CONTEL CELLULAR INC, DEF 14A, 1994-04-29

CONTEL CELLULAR INC
DEF 14A, 1994-04-29
RADIOTELEPHONE COMMUNICATIONS

Previous: SUPERMARKETS GENERAL HOLDINGS CORP, 10-K, 1994-04-29

Next: SHAWMUT NATIONAL CORP, 11-K, 1994-04-29

<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement

/X/ Definitive Proxy Statement

/ / Definitive Additional Materials

/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12

CONTEL CELLULAR INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)

CONTEL CELLULAR INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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

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

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

Set forth the amount on which the filing fee is calculated and state how it
was determined.

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

(1) Amount Previously Paid:

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

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

[LOGO]

Contel Cellular Inc.
245 Perimeter Center Parkway
Atlanta, Georgia 30346

To the Stockholders of
Contel Cellular Inc.:

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The Annual Meeting of Stockholders of Contel Cellular Inc., a Delaware
corporation, will be held at 10:00 a.m. (local time) on Wednesday, June 1, 1994,
at the Chemical Bank Building, 270 Park Avenue, Eleventh Floor, Room 2, New
York, New York 10017, for the following purposes:

(1) To elect a Board of Directors to serve until the next Annual
Meeting of Stockholders or until successors are duly elected and qualified;
and

(2) To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed April 22, 1994, as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting of Stockholders or at any adjournment thereof.

By Order of the Board of Directors,

JAY M. ROSEN
Secretary

Dated: April 29, 1994

PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
<PAGE> 3

CONTEL CELLULAR INC.
245 PERIMETER CENTER PARKWAY
ATLANTA, GEORGIA 30346

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
JUNE 1, 1994

This Proxy Statement is furnished to stockholders of Contel Cellular Inc.
("Contel Cellular" or the "Company") in connection with the Annual Meeting of
the Stockholders of Contel Cellular (the "Annual Meeting") to be held at 10:00
a.m., Local Time, on Wednesday, June 1, 1994, at the Chemical Bank Building, 270
Park Avenue, Eleventh Floor, Room 2, New York, New York 10017, and at any
adjournment thereof. The Contel Cellular Board of Directors is soliciting
proxies to be voted at the Annual Meeting.

This Proxy Statement and Notice of Meeting, the proxy card and Contel
Cellular's Annual Report to stockholders were mailed to stockholders beginning
April 29, 1994.

PROXY PROCEDURE

Only stockholders of record at the close of business on April 22, 1994 are
entitled to vote in person or by proxy at the Annual Meeting.

If a stockholder attends the Annual Meeting, he or she may vote by ballot.
However, many of our stockholders are unable to attend the Annual Meeting.
Therefore, Contel Cellular's Board of Directors solicits proxies so that each
stockholder has the opportunity to vote on the proposals to be considered at the
Annual Meeting. When a proxy card is returned properly signed and dated, the
shares represented thereby will be voted in accordance with the instructions on
the proxy card. If a stockholder does not return a signed proxy card or does not
attend the Annual Meeting and vote in person, his or her shares will not be
voted. Abstentions are counted towards determining whether a quorum is present.
Shares represented by broker non-votes are not considered present at the meeting
and are not counted towards quorum.

Stockholders are urged to mark a box on the proxy card to indicate how
their shares are to be voted. If a stockholder returns a signed proxy card but
does not mark a box, the shares represented by that proxy card will be voted as
recommended by the Board of Directors. The proxy card also confers discretionary
authority on the individuals named as Proxies on the proxy card to vote the
shares represented by the proxy card on any other matter that is properly
presented for action at the Annual Meeting. A stockholder may revoke his or her
proxy at any time before it is voted by (1) giving notice in writing to the
Secretary of Contel Cellular, (2) granting a subsequent proxy, or (3) appearing
in person and voting at the Annual Meeting.

COST OF SOLICITATION

The cost of soliciting proxies will be borne by Contel Cellular. Proxies
may be solicited by directors, officers or regular employees of Contel Cellular
in person or by telephone, telegram or other means of communication. In
addition, Contel Cellular has retained D.F. King & Co., Inc., New York, New
York, to assist in the solicitation of proxies, and it is estimated their
charges and expenses will not exceed $5,000. Contel Cellular also will reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
expenses in accordance with the regulations of the Securities and Exchange
Commission concerning the sending of proxies and proxy material to the
beneficial owners of Contel Cellular Class A Common Stock.

VOTING

Shares Outstanding

As of April 22, 1994, there were 99,950,733 shares of capital stock of the
Company issued, outstanding and entitled to vote as follows: 9,950,733 shares of
Class A Common Stock, $1.00 par value per share; and
<PAGE> 4

90,000,000 shares of Class B Common Stock, $1.00 par value per share. Holders of
Class A Common Stock are entitled to one vote per share, and holders of Class B
Common Stock are entitled to five votes per share. All of the outstanding shares
of Class B Common Stock are presently held by Contel Corporation ("Contel"), a
wholly owned subsidiary of GTE Corporation ("GTE"). See "CERTAIN TRANSACTIONS."

Vote Required

In accordance with the By-laws of the Company, a plurality of all votes
cast at the Annual Meeting is required for the election of directors. As a
result of its indirect ownership of all of the Class B Common Stock, GTE
currently controls approximately 97.8% of the combined voting power of both
classes of the capital stock of the Company. GTE intends to vote all of its
shares of Class B Common Stock in favor of the nominees set forth herein. If GTE
votes its shares in this manner, the election of these nominees is assured.

PROXY STATEMENT PROPOSALS

At the annual meeting each year, the Board of Directors submits to
stockholders its nominees for election as directors. In addition, the Board of
Directors may submit other matters to the stockholders for action at the annual
meeting. Stockholders of Contel Cellular also may submit proposals for inclusion
in the proxy material. These proposals must meet the stockholder eligibility and
other requirements of the Securities and Exchange Commission. In order to be
included in Contel Cellular's 1995 proxy material, a stockholder's proposal must
be received not later than December 30, 1994 at Contel Cellular's Corporate
Headquarters, 245 Perimeter Center Parkway, Atlanta, Georgia 30346.

