PALMER WIRELESS INC, 424B1, 1996-06-13

PALMER WIRELESS INC
424B1, 1996-06-13
RADIOTELEPHONE COMMUNICATIONS

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<PAGE> 1
File pursuant to Rule 424(b)(1).
Registration No. 333-00122

5,000,000 SHARES
[PALMER WIRELESS, INC. LOGO]
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------

All of the 5,000,000 shares of Class A Common Stock offered hereby (the
"Offering") are being sold by the Company.

The Company has two classes of authorized Common Stock, Class A Common
Stock, par value $.01 per share, and Class B Common Stock, par value $.01 per
share. The rights of the Class A Common Stock and the Class B Common Stock are
substantially identical, except that holders of the Class A Common Stock are
entitled to one vote per share and holders of the Class B Common Stock are
entitled to five votes per share. Both classes will vote together as one class
on all matters generally submitted to a vote of stockholders, including the
election of directors. See "Description of Capital Stock". Palmer Communications
Incorporated owns all of the outstanding shares of Class B Common Stock, which
represents 75.0% of the combined voting power of both classes of Common Stock.
As a result, Palmer Communications Incorporated has the ability to elect all of
the Company's directors and will continue to control the Company. See "Risk
Factors -- Control of the Company by PCI" and "Description of Capital Stock --
Common Stock".

The Class A Common Stock is quoted on the Nasdaq National Market under the
symbol "PWIR". On June 12, 1996, the last reported sale price of the Class A
Common Stock was $20.50 per share. See "Price Range of Class A Common Stock and
Dividend Policy."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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

<TABLE>
<CAPTION>
PUBLIC
OFFERING UNDERWRITING PROCEEDS TO
PRICE DISCOUNT(1) COMPANY(2)
------------- ----------- ------------
<S> <C> <C> <C>
Per Share........................................................ $20.00 $1.00 $19.00
Total(3)......................................................... $ 100,000,000 $ 5,000,000 $ 95,000,000
</TABLE>

- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(2) Before deducting estimated expenses of $500,000 payable by the Company.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 750,000 shares at the public offering price per share,
less the underwriting discount, solely to cover over-allotments. If such
option is exercised in full, the total Public Offering Price, Underwriting
Discount and Proceeds to Company will be $115,000,000, $5,750,000 and
$109,250,000, respectively. See "Underwriting".
------------------------

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares of Class A Common Stock offered hereby will be ready for delivery
in New York, New York, on or about June 18, 1996.

GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC

WHEAT FIRST BUTCHER SINGER
------------------------
The date of this Prospectus is June 12, 1996.
<PAGE> 2

The map depicts the location of the Company's cellular service areas
in Florida, Georgia, Alabama and South Carolina.

(ARTWORK)

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE CLASS A COMMON
STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6a UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING".

2
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus. Unless otherwise indicated, the information contained in this
Prospectus assumes that the Underwriters' over-allotment option is not
exercised. Each prospective investor is urged to read this Prospectus in its
entirety.

THE COMPANY

The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. At
March 31, 1996, the Company provided cellular telephone service to 227,400
subscribers in Florida, Georgia, Alabama and South Carolina in a total of 15
licensed service areas composed of nine Metropolitan Statistical Areas ("MSAs")
and six Rural Service Areas ("RSAs"), with an aggregate estimated population of
3.3 million. The Company recently has entered into definitive agreements to
acquire cellular telephone systems located in the Georgia-6 RSA Market No.
376(A) and the Georgia-1 RSA Market No. 371(A) (collectively, the "Proposed
Acquisitions"). If consummated, the Proposed Acquisitions will result in the
Company expanding its cellular service in Georgia by approximately 6,222
subscribers (as of March 31, 1996) and by two additional RSAs with an aggregate
estimated population of 0.4 million. The Company sells its cellular telephone
service as well as a full line of cellular products, services and accessories
principally through its network of retail stores. The Company markets all of its
products and services under the nationally-recognized service mark CELLULAR
ONE(R).

OPERATIONS

The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in three
market areas in order to provide broad areas of uninterrupted service and
achieve certain economies of scale, including centralized marketing and
administrative functions as well as multi-system capital expenditures. The
Company devotes considerable attention to engineering, maintenance and
improvement of its cellular telephone systems in an effort to deliver
high-quality service to its subscribers and to implement new technologies as
soon as economically practicable. Through its participation in the North
American Cellular Network ("NACN"), the Company is able to offer seven-digit
dialing access to its subscribers when they travel outside the Company's service
areas, providing them with convenient roaming access throughout large areas of
the United States, Canada, Mexico and Puerto Rico currently served by other NACN
participants. By marketing its products and services under the CELLULAR ONE name
throughout the markets it serves, the Company also enjoys the benefits of
association with a nationally-recognized service mark.

The Company's cellular telephone systems serve three distinct markets. The
largest of these markets includes 13 contiguous licensed service areas in
Georgia, Alabama and South Carolina which had an aggregate estimated population
of 2.8 million for 1995. The Proposed Acquisitions, if consummated, will
increase the number of licensed service areas in the Company's
Georgia/Alabama/South Carolina market to 15 and increase the aggregate estimated
population of those service areas to 3.2 million. The Company's other two
markets are located in Fort Myers, Florida and Panama City, Florida, which had
aggregate estimated populations for 1995 of 0.4 million and 0.1 million,
respectively.

STRATEGY

The Company's four strategic objectives are to: (1) expand its regional
wireless communications presence by selectively acquiring additional interests
in cellular telephone systems (including minority interests), (2) expand its
revenue base by increasing penetration in existing service areas and encouraging
greater usage among its existing customers, (3) provide high-quality customer
service to create and maintain customer loyalty and (4) enhance performance by
aggressively pursuing opportunities to increase operating efficiencies.

3
<PAGE> 4

RECENT DEVELOPMENTS

In March 1995, the Company successfully completed an initial public
offering (the "IPO") of 5,000,000 shares of Class A Common Stock, par value $.01
per share ("Class A Common Stock"), at $14.25 per share, with proceeds net of
underwriting discount to the Company totaling $66.3 million. On April 18, 1995,
the underwriters of the IPO purchased an additional 369,350 shares of Class A
Common Stock pursuant to their exercise of the over-allotment option resulting
in additional proceeds net of underwriting discount to the Company totaling $4.8
million and total proceeds net of underwriting discount to the Company from the
IPO of $71.1 million.

On December 1, 1995, the Company acquired Georgia Metronet, Inc. ("GMI")
and Augusta Metronet, Inc. ("AMI" and together with GMI, the "GTE Companies")
for an aggregate purchase price of $158.4 million (the "GTE Acquisition"). As of
March 31, 1996, GMI owned a 98.2% interest in the Savannah Cellular Limited
Partnership, which holds the license granted by the FCC for the Savannah,
Georgia MSA. AMI holds the FCC license for the Augusta, Georgia MSA. The
cellular telephone systems in the newly-acquired MSAs serve a geographic
territory in eastern Georgia and a portion of South Carolina that is adjacent to
the Company's existing markets in the Georgia-8 RSA and Georgia-12 RSA. In
addition, the Company has also acquired the interim authority to provide
cellular service to the southern portions of South Carolina RSA Market Nos. 631
and 632, otherwise known as South Carolina-7 RSA and South Carolina-8 RSA,
respectively, which serve a geographic territory that is adjacent to the
Company's existing markets in the Georgia-8 RSA as well as the Savannah, Georgia
MSA and the Augusta, Georgia MSA. As a result of the GTE Acquisition, the
Company increased the number of subscribers served by its cellular telephone
systems by 35,144 and its Net Pops by 708,524 as of December 1, 1995.

