<PAGE> 1
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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
This statement is filed in connection with
a. /X/ The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act of
1933.
c. / / A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: /X/
CALCULATION OF FILING FEE
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Transaction Valuation: $254,259,301.50* Amount of Filing Fee: $50,851.86
- --------------------------------------------------------------------------------
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* For purposes of calculating fee only. This amount is based upon (a)
9,970,953 shares of Class A Common Stock of Contel Cellular Inc., par value
$1.00 per share, (the "Class A Shares"), outstanding as of February , 1995
and (b) the price offered per Class A Share. The amount of the filing fee,
calculated in accordance with Rule 0-11 under the Securities Exchange Act of
1934, as amended, equals 1/50 of one per centrum of the value of the Class A
Shares offered to be purchased.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: $50,851.86 Filing Party: Contel Cellular Inc.
Form of Registration Number: Schedule 14C Date Filed: January 30, 1995
</TABLE>
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<PAGE> 2
INTRODUCTION
This Schedule 13E-3 is being filed jointly 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"). This Schedule 13E-3 relates to the proposed merger
(the "Merger") of CCI Acquisition with and into the Company (with the Company
being the surviving corporation (the "Surviving Corporation")). Contel owns all
of the outstanding shares of the Class B Common Stock, par value $1.00 per
share, of the Company (each a "Class B Share"). The Class B Shares constitute
90% of the outstanding common stock of the Company and represent approximately
98% of the combined voting power of the outstanding common stock of the Company.
The public owns all of the outstanding shares of Class A Common Stock, par value
$1.00 per share, of the Company (each a "Class A Share"). The Class A Shares
constitute the remaining 10% of the outstanding common stock of the Company and
represent approximately 2% of the combined voting power of the outstanding
common stock of the Company.
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
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 Class B
Share will be converted into one newly issued share of the Class B common stock
of the Surviving Corporation.
As a result of the Merger, the Company, as the Surviving Corporation, will
become a privately held, wholly owned subsidiary of Contel. Contel, CCI
Acquisition and the Company have entered into an Agreement and Plan of Merger
dated as of December 27, 1994, as amended (the "Merger Agreement"), which is
attached as Exhibit A to the Information Statement on Schedule 14C (the
"Information Statement") filed by the Company with the Securities and Exchange
Commission on the date hereof.
<PAGE> 3
The following Cross Reference Sheet shows the location in the Information
Statement of items required by Schedule 13E-3. Information contained in such
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 OF AND DIVIDENDS ON THE COMMON STOCK OF THE
COMPANY".
(c) "MARKET PRICES OF AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY".
(d) "MARKET PRICES OF 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."
(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".
(b) Not applicable.
3
<PAGE> 4
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".
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for
the Company".
(b) Not applicable.
(c) "RELATED PARTY TRANSACTIONS -- Transition Arrangements".
(d) None.
(e) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for
the Company".
(f) "SPECIAL FACTORS -- Certain Effects of the Merger".
(g) "SPECIAL FACTORS -- Certain Effects of the Merger".
Item 6. Source and Amount of Funds or Other Consideration.
(a) "SPECIAL FACTORS -- Merger Consideration".
(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
Miscellaneous................................................. $ 115,000.00
-------------
============
</TABLE>
(c) "SPECIAL FACTORS -- Merger Consideration".
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for
the Company".
(b) Not applicable.
(c) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for
the Company".
(d) "SPECIAL FACTORS -- Introduction; The Merger"; "SPECIAL
FACTORS -- Written Consent; Purpose of the Merger; Plans for the
Company"; "SPECIAL FACTORS -- Merger Consideration"; "SPECIAL
FACTORS -- Certain Federal Income Tax Consequences of the Merger";
"SPECIAL FACTORS -- Certain Effects of the Merger"; "SPECIAL
FACTORS -- Accounting Treatment of the Merger".
Item 8. Fairness of the Transaction.
(a) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of
the Merger".
(b) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of
the Merger".
4
<PAGE> 5
(c) Cover Page, "SPECIAL FACTORS -- Written Consent; Purpose of the Merger;
Plans for the Company".
(d) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL
FACTORS -- Determination of the Special Committee; Fairness of the
Merger".
(e) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of
the Merger".
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of
the Merger"; "SPECIAL FACTORS -- Opinion of Financial Advisor to the
Special Committee"; SPECIAL FACTORS -- Opinions of Financial Advisors
to GTE".
(b) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL
FACTORS -- Opinion of Financial Advisor to the Special Committee";
"SPECIAL FACTORS -- Opinions of Financial Advisors to GTE".
(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) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for
the Company"; "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Directors and Executive Officers of the Company".
(b) "SPECIAL FACTORS -- Determination of the Special Committee; 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.
5
<PAGE> 6
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 Preliminary Information Statement filed as Exhibit
(d)(1) 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.
(c)(1) Agreement and Plan of Merger dated as of December 27, 1994, as
amended, included as Exhibit A to the Preliminary Information
Statement filed as Exhibit (d)(1) 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.
(e) Delaware General Corporation Law Section 262 included as Exhibit D
to the Preliminary Information Statement filed as Exhibit (d)(1)
hereto.
(f) Not applicable.
6
<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: , 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
--------------------------------------
7
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ---------- ------------------------------------------------------------------------ ------------
<S> <C> <C>
(a) -- Not applicable.
(b)(1) -- Opinion of Lazard Freres & Co. dated December 30, 1994 included as
Exhibit B to the Preliminary Information Statement filed as Exhibit
(d)(1) 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. .........................................................
(c)(1) -- Agreement and Plan of Merger dated as of December 27, 1994, as amended,
included as Exhibit A to the Preliminary Information Statement filed as
Exhibit (d)(1) 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.......
(e) -- Delaware General Corporation Law Section 262 included as Exhibit D to
the Preliminary Information Statement filed as Exhibit (d)(1) hereto....
(f) -- Not applicable.
</TABLE>
<PAGE> 1
CONTEL CELLULAR INC.
VALUATION ANALYSIS
LAZARD FRERES & CO. DECEMBER 22,1994
<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 at Time of
GTE's Initial Offer
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").
- - 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, Inc. 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. 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.
Because the recent asset swap was deemed by GTE to be "value neutral,"
all of the following CCI financial and operating information is not pro
forma for the swap.
- - 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
(iii) Discounted Cash Flow Analysis: estimating the present value of
the future cash flows that the management of the Company expects
the CCI cellular markets to generate cover varying future periods.
-1-
<PAGE> 5
CONTEL CELLULAR INC.
BACKGROUND AND DESCRIPTION OF INITIAL AND 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 initial offer price of $22.50 per share for each Class A common share
implies a value of approximately $194 of market capitalization per net
POP for CCI's 23.9 million net POPs, $181 per net POP adjusting for the
value of other assets (excluding PCS) and $156 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 $161 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 December 21 of $24.50 represents a further 8.9%
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.
- - Lazard has held various discussions with GTE's bankers over the last
several weeks to negotiate the price upwards from $22.50 to $25.50 (a
13.3% additional premium and a 43.7% premium over the unaffected market
price). Total price for the public's shares would equal $254 million.
- - The offer price of $25.50 per share for each Class A common share
implies a value of approximately $207 of market capitalization per net
POP for CCI's 23.9 million net POPs, $193 per net POP adjusting for the
value of other assets (excluding PCS) and $169 per net POP after further
adjusting for the value of net PP&E.
-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 initial 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 current GTE offer's premium of 44% 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 18.7% 206.7%
8/07/90 GTE and Contel Corp. agree to merge $16.00 11.6% 59.4%
3/14/91 Contel/GTE transaction completed $23.25 2.6% 9.7%
9/08/94 GTE offers $22.50 cash for each
Class A common share $23.50 75.5% 8.5%
12/21/94 Most recent close $24.50 NM 4.1%
</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 $2.0
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 - $2,028 $280 - $341 $16.64 - $20.28
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 $(1,730) - $(17.30)
--------------- ----------- ---------------
Total Company (w/o PCS) $3,235 - $3,599 - $32.36 - $36.00
</TABLE>
- - Lazard has also performed a discounted cash flow analysis for CCI based
upon Management's forecasts and Alternative Cases with upside and
downside assumptions. The cases produce values as follows:
<TABLE>
<CAPTION>
DCF VALUE TOTAL CELLULAR ASSET VALUE TOTAL EQUITY VALUE
FOR PMV ($MM) PER NET POP PER SHARE
------------------ -------------------------- ------------------
<S> <C> <C> <C>
Upside Case $4,524 - $5,496 MM $176 - $216 $24.65 - $34.38
Management Case $4,059 - $4,919 $156 - $192 $19.99 - $28.60
Downside Case $3,657 - $4,422 $139 - $171 $15.97 - $23.62
</TABLE>
- - These valuations are before any value is assigned to elements of the
Competition Agreement.
-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 currently proposed by GTE represents a 15.9%
premium to the highest public market trading value for the CCI
Class A Common Shares over the 52 weeks prior to announcement of
the initial offer. (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 22 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 I. 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: 12/21/93 to 12/21/94)
[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: 12/20/91 to 12/21/94)
[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)
POTENTIAL "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.
- For the purpose of this analysis, Lazard has ascribed no value to the
Company's rights under these contracts.
-11-
<PAGE> 15
CONTEL CELLULAR INC.
JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D)
POTENTIAL "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 60% 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 12/21/94
--------- --------
<S> <C> <C> <C> <C> <C>
PRICE $22.50 $23.00 $24.50 $25.00 $25.50
-------- -------- -------- -------- --------
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 $243.8 $248.8 $253.7
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 $2,205.0 $2,250.0 $2,295.0
-------- -------- -------- -------- --------
Total Market Value Implied to Market $2,248.9 $2,298.9 $2,448.8 $2,498.8 $2,548.7
Actual Market Value (including Other Assets) $2,578.9 $2,628.9 $2,778.8 $2,828.8 $2,878.7
Notes Payable - Affiliates $2,011.6 $2,011.6 $2,011.6 $2,011.6 $2,011.6
Other 30.8 30.8 30.8 30.8 30.8
Minority Interests 18.2 18.2 18.2 18.2 18.2
Cash and Equivalents (0.1) (0.1) (0.1) (0.1) (0.1)
-------- -------- -------- -------- --------
Net Debt $2,060 $2,060 $2,060 $2,060 $2,060
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 $4,639.4 $4,689.3 $4,839.3 $4,889.2 $4,939.2
Other Assets (without PCS) ($330.0) ($330.0) ($330.0) ($330.0) ($330.0)
-------- -------- -------- -------- --------
Cellular Assets Value $4,309.4 $4,359.3 $4,509.3 $4,559.2 $4,609.2
Net PP&E (580.7) (580.7) (580.7) (580.7) (580.7)
-------- -------- -------- -------- --------
Cellular License Value $3,728.7 $3,778.6 $3,928.6 $3,978.5 $4,028.5
PCS [] [] [] [] []
MARKET CAPITALIZATION/
LTM Revenue of $513.8 9.0x 9.1x 9.4x 9.5x 9.6x
1994 Revenue of $374.0 12.4x 12.5x 12.9x 13.1x 13.2x
1995 Revenue of $603.3 (2) 7.7x 7.8x 8.0x 8.1x 8.2x
1996 Revenue $734.8 (2) 6.3x 6.4x 6.6x 6.7x 6.7x
LTM EBITDA of $133.5 34.7x 35.1x 36.2x 36.6x 37.0x
1994 EBITDA of $79.9 58.1x 58.7x 60.6x 61.2x 61.8x
1995 EBITDA of $221.1 (2) 21.0x 21.2x 21.9x 22.1x 22.3x
1996 EBITDA of $291.5 (2) 15.9x 16.1x 16.6x 16.8x 16.9x
LTM EBIT of $19.5 NM NM NM NM NM
LTM EBIT of $(28.3) NM NM NM NM NM
1995 EBIT of $68.6 (2) 67.6x 68.4x 70.5x 71.3x 72.0x
1996 EBIT of $122.4 (2) 37.9x 38.3x 39.5x 39.9x 40.4x
PRICE (EXCLUDING OTHER ASSETS)/
LTM EPS of $0.01 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 59.8x 61.0x 62.2x
MARKET CAPITALIZATION/PROPORTIONATE POPS OF 23.9 $194 $196 $203 $205 $207
CELLULAR ASSET VALUE/PROPORTIONATE POPS OF 23.9 $181 $183 $189 $191 $193
CELLULAR LICENSE VALUE/PROPORTIONATE POPS OF 23.9 $156 $158 $165 $167 $169
<CAPTION>
<S> <C> <C> <C> <C>
PRICE $26.00 $26.50 $27.00 $27.50
-------- -------- -------- --------
Number of Class A Common 10.0 10.0 10.0 10.0
Market Value of Class A Equity $258.7 $263.7 $268.7 $273.6
Number of Class B Common 90.0 90.0 90.0 90.0
Market Value of Class B Equity $2,340.0 $2,385.0 $2,430.0 $2,475.0
-------- -------- -------- --------
Total Market Value Implied to Market $2,598.7 $2,648.7 $2,698.7 $2,748.6
Actual Market Value (including Other Assets) $2,928.7 $2,978.7 $3,028.7 $3,078.6
Notes Payable - Affiliates $2,011.6 $2,011.6 $2,011.6 $2,011.6
Other 30.8 30.8 30.8 30.8
Minority Interests 18.2 18.2 18.2 18.2
Cash and Equivalents (0.1) (0.1) (0.1) (0.1)
-------- -------- -------- --------
Net Debt $2,060 $2,060 $2,060 $2,060
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 $4,989.2 $5,039.2 $5,089.1 $5,139.1
Other Assets (without PCS) ($330.0) ($330.0) ($330.0) ($330.0)
-------- -------- -------- --------
Cellular Assets Value $4,659.2 $4,709.2 $4,759.1 $4,809.1
Net PP&E (580.7) (580.7) (580.7) (580.7)
-------- -------- -------- --------
Cellular License Value $4,078.5 $4,128.5 $4,178.4 $4,228.4
PCS [] [] [] []
MARKET CAPITALIZATION/
LTM Revenue of $513.8 9.7x 9.8x 9.9x 10.0x
1994 Revenue of $374.0 13.3x 13.5x 13.6x 13.7x
1995 Revenue of $603.3 (2) 8.3x 8.4x 8.4x 8.5x
1996 Revenue $734.8 (2) 6.8x 6.9x 6.9x 7.0x
LTM EBITDA of $133.5 37.4x 37.7x 38.1x 38.5x
1994 EBITDA of $79.9 62.5x 63.1x 63.7x 64.3x
1995 EBITDA of $221.1 (2) 22.6x 22.8x 23.0x 23.2x
1996 EBITDA of $291.5 (2) 17.1x 17.3x 17.5x 17.6x
LTM EBIT of $19.5 NM NM NM NM
LTM EBIT of $(28.3) NM NM NM NM
1995 EBIT of $68.6 (2) 72.7x 73.5x 74.2x 74.9x
1996 EBIT of $122.4 (2) 40.8x 41.2x 41.6x 42.0x
PRICE (EXCLUDING OTHER ASSETS)/
LTM EPS of $0.01 NM NM NM NM
1995 EPS of $0.04 (2) NM NM NM NM
1996 EPS of $0.41 (2) 63.4x 64.6x 65.9x 67.1x
MARKET CAPITALIZATION/PROPORTIONATE POPS OF 23.9 $209 $211 $213 $215
CELLULAR ASSET VALUE/PROPORTIONATE POPS OF 23.9 $195 $197 $199 $201
CELLULAR LICENSE VALUE/PROPORTIONATE POPS OF 23.9 $171 $173 $175 $177
</TABLE>
- ---------------
(1) Excludes any value for PCS. Market value and market capitalization not
adjusted for options calculations.
(2) Source for projections: Bear Stearns research report, dated January 19,
1994. Revenue numbers include immaterial amount of cellular equipment
revenue.
-16-
<PAGE> 20
CONTEL CELLULAR INC.
SUMMARY OF CCI VALUATION ANALYSES(1)
<TABLE>
<CAPTION>
TOTAL MARKET CAP VALUE TOTAL EQUITY VALUE(2) TOTAL EQUITY VALUE
PER NET POP ($MM) PER SHARE(3)
---------------------- --------------------- ------------------
<S> <C> <C> <C>
- Comparable Public Company Analysis $184 - $194 $2,328 - $2,567 $23.29 - $25.68
- Comparable Acquisition Transaction
Analysis(4)
- Full Private Market Value $222 - $237 $3,235 - $3,600 $32.36 - $36.00
ILLUSTRATIVE HYPOTHETICAL DISCOUNTS TO PRIVATE MARKET VALUE
- 10% Discount to Private Market $200 - $213 $2,705 - $3,033 $27.07 - $30.34
Discount -10.0% - -10.0% -16.4% - -15.7% -16.4% - -15.7%
- 20% Discount to Private Market $177 - $190 $2,176 - $2,467 $21.77 - $24.68
Discount -20.0% - -20.0% -32.7% - -31.5% -32.7% - -31.5%
- 30% Discount to Private Market $155 - $166 $1,646 - $1,901 $16.47 - $19.02
Discount -30.0% - -30.0% -49.1% - -47.2% -49.1% - -47.2%
- Discounted Cash Flow Analysis
- Upside Case(5) $189 - $230 $2,463 - $3,436 $24.65 - $34.38
- Management Case $170 - $206 $1,998 - $2,859 $19.99 - $28.60
- Downside Case(6) $153 - $185 $1,596 - $2,361 $15.97 - $23.62
</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 - $237 $3,235 - $3,600 $32.36 - $36.00
ILLUSTRATIVE HYPOTHETICAL DISCOUNTS TO PRIVATE MARKET VALUE
- 10% Discount to Private Market $207 - $222 $2,872 - $3,235 $28.73 - $32.37
Discount -6.9% - -6.4% -11.2% - -10.1% -11.2% - -10.1%
- 20% Discount to Private Market $191 - $207 $2,509 - $2,872 $25.10 - $28.74
Discount -13.7% - -12.8% -22.4% - -20.2% -22.4% - -20.2%
- 30% Discount to Private Market $176 - $191 $2,145 - $2,509 $21.47 - $25.11
Discount -20.6% - -19.2% -33.7% - -30.3% -33.7% - -30.3%
</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
and 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 enhance the focus of respective area management
teams 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
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES
(amounts in millions, except per POP data)
<TABLE>
<CAPTION>
AIRTOUCH BCE MOBILE CENTENNIAL
COMPANY COMMUNICATIONS COMMUNICATIONS(b1) CELLULAR
- ------- -------------- ------------------ ----------
<S> <C> <C> <C>
Price @ 12/21/94 $ 28.38 $ 31.19 $ 15.50
Date of Financials 9/30/94 12/31/93 8/31/94
Date of Last Fiscal Year 12/31/93 12/31/93 5/31/94
MV of Equity (Fully Diluted) $ 14,007.2 $ 2,161.1 $ 386.4
Market Capitalization 13,598.0 2,429.9 743.4
Cellular Asset Value 6,517.8 2,296.7 740.6
Cellular License Value(1) 5,688.6 1,821.8 704.7
Market Capitalization per Total Net POP $ 142 (a1) $ 155 $ 124
Cellular Asset Value per Total Net POP 186 146 124
Cellular License Value per Total Net POP (1) 163 116 118
Cellular Asset Value/Cellular Cons. EBITDA (LQA) 13.0 (a2) 18.4 25.3
Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 12.6 (a2) 15.7 23.6
Cellular Cons. EBITDA Margin (LQ) 43.0%(a2) 41.8% 44.9%
Market Capitalization/Company Cons. EBITDA (LQA) 50.0 18.0 24.5
Net Debt/Company Cons. EBITDA (LQA) (1.5) 2.0 11.7
Total # of Net POPs 35.0 15.7 6.0
Total Net MSA POPs 34.4 NA 2.5
Total Net RSA POPs 0.6 NA 3.5
<CAPTION>
COMMNET CONTEL
COMPANY CELLULAR CELLULAR(e1)
- ------- -------- ------------
<S> <C> <C>
Price @ 12/21/94 $ 28.13 $ 24.50
Date of Financials 6/30/94 9/30/94
Date of Last Fiscal Year 9/30/93 12/31/93
MV of Equity (Fully Diluted) $ 415.2 $ 2,779.1
Market Capitalization 556.5 4,845.6
Cellular Asset Value 534.0 4,515.6
Cellular License Value(1) 467.2 3,975.8
Market Capitalization per Total Net POP $ 176 $ 203
Cellular Asset Value per Total Net POP 169 189
Cellular License Value per Total Net POP(1) 148 167
Cellular Asset Value/Cellular Cons. EBITDA (LQA) 44.2 20.9
Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 53.9 NA
Cellular Cons. EBITDA Margin (LQ) 19.7% 36.2%
Market Capitalization/Company Cons. EBITDA (LQA) 46.1 22.4
Net Debt/Company Cons. EBITDA (LQA) 11.7 9.6
Total # of Net POPs 3.2 23.9 (e2)
Total Net MSA POPs 0.6 18.9
Total Net RSA POPs 2.5 5.0
<CAPTION>
PRICELLULAR ROGERS UNITED STATES
COMPANY CORPORATION(f1) CANTEL(g1) CELLULAR
- ------- --------------- ---------- -------------
<S> <C> <C> <C>
Price @ 12/21/94 $ 9.38 $ 28.75 $ 33.13
Date of Financials 6/30/94 12/31/93 9/30/94
Date of Last Fiscal Year 12/31/93 12/31/93 12/31/93
MV of Equity (Fully Diluted) $ 149.8 $ 2,699.5 $ 2,602.2
Market Capitalization 200.0 3,446.9 2,921.2
Cellular Asset Value 200.0 3,354.0 2,900.4
Cellular License Value(1) 186.5 2,652.2 2,585.7
Market Capitalization per Total Net POP $ 117 146 $ 124
Cellular Asset Value per Total Net POP 117 142 123
Cellular License Value per Total Net POP(1) 109 112 109
Cellular Asset Value/Cellular Cons. EBITDA (LQA) 40.6 (f2) 19.3 26.0
Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) NA 16.0 36.1
Cellular Cons. EBITDA Margin (LQ) 27.3%(f2) 38.9% 31.0%
Market Capitalization/Company Cons. EBITDA (LQA) 40.6 (f2) 19.8 26.2
Net Debt/Company Cons. EBITDA (LQA) 10.2 (f2) 4.3 2.9
Total # of Net POPs 1.7 23.7 23.6
Total Net MSA POPs 0.8 NA 9.0
Total Net RSA POPs 0.9 NA 14.6
<CAPTION>
VANGUARD
COMPANY CELLULAR AVERAGE
- ------- --------- -------------
<S> <C> <C>
Price @ 12/21/94 $ 25.13
Date of Financials 9/30/94
Date of Last Fiscal Year 12/31/93
MV of Equity (Fully Diluted) $ 979.3
Market Capitalization 1,279.0
Cellular Asset Value 1,256.5
Cellular License Value(1) 1,160.9
Market Capitalization per Total Net POP $ 198 $ 155(2)
Cellular Asset Value per Total Net POP 194 154
Cellular License Value per Total Net POP(1) 180 136
Cellular Asset Value/Cellular Cons. EBITDA (LQA) 25.4
Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 29.9
Cellular Cons. EBITDA Margin (LQ) 27.7%
Market Capitalization/Company Cons. EBITDA (LQA) 25.8
Net Debt/Company Cons. EBITDA (LQA) 6.1
Total # of Net POPs 6.5
Total Net MSA POPs 5.8
Total Net RSA POPs 0.7
</TABLE>
- ------------------
(1) Excludes working capital.
