 2.4(a) hereof. Pending distribution of the cash deposited
with the Depositary, Purchaser may from time to time direct the Depositary to
invest such cash, provided that such investments (i) shall be (A) obligations of
(or guaranteed by) the United States of America or its agencies or
instrumentalities, (B) commercial paper obligations receiving the highest rating
from either Moody's Investors Services, Inc. or Standard & Poor's Corporation,
(C) certificates of deposit, bank repurchase agreements or bankers acceptances
on interest bearing accounts of commercial banks with capital exceeding $250
million (collectively, "Permitted Investments") or (D) money market funds that
are required by their most current prospectus to have at least 80% of their
assets invested in Permitted Investments and (ii) shall have maturities that
will not prevent or delay payments to be made pursuant to this section.
(b) As soon as practicable after the Effective Time, the Depositary shall
be instructed to mail to each record holder (other than any holder of Dissenting
Shares, the Company, Purchaser, Contel and GTE) of a certificate or certificates
that immediately prior to the Effective Time represented shares of Class A
Common Stock (the "Certificates") a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss shall pass, only upon
proper delivery of the Certificates to the Depositary) and instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender to the Depositary of a Certificate, together with
such letter of transmittal duly executed and completed in accordance with the
instructions thereon, the holder of such Certificate shall be entitled to
receive in exchange therefor consideration equal to the number of shares of
Class A Common Stock represented by such Certificate multiplied by the Merger
Consideration and such Certificate shall forthwith be cancelled. No interest
will be paid or accrued on the Merger Consideration. All distributions to
holders of Certificates shall be subject to any applicable income tax
withholding. If the Merger Consideration is to be distributed to a person other
than the person in whose name the Certificate surrendered is registered, it
shall be a condition of such distribution that the Certificate so surrendered
shall be properly endorsed or otherwise in proper form for transfer (including
signature guarantees if required by Purchaser) and that the person requesting
such distribution shall pay any transfer or other taxes required by reason of
such distribution to a person other than the registered holder of the
Certificate surrendered or, in the alternative, establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
After one hundred and eighty (180) days following the Effective Time, the
Surviving Corporation shall be entitled to require the Depositary to deliver to
it any cash (including any interest received with respect thereto) that it has
made available to the Depositary and that has not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to the
Surviving Corporation only as general creditors thereof with respect to the cash
payable upon due surrender of their Certificates. The Surviving Corporation
shall pay all charges and expenses, including those of the Depositary, in
connection with the distribution of the Merger Consideration for shares of Class
A Common Stock. Until surrendered in accordance with the provisions of this
Section 3.2, each Certificate (other than Certificates representing Dissenting
Shares or shares of Class A Stock held by the Company, Purchaser, Contel or GTE)
shall represent for all purposes the right to receive consideration equal to the
Merger Consideration multiplied by the number of shares of Class A Common Stock
evidenced by such
A-4
<PAGE> 68
Certificate. From and after the Effective Time, holders of Certificates
immediately prior to the Merger shall have no right to vote or to receive any
dividends or other distributions with respect to any shares of Class A Common
Stock that were theretofore represented by such Certificates, other than any
dividends or other distributions payable to holders of record as of a date prior
to the Effective Time, and shall have no other rights in respect thereof other
than as provided herein or by law.
(c) From and after the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of Class A
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, other than Certificates in respect of Dissenting Shares, the rights
to which have been perfected or not withdrawn or lost under the DGCL, they shall
be cancelled and exchanged for Merger Consideration as provided in this Article
III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, Contel and GTE as
follows:
SECTION 4.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has the requisite corporate power to carry on its business as now conducted.
SECTION 4.2 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Company, and no other corporate proceeding on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby (other than the approval of
stockholders of the Company required to consummate the Merger). This Agreement
has been duly executed and delivered by the Company and constitutes its valid
and binding obligation, enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONTEL, GTE AND PURCHASER
SECTION 5.1 Representations and Warranties of Purchaser
Purchaser represents and warrants to the Company as follows:
(a) Organization and Qualification. It is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the requisite corporate power to carry
on its business as now conducted.
(b) Authority Relative to this Agreement. It has the requisite
corporate power and authority to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery of this Agreement by
it and the consummation by it of the transactions contemplated hereby have
been duly authorized by its Board of Directors, and no other corporate
proceeding on its part is necessary to authorize the execution, delivery
and performance of this Agreement and the transactions contemplated hereby
(other than the approval of its stockholders required to consummate the
Merger). This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general
equitable principles.
A-5
<PAGE> 69
(c) No Prior Activities. It has not incurred, nor will it incur,
directly or through any subsidiary, any liabilities or obligations, except
those incurred in connection with its organization or with the negotiation
of this Agreement and the consummation of the transactions contemplated
hereby, including the Merger. Except as set forth in the previous sentence,
it has not engaged, directly or through any subsidiary, in any business
activities of any type or kind whatsoever, or entered into any agreements
or arrangements with any person or entity.
SECTION 5.2 Representations and Warranties of GTE and Contel.
Contel and GTE each represents and warrants to the Company as follows:
(a) Organization and Qualification. It is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the requisite corporate power to carry
on its business as now conducted.
(b) Authority Relative to this Agreement. It has the requisite
corporate power and authority to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery of this Agreement by
it and the consummation by it of the transactions contemplated hereby have
been duly authorized by its Board of Directors, and no other corporate
proceeding on its part is necessary to authorize the execution, delivery
and performance of this Agreement and the transactions contemplated hereby.
This Agreement has been duly executed and delivered by it and constitutes
its valid and binding obligation, enforceable against it in accordance with
its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally or by general equitable
principles.
ARTICLE VI
COVENANTS
SECTION 6.1 Conduct of Business of the Company. Except as otherwise
expressly provided in this Agreement, from the date of this Agreement to the
Effective Time, the Company will conduct its business in the ordinary course.