On March 22, 1996, two of the Company's subsidiaries, Columbus Cellular
Telephone Company ("Columbus") and Macon Cellular Telephone Systems Limited
Partnership ("Macon") entered into a definitive agreement to acquire the
cellular telephone system of Horizon Cellular Telephone Company of Spalding,
L.P. ("Horizon") for a cash purchase price of $35 million, subject to certain
adjustments (the "Proposed GA-6 Acquisition"). The entire purchase price will be
financed through borrowings under the Company's existing Credit Facility (as
defined). As of March 31, 1996, the Company and its wholly owned subsidiaries
owned 84.2% of the outstanding partnership interests in Columbus and 98.7% of
the outstanding partnership interests in Macon. The assets to be acquired by the
Company from Horizon include the cellular telephone system in the Georgia-6 RSA
Market No. 376(A) ("Georgia-6 RSA"), which serves a geographic territory that is
adjacent to the Company's existing markets in the Macon and Columbus, Georgia
MSAs. There can be no assurance that the Proposed GA-6 Acquisition will be
consummated. See "Risk Factors -- Proposed Acquisitions." As of March 31, 1996,
the Georgia-6 RSA served 4,844 subscribers and, if consummated, the Proposed
GA-6 Acquisition would increase the Company's Net Pops by 185,647.

On April 23, 1996, the Company entered into a definitive agreement to
acquire the cellular telephone system of USCOC of Georgia RSA #1, Inc. ("USCOC")
for a cash purchase price of $31.5 million, subject to certain adjustments (the
"Proposed GA-1 Acquisition"). The entire purchase price will be financed through
borrowings under the Company's existing Credit Facility. The assets to be
acquired by the Company from USCOC include the cellular telephone system located
in Georgia-1 RSA Market No. 371(A) ("Georgia-1 RSA"), which serves a geographic
territory in northwestern Georgia, north of the city of Atlanta. There can be no
assurance that the Proposed GA-1 Acquisition will be consummated. See "Risk
Factors -- Proposed Acquisitions." As of March 31, 1996, the Georgia-1 RSA
served 1,378 subscribers and, if consummated, the Proposed GA-1 Acquisition
would increase the Company's Net Pops by 217,283.

RELATIONSHIP WITH PALMER COMMUNICATIONS INCORPORATED

Palmer Wireless, Inc., a Delaware corporation ("Palmer Wireless"), was
formed in December 1993 and is a subsidiary of Palmer Communications
Incorporated, a Delaware corporation ("PCI"). PCI

4
<PAGE> 5

entered the cellular telephone business in 1987 in Fort Myers, Florida. Starting
in 1989, PCI transferred its cellular properties to Palmer Cellular Partnership,
an Iowa general partnership (the "Partnership"), which conducted PCI's cellular
telephone business until March 1995. During this period, the Partnership
acquired and integrated 12 additional cellular telephone systems, which enlarged
its coverage area and enabled it to enjoy economies of scale and operating
synergies in its cellular telephone business within its three market areas.

Since March 1995, PCI's cellular telephone operations have been conducted
by Palmer Wireless. In March 1995, contemporaneously with the IPO, (a) the
partnership interests in the Partnership, the assets and liabilities of the
Partnership and certain other assets were transferred to Palmer Wireless in
exchange for (i) 704,755 shares of Class A Common Stock of Palmer Wireless, all
of which were distributed to the partners of the Partnership other than PCI, and
(ii) 17,288,578 shares of Class B Common Stock, par value $.01 per share, of
Palmer Wireless (the "Class B Common Stock"), all of which were distributed to
PCI, and (b) the Partnership was liquidated (collectively, the "Exchange"). See
"The Exchange" and "Principal Stockholders". Prior to the Exchange, Palmer
Wireless had no operations and had no material assets or liabilities other than
deferred expenses incurred before the IPO. After completion of the Offering, PCI
will continue to control Palmer Wireless. See "Risk Factors -- Control of the
Company by PCI" and "Description of Capital Stock -- Common Stock".
------------------------

Unless the context indicates or requires otherwise, any reference in this
Prospectus to (1) the "Partnership" refers to the Partnership and its
subsidiaries, (2) "Palmer Wireless" refers to Palmer Wireless and its
subsidiaries and (3) the "Company" refers, with respect to any date prior to
completion of the Exchange, to the Partnership, and, with respect to any date
subsequent to completion of the Exchange, to Palmer Wireless. Any reference in
this Prospectus to a "service area" of the Company is to an area in which the
Company has been issued a license by the FCC to provide cellular telephone
service. Any reference in this Prospectus to "Net Pops" is to the estimated
population with respect to a given cellular service area multiplied by the
percentage interest that the Company owns in the entity licensed in such
cellular service area.

5
<PAGE> 6

THE OFFERING

Class A Common Stock offered by
the Company..................... 5,000,000 shares

Class A Common Stock to be
outstanding after the
Offering(1)..................... 11,102,438 shares

Class B Common Stock to be
outstanding after the Offering.. 17,293,578 shares

Total Common Stock to be
outstanding after the
Offering(1)..................... 28,396,016 shares

Relative Rights of Shares......... The shares of Class A Common Stock have one
vote per share while the shares of Class B
Common Stock have five votes per share (the
Class A Common Stock and Class B Common
Stock are collectively referred to herein
as "Common Stock"); provided, however, that
the holders of Class B Common Stock are
entitled to cast only that number of votes
per share such that, in the aggregate, the
vote of the holders of Class B Common Stock
is no more than 75.0% of the total votes
cast on any matters on which holders of
outstanding Common Stock are permitted to
vote. Shares of Class A Common Stock and
Class B Common Stock vote together on all
matters, including the election of
directors. The Class B Common Stock, which
has effective control of the Company and
may be owned only by PCI or certain
successors of PCI, is not being offered by
this Prospectus. Class B Common Stock is
convertible into Class A Common Stock on a
share-for-share basis: (i) at the option of
the holder; (ii) immediately upon transfer
of shares of Class B Common Stock to any
holder other than certain successors of
PCI; (iii) immediately if the shares of
Class B Common Stock constitute 33.0% or
less of the outstanding shares of common
stock of the Company; (iv) at the end of 20
years from the original issuance of those
shares of Class B Common Stock; or (v)
under certain circumstances involving a
change of beneficial ownership of more than
50.0% of the shares of capital stock of
PCI. See "Description of Capital Stock".

Use of Proceeds................... The net proceeds of the Offering are
estimated to be approximately $94.5 million
(approximately $108.8 million if the
Underwriters' over-allotment option is
exercised in full), after deducting the
estimated underwriting discount,
transaction fees and expenses of the
Offering payable by the Company. At March
31, 1996, the Company had an outstanding
balance under the Credit Facility of $345.0
million. The net proceeds of the Offering
will be used to reduce amounts outstanding
under the Credit Facility. See "Use of
Proceeds".

Nasdaq National Market symbol..... PWIR

Dividend Policy................... The Company does not anticipate paying
dividends on the Common Stock, cash or
otherwise, in the foreseeable future. The
Company's ability to pay dividends is
limited by the terms of the Credit
Facility. See "Price Range of Class A
Common Stock and Dividend Policy".
- ---------------
(1) Does not include 2,058,334 shares of Class A Common Stock reserved for
issuance under the Company's existing stock option and stock purchase plans
as of April 25, 1996. As of April 25, 1996, there are options outstanding
under the Company's two stock option plans to purchase an aggregate of
738,334 shares of Class A Common Stock. See "Management -- Executive
Compensation -- Stock Options" and "-- Stock Purchase Plans".