BOARD OF DIRECTORS

The Board of Directors manages the business of Contel Cellular. It
establishes the overall policies and standards for Contel Cellular and reviews
the performance of management. The directors are kept informed of Contel
Cellular's operations at meetings of the Board and its committees, through
reports and analyses and discussions with management.

The Board of Directors meets on a regularly scheduled basis and during 1993
met on five occasions. During 1993, only one of the incumbent directors, Irwin
Schneiderman, attended less than 75% of the aggregate of (1) the total number of
meetings of the Board of Directors and (2) the total number of meetings of all
Committees of the Board on which he served. Mr. Schneiderman serves on the Board
and on the Compensation Committee and attended 70% of these combined meetings.
For the Board of Directors as a whole, average attendance at Board and Committee
meetings during 1993 was 93%.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established two standing Committees and has
assigned certain responsibilities to each of these Committees.

Audit Committee

The Audit Committee met two times in 1993. The Audit Committee reviews the
scope of audits proposed by the independent public accountants, reviews internal
audit reports on various aspects of corporate operations and periodically
consults with the independent public accountants on matters relating to internal
financial controls and procedures.

Compensation Committee

The Compensation Committee met five times in 1993. The Compensation
Committee reviews and approves the compensation of the senior management of the
Company.

2
<PAGE> 5

DIRECTORS' COMPENSATION

Retainer and Meeting Fees

Directors who are also employees of Contel Cellular, GTE or any subsidiary
of GTE are not paid any fees or other remuneration, as such, for service on the
Board or on any Board Committee.

Each nonemployee director receives an annual retainer for Board service
equal to $12,000. In addition, each nonemployee director receives $1,000 for
each Board or Committee meeting he attends. Nonemployee directors are not
otherwise eligible to participate in the employee incentive programs, savings
plans, or stock purchase plans.

All directors receive reimbursement of all out-of-pocket expenses they
incur in attending meetings of the Board or its Committees.

EXECUTIVE COMPENSATION

Report of the Compensation Committee

The Compensation Committee (the "Committee") of the Board of Directors of
Contel Cellular Inc. ("Contel Cellular" or the "Company") was established on
December 3, 1992. As members of the Committee, we review and approve the annual
compensation of Contel Cellular's Chief Executive Officer and senior management
personnel (the "Executive Group").

Compensation Philosophy. The Committee believes that the compensation for
the Executive Group should attract superior individuals, reward sustained
performance and maximize shareholder value. The Committee also believes that
because Contel Cellular is a majority owned subsidiary of GTE Corporation
("GTE"), the compensation for the Executive Group should be compatible with the
compensation of other GTE subsidiaries. This compatibility allows employees to
transfer from Contel Cellular to other GTE business units and in turn allows
Contel Cellular to draw superior employees from other parts of GTE, thereby
providing for a vital workforce renewal.

GTE has a uniform system of compensation among all of its subsidiaries
designed to compensate executives at competitive compensation levels of
comparable companies. This system is modified within each subsidiary, including
Contel Cellular, based on the unit's unique business demands and comparable
industry statistics. Information about GTE's compensation system has been
provided to the Committee by representatives of GTE.

To determine how GTE's uniform system of compensation should be modified
and applied to Contel Cellular, Contel Cellular participates in surveys
conducted by nationally recognized compensation consultants. Based on these
surveys, the Committee believes Contel Cellular executives are compensated at or
near the median of the range of comparable companies.

The companies participating in these surveys include the cellular
subsidiaries of the Regional Bell Operating Companies ("RBOC Subsidiaries") as
well as independent publicly traded cellular companies. The companies included
in the compensation surveys are not identical to the companies included in the
Industry Peer Group utilized in the Performance Graph on page 9 because the RBOC
Subsidiaries are included in the compensation surveys but not in the Industry
Peer Group. The RBOC Subsidiaries are included in the compensation surveys
because they are in the same industry as the Company and are frequently
competitors of the Company. They are not included in the Industry Peer Group
because the stocks of the RBOC Subsidiaries are not publicly traded
independently of the stocks of their parent holding companies.

Although the Committee attempts to keep the Company's executive
compensation uniform with GTE's other subsidiaries, the Committee recognizes
that Contel Cellular is not wholly owned by GTE. This fact requires some
deviations from GTE's standard practices. These deviations are more fully
described below.

In keeping with the compensation philosophy of the Committee, the Executive
Group's compensation is comprised of three components: base salary, incentive
pay and stock awards.

3
<PAGE> 6

Base Compensation. The first component of executive pay is base salary.
Each management position is given a grade level with an attendant salary range.
The grade levels are determined using the Hay Job Evaluation System, an orderly
and widely recognized job leveling system. The individual's performance, years
of experience and prior salary increase history determine where within the
salary range the individual's base salary falls.

The base salary of each member of the Executive Group is determined by
reviewing the individual's performance as well as the duties and
responsibilities of the respective executive management position. The grade
levels of the Executive Group are generally comparable to other similar
management positions within GTE. However, because Contel Cellular is not wholly
owned by GTE, the Committee reviews the grade levels and the base salary of each
member of the Executive Group.

The base compensation of Dennis L. Whipple, Chief Executive Officer of
Contel Cellular, was increased from $162,600 to $170,700 effective March 15,
1993. This change represented a 5% increase in Mr. Whipple's base salary and was
based upon both the performance of Contel Cellular and Mr. Whipple in 1992 as
well as industry trends regarding executive compensation. The Committee reviewed
Contel Cellular's and Mr. Whipple's performance with respect to objectives
related to revenue, operating income, net income, capital expenditures,
reduction in bad debt, service revenue, year-end subscribers, annual subscriber
churn rate, revenue per subscriber, network quality, acquisition costs and
facilities costs. The Committee also reviewed certain qualitative objectives of
Mr. Whipple including network improvement, increased customer satisfaction,
increased market share, margin improvement and revenue enhancement.

The base compensation of each member of the Executive Group was also
increased during 1993. The percentage increases ranged from 4.7% to 6.2% and
were based upon Contel Cellular's performance of the objectives outlined above,
each individual's performance, each individual's position in the assigned salary
range and general industry trends regarding base compensation.