SECTION 6.2 Indemnification, Etc. The Company shall indemnify and hold
harmless, and, after the Effective Time, the Surviving Corporation and GTE (the
Company, the Surviving Corporation and GTE, for the purpose of this Section 6.2
being the "Indemnitor") will indemnify and hold harmless, each present and
former director and officer of the Company (the "Indemnified Parties") against
any losses, claims, damages, liabilities, costs, expenses, judgments and amounts
paid in settlement in connection with any claim, action, suit, proceeding or
investigation (collectively, "Actions") arising out of or pertaining to any
action or omission occurring prior to the Effective Time (including without
limitation, any Actions which arise out of or relate to the transactions
contemplated by this Agreement) to the full extent permitted under the DGCL (and
the Indemnitor will advance reasonable expenses to each such person to the full
extent so permitted); provided, however, that any determination required to be
made with respect to whether an Indemnified Party's conduct complied with the
standards set forth in the DGCL shall be made in accordance with the DGCL, and
the Indemnitor shall pay the reasonable fees and expenses incurred in connection
with such determination. If any such Action is brought against any Indemnified
Party (whether arising before or after the Effective Time), (a) the Indemnified
Parties may retain counsel reasonably satisfactory to them and the Indemnitor,
(b) the Indemnitor shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received, and
(c) the Indemnitor and the Indemnified Parties will cooperate in the vigorous
defense of any such matter, provided, that the Indemnitor shall not be liable
for any such settlement effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any Indemnified Party wishing to
claim indemnification under this Section 6.2, upon learning of any such Action
shall notify the Indemnitor thereof and shall deliver to the Indemnitor an
undertaking to repay any amounts advanced pursuant hereto when and if a court of
competent jurisdiction shall ultimately determine, after exhaustion of all
avenues of appeal, that such Indemnified Party was not entitled to
indemnification under this Section. The Indemnified Parties as a group may
retain only one law firm in each jurisdiction to represent
A-6
<PAGE> 70
them with respect to any such matter unless there is, under applicable standards
of professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. GTE and Purchaser agree to
cause to be maintained in effect the present policy of directors' and officers'
liability insurance (or an equivalent policy) covering those persons who are
currently covered by such policy for three years from the Effective Time. This
Section 6.2 shall survive consummation of the Merger.
SECTION 6.3 Stockholders' Approval; SEC Filings.
(a) Subject to the terms and conditions contained herein, this
Agreement and the transactions contemplated hereby shall be submitted by
the Company and Purchaser to their respective stockholders for approval.
Promptly after the execution of this Agreement, the Company and Purchaser
shall together, or pursuant to an allocation of responsibility to be agreed
upon between them, (i) use their best efforts to obtain all information
required to be included in the Information Statement, the Transaction
Statement and related materials (the "Stockholder Materials"), (ii) prepare
and file with the Commission the Stockholder Materials, (iii) use all
reasonable efforts to have the Stockholder Materials cleared by the
Commission as promptly as practicable, and (iv) promptly following
clearance by the Commission, mail the Stockholders Materials to
shareholders of the Company. Purchaser and the Company also shall take any
action required to be taken under state blue sky or securities laws or the
rules and regulations of any securities exchanges or markets on which their
securities are listed for trading in connection with transactions
contemplated hereby including the Merger. The Information Statement and the
Transaction Statement shall, when first mailed to the stockholders of the
Company and as amended or supplemented thereafter, comply as to form in all
material respects with all applicable requirements of federal securities
laws. Purchaser and the Company shall each furnish to the other and their
counsel all such information as may be required to prepare the Stockholders
Materials. All such information provided and to be provided by Purchaser
and the Company respectively, for use in the Stockholder Materials shall,
on the date the Information Statement or Transaction Statement is first
mailed to the Company's stockholders and as amended or supplemented
thereafter, be true and correct in all material respects and shall not omit
to state any material fact necessary in order to make such information in
light of the circumstances in which it was given not misleading, and the
Company and the Purchaser each agree to correct any information provided by
it for use in the Information Statement or Transaction Statement which
shall have become false or misleading in any material respect.
(b) Subject to the terms and conditions set forth in the next
sentence, GTE, the Company and Contel agree that Contel shall execute a
written consent as majority shareholder of the Company approving this
Agreement and the Merger. Such consent shall be executed by Contel only
after the passage of any waiting periods, following the mailing of the
Stockholders' Materials to the stockholders of the Company, required for
compliance with the Securities Act, the Exchange Act, the DGCL and any
other laws, rules or regulations applicable to Company.
(c) Contel shall also execute a written consent as majority
shareholder of Purchaser approving this Agreement and the Merger. Such
consent shall be executed concurrently with the execution of the consent
referred to in paragraph (b).
Section 6.4 Consents. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use its commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, and to
cooperate with each other in connection with the foregoing, including using
commercially reasonable efforts to (i) obtain all necessary waivers, consents
and approvals from other parties to loan agreements, leases and other contracts,
(ii) obtain all necessary consents, approvals and authorizations as are required
to be obtained under any federal, state or foreign law or regulations, (iii)
defend all lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, and (v)
effect all registrations and filings necessary to consummate the transactions
contemplated hereby.
A-7
<PAGE> 71
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by any necessary vote of the stockholders of the Company and
Purchaser in accordance with applicable law and Sections 6.3(b) and (c);
(b) No statute, rule, regulation, executive order, decree or
injunction (preliminary or permanent) shall have been enacted, entered,
promulgated or enforced by any federal or state court of competent
jurisdiction in the United States or other governmental authority which
prohibits the consummation of the Merger and remains in effect after GTE,
the Company and Purchaser shall have used all commercially reasonable
efforts to lift any injunction;
(c) No consents of or filings with any governmental entity shall be
required for consummation of the Merger which have not been obtained or
filed; and
(d) The Special Committee of the Board of Directors of the Company
shall not have modified or rescinded its recommendation with respect to the
Merger.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of each of Purchaser and the Company; or
(b) by Purchaser or the Company if any court of competent jurisdiction
in the United States or other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and non-appealable; or
(c) by Purchaser or the Company if the Merger does not occur within
120 days of the date of this Agreement unless the Merger shall not have
occurred primarily as the result of a delay occasioned by review of filings
by regulatory agencies.