6
<PAGE> 7

SELECTED OWNERSHIP DATA

The following table sets forth, with respect to each licensed service area
in which the Company owns (assuming consummation of the Proposed Acquisitions) a
cellular telephone system, the aggregate estimated population for 1995, the
Company's beneficial ownership percentage and the Net Pops as of March 31, 1996,
and the date of the initial operation of such system by the Company or a
predecessor operator.

<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Georgia/Alabama
Albany, GA........................................... 117,842 82.7% 97,455 4/88
Augusta, GA.......................................... 434,547 100.0 434,547 4/87
Columbus, GA......................................... 256,783 84.2 216,211 11/88
Macon, GA............................................ 311,472 98.7 307,423 12/88
Savannah, GA......................................... 279,854 98.2 274,817 3/88
Georgia-1 RSA(3)..................................... 217,283 100.0 217,283 10/92
Georgia-6 RSA(4)..................................... 196,660 94.4 185,647 4/93
Georgia-7 RSA........................................ 132,550 100.0 132,550 9/91
Georgia-8 RSA........................................ 155,516 100.0 155,516 10/91
Georgia-9 RSA........................................ 118,689 100.0 118,689 9/92
Georgia-10 RSA....................................... 148,207 100.0 148,207 10/91
Georgia-12 RSA....................................... 211,720 100.0 211,720 10/91
Dothan, AL........................................... 135,209 92.1 124,527 2/89
Montgomery, AL....................................... 316,463 91.9 290,829 7/88
Alabama-8 RSA........................................ 169,573 100.0 169,573 7/93
------------- ----------
Subtotal........................................... 3,202,368 3,084,994
Fort Myers, FL......................................... 375,454 99.0 371,700 8/87
Panama City, FL........................................ 142,905 77.9 111,323 9/88
------------- ----------
Total......................................... 3,720,727 3,568,017
=========== ========
</TABLE>

- ---------------
(1) Does not include South Carolina-7 RSA and South Carolina-8 RSA where the
Company has interim operating authority as a result of the GTE Acquisition.
The Company has no subscribers and maintains no cell sites in South
Carolina-7 RSA and South Carolina-8 RSA, but instead provides roaming access
to its own subscribers and others when they travel in these two service
areas, utilizing its existing cell sites in adjacent service areas. Does not
include Alabama-5 RSA where the Company has interim operating authority.
(2) Based on population estimates for 1995 from The Sourcebook of County
Demographics, Eighth Edition, 1995, published by CACI Marketing Services
(the "CACI Sourcebook"), which estimates are calculated based on the 1990
Census and U.S. Bureau of Census Current Population Reports.
(3) Assumes consummation of the Proposed GA-1 Acquisition.
(4) Assumes consummation of the Proposed GA-6 Acquisition.

7
<PAGE> 8

SELECTED OPERATING DATA

The following table sets forth information, at the dates indicated,
regarding the estimated aggregate population in the Company's licensed service
areas and the Company's aggregate Net Pops, subscribers, penetration rate, cost
to add a net subscriber, average monthly churn rate and average monthly revenue
per subscriber.
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------------------------------------------- ---------------------------------------
1991 1992 1993 1994(1) 1995(2) 1995 1996 1996
--------- --------- --------- ---------- ---------- --------- --------- ---------------
PRO FORMA(3)
---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Estimated
population(4)....... 1,554,226 1,692,515 1,889,770 2,561,256 3,306,784 2,570,443 3,306,784 3,720,727
Net Pops.............. 1,304,906 1,463,482 1,701,173 2,403,494 3,160,037 2,436,871 3,165,087 3,568,017
Subscribers(5)........ 22,536 37,209 65,761 117,224 211,985 128,661 227,400 233,622
Penetration(6)........ 1.45% 2.20% 3.48% 4.58% 6.41% 5.01% 6.88% 6.28%
Cost to add a net
subscriber(7)....... $ 405 $ 283 $ 203 $ 247 $ 276 $ 315 $ 357 $ 369
Average monthly churn
rate(8)............. 2.49% 1.69% 1.37% 1.55% 1.55% 1.51% 1.51% 1.53%
Average monthly
service revenue per
subscriber(9)....... $ 78.81 $ 68.30 $ 62.69 $ 60.02 $ 56.68 $ 56.64 $ 52.10 $ 52.95
</TABLE>

- ---------------
(1) Includes the acquisition by the Company on October 31, 1994 of the cellular
telephone systems of Southeast Georgia Cellular Limited Partnership ("SGC")
and Georgia 12 Cellular Limited Partnership ("Georgia 12" and together with
SGC, the "Georgia Partnerships"), serving Georgia-7 RSA, Georgia-8 RSA,
Georgia-10 RSA and Georgia-12 RSA (the "Georgia Acquisition"). At December
31, 1994, the Georgia Partnerships' Estimated population, Net Pops,
Subscribers and Penetration were 640,624, 640,624, 12,140 and 1.90%,
respectively. For the two months ended December 31, 1994, the Georgia
Partnerships' Cost to add a net subscriber, Average monthly churn rate and
Average monthly service revenue per subscriber were $322, 3.21% and $74.56,
respectively.
(2) Includes the GTE Acquisition, which occurred on December 1, 1995. At
December 31, 1995, the GTE Companies' Estimated population, Net Pops,
Subscribers and Penetration were 714,401, 708,524, 34,904 and 4.89%,
respectively. For the one month ended December 31, 1995, the GTE Companies'
Average monthly churn rate and Average monthly service revenue per
subscriber were 5.40% and $58.04, respectively.
(3) Adjusted to reflect the Proposed Acquisitions (assuming each such
acquisition occurred at the beginning of the period). For the three months
ended March 31, 1996, Horizon's Cost to add a net subscriber, Penetration,
Average monthly churn rate and Average monthly service revenue per
subscriber for Georgia-6 RSA were $577, 2.46%, 1.85% and $92.07,
respectively. For the three months ended March 31, 1996, USCOC's Cost to add
a net subscriber, Penetration, Average monthly churn rate and Average
monthly service revenue per subscriber for Georgia-1 RSA were $1,098, 0.63%,
4.23% and $188.39, respectively.
(4) Based on year-end population estimates from the CACI Sourcebook.
(5) Each billable telephone number in service represents one subscriber, not
including test, demonstration or other telephone numbers for which payment
is not expected. Amounts at December 31, 1991, 1992 and 1993 include the
subscribers in the Alabama-7 RSA where the Company had interim operating
authority from June 4, 1991 through July 1, 1994. The number of subscribers
served in the Alabama-7 RSA was 335, 955 and 2,576 at December 31, 1991,
1992 and 1993, respectively. In 1994, the Company entered into an agreement
to sell the accounts of its subscribers in the Alabama-7 RSA to the third
party licensee of this RSA.
(6) Determined by dividing the aggregate number of subscribers by the estimated
population.
(7) Determined for the 12-month periods ended December 31, 1991, 1992, 1993,
1994 and 1995 and for the three months ended March 31, 1995 and 1996
(including the pro forma three months ended March 31, 1996) by dividing (i)
the amount of all costs of sales and marketing, including salaries,
commissions and employee benefits paid to all sales and marketing personnel,
travel and accommodations, meals and entertainment expenses incurred by
sales and marketing personnel, training and education of such personnel, all
advertising and promotion expenses (including cash or trade), agent
commissions, credit reference expenses, losses on cellular telephone sales,
rental expenses allocated to retail operations, net installation expenses
and other miscellaneous sales and marketing charges for such period, by (ii)
the net subscribers added during such period. Cost to add a net subscriber
does not include engineering and technical expenses, interconnect charges or
general and administrative expenses.
(8) Determined for the 12-month periods ended December 31, 1991, 1992, 1993,
1994 and 1995 and for the three months ended March 31, 1995 and 1996
(including the pro forma three months ended March 31, 1996) by dividing
total subscribers discontinuing service during such period by the average
subscribers for such period (beginning subscribers plus ending subscribers,
divided by two), and dividing that result by the number of months in such
period.
(9) Determined for the 12-month periods ended December 31, 1991, 1992, 1993,
1994 and 1995 and for the three months ended March 31, 1995 and 1996
(including the pro forma three months ended March 31, 1996) by dividing the
sum of the access, airtime, roaming, long distance, features, connection,
disconnection and other revenues for such period by average subscribers for
such period (the sum of the number of subscribers at the beginning of each
month in such period divided by the number of months in such period), and
dividing that result by the number of months in such period.