The base salaries of the Chief Executive Officer and the other four most
highly compensated officers of Contel Cellular are included under the "Salary"
column of the Summary Compensation Table on page 6.

Incentive Compensation. The second component of compensation of the
Executive Group is incentive pay. The Chief Executive Officer participates in
the GTE Executive Incentive Plan. Each other member of the Executive Group
participates in the GTE Unit Incentive Plan. Under both of these plans, awards
are made based upon Contel Cellular's performance during the last fiscal year
and upon the individual participant's achievement of certain objectives. Both of
these plans are administered by the Executive Compensation and Organization
Structure Committee of the Board of Directors of GTE. However, because Contel
Cellular is not a wholly owned subsidiary of GTE, the Committee approves all
awards under these plans to the Executive Group.

The award to Mr. Whipple under the GTE Executive Incentive Plan ("EIP") was
$69,300 for 1993. This award represented approximately 29% of Mr. Whipple's
total cash compensation for the year and was based on both the performance of
Contel Cellular and Mr. Whipple with respect to certain quantitative and
qualitative objectives. The objectives reviewed by the Committee to determine
Mr. Whipple's EIP award were essentially the same as those reviewed to determine
the merit increase in his base salary. The Committee determined that Mr. Whipple
met or exceeded the majority of these objectives.

Each other member of the Executive Group also received an award under the
GTE Unit Incentive Plan ("UIP") for 1993 performance. The total amount of these
awards was $152,600. The Committee determined the amount of these awards based
upon the same performance objectives for Contel Cellular as used to determine
Mr. Whipple's EIP award, as well as each individual's performance with respect
to certain pre-established goals.

EIP and UIP awards for the Chief Executive Officer and the other four most
highly compensated officers of Contel Cellular are included in the "Bonus"
column of the Summary Compensation Table on page 6.

Stock-Based Awards. The third and final component of compensation of the
Executive Group is eligibility to receive certain stock-based awards under the
Contel Cellular Inc. 1987 Key Employee Stock Plan

4
<PAGE> 7

(the "Contel Cellular Stock Plan"). This plan authorizes the Board of Directors
or duly authorized Committee thereof to grant stock options, stock appreciation
rights and restricted stock units to key employees of Contel Cellular. The
exercise price per share cannot be less than 100% of the fair market value of a
share of Contel Cellular Class A Common Stock on the date of grant.

This component is designed to be a long-term incentive program for key
executives of Contel Cellular which provides a direct link between the
performance of Contel Cellular's stock and the compensation of the Executive
Group. This component is also designed to be equivalent to the stock options
granted under GTE's 1991 Long Term Incentive Plan ("LTIP") for the executives of
GTE's other business units. Under LTIP, GTE grants executives at certain levels
a specified number of GTE stock options on an annual basis and grants stock
options to individuals below these levels on an ad-hoc basis. Because Contel
Cellular is not a wholly owned subsidiary of GTE, the Committee believes that it
is more appropriate for key executives of Contel Cellular to receive Contel
Cellular option grants instead of GTE options grants. In determining the number
of stock options granted, the Committee does not consider the number of options
currently held by any individual participant in the Contel Cellular Stock Plan,
since such action may create an incentive to accelerate the exercise of such
options and sale of shares.

Mr. Whipple received a grant of 3,300 stock options and the Executive Group
collectively received a grant of 8,500 stock options at an exercise price of
$15.00 on March 10, 1993 under the Contel Cellular Stock Plan.

The Summary Compensation Table and the Option/SAR Grants in Last Fiscal
Year Table on pages 6 and 7, respectively, summarize stock grants under this
Plan.

New Internal Revenue Service Rules. In late December 1993, the Internal
Revenue Service issued proposed regulations limiting the deduction a publicly
held corporation may take for compensation paid to its chief executive officer
and its four other most highly compensated officers. The IRS regulations limit
the amount that a company may deduct to one million dollars per person unless
the compensation constitutes "performance based" compensation. Final rules have
not yet been issued. Currently no Contel Cellular executive receives
compensation which would subject Contel Cellular to this regulation.

Other Compensation. Employees of Contel Cellular also participate in
various broad-based GTE employee benefit plans. Members of the Executive Group
participate in these plans on the same terms as eligible non-executive
employees, subject to any legal limits on the amounts that may be contributed or
paid to executives under the plans. GTE offers an Employees' Stock Plan pursuant
to the provisions of Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code") under which employees may purchase GTE Common Stock at a
discount. The GTE Savings Plan (the "Savings Plan") offered pursuant to
provisions of Section 401(k) of the Code permits employees to invest in a
variety of funds on a pre-or after-tax basis. Matching contributions under the
Savings Plan are made in GTE Common Stock. Contel Cellular employees also
participate in pension plans, insurance and other benefit plans.

Russell E. Palmer, Chairman Date: April 20, 1994
Terry S. Parker
Irwin Schneiderman

5
<PAGE> 8

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The directors whose names appear at the conclusion of the Report of the
Compensation Committee currently serve as members of the Contel Cellular
Compensation Committee. Mr. Terry S. Parker is Senior Vice President of GTE and
President of Personal Communications Services, a division of GTE.

EXECUTIVE COMPENSATION TABLES

The following tables provide information about executive compensation.

SUMMARY COMPENSATION TABLE

The following table sets forth information about the compensation of the
Chief Executive Officer and each of the other five executive officers of Contel
Cellular for services in all capacities to Contel Cellular and its subsidiaries.