SECTION 8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and have no effect, without liability on the part of any
party or its directors, officers, stockholders or partners.
SECTION 8.3 Amendment. This Agreement may be amended by action taken by
Purchaser and the Company at any time, provided that following approval of this
agreement by the shareholders of Company or Purchaser any amendment of this
Agreement shall be subject to compliance with Section 251(d) of the DGCL. The
prior approval of a majority of the members of the Special Committee shall be
required in connection with any amendment or modification by or on behalf of the
Company. This Agreement may not be amended, modified or supplemented except by
an instrument in writing signed on behalf of the party against whom enforcement
is sought.
SECTION 8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) waive
compliance with any of the agreements or conditions contained herein, except as
otherwise provided by law and except that the provisions of Section 6.2 hereof
shall not be waived.
A-8
<PAGE> 72
Any agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing on behalf of such party,
and, in the case of an extension or waiver by the Company, if such extension or
waiver has been approved by a majority of the members of the Special Committee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements made herein shall not survive beyond
the Effective Time, except for the agreements set forth in Sections 2.10, 3.1,
3.2 and 6.2.
SECTION 9.2 Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties or any of them with respect to the subject
matter hereof, and (b) shall not be assigned by operation of law or otherwise;
provided that Purchaser may assign its rights and obligations to any wholly
owned, direct or indirect subsidiary, but no such assignment shall relieve
Purchaser of its obligations hereunder if such assignor does not perform such
obligations.
SECTION 9.3 Validity. The validity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
SECTION 9.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telegram or telex, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses or at such other addresses as
shall be specified by the parties by like notice.
(i) if to the Purchaser, to:
Marianne Drost, Secretary
CCI Acquisition Corporation
One Stamford Forum
Stamford, CT 06904
with a copy to:
Jeffrey Rosen
O'Melveny & Myers
555 Thirteenth Street, N.W.
Suite 500 West
Washington, DC 20004
(ii) if to the Company, to:
Marianne Drost
Contel Cellular Inc.
c/o GTE Corporation
One Stamford Forum
Stamford, CT 06904
with a copy to:
W. Leslie Duffy
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
A-9
<PAGE> 73
(iii) if to Contel, to:
Marianne Drost, Secretary
Contel Corporation
One Stamford Forum
Stamford, CT 06904
(iv) if to GTE, to:
Marianne Drost, Secretary
GTE Corporation
One Stamford Forum
Stamford, CT 06904
SECTION 9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of conflict of laws
thereof.
SECTION 9.6 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement, except as expressly provided in Section 6.2 (which is intended to be
for the benefit of the persons referred to therein and may be enforced by such
persons).
SECTION 9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.9 Expenses. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
SECTION 9.10 Specific Performance. The parties hereto agree that if for
any reason any party hereto shall have failed to perform its obligations under
this Agreement, then any other party hereto seeking to enforce this Agreement
against such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that any party hereto may have against
any other party hereto for any failure to perform its obligations under this
Agreement.
A-10
<PAGE> 74
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
CONTEL CELLULAR INC.
By: /s/ DENNIS WHIPPLE
--------------------------------------
Title: President
CONTEL CELLULAR ACQUISITION
CORPORATION
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
CONTEL CORPORATION
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
GTE CORPORATION
By: /s/ JAMES MURPHY
--------------------------------------
Title: Vice President and Treasurer
A-11
<PAGE> 75
FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER
First Amendment to the Agreement and Plan of Merger dated as of January 27,
1995 (the "First Amendment") among GTE Corporation, a New York corporation
("GTE"), Contel Corporation, a Delaware corporation and a wholly-owned
subsidiary of GTE ("Contel"), Contel Cellular Acquisition Corporation, a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Contel, and
Contel Cellular Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, GTE, Contel, Purchaser and the Company have entered into an
Agreement and Plan of Merger dated as of December 27, 1994 (the "Agreement");
WHEREAS, GTE, Contel, Purchaser and the Company desire to amend the
Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein shall have
the meaning ascribed to them in the Agreement.
Section 2. Amendment of Section 2.3. Section 2.3 of the Agreement is
hereby amended in its entirety to read as follows:
Upon the terms and subject to the conditions hereof, as soon as
practicable after the execution of the written consents of shareholders
contemplated by Sections 6.3(b) and (c) hereof and after the passage of
waiting periods required for compliance with the Securities Act, the
Exchange Act, the DGCL and any other rules or regulations applicable to
the Company, the Company and Purchaser shall file the Certificate of
Merger in accordance with Section 2.2 hereof, and the Company and
Purchaser shall take all such other and further actions as may be
required by law to make the Merger effective.
Section 3. Amendment of Section 6.3(b). Section 6.3(b) of the
Agreement is hereby amended in its entirety to read as follows:
(b) GTE, the Company and Contel agree that Contel shall execute a
written consent as majority shareholder of the Company approving this
Agreement and the Merger as soon as practicable after the execution of
this Agreement.
The Agreement, as amended hereby, shall remain in full force and effect and
shall constitute the agreement of the parties.
A-12
<PAGE> 76
IN WITNESS WHEREOF, each of the parties has caused this First Amendment to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
CONTEL CELLULAR INC.