8
<PAGE> 9

SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data set forth below have been derived
from the Company's audited consolidated financial statements for the four years
ended December 31, 1995 (the "Consolidated Financial Statements"), the
Partnership's audited consolidated financial statements for the year ended
December 31, 1991, the Company's unaudited condensed consolidated financial
statements for the three months ended March 31, 1995 and 1996, the Company's pro
forma combined summaries of operations for the year ended December 31, 1995 and
the three months ended March 31, 1996 and the Company's pro forma combined
balance sheet as of March 31, 1996 (collectively, the "Pro Forma Financial
Statements"). The summary consolidated financial data set forth below should be
read in conjunction with the Pro Forma Financial Statements, the historical
financial statements listed on pages F-1 and F-2 hereto (the "Historical
Financial Statements") and related notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1991 1992 1993 1994(1) 1995(2) 1995
----------- ----------- ----------- ---------------
PRO FORMA(3)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue
Service......................... $ 16,579 $ 23,017 $ 35,173 $ 61,021 $ 96,686 $ 123,673
Equipment sales and
installation.................. 3,532 4,284 6,285 7,958 8,220 9,285
----------- ----------- ----------- ----------- ----------- ---------------
Total revenue................. $ 20,111 $ 27,301 $ 41,458 $ 68,979 $ 104,906 $ 132,958
----------- ----------- ----------- ----------- ----------- ---------------
Engineering, technical and other
direct expenses................. 4,404 5,395 7,343 12,776 18,184 22,044
Cost of equipment................ 3,727 5,071 7,379 11,546 14,146 16,783
Selling, general and
administrative expenses......... 7,308 9,458 13,886 19,757 30,990 40,893
Depreciation and amortization.... 11,513 11,687 10,689 9,817 15,004 22,186
----------- ----------- ----------- ----------- ----------- ---------------
Operating income (loss).......... $ (6,841) $ (4,310) $ 2,161 $ 15,083 $ 26,582 $ 31,052
Other income (expense):
Interest, net................... (8,218) (8,290) (9,006) (12,715) (21,213) (30,190)
Other, net...................... (25) (5) (590) (70) (687) (673)
----------- ----------- ----------- ----------- ----------- ---------------
Total other expense........... $ (8,243) $ (8,295) $ (9,596) $ (12,785) $ (21,900) $ (30,863)
Minority interest share of
(income) losses................. 818 377 83 (636) (1,078) (968)
Income taxes..................... 0 0 0 0 (2,650) (2,650)
----------- ----------- ----------- ----------- ----------- ---------------
Net income (loss)................ $ (14,266) $ (12,228) $ (7,352) $ 1,662 $ 954 $ (3,429)
=========== =========== =========== =========== =========== =================
PER SHARE DATA:
Net income (loss) per share of
common stock(4)................. $ (0.79) $ (0.68) $ (0.41) $ 0.09 $ 0.04 $ (0.12)
Average shares of common stock
outstanding(5).................. 17,993,333 17,993,333 17,993,333 18,000,000 22,326,613 28,369,350
OTHER DATA:
Capital expenditures............. $ 2,647 $ 3,835 $ 13,304 $ 22,541 $ 36,564 $ 39,332
Total subscribers at end of
period(6)....................... 22,536 37,209 65,761 117,224 211,985 217,676
Operating income before
depreciation and amortization
("EBITDA")(7)................... $ 4,672 $ 7,377 $ 12,850 $ 24,900 $ 41,586 $ 53,238
EBITDA margin on service
revenue......................... 28.2% 32.1% 36.5% 40.8% 43.0% 43.0%

<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------
1995 1996 1996
--------------- --------------- ---------------
PRO FORMA(3)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue
Service......................... $ 20,408 $ 33,856 $ 35,497
Equipment sales and
installation.................. 1,966 2,035 2,096
--------------- --------------- ---------------
Total revenue................. $ 22,374 $ 35,891 $ 37,593
--------------- --------------- ---------------
Engineering, technical and other
direct expenses................. 3,860 6,624 6,586
Cost of equipment................ 3,144 3,931 4,084
Selling, general and
administrative expenses......... 7,131 10,924 11,592
Depreciation and amortization.... 3,367 5,898 6,456
--------------- --------------- ---------------
Operating income (loss).......... $ 4,872 $ 8,514 $ 8,875
Other income (expense):
Interest, net................... (5,730) (7,945) (7,348)
Other, net...................... (328) -- 1
--------------- --------------- ---------------
Total other expense........... $ (6,058) $ (7,945) $ (7,347)
Minority interest share of
(income) losses................. (122) (452) (431)
Income taxes..................... (2,650) (41) (263)
--------------- --------------- ---------------
Net income (loss)................ $ (3,958) $ 76 $ 834
=========== =============== ===============
PER SHARE DATA:
Net income (loss) per share of
common stock(4)................. $ (0.21) $ 0.00 $ 0.03
Average shares of common stock
outstanding(5).................. 18,611,111 23,561,923 28,561,923
OTHER DATA:
Capital expenditures............. $ 4,442 $ 6,618 $ 6,983
Total subscribers at end of
period(6)....................... 128,661 227,400 233,622
Operating income before
depreciation and amortization
("EBITDA")(7)................... $ 8,239 $ 14,412 $ 15,331
EBITDA margin on service
revenue......................... 40.4% 42.6% 43.2%
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------------
1991 1992 1993 1994(8) 1995(9)
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash.............................. $ 257 $ 443 $ 1,670 $ 2,998 $ 3,436
Working capital (deficit)......... 2,816 (740) 799 2,490 (1,435)
Property, plant, and equipment,
net.............................. 19,113 17,371 23,918 51,884 100,936
Licenses and other intangibles,
net.............................. 102,001 103,901 114,955 199,265 332,850
Total assets...................... 127,507 127,867 150,054 273,020 462,871
Total debt(11).................... 94,921 106,811 131,361 245,609 350,441
Equity............................ 22,887 10,659 3,244 4,915 74,553

<CAPTION>
AS OF MARCH 31, 1996
-------------------------------
ACTUAL PRO FORMA(10)
--------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash.............................. $ 4,553 $ 4,553
Working capital (deficit)......... (2,542) (2,085)
Property, plant, and equipment,
net.............................. 103,885 112,399
Licenses and other intangibles,
net.............................. 333,284 389,063
Total assets...................... 466,041 531,905
Total debt(11).................... 352,603 322,853
Equity............................ 74,629 169,129
</TABLE>