(2) Excludes AirTouch because of noncomparability of international POPs.
(a1) Includes 60.9M international POPs in per POP calculation for total company
because international holdings are not backed out of Market Capitalization.
(a2) Financial breakdown for domestic cellular operations available only on a
proportionate basis.
-29-
<PAGE> 33
CONTEL CELLULAR INC.
CCI and GTE vs. S&P 400
(Indexed Daily Close Price Comparison: 8/1/94 to 12/21/94)
[FIGURE 3]
-30-
<PAGE> 34
CONTEL CELLULAR INC.
CONTEL CELLULAR VS. S&P 400
(Indexed Weekly Close Price Comparison: 4/22/88 to 12/21/94)
[FIGURE 4]
-31-
<PAGE> 35
CONTEL CELLULAR INC.
CONTEL CELLULAR VS. CELLULAR INDEX(1)
(Indexed Daily Close Price Comparison: 12/21/93 to 12/21/94)
[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: 5/31/94 to 12/21/94)
[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 12/21/94)
[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 12/21/94)
[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 12/21/94)
[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 12/21/94)
[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 12/21/94)
[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 $341 1,664 2,028
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 93 93
------ ------
TOTAL CELLULAR ASSET VALUE $4,965 $5,329
------ ------
International Assets 30 30
Wireless Data 300 300
------ ------
TOTAL ASSET VALUE $5,295 $5,659
Less Net Debt (2,060) (2,060)
------ ------
TOTAL EQUITY VALUE 3,235 3,599
------ ------
Fully Diluted Shares (MM) 100 100
------ ------
EQUITY VALUE PER SHARE $32.36 $36.00
====== ======
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 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 $341 $2,028
</TABLE>
- ---------------
(1) Source: 1993 Donnelly Marketing Information Services.
-42-
<PAGE> 46
CONTEL CELLULAR INC.
CASH FLOW VALUATION OF MINORITY INTEREST MSAs
MULTIPLE CALCULATIONS
<TABLE>
<CAPTION>
PROJECTED DOMESTIC
CELLULAR SERVICE REVENUE ($MM)
--------------------------------- STOCK CELLULAR
COMPANY 1994 1995 1996 PRICE ASSET VALUE
- ------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
AirTouch(1) $524.6 $673.6 $818.8 $28.38 $6,518
Growth -- 28.4% 21.6%
BCE Mobile Comm.(2) $151.7 $202.3 $255.1 $31.19 $2,297
Growth -- 33.4% 26.1%
Centennial Cellular(3) $23.1 $28.8 $37.0 $15.50 $741
Growth -- 24.7% 28.5%
Rogers Cantel(4) $191.7 $235.6 $291.7 $28.75 $3,354
Growth -- 22.9% 23.8%
U.S. Cellular(5) $80.0 $150.8 $237.0 $33.13 $2,900
Growth -- 88.5% 57.2%
Vanguard Cellular(6) $41.5 $70.6 $101.7 $25.13 $1,256
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) 12.4x 9.7x 8.0x
Growth
BCE Mobile Comm.(2) 15.1x 11.4x 9.0x
Growth
Centennial Cellular(3) 32.1x 25.7x 20.0x
Growth
Rogers Cantel(4) 17.5x 14.2x 11.5x
Growth
U.S. Cellular(5) 36.3x 19.2x 12.2x
Growth
Vanguard Cellular(6) 30.3x 17.8x 12.4x
------ ------ ------
Growth
Mean of Comparables 23.9x 16.3x 12.2x
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 $2,028 $1,861 $1,774
Net POPs 5,549 5,549 5,549
Cellular Asset Value per net POP $365 $335 $320
</TABLE>
- ---------------
(1) Source: Prudential Securities research report, dated May 16, 1994.
(2) Source: Salomon Brothers research report, dated August 31, 1994. Assumes
C$ - $0.74 $US. There were immaterial differences in stock price quote
between Bloomberg and FactSet due to extremely slight (.0005) difference
in $US/C$ exchange rate.
(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)
<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
------- ------- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Cash Flow Total $251 $358 $453 $526 $644
Operating Cash Flow (Wireless Data) 1 (5) (18) (31) (42)
- -- --- --- ---
Operating Cash Flow
(Cellular w/o PCS) $252 $353 $435 $495 $602
FCF Adj. for Int. (Total) $(58) $118 $240 $313 $365
Unlevered FCF (Wireless Data) 3 (2) (9) (15) (21)
- -- --- --- ---
FCF (Cellular w/o PCS) $(55) $116 $231 $298 $344
NPV of FCF (Cellular w/o PCS) $1,364
Terminal Value @ 13.0x OCF(1)
NPV of Terminal Value of OCF $2,770
------
Total NPV -- Cellular (w/o PCS) $4,135
International Assets $30
PCS Development $0
Wireless Data $300
Net Debt $(2,060)
-------
Equity Value $2,404
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
Operating Cash Flow (Wireless Data) (48) (51) (54) (57)
--- --- --- ---
Operating Cash Flow
(Cellular w/o PCS) $625 $630 $648 $662
FCF Adj. for Int. (Total) $371 $412 $424 $467
Unlevered FCF (Wireless Data) (24) (25) (27) (28)
--- --- --- ---
FCF (Cellular w/o PCS) $347 $386 $397 $439
NPV of FCF (Cellular w/o PCS)
Terminal Value @ 13.0x OCF(1) $8,605
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
----------------------------
<S> <C> <C> <C>
TOTAL NPV OF EQUITY 11.0% 12.0% 13.0%
------ ------ ------
12.0x $2,509 $2,191 $1,901
12.5x 2,626 2,298 1,998
TVM 13.0x 2,742 2,404 2,096
13.5x 2,859 2,511 2,193
14.0x 2,975 2,617 2,291
<CAPTION>
DISCOUNT RATE
----------------------------
<S> <C> <C> <C>
EQUITY VALUE SHARE 11.0% 12.0% 13.0%
------ ------ ------
12.0x $25.09 $21.91 $19.01
12.5x 26.26 22.98 19.98
TVM 13.0x 27.42 24.04 20.96
13.5x 28.59 25.11 21.93
14.0x 29.75 26.17 22.91
<CAPTION>
DISCOUNT RATE
----------------------------
<S> <C> <C> <C>
NPV OF CELL. ASSETS 11.0% 12.0% 13.0%
------ ------ ------
12.0x $4,240 $3,921 $3,631
12.5x 4,356 4,028 3,729
TVM 13.0x 4,473 4,135 3,826
13.5x 4,589 4,241 3,924
14.0x 4,706 4,348 4,021
<CAPTION>
DISCOUNT RATE
----------------------------
<S> <C> <C> <C>
CELL. PMV/NET POP 11.0% 12.0% 13.0%
------ ------ ------
12.0x $178 $164 $152
12.5x 182 169 156
TVM 13.0x 187 173 160
13.5x 192 178 164
14.0x 197 182 168
</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 Total $260 $373 $476 $558 $689
Operating Cash Flow (Wireless Data) 1 (5) (18) (31) (42)
- -- --- --- ---
Operating Cash Flow
(Cellular w/o PCS) $261 $369 $459 $527 $647
FCF Adj. for Int. (Total) $(56) $145 $257 $335 $393
Unlevered FCF (Wireless Data) 3 (2) (9) (15) (21)
- -- --- --- ---
FCF (Cellular w/o PCS) $(53) $143 $249 $320 $372
NPV of FCF (Cellular w/o PCS) $1,502
Terminal Value @ 13.0x OCF(1)
NPV of Terminal Value of OCF $3,151
------
Total NPV -- Cellular (w/o PCS) $4,652
International Assets $30
PCS Development $0
Wireless Data $300
Net Debt $(2,060)
-------
Equity Value $2,922
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 Total $719 $735 $751 $783 $810
Operating Cash Flow (Wireless Data) (45) (48) (51) (54) (57)
--- --- --- --- ---
Operating Cash Flow
(Cellular w/o PCS) $674 $687 $701 $729 $753
FCF Adj. for Int. (Total) $397 $399 $444 $465 $514
Unlevered FCF (Wireless Data) (22) (24) (25) (27) (28)
--- --- --- --- ---
FCF (Cellular w/o PCS) $375 $375 $419 $438 $486
NPV of FCF (Cellular w/o PCS)
Terminal Value @ 13.0x OCF(1) $9,786
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
--------------------------------
<S> <C> <C> <C>
TOTAL NPV OF EQUITY 11.0% 12.0% 13.0%
------ ------ ------
12.0x $3,038 $2,680 $2,353
12.5 3,171 2,801 2,463
TVM 13.0x 3,303 2,922 2,574
13.5x 3,436 3,043 2,685
14.0x 3,568 3,164 2,796
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
EQUITY VALUE SHARE 11.0% 12.0% 13.0%
------ ------ ------
12.0x $30.38 $26.80 $23.53
12.5x 31.71 28.01 24.63
TVM 13.0x 33.03 29.22 25.74
13.5x 34.36 30.43 26.85
14.0x 35.68 31.64 27.96
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
NPV OF CELL. ASSETS 11.0% 12.0% 13.0%
------ ------ ------
12.0x $4,769 $4,410 $4,083
12.5x 4,901 4,531 4,194
TVM 13.0x 5,034 4,652 4,305
13.5x 5,166 4,774 4,416
14.0x 5,299 4,895 4,527
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
CELL. PMV/NET POP 11.0% 12.0% 13.0%
------ ------ ------
12.0x $ 200 $ 185 $ 171
12.5x 205 190 176
TVM 13.0x 211 195 180
13.5x 216 200 185
14.0x 222 205 190
</TABLE>
- ---------------
(1) EOY 2004.
-47-
<PAGE> 51
CONTEL CELLULAR INC.
SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- CCI MANAGEMENT CASE
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Cash Flow Total $243 $345 $433 $498 $604
Operating Cash Flow (Wireless Data) 1 (5) (18) (31) (42)
- -- --- --- ---
Operating Cash Flow
(Cellular w/o PCS) $245 $340 $415 $467 $562
FCF Adj. for Int. (Total) $(60) $94 $225 $294 $340
Unlevered FCF (Wireless Data) 3 (2) (9) (15) (21)
- -- --- --- ---
FCF (Cellular w/o PCS) $(58) $92 $216 $279 $319
NPV of FCF (Cellular w/o PCS) $1,244
Terminal Value @ 13.0x OCF(1)
NPV of Terminal Value of OCF $2,444
------
Total NPV -- Cellular (w/o PCS) $3,688
International Assets $30
PCS Development $0
Wireless Data $300
Net Debt $(2,060)
-------
Equity Value $1,957
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 Total $618 $619 $620 $632 $641
Operating Cash Flow (Wireless Data) (45) (48) (51) (54) (57)
--- --- --- --- ---
Operating Cash Flow
(Cellular w/o PCS) $573 $571 $569 $579 $584
FCF Adj. for Int. (Total) $339 $347 $383 $388 $426
Unlevered FCF (Wireless Data) (22) (24) (25) (27) (28)
--- --- --- --- ---
FCF (Cellular w/o PCS) $317 $323 $358 $362 $398
NPV of FCF (Cellular w/o PCS)
Terminal Value @ 13.0x OCF(1) $7,590
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
--------------------------------
<S> <C> <C> <C>
TOTAL NPV OF EQUITY 11.0% 12.0% 13.0%
------ ------ ------
12.0x $2,053 $1,769 $1,510
12.5x 2,156 1,863 1,596
TVM 13.0x 2,258 1,957 1,682
13.5x 2,361 2,051 1,768
14.0x 2,464 2,145 1,854
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
EQUITY VALUE SHARE 11.0% 12.0% 13.0%
------ ------ ------
12.0x $20.53 $17.69 $15.10
12.5x 21.56 18.63 15.96
TVM 13.0x 22.58 19.57 16.82
13.5x 23.61 20.51 17.68
14.0x 24.64 21.45 18.54
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
NPV OF CELL. ASSETS 11.0% 12.0% 13.0%
------ ------ ------
12.0x $3,783 $3,500 $3,241
12.5x 3,886 3,594 3,327
TVM 13.0x 3,989 3,688 3,413
13.5x 4,092 3,782 3,499
14.0x 4,194 3,876 3,585
<CAPTION>
DISCOUNT RATE
--------------------------------
<S> <C> <C> <C>
CELL. PMV/NET POP 11.0% 12.0% 13.0%
----- ----- -----
12.0x $158 $147 $136
12.5x 163 151 139
TVM 13.0x 167 154 143
13.5x 171 158 147
14.0x 176 162 150
</TABLE>
- ---------------
(1) EOY 2004.
-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 --
Jannuary 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. DECEMBER 22, 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(1) under
a line of credit arrangement with GTE. The interest rate at June 30,
1994 under this credit facility was not disclosed.
- -----------------------------------------------
(1) Figure not explicitly updated for the CCI 10-Q, dated September 30, 1994.
-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(2) 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%
</TABLE>
- -----------------------------------------------
(1) Source: Management
(2) Includes Owensboro, KY market.
-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% 35.4%
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 45.0
11/7/94 24.25 24.00 24.13 35.3
11/8/94 24.75 24.25 24.38 99.5
11/9/94 24.75 24.38 24.38 31.5
11/10/94 24.75 24.38 24.75 22.8
11/11/94 24.75 24.50 24.63 19.1
11/14/94 24.88 24.63 24.88 16.5
11/15/94 24.88 24.63 24.75 26.0
11/16/94 24.88 24.63 24.63 18.3
11/17/94 24.88 24.25 24.63 42.0
11/18/94 24.38 24.25 24.38 41.8
11/21/94 24.38 24.19 24.38 44.2
11/22/94 24.50 24.25 24.50 23.6
11/23/94 24.38 24.00 24.38 235.5
11/25/94 24.38 24.25 24.38 37.4
11/28/94 24.50 24.13 24.50 24.3
11/29/94 24.50 24.13 24.38 30.0
11/30/94 24.50 24.13 24.31 62.4
12/1/94 24.50 24.13 24.50 16.0
12/2/94 24.50 24.13 24.25 250.0
12/5/94 24.50 24.13 24.25 3.1
12/6/94 24.50 24.13 24.38 52.1
12/7/94 24.50 24.13 24.13 112.4
12/8/94 24.50 24.13 24.38 22.8
12/9/94 24.38 24.13 24.38 4.6
12/12/94 24.38 24.13 24.38 17.1
12/13/94 24.50 24.13 24.31 55.1
12/14/94 24.38 24.13 24.38 10.4
12/15/94 24.50 24.25 24.50 2.7
12/16/94 24.50 24.13 24.13 11.5
12/19/94 24.13 24.13 24.13 0.3
12/20/94 24.38 24.13 24.38 1.5
12/21/94 24.50 24.13 24.50 6.9
</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 CENTENNIAL COMMNET CONTEL
COMPANY COMMUNICATIONS COMMUNICATIONS(b1) CELLULAR CELLULAR CELLULAR(e1)
- ------- -------------- ------------------ --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Price @ 12/21/94 $ 28.38 $ 31.19 $ 15.50 $ 28.13 $ 24.50
Date of Financials 9/30/94 12/31/93 8/31/94 6/30/94 9/30/94
Date of Last Fiscal Year 12/31/93 12/31/93 5/31/94 9/30/93 12/31/93
MV of Equity (Fully Diluted) $ 14,007.2 $ 2,161.1 $ 386.4 $ 415.2 $ 2,779.1
Market Capitalization 13,598.0 2,429.9 743.4 556.5 4,845.6
Cellular Asset Value 6,517.8 2,296.7 740.6 534.0 4,515.6
Cellular License Value (1) 5,688.6 1,821.8 704.7 467.2 3,975.8
Market Capitalization per Total Net POP $ 142(a1) $ 155 $ 124 $ 176 $ 203
Cellular Asset Value per Total Net POP 186 146 124 169 189
Cellular License Value per Total Net POP
(1) 163 116 118 148 167
Cellular Asset Value/Cellular Cons.
EBITDA (LQA) 13.0(a2) 18.4 25.3 44.2 20.9
Cellular Asset Value/Cellular Cons.
EBITDA (LFY+1) 12.6(a2) 15.7 23.6 53.9 NA
Cellular Cons. EBITDA Margin (LQ) 43.0%(a2) 41.8% 44.9% 19.7 % 36.2%
Market Capitalization/Company Cons.
EBITDA (LQA) 50.0 18.0 24.5 46.1 22.4
Net Debt/Company Cons. EBITDA (LQA) (1.5) 2.0 11.7 11.7 9.6
Total # of Net Pops 35.0 15.7 6.0 3.2 23.9(e2)
Total Net MSA POPs 34.4 NA 2.5 0.6 18.9
Total Net RSA POPs 0.6 NA 3.5 2.5 5.0
</TABLE>
<TABLE>
<CAPTION>
UNITED
PRICELLULAR ROGERS STATES VANGUARD
COMPANY CORPORATION(F1) CANTEL (G1) CELLULAR CELLULAR AVERAGE
- ------- --------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Price @ 12/21/94 $ 9.38 $ 28.75 $ 33.13 $ 25.13
Date of Financials 6/30/94 12/31/93 9/30/94 9/30/94
Date of Last Fiscal Year 12/31/93 12/31/93 12/31/93 12/31/93
MV of Equity (Fully Diluted) $ 149.8 $ 2,699.5 $ 2,602.2 $ 979.3
Market Capitalization 200.0 3,446.9 2,921.2 1,279.0
Cellular Asset Value 200.0 3,354.0 2,900.4 1,256.5
Cellular License Value (1) 186.5 2,652.2 2,585.7 1,160.9
Market Capitalization per Total Net POP $ 117 $ 146 $ 124 $ 198 $ 155(2)
Cellular Asset Value per Total Net POP 117 142 123 194 154
Cellular Licence Value per Total Net POP
(1) 109 112 109 180 136
Cellular Asset Value/Cellular Cons.
EBITDA (LQA) 40.6(f2) 19.3 26.0 25.4
Cellular Asset Value/Cellular Cons.
EBITDA (LFY+1) NA 16.0 36.1 29.9
Cellular Cons. EBITDA Margin (LQ) 27.3%(f2) 38.9% 31.0% 27.7 %
Market Capitalization/Company Cons.
EBITDA (LQA) 40.6(f2) 19.8 26.2 25.8
Net Debt/Company Cons. EBITDA (LQA) 10.2(f2) 4.3 2.9 6.1
Total # of Net Pops 1.7 23.7 23.6 6.5
Total Net MSA POPs 0.8 NA 9.0 5.8
Total Net RSA POPs 0.9 NA 14.6 0.7
</TABLE>
- ---------------
(1) Excludes working capital.