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------------------- -------------
--------------------------------------- RESTRICTED
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) AWARDS(#) SARS(#)(2) PAYOUTS($)(3) COMPENSATION($)(4)
- - ------------------- ---- ------------ -------- --------------- ------------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis L. Whipple 1993 $169,142 $69,300 $ 0 0 3,300/2,200 N/A $5,041
President, Chief 1992 166,407 60,600 0 0 8,250/5,500 N/A 4,739
Executive Officer 1991 117,115 65,800 0 0 0 N/A 3,507
and Director(5)

Todd E. Eliason 1993 122,285 45,500 0 0 1,800/1,200 N/A 3,669
Vice President -- 1992 41,538 49,300 0 0 0 N/A 3,526
Operations(6)

Randall L. Crouse 1993 119,592 38,400 0 0 1,400/933 N/A 3,586
Vice President --
Network
Operations(7)

Stephen R. Cook 1993 119,767 35,800 0 0 1,400/933 N/A 0
Area Vice
President --
Tennessee(8)

Laura E. Binion 1993 101,946 26,100 0 0 700/467 N/A 0
General
Counsel(9)

Theodore J. Carrier 1993 98,681 27,300 0 0 1,000/667 N/A 0
Chief Financial 1992 97,649 23,000 0 0 0 N/A 1,842
Officer and 1991 89,424 24,800 0 0 4,000/2,667 N/A 2,220
Treasurer(10)
</TABLE>

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

(1) Contel Cellular executives are paid bi-weekly. As a result of this cycle,
executives received 27 payments of base salary in 1992, rather than the
usual 26. The data in the table includes the extra payment and,
accordingly, overstates the 1992 base salary rate by 1/26th, or 3.8%.
(2) Two-thirds of the stock options granted allow stock appreciation rights to
be substituted for the corresponding options.
(3) Contel Cellular has not adopted a long-term incentive plan.
(4) Represents contributions by Contel Cellular to the GTE Corporation Savings
Plan and its predecessor plans.
(5) Mr. Whipple became President and Chief Executive Officer in March 1991. The
1991 salary listed in the table for Mr. Whipple reflects only his salary
for the portion of the year he was employed by Contel Cellular.
(6) Mr. Eliason became Vice President -- Operations on January 3, 1994. Prior
to that time he was Vice President/General Manager -- National Region
effective August 1992. The 1992 salary listed in the table for Mr. Eliason
reflects only his salary for the portion of the year he was employed by
Contel Cellular.

6
<PAGE> 9

(7) Mr. Crouse became Vice President -- Network Operations on January 18, 1993.
The 1993 salary listed in the table for Mr. Crouse reflects only his salary
for the portion of the year he was employed by Contel Cellular.
(8) Mr. Cook became Area Vice President -- Tennessee on November 29, 1993, and
accordingly is no longer considered to be an executive officer. Prior to
that time he was Vice President -- Marketing effective January 18, 1993.
The 1993 salary listed in the table for Mr. Cook reflects only his salary
for the portion of the year he was employed by Contel Cellular.
(9) Ms. Binion became an officer of Contel Cellular on January 18, 1993.
(10) Mr. Carrier became Chief Financial Officer and Treasurer in March 1991.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table shows all grants of options and tandem stock
appreciation rights ("SAR's") to the named executive officers of Contel Cellular
in 1993. The options and SAR's were granted under the Contel Cellular 1987 Key
Employee Stock Plan. Pursuant to Securities and Exchange Commission (the "SEC")
rules, the table also shows the value of the options granted at the end of the
option term (ten years) if the stock price were to appreciate annually by 5% and
10% respectively. There is no assurance that the stock price will appreciate at
the rates shown in the table and the table also indicates that if the stock
price does not appreciate, there will be no increase in the potential realizable
value of the options granted.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED ANNUAL
PERCENT OF TOTAL RATES OF STOCK PRICE
OPTIONS/SARS APPRECIATION FOR OPTION
GRANTED TO EXERCISE OR TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- - ----------------------- ------------ ---------------- ----------- ---------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis L. Whipple...... 3,300/2,200 28.95% $ 15.00 02/16/03 $ 0 $31,130 $78,890
Todd E. Eliason........ 1,800/1,200 15.79 $ 15.00 02/16/03 0 16,980 43,031
Randall L. Crouse...... 1,400/933 12.28 $ 15.00 02/16/03 0 13,207 33,469
Stephen R. Cook........ 1,400/933 12.28 $ 15.00 02/16/03 0 13,207 33,469
Laura E. Binion........ 700/467 6.14 $ 15.00 02/16/03 0 6,603 16,704
Theodore J. Carrier.... 1,000/667 8.77 $ 15.00 02/16/03 0 9,433 23,906
</TABLE>

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

(1) Two-thirds of the stock options granted allow SARs to be substituted for the
corresponding options.

If the price of Class A Common Stock of Contel Cellular (the "Company
Stock") appreciates, the value of Company Stock held by the shareholders will
also increase. For example, the market value of Company Stock on February 17,
1993 was approximately $149 million based upon the market price on that date. If
the share price of Company Stock increases by 5% per year, the market value on
February 17, 2003 of the same number of shares would be approximately $242
million. If the price of Company Stock increases by 10% per year, the market
value on February 17, 2003 would be approximately $386 million.

7
<PAGE> 10

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES

The following table provides information as to options and stock
appreciation rights exercised by each of the named executive officers of Contel
Cellular during 1993 and the value of options and stock appreciation rights held
by such officers at year end measured in terms of the closing price of Contel
Cellular Class A Common Stock on December 31, 1993.

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS/SARS AT FISCAL YEAR THE-MONEY OPTIONS/SARS AT
SHARES END(1) FISCAL YEAR END($)
ACQUIRED ON VALUE ---------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------ ----------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis L. Whipple....... 0 $0 2,750/1,833 8,800/5,867 $ 0 $ 4,538
Todd E. Eliason......... 0 0 0 1,800/1,200 0 2,475
Randall L. Crouse....... 0 0 0 1,400/933 0 1,925
Stephen R. Cook......... 0 0 0 1,400/933 0 1,925
Laura E. Binion......... 0 0 0 700/467 0 963
Theodore J. Carrier..... 0 0 13,000/2,667 1,000/667 0 1,375
</TABLE>

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

(1) The SARs granted may be substituted for the corresponding stock options.

8
<PAGE> 11

PERFORMANCE GRAPH

The following table shows a comparison of the total return to stockholders
for Contel Cellular, its Industry Peer Group, and the NASDAQ Composite Index
("NASDAQ Index").