(Footnotes on following page)

9
<PAGE> 10

(Footnotes from previous page)
- ---------------
(1) Includes the Georgia Acquisition, which occurred on October 31, 1994. For
the two months ended December 31, 1994, the Georgia Acquisition resulted in
revenues to the Company of $1,803 and operating income (loss) of ($645).
(2) Includes the GTE Acquisition, which occurred on December 1, 1995. For the
one month ended December 31, 1995, the GTE Acquisition resulted in
additional revenues to the Company of $2,126 and additional operating
income of $208.
(3) For the year ended December 31, 1995, adjusted to reflect the pro forma
effects of the IPO and the Offering (including the application of the net
proceeds of the IPO and the estimated net proceeds of the Offering to
reduce amounts outstanding under the Credit Facility and related interest
expense), the GTE Acquisition, the Proposed Acquisitions and the
acquisition of certain minority interests in the Company's cellular systems
(assuming each such transaction occurred at the beginning of the period).
For the three months ended March 31, 1996, adjusted to reflect the pro
forma effects of the Offering (including the application of the estimated
net proceeds of the Offering to reduce amounts outstanding under the Credit
Facility and related interest expense), the Proposed Acquisitions and the
acquisition of certain minority interests in the Company's cellular systems
(assuming each such transaction occurred at the beginning of the period).
For information relating to pro forma assumptions and adjustments, see the
Pro Forma Financial Statements and related notes thereto included in this
Prospectus.
(4) Net income (loss) for the period divided by the weighted average number of
shares of Common Stock outstanding.
(5) Excludes 2,065,000 shares of Class A Common Stock reserved for issuance
under the Company's existing stock option and stock purchase plans;
however, for the year ended December 31, 1995, the three months ended March
31, 1996 and the pro forma three months ended March 31, 1996, stock options
outstanding have been considered common stock equivalents and have
increased the average shares of Common Stock outstanding by 147,620,
172,573, and 172,573 shares, respectively (computed using the treasury
stock method).
(6) Amounts at December 31, 1991, 1992 and 1993 include the subscribers in the
Alabama-7 RSA where the Company had interim operating authority from June
4, 1991 through July 1, 1994. The number of subscribers served in the
Alabama-7 RSA was 335, 955 and 2,576 at December 31, 1991, 1992 and 1993,
respectively. In 1994, the Company entered into an agreement to sell the
accounts of its subscribers in the Alabama-7 RSA to the third party
licensee of this RSA.
(7) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income (loss),
operating income (loss) or any other measure of performance under generally
accepted accounting principles ("GAAP"). The Company believes that
operating income before depreciation and amortization is viewed as a
relevant supplemental measure of performance in the cellular telephone
industry.
(8) Includes the Georgia Acquisition, which occurred on October 31, 1994.
(9) Includes the GTE Acquisition, which occurred on December 1, 1995.
(10) Adjusted to reflect the pro forma effects of the Offering (including the
application of the estimated net proceeds of the Offering to reduce amounts
outstanding under the Credit Facility) and the Proposed Acquisitions
(assuming each such transaction occurred on March 31, 1996). For
information relating to pro forma assumptions and adjustments, see the Pro
Forma Financial Statements and related notes thereto included in this
Prospectus.
(11) Includes current installments of long-term debt and amounts due PCI.

10
<PAGE> 11

RISK FACTORS

The following factors, in addition to the other information contained
elsewhere in this Prospectus, should be considered carefully in evaluating the
Company and its business.

HISTORY OF NET LOSSES

Although the Company had a net income of $1.7 million and $1.0 million for
the years ended December 31, 1994 and 1995, respectively, it sustained a net
loss in each of the preceding three fiscal years and on a pro forma basis for
1995 its net loss would have been $(3.4) million. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations". There can be no
assurance that the Company's operations will remain profitable in the future.

CONTROL OF THE COMPANY BY PCI

PCI owns all of the outstanding shares of Class B Common Stock, which
represents 75.0% of the combined voting power of both classes of Common Stock.
The capital stock of PCI is owned by members of the Palmer family and trusts
created for the benefit of Palmer family members. See "Principal Stockholders".
Two family members, who are stockholders, are also directors of PCI and are
represented on the Company's board of directors. Certain other directors of PCI
are also directors and executive officers of the Company. Accordingly, PCI and
its stockholders are able, without the approval of the Company's public
stockholders, to (i) elect all of the Company's directors, (ii) amend the
Company's restated certificate of incorporation (the "Restated Certificate of
Incorporation") with respect to most matters or effect a merger, sale of assets,
or other major corporate transaction, (iii) defeat any non-negotiated takeover
attempt, (iv) sell PCI's shares of Class B Common Stock without participation in
such sale by the Company's public stockholders, (v) determine the amount and
timing of dividends paid, if any, with respect to Common Stock and (vi)
otherwise control the management and operations of the Company and the outcome
of virtually all matters submitted for a stockholder vote. PCI may also, by
converting its shares of Class B Common Stock into shares of Class A Common
Stock, obtain a sufficient number of shares of Class A Common Stock to determine
the outcome of any vote with respect to any matter on which the holders of Class
A Common Stock are entitled to vote together as a class.

In addition, there are various measures included in the Restated
Certificate of Incorporation and bylaws (the "Bylaws") and in the Credit
Facility that may have the effect of discouraging non-negotiated takeover
attempts of the Company. In particular, the Credit Facility provides for an
event of default if (i) PCI and PCI's existing stockholders and any trust the
beneficiaries of which are any of the stockholders or any of their immediate
family members cease together to own (x) at least 51.0% of all voting rights
with respect to the capital stock of the Company, (y) at least 33.0% of all
outstanding shares of capital stock of the Company or (z) the single largest
percentage of the outstanding shares of capital stock of the Company, (ii) PCI's
existing stockholders and any trust the beneficiaries of which are any of the
stockholders or any of their immediate family members cease together to own (x)
at least 51.0% of each class of the capital stock of PCI having the right to
vote in an election of PCI's directors or (y) at least 51.0% of all the
outstanding shares of capital stock of PCI, or (iii) the Company (x) sells,
leases, abandons or otherwise disposes of any of its assets, other than in the
ordinary course of business, without the prior written consent of its lenders or
(y) merges with another corporation. See "Description of Capital Stock" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Facility".

COMPETITION FROM WIRELINE TELEPHONE COMPANIES AND NEW TECHNOLOGIES

Although current policies of the FCC authorize only two licensees to
operate cellular telephone systems in each cellular market, there is, and the
Company expects there will continue to be, significant competition from the
other licensee authorized to serve each cellular market in which the Company
operates, as well as from resellers of cellular service. Competition for
subscribers between cellular licensees is based principally upon the services
and enhancements offered, the technical quality of the cellular telephone
system, customer service, system coverage and capacity and price. The Company

11
<PAGE> 12

competes with a wireline licensee in each of its cellular markets, some of which
are larger and have access to more substantial capital resources than the
Company.

The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, specialized mobile
radio ("SMR") and enhanced specialized mobile radio ("ESMR") systems and paging
services. ESMR is a "cellular-like" communications service supplied by
converting analog SMR services into an integrated, digital transmission system
providing for call hand-off, frequency reuse and wide call delivery networks.
The Company will also face competition from personal communications services
("PCS"). PCS is a digital, wireless communications system supported by
high-density call transmitters. It is expected that broadband PCS will involve a
network of small, low-powered transceivers placed throughout a neighborhood,
business complex, community or metropolitan area to provide customers with
mobile and portable voice and data communications. PCS subscribers could have
dedicated personal telephone numbers and would communicate using small digital
radio handsets that could be carried in a pocket or purse.