(2) Excludes AirTouch because on noncomparability of international POPs.
(a1) Includes 60.9M international POPs in per POP calculation for total company
because international holdings are not backed out of Market Capitalization.
(a2) Financial breakdown for domestic cellular operations available only on a
proportionate basis.
-44-
<PAGE> 102
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
(amounts in millions, except per POP data)
<TABLE>
<CAPTION>
AIR TOUCH BCE MOBILE CENTENNIAL
COMPANY COMMUNICATIONS COMMUNICATIONS CELLULAR
-------------- -------------- ----------
IN CANADIAN $
<S> <C> <C> <C>
TICKER ATI BCX CYCL
DATE OF FINANCIALS 9/30/94 12/31/93 8/31/94
DATE OF LAST FISCAL YEAR 12/31/93 12/31/93 5/31/94
PRICE @ 12/21/94 $ 28.38 $ 43.50 $ 15.50
UNADJUSTED SHARES OUTSTANDING 493.6 69.2 24.3
SHARES OUTSTANDING (FULLY DILUTED) 493.9 69.4 25.1
MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 14,005.0 $ 3,012.3 $ 375.9
MARKET VALUE (FULLY DILUTED) $ 14,007.2 $ 3,013.6 $ 386.4
ADJUSTMENT FOR CCI OTHER ASSETS
---------- ---------- --------
ADJUSTED MARKET VALUE $ 14,007.2 $ 3,013.6 $ 386.4
PLUS:
Debt and Preferred 103.5 373.5 443.5
Minority Interest 137.9 2.3 0.0
LESS:
Cash & Equivalents 650.6 0.9 86.5
---------- ---------- --------
MARKET CAPITALIZATION $ 13,598.0 $ 3,388.5 $ 743.4
========== ========== ========
LESS:
Market Investments 613.9 0.0 0.0
Other Assets 6,466.3 185.7 2.8
---------- ---------- --------
CELLULAR ASSET VALUE (INC. PP&E & WC) $ 6,517.8 $ 3,202.8 $ 740.6
========== ========== ========
LESS:
PP&E 871.0 647.4 47.6
Working Capital (41.8) 14.8 (11.7)
---------- ---------- --------
CELLULAR LICENSE VALUE(1) $ 5,688.6 $ 2,540.5 $ 704.7
========== ========== ========
TOTAL ADJ POPS: 35.0 15.7 6.0
Net Debt per Total POP $ (11.7) $ 23.9 $ 59.6
Cellular License Value per Total Net POP(1) 162.5 161.8 117.7
Cellular Asset Value per Total Net POP 186.2 204.0 123.7
RATIOS:
Cellular Asset Value $ 6,517.8 $ 3,202.8 $ 740.6
Market Capitalization 13,598.0 3,388.5 743.4
Net Debt (409.2) 374.9 357.1
Cellular Asset Value/LQA Cellular EBITDA 13.0(a2) 18.4 25.3
Cellular Asset Value/LFY+1 Cellular EBITDA 12.6(a2) 15.7 23.6
Market Capitalization/LQA Company EBITDA 50.0 18.0 24.5
Net Debt/LQA Company EBITDA (1.5) 2.0 11.7
Cellular EBITDA Margin (LQ) 43.0%(a2) 41.8% 44.9%
OWNERSHIP STATISTICS:
MSA POPs in Majority-Owned Markets (mm) 27.4 NA 2.6
MSA POPs in 100%-Owned Markets (mm) 6.2 NA 2.1
MSA POPs in Top 100 Markets (mm) 32.0 NA 0.6
<CAPTION>
COMMNET CONTEL
COMPANY CELLULAR CELLULAR(e1)
-------- ------------
<S> <C> <C>
TICKER CELS CCXLA
DATE OF FINANCIALS 6/30/94 9/30/94
DATE OF LAST FISCAL YEAR 9/30/93 12/31/93
PRICE @ 12/21/94 $ 28.13 $ 24.50
UNADJUSTED SHARES OUTSTANDING 11.7 100.0
SHARES OUTSTANDING (FULLY DILUTED) 14.8 100.0
MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 329.5 $ 2,448.8
MARKET VALUE (FULLY DILUTED) $ 415.2 $ 2,449.1
ADJUSTMENT FOR CCI OTHER ASSETS 330.0
-------- ----------
ADJUSTED MARKET VALUE $ 415.2 $ 2,779.1(e1)
PLUS:
Debt and Preferred 152.1 2,048.4
Minority Interest 3.5 18.2
LESS:
Cash & Equivalents 14.3 0.1
-------- ----------
MARKET CAPITALIZATION $ 556.5 $ 4,845.6
======== ==========
LESS:
Market Investments 22.5 0.0
Other Assets 0.0 330.0
-------- ----------
CELLULAR ASSET VALUE (INC. PP&E & WC) $ 534.0 $ 4,515.6
======== ==========
LESS:
PP&E 68.0 580.7
Working Capital (1.2) (40.9)
-------- ----------
CELLULAR LICENSE VALUE(1) $ 467.2 $ 3,975.8
======== ==========
TOTAL ADJ POPS: 3.2 23.9
Net Debt per Total POP $ 44.8 $ 86.6
Cellular License Value per Total Net POP(1) 148.1 166.5
Cellular Asset Value per Total Net POP 169.2 189.1
RATIOS:
Cellular Asset Value $ 534.0 $ 4,515.6
Market Capitalization 556.5 4,845.6
Net Debt 141.3 2,066.5
Cellular Asset Value/LQA Cellular EBITDA 44.2 20.9
Cellular Asset Value/LFY+1 Cellular EBITDA 53.9 NA
Market Capitalization/LQA Company EBITDA 46.1 22.4
Net Debt/LQA Company EBITDA 11.7 9.6
Cellular EBITDA Margin (LQ) 19.7% 36.2%
OWNERSHIP STATISTICS:
MSA POPs in Majority-Owned Markets (mm) 0.0 12.9
MSA POPs in 100%-Owned Markets (mm) 0.0 7.5
MSA POPs in Top 100 Markets (mm) 0.0 15.4
</TABLE>
-45-
<PAGE> 103
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
(amounts in millions, except per POP data)
<TABLE>
<CAPTION>
PRICELLULAR ROGERS UNITED STATES VANGUARD
COMPANY CORPORATION(f1) CANTEL(g1) CELLULAR CELLULAR
- ------- --------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
TICKER PC RCMIF USM VCELA
DATE OF FINANCIALS 6/30/94 12/31/93 9/30/94 9/30/94
DATE OF LAST FISCAL YEAR 12/31/93 12/31/93 12/31/93 12/31/93
PRICE @ 12/21/94 $ 9.38 $ 28.75 $ 33.13 $ 25.13
UNADJUSTED SHARES OUTSTANDING 15.7 93.9 78.6 38.8
SHARES OUTSTANDING (FULLY DILUTED) 17.8 93.9 78.6 39.8
MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 146.7 $ 2,699.4 $ 2,602.1 $ 973.8
MARKET VALUE (FULLY DILUTED) $ 149.8 $ 2,699.5 $ 2,602.2 $ 979.3
ADJUSTMENT FOR CCI OTHER ASSETS
--------- --------- ---------- ---------
ADJUSTED MARKET VALUE $ 149.8 $ 2,699.5 $ 2,602.2 $ 979.3
PLUS:
Debt and Preferred 114.2 747.4 307.8 302.7
Minority Interest 0.0 0.0 28.2 2.5
LESS:
Cash & Equivalents 64.0 0.0 16.9 5.5
--------- --------- ---------- ---------
MARKET CAPITALIZATION $ 200.0 $ 3,446.9 $ 2,921.2 $ 1,279.0
========= ========== ========== =========
LESS:
Market Investments 0.0 0.0 20.9 22.5
Other Assets 0.0 92.9 0.0 0.0
--------- --------- ---------- ---------
CELLULAR ASSET VALUE (INC. PP&E & WC) $ 200.0 $ 3,354.0 $ 2,900.4 $ 1,256.5
========= ========== =========== =========
LESS:
PP&E 25.8 695.5 326.1 96.4
Working Capital (12.3) 6.3 (11.4) (0.8)
--------- --------- ---------- ---------
CELLULAR LICENSE VALUE(1) $ 186.5 $ 2,652.2 $ 2,585.7 $ 1,160.9
========= ========= ========== =========
TOTAL ADJ POPS: 1.7 23.7 23.6 6.5
Net Debt per Total POP $ 29.4 $ 31.6 $ 13.5 $ 46.4
Cellular License Value per Total POP(1) 109.2 112.0 109.4 179.7
Cellular Asset Value per Total POP 117.1 141.6 122.7 194.5
RATIOS:
Cellular Asset Value $ 200.0 $ 3,354.0 $ 2,900.4 $ 1,256.5
Market Capitalization 200.0 3,446.9 2,921.2 1,279.0
Net Debt 50.2 747.4 319.0 299.7
Cellular Asset Value/LQA Cellular EBITDA 40.6(f2) 19.3 26.0 25.4
Cellular Asset Value/LFY + 1 Cellular EBITDA NA 16.0 36.1 29.9
Market Capitalization/LQA Company EBITDA 40.6(f2) 19.8 26.2 25.8
Net Debt/LQA Company EBITDA 10.2(f2) 4.3 2.9 6.1
Cellular EBITDA Margin(LQ) 27.3%(f2) 38.9% 31.0% 27.7%
OWNERSHIP STATISTICS:
MSA POPs in Majority-Owned Markets(mm) 0.8 NA 6.1 5.3
MSA POPs in 100%-Owned Markets(mm) 0.5 NA 2.4 4.5
MSA POPs in Top 100 Markets(mm) 0.0 NA 2.9 2.7
</TABLE>
-46-
<PAGE> 104
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
(Amounts in millions, except per POP data)
FOOTNOTES
<TABLE>
<S> <C>
GENERAL:
(1) Excludes working capital.
(2) Excludes AirTouch because of noncomparability of international POPs.
(3) Source: Donaldson, Lufkin & Jenrette Wireless Communications Industry research report,
Winter 1994.
(4) Source: I\B\E\S research estimates dated October 20, 1994.
AIRTOUCH COMMUNICATIONS
(a1) Includes 60.9M international POPs in per POP calculation for total company because
international holdings are not backed out of Market Capitalization.
(a2) Financial breakdown for domestic cellular operations available only on a proportionate
basis.
(a3) Projections taken from Wheat First Butcher Singer research report dated November 2,
1994.
(a4) Excludes gain on sale of telecommunications interests. Marginal tax rate of 38%
assumed.
(a5) 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.
(a6) Includes foreign paging subscribers.
(a7) Per POP valuation taken from Prudential Securities research report dated May 16, 1994.
(a8) Estimated value taken from Prudential Securities research report dated May 16, 1994,
less South Korean investment which is broken out separately.
(a9) May 1994 investment (11.3%) in consortium for digital cellular system in South Korea
valued at initial (June 1994) $20M contribution to consortium.
(a10) 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 $30 per POP, respectively. However, total here excludes Belgian
and Italian investments because awards have not yet been finalized nor transactions
effected according to the Company's September 30, 1994 10-Q. There is insufficient
information to effectively "pro forma" these transactions.
BCE MOBILE COMMUNICATIONS
(b1) Market price, balance sheet items and operating statistics (listed in C$) are
translated here into US$ at 12/21/94 exchange rate of 0.72 US$/C$.
(b2) Assumes operating cash flow margin for LFQ is same as for LFY.
(b3) Calculated from cellular operating cash flow margin as presented in Annual Report.
(b4) Projection from Sanwa McCarthy Securities research report dated November 11, 1993.
(b5) Assumes cellular margin is same as global company margin.
(b6) 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.
(b7) Priced to give typical value per subscriber translated into Canadian dollars.
(b8) Valued at 1.2x revenues of non-cellular operations of $124.2M (excluding paging
operations).
(69) Book value of investment as of year-end 1993.
(610) Prepayment on 50 million minutes of airtime on the MSAT
satelite. Valued at cost of converted $30M investment.
CENTENNIAL CELLULAR
(c1) Projections from Donaldson, Lufkin & Jenrette research report dated October 31, 1994.
Figure assumes fraction of company EBITDA derived from cellular operations is same as
for LTM.
(c2) Excludes interest income.
(c3) Includes Clinton, IA market acquired on September 21, 1994 and Huntington, IN market
acquired on September 30, 1994.
COMMNET
(d1) Excludes write down of cellular system equipment. Marginal tax rate of 38% assumed.
(d2) Projection taken from Smith Barney research report dated November 9, 1994.
(d3) Excludes extraordinary charge related to early extinguishment of secured bank
financing.
(d4) Convertible subordinated debentures.
(d5) Reduction in debt from conversion of debentures.
(d6) 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.
</TABLE>
-47-
<PAGE> 105
CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D)
(Amounts in millions, except per POP data)
FOOTNOTES
<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) Data as of September 30, 1994.
(e3) Excludes gains on sales of cellular interests. Marginal tax rate of 38% assumed.
(e4) 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 the options outstanding at
year end.
(e5) 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.
(e6) 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.
(e7) Valuation detailed in other sections of CCI analysis.
(e8) Excludes value of PCS.
PRICELLULAR CORPORATION
(f1) Company data taken from October 27, 1994 Registration Statement for 4 million share
public stock offering. Pro forma for the public offering, the sale of the Company's
Aviliene market, and the acquisition of Cellular Information Systems, Inc. (CIS).
(f2) Due to lack of information, figure represents an annualized result from the last
half-year.
(f3) Due to lack of information, figure represents an annualized result from the last
half-year.
ROGERS CANTEL
(g1) Balance sheet items and operating statistics taken from Annual Report (listed in C$)
and translated into US$ at 12/21/94 exchange rate of 0.72 US$/C$.
(g2) Source: Scotia McLeod Inc. research report dated August 17, 1994. Assumes fraction of
company totals derived from cellular operations is same as for LFY.
(g3) Assumes D&A for noncellular operations is negligible.
(g4) Assumes fraction of company revenues derived from cellular operations is same as for
LFY.
(g5) Excludes provision for restructuring costs. Marginal tax rate of 38% assumed.
(g6) Includes revenues from equipment sales. Equipment sales not included in other cellular
earnings figures because of insufficient information.
(g7) Includes 62,000 new subscribers assumed in acquisition of MacLean Hunter's paging
subsidiary.
U.S.CELLULAR
(h1) Excludes amortization of license and deferred costs related to investments (broken out
after EBIT on the financial statements).
(h2) Excludes gain on sale of cellular interests. Marginal tax rate of 38% assumed.
(h3) Stock Appreciation Rights.
(h4) No further information or breakdown given on public documents.
VANGUARD CELLULAR
(i1) Projection taken from Bear Stearns research report dated August 25, 1994.
(i2) Figure taken from Prudential Securities research report dated April 12, 1994. Goetek
options out of the money and therefore valued at nil.
</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>
11/94 ALLTEL/ 6 Ft. Smith, AR (165) 47 20% $135
US Cellular
11/94 Independent Cellular/ 16 Williamsport, PA (251) 122 100% $130
US Cellular
11/94 US Cellular/ 12 Iowa City, IA (296) 89 87% $140
Independent Cellular
11/94 SNET/ 420 Hartford, CT (37) 180 16% $170
Bell Atlantic/NYNEX Providence, RI (47) 915 100% 235
Bridgeport, CT (54) 133 16% 175
New Haven, CT (56) 129 16% 160
Springfield, MA (77) 97 16% 130
New Bedford, MA (86) 507 100% 202
New London, CT (161) 41 16% 130
Pittsfield, MA (245) 108 80% 150
----- ----
2,109 $202
10/94 CGE/ 158 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 Century Telephone/ 9 Pine Bluff, AR (291) 86 100% $100
Cellular Information Systems
09/94 Contel Cellular/ 72 Huntsville, AL (120) 402 100% $180
Crowley Cellular
09/94 US Cellular/ N/A Portland, OR (30) 5 0.33% N/A
Metroplex Communications Olympia, WA (242) 8 4% N/A
--
13
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-49-
<PAGE> 107
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $120
Sprint Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-50-
<PAGE> 108
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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.
12/93 McCaw Comm./ 32 Chico, CA (215) 199 100% $160
General Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-51-
<PAGE> 109
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $110
McLang Cellular
10/93 PriCellular/ N/A Duluth, MN (141) 234 100% N/A
CIS Op-2
10/93 PriCellular/ N/A Eau Claire, WI (232) 100 70% N/A
CIS Debtor in Poss
10/93 US Cellular/ N/A Rochester, MN (288) 34 30% N/A
Pine Island
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-52-
<PAGE> 110
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $130
Bawab, Richard
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-53-
<PAGE> 111
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $84
General Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-54-
<PAGE> 112
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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 $35
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-55-
<PAGE> 113
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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.
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% $161
McCaw Cellular Comm. Topeka, KS (179) 157 78.0%
---
620
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-56-
<PAGE> 114
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $160
Bell South
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-57-
<PAGE> 115
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $185
Cellular Inc.
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-58-
<PAGE> 116
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $313
LIN Broadcasting
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-59-
<PAGE> 117
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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 $144
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-60-
<PAGE> 118
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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.
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 $275
Metromedia
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-61-
<PAGE> 119
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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")
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 $44
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-62-
<PAGE> 120
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
02/89 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% $93
United Telespectrum Youngstown (56) 72.0
Greenville-Spartanburg (67) 72.5
Harrisburg (84) 79.4
Johnson City-Kingsport (85) 100.0
Charleston (90) 51.7
York (99) 79.0
and 31 other markets
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Per MSA POP. Conforms to Merrill Lynch numbers.
-63-
<PAGE> 121
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($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.
-64-
<PAGE> 122
CONTEL CELLULAR INC.
SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
- ----------------------------------
(a) Based on PacTel paying $39.00 a share for 2.2 million shares or a 5% stake.
In addition, PacTel and CCI will create a 15 million - POP regional
presence in Ohio and Michigan. It is envisioned that PacTel will buy-out
CCI over the next 5 to 8 years.
(b) Total value of GTE/Contel deal, includes telephone information and federal
systems.
(c) 1989 POP'S.
(d) Source: Paul Kagan & Associates, Inc.
(e) Price paid per POP without PP&E.
(f) Price paid per POP with PP&E.
(g) Celutel purchased 50.01% of Pascagoula from McCaw for $13.1 million. Three
days later, the company also agreed to SWAP its 98% owned Parkersburg, WV
area for 29% of Jackson and an additional 22% of Pascagoula.
(h) Does not include the purchase of 217,000 POPS in Utica/Rome.
(i) McCaw SWAPped 1.6 million shares of CCI valued at $38 per share for that
company's Dallas interest.
(j) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, November 30, 1989.
(k) Implied value of entire company. Based on a $130 per share blended value.
(l) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, October 31, 1989.
(m) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, July 31, 1989.
(m) Adjusted for purchase of 1,245,000 RSA's at $38.50 per RSA POP.
(o) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, November 30, 1988.
(p) Adjusted for purchase of 433,000 pagers at $600 per pager.
(q) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, March 21, 1988.
(r) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, January 20, 1989.
(s) Value of individual markets as estimated by Charles Schelke,
"Telecommunications Industry: Revised Stock Valuations",
February 13, 1989.
(t) Purchase Price of Equity.
(u) Based on a total Macon market valuation of $42 million per Vanguard's
September 30, 1988 10-Q.
(v) Purchase Price of Equity ($733 million) minus Capital Investment ($90
million) minus Value of 21,000 paging customers ($13 million).
(w) Value of individual markets as estimated by Paul Kagan Associates, Inc.
Cellular Investor, April 28, 1989.
-65-
<PAGE> 123
CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/94 ALLTEL/ 21 Early, GA (383) 142 100% $80
US Cellular Henderson, NC (568) 88 76% 110
--- ---
230 $91
11/94 Independent Cellular/ 70 Williamsport, PA (251) 122 100% $130
US Cellular Union, PA (619) 404 100% 135
--- ----
526 $134
11/94 SNET/ 22 Litchfield, CT (357) 29 16% $120
Bell Atlantic/NYNEX Windham, CT (358) 17 16% 111
Franklin, MA (470) 11 16% 85
Newport, RI (624) 89 100% 180
--- ----
146 $153
11/94 US Cellular/ 28 Nowata, OK (599) 103 100% $90
ALLTEL Raleigh, WV (707) 250 100% 75
--- ---
353 $79
11/94 US Cellular/ 58 Monroe, IA (414) 89 100% $95
Independent Cellular Muscatine, IA (415) 156 100% 95
Iowa, IA (417) 155 100% 150
Hardin, IA (422) 108 100% 105
--- ----
508 $114
10/94 BellSouth/ 13 Decatur, IN (411) 142 100% $95
SE IN Cell. Tel.
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 $175
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-66-
<PAGE> 124
CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
<TABLE>
<CAPTION>
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
---- ------------------------ ------- ------------------------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
10/94 James Valley Tel./ N/A McPherson, SC (636) 5 9% N/A
Dickey Rural Tel.