<TABLE>
<CAPTION>
Measurement Period Industry Peer
(Fiscal Year Covered) Contel Celluar Group NASDAQ Index
<S> <C> <C> <C>
Dec. 30, 1988 100.00 100.00 100.00
Dec. 29, 1989 210.00 154.00 121.00
Dec. 31, 1990 164.00 93.00 102.00
Dec. 31, 1991 187.00 118.00 165.00
Dec. 31, 1992 147.00 124.00 192.00
Dec. 31, 1993 136.00 179.00 219.00
</TABLE>

- - - Assumes $100 invested on December 30, 1988.
- - - Industry Peer Group is comprised of LIN Broadcasting Corp., United States
Cellular, Inc., Vanguard Cellular Systems and McCaw Cellular Communications,
Inc.

RETIREMENT PROGRAMS

Pension Plans

Employees of the Company participate in the pension plan maintained by GTE
Service Corporation (the "GTE Pension Plan"), which is a noncontributory pension
plan based on years of service. Pension benefits to be paid from this plan and
contributions to this plan are related to basic salary exclusive of overtime,
differentials, incentive compensation (except as otherwise described) and other
similar types of payment. Under this plan, pensions are computed on a two-rate
formula basis of 1.15% and 1.45% for each year of service, with the 1.15%
service credit being applied to that portion of the average annual salary for
the five highest consecutive years that does not exceed the Social Security
Integration Level (the portion of salary subject to the Federal Social Security
Act), and the 1.45% service credit being applied to that portion of the average
annual salary that exceeds said level. As of February 15, 1994, the credited
years of service under the GTE Pension Plan for Messrs. Whipple, Eliason,
Crouse, Cook and Carrier and Ms. Binion are 22, 17, 29, 3, 10 and 7,
respectively.

9
<PAGE> 12

The estimated annual benefits payable, calculated on a single life annuity
basis, under the GTE Pension Plan at normal retirement at age 65, based upon
final average earnings and years of employment, is illustrated in the table
below:

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------------------------------------------------
EARNINGS 15 20 25 30 35
- - ------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 125,000 $26,166 $34,888 $ 43,610 $ 52,332 $ 61,054
$ 150,000 $31,604 $42,138 $ 52,673 $ 63,207 $ 73,742
$ 175,000 $37,041 $49,388 $ 61,735 $ 74,082 $ 86,429
$ 200,000 $42,479 $56,638 $ 70,798 $ 84,957 $ 99,117
$ 300,000 $64,229 $85,638 $107,048 $128,457 $149,867
</TABLE>

Under federal law, an employee's benefits under a qualified pension plan
such as the GTE Pension Plan are limited to certain maximum amounts. Certain
qualified employees of Contel Cellular also participate in the GTE Supplemental
Executive Retirement Plan ("SERP") which supplements the benefits of any
participant in the qualified pension plan by direct payment of a lump sum or by
an annuity, on an unfunded basis, of the amount by which any participant's
benefits under the GTE Pension Plan are limited by law. In addition, the SERP
includes a provision permitting the payment of additional retirement benefits
determined in a similar manner as under the qualified pension plan on
remuneration accrued under the management incentive plans. In 1993, Messrs.
Whipple, Eliason, Crouse, Cook and Carrier and Ms. Binion participated in SERP.

Executive Retired Life Insurance Plan

Messrs. Whipple, Eliason and Cook also participated in the GTE Executive
Retired Life Insurance Plan ("ERLIP"), which provides for a post-retirement life
insurance benefit of up to three times final base salary. Upon retirement, ERLIP
benefits may be paid as life insurance or, optionally, an equivalent amount may
be paid as a lump sum payment equal to the present value of the life insurance
amount (based on actuarial factors and the interest rate then in effect), as an
annuity or as installment payments. If an optional payment method is selected,
the ERLIP benefit will be based on the actuarial equivalent of the present value
of the life insurance amount.

CERTAIN TRANSACTIONS

Mr. Michael T. Masin is a director of Contel Cellular and was a managing
partner in the law firm of O'Melveny & Myers until October 1993. Contel Cellular
and its subsidiaries utilized the services of this firm during 1993.

Arrangements and Transactions with Contel and GTE

The Company was initially formed as a wholly owned subsidiary of Contel. On
March 14, 1991, GTE Exchange Corporation, a wholly owned subsidiary of GTE,
merged into and with Contel (the "Merger"), and Contel became a wholly owned
subsidiary of GTE. On January 7, 1993, Contel adopted a Plan of Merger pursuant
to which Contel will merge into and with GTE no later than December 31, 1995.

GTE, through Contel, currently owns all of the Company's Class B Common
Stock, which constitutes approximately 90% of the Company's outstanding capital
stock. As a result of the disproportionate voting rights between Class A Common
Stock and Class B Common Stock (one vote for each share of the Class A Common
Stock compared with five votes for each share of the Class B Common Stock), GTE
controls approximately 97.8% of the combined voting power of both classes of the
Company's capital stock. Nine of the nominees for positions on the Board of
Directors of the Company are currently executive officers or directors of GTE,
or one of its subsidiaries. Based on its continuing ownership of Class B Common
Stock, GTE will continue to have the ability, without the approval of the
Company's public stockholders, to elect all of the

10
<PAGE> 13

Company's directors, to direct or substantially influence the Company's affairs
and policies, to amend the Company's Amended and Restated Certificate of
Incorporation, to effect a merger, sale of assets, or other corporate
transaction and to defeat any hostile tender offer.

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 return.

With respect to states permitting unitary or combined tax filings, GTE
includes the Company 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 if it had filed a separate tax return.

Financing and Cash Management. During 1993, 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 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 this $1.3 billion. This $1.3 billion
was originally funded by a loan from Contel Capital Corporation, 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, 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 short-term 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
short-term variable rate debt, including a portion of the debt incurred in
connection with the acquisition of the Southeast Properties, to long-term debt.
As a result of this program, the Company entered into the following loans in
1992 and 1993: (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, and (v) a $150 million loan from GTE Finance to the Company bearing
interest at 7.71% and maturing on February 25, 1997. The interest rates on these
loans are comparable United States Treasury rates plus 3% per annum and are the
rates which GTE believes approximate the interest rates the Company could obtain
in the marketplace from non-affiliated lenders. These rates exceed the interest
paid by GTE for these funds. As of April 15, 1994, the Company has borrowed
approximately $1.55 billion from GTE in long-term debt.