The FCC has promulgated rules for the licensing of operators to provide
broadband PCS and ESMR services. The FCC has allocated 120 MHz of spectrum for
licensed broadband PCS and has decided to offer over 2,000 licenses for
broadband PCS use in separate competitive bidding auctions. The allocations for
broadband PCS service are split into six blocks of frequencies: blocks "A" and
"B" being two 30 MHz allocations in each of the 51 Major Trading Areas ("MTAs")
covering the United States; block "C" being one 30 MHz allocation in each of 493
Basic Trading Areas ("BTAs") covering the United States; and blocks "D", "E" and
"F" being three 10 MHz allocations in each of the BTAs. The FCC generally will
allow current cellular providers to obtain licenses for only 10 MHz of PCS
spectrum within their current cellular service areas, although cellular
providers are eligible for licenses for other PCS spectrum outside their
cellular service areas; however, there is currently pending, before the FCC, a
proposed rulemaking to allow cellular carriers to obtain up to 20 MHz of PCS
spectrum in their current cellular service areas. The FCC has concluded the
auction of broadband PCS frequency blocks "A" and "B" and issued PCS licenses to
operators in each of the 51 MTAs. The FCC has also concluded the auction of
broadband PCS frequency block "C", however licenses have not yet been issued.
The FCC has licensed current SMR operators to construct ESMR systems on existing
SMR frequencies in many major metropolitan areas throughout the United States.
At such time that broadband PCS or ESMR systems are constructed in the Company's
cellular service areas, these multi-site configuration systems are expected to
offer interconnected mobile telephone service which would compete with the
Company's cellular telephone service.

Considering the competition the Company's operations face from existing
communications technologies and additional technologies that may be introduced
in the future, there can be no assurance that one or more of the technologies
currently utilized by the Company in its business will not become obsolete at
some time in the future. See "Business -- Competition".

LIMITATIONS ON EXISTING INDEBTEDNESS AND POSSIBLE NEED FOR ADDITIONAL FINANCING

The cellular telephone and other radio telecommunications businesses are
highly capital intensive. To date, the Company has relied primarily upon equity
contributions by and borrowings from PCI and its affiliates, the IPO and bank
credit to meet its funding requirements. Since consummation of its IPO in March
1995, the Company has not utilized loans from PCI or its affiliates as a source
of financing. At March 31, 1996, the Company's outstanding long-term debt
totaled $352.6 million, representing borrowings under the Credit Facility of
approximately $345.0 million and certain purchase obligations of approximately
$7.6 million. The Company currently estimates that it will require an aggregate
of approximately $66.0 million to fund its ongoing capital expenditure
requirements through the period ending December 31, 1997, substantially all of
which will be for the development and expansion of the Company's existing
cellular telephone systems. The aggregate purchase of the Proposed Acquisitions
is $66.5 million, subject to certain adjustments, the entire amount of which
will be financed through borrowings under the Credit Facility. Although the
Company believes that borrowings available under the Credit Facility (including
amounts repaid with proceeds of the Offering) and net cash provided by operating
activities will provide the Company with adequate capital to satisfy its
projected funding

12
<PAGE> 13

requirements for the next two to three years, the Credit Facility contains
certain restrictions with regard to capital expenditures and acquisitions,
including restrictions with respect to the financing of PCS acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Facility". If the
Company's estimates as to its capital needs or future cash flows from operations
prove incorrect, if the size of a future acquisition which the Company wishes to
undertake is greater than the amount then available under the Credit Facility,
if the Company fails to meet the financial ratios or comply with other
provisions of the Credit Facility or if the Company wishes to use financing for
transactions other than those for which funds may be borrowed under the Credit
Facility, additional financing may be required, and there can be no assurance
that such financing will be available, or, if available, that the terms thereof
will be attractive to the Company. If such financing is not available to the
Company, the Company may be materially limited in its ability to make future
acquisitions or to build out its existing cellular telephone systems. If the
Company fails to meet the financial ratios or comply with other provisions of
the Credit Facility, unless the lenders agree to modify or waive such ratios or
provisions, the amount outstanding under the Credit Facility could become
immediately due and payable, which would have a material adverse effect on the
Company. The Company expects that it will continue to meet the financial ratios
and to comply with the other provisions of the Credit Facility.

CHALLENGES OF GROWTH BY ACQUISITIONS

The Company will continue to pursue opportunities to acquire additional
cellular telephone systems which complement its existing cellular telephone
systems and to acquire additional interests in licensees in which it currently
owns less than a 100% interest. If the Company is more successful than
anticipated with respect to such acquisitions, the Company may require
substantial additional financing to acquire and develop additional cellular
telephone systems. The Company may also bid in the upcoming FCC auction of
broadband PCS frequencies which overlay its existing cellular service areas. If
the Company bids in this upcoming auction and is successful, the Company may
also require substantial additional financing to acquire broadband PCS licenses
and to develop broadband PCS systems. There can be no assurance that the Company
will be able to obtain such additional financing. In addition, the Credit
Facility contains certain restrictions with regard to, among other things,
acquisitions, capital expenditures, financing of PCS acquisitions and the
incurrence of additional indebtedness, any of which may limit the ability of the
Company to complete certain acquisitions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Credit Facility". Furthermore, in acquiring additional
cellular telephone systems, the Company will be subject to the risks that new
cellular telephone systems will not perform as expected and that the returns
from such cellular telephone systems will not support the indebtedness incurred
to acquire, or the capital expenditures incurred to develop, such systems. In
addition, in seeking to acquire additional cellular telephone systems or
licenses in its primary markets, the Company competes with other communications
companies, many of which are larger and have access to more substantial capital
resources than the Company. The Company will face substantially similar risks if
it should decide to seek to acquire broadband PCS licenses and to create
broadband PCS systems in its current cellular service areas. Competition among
bidders for acquisition targets is based upon a variety of factors, including
price, terms and conditions, size and access to capital, ability to offer cash,
stock or other forms of consideration and similar matters.

PROPOSED ACQUISITIONS

The Company has entered into definitive agreements with respect to the
Proposed Acquisitions. There can be no assurance that the Proposed Acquisitions
will be consummated. The FCC has granted its approval for the transfer of the
cellular and microwave licenses from USCOC to the Company for the Georgia-1 RSA.
However, there can be no assurance that the FCC will grant its approval for the
transfer of the cellular license from Horizon to the Company for the Georgia-6
RSA, and the associated microwave licenses, although the Company expects to
receive such grants in due course. In the event either or both of the Proposed
Acquisitions are consummated, there can be no assurance that each of the
Georgia-6 RSA and Georgia-1 RSA will perform as expected or that the returns
from such systems will

13
<PAGE> 14

support the indebtedness incurred to acquire, or the capital expenditures
incurred to develop, such systems. See "-- Limitations on Existing Indebtedness
and Possible Need for Additional Financing".

POTENTIAL FOR REGULATORY CHANGES AND NEED FOR REGULATORY APPROVALS

The licensing, construction, operation, acquisition, assignment and
transfer of cellular telephone systems, as well as the number of licensees
permitted in each market, are regulated by the FCC. Changes in the regulation of
cellular activities could have a material adverse effect on the Company's
operations. In addition, all cellular licenses in the United States are granted
for an initial term of up to 10 years and are subject to renewal. The Company's
cellular licenses expire in the following years with respect to the following
number of service areas: 1996 (two); 1997 (four); 1998 (three); 2001 (five); and
2002 (one). While the Company believes that each of these licenses will be
renewed based upon FCC rules establishing a renewal expectancy in favor of
licensees that have complied with their regulatory obligations during the
initial license period, there can be no assurance that all of the Company's
licenses will be renewed in due course. See "Business -- Regulation".