10/94 SBC/ 25 Jefferson, NY (559) 262 100% $95
US Cellular
10/94 US Cellular/ 17 Fulton, KY (443) 185 100% $92
PC Cellular et al
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% $80
MetaComm Cellular
</TABLE>
- ----------------------------------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-67-
<PAGE> 125
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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/ 14 Columbia, NY (564) 110 100% $125
MICEL/Sterling
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
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 (560) 232 100% $100
Adirondack Cellular Telephone
07/94 Atlantic Cell/ 19 Franklin, VT (679) 207 100% $90
PC Cellular et al
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-68-
<PAGE> 126
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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 (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% $50
Vanguard Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-69-
<PAGE> 127
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $65
National Cellular
05/94 General Cellular/ N/A Boone, NE (537) 143 100% N/A
National Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-70-
<PAGE> 128
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $110
Dowdy Cellular
05/94 Saipan Cellular/ N/A N. Mariana Islands (734) 63 100% N/A
RJL Cellular
05/94 Southern Cellular/ N/A Imperial, CA-7 (342) 129 100% N/A
Contel Cellular
05/94 Vanguard Cellular/ 7 Washington, ME (466) 83 100% 85
Sterling Cellular et al
05/94 Vanguard Cellular/ N/A Mason, WV (701) 75 100% N/A
Sterling Cellular et al
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-71-
<PAGE> 129
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $100
Iberia Cell. Tel.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-72-
<PAGE> 130
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/94 Centennial/ 23 De Soto, LA-3 (456) 159 100% $100
Midsouth Cell. Caldwell, LA-4 (457) 71 100% 100
--- ---
230 $100
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% $100
Tri-Coastal Cell.
02/94 Centennial/ N/A Clay, AR-4 (327) 203 100% N/A
East AR Cell.
02/94 Centennial/ N/A Morehouse, LA-2 (455) 116 100% N/A
Tri-Coastal Cell.
02/94 Peninsula Cell./ N/A Bethel, AK-2 B4 (316) N/A N/A N/A
Matanuska-Kenai
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-73-
<PAGE> 131
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $52
Parmer Comm. (MHF)
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-74-
<PAGE> 132
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $85
Horizon
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-75-
<PAGE> 133
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $120
Pegasus CelTel
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-76-
<PAGE> 134
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
11/93 Triad Cellular/ 5 Jackson, OK-8 (603) 94 100% $55
Sooner Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-77-
<PAGE> 135
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $92
DiCroce Partnership
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-78-
<PAGE> 136
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/93 Centennial Cellular/ 18 Randolph, IN-6 (408) 216 100% $85
Florida Metro
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% $85
Mo-Tel Cellular
08/93 US West NewV./ N/A Conconino, AZ-2 (319) 56 25% N/A
Contel Cellular
08/93 US West NewV./ N/A Navajo, AZ-3 (320) 58 40% N/A
Contel Cellular
08/93 US West NewV./ N/A Lemhi, ID-3 (390) 5 33% N/A
Contel Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-79-
<PAGE> 137
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $50
GMD Partnership
08/93 McCaw Communications/ 13 Alpine, CA-3 (338) N/A N/A N/A
CA RSA #3
08/93 McCaw Communications/ 28 Grant, OK-3 (598) N/A N/A N/A
OK RSA #3
08/93 McCaw Communications/ 34 Newton, TX-17 (668) N/A N/A N/A
TX RSA #17
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-80-
<PAGE> 138
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $40
JMW Inc.
06/93 InterCel/ N/A Somerset, ME-2 (464) 79 51% N/A
Unity Telephone
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-81-
<PAGE> 139
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
06/93 McCaw Comm./ 52 Ocean, NJ-2 (551) 347 75% $150
Midland Comm.
06/93 Poka-Lambro Tele./ N/A Parmer, TX-3 B2 (654) 6 100% N/A
TX-3 LP
06/93 Radiofone/ N/A St. James, LA-8 (461) 107 100% N/A
PriCellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-82-
<PAGE> 140
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
05/93 Triad Cellular/ 1 Lac Qui Parle, MN-8 (489) 67 100% $18
RCW Cell Partnership
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-83-
<PAGE> 141
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/93 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% $55
Tsaconas Cell.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-84-
<PAGE> 142
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/93 GTE/Contel/ 17 Giles, TN-6 (648) 147 100% $115
Mid-Tenn. Cell.
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% $35
Greater MN Cell.
01/93 McCaw Communications/ N/A Kittitas, WA-5 (697) 84 80% N/A
Kitcell Group
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-85-
<PAGE> 143
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/93 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
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% $12
General Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-86-
<PAGE> 144
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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)
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% $75
RSA Partnership II
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-87-
<PAGE> 145
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $78
Carale Cell. Ptnrs.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-88-
<PAGE> 146
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $60
Sugar Land Tele.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-89-
<PAGE> 147
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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.
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% $50
Arizona Telephone
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-90-
<PAGE> 148
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $57
Western Rural
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-91-
<PAGE> 149
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $59
Pacific Telecom
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-92-
<PAGE> 150
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
11/91 City of Fairbanks 4 Wade Hampton, AK-1 (375) 121 100% $50
Hermes Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-93-
<PAGE> 151
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/91 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% $83
Max-Cell Comm.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-94-
<PAGE> 152
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/91 Miscellco Comm./ <1 Hodgeman, KS-12 (439) 42 100% $10
Pinnacle Three
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% $40
S. Central KY Cell.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-95-
<PAGE> 153
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $65
Karl Eckel Cell.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-96-
<PAGE> 154
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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.
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% $30
MCI Comm.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-97-
<PAGE> 155
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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% $70
Rural Telco Inc.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-98-
<PAGE> 156
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
01/91 US Cellular/ 16 Kennebec, ME-3 (465) 212 100% $75
United Cellular. Assoc.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-99-
<PAGE> 157
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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% $95
Cherokee Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-100-
<PAGE> 158
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
12/90 Celltel Systems/ 2 Kittson, MN-1 (482) 52 100% $30
Prairie Cellular MN
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% $110
Legg Mason Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-101-
<PAGE> 159
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
11/90 US Cellular/ 180 29 RSA Markets 2,649 100% $68
TDS
11/90 U S WEST/ 23 19% of U S WEST 323 100% $72
U S WEST NewVector NewVector
11/90 Cellular Inc./ 0 Piute, UT-6 (678) 6 20% $18
Contel Cellular
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% $29
Wilcom Cellular Corp.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-102-
<PAGE> 160
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
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(a) (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% $200+
Mass 2 Inc.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-103-
<PAGE> 161
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/90 SW Bell/ 5 Washington, MO-13(a) 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(a) (306) N/A 100% N/A
Roanoke Valley Cell.
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% $40
Dacourt Communications
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-104-
<PAGE> 162
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/90 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(a) (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
08/90 Cellular Information Systems/ 1 Toole, MT-2 (524) 38 100% $25
N. American Rural Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-105-
<PAGE> 163
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
08/90 Cellular 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(a) (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% $75
Alpha Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-106-
<PAGE> 164
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
06/90 ALLTEL/ 18 Lake, TN-1 (643) 307 100% $59
Maxcell Telecom
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% $53
Nevada One Cellular
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-107-
<PAGE> 165
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
06/90 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
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% $90
Stoneman Inv. Partnership
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-108-
<PAGE> 166
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
05/90 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
03/90 N/A 5 Marshall, SD-4 (a) (637) 71 100% $76
Decourt Communications
03/90 Cellular Inc. 19 Iowa, IA-6 (a) (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% $55
Delta Cellular Partners
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-109-
<PAGE> 167
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
03/90 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
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 $105
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-110-
<PAGE> 168
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
01/90 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% $85
USCC
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-111-
<PAGE> 169
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($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% $71
RSAC Inc.
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-112-
<PAGE> 170
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
09/89 Cellular Information Systems/ 9 CA-7 113 100% $71
RSA Inc.
09/89 General Cellular/ 26 CA-1 191 100% $135
Undisclosed
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(1)
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% $65
Geral Schaefers
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-113-
<PAGE> 171
CONTEL CELLULAR INC.
<TABLE>
<CAPTION>
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED
VALUE NET POPS AFTER PRICE PER
DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP
- ----- ------------------------------- ------- --------------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
02/89 Cellular Inc./ 9 WY-3 152 100% $60
EZ Communications
</TABLE>
- ----------
(1) Source: Wireless Investor and Cellular Investor (Paul Kagan).
(2) Wireline interest.
-114-
<PAGE> 172
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>
12/21/93 100 100
12/22/93 100 100
12/23/93 100 100
12/27/93 99 101
12/28/93 99 101
12/29/93 103 101
12/30/93 100 101
12/31/93 104 101
1/3/94 103 101
1/4/94 102 101
1/5/94 102 101
1/6/94 105 101
1/7/94 114 102
1/10/94 113 103
1/11/94 117 103
1/12/94 116 103
1/13/94 113 102
1/14/94 111 103
1/17/94 113 103
1/18/94 108 103
1/19/94 108 103
1/20/94 107 103
1/21/94 108 103
1/24/94 105 103
1/25/94 106 102
1/26/94 104 102
1/27/94 105 103
1/28/94 108 103
1/31/94 106 104
2/1/94 108 104
2/2/94 111 104
2/3/94 110 104
2/4/94 106 102
2/7/94 106 102
2/8/94 107 102
2/9/94 105 103
2/10/94 103 102
2/11/94 106 102
2/14/94 108 102
2/15/94 112 103
2/16/94 114 103
2/17/94 111 103
2/18/94 111 102
2/22/94 108 103
2/23/94 110 103
2/24/94 108 101
2/25/94 111 102
2/28/94 105 102
3/1/94 106 101
3/2/94 103 101
3/3/94 103 101
3/4/94 105 101
3/7/94 105 102
3/8/94 103 102
3/9/94 101 102
3/10/94 98 102
3/11/94 97 102
3/14/94 95 102
3/15/94 98 102
3/16/94 102 102
3/17/94 101 103
3/18/94 102 103
3/21/94 102 102
3/22/94 102 102
3/23/94 105 102
3/24/94 102 101
3/25/94 105 100
3/28/94 103 100
3/29/94 95 98
3/30/94 92 97
3/31/94 90 97
4/4/94 84 96
4/5/94 92 98
4/6/94 95 98
4/7/94 97 98
4/8/94 100 97
4/11/94 98 98
4/12/94 98 97
4/13/94 98 97
4/14/94 92 97
4/15/94 97 96
4/18/94 95 96
4/19/94 94 95
4/20/94 93 95
4/21/94 93 97
4/22/94 97 97
4/25/94 94 98
4/26/94 97 98
4/28/94 94 97
4/29/94 97 98
5/2/94 95 98
5/3/94 95 98
5/4/94 97 98
5/5/94 99 98
5/6/94 96 97
5/9/94 95 96
5/10/94 97 97
5/11/94 95 96
5/12/94 98 97
5/13/94 97 97
5/16/94 98 97
5/17/94 100 98
5/18/94 105 98
5/19/94 108 99
5/20/94 110 99
5/23/94 100 99
5/24/94 102 99
5/25/94 103 99
5/26/94 102 99
5/27/94 103 99
5/31/94 103 99
6/1/94 103 99
6/2/94 103 99
6/3/94 106 100
6/6/94 103 99
6/7/94 106 99
6/8/94 105 99
6/9/94 105 99
6/10/94 103 99
6/13/94 104 99
6/14/94 106 100
6/15/94 104 100
6/16/94 106 100
6/17/94 106 99
6/20/94 105 99
6/21/94 103 98
6/22/94 103 98
6/23/94 103 97
6/24/94 105 96
6/27/94 100 97
6/28/94 102 97
6/29/94 102 97
6/30/94 105 96
7/1/94 102 97
7/5/94 102 97
7/6/94 102 97
7/7/94 110 97
7/8/94 106 97
7/11/94 107 97
7/12/94 108 97
7/13/94 105 97
7/14/94 104 98
7/15/94 106 99
7/18/94 108 99
7/19/94 108 99
7/20/94 105 98
7/21/94 105 98
7/22/94 110 98
7/25/94 106 99
7/26/94 114 98
7/27/94 116 98
7/28/94 116 99
7/29/94 113 99
8/1/94 113 100
8/2/94 114 100
8/3/94 116 100
8/4/94 121 99
8/5/94 119 99
8/8/94 116 99
8/9/94 122 99
8/10/94 122 100
8/11/94 119 100
8/12/94 117 100
8/15/94 117 100
8/16/94 117 101
8/17/94 116 101
8/18/94 114 101
8/19/94 119 101
8/22/94 116 101
8/23/94 116 101
8/24/94 117 102
8/25/94 114 102
8/26/94 114 104
8/29/94 113 104
8/30/94 115 104
8/31/94 113 104
9/1/94 117 104
9/2/94 114 103
9/6/94 114 103
9/7/94 113 103
9/8/94 149 104
9/9/94 147 103
9/12/94 148 102
9/13/94 148 103
9/14/94 149 103
9/15/94 149 104
9/16/94 152 104
9/19/94 152 104
9/20/94 149 102
9/21/94 149 102
9/22/94 149 102
9/23/94 151 101
9/26/94 150 102
9/27/94 151 102
9/28/94 151 102
9/29/94 149 102
9/30/94 150 102
10/3/94 151 102
10/4/94 151 100
10/5/94 150 100
10/6/94 152 100
10/7/94 149 100
10/10/94 150 101
10/11/94 150 103
10/12/94 151 103
10/13/94 151 103
10/14/94 151 104
10/17/94 151 104
10/18/94 151 103
10/19/94 152 104
10/20/94 152 103
10/21/94 152 103
10/24/94 152 102
10/25/94 153 102
10/26/94 153 103
10/27/94 154 103
10/28/94 153 105
10/31/94 153 105
11/1/94 153 104
11/2/94 153 103
11/3/94 153 104
11/4/94 154 102
11/7/94 153 102
11/8/94 155 103
11/9/94 155 103
11/10/94 157 103
11/11/94 156 103
11/14/94 158 103
11/15/94 157 103
11/16/94 156 104
11/17/94 156 103
11/18/94 155 103
11/21/94 155 102
11/22/94 156 100
11/23/94 155 100
11/25/94 155 100
11/28/94 156 101
11/29/94 155 101
11/30/94 154 101
12/1/94 156 99
12/2/94 154 100
12/5/94 154 100
12/6/94 155 100
12/7/94 153 100
12/8/94 155 98
12/9/94 155 99
12/12/94 155 99
12/13/94 154 99
12/14/94 155 100
12/15/94 156 101
12/16/94 153 101
12/19/94 153 101
12/20/94 155 101
12/21/94 156 102
</TABLE>
<PAGE> 173
Fig. 2
FIGURE 2
<TABLE>
<CAPTION>
Date Contel Cellular Index S&P 400
---- ------ -------------- -------
<S> <C> <C> <C>
12/20/91 100 100 100
12/27/91 101 103 105
1/3/92 111 109 109
1/10/92 104 113 108
1/17/92 98 118 109
1/24/92 102 114 108
1/31/92 99 110 106
2/7/92 99 111 107
2/14/92 98 111 108
2/21/92 98 113 107
2/28/92 96 115 108
3/6/92 96 115 106
3/13/92 93 114 106
3/20/92 95 115 107
3/27/92 88 109 105
4/3/92 84 107 105
4/10/92 88 107 106
4/16/92 90 107 109
4/24/92 88 106 106
5/1/92 86 100 107
5/8/92 85 101 108
5/15/92 85 99 106
5/22/92 84 101 107
5/29/92 77 94 108
6/5/92 78 94 107
6/12/92 75 94 106
6/19/92 72 90 104
6/26/92 67 90 104
7/2/92 72 92 106
7/10/92 81 92 107
7/17/92 79 91 107
7/24/92 78 92 106
7/31/92 74 97 109
8/7/92 79 96 108
8/14/92 75 96 108
8/21/92 77 95 107
8/28/92 77 91 107
9/4/92 75 92 108
9/11/92 75 94 109
9/18/92 78 95 110
9/25/92 72 92 107
10/2/92 69 89 105
10/9/92 69 89 103
10/16/92 69 89 106
10/23/92 67 89 107
10/30/92 68 91 108
11/6/92 80 99 107
11/13/92 85 99 109
11/20/92 85 101 110
11/27/92 84 102 111
12/4/92 88 102 111
12/11/92 90 103 111
12/18/92 89 103 113
12/24/92 84 103 112
12/31/92 88 104 111
1/8/93 84 102 110
1/15/93 90 107 111
1/22/93 75 106 111
1/29/93 73 100 112
2/5/93 73 100 114
2/12/93 77 101 113
2/19/93 78 101 109
2/26/93 78 103 112
3/5/93 79 108 113
3/12/93 84 107 113
3/19/93 78 112 114
3/26/93 74 111 113
4/2/93 70 111 111
4/8/93 69 109 110
4/16/93 69 107 112
4/23/93 67 109 109
4/30/93 69 109 111
5/7/93 74 112 112
5/14/93 69 111 111
5/21/93 78 111 113
5/28/93 75 113 114
6/4/93 74 116 114
6/11/93 72 115 113
6/18/93 70 116 112
6/25/93 78 117 112
7/2/93 80 117 111
7/9/93 82 120 112
7/16/93 80 121 111
7/23/93 79 116 111
7/30/93 81 119 111
8/6/93 83 123 111
8/13/93 84 126 111
8/20/93 90 134 114
8/27/93 90 135 114
9/3/93 91 138 114
9/10/93 91 134 114
9/17/93 89 132 113
9/24/93 85 130 113
10/1/93 85 132 114
10/8/93 90 134 114
10/15/93 102 148 117
10/22/93 98 149 116
10/29/93 94 147 117