The Company fulfills its short term 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 March 31, 1994, the amount of the ICN was approximately
$381 million. During 1993, the interest rate on the ICN was the 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 obtain in the
marketplace from non-affiliated lenders and exceeds the interest paid by GTE for
these funds.

11
<PAGE> 14

During 1993, 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 1993, the Company received numerous services,
both primary and supplemental, from GTE Mobile Communications Service
Corporation ("GTE Mobile Communications") pursuant to a Services Agreement
between the Company and GTE Mobile Communications. These services were also
provided to GTE's wholly owned cellular subsidiary, GTE Mobilnet, Incorporated
("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 Mobile Communications for its expenses in accordance with a cost
causative allocation formula which allocated pools of costs to operating units
based on one of five factors. The five 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's consolidated and unconsolidated business units paid GTE
Mobile Communications approximately $45 million in 1993, which was approximately
41% of all of the expenses of GTE Mobile Communications.

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 a Third
Restated Competition Agreement (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 Merger which were specifically
listed in the Competition Agreement. In 1993, the Company waived its right to
purchase the company which provides cellular service in Burlington, North
Carolina and exercised its right to purchase a .2166% limited partnership
interest in the partnership in which it is a general partner and which provides
service to Tuscaloosa, Alabama for $110,460.

The Competition Agreement also provides that in the event the Company sells
certain rural service areas previously owned by Contel prior to August 1, 1993,
it will remit the proceeds of such sale, after deducting the amount of the
Company's investment, to Contel. In 1992, the Company sold interests in two of
these rural service areas at a gain of $2.5 million. This gain was deferred in
1992 and realized in 1993. The Company remitted the proceeds received from this
sale to Contel.

12
<PAGE> 15

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 17, 1994 to be beneficial owners of more
than 5% of any class of the Company's voting securities:

<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL PERCENTAGE
TITLE OF CLASS NAME AND ADDRESS OF 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 Fund 519,200(4) 5.22%
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.
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.

Directors and Executive Officers

The number of shares of Contel Cellular Class A Common Stock and GTE Common
Stock owned by each director of the Company, and each of the Executive Officers,
as of February 17, 1994, 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 CONTEL CELLULAR NUMBER OF SHARES OF
CLASS A COMMON STOCK GTE COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME OF DIRECTOR OWNED(1) OWNED(2)
- - ------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
Leo Jaffe.............................................. 2,000 0
James L. Johnson....................................... 0 627,960(3)(4)
Robert E. LaBlanc...................................... 4,000 0
Charles R. Lee......................................... 0 479,284(3)(4)
Michael T. Masin....................................... 0 2,600(5)
Russell E. Palmer...................................... 0 1,800(6)
Terry S. Parker........................................ 0 133,556(3)(4)(7)
Irwin Schneiderman..................................... 2,000 7,261
Nicholas L. Trivisonno................................. 0 110,389(3)(4)
James W. Walter........................................ 0 11,800(8)
Dennis L. Whipple...................................... 6,600(9) 12,720(3)(4)
Charles Wohlstetter.................................... 7,000 268,118
</TABLE>

13
<PAGE> 16

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CONTEL CELLULAR NUMBER OF SHARES OF
CLASS A COMMON STOCK GTE COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME OF EXECUTIVE OFFICER OWNED(1) OWNED(2)
- - ------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
Dennis L. Whipple...................................... 6,600(9) 12,720(3)(4)
Todd E. Eliason........................................ 600(9) 3,065(3)(4)
Randall L. Crouse...................................... 466(9) 4,742(3)(4)
Stephen R. Cook........................................ 466(9) 236(3)(4)
Laura E. Binion........................................ 233(9) 1,693(3)(4)
Theodore J. Carrier.................................... 13,333(9) 206(3)(4)
All directors and officers as a group (the "Executive
Group").............................................. 36,698(9) 1,703,900(3)(4)
</TABLE>

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

(1) Each of these amounts, and all of them in the aggregate, represented less
than 1% of the outstanding shares of Contel Cellular Class A Common Stock
as of February 17, 1994.
(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 February 17,
1994.
(3) Included in the number of shares beneficially owned by Messrs. Johnson, Lee,
Parker, Trivisonno and Whipple and the Executive Group are 539,375,
418,166, 118,833, 100,066, 5,300, and 1,198,289 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
9,087 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").
(6) In addition to the shares of GTE Common Stock shown above, Mr. Palmer owns
935 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.
(8) In addition to the shares of GTE Common Stock shown above, Mr. Walter owns
111,438 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,
Eliason, Crouse, Cook and Carrier and Ms. Binion and the Executive Group
are 6,600, 600, 466, 466, 13,333, 233, and 21,698 shares, respectively,
which such persons have the right to acquire within 60 days pursuant to
stock options.

Director and Officer Securities Reports

The Federal securities laws require the Company's directors and executive
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of any equity
securities of the Company.

To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all persons subject to these reporting requirements filed
the required reports on a timely basis, except Pamela F. Lopez. Ms. Lopez
inadvertently failed to timely file a Form 3 upon her election to Vice
President -- Marketing in December 1993. Ms. Lopez has since filed this Report.

14
<PAGE> 17

ELECTION OF DIRECTORS

The Board of Directors proposes that the twelve nominees listed below be
elected as directors of the Company to hold office until the next Annual Meeting
of Stockholders or until their successors are duly elected and qualified.

The following provides information about the nominees for directors. All
data is as of April 1, 1994.

JAMES L. JOHNSON..................... Chairman Emeritus of GTE, a telecommunications company.
66 1991 Mr. Johnson joined GTE in 1949 and has held a
variety of management positions within the Telephone
Operating Group. He was elected President of the GTE
Telephone Operating Group in 1981, Senior Vice
President of GTE and President and Chief Operating
Officer of its Telephone Operating Group in December
1983, President and Chief Operating Officer of GTE
in March 1986 and Chairman and Chief Executive
Officer in May 1988. Mr. Johnson is a director of
GTE, MONY (The Mutual Life Insurance Company of New
York), Valero Energy Corporation, Greyhound
Financial Corp., British Columbia Telephone Company,
Compania Anonima Nacional Telefonos de Venezuela,
VenWorld Telecom, C.A. and Harte Hanks
Communications Corporation; Member of the Texas Tech
Board of Regents and Trustee of the Joint Council of
Economic Education.