By: /s/ DENNIS WHIPPLE
--------------------------------------
Title: President
CONTEL CELLULAR ACQUISITION
CORPORATION
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
CONTEL CORPORATION
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
GTE CORPORATION
By: /s/ JAMES MURPHY
--------------------------------------
Title: Vice President and
Treasurer
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
A-13
<PAGE> 77
SECOND AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER
Second Amendment to the Agreement and Plan of Merger dated as of March 10,
1995 (the "Second Amendment") among GTE Corporation, a New York corporation
("GTE"), Contel Corporation, a Delaware Corporation and a wholly-owned
subsidiary of GTE ("Contel"), Contel Cellular Acquisition Corporation, a
Delaware Corporation ("Purchaser") and a wholly-owned subsidiary of Contel, and
Contel Cellular Inc., a Delaware Corporation (the "Company").
RECITALS
WHEREAS, GTE, Contel, Purchaser and the Company have entered into an
Agreement and Plan of Merger dated as of December 27, 1994, which Agreement was
amended pursuant to the First Amendment to the Agreement and Plan of Merger
dated as of January 27, 1995 (as amended, the "Agreement"); and
WHEREAS, GTE, Contel, Purchaser and the Company desire further to amend the
Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein shall have
the meanings ascribed to them in the Agreement.
Section 2. Amendment of Section 2.4. Section 2.4 of the Agreement is
hereby amended in its entirety to read as follows:
SECTION 2.4 CONVERSION OF SHARES OF COMMON STOCK. (a) Each share
of Class A common Stock issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares, if any, and shares of
Class A Common Stock held by the company, Purchaser, Contel or GTE)
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be cancelled and retired and shall cease to exist as
issued and outstanding shares and shall be converted into the right to
receive cash in the amount of $25.50 in accordance with Section 3.2
hereof. The consideration to be paid in respect of each share of Class A
Common Stock in accordance with the foregoing is hereinafter referred to
as the "Merger Consideration."
(b) Each share of Class A Common Stock held by the Company,
Purchaser, Contel or GTE immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and cease to exist as an issued and
outstanding share, without any conversion thereof and without any Merger
Consideration being paid with respect thereto.
(c) The shares of Class B Common Stock shall not be changed or
converted in the Merger, and each share of Class B Common Stock issued
and outstanding immediately prior to the Effective Time shall continue
to be outstanding subsequent to the Effective Time as one share of Class
B Common Stock of the Surviving Corporation.
The Agreement, as amended hereby, shall remain in full force and effect and
shall constitute the agreement of the parties.
A-14
<PAGE> 78
IN WITNESS WHEREOF, each of the parties has caused this Second Amendment to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
CONTEL CELLULAR INC.
By: /s/ DENNIS WHIPPLE
--------------------------------------
Title: President
CONTEL CELLULAR ACQUISITION
CORPORATION
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
CONTEL CORPORATION
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
GTE CORPORATION
By: /s/ JAMES MURPHY
--------------------------------------
Title: Vice President and
Treasurer
By: /s/ MARIANNE DROST
--------------------------------------
Title: Secretary
A-15
<PAGE> 79
EXHIBIT B
OPINION OF LAZARD FRERES & CO.
[LAZARD FRERES & CO. LETTERHEAD]
December 30, 1994
Special Committee of the
Board of Directors
Contel Cellular Inc.
c/o Contel Corporation
375 Park Avenue, 24th Floor
New York, NY 10152
Dear Members of the Special Committee:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the Class A Common Stock, par value $1.00 per share
(the "Common Stock") of Contel Cellular Inc. ("CCI"), other than GTE Corporation
("GTE"), Contel Corporation ("Contel") and their affiliates, of the
consideration to be received by such holders in the proposed merger (the
"Merger") of CCI and a subsidiary of Contel.
We understand that the Merger is to be effected pursuant to an Agreement
and Plan of Merger, to be entered into among GTE, Contel, a subsidiary of
Contel, and CCI, a draft of which, dated December 29, 1994, has been furnished
to us (the "Merger Agreement"). The terms of the Merger Agreement provide, among
other things, that each share of Common Stock (other than any shares of Common
Stock held by stockholders who properly exercise and perfect stockholder
appraisal rights, if any, under the General Corporation Law of the State of
Delaware, and any shares held by CCI, GTE, Contel or such subsidiary of Contel
all of which shall be canceled), will be converted into the right to receive
cash in the amount of $25.50. We understand that GTE beneficially owns all of
the issued and outstanding shares of Class B Common Stock, par value $1.00 per
share, of CCI, which represents approximately ninety percent (90%) of the issued
and outstanding equity of CCI.
In connection with this opinion, we have, among other things:
(i) reviewed the terms and conditions of the Merger Agreement;
(ii) analyzed certain historical business and financial information
relating to CCI, including the Annual Reports to Stockholders
and Annual Reports on Form 10-K of CCI for each of the fiscal
years ended December 31, 1991 through 1993, and Quarterly
Reports on Form 10-Q of CCI for the quarters ended March 31,
June 30, and September 30, 1994;
(iii) reviewed certain financial forecasts and other data provided to
us by CCI relating to CCI;
(iv) held discussions with members of the senior managements of CCI
and GTE with respect to the businesses and prospects of CCI and
its strategic objectives;
(v) reviewed public information with respect to certain other
companies in lines of businesses we believe to be generally
comparable to the businesses of CCI;
(vi) reviewed the financial terms of certain recent business
combinations involving companies in lines of businesses we
believe to be generally comparable to CCI, and in other
industries generally;
(vii) reviewed the financial terms of certain recent business
combinations we believe to be comparable in certain respects to
the proposed Merger;
(viii) reviewed the historical stock prices and trading volumes of the
Common Stock; and
(ix) conducted such other financial studies, analyses and
investigations as we deemed appropriate.