11/5/93 91 139 116
11/12/93 85 140 118
11/19/93 79 137 118
11/26/93 84 131 118
12/3/93 83 133 118
12/10/93 81 134 118
12/17/93 78 132 118
12/23/93 78 133 118
12/31/93 81 137 118
1/7/94 89 140 120
1/14/94 86 141 121
1/21/94 84 136 121
1/28/94 84 135 122
2/4/94 83 135 120
2/11/94 83 135 120
2/18/94 86 135 120
2/25/94 86 132 120
3/4/94 81 129 119
3/11/94 75 129 120
3/18/94 79 126 121
3/25/94 81 125 118
3/31/94 70 119 114
4/8/94 78 117 115
4/15/94 75 118 114
4/22/94 75 119 114
4/29/94 75 122 115
5/6/94 75 121 115
5/13/94 75 120 114
5/20/94 85 123 116
5/27/94 80 126 117
6/3/94 82 127 117
6/10/94 80 128 117
6/17/94 83 127 117
6/24/94 81 125 113
7/1/94 79 122 114
7/8/94 83 124 115
7/15/94 83 129 116
7/22/94 85 130 116
7/29/94 88 133 117
8/5/94 93 134 117
8/12/94 91 138 118
8/19/94 93 139 119
8/26/94 89 145 122
9/2/94 89 147 121
9/9/94 114 146 121
9/16/94 118 154 122
9/23/94 117 149 119
9/30/94 117 145 120
10/7/94 116 146 118
10/14/94 117 149 122
10/21/94 119 153 121
10/28/94 119 157 123
11/4/94 120 158 120
11/11/94 122 159 121
11/18/94 120 161 121
11/25/94 120 154 118
12/2/94 120 156 118
12/9/94 120 149 116
12/16/94 119 150 119
12/21/94 121 154 120
</TABLE>
<PAGE> 174
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
11/7/94 103 99 99
11/8/94 104 100 99
11/9/94 104 100 99
11/10/94 105 99 99
11/11/94 105 100 99
11/14/94 106 101 100
11/15/94 105 101 99
11/16/94 105 99 100
11/17/94 105 99 99
11/18/94 104 97 99
11/21/94 104 98 98
11/22/94 104 97 96
11/23/94 104 99 96
11/25/94 104 99 96
11/29/94 104 99 97
11/30/94 103 99 97
12/1/94 104 98 96
12/2/94 103 98 97
12/5/94 103 98 97
12/6/94 104 98 96
12/7/94 103 98 96
12/8/94 104 98 95
12/9/94 104 99 95
12/12/94 104 100 96
12/13/94 103 99 96
12/14/94 104 100 97
12/15/94 104 99 97
12/16/94 103 100 98
12/19/94 103 99 97
12/20/94 104 98 97
12/21/94 104 98 98
</TABLE>
<PAGE> 175
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
11/11/94 294 182
11/18/94 291 182
11/25/94 291 177
11/29/94 290 178
12/9/94 291 175
12/16/94 288 180
12/21/94 293 180
</TABLE>
<PAGE> 176
Fig. 5
FIGURE 5
<TABLE>
<CAPTION>
Date Contel Cellular Index S&P 400
---- ------ -------------- -------
<S> <C> <C> <C>
12/21/93 100 100 100
12/22/93 100 100 100
12/23/93 100 101 100
12/27/93 99 102 101
12/28/93 99 102 101
12/29/93 103 103 101
12/30/93 100 104 101
12/31/93 104 106 101
1/3/94 103 106 101
1/4/94 102 107 101
1/5/94 102 105 101
1/6/94 105 105 101
1/7/94 114 106 102
1/10/94 113 108 103
1/11/94 117 109 103
1/12/94 116 108 103
1/13/94 113 107 102
1/14/94 111 106 103
1/17/94 113 107 103
1/18/94 108 106 103
1/19/94 108 104 103
1/20/94 107 103 103
1/21/94 108 103 103
1/24/94 105 103 103
1/25/94 106 103 102
1/26/94 104 102 102
1/27/94 105 102 103
1/28/94 108 102 103
1/31/94 106 103 104
2/1/94 108 103 104
2/2/94 111 103 104
2/3/94 110 103 104
2/4/94 106 102 102
2/7/94 106 102 102
2/8/94 107 101 102
2/9/94 105 103 103
2/10/94 103 102 102
2/11/94 106 102 102
2/14/94 108 102 102
2/15/94 112 102 103
2/16/94 114 103 103
2/17/94 111 103 103
2/18/94 111 102 102
2/22/94 108 102 103
2/23/94 110 101 103
2/24/94 108 99 101
2/25/94 111 100 102
2/28/94 105 100 102
3/1/94 106 99 101
3/2/94 103 98 101
3/3/94 103 98 101
3/4/94 105 98 101
3/7/94 105 99 102
3/8/94 103 99 102
3/9/94 101 98 102
3/10/94 98 99 102
3/11/94 97 99 102
3/14/94 95 98 102
3/15/94 98 98 102
3/16/94 102 98 102
3/17/94 101 97 103
3/18/94 102 96 103
3/21/94 102 96 102
3/22/94 102 97 102
3/23/94 105 97 102
3/24/94 102 96 101
3/25/94 105 95 100
3/28/94 103 93 100
3/29/94 95 92 98
3/30/94 92 92 97
3/31/94 90 91 97
4/4/94 84 88 96
4/5/94 92 90 98
4/6/94 95 90 98
4/7/94 97 90 98
4/8/94 100 91 97
4/11/94 98 90 98
4/12/94 98 91 97
4/13/94 98 91 97
4/14/94 92 91 97
4/15/94 97 91 96
4/18/94 95 91 96
4/19/94 94 90 95
4/20/94 93 91 95
4/21/94 93 91 97
4/22/94 97 92 97
4/25/94 94 93 98
4/26/94 97 93 98
4/28/94 94 94 97
4/29/94 97 93 98
5/2/94 95 93 98
5/3/94 95 93 98
5/4/94 97 93 98
5/5/94 99 93 98
5/6/94 96 93 97
5/9/94 95 92 96
5/10/94 97 92 97
5/11/94 95 91 96
5/12/94 98 92 97
5/13/94 97 91 97
5/16/94 98 92 97
5/17/94 100 92 98
5/18/94 105 94 98
5/19/94 108 94 99
5/20/94 110 94 99
5/23/94 100 94 99
5/24/94 102 94 99
5/25/94 103 95 99
5/26/94 102 95 99
5/27/94 103 96 99
5/31/94 103 95 99
6/1/94 103 95 99
6/2/94 103 96 99
6/3/94 106 96 100
6/6/94 103 97 99
6/7/94 106 97 99
6/8/94 105 97 99
6/9/94 105 97 99
6/10/94 103 97 99
6/13/94 104 96 99
6/14/94 106 97 100
6/15/94 104 97 100
6/16/94 106 97 100
6/17/94 106 96 99
6/20/94 105 95 99
6/21/94 103 95 98
6/22/94 103 94 98
6/23/94 103 94 97
6/24/94 105 94 96
6/27/94 100 93 97
6/28/94 102 93 97
6/29/94 102 92 97
6/30/94 105 90 96
7/1/94 102 91 97
7/5/94 102 92 97
7/6/94 102 92 97
7/7/94 110 93 97
7/8/94 106 93 97
7/11/94 107 91 97
7/12/94 108 92 97
7/13/94 105 92 97
7/14/94 104 94 98
7/15/94 106 95 99
7/18/94 108 94 99
7/19/94 108 95 99
7/20/94 105 95 98
7/21/94 105 95 98
7/22/94 110 95 98
7/25/94 106 95 99
7/26/94 114 97 98
7/27/94 116 97 98
7/28/94 116 98 99
7/29/94 113 97 99
8/1/94 113 97 100
8/2/94 114 97 100
8/3/94 116 97 100
8/4/94 121 97 99
8/5/94 119 97 99
8/8/94 116 97 99
8/9/94 122 98 99
8/10/94 122 99 100
8/11/94 119 100 100
8/12/94 117 100 100
8/15/94 117 100 100
8/16/94 117 101 101
8/17/94 116 101 101
8/18/94 114 101 101
8/19/94 119 102 101
8/22/94 116 102 101
8/23/94 116 103 101
8/24/94 117 104 102
8/25/94 114 105 102
8/26/94 114 107 104
8/29/94 113 108 104
8/30/94 115 107 104
8/31/94 113 109 104
9/1/94 117 107 104
9/2/94 114 107 103
9/6/94 114 107 103
9/7/94 113 107 103
9/8/94 149 107 104
9/9/94 147 107 103
9/12/94 148 107 102
9/13/94 148 108 103
9/14/94 149 109 103
9/15/94 149 111 104
9/16/94 152 112 104
9/19/94 152 112 104
9/20/94 149 111 102
9/21/94 149 108 102
9/22/94 149 108 102
9/23/94 151 108 101
9/26/94 150 108 102
9/27/94 151 107 102
9/28/94 151 106 102
9/29/94 149 105 102
9/30/94 150 106 102
10/3/94 151 106 102
10/4/94 151 105 100
10/5/94 150 105 100
10/6/94 152 106 100
10/7/94 149 107 100
10/10/94 150 107 101
10/11/94 150 109 103
10/12/94 151 109 103
10/13/94 151 109 103
10/14/94 151 109 104
10/17/94 151 109 104
10/18/94 151 110 103
10/19/94 152 110 104
10/20/94 152 111 103
10/21/94 152 112 103
10/24/94 152 112 102
10/25/94 153 110 102
10/26/94 153 111 103
10/27/94 154 111 103
10/28/94 153 114 105
10/31/94 153 116 105
11/1/94 153 115 104
11/2/94 153 115 103
11/3/94 153 115 104
11/4/94 154 114 102
11/7/94 153 114 102
11/8/94 155 114 103
11/9/94 155 115 103
11/10/94 157 115 103
11/11/94 156 115 103
11/14/94 158 115 103
11/15/94 157 115 103
11/16/94 156 115 104
11/17/94 156 116 103
11/18/94 155 117 103
11/21/94 155 116 102
11/22/94 156 114 100
11/23/94 155 111 100
11/25/94 155 111 100
11/28/94 156 112 101
11/29/94 155 113 101
11/30/94 154 113 101
12/1/94 156 112 99
12/2/94 154 112 100
12/5/94 154 113 100
12/6/94 155 112 100
12/7/94 153 111 100
12/8/94 155 109 98
12/9/94 155 108 99
12/12/94 155 107 99
12/13/94 154 107 99
12/14/94 155 107 100
12/15/94 156 109 101
12/16/94 153 109 101
12/19/94 153 109 101
12/20/94 155 110 101
12/21/94 156 111 102
</TABLE>
<PAGE> 177
Fig. 6
FIGURE 6
<TABLE>
<CAPTION>
Date Contel Cell Ind. S&P 400
---- ------ --------- -------
<S> <C> <C> <C>
5/31/94 100 100 100
6/1/94 100 101 100
6/2/94 100 101 100
6/3/94 102 102 101
6/6/94 100 103 100
6/7/94 103 103 100
6/8/94 102 102 100
6/9/94 102 102 100
6/10/94 100 102 100
6/13/94 101 101 100
6/14/94 102 102 101
6/15/94 101 102 101
6/16/94 103 101 101
6/17/94 103 100 100
6/20/94 102 99 100
6/21/94 100 99 99
6/22/94 100 99 99
6/23/94 100 99 98
6/24/94 102 99 97
6/27/94 97 98 98
6/28/94 98 98 98
6/29/94 98 97 98
6/30/94 102 95 97
7/1/94 98 96 97
7/5/94 98 97 98
7/6/94 99 97 97
7/7/94 106 98 98
7/8/94 103 98 98
7/11/94 104 96 98
7/12/94 105 97 98
7/13/94 102 97 98
7/14/94 101 99 99
7/15/94 103 99 99
7/18/94 105 99 100
7/19/94 105 100 99
7/20/94 102 100 99
7/21/94 102 101 99
7/22/94 106 100 99
7/25/94 103 101 100
7/26/94 111 102 99
7/27/94 112 103 99
7/28/94 112 103 99
7/29/94 109 103 100
8/1/94 109 103 101
8/2/94 111 103 101
8/3/94 112 103 101
8/4/94 117 102 100
8/5/94 115 102 100
8/8/94 112 102 100
8/9/94 118 103 100
8/10/94 118 104 101
8/11/94 115 105 101
8/12/94 114 106 101
8/15/94 114 106 101
8/16/94 114 107 102
8/17/94 112 106 102
8/18/94 111 107 102
8/19/94 115 107 102
8/22/94 112 107 102
8/23/94 112 108 102
8/24/94 114 109 103
8/25/94 111 110 103
8/26/94 111 112 105
8/29/94 109 113 105
8/30/94 112 113 105
8/31/94 109 114 105
9/1/94 114 113 104
9/2/94 111 113 104
9/6/94 111 113 104
9/7/94 109 113 104
9/8/94 145 113 105
9/9/94 142 113 104
9/12/94 143 113 103
9/13/94 143 113 104
9/14/94 145 115 104
9/15/94 145 117 105
9/16/94 147 118 105
9/19/94 147 118 105
9/20/94 145 116 103
9/21/94 145 113 103
9/22/94 145 113 103
9/23/94 146 113 102
9/26/94 145 113 103
9/27/94 146 112 103
9/28/94 146 112 103
9/29/94 145 111 103
9/30/94 145 112 103
10/3/94 146 112 103
10/4/94 146 110 101
10/5/94 145 110 101
10/6/94 147 111 101
10/7/94 145 112 101
10/10/94 145 113 102
10/11/94 145 115 104
10/12/94 146 115 104
10/13/94 146 115 104
10/14/94 146 115 105
10/17/94 146 115 105
10/18/94 146 116 104
10/19/94 148 116 105
10/20/94 148 117 104
10/21/94 148 117 104
10/24/94 147 117 103
10/25/94 148 116 103
10/26/94 148 117 104
10/27/94 149 117 104
10/28/94 148 120 106
10/31/94 148 122 106
11/1/94 148 120 105
11/2/94 148 120 104
11/3/94 148 120 104
11/4/94 149 119 103
11/7/94 148 118 103
11/8/94 150 119 104
11/9/94 150 119 104
11/10/94 152 119 104
11/11/94 152 120 104
11/14/94 153 120 104
11/15/94 152 120 104
11/16/94 152 120 104
11/17/94 152 120 104
11/18/94 150 121 104
11/21/94 150 121 103
11/22/94 151 119 101
11/23/94 150 115 100
11/25/94 150 115 101
11/29/94 150 118 102
11/30/94 150 118 101
12/1/94 151 117 100
12/2/94 149 117 101
12/5/94 149 117 101
12/6/94 150 116 101
12/7/94 148 116 101
12/8/94 150 114 99
12/9/94 150 112 100
12/12/94 150 112 100
12/13/94 150 112 100
12/14/94 150 112 101
12/15/94 151 114 101
12/16/94 148 114 102
12/19/94 148 115 102
12/20/94 150 116 102
12/21/94 151 116 103
</TABLE>
<PAGE> 178
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
11/7/94 136 105 99
11/8/94 137 106 100
11/9/94 137 106 100
11/10/94 139 106 100
11/11/94 139 106 99
11/14/94 140 106 100
11/15/94 139 106 100
11/16/94 139 107 100
11/17/94 139 107 100
11/18/94 137 108 100
11/21/94 137 107 99
11/22/94 138 106 97
11/23/94 137 102 96
11/25/94 137 102 97
11/28/94 138 103 98
11/29/94 137 104 98
11/30/94 137 104 97
12/1/94 138 104 96
12/2/94 137 104 97
12/5/94 137 104 97
12/6/94 137 103 97
12/7/94 136 103 97
12/8/94 137 101 95
12/9/94 137 100 96
12/12/94 137 100 96
12/13/94 137 99 96
12/14/94 137 100 97
12/15/94 138 101 97
12/16/94 136 101 98
12/19/94 136 102 98
12/20/94 137 103 98
12/21/94 138 103 99
</TABLE>
<PAGE> 179
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
11/7/94 148 89 102 108
11/8/94 150 89 103 109
11/9/94 150 89 103 109
11/10/94 152 89 102 109
11/11/94 152 89 102 109
11/14/94 153 91 103 110
11/15/94 152 90 103 110
11/16/94 152 88 103 110
11/17/94 152 88 103 110
11/18/94 150 87 102 111
11/21/94 150 87 101 111
11/22/94 151 87 99 109
11/23/94 150 88 99 105
11/25/94 150 89 99 106
11/28/94 151 88 100 106
11/29/94 150 89 100 108
11/30/94 150 88 100 108
12/1/94 151 88 99 107
12/2/94 149 88 100 107
12/5/94 149 88 100 107
12/6/94 150 88 100 106
12/7/94 148 87 99 106
12/8/94 150 87 98 104
12/9/94 150 89 98 103
12/12/94 150 89 99 103
12/13/94 150 89 99 102
12/14/94 150 90 100 103
12/15/94 151 88 100 104
12/16/94 148 89 101 105
12/19/94 148 89 101 105
12/20/94 150 88 100 106
12/21/94 151 88 101 107
</TABLE>
<PAGE> 180
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
11/7/94 115 99 102 108
11/8/94 115 99 103 109
11/9/94 115 101 103 109
11/10/94 116 100 102 109
11/11/94 116 100 102 109
11/14/94 116 101 103 110
11/15/94 116 102 103 110
11/16/94 117 101 103 110
11/17/94 116 103 103 110
11/18/94 114 102 102 111
11/21/94 114 102 101 111
11/22/94 114 106 99 109
11/23/94 109 104 99 105
11/25/94 109 103 99 106
11/28/94 110 103 100 106
11/29/94 112 102 100 108
11/30/94 112 103 100 108
12/1/94 112 102 99 107
12/2/94 111 102 100 107
12/5/94 112 102 100 107
12/6/94 110 103 100 106
12/7/94 111 102 99 106
12/8/94 109 101 98 104
12/9/94 108 99 98 103
12/12/94 111 100 99 103
12/13/94 112 100 99 102
12/14/94 112 99 100 103
12/15/94 115 99 100 104
12/16/94 115 100 101 105
12/19/94 118 100 101 105
12/20/94 117 101 100 106
12/21/94 117 100 101 107
</TABLE>
<PAGE> 181
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
11/7/94 146 75 102 108
11/8/94 149 75 103 109
11/9/94 149 74 103 109
11/10/94 148 73 102 109
11/11/94 147 75 102 109
11/14/94 147 76 103 110
11/15/94 147 76 103 110
11/16/94 146 75 103 110
11/17/94 146 76 103 110
11/18/94 155 77 102 111
11/21/94 157 77 101 111
11/22/94 155 72 99 109
11/23/94 147 71 99 105
11/25/94 147 71 99 106
11/28/94 149 70 100 106
11/29/94 158 73 100 108
11/30/94 157 73 100 108
12/1/94 156 71 99 107
12/2/94 157 71 100 107
12/5/94 155 73 100 107
12/6/94 155 71 100 106
12/7/94 157 73 99 106
12/8/94 155 71 98 104
12/9/94 145 70 98 103
12/12/94 141 71 99 103
12/13/94 142 68 99 102
12/14/94 147 71 100 103
12/15/94 148 71 100 104
12/16/94 149 71 101 105
12/19/94 151 70 101 105
12/20/94 155 69 100 106
12/21/94 152 69 101 107
</TABLE>
<PAGE> 182
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
11/7/94 117 91 137 102 108
11/8/94 117 91 140 103 109
11/9/94 116 92 140 103 109
11/10/94 116 93 142 102 109
11/11/94 115 93 142 102 109
11/14/94 114 93 142 103 110
11/15/94 116 91 142 103 110
11/16/94 116 94 143 103 110
11/17/94 116 94 142 103 110
11/18/94 116 94 142 102 111
11/21/94 114 94 141 101 111
11/22/94 111 91 136 99 109
11/23/94 105 88 134 99 105
11/25/94 107 89 134 99 106
11/28/94 110 89 133 100 106
11/29/94 110 89 132 100 108
11/30/94 109 89 133 100 108
12/1/94 110 89 131 99 107
12/2/94 109 88 134 100 107
12/5/94 108 89 135 100 107
12/6/94 108 89 132 100 106
12/7/94 107 89 123 99 106
12/8/94 104 88 123 98 104
12/9/94 101 88 128 98 103
12/12/94 101 88 128 99 103
12/13/94 100 87 126 99 102
12/14/94 101 86 127 100 103
12/15/94 105 87 127 100 104
12/16/94 105 89 124 101 105
12/19/94 105 90 123 101 105
12/20/94 106 91 124 100 106
12/21/94 106 95 126 101 107
</TABLE>
<PAGE> 1
FORM OF AGREEMENT WITH OPTIONHOLDERS
February , 1995
To the Holders of Stock Options
Issued Pursuant to the
1987 Key Employee Stock Plan
of Contel Cellular Inc.
As you know, Contel Corporation ("Contel"), a subsidiary of GTE, intends to
acquire all of the outstanding shares of Class A Common Stock of Contel Cellular
Inc. ("CCI") for $25.50 per share in cash. The transaction will be structured as
a merger (the "Merger") of a Contel subsidiary into CCI. CCI will be the
surviving corporation.
On the effective date of the Merger (the "Effective Date"), the holders of
currently outstanding shares of Class A Common Stock will be entitled to receive
$25.50 per share in cash, and the outstanding shares of Class A Common Stock of
CCI will be cancelled. After the Merger, there will no longer be a public market
for the Class A Common Stock, and that stock will cease to be quoted on the
Nasdaq National Market. When the Merger occurs, the surviving corporation will
file to terminate the registration of the Class A Common Stock under the
Securities Exchange Act of 1934. Once the registration of the Class A Common
Stock is terminated, the surviving corporation will no longer be required to
file reports with the Securities and Exchange Commission or to solicit proxies.
You have been granted non-qualified options to purchase shares of Class A
Common Stock of CCI pursuant to the terms of the 1987 Key Employee Stock Plan of
Contel Cellular Inc. (the "Plan"). (The number of options you hold and their
exercise prices are set forth on the attached Schedule 1.) In connection with
the Merger, CCI offers to make a cash payment to you for the surrender of all
(but not less than all) of the options you hold, other than those options which
have ceased to be exercisable prior to the date of the Merger (the "Options").
The offer is conditioned upon consummation of the Merger.
For each Option you surrender, whether or not your interest in the Option
is vested, you will receive an amount in cash (the "Option Consideration") equal
to $25.50, less the exercise price for the Option. If you agree to surrender
your Options based on the terms of this offer, CCI will pay you the Option
Consideration for each Option you hold, whether or not that Option is currently
vested. You will receive the Option Consideration promptly after the Effective
Date. If the Merger is not consummated within 6 months of the date of this
letter, this letter agreement shall be null and void.
The Option Consideration will be taxable to you as ordinary income;
reported on your Form W-2 in the year the consideration is paid to you; and
subject to applicable federal and state payroll tax withholding. This is the
same tax treatment you would receive if you exercised the Options. The Option
Consideration will not be considered compensation under any company pension or
benefit plan.
By executing this letter in the space indicated below, you hereby agree
that upon the effectiveness of the Merger and payment of the Option
Consideration for all of your Options (less all applicable taxes required to be
withheld), and without any further action by CCI, you or any other person, all
rights under
(i) all Options and any related SARs (as defined in the Plan), and
(ii) the Plan and all Stock Option Agreements and Stock Appreciation
Rights Agreements entered into between you and CCI thereunder,
shall be terminated. You further agree to execute any additional documents that
may be requested to evidence such termination.
C-2-1
<PAGE> 2
By executing this letter, you acknowledge and agree that you have received
and had the opportunity to review the Information Statement on Schedule 14C
relating to the Merger.
You should be aware that if you do not surrender your Options, in
accordance with the terms of the Plan and existing Stock Options Agreements, if
your employment with CCI terminates, any unvested Options will be forfeited and
the period during which your Options can be exercised will be limited. If you
are transferred to another GTE subsidiary, that will be considered to be a
termination under the Plan. If you are under age 55 at the time of your
employment with CCI terminates, you will have 90 days to exercise any vested
Options. If you are age 55 or older at that time, you will have one year to
exercise any vested options.