In connection with the Proposed GA-1 Acquisition, the FCC has granted its
approval for the transfer of the cellular and microwave licenses from USCOC to
the Company for the Georgia-1 RSA. In connection with the Proposed GA-6
Acquisition, the FCC's approval will be required to assign the cellular license
from Horizon to the Company for the Georgia-6 RSA and the associated microwave
licenses, and for the Company to assume management of the cellular system of the
Georgia-6 RSA. Although the Company believes that it will receive such approval,
there can be no assurance that such approval will be granted or that the
Proposed Acquisitions will ever be consummated. In addition, the cellular
licenses for each of the Georgia-6 RSA and Georgia-1 RSA expire in 2002. If the
Proposed Acquisitions are consummated and the cellular licenses for the GA-6 and
GA-1 RSAs are transferred to the Company, there can be no assurance that the
license will be renewed, although the Company expects to receive a renewal
expectancy with respect to these licenses, leading to a renewal in due course.

FLUCTUATIONS IN MARKET VALUE OF LICENSES

A substantial portion of the Company's assets consists of its interests in
cellular licenses. The assignment of interests in such licenses is subject to
prior FCC approval and may also be subject to contractual restrictions, future
competition and the relative supply and demand for radio spectrum. The future
value of the Company's interests in its cellular licenses will depend
significantly upon the success of the Company's business. While there is a
current market for the Company's licenses, such market may not exist in the
future or the values obtainable may be significantly lower than at present. As a
consequence, in the event of the liquidation or sale of the Company's assets,
there can be no assurance that the proceeds would be sufficient to pay the
Company's obligations, and a significant reduction in the value of the licenses
could require a charge to the Company's results of operations.

RELATIONSHIP WITH PCI; POTENTIAL CONFLICTS OF INTEREST

Directors of PCI and its subsidiaries who are also directors or officers of
the Company have certain fiduciary obligations to each organization. PCI and
directors of PCI and its subsidiaries who are also directors and officers of the
Company are in positions involving the possibility of conflicts of interest with
respect to certain transactions concerning the Company. In addition, the Company
and PCI and certain of PCI's subsidiaries have entered into arrangements which
provide for certain transactions and relationships between the parties or which
otherwise affect the Company. See "Transactions and Relationships with PCI and
its Affiliates". In an effort to reduce the potential for certain conflicts of
interest, PCI and the Company entered into an agreement in March 1995 (the "PCI
Non-Competition Agreement") to limit PCI's ability to compete with the Company's
cellular telephone and mobile communications services. Nonetheless, although the
terms of certain of these arrangements were established by PCI in consultation
with the Company, they were not the result of arm's-length negotiations.
Accordingly, although PCI believes that the terms of these arrangements were
reasonable under the circumstances, there can be no assurance that these
agreements, or the terms of any future arrangements between PCI or any of its
affiliates and the Company, are or will be as favorable to the Company as those
that could be obtained

14
<PAGE> 15

from unaffiliated third parties. With the exception of the PCI Non-Competition
Agreement, the Company currently has not adopted or formulated any other
procedures to resolve conflicts of interest.

RELIANCE ON USE OF THIRD-PARTY SERVICE MARK

The Company currently uses the registered service mark CELLULAR ONE to
market its services. The Company's use of this service mark is governed by
five-year contracts between the Company and Cellular One Group, the owner of the
service mark. Such contracts expire on various dates from July 1996 to March
1998 and each is renewable at the option of the Company for three additional
five-year terms. See "Business -- Service Marks". Under these agreements, the
Company has agreed to meet certain operating and service quality standards for
its cellular service areas. If these agreements were not renewed upon expiration
or if the Company were to fail to meet the applicable operating or service
quality standards, and therefore no longer be permitted to use the CELLULAR ONE
service mark, the Company's ability both to attract new subscribers and retain
existing subscribers could be materially affected. The Company does not
anticipate any difficulty in obtaining renewal of its agreements with Cellular
One Group or in continuing to meet such standards. In addition, if for some
reason beyond the Company's control, the name CELLULAR ONE were to suffer
diminished marketing appeal, the Company's ability both to attract new
subscribers and retain existing subscribers could be materially affected. AT&T
Wireless Services, Inc., which has been the single largest user of the CELLULAR
ONE service mark, has significantly reduced its use of the service mark as a
primary service mark.

NO ANTICIPATED STOCKHOLDER DISTRIBUTIONS

The Company does not anticipate paying and may not be able to pay cash
dividends in the foreseeable future. See "Price Range of Class A Common Stock
and Dividend Policy". Certain covenants in the Credit Facility prohibit the
payment of cash dividends by the Company without consent of the lenders. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Facility".

DEPENDENCE ON KEY PERSONNEL

The Company's affairs are managed by a small number of key management and
operating personnel, the loss of whom could have an adverse impact on the
Company. See "Management".

RADIOFREQUENCY EMISSION CONCERNS

Media reports have suggested that certain radiofrequency ("RF") emissions
from portable cellular telephones may be linked to certain types of cancer. In
addition, recently a limited number of lawsuits have been brought, not involving
the Company, alleging a connection between cellular telephone use and certain
types of cancer. The FCC has a rulemaking proceeding pending to update the
guidelines and methods it uses for evaluating RF emissions from radio equipment,
including cellular telephones. The Telecom Act (as hereinafter defined) imposed
a 180-day deadline upon the FCC to conclude this proceeding. While the proposal
would impose more restrictive standards on RF emissions from low power devices
such as portable cellular telephones, the Company believes that all cellular
telephones currently marketed and in use already comply with the new proposed
standards.

15
<PAGE> 16

THE COMPANY

The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. At
March 31, 1996, the Company provided cellular telephone service to 227,400
subscribers in Florida, Georgia, Alabama and South Carolina in a total of 15
licensed service areas composed of nine MSAs and six RSAs, with an aggregate
estimated population of 3.3 million. If consummated, the Proposed Acquisitions
will result in the Company expanding its cellular service in Georgia by
approximately 6,222 subscribers (as of March 31, 1996) and by two additional
RSAs with an aggregate estimated population of 0.4 million. The Company sells
its cellular telephone service as well as a full line of cellular products,
services and accessories principally through its network of retail stores. The
Company markets all of its products and services under the nationally-recognized
service mark CELLULAR ONE.

The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in three
market areas in order to provide broad areas of uninterrupted service and
achieve certain economies of scale, including centralized marketing and
administrative functions as well as multi-system capital expenditures. The
Company devotes considerable attention to engineering, maintenance and
improvement of its cellular telephone systems in an effort to deliver
high-quality service to its subscribers and to implement new technologies as
soon as economically practicable. Through its participation in the NACN, the
Company is able to offer seven-digit dialing access to its subscribers when they
travel outside the Company's service areas, providing them with convenient
roaming access throughout large areas of the United States, Canada, Mexico and
Puerto Rico currently served by other NACN participants. By marketing its
products and services under the CELLULAR ONE name throughout the markets it
serves, the Company also enjoys the benefits of association with a nationally
recognized service mark.

The Company's business was started by the Palmer family, which has been in
the broadcast business in Iowa since 1922. PCI was also active in the cable
television industry for over 25 years, substantially exiting the industry in
1992.