B-1
<PAGE> 80
We understand that CCI and an affiliate of GTE propose to exchange certain
cellular assets owned by each of them for certain cellular assets owned by a
publicly-held company (the "Cellular Exchange"). We have received a copy of a
letter dated December 19, 1994 from GTE's Senior Vice President -- Finance
addressed to GTE's financial advisors, Merrill Lynch & Co. and PaineWebber
Incorporated, regarding the Cellular Exchange to the effect that it is an
exchange of equivalent assets and, accordingly, is value neutral to CCI. We have
neither received nor reviewed any other information regarding the Cellular
Exchange, including any financial projections or any other non-public financial
information prepared by GTE or CCI. With your consent, we have assumed that the
Cellular Exchange involves the exchange of assets with substantially equivalent
value and, accordingly, will have an immaterial effect, if any, on CCI.
For purposes of this opinion, with your concurrence, we have ascribed no
value to CCI's rights under either (i) that certain Third Restated Competition
Agreement dated March 14, 1991, among Contel, GTE and CCI, or (ii) that certain
Services Agreement dated May 1, 1991, as amended, by and between GTE Mobile
Communications Service Corporation and CCI.
We have not reviewed any proxy or information statement or similar document
that may be prepared for use in connection with the proposed Merger. In
addition, we were not asked by the Special Committee (the "Special Committee")
of the Board of Directors of CCI to solicit third party indications of interest
in acquiring all or any part of CCI, nor did we seek any such offers.
We have relied upon the accuracy and completeness of the foregoing
financial and other information and have not assumed any responsibility for any
independent verification of such information or any independent valuation or
appraisal of any of the assets of CCI. With respect to financial forecasts, we
have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of management of CCI as to the
future financial performance of CCI. We assume no responsibility and express no
view as to such forecasts or the assumptions on which they are based.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
In rendering our opinion, we have assumed that the actual Agreement and
Plan of Merger entered into among the parties thereto will be identical in all
material respects to the Merger Agreement, that the Merger will be consummated
on the terms described in the Merger Agreement, without any waiver of any
material terms or conditions by CCI and that obtaining the necessary regulatory
approvals for the Merger will not have an adverse effect on CCI.
Lazard Freres & Co. has acted as financial advisor to the Special Committee
in connection with the proposed Merger and will receive a fee for our services,
a substantial portion of which is payable upon rendering this opinion.
Based on and subject to the foregoing, we are of the opinion that the
consideration to be received by the holders of the Common Stock (other than GTE,
Contel or any of their affiliates) is fair to such holders from a financial
point of view.
Very truly yours,
LAZARD FRERES & CO.
B-2
<PAGE> 81
EXHIBIT C-1
OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
[MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED LETTERHEAD]
December 27, 1994
Board of Directors
GTE Corporation
One Stamford Forum
Stamford, CT 06904
Attention: J. Michael Kelly
Gentlemen:
Contel Corporation, a Delaware corporation ("Contel") and a wholly-owned
subsidiary of GTE Corporation (the "Company"), CCI Acquisition Company, a
Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Contel,
and Contel Cellular Inc., a Delaware corporation (the "Subject Company"),
propose to enter into an Agreement and Plan of Merger (the "Agreement") pursuant
to which the Purchaser will be merged into the Subject Company in a transaction
(the "Merger") in which each share of the Subject Company's Class A Common
Stock, par value $1.00 per share (the "Shares"), will be converted into the
right to receive $25.50 in cash per Share.
You have asked us whether, in our opinion, the proposed cash consideration
to be paid for the Shares pursuant to the Merger is fair to the Company from a
financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Subject Company's Annual Reports, Forms 10-K and
related financial information for the five fiscal years ended December 31,
1993 and the Subject Company's Forms 10-Q and the related unaudited
financial information for the quarterly periods ending March 31, 1994, June
30, 1994 and September 30, 1994;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and prospects of the
Subject Company, furnished to us by the Subject Company;
(3) Conducted discussions with members of senior management of the
Subject Company concerning its businesses and prospects;
(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be reasonably similar to the Subject Company;
(5) Compared the results of operations of the Subject Company with
that of certain companies which we deemed to be reasonably similar to the
Subject Company;
(6) Compared the proposed financial terms of the transactions
contemplated by the Agreement with the financial terms of certain other
mergers and acquisitions which we deemed to be relevant;
(7) Considered the pro forma effect of the Merger on the Company's
capitalization ratios, earnings and cash flow;
(8) Considered a discounted cash flow analysis based on future cash
flows that management of the Subject Company expects the Subject Company to
generate;
(9) Reviewed a draft of the Agreement dated December 20, 1994; and
C-1-1
<PAGE> 82
(10) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market and
monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Subject
Company, and we have not assumed any responsibility to independently verify such
information or undertaken an independent appraisal of the assets of the Subject
Company. With respect to the financial forecasts furnished by the Subject
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Subject Company's
management as to the expected future financial performance of the Subject
Company. This opinion does not address the relative merits of the Merger and any
other transactions or business strategies discussed by the Board of Directors of
the Company as alternatives to the Merger or the decision of the Board of
Directors of the Company to proceed with the Merger.
In rendering this opinion, we have not been engaged to act as an agent or
fiduciary of the Company's equity holders or any other third party.
We have, in the past, provided financial advisory services to the Subject
Company and have received fees for the meeting of such services.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed cash consideration to be paid pursuant to the Merger is fair to the
Company from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ ALAIN LEBEC
------------------------
ALAIN LEBEC
Managing Director
Investment Banking Group
C-1-2
<PAGE> 83
EXHIBIT C-2
OPINION OF PAINEWEBBER INCORPORATED
[PAINEWEBBER LETTERHEAD]
December 27, 1994 [PAINEWEBBER LOGO]
Board of Directors
GTE Corporation
One Stamford Forum
Stamford, CT 06904
Attention: J. Michael Kelly
Gentlemen:
Contel Corporation, a Delaware corporation ("Contel") and a wholly-owned
subsidiary of GTE Corporation (the "Company"), CCI Acquisition Company, a
Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Contel,
and Contel Cellular Inc,. a Delaware corporation (the "Subject Company"),
propose to enter into an Agreement and Plan of Merger (the "Agreement") pursuant
to which the Purchaser will be merged into the Subject Company in a transaction
(the "Merger") in which each share of the Subject Company's Class A Common
Stock, par value $1.00 per share (the "Shares"), will be converted into the
right to receive $25.50 in cash per Share.