If any Options have not been surrendered under the terms of this letter on
the Effective Date or terminated in accordance with the terms of the Plan, the
committee administering the Plan has authority under Article X of the Plan to
adjust the terms of such Options. The committee could decide to adjust the terms
of such Options to provide that, upon the Effective Date, each remaining Option
entitles the holder thereof to receive, upon exercise of the Option, a cash
payment equal to the payment to be made to holders of shares of Class A Common
Stock of CCI pursuant to the Merger less the exercise price of the Option. The
committee has decided not to make any adjustment to the terms of the Options.
Thus, the Options will continue to entitle the holder to acquire Class A Common
Stock of CCI. However, that stock will not be listed for trading on any
exchange, nor will it be registered under the securities laws. Accordingly, such
stock will not be transferable, unless an exemption from registration is
available, and it is not expected that there will be any regular market for such
stock.
To surrender your Options in exchange for the Option Consideration, you
must sign this letter in the space indicated below and return the executed copy
to the following address no later than , 1995. If you have any
questions about this offer, please contact Jae Early.
Contel Cellular Inc.
245 Parimeter Center Parkway
Atlanta, GA 30346
(404) 804-3443
Very truly yours,
Acknowledged and Agreed
Name: ______________________
Date: ______________________
C-2-2
<PAGE> 1
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 be converted into one newly issued share of the Class B common
stock of the Surviving Corporation. 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
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 February , 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 February , 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 March , 1995.
This Information Statement is being mailed on or about February , 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 February , 1995
<PAGE> 2
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; Fairness of the Merger..................... 11
Opinion of Financial Advisor to the Special Committee.............................. 12
Opinions of Financial Advisors to GTE.............................................. 16
Written Consent; Purpose of the Merger; Plans for the Company...................... 21
Regulatory Requirements............................................................ 22
Merger Consideration............................................................... 22
Accounting Treatment of the Merger................................................. 22
Certain Federal Income Tax Consequences of the Merger.............................. 22
Certain Effects of the Merger...................................................... 23
THE MERGER AGREEMENT................................................................. 24
General............................................................................ 24
Designation of Directors; Certificate of Incorporation and By-laws................. 24
Representations and Warranties..................................................... 24
Indemnification and Other Covenants................................................ 24
Conditions to the Merger........................................................... 25
Termination........................................................................ 25
Amendment.......................................................................... 25
Extension; Waiver.................................................................. 25
PAYMENT OF THE MERGER CONSIDERATION.................................................. 26
DISSENTERS' RIGHTS OF APPRAISAL...................................................... 27
MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK
OF THE COMPANY..................................................................... 29
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY.................................. 30
PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY................................. 31
BUSINESS OF THE COMPANY.............................................................. 33
Overview........................................................................... 33
Cellular Interests................................................................. 33
The Cellular Telephone Industry.................................................... 36
The Company's Cellular Operations.................................................. 37
Non-Controlled Systems............................................................. 41
International Interests............................................................ 41
Competition........................................................................ 41
Regulation......................................................................... 42
RELATED PARTY TRANSACTIONS........................................................... 43
Arrangements and Transactions with Contel and GTE.................................. 43
Payments to Optionholders.......................................................... 45
Relationship between GTE Director and PaineWebber.................................. 45
Transition Arrangements............................................................ 45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT......................................................................... 47
Certain Beneficial Owners.......................................................... 47
Directors and Executive Officers of the Company.................................... 48
Directors and Executive Officers of GTE, Contel and CCI Acquisition................ 49
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 50
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
EXHIBIT A -- AGREEMENT AND PLAN OF MERGER........................................... 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
EXHIBIT F -- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS............................... F-1
</TABLE>
3
<PAGE> 4
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 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
be converted into one newly issued share of the Class B common stock of the
Surviving Corporation.
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 March , 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
consolidating the operations and acquiring the outstanding minority interest in
the Company. 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. 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. Nine of the Company's twelve
directors are currently executive officers or directors of GTE or the Company.
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.
4
<PAGE> 5
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 February , 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 and Class B
Shares, approved the Merger by written consent on February , 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. On December 27,
1994, the Special Committee concluded that the offer price of $25.50 per Class A
Share was fair to the Class A Stockholders and recommended that the Board of
Directors approve the Merger and the Merger Agreement. 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; Fairness of the Merger".
Opinion of Financial Advisor to the Special Committee. At 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 outstanding 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 outstanding Class A Shares in the Merger 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".
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".
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 in
exchange for each Class A Share $25.50 in cash, without
5
<PAGE> 6
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 paid out 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
DELIVERED TO THE GENERAL COUNSEL OF THE COMPANY WITHIN 20 DAYS AFTER THE DATE 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.
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).
6
<PAGE> 7
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 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".
7
<PAGE> 8
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
YEARS ENDED DECEMBER 31,
------------------------------------------------------------ ------------------------
1989 1990 1991 1992 1993 1993 1994
-------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues and sales.................... $ 65,519 $ 167,178 $ 235,107 $ 286,999 $ 374,014 $ 265,262 $ 405,069
Operating income
(loss)(1)........................... (14,682) (38,143) (68,577) (50,113) (28,305) (12,536) 35,262
Loss from consolidated operations..... (12,328) (158,865) (223,726) (196,347) (188,011) (136,253) (101,794)
Equity in earnings of unconsolidated
partnerships........................ 17,539 19,069 15,687 29,027 37,351 27,864 48,510
Gains on sales of partnership
interests........................... -- -- 18,387 60,806 48,023 8,326 76,348
Net income (loss) before cumulative
effect of change in accounting
principles.......................... 2,621 (102,794) (118,900) (73,061) (74,918) (70,382) 6,360
Cumulative effect of change in
accounting principles(2)............ -- -- -- (2,080) (241) -- --
Net income (loss)..................... 2,621 (102,794) (118,900) (75,141) (75,159) (70,382) 6,360
Net income (loss) per share before
cumulative effect of change in
accounting principles............... 0.03 (1.03) (1.19) (0.73) (0.75) (0.70) 0.06
Net income (loss) per
share............................... 0.03 (1.03) (1.19) (0.75) (0.75) (0.70) 0.06
Weighted average shares outstanding
(in thousands)...................... 99,983 99,931 99,942 99,947 99,949 99,949 99,951
OTHER OPERATING DATA:
Capital expenditures.................. 31,871 70,841 107,792 183,504 130,042 81,377 139,345
Ending subscribers.................... 50,050 155,285 236,282 327,645 521,226 434,338 672,560
</TABLE>
<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------ ------------------------
1989 1990 1991 1992 1993 1993 1994
-------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $207,186 $1,665,395 $1,870,669 $1,930,469 $2,052,984 $1,979,987 $2,175,701
Long-term obligations:
Notes payable --
affiliates........................ -- 1,540,000 1,735,034 1,814,327 1,901,726 1,906,191 2,011,613
Other............................... 14,280 14,280 42,280 36,280 36,792 30,280 30,792
Stockholders' equity
(deficit)........................... 130,166 27,525 (91,085) (166,084) (241,221) (236,444) (234,820)
Book value per share.................. 1.30 0.28 (0.91) (1.66) (2.41) (2.37) (2.35)
</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 1991, 1992, 1993 or
for the nine months ended September 30, 1993 and 1994. The amount of such
deficiency was $203 million, $128 million and $129 million for the years ended
December 31, 1991, 1992 and 1993, respectively, and $126 million and $6 million
for the nine months ended September 30, 1993 and 1994, respectively.
8
<PAGE> 9
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, its financial
advisor 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> 10
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 (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 be converted into one newly issued
share of the Class B common stock of the Surviving Corporation.
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 March , 1995.
BACKGROUND OF THE MERGER
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. 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. Since the date of that merger, the
concept of acquiring the publicly held shares of the Company was discussed from
time to time on a limited and confidential basis but no decision was made to
proceed. In early 1994, GTE began seriously to consider acquiring the publicly
held shares of the Company.
In early August 1994, GTE management concluded that it would be advisable
to proceed to acquire the publicly held shares of the Company. GTE's decision
was based on its belief that eliminating the minority interest and consolidating
its cellular mobile services businesses would 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.
GTE met with its legal and financial advisors to discuss structuring the
transaction. GTE 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. On September 8, 1994, the Board of Directors of GTE
approved the proposal to acquire the Class A Shares for $22.50 per share and
also authorized negotiations with
10
<PAGE> 11
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.
Following the public announcement on September 8, 1994, four class action
lawsuits were brought on behalf of the Class A Stockholders of the Company
alleging that the announced purchase price of $22.50 per Class A Share was
inadequate. Counsel for GTE, Contel and CCI Acquisition subsequently began
discussions with plaintiffs' counsel regarding the stockholder lawsuits and
invited plaintiffs' counsel to review financial information and meet with the
Special Committee and its financial advisors. On December 23, 1994 a tentative
settlement agreement was reached with plaintiffs, subject to confirmatory
discovery. The tentative settlement approved an increased price of $25.50 per
Class A Share and the payment of certain plaintiffs' counsel fees.
Nine of the Company's twelve directors are currently 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 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.
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. 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 and to Lazard Freres a preliminary draft
of their background analysis. A final version of such preliminary draft
background analysis was never furnished to GTE or Lazard Freres by the GTE
Financial Advisors. The GTE Financial Advisors based their fairness opinions to
GTE on the analyses described below in "SPECIAL FACTORS -- Opinions of Financial
Advisors to GTE". 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, the price per Class A Share proposed to be given in the Merger was
increased by GTE to $25.50.
DETERMINATION OF THE SPECIAL COMMITTEE; 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
11
<PAGE> 12
Acquisition would be cancelled, and no payment would be made with respect
thereto and (iii) each outstanding Class B Share would be converted into one
newly issued share of the Class B common stock of the Surviving Corporation. At
a meeting held on December 27, 1994, the Special Committee 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 approved the
Merger at a price of $25.50 per Class A Share and the Merger Agreement.
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, including but not limited to:
(a) the terms and conditions of the Merger, including the $25.50 per
Class A Share cash consideration offered to Class A Stockholders;
(b) the Company's historical and recent financial condition, results
of operations, business, assets and liabilities and the Special Committee's
and management's evaluation of the Company's business, properties and
future prospects;
(c) 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;
(d) 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;
(e) 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;
(f) 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;
(g) statements by Lazard Freres at the December 22 Special Committee
Meeting that it would be prepared to deliver 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 by Lazard Freres; and
(h) 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.
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 outstanding Class A Shares 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. Lazard Freres' opinion was delivered for the benefit of
the Special Committee and is not on behalf of, and is not intended to confer
rights or remedies upon any stockholders of
12
<PAGE> 13
the Company, GTE, or any other person. 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, Lazard Freres, among other things, (i) reviewed
the terms and conditions of a 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, will have an immaterial effect, if any, on
the Company. Further, although Lazard Freres was not informed of the fact, GTE
and the Company estimated that the Cellular Exchange, if consummated, would
involve not more than approximately 4.5% of the Company's total POPs.
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.
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.
13
<PAGE> 14
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 the necessary regulatory approvals for the Merger would not have an
adverse effect on the Company.
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"). 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 per net POP, $181 of cellular asset
value per net POP (which excludes the value of the Company's non-cellular
assets), and $156 of cellular license value per net POP (which excludes the
value of the Company's non-cellular assets and the value of the Company's
cellular net property, plant and equipment). 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 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 (i) how expected
population growth in each such MSA compared to the average population growth
expected for the United States, as a whole; (ii) how median household income in
each such MSA compared to median household income for the United States, as a
whole; (iii) how average commuting time for each such MSA compared to average
commuting time for the United States, as a whole; and (iv) whether each such MSA
was contiguous to other MSAs or RSAs serviced by the Company. Implied private
market values for the Company's non-controlled MSA net POPs were also estimated
utilizing a comparable public company analysis, in 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
14
<PAGE> 15
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) 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 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) 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 full private market
valuation of the Class A Shares was estimated at between $32.36 and $36.00 per
share.
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, 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.
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
15
<PAGE> 16
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. 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.
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
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advice in connection with matters other than the Merger, for which it is
receiving customary compensation. 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.
Shareholders are cautioned that the opinions of the GTE Financial Advisors
were prepared solely for the benefit of GTE, to provide GTE advice regarding the
fairness of the price of $25.50 per Class A Share to GTE from a financial point
of view. The GTE Financial Advisors were not engaged to evaluate the fairness of
the transaction or the price to Class A Stockholders.
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. 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
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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 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.
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.
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). PaineWebber then 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,
1994 to January 1, 1995 and 10.0% to 12.0% to discount all values from December
31, 2004 to January 1, 2000.
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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 $14.53
to $25.45 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 Transactions 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. Using detailed information regarding MSA market rank
of the target's POPs in these transactions, PaineWebber developed a range of
assumed private market values for the various MSA markets. PaineWebber also
developed valuation assumptions for RSA POPs. 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. 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 $206. 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 selected minority buy out
transactions not limited to the cellular communications industry 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 price) and 33.3%, 33.3%, 20.4%, 7.4%,
2.2% and 58.9%, respectively. PaineWebber examined the premiums paid in the most
recent minority buy out in the cellular communications industry, U.S. West,
Inc.'s purchase of U.S. West New Vector 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.
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,
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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 5-year strategic plan projection and a 10-year projection. Due to
the inherently less certain nature of the 10-year projections, and the fact that
the Company had advised Merrill Lynch that it had not prepared the 10-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 10-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 $20 million to reflect the
Company's interests in Mexico.
Utilizing the 5-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
10-year projections Merrill Lynch arrived at a range of values per Class A Share
of approximately $14.93-$25.97 per share.
Private Market Transaction Analysis. Merrill Lynch reviewed several
publicly announced merger and acquisition transactions in the cellular
communications industry, together with information regarding certain private
transactions that GTE furnished to Merrill Lynch. Using detailed information
regarding MSA market rank and the target's POPs in these transactions, Merrill
Lynch developed a range of assumed private market values for the various MSA
markets. Merrill Lynch also developed valuation assumptions for RSA POPs.
Merrill Lynch then applied these per POP valuation ranges to the Company's POPs.
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. 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.
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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 $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. Merrill Lynch examined
selected minority buy out transactions not limited to the cellular
communications industry 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% (%
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 most recent minority buy out in the cellular communications industry, U.S.
West, Inc's purchase of U.S. West New Vector Group, Inc. on November 12, 1990,
which resulted in premiums of 22.2% (% 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% (% change from
initial offer price to final offer price) and 56.9%, 39.7%, 43.7%, 10.3%, 6.3%
and 96.2%, respectively.
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
"SPECIAL FACTORS -- 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".
WRITTEN CONSENT; PURPOSE OF THE MERGER; PLANS FOR THE COMPANY
The Record Date for stockholders entitled to notice of or entitled to give
consent to the Merger was February , 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 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 and Class B Shares, approved the Merger by written consent on February
, 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.
The Merger will enable GTE, through its wholly-owned subsidiary Contel, to
acquire the entire equity interest in the Company and permit GTE to implement a
unified marketing strategy for its cellular operations, provide increased
flexibility to pursue future opportunities, generate efficiencies in the
combined cellular communications business and eliminate complexities raised by
operating two cellular businesses with overlapping but not identical ownership.
The acquisition of the entire equity interest in the Company has been structured
as a merger in order to provide a prompt and orderly transfer of the minority
interest in the
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Company from the Class A Stockholders to Contel and GTE, and to provide the
Class A Stockholders with cash in exchange for their Class A Shares.
From time to time, GTE has attempted to align its legal entities and
simplify its corporate structure. As part of this process, Contel adopted a plan
of liquidation in January 1993 and continues to wind up its affairs. GTE also
plans to consolidate the operations of the Company and GTE Mobilnet over time. A
merger transition team has been formed to develop plans for the consolidation.
The purpose of the consolidation will be to provide operating efficiencies,
reduce the overhead of GTE's cellular properties, maximize marketing advantage
of a single brand identity and enhance GTE's ability to compete in the cellular
communications market by providing increased flexibility to pursue joint
ventures and other combinations and new business opportunities. 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.
REGULATORY REQUIREMENTS
The Merger will require notice filings in a number of states, but the
approval of regulatory authorities will not be required in any jurisdiction.
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 initially will finance such
equity contributions through the issuance of short term debt. The short term
debt is expected to be issued with terms comparable to those pursuant to which
GTE periodically issues short term debt in the ordinary course of its business.
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.
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
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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).
CERTAIN EFFECTS OF THE MERGER
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.
23
<PAGE> 24
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 be converted into one newly issued share of the Class B common stock
of the Surviving Corporation.
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
24
<PAGE> 25
commercially reasonable efforts to take all action and to do all things
necessary to consummate the 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
25
<PAGE> 26
Agreement other than those relating to indemnification. Any agreement on the
part of any party to any such 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 were mailed to the Class A Stockholders
beginning on March , 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 396,
BOWLING GREEN STATION, NEW YORK, NY 10274.
26
<PAGE> 27
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 this Information Statement. 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.
Within 10 days after the Effective Time, the Surviving Corporation will
notify each Class A Stockholder who has complied with Section 262 of the date
the Merger has become effective. 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 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.
27
<PAGE> 28
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.
28
<PAGE> 29
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 February , 1995, the
Company had 390 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.
29
<PAGE> 30
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The selected consolidated financial data presented below as of December 31,
1989-1993 and for each of the years then ended have been derived from the
consolidated financial statements of the Company which have been audited (except
for the number of subscribers) by Arthur Andersen LLP, independent certified
public accountants. See the "REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS" attached
as Exhibit F to this Information Statement. The selected consolidated financial
data as of September 30, 1993 and 1994 and for the nine-month periods then ended
have been derived from the unaudited consolidated financial statements of the
Company. The consolidated financial statements as of December 31, 1993 and 1992,
and for each of the years in the three-year period ended December 31, 1993, 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>
NINE MONTHS
ENDED SEPTEMBER 30,
YEARS ENDED DECEMBER 31,
------------------------------------------------------------ -----------------------
1989 1990 1991 1992 1993 1993 1994
-------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues and sales................... $ 65,519 $ 167,178 $ 235,107 $ 286,999 $ 374,014 $ 265,262 $ 405,069
Operating income (loss)(1)........... (14,682) (38,143) (68,577) (50,113) (28,305) (12,536) 35,262
Loss from consolidated operations.... (12,328) (158,865) (223,726) (196,347) (188,011) (136,253) (101,794)
Equity in earnings of unconsolidated
partnerships....................... 17,539 19,069 15,687 29,027 37,351 27,864 48,510
Gains on sales of partnership
interests.......................... -- -- 18,387 60,806 48,023 8,326 76,348
Net income (loss) before cumulative
effect of change in accounting
principles......................... 2,621 (102,794) (118,900) (73,061) (74,918) (70,382) 6,360
Cumulative effect of change in
accounting principles(2)........... -- -- -- (2,080) (241) -- --
Net income (loss).................... 2,621 (102,794) (118,900) (75,141) (75,159) (70,382) 6,360
Net income (loss) per share before
cumulative effect of change in
accounting principles.............. 0.03 (1.03) (1.19) (0.73) (0.75) (0.70) 0.06
Net income (loss) per share.......... 0.03 (1.03) (1.19) (0.75) (0.75) (0.70) 0.06
Weighted average shares outstanding
(in thousands)..................... 99,983 99,931 99,942 99,947 99,949 99,949 99,951
OTHER OPERATING DATA:
Capital expenditures................. 31,871 70,841 107,792 183,504 130,042 81,377 139,345
Ending subscribers................... 50,050 155,285 236,282 327,645 521,226 434,338 672,560
</TABLE>
<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------ -----------------------
1989 1990 1991 1992 1993 1993 1994
-------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets......................... $207,186 $1,665,395 $1,870,669 $1,930,469 $2,052,984 $1,979,987 $2,175,701
Long-term obligations
Notes payable -- affiliates........ -- 1,540,000 1,735,034 1,814,327 1,901,726 1,906,191 2,011,613
Other.............................. 14,280 14,280 42,280 36,280 36,792 30,280 30,792
Stockholders' equity (deficit)....... 130,166 27,525 (91,085) (166,084) (241,221) (236,444) (234,820)
Book value per share................. 1.30 0.28 (0.91) (1.66) (2.41) (2.37) (2.35)
</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 1991, 1992, 1993 or
for the nine months ended September 30, 1993 and 1994. The amount of such
deficiency was $203 million, $128 million and $129 million for the years ended
December 31, 1991, 1992 and 1993, respectively, and $126 million and $6 million
for the nine months ended September 30, 1993 and 1994, respectively.
30
<PAGE> 31
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 internal planning purposes.
These five year projections are included in this Information Statement because
such projections were made available to the Special Committee, its financial
advisor, GTE 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, its 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)................... 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)............................... 298 220 158 135 145
Operating cash flow................................... 268 367 464 540 659
</TABLE>
31
<PAGE> 32
<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(6).............................. 2,135 2,183 2,233 2,185 1,983
Stockholders' deficit(7).............................. (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
preparation 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, its financial advisor 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 83 154 181 198 215 239 266
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
</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) 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.
(7) 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.