ROBERT E. LABLANC.................... President of Robert E. LaBlanc Associates, Inc., a
60 1987 telecommunications consulting firm. Mr. LaBlanc
founded and has served as President of Robert E.
LaBlanc Associates, Inc. since 1981. Prior to that
Mr. LaBlanc was Vice Chairman of Contel and a
general partner in Salomon Brothers, Inc., an
investment banking firm. Mr. LaBlanc is a director
of M/A -- COM, Inc., Storage Technology Corporation,
TIE/communications, Inc., Tribune Company,
Prudential Global Fund, Inc., Prudential Short-Term
Global Income Fund, Inc., Prudential Pacific Growth
Fund, Inc., and Trustee of Prudential U.S.
Government Fund. Mr. LaBlanc is also the Vice
Chairman of the Manhattan College Board of Trustees.
</TABLE>

15
<PAGE> 18

<TABLE>
<CAPTION>
NOMINEE, AGE AND YEAR PRINCIPAL OCCUPATION AND
ELECTED AS A DIRECTOR OTHER INFORMATION
- - ------------------------------------- ------------------------------------------------------
<S> <C>
CHARLES R. LEE....................... Chairman and Chief Executive Officer of GTE. Mr. Lee
54 1991 joined GTE in 1983 as Senior Vice President -- Finance
and in 1986 he was named Senior Vice
President -- Finance and Planning. He was elected
President and Chief Operating Officer effective
January 1, 1989, and became Chairman and Chief
Executive Officer in 1992. Prior to joining GTE, he
held various financial and management positions in
the steel, transportation and entertainment
industries. Mr. Lee is a director of GTE, United
Technologies Corporation and USX Corporation. He was
also elected a Director of The Procter & Gamble
Company, effective March 8, 1994. He is a member of
the Business Roundtable, a Trustee of the Board of
Trustees of Cornell University, a Trustee of the
National Planning Association and Chairman of the
New American Realities Committee of the National
Planning Association, a member of The Conference
Board, Harvard Business School's Board of Directors
of the Associates, and a Director of Stamford
Hospital Foundation.

MICHAEL T. MASIN..................... Vice Chairman of the Board of Directors of GTE. Mr.
49 1991 Masin was elected Vice Chairman on October 20, 1993.
Prior to that Mr. Masin was Managing Partner of the
New York office of the law firm of O'Melveny &
Myers. Mr. Masin joined the firm in 1969 and became
a partner in 1977. He is a Director of GTE and the
Trust Company of the West (Los Angeles). Mr. Masin
is a Trustee of The American University and a member
of the Council on Foreign Relations.

RUSSELL E. PALMER.................... Chairman and Chief Executive Officer of The Palmer
59 1991 Group. Mr. Palmer was formerly Dean, The Wharton
School, University of Pennsylvania from 1983 until
June 1990. Prior to that, he was managing director
and Chief Executive Officer of Touche Ross
International (now Deloitte & Touche), a worldwide
accounting firm. Mr. Palmer joined Touche Ross in
1956 and was elected managing director of Touche
Ross International in 1974. Mr. Palmer is a director
of GTE, The Goodyear Tire & Rubber Company, Bankers
Trust New York Corporation, and its subsidiary,
Bankers Trust Company, May Department Stores
Company, Allied-Signal, Inc., Safeguard Scientifics,
Inc., Imasco Limited and Federal Home Loan Mortgage
Corporation.

TERRY S. PARKER...................... Senior Vice President of GTE and President of Personal
49 1991 Communications Services, a division of GTE. Mr.
Parker assumed his present position effective
November 1993. From 1990 to 1993, Mr. Parker served
as President of Telecommunications Products and
Services. From 1988 to 1990, Mr. Parker served as
President of GTE Mobile Communications and from 1986
to 1988 he served as President of GTE Mobilnet.

IRWIN SCHNEIDERMAN................... Senior Counsel of the law firm of Cahill Gordon &
70 1990 Reindel. Prior to becoming senior counsel, Mr.
Schneiderman was a partner with this law firm.
</TABLE>

16
<PAGE> 19

<TABLE>
<CAPTION>
NOMINEE, AGE AND YEAR PRINCIPAL OCCUPATION AND
ELECTED AS A DIRECTOR OTHER INFORMATION
- - ------------------------------------- ------------------------------------------------------
<S> <C>
NICHOLAS L. TRIVISONNO............... Executive Vice President -- Strategic Planning of GTE
46 1991 and Group President. Mr. Trivisonno assumed his
present position with GTE in November 1993. Prior to
assuming his current position, Mr. Trivisonno was
Senior Vice President -- Finance of GTE. Prior to
becoming Senior Vice President of GTE, Mr.
Trivisonno served as Vice President and Controller
of GTE from November 1988 to January 1989. From 1968
to 1988, he was associated with Arthur Andersen &
Co. and served as the managing partner of its
Stamford, Connecticut office from April 1986 to
November 1988. Mr. Trivisonno is a director of
Allendale Mutual Insurance Company and Yankee Energy
Systems, Inc.

JAMES W. WALTER...................... Founder of Walter Industries, Inc. (formerly Jim
71 1991 Walter Corporation), a home construction-building
materials manufacturer, in 1946 and Chairman of its
Board since 1962. Mr. Walter is a director of GTE
and Anchor Glass Container Corporation.

DENNIS L. WHIPPLE.................... President and Chief Executive Officer of the Company.
50 1991 Mr. Whipple became President of the Company in March
1991. From April 1990 to March 1991, Mr. Whipple
served as Vice President -- Marketing and Business
Planning of GTE Mobile Communications. From 1987 to
1990, Mr. Whipple served as General Manager of the
Florida Region of GTE Mobilnet. From 1985 to 1987,
Mr. Whipple served as Assistant Vice
President -- Employee Relations of GTE Telephone
Operating Group.