You have asked us whether, in our opinion, the proposed cash consideration
to be paid for the Shares pursuant to the Merger is fair to the Company from a
financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Subject Company's Annual Reports, Forms 10-K and
related financial information for the five fiscal years ended December 31,
1993 and the Subject Company's Forms 10-Q and the related unaudited
financial information for the quarterly periods ending March 31, 1994, June
30, 1994, and September 30, 1994;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and prospects of the
Subject Company;
(3) Conducted discussions with members of senior management of the
Subject Company concerning its businesses and prospects;
(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be reasonably similar to the Subject Company;
(5) Compared the results of operations of the Subject Company with
that of certain companies which we deemed to be reasonably similar to the
Subject Company;
(6) Compared the proposed financial terms of the transactions
contemplated by the Agreement with the financial terms of certain other
mergers and acquisitions which we deemed to be relevant;
(7) Considered the pro forma effect of the Merger on the Company's
capitalization ratios, earnings and cash flow;
(8) Considered a discounted cash flow analysis based on future cash
flows that management of the Subject Company expects the Subject Company to
generate;
(9) Reviewed a draft of the Agreement dated December 20, 1994; and
C-2-1
<PAGE> 84
(10) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market and
monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Subject
Company, and we have not assumed any responsibility to independently verify such
information or undertaken an independent appraisal of the assets of the Subject
Company. With respect to the financial forecasts furnished by the Subject
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Subject Company's
management as to the expected future performance of the Subject Company. This
opinion does not address the relative merits of the Merger and any other
transactions or business strategies discussed by the Board of Directors of the
Company as alternatives to the Merger or the decision of the Board of Directors
of the Company to proceed with the Merger.
In rendering this opinion, we have not been engaged to act as an agent or
fiduciary of the Company's equity holders or any other third party.
We have, in the past, provided financial advisory services to the Company
and have received fees for the rendering of such services.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed cash consideration to be paid pursuant to the Merger is fair to the
Company from a financial point of view.
Very truly yours,
PAINEWEBBER INCORPORATED
C-2-2
<PAGE> 85
EXHIBIT D
DELAWARE GENERAL CORPORATION LAW SECTION 262
SEC. 262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except: a. shares of stock of the corporation surviving
or resulting from such merger or consolidation, or depository receipts in
respect thereof; b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository receipts
at the effective date of the merger or consolidation will be either listed
on a national securities exchange or designated as a national market system
security on an inter-dealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders; c.
Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or d.
Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a
D-1
<PAGE> 86
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his share. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1
D-2
<PAGE> 87
week before the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by publications shall be
approved by the Court, and the costs thereof shall be borne by the surviving or
resulting corporation.
(g) At the hearing of such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such directions, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders, entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of the
shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of the
Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
D-3
<PAGE> 88
EXHIBIT E
DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION,
CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION
CORPORATION AND CONTEL CELLULAR INC.
1. Directors and Executive Officers of GTE Corporation. The following
table sets forth the name, business address, present principal occupation and
the other material occupations, positions, offices or employments for the past
five years (if applicable) of each director and executive officer of GTE
Corporation, a New York corporation ("GTE"). Each director and executive officer
of GTE is a citizen of the United States. GTE, through its subsidiaries,
provides local telephone service, cellular mobile telephone service,
directories, and other telecommunications related products and services. GTE
also has subsidiaries which offer financial and related services primarily to
GTE operating companies. The address of GTE's principal executive offices is One
Stamford Forum, Stamford, Connecticut 06904.
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
GTE -- DIRECTORS
Edwin L. Artzt..................... Chairman of the Board and Not applicable
The Procter & Gamble Company Chief Executive Officer of The
One Procter & Gamble Plaza Procter & Gamble Company
Cincinnati, OH 45202-3315
James R. Barker.................... Chairman of the Interlake Not applicable
Mormac Marine Group, Inc. Steamship Co.; Vice Chairman
Three Landmark Square of Mormac Marine Group, Inc.;
Stamford, CT 06901 Vice Chairman of Moran Towing
Company
Edward H. Budd..................... Chairman of the Board of the Chairman of Travelers
The Travelers Insurance Companies Executive Committee and Insurance Group, Inc.
One Tower Square Director of The Travelers from January 1994 to
Hartford, CT 06138-1100 Insurance Group, Inc. September 1994. Chairman
of The Travelers, Inc.
since 1982
Kent B. Foster..................... Vice Chairman of GTE and Not applicable
GTE President of GTE Telephone
600 Hidden Ridge, HQE04J17 Operations Group
Irving, TX 75308
James L. Johnson................... Chairman Emeritus of GTE since Chairman and Chief
600 Hidden Ridge 1992 Executive of GTE since
Irving, TX 75038 1988
Richard W. Jones................... Business Consultant, Not applicable
Business Consultant PaineWebber Incorporated
PaineWebber Incorporated
725 S. Figueroa Street
Suite 4100
Los Angeles, CA 90017
James L. Ketelsen.................. Retired Chairman of Tenneco Chairman and Chief
Tenneco Inc. Inc. since 1992 Executive Officer of
Tenneco Building Tenneco Inc. since 1978
1010 Milam Street
Houston, TX 77002
Charles R. Lee..................... Chairman and Chief Executive President and Chief
GTE Officer of GTE since 1992 Operating Officer of GTE
One Stamford Forum since 1989
Stamford, CT 06904
</TABLE>
E-1
<PAGE> 89
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
Michael T. Masin................... Vice Chairman of GTE since Managing Partner of the
GTE 1993 New York office of the
One Stamford Forum law firm of O'Melveny &
Stamford, CT 06904 Myers and a partner with
that firm since 1977
Sandra O. Moose.................... Senior Vice President and Not applicable
The Boston Consulting Group, Inc. Chair of the East Coast as
135 E. 57th Street well as New York Office
New York, NY 10022 Administrator and Director of
The Boston Consulting Group,
Inc.