32
<PAGE> 33
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
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 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 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
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
COMPANY COMPANY
PERCENTAGE 1994 ESTIMATED POPULATION
MARKET MSA RANK OWNERSHIP POPULATION(1) EQUIVALENTS
- ------------------------------------------- -------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Clarksville, TN............................ 209 100.00% 172,410 172,410
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>
34
<PAGE> 35
<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>
35
<PAGE> 36
<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 Federal Communications Commission (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
36
<PAGE> 37
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. No licenses
have been awarded as of February , 1995.
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 was an affiliate of a
wireline telephone company, it had the right to apply for the wireline cellular
license in any
37
<PAGE> 38
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 January 1994, the Company purchased 100% of the cellular system serving
Tennessee RSA 2 and the remaining 51% interest in Tennessee RSA 3. In December
1994, the Company announced that it had completed the purchase of 100% of the
cellular system serving the Huntsville, Alabama MSA and Alabama RSA 2 as well as
an 80% controlling interest in an entity that has interim operating authority to
provide service in Alabama RSA 1. Also, during the third quarter of 1994, the
Company executed a definitive agreement to purchase an additional 29.2% interest
in California RSA 4. The California purchase is subject to certain regulatory
approvals.
During 1994, the Company also completed the sales of certain properties, as
part of the definitive agreement reached with NYNEX Mobile Communications
Company ("NYNEX") in December of 1993 (the "NYNEX Agreement"). To date, the
Company has completed the sale of its 60% interest in the cellular system
serving the Manchester, New Hampshire MSA, 36.6% interest in New Hampshire RSA
2, 100% interest in the Burlington, Vermont MSA, 83.3% interest in Vermont RSAs
1 and 2 and 25% interest in New York RSA 2. The NYNEX Agreement also provides
for the sale of the Company's cellular interests in the MSAs of Binghamton and
Elmira, New York, New York RSA 3, Pennsylvania RSA 3 and Pennsylvania RSA 4. The
completion of the sale of these properties is subject to final regulatory
approval.
Additional sales completed during 1994 include 100% of Oregon RSA 5, 100%
of Kentucky RSA 11, 100% of California RSA 7, 33.3% of Alabama RSA 1, 50% of
North Carolina RSA 1, 7.1% of Iowa RSA 1, 16.7% of Iowa RSA 8, 5.6% of Iowa RSA
14, 33.3% of South Dakota RSA 5 and 14.3% of South Dakota RSA 6.
The transactions described above have resulted or will result when
completed in a net decrease in the Company's POPs of approximately 0.9 million.
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.
38
<PAGE> 39
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 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
39
<PAGE> 40
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). Because
the Company holds both wireline and non-wireline licenses, it participates in
both of these alliances.
The Company has executed franchise agreements with the Cellular One Group
for each of its non-wireline markets pursuant to which the Company obtained the
right to market its services under the Cellular One name. In return, the Company
is obligated to meet certain standards for service and customer satisfaction.
The Company is also obligated to pay an annual license fee equal to $.02 per POP
and an annual marketing fee of up to $.05 per POP in each market where the
Company uses this name.
The Company has also executed agreements with B-Side Carriers L.P. for its
wireline properties to be MobiLink providers. MobiLink service: (i) allows
people to more easily make and receive calls using standardized dialing codes in
major metropolitan areas, (ii) provides 24-hour customer service, (iii) provides
service centers for repairs and loaner phones and (iv) provides an extensive
customer satisfaction guarantee. The cost of being a MobiLink provider is equal
to $.065 per POP per year for each market where the Company has chosen to be a
MobiLink provider. GTE Mobile is an equity owner in B-Side Carriers L.P. See
"RELATED PARTY TRANSACTIONS -- Equity Ownership in B-Side Carriers L.P."
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.
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
40
<PAGE> 41
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.
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
41
<PAGE> 42
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. As of February , 1995, no licenses were awarded under
this process. The service offerings under the additional frequencies will be
similar in nature to cellular service and will offer direct competition once
established.
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. 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. A subsidiary of
GTE is bidding for licenses. No licenses have been awarded as of February ,
1995.
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
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<PAGE> 43
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
General. The Company was initially formed as a wholly owned subsidiary of
Contel. In April 1988, a portion of the common stock of the Company was sold to
the public in a public offering. In March 1991, a wholly-owned subsidiary of GTE
merged with and into Contel (the "Contel Merger"), and Contel became a wholly
owned subsidiary of GTE. As a result of this Merger, the Company became an
indirectly held subsidiary of GTE. GTE also provided and continues to provide
cellular communications services through another subsidiary, GTE Mobilnet.
From time to time, GTE has attempted to align its legal entities and
simplify its corporate structure. As part of this process, Contel adopted a Plan
of Liquidation on January 7, 1993, pursuant to which Contel is in the process of
winding up its affairs and plans to complete its liquidation no later than
December 31, 1995.
GTE, through Contel, currently owns all of the Company's Class B Shares,
which constitute approximately 90% of the Company's outstanding capital stock.
As a result of the disproportionate voting rights between Class A Shares and
Class B Shares (one vote for each Class A Share compared with five votes for
each Class B Share), GTE controls approximately 98% of the combined voting power
of both classes of the Company's capital stock. The Class B Shares are
convertible at any time into Class A Shares on a one to one basis. Nine of the
directors of the Company are currently executive officers or directors of GTE or
the Company. Based on its current ownership of greater than 50% of the capital
stock of the Company, GTE has the ability, without the approval of the Class A
Stockholders, to effect the Merger.
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.
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<PAGE> 44
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.
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 United States Treasury rates
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 non-affiliated 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
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<PAGE> 45
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.
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.
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"). 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.
RELATIONSHIP BETWEEN GTE DIRECTOR AND PAINEWEBBER
Mr. Richard W. Jones is a director of GTE and is also engaged as a
consultant to PaineWebber, one of GTE's financial advisors in connection with
the Merger. He receives a fixed annual fee from PaineWebber for his services.
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
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<PAGE> 46
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
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 award
cycle, he will receive an equivalent cash 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.
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<PAGE> 47
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 February 15, 1994 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......... The Capital Group, Inc. 794,000(2) 7.98%
333 South Hope Street
Los Angeles, CA 90071(1)
Class A Common Stock......... College Retirement Equities 519,200(4) 5.22%
Fund
730 Third Avenue
New York, NY 10017(3)
Class B Common Stock......... GTE Corporation 90,000,000(6) 100%
One Stamford Forum
Stamford, CT 06904(5)
</TABLE>
- ---------------
(1) This information was obtained from Amendment No. 3 to a Schedule 13G filed
with the SEC on February 10, 1994 by The Capital Group, Inc. ("Capital") on
behalf of itself and Capital Research and Management Company ("Capital
Research"). Amendment No. 3 to the Schedule 13G discloses that Capital and
Capital Research are located at the same address.
(2) Amendment No. 3 to the Schedule 13G filed by Capital and Capital Research
discloses that Capital and Capital Research share dispositive power over
these shares.
(3) This information was obtained from Amendment No. 1 to a Schedule 13G filed
with the SEC on February 15, 1994 by College Retirement Equities Fund
("CREF").
(4) Amendment No. 1 to the Schedule 13G filed by CREF discloses that CREF
exercises sole voting power and sole dispositive power over these shares.
(5) 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.
(6) GTE, through Contel, exercises sole voting power and sole dispositive power
over these shares.
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<PAGE> 48
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The number of Class A Shares owned by each director and executive officer
of the Company as of January 31, 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................................ 0 721,885(3)(4)
Robert E. LaBlanc............................... 4,000 0
Charles R. Lee.................................. 0 634,045(3)(4)
Michael T. Masin................................ 0 75,199(3)(5)
Russell E. Palmer............................... 0 1,800(6)
Terry S. Parker................................. 0 188,359(3)(4)(7)
Irwin Schneiderman.............................. 0 0
Nicholas L. Trivisonno.......................... 0 181,762(3)(4)
James W. Walter................................. 0 11,800(8)
Dennis L. Whipple............................... 18,650(9) 9,724(3)(4)
Charles Wohlstetter............................. 0 232,455
</TABLE>
<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(9) 9,724(3)(4)
Randall L. Crouse............................. 3,100(9) 5,505(4)
Pamela F. Lopez............................... 1,700(9) 2,585(4)
Laura E. Binion............................... 1,700(9) 1,905(3)(4)
Theodore J. Carrier........................... 15,000(9) 216(4)
All directors and officers as a group (the
"Executive Group").......................... 46,150(9) 2,114,809(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, Parker, Trivisonno and Whipple and Ms. Binion and the Executive Group
are: 633,300; 571,999; 72,599; 169,099; 170,233; 5,300; 816; and 1,648,978
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 Nonemployee 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
994 GTE Common Stock Units, which are payable in cash under the Deferred
Compensation Plan.
(7) This amount includes 68 shares of GTE Common Stock held by a member of Mr.
Parker's family.
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<PAGE> 49
(8) In addition to the shares of GTE Common Stock shown above, Mr. Walter owns
120,816 GTE Common Stock Units, which are payable in cash under the Deferred
Compensation Plan.
(9) 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".
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.
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<PAGE> 50
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Securities and Exchange Commission, as noted below, are incorporated by
reference into this Information Statement: (a) Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 (as amended by Form 10-K/A filed January
25, 1995); (b) Quarterly Report on Form 10-Q for the fiscal quarters ended March
31, 1994, June 30, 1994 and September 30, 1994; and (c) Proxy Statement dated
April 29, 1994. The File Number for all of the above referenced documents 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).
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
February , 1995
50
<PAGE> 51
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
EXHIBIT F -- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.......................... F-1
</TABLE>
<PAGE> 52
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.
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"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
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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
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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
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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.
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(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
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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.
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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.
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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
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(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.
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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> 63
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.
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<PAGE> 64
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> 65
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.
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<PAGE> 66
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.
Our engagement and the opinion expressed herein is solely for the benefit
of the Special Committee and is not on behalf of, and is not intended to confer
rights or remedies upon, GTE, any stockholders of CCI or GTE, or any other
person. It is understood that this letter may not be disclosed or otherwise
referred to without our prior consent, except as may otherwise be required by
law or a court of competent jurisdiction.
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.
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<PAGE> 67
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
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<PAGE> 68
(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
Managing Director
Investment Banking Group
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<PAGE> 69
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
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<PAGE> 70
(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
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<PAGE> 71
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
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 or 263 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 and 263 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 interdealer 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 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.
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<PAGE> 72
(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 subsections (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 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. 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 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.
(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 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
D-2
<PAGE> 73
publications shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on 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> 74
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 Service Corporation President of GTE Telephone
600 Hidden Ridge, HQE04J17 Operations Group
Irving, TX 75308
James L. Johnson................... Chairman Emeritus of GTE since Chairman and Chief
GTE 1992 Executive of GTE since
600 Hidden Ridge 1988
Irving, TX 75038
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> 75
<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
GTE 1991 Contel Corporation since
375 Park Avenue 1960
New York, NY 10152
GTE -- EXECUTIVE OFFICERS
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> 76
<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
Terry S. Parker(1)................. Senior Vice President of GTE President - GTE
GTE since 1993 and President of Telecommunications
245 Perimeter Center Parkway Personal Communications Products and Services
Atlanta, GA 30346 Services of GTE Service Group since 1990
Corporation since 1993
Jeffrey S. Rubin................... Senior Vice Executive Vice President
GTE President - Corporate Planning and Chief Financial
One Stamford Forum and Development of GTE since Officer of NYNEX
Stamford, CT 06904 1994 Corporation which he
joined in 1990 as Vice
President Finance
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
</TABLE>
E-3
<PAGE> 77
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
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>
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
CONTEL CORPORATION -- EXECUTIVE
OFFICERS
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
E-4
<PAGE> 78
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
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
GTE
600 Hidden Ridge
Irving, TX 75038
</TABLE>
E-5
<PAGE> 79
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
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
Russell E. Palmer.................. See prior entry See prior entry
The Palmer Group
3600 Market Street
Philadelphia, PA 19104
Terry S. Parker(1)................. See prior entry See prior entry
GTE Telecommunications Products &
Services
245 Perimeter Center Parkway
Atlanta, GA 30346
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
Contel Cellular Inc. Officer of the Company since President - Marketing and
245 Perimeter Center Parkway 1991 Business Planning for GTE
Atlanta, GA 30346 Mobile from April 1990 to
March 1991; previously
General Manager - Florida
of GTE Mobilnet
Charles Wohlstetter................ See prior entry See prior entry
GTE
375 Park Avenue
New York, NY 10152-0192
COMPANY -- EXECUTIVE OFFICERS
Terry S. Parker(1)................. See prior entry See prior entry
Chairman
Contel Cellular Inc.
245 Perimeter Center Parkway
Atlanta, GA 30346
Dennis L. Whipple.................. See prior entry See prior entry
President and Chief Executive
Officer
Contel Cellular Inc.
245 Perimeter Center Parkway
Atlanta, GA 30346
</TABLE>
E-6
<PAGE> 80
<TABLE>
<CAPTION>
PREVIOUS MATERIAL
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS
- ----------------------------------- ------------------------------ -------------------------
<S> <C> <C>
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
John P.Z. Kent..................... See prior entry See prior entry
Vice President - Taxes
Contel Cellular Inc.
One Stamford Forum
Stamford, CT 06904
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
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>
- ---------------
(1) Mr. Parker will retire from his positions with GTE and its subsidiaries
effective March 1, 1995.
E-7
<PAGE> 81
EXHIBIT F
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Stockholders of
Contel Cellular Inc.:
We have audited the consolidated balance sheets of CONTEL CELLULAR INC. (a
Delaware corporation and majority owned subsidiary of GTE Corporation) AND
SUBSIDIARIES as of December 31, 1993 and 1992 and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of certain unconsolidated
partnerships as described in Note 4 to the financial statements. The investment
in these partnerships is reflected in the accompanying balance sheets using the
equity method of accounting and represented $82,140,000 and $62,543,000 (or 4%
and 3% respectively) of total consolidated assets at December 31, 1993 and 1992,
respectively. The equity in their earnings is included in the statements of
operations and represented $28,024,000, $20,070,000, and $16,570,000 for the
years ended December 31, 1993, 1992, and 1991, respectively. The summarized
financial information contained in Note 4 to the consolidated financial
statements includes financial information for the aforementioned partnerships.
The financial statements of these unconsolidated partnerships were audited by
other auditors whose reports have been furnished to us, and our opinion, insofar
as it relates to the amounts included for these unconsolidated partnerships, is
based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Contel Cellular Inc. and subsidiaries as of December
31, 1993 and 1992 and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1993 in conformity with
generally accepted accounting principles.
A report of other auditors referred to above indicates that the Los Angeles SMSA
Limited Partnership is involved in litigation with several agents as discussed
in Note 4 and Note 14 and with cellular subscribers as discussed in Note 8 and
Note 14, the outcome of which cannot presently be determined. Accordingly, no
provision for any liability that may result upon adjudication has been made in
the accompanying financial statements.
F-1
<PAGE> 82
As discussed in Note 14, the cellular partnership in San Francisco, California,
of which the Company holds a non-controlling interest, is involved in litigation
with a class of cellular subscribers, the outcome of which cannot presently be
determined. Accordingly, no provision for any liability that may result upon
adjudication has been made in the accompanying financial statements.
As discussed in Note 3 to the financial statements, effective January 1, 1992,
the Company changed its method of accounting for postretirement benefits other
than pensions.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 25, 1994
(except with respect to the matters discussed in
Note 14, as to which the date is January 25, 1995)
F-2
<PAGE> 1
LETTER OF TRANSMITTAL
To Accompany Certificates Representing
Shares of Class A Common Stock of
CONTEL CELLULAR INC.
Pursuant to the Merger Agreement
Dated as of December 27, 1994
Among
Contel Cellular Inc.,
Contel Cellular Acquisition Corporation,
Contel Corporation
and GTE Corporation
Disbursing Agent: Chemical Bank
<TABLE>
<CAPTION>
If by Mail: If by Overnight Mail Express: If by Hand:
---------- ---------------------------- ----------
<S> <C> <C>
Chemical Bank Chemical Bank Chemical Bank
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 396 85 Challenger Rd. 120 Broadway
Bowling Green Station Overpeck Centre 13th Floor
New York, NY 10274 Ridgefield Park, NJ 07660 New York, NY
</TABLE>
Delivery of this Letter of Transmittal to an address other than
as set forth above will not constitute a valid delivery.
DESCRIPTION OF COMMON STOCK ENCLOSED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
of Class A Common Stock, $1.00 par value per share Certificate(s) Enclosed
(Please fill in) (Attach additional list if necessary)
- ----------------------------------------------------------------------------------------------------------
Certificate Number of
Number(s) Shares
---------------------------------
<S> <C> <C>
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Gentlemen:
Pursuant to the Merger Agreement dated as of December 27, 1994 (the "Merger
Agreement"), providing for the merger (the "Merger") of Contel Cellular
Acquisition Corporation ("CCI Acquisition") with and into Contel Cellular
Inc.
<PAGE> 2
(the "Company"), the undersigned surrenders the enclosed certificate(s)
which, prior to the Merger, represented shares of Class A common stock of the
Company, $1.00 par value (the "Shares"), to be exchanged for cash in the
amount of $25.50, without interest, for each such Share. The undersigned has
received a copy of the Information Statement dated February ___, 1995.
The undersigned hereby represents and warrants that (i) the undersigned is
the exclusive owner of the Shares represented by the enclosed certificates and
is entitled to all rights evidenced thereby and (ii) such Shares are free and
clear of all liens, claims and encumbrances. All authority conferred or agreed
to be conferred in this Letter of Transmittal shall be binding upon the
undersigned and the successors, assigns, heirs, executors, administrators and
legal representatives of the undersigned and shall not be affected by, and
shall survive the death or incapacity of, the undersigned.
Submission of the certificates for Shares listed above is subject to the
terms, conditions and limitations set forth in the Merger Agreement and in the
instructions herein contained.
In accordance with the Merger Agreement, please deliver in compliance with
the instructions below a check in an amount determined by multiplying $25.50
times the number of Shares submitted herewith as payment for such Shares.
Unless otherwise indicated under Special Payment Instructions, please issue the
check in the name of the undersigned. Unless otherwise indicated under Special
Delivery Instructions, please mail the check to the person to whom it is issued
at the address shown above or, if the Special Payment Instructions are
completed, at the address there indicated.
<PAGE> 3
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 5 and 6) (See Instructions 1, 4, 5 and 6)
To be completed ONLY if the check is to be issued To be completed ONLY if the check is to be sent
in the name of someone other than the undersigned. to a name or address other than that of the
party to which it is to be issued.
Issue check to: Mail check to:
Name . . . . . . . . . . . . . . . . . . . . . . . Name . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT) (PLEASE PRINT)
Address . . . . . . . . . . . . . . . . . . . . . Address . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(TAX ID. OR SOCIAL SECURITY NO.) (TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9) (SEE SUBSTITUTE FORM W-9)
</TABLE>
STOCKHOLDER(S) SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9
X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . , 19 . . . . .
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on stock certificate(s) or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted herewith. If signature is
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
please provide the following information and see Instruction 4.)
Name(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT)
Capacity (full title) . . . . . . . . . . . . . . . . . . . . . . . . . .
Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDE ZIP CODE)
Area Code and Telephone Number . . . . . . . . . . . . . . . . . . . . . .
Tax Identification or
Social Security No. . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPLETE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 4)
Authorized Signature . . . . . . . . . . . . . . . . . . . . . . . . . . .
Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Name of Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT)
Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDE ZIP CODE)
Area Code and Telephone Number . . . . . . . . . . . . . . . . . . . . . .
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . , 19 . . . . .
<PAGE> 4
INSTRUCTIONS
1. Guarantee of Signatures. Signatures on all Letters of
Transmittal must be guaranteed by a financial institution that is a member of a
Securities Transfer Association approved medallion program such as STAMP, SEMP
or MSP (an "Eligible Institution"), except in cases where Shares are
surrendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. See Instruction 4.
2. Delivery of Letter of Transmittal and Certificates. This
Letter of Transmittal, properly completed and duly executed, together with the
certificate(s) for Shares described should be delivered to the address set
forth on the face hereof. A return envelope addressed to the Disbursing Agent
is enclosed for convenience.
THE METHOD OF DELIVERY OF CERTIFICATE(S) FOR SHARES AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE OWNER, BUT IF SENT
BY MAIL, IT IS RECOMMENDED THAT THEY BE SENT BY REGISTERED MAIL WITH RETURN
RECEIPT REQUEST.
3. Inadequate Space. If the space provided is inadequate, the
certificate numbers and the number of Shares should be listed on a separate
schedule to be attached hereto.
4. Signatures on Letter of Transmittal, Stock Powers and
Endorsements. When this Letter of Transmittal is signed by the registered
owner(s) of the certificate(s) listed and surrendered hereby, no endorsements
of certificates or separate stock powers are required.
If the certificate(s) surrendered hereby is (are) owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any surrendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by a person other than the
registered owner of the certificate(s) listed, such certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is
signed by trustees, executors, administrators, guardians, attorneys- in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence,
satisfactory to the Disbursing Agent, of their authority must be submitted.