CHARLES WOHLSTETTER.................. Vice Chairman of the Board of Directors of GTE. Prior
83 1987 to joining GTE's Board, Mr. Wohlstetter was Chairman
of the Board of Contel Corporation. He was one of
the three co-founders of Contel and served on its
Board since 1960. Mr. Wohlstetter was an investment
banker and a member of the New York Stock Exchange,
Inc. earlier in his career. Mr. Wohlstetter is
Chairman of the Board of Tesoro Petroleum
Corporation and a Director of GTE and Fifth
Dimension Inc.
</TABLE>

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen & Co., independent public accountants, has been selected to
continue as the Company's principal public accountants for 1994. Representatives
of Arthur Andersen & Co. will be present at the Annual Meeting and will be given
the opportunity to make a statement if they so desire and will also be available
to respond to appropriate questions.

OTHER MATTERS

The Board of Directors does not intend to bring any matters before the
meeting other than those specifically set forth in the notice of the meeting and
knows of no matters to be brought before the meeting by others. If any other
matters properly come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy in accordance with the
judgment of the Board of Directors.

17
<PAGE> 20

Financial statements for Contel Cellular and its consolidated subsidiaries
are included in Contel Cellular's Annual Report to shareholders for the year
1993. The Annual Report was mailed to the stockholders beginning April 29, 1994.

A COPY OF CONTEL CELLULAR'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE TO THOSE
STOCKHOLDERS WHO WOULD LIKE MORE INFORMATION CONCERNING CONTEL CELLULAR. TO
OBTAIN A COPY, PLEASE WRITE TO: JAY M. ROSEN, SECRETARY, CONTEL CELLULAR INC.,
245 PERIMETER CENTER PARKWAY, ATLANTA, GEORGIA 30346.

By order of the Board of Directors,

JAY M. ROSEN
Secretary

Dated: April 29, 1994

18
<PAGE> 21

CONTEL CELLULAR INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 1, 1994
CLASS A COMMON STOCK

The undersigned hereby appoints TERRY S. PARKER, DENNIS L. WHIPPLE and JAY M.
ROSEN, and each of them, with full power of substitution, proxies for the
undersigned to vote all shares of Class A Common Stock of Contel Cellular Inc.
(the "Company") which the undersigned would be entitled to vote at the Annual
Meeting of Stockholders to be held on June 1, 1994, and all adjournments or
postponements thereof, with all the powers the undersigned would possess if
personally present, and particularly but without limiting the generality of the
foregoing, to vote and act upon the following:

ITEM 1 -- Election of the following nominees as directors: Leo Jaffe; James L.
Johnson; Robert E. LaBlanc; Charles R. Lee; Michael T. Masin; Russell E. Palmer;
Terry S. Parker; Irwin Schneiderman; Nicholas L. Trivisonno; James W. Walter;
Dennis L. Whipple; Charles Wohlstetter.

<TABLE>
<C> <C> <S>
WITHHOLD AUTHORITY
FOR ALL TO VOTE FOR ALL
NOMINEES NOMINEES WITHHOLD AUTHORITY TO VOTE FOR THE FOLLOWING NOMINEES ONLY:
/ / / / (Write the name(s) of the nominee(s) in the space below)

-------------------------------------------------------------------
</TABLE>

ITEM 2 -- In accordance with their best judgment with respect to any other
matters that may properly come before the meeting.

(Continued on reverse side)

(Continued from other side)

The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement and the 1993 Annual Report of the Company.
Any proxy heretofore given to vote said stock is hereby revoked. The undersigned
hereby ratifies and confirms all that said proxies or their substitutes may
lawfully do by virtue hereof. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES IN ITEM 1. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES IN ITEM 1.
Please mark, date and sign as
your name(s) appear(s) to the
left and return in the enclosed
envelope. If acting as an
executor, administrator,
trustee, guardian, etc., you
should so indicate when
signing. If the signer is a
corporation, please sign the
full corporate name, by duly
authorized officer. If shares
are held jointly, each
stockholder named should sign.

Date
------------------------------

Signature
------------------------------

Signature
------------------------------
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF
DIRECTORS OF CONTEL
CELLULAR INC.

IMPORTANT -- Please sign, date and return this Proxy in the enclosed envelope
which requires no postage if mailed in the United States.
<PAGE> 22

(LOGO)(R)

CONTEL CELLULAR INC.

Proxy of Annual Meeting of Stockholders
June 1, 1994

The undersigned hereby appoints TERRY S. PARKER, DENNIS L. WHIPPLE and
JAY M. ROSEN, and each of them, with full power of substitution, proxies for
the undersigned to vote all shares of Class A Common Stock of Contel Cellular
Inc. (the "Company") which the undersigned would be entitled to vote, as fully
as the undersigned could vote and act if personally present, at the Annual
Meeting of Stockholders to be held on June 1, 1994, and all adjournments or
postponements thereof.

PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.

(Continued on reverse side)
<PAGE> 23
/X/ Please mark
your votes
like this

----------
COMMON

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED BELOW.

THE BOARD OF DIRECTORS RECOMMENDS WITHHOLD
A VOTE FOR ALL NOMINEES IN ITEM 1. AUTHORITY to
FOR all Vote for all
Nominees Nominees
/ / / /

Item 1--Election of the following nominees as directors: Item--2 In accordance with their best judgment
Leo Jaffe; James L. Johnson; Robert E. LaBlanc; with respect to any other matters that may
Charles R. Lee; Michael T. Masin; Russell E. Palmer; properly come before the meeting.
Terry S. Parker; Irwin Schneiderman; Nicholas L. Trivisonno;
James W. Walter; Dennis L. Whipple; Charles Wohlstetter.

Withhold Authority to Vote for the Following Nominees Only:
(Write the name(s) of the nominee(s) in the space below)

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

I PLAN TO ATTEND / /
MEETING

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF CONTEL CELLULAR INC.
PLEASE mark, date and sign as your name(s)
appear(s) to the left and return in the
enclosed envelope. If acting as an executor,
administrator, trustee, guardian, etc. you
should so indicate when signing name, by duly
authorized officer. If shares are held
jointly, each stockholder named should sign.

DATE
-------------------------------------------
SIGNATURE
-------------------------------------------
SIGNATURE
-------------------------------------------
IMPORTANT--PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

</TABLE>