Russell E. Palmer.................. Chairman and Chief Executive Dean, The Wharton School,
The Palmer Group Officer of The Palmer Group University of
3600 Market Street since 1990 Pennsylvania from 1983
Philadelphia, PA 19104 until 1990
Howard Sloan....................... Private Investor Not applicable
375 Park Avenue
New York, NY 10152
Robert D. Storey................... Partner with the Cleveland law Partner with the
Thompson, Hine & Flory firm of Thompson, Hine & Flory Cleveland law firm of
1100 National City Bank Bldg. since 1993 McDonald, Hopkins, Burke
629 Euclid Avenue & Haber Co., L.P.A. since
Cleveland, OH 44114 1971
James W. Walter.................... Chairman of Walter Industries, Not applicable
Walter Industries, Inc. Inc.
1500 N. Dale Mabry Highway
Tampa, FL 33607
Charles Wohlstetter................ Vice Chairman of GTE since Chairman of the Board of
375 Park Avenue 1991 Contel Corporation since
New York, NY 10152 1960
</TABLE>
GTE -- EXECUTIVE OFFICERS
<TABLE>
<S> <C> <C>
Charles R. Lee..................... See prior entry See prior entry
GTE
One Stamford Forum
Stanford, CT 06904
Charles Wohlstetter................ See prior entry See prior entry
GTE
375 Park Avenue
New York, NY 10152
Kent B. Foster..................... See prior entry See prior entry
GTE
600 Hidden Ridge
Irving, TX 75308
Michael T. Masin................... See prior entry See prior entry
GTE
One Stamford Forum
Stanford, CT 06904
Nicholas L. Trivisonno............. Executive Vice President - Senior Vice President -
GTE Strategic Planning and Group Finance since 1989
One Stamford Forum President of GTE since 1993
Stamford, CT 06904
</TABLE>
E-2
<PAGE> 90
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
William P. Barr.................... Senior Vice President and Partner in the Washington
GTE General Counsel of GTE since D.C. office of the law
One Stamford Forum 1994 firm of Shaw, Pittman,
Stamford, CT 06904 Potts & Trowbridge since
1993; Attorney General of
the United States from
1991 to 1993; previously
Deputy Attorney General
of the United States
Bruce Carswell..................... Senior Vice President - Human Not applicable
GTE Resources and Administration
One Stamford Forum of GTE
Stamford, CT 06904
J. Michael Kelly................... Senior Vice Vice President and
GTE President - Finance of GTE Controller of GTE since
One Stamford Forum since 1994 December 1991; Vice
Stamford, CT 06904 President - Finance and
Business Development for
GTE Telecommunications
Products and Services
Group since 1991; Vice
President and Controller
for Contel Corporation
since 1990
John P.Z. Kent..................... Vice President - Taxes of GTE Not applicable
GTE
One Stamford Forum
Stamford, CT 06904
James Murphy....................... Vice President and Treasurer Not applicable
GTE of GTE
One Stamford Forum
Stamford, CT 06904
G. Bruce Redditt................... Vice President - Public Vice President - Public
GTE Affairs and Communications of Affairs for the Telephone
One Stamford Forum GTE since 1994 Operations Group of GTE
Stamford, CT 06904 Service Corporation since
1991, previously Vice
President - Corporate
Communications for Contel
Corporation
Samuel F. Shawhan, Jr.............. Vice President - Government Not applicable
GTE Affairs of GTE
1850 M Street, N.W.
Washington, D.C. 20036
William D. Wilson.................. Vice President and Controller Area Vice President -
GTE of GTE since 1994 General Manager for the
One Stamford Forum East Area of the
Stamford, CT 06904 Telephone Operations
Group of GTE Service
Corporation since 1993;
previously Vice
President - Business
Planning for the
Telephone Operations
Group of GTE Service
Corporation
Marianne Drost..................... Secretary of GTE Not applicable
GTE
One Stamford Forum
Stamford, CT 06904
</TABLE>
E-3
<PAGE> 91
2. Directors and Executive Officers of Contel Corporation. The following
table sets forth the name, business address, present principal occupation and
the other material occupations, positions, offices or employments for the past
five years (if applicable) of each director and executive officer of Contel
Corporation, a Delaware corporation ("Contel"). Each director and executive
officer of Contel is a citizen of the United States. Contel, through its
subsidiaries, provides telecommunications products and services. The address of
Contel's principal executive offices is One Stamford Forum, Stamford,
Connecticut 06904.
CONTEL CORPORATION -- DIRECTORS
<TABLE>
<S> <C> <C>
Bruce Carswell..................... See prior entry See prior entry
Contel Corporation
One Stamford Forum
Stamford, CT 06904
Charles R. Lee..................... See prior entry See prior entry
Contel Corporation
One Stamford Forum
Stamford, CT 06904
Nicholas L. Trivisonno............. See prior entry See prior entry
Contel Corporation
One Stamford Forum
Stamford, CT 06904
</TABLE>
CONTEL CORPORATION -- EXECUTIVE OFFICERS
<TABLE>
<S> <C> <C>
J. Michael Kelly................... See prior entry See prior entry
President
Contel Corporation
One Stamford Forum
Stamford, CT 06904
James Murphy....................... See prior entry See prior entry
Vice President and Treasurer
Contel Corporation
One Stamford Forum
Stamford, CT 06904
Marianne Drost..................... See prior entry See prior entry
Secretary
Contel Corporation
One Stamford Forum
Stamford, CT 06904
</TABLE>
3. Directors and Executive Officers of Contel Cellular Acquisition
Corporation. The following table sets forth the name, business address, present
principal occupation and the other material occupations, positions, offices or
employments for the past five years (if applicable) of each director and
executive officer of Contel Cellular Acquisition Corporation, a Delaware
corporation ("CCI Acquisition"). Each director and executive officer is a
citizen of the United States. CCI Acquisition was incorporated in December 1994
for the purpose of acquiring the Company and has not engaged in any business
activities other than those relating to the Merger. The address of CCI
Acquisition's principal executive office is One Stamford Forum, Stamford,
Connecticut 06904.