5. Stock Transfer Taxes. If payment for Shares is to be made to
any person other than the registered holder, or if surrendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on account of the transfer to
such person
<PAGE> 5
will be deducted from the payment for such Shares if satisfactory evidence of
the payment of such taxes, or exemption therefrom, is not submitted.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
6. Special Payment and Delivery Instructions. Indicate the name
and address to which payment for the Shares is to be sent if different from the
name and address of the person(s) signing this Letter of Transmittal.
7. Return of Certificate(s) for Shares. If the Merger is not
consummated within 120 days from the date of the Information Statement, the
Disbursing Agent will return all certificates for Shares to stockholders. The
Company's stockholders may request that the Disbursing Agent return the
certificates for Shares to them at any time before the Merger is consummated.
8. Substitute Form W-9. The shareholder is required to provide
the Disbursing Agent with a correct taxpayer identification number on
Substitute form W-9. Failure to provide the information on the form may
subject the tendering shareholder to 31% Federal income tax withholding on any
payments due to such shareholder. A stockholder may write "Applied For" in
the space provided in Part I of Substitute Form W-9 and may sign the
Certificate of Awaiting Taxpayer Identification Number if the stockholder has
not been issued a taxpayer identification number and has applied for a number
or intends to apply for a number in the near future. If the stockholder writes
"Applied For" and signs such Certificate and the Disbursing Agent is not
provided with a taxpayer identification number within 60 days, the Disbursing
Agent will withhold 31% of any payments due to the stockholders thereafter
until a taxpayer identification number is provided to the Disbursing Agent.
9. Additional Copies. Additional copies of this Letter of
Transmittal and of the Information Statement may be obtained from the
Disbursing Agent at the address listed on the face hereof.
10. Lost or Destroyed Certificates. Any stockholder of the
Company who has lost certificates of Shares should make arrangements (which may
include the posting of a bond or other satisfactory indemnification) to replace
lost certificates for Shares. Such arrangements should be made with the
Disbursing Agent which is also the transfer agent for the Shares.
All questions as to the validity, form and eligibility of any surrender
of certificates hereunder will be determined by the Disbursing Agent and the
Company and such determination shall be final and binding. The Disbursing
Agent and the Company reserve the right to waive any irregularities or defects
in the surrender of any certificates. A surrender will not be deemed to have
been made until all irregularities have been cured or waived.
<PAGE> 6
IMPORTANT TAX INFORMATION
Under the Federal income tax law, a stockholder whose Shares are
surrendered for payment is required to provide the Disbursing Agent with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification
number is such stockholder's social security number. If the Disbursing Agent
is not provided with the correct taxpayer identification number, the
stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder may be
subject to backup withholding.
Exempt stockholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Disbursing Agent. See the enclosed
Guidelines for Certification of taxpayer identification number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Disbursing Agent is required to
withhold 31% of any payments made to the stockholder. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a
stockholder with respect to Shares surrendered pursuant to the Merger, the
stockholder is required to notify the Disbursing Agent of his correct taxpayer
identification number by completing the form below certifying that the taxpayer
identification number provided on Substitute Form W-9 is correct (or that such
stockholder is awaiting a taxpayer identification number) and that the
stockholder is not subject to backup withholding either because he has not been
notified by the IRS that he is subject to backup withholding or because the IRS
has notified him that he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DISBURSING AGENT
The taxpayer identification number that must be provided is that of
the registered holder(s) of the Shares or of the last transferee appearing on
the transfers attached to or endorsed on the Shares (or, if the check is made
payable to another person(s) as provided in Instruction 6, then of such
persons(s)). The taxpayer identification number is the social security number
or employer identification number of such registered holder(s) or of such last
transferee. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of taxpayer
identification number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder or other payee has not been
issued a taxpayer identification number, but has applied for a taxpayer
identification number, or intends to apply for one in the near future, such
holder should write "Applied For" in the space provided for the taxpayer
identification number in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting taxpayer
identification number. If "Applied For" is written in Part I and the
Disbursing Agent is not provided with a taxpayer identification number within
sixty (60) days, the Disbursing Agent will withhold 31% of all payments to such
<PAGE> 7
stockholder until a taxpayer identification number is provided to the
Disbursing Agent. If the tendering stockholder or other payee furnishes the
Disbursing Agent with his taxpayer identification number within sixty (60) days
of the date of the Substitute Form W-9, the Disbursing Agent shall remit such
amounts retained during such period to such holder. If, however, the tendering
stockholder or other payee has not provided the Disbursing Agent with his
taxpayer identification number within the sixty (60) day period, the Disbursing
Agent shall remit such previously retained amounts to the Internal Revenue
Service as backup withholding. For additional guidance, see the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
<PAGE> 8
PAYER'S NAME: CHEMICAL BANK
<TABLE>
<S> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number
THE RIGHT AND CERTIFY BY SIGNING AND DATING or Employer
BELOW. Identification Number
Form W-9
--------------------------------
Department of the Treasury Part 2 -- Certification -- Under penalties of perjury, I certify that:
Internal Revenue Service
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
PAYER'S REQUEST FOR TAXPAYER Certification Instructions - You must cross out item (2) above if you have
IDENTIFICATION NUMBER ("TIN") been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such
Item(2).
SIGN HERE Part 3 --
----> SIGNATURE........................................
Awaiting TIN / /
DATE......................................., 1995
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a tax identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days of the date of this Certificate.
Signature............................ Date........................., 1995
<PAGE> 9
The Information Agent for the Merger is:
Chemical Bank
Reorganization Department
P.O. Box 396
Bowling Green Station
New York, NY 10274
or
CALL TOLL-FREE 1-800-758-4655
<PAGE> 10
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------- -----------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF -- NUMBER OF --
- ----------------------------------------------------- -----------------------------------------------------
1. An individual's account The individual 9. A valid trust, estate, or The legal entity
pension trust (Do not furnish the
2. Two or more individuals The actual owner of identifying number
(joint account) the account or, if of the personal
combined funds, representative or
any one of the trustee unless the
individuals(1) legal entity itself
is not designated
3. Husband and wife (joint The actual owner of in the account
account) the account or, if title.)(5)
joint funds, either
person(1) 10. Corporate account The corporation
4. Custodian account of a minor The minor(2) 11. Religious, charitable, or The organization
(Uniform Gift to Minors Act) educational organization
account
5. Adult and minor (joint The adult or, if
account) the minor is the 12. Partnership account held in The partnership
only contributor, the name of the business
the
minor(1) 13. Association, club, or other The organization
tax-
6. Account in the name of The ward, minor, exempt organization
guardian or committee for a or incompetent
designated ward, minor, or person(3) 14. A broker or registered The broker or
incompetent person nominee nominee
7. a. The usual revocable The grantor- 15. Account with the Department The public entity
savings trust account trustee(1) of Agriculture in the name of
(grantor is also trustee) a public entity (such as a
b. So-called trust account The actual owner(1) State or local government,
that is not a legal or valid school district, or prison)
trust under State law that receives agricultural
program payments
8. Sole proprietorship account The owner(4)
_______________________________________________________ ________________________________________________
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 20% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
FORM OF NOTICE OF CLASS ACTION
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------
In re:
CONTEL CELLULAR INC. Civil Action No. 13726
SHAREHOLDERS LITIGATION
- ---------------------------------------------------------------------
</TABLE>
NOTICE OF PENDENCY OF CLASS ACTIONS,
CLASS ACTION DETERMINATION, PROPOSED SETTLEMENT,
SETTLEMENT HEARING AND RIGHT TO APPEAR
TO: ALL RECORD AND BENEFICIAL OWNERS OF CLASS A COMMON STOCK ("CLASS A STOCK")
OF CONTEL CELLULAR INC. ("CONTEL") AT ANY TIME FROM SEPTEMBER 8, 1994 AND THEIR
SUCCESSORS IN INTEREST OR TRANSFEREES AND ASSIGNS, IMMEDIATE AND REMOTE,
EXCLUDING ANY SUCH OWNERS WHO VALIDLY REQUEST AN APPRAISAL OF THEIR CLASS A
STOCK.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A
PROPOSED SETTLEMENT OF THE CLASS ACTION AND CONTAINS IMPORTANT INFORMATION
REGARDING YOUR RIGHTS. AN ESSENTIAL ELEMENT OF THIS SETTLEMENT IS A MERGER. THE
$25.50 PER SHARE PRICE PROVIDED BY THE MERGER WILL BE PAID ONLY TO THOSE MEMBERS
OF THE CLASS WHO OWN CLASS A STOCK AT THE TIME OF THE MERGER. YOU NEED NOT FILE
A PROOF OF CLAIM IN ORDER TO RECEIVE THE $25.50 PER SHARE AMOUNT.
IF THE COURT APPROVES THE PROPOSED SETTLEMENT, YOU WILL BE FOREVER BARRED FROM
CONTESTING THE FAIRNESS, REASONABLENESS, OR ADEQUACY OF THE PROPOSED SETTLEMENT
AND FROM PURSUING THE SETTLED CLAIMS.
IF YOU ARE NOT THE BENEFICIAL HOLDER OF CLASS A STOCK BUT HOLD CLASS A STOCK FOR
A BENEFICIAL HOLDER, PLEASE TRANSMIT THIS NOTICE TO SUCH BENEFICIAL HOLDER.
ADDITIONAL COPIES OF THIS NOTICE WILL BE MADE AVAILABLE TO YOU FOR THIS PURPOSE
UPON REQUEST DIRECTED TO ***.
This notice is given pursuant to Rule 23 of the Court of Chancery of the
State of Delaware, in and for New Castle County (the "Court"), and pursuant to
an Order of the Court, to notify you of the pendency of these lawsuits, the
proposed settlement of these lawsuits, and the Court's certification of a class
of Contel common stockholders, and to give you notice of a hearing (the
"Hearing") to be held by the Court at * * * a.m. on * * *, 1995, and of your
rights, among other things, to participate in the Hearing. The Hearing will be
held to determine whether the proposed settlement should be approved by the
Court as fair, reasonable and adequate, and in the best interests of the Class
as defined below, and whether final judgment should be entered thereon, and to
consider the applications by plaintiffs' counsel for attorneys' fees and
reimbursement of expenses.
D-3-1
<PAGE> 2
BACKGROUND
On or about September 8, 1994, defendant GTE Corporation ("GTE") and
defendant Contel both announced that GTE had proposed to acquire all outstanding
Contel Class A Stock held by the public, consisting entirely of approximately 10
million shares of Class A Stock, for $22.50 cash per share. GTE owns the
remaining 90 percent of outstanding Contel common shares, consisting entirely of
Contel Class B common stock ("Class B Stock"). Under the terms of the proposal,
GTE subsidiary would merge into Contel. The Class B Stock would be converted
into shares of the merged entity. (GTE owns no Class A Stock.) The proposed
merger would not require a vote by the holders of Class A Stock or the
shareholders of GTE.
Following the announcement, four separate lawsuits were commenced in this
Court alleging that the purchase price of $22.50 per share was grossly
inadequate and constituted a breach of the defendants' fiduciary duties to
Contel public shareholders (the "Actions"). The Actions were brought by
plaintiffs Airmont Plaza Associates, Arnel Gonzalez, Blimy Itzkowitz, and Paul
Gambal ("Plaintiffs"). The complaints asserted claims on behalf of a Class
consisting of all public common stockholders of Contel as of September 8, 1994.
Nine of Contel's twelve directors are executive officers or directors of
GTE or Contel, causing a conflict of interest. Accordingly, at a meeting of
Contel's Board of Directors on September 9, 1994, the Board appointed the three
outside Contel directors who are not officers or directors of GTE or Contel
(Irwin Schneiderman, Leo Jaffe, and Robert E. LaBlanc) to a Special Committee to
review the fairness of and negotiate the terms of the proposed merger. The
Special Committee retained Cahill Gordon & Reindel ("Cahill Gordon") as legal
counsel to the Special Committee and Lazard Freres & Co. ("Lazard Freres") as
its financial advisor.
On November 16, 1994, the Court entered an Order consolidating the Actions
for all purposes and designating the law firms of Abbey & Ellis, Bernstein
Liebhard & Lifshitz, and Wolf Popper Ross Wolf & Jones as Plaintiffs' Co-Lead
Counsel.
Plaintiffs' counsel retained an expert adviser and obtained initial
documentary discovery, including documents produced by Lazard Freres.
Thereafter, counsel for GTE and Contel Cellular Acquisition Corporation (which
was formed solely to effect the proposed merger) began discussions and
negotiations with Plaintiffs' counsel regarding the resolution of the Actions.
While negotiations were ongoing, Plaintiffs' counsel met with the Special
Committee and Lazard Freres to discuss valuations. The Special Committee had
numerous meetings with Lazard Freres and Cahill Gordon and negotiated with GTE,
during a period of two months commencing October 17, 1994. Following
negotiations with Plaintiffs' counsel, and with the Special Committee (through
Lazard Freres), GTE agreed, in December 1994, to raise the offer for the
proposed merger to $25.50 per share.
On December 23, 1994, GTE and Contel reached an agreement in principle with
Plaintiffs' counsel to settle the Actions, subject to additional discovery. The
settlement was based on the increased price of $25.50 per share of Class A Stock
and the payment by defendants of certain attorneys' fees and expenses to
Plaintiffs' counsel as hereinafter described. Following the settlement agreement
in principle, and the completion of additional documentary and deposition
discovery, Plaintiffs and defendants executed a Stipulation of settlement (the
"Stipulation") containing the terms and conditions as set forth in more detail
below.
THE SETTLEMENT
As described above, the settlement increases the consideration offered in
the proposed merger from $22.50 per share of Class A Stock to $25.50 per share.
GTE, Contel, and the Special Committee have acknowledged the litigation efforts
and negotiations by Plaintiffs' counsel were significant factors in prompting
GTE to consider the possibility of improving its original $22.50 per share offer
and in arriving at the improved price of $25.50 per share.
Prior to and after institution of the suit, Plaintiffs' counsel made a
thorough investigation of the law and facts relating to the class claims.
Plaintiffs' counsel reviewed documents produced by the defendants which
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related to the proposed merger; thoroughly reviewed the public filings of GTE
and Contel filed in connection with the proposed merger; interviewed and took
depositions of several representatives of Contel, GTE and their respective
financial advisers; and retained an expert adviser who met with the Special
Committee and discussed valuations of the proposed merger with Lazard Freres.
Plaintiffs' counsel also studied the legal principles applicable to Plaintiffs'
claims and have conducted discussions and arms' length negotiations with GTE,
Contel, and the Special Committee with a view to settling the issues in dispute
and achieving the best possible settlement consistent with the interest of the
Contel public shareholders.
Having engaged in such investigations and negotiations and having
considered the events and agreements described herein, Plaintiffs and
Plaintiff's counsel have concluded that the outcome of the action would be
uncertain and that, by reason of the substantial benefits obtained as a result
of the settlement, the terms and conditions of such settlement are fair,
reasonable and adequate to the Contel public shareholders. Plaintiffs and
Plaintiffs' counsel have agreed to settle the actions according to the terms and
provisions of the Stipulation after considering: (i) the substantial benefits to
be obtained by the public shareholders of Contel as a result of the settlement;
(ii) the attendant risks of litigation; (iii) the probability of success on the
merits of Plaintiffs' claims, including the uncertainty relating to the proof of
those allegations; (iv) the desirability of settling the actions; (v)
Plaintiffs' and Plaintiffs' counsel's conclusions that the settlement is fair,
reasonable and adequate.
The defendants have denied and continue to deny all claims of wrongdoing
made in the Actions. Nonetheless, the defendants consider it desirable that the
Actions be settled in the manner and on the terms and conditions set forth in
the Stipulation, thereby putting to rest all claims which have been or might
have been asserted by any parties arising out of the matters alleged in the
Actions or set forth in the Stipulation, and avoiding further expense,
inconvenience, distraction, and diversion of management of GTE and Contel, which
would be caused by further litigation.
CLASS ACTION DETERMINATION
The Court has ordered that, for purposes of the settlement only, the
Actions shall be maintained as a class action, pursuant to Court of Chancery
Rules 23(b)(1) and (b)(2), on behalf of a Class consisting of all holders of
Class A Stock from September 8, 1994 and their successors in interest and/or
transferees and assigns, immediate and remote, excluding any such holders who
validly request an appraisal of their Class A Stock and excluding the defendants
and their families and affiliates.
Inquiries or comments about the settlement may be directed to the attention
of Liaison Counsel to the Class representatives as follows:
Norman M. Monhait, Esq.
Rosenthal, Monhait, Gross & Goddess, P.A.
Suite 214 First Federal Plaza
P.O. Box 1070
Wilmington, Delaware 19899-1070
(302) 656-4433
Please do not contact the Court of Chancery or Register in Chancery
regarding any questions or comments you may have.
THE TERMS OF THE SETTLEMENT
The principal terms, conditions and other matters that are part of the
settlement are summarized here. This summary should be read in conjunction with,
and is qualified in its entirety by reference to, the Stipulation, which is on
file with the Court of Chancery.
The parties have agreed to the following terms and conditions:
In furtherance of the merger of Contel and GTE, GTE shall pay $25.50 cash
per outstanding share of Class A Stock. A GTE subsidiary will merge into Contel.
The Class A Stock will be cancelled, and each
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outstanding share of Class B Stock will be converted into shares of Class B
Stock of the merged entity. The merger will not require a vote by the holders of
Contel Class A Stock or by GTE shareholders. GTE (not the Class) will bear the
Plaintiffs' attorneys' fees and expenses incurred in prosecuting and settling
the Actions up to the amount of $525,000, as approved by the Court.
If the settlement is approved by the Court, the Actions will be dismissed
on the merits with respect to all defendants and with prejudice as against
Plaintiffs and all holders of Class A Stock, and that the settlement is in full
compromise, settlement and discharge of all claims, whether or not presently
known, which have been asserted by Plaintiffs or which might have been asserted
by Plaintiffs or by Contel shareholders in this Court or any other forum against
any of the defendants arising from or in any way relating to the events or
transactions alleged in the Complaint or set forth in the Stipulation.
APPLICATION FOR ATTORNEYS' FEES AND EXPENSES
If the settlement is approved, Plaintiffs' counsel will, at the Hearing or
thereafter, apply to the Court for an aggregate award of attorneys' fees and
expenses (including expert fees and expenses) not to exceed $525,000. GTE has
agreed to bear such fees and expenses, and defendants have agreed not to oppose
such application. Subject to the terms and conditions and on the date set forth
in the Stipulation, GTE will pay all such attorneys' fees and expenses the Court
awards to the Plaintiff (subject to the maximum amount set forth above).
RIGHT TO APPEAR
At the Hearing, any holder of Class A Stock who objects to the Stipulation,
the settlement, the judgment to be entered with respect thereto, or the award of
attorneys' fees and expenses to Plaintiff's counsel, or who otherwise wishes to
be heard, may appear in person or by his attorney at the Hearing and present any
evidence or argument that may be proper and relevant; provided, however, that no
person other than the Plaintiffs and defendants in the Action shall be heard,
and no paper, briefs, pleadings or other documents submitted by any such person
shall be received and considered by the Court (unless the Court in its
discretion shall thereafter otherwise direct, upon application of such person
for good cause shown), unless no later than fourteen days prior to the Hearing
(i) a notice of intention to appear, (ii) a statement listing all such person's
holdings of securities of Contel and the date(s) of acquisition thereof, (iii) a
statement of such person's objections to any matter before the Court, and (iv)
the grounds therefore, the reasons for such person desiring to appear and to be
heard, as well as all documents or writings which such person desires the Court
to consider shall be filed with the Register in Chancery and, on or before such
filing, shall be sent to or served upon each of the following counsel of record:
Norman M. Monhait, Esq.
Rosenthal, Monhait, Gross & Goddess, P.A.
First Federal Plaza
P.O. Box 1070
Wilmington, DE 19899
Attorneys for Plaintiffs
R. Franklyn Balotti, Esq.
Richards Layton & Finger
1 Rodney Square
Wilmington, DE 19899
Attorneys for Defendants
Unless the Court otherwise directs, no stockholder of Contel will be
entitled to contest the approval of the Stipulation, the settlement, the
judgment to be entered thereon, or the award of attorneys' fees and expenses to
Plaintiff's counsel, or otherwise to be heard, except by serving and filing
written objections as described above.
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Any person who fails to object in the manner prescribed above will be deemed to
have waived such objection and will be forever barred from raising such
objection.
SCOPE OF THIS NOTICE
The foregoing description of the Hearing, the Actions, the activities
leading to the settlement, the terms of the settlement, and other matters
described herein, does not purport to be comprehensive. Accordingly, holders of
Class A Stock are referred to the documents filed with the Court, including the
Stipulation, pleadings, briefs, and other papers, all of which may be examined
during regular business hours of each business day at the Office of the Register
in Chancery, Daniel L. Herrmann Courthouse, Eleventh and Kings Streets,
Wilmington, Delaware 19801.
------------------------------------
Register in Chancery
Dated: February , 1995
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