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
CCI ACQUISITION -- DIRECTORS
J. Michael Kelly................... See prior entry See prior entry
CCI Acquisition
One Stamford Forum
Stamford, CT 06904
</TABLE>
E-4
<PAGE> 92
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
James Murphy....................... See prior entry See prior entry
CCI Acquisition
One Stamford Forum
Stamford, CT 06904
Marianne Drost..................... See prior entry See prior entry
CCI Acquisition
One Stamford Forum
Stamford, CT 06904
</TABLE>
CCI ACQUISITION -- EXECUTIVE OFFICERS
<TABLE>
<S> <C> <C>
J. Michael Kelly................... See prior entry See prior entry
President
CCI Acquisition
One Stamford Forum
Stamford, CT 06904
James Murphy....................... See prior entry See prior entry
Vice President and Treasurer
CCI Acquisition
One Stamford Forum
Stamford, CT 06904
Marianne Drost..................... See prior entry See prior entry
Secretary
CCI Acquisition
One Stamford Forum
Stamford, CT 06904
</TABLE>
4. Directors and Executive Officers of Contel Cellular Inc. The following
table sets forth the name, business address, present principal occupation and
the other material occupations, positions, offices or employments (if
applicable) for the past five years of each director and executive officer of
Contel Cellular Inc., a Delaware corporation (the "Company"). Each director and
executive officer of the Company is a citizen of the United States. The Company,
through its subsidiaries and through partnerships, provides or participates in
the provision of cellular telephone service in various areas throughout the
United States. The address of the Company's principal executive offices is 245
Perimeter Center Parkway, Atlanta, Georgia 30346.
COMPANY -- DIRECTORS
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
Leo Jaffe.......................... Chairman Emeritus of Columbia Not applicable
425 East 58th Street Pictures, Inc.
New York, NY 10022
James L. Johnson................... See prior entry See prior entry
600 Hidden Ridge
Irving, TX 75038
Robert LaBlanc..................... President of Robert E. LaBlanc Not applicable
323 Highland Avenue Associates, Inc.
Ridgewood, NJ 07450
Charles R. Lee..................... See prior entry See prior entry
GTE
One Stamford Forum
Stamford, CT 06904
Michael T. Masin................... See prior entry See prior entry
GTE
One Stamford Forum
Stamford, CT 06904
</TABLE>
E-5
<PAGE> 93
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
Russell E. Palmer.................. See prior entry See prior entry
The Palmer Group
3600 Market Street
Philadelphia, PA 19104
Irwin Schneiderman................. Senior Counsel of the law firm Not applicable
Cahill Gordon & Reindel of Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Nicholas L. Trivisonno............. See prior entry See prior entry
GTE
One Stamford Forum
Stamford, CT 06904
James W. Walter.................... See prior entry See prior entry
Walter Industries Inc.
1500 N. Dale Mabry Highway
Tampa, FL 33607
Dennis L. Whipple.................. President and Chief Executive Vice President
Contel Cellular Inc. Officer of the Company since Marketing and Business
245 Perimeter Center Parkway 1991 Planning for GTE Mobile
Atlanta, GA 30346 from April 1990 to
March 1991; previously
General Manager - Florida
of GTE Mobilnet
Charles Wohlstetter................ See prior entry See prior entry
375 Park Avenue
New York, NY 10152-0192
COMPANY -- EXECUTIVE OFFICERS
Dennis L. Whipple.................. See prior entry See prior entry
President and Chief Executive
Officer
Contel Cellular Inc.
245 Perimeter Center Parkway
Atlanta, GA 30346
Theodore J. Carrier................ Treasurer and Chief Financial Controller of the Company
Treasurer and Chief Financial Officer of the Company since
Officer 1991
Contel Cellular Inc.
245 Perimeter Center Parkway
Atlanta, GA 30346
Pamela F. Lopez.................... Vice President - Marketing of Marketing and
Vice President - Marketing the Company since 1993 Distribution Manager of
Contel Cellular Inc. the Company's National
245 Perimeter Center Parkway Region since 1991;
Atlanta, GA 30346 previously Regional Agent
Manager in the Company's
Virginia operation
Randall L. Crouse.................. Vice President - Network Director - Technology
Vice President - Network Operations Operations of the Company Projects for GTE Mobile
Contel Cellular Inc. since 1993 from 1991 to 1993;
245 Perimeter Center Parkway previously Director -
Atlanta, GA 30346 Advanced Technology
Planning for GTE Mobile
Jay M. Rosen....................... Vice President, Government Vice President and
Secretary Affairs and General Counsel, Associate General
Contel Cellular Inc. Telecommunications Products Counsel - GTE Electrical
One Stamford Forum and Services Group of GTE Products and Governmental
Stamford, CT 06904 Service Corporation since 1991 Systems Group
</TABLE>
E-6
<PAGE> 94
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
Laura E. Binion.................... General Counsel and Assistant Corporate Counsel of
General Counsel and Assistant Secretary of the Company since Contel
Secretary 1991
Contel Cellular Inc.
245 Perimeter Center Parkway
Atlanta, GA 30346
</TABLE>
E-7