PCI entered the cellular telephone business in 1987, when it constructed a
cellular telephone system for the Fort Myers, Florida MSA. PCI acquired control
of this system in March 1988 and rapidly expanded its cellular telephone
holdings, acquiring control of the non-wireline cellular licenses for the
Columbus and Albany, Georgia and Dothan and Montgomery, Alabama MSAs in 1988.
These acquisitions created the nucleus for the development of a regional
cellular telephone company serving central and southern Georgia and Alabama.
During 1989, PCI transferred its cellular properties to the Partnership, a newly
organized general partnership that was formed to manage and operate all of PCI's
cellular telephone operations. PCI was the managing partner of the Partnership.
The Partnership continued the growth strategy of PCI and enhanced the Company's
regional cellular cluster in 1989 by acquiring control of the cellular license
for the Macon, Georgia MSA.

In 1991, the Company acquired control of the non-wireline cellular license
for the Panama City, Florida MSA. In 1992 and 1993, the Company acquired two
non-wireline cellular licenses for RSAs contiguous to the Company's MSAs in
Georgia and Alabama: the Georgia-9 RSA in June 1992 and the Alabama-8 RSA in
April 1993. The Georgia-9 RSA acquisition added the geographic territory between
the Columbus, Macon and Albany, Georgia MSAs to the Company's service area
coverage. The Alabama-8 RSA expanded the Company's service areas around three
MSAs served by the Company, covering a substantial portion of the geographic
territory between the Dothan and Montgomery, Alabama and Columbus, Georgia MSAs
and the Georgia-9 RSA. In 1993, the Company also increased its majority position
in its MSAs in Albany, Georgia and in Dothan and Montgomery, Alabama, through
the purchase of certain minority interests for an aggregate purchase price of
$2.9 million.

During 1994, the Company continued to acquire minority interests in six of
its MSAs for an aggregate purchase price of $3.1 million. Also, on October 31,
1994, the Company acquired the cellular telephone systems of the Georgia
Partnerships for an aggregate purchase price of $91.7 million. The assets
acquired by the Company included the non-wireline cellular telephone systems
located in Georgia RSA Market Nos. 377, 378, 380 and 382 (Georgia-7 RSA,
Georgia-8 RSA, Georgia-10 RSA and Georgia-12

16
<PAGE> 17

RSA). The cellular telephone systems in the acquired RSAs serve a geographic
territory in southeast Georgia that is adjacent to the Company's Georgia-9 RSA
and Macon, Georgia MSA.

On December 1, 1995, the Company acquired the GTE Companies for an
aggregate purchase price of $158.4 million. As of March 31, 1996, GMI owned a
98.2% interest in the Savannah Cellular Limited Partnership, which holds the
license granted by the FCC for the Savannah, Georgia MSA. AMI holds the FCC
license for the Augusta, Georgia MSA. The cellular telephone systems in the
newly-acquired MSAs serve a geographic territory in eastern Georgia and a
portion of South Carolina that is adjacent to the Company's existing markets in
the Georgia-8 RSA and Georgia-12 RSA. In addition, the Company has also acquired
the interim authority to provide cellular service to the southern portions of
South Carolina RSA Market Nos. 631 and 632, otherwise known as South Carolina-7
RSA and South Carolina-8 RSA, respectively, which serve a geographic territory
that is adjacent to the Company's existing markets in the Georgia-8 RSA as well
as the Savannah, Georgia MSA and the Augusta, Georgia MSA. Also, during 1995,
the Company acquired additional minority interests in six of its MSAs for an
aggregate purchase price of $2.0 million.

On March 22, 1996, two of the Company's subsidiaries entered into a
definitive agreement with respect to the Proposed GA-6 Acquisition to acquire
the cellular telephone system of Horizon for a purchase price of $35 million,
subject to certain adjustments. This system serves a geographic territory that
is adjacent to the Company's existing markets in the Macon and Columbus, Georgia
MSAs. On April 23, 1996, the Company entered into a definitive agreement with
respect to the Proposed GA-1 Acquisition under which it will acquire the
cellular telephone system of USCOC for a purchase price of $31.5 million,
subject to certain adjustments. This system serves a geographic territory in
northwestern Georgia, north of the city of Atlanta. Also, during the three
months ended March 31, 1996, the Company acquired additional minority interests
in four of its MSAs for an aggregate purchase price of $0.7 million.

Prior to March 1995, the Company's operations were conducted by the
Partnership. Contemporaneously with the IPO in March 1995, the Partnership's
operations, assets and liabilities and certain other assets were transferred to
Palmer Wireless pursuant to the Exchange. See "The Exchange". Prior to the
Exchange, Palmer Wireless had no operations and had no material assets or
liabilities other than deferred expenses incurred before the IPO. In 1994,
Palmer Wireless incurred approximately $167,000 in interest and other
administrative expenses.

The Company's executive offices are located at 12800 University Drive, Fort
Myers, Florida 33907-5333 and its telephone number is (941) 433-4350.

THE EXCHANGE

In March 1995, contemporaneously with the IPO, the partners of the
Partnership contributed their collective 100% interest in the Partnership to
Palmer Wireless for stock in Palmer Wireless. These transactions occurred
pursuant to an agreement among (i) Palmer Wireless, (ii) Palmer Wireless
Holdings, Inc. ("Holdings"), a wholly owned subsidiary of Palmer Wireless, (iii)
the Partnership and (iv) each of the partners of the Partnership (the "Exchange
Agreement"). The partners of the Partnership were PCI and three corporations
that are wholly owned by Palmer family members (Bonnie P. McCloskey Inc.
("MINC"), Jenny W. Sutton Inc. ("SINC") and Vickie A. Palmer Inc. ("PINC")). The
capital stock of PCI is owned by members of the Palmer family and trusts created
for the benefit of Palmer family members. See "Principal Stockholders".

Pursuant to the Exchange Agreement, contemporaneously with the IPO, (a) the
partnership interests in the Partnership, all of the assets and liabilities of
the Partnership and certain other assets were transferred to Palmer Wireless in
exchange for (i) 704,755 shares of Class A Common Stock, all of which were
distributed to the partners of the Partnership other than PCI, and (ii)
17,288,578 shares of Class B Common Stock, all of which were distributed to PCI,
and (b) the Partnership was liquidated. See "Principal Stockholders". As a
result of these transfers, PCI owns all of the outstanding shares of Class B
Common Stock, which represent 75.0% of the combined voting power of both classes
of Common Stock. The transfer of the assets of the Partnership to Palmer
Wireless was recorded by Palmer Wireless on its books at the historical carrying
values of the Partnership. See "Risk Factors -- Control of

17
<PAGE> 18

the Company by PCI" and "-- Relationship with PCI; Potential Conflicts of
Interest". Because the Exchange was structured to qualify as tax-free under
Section 351 of the Internal Revenue Code of 1986, as amended, the tax basis of
the assets held by Palmer Wireless after the Exchange is the same as the tax
basis of the assets in the hands of the Partnership immediately before the
Exchange, and Palmer Wireless has added to its holding period for certain assets
the period for which the Partnership held such assets. The Exchange Agreement
also provided that Palmer Wireless would transfer certain assets (subject to
certain liabilities) to Holdings.

The Exchange Agreement required Palmer Wireless to indemnify the partners
of the Partnership against all of the obligations and liabilities associated
with the Partnership's operations. In addition, Palmer Wireless was required to
bear all of the costs incurred by the Partnership and its partners (excluding
PCI), and all transfer taxes and related fees in connection with the Exchange.

A total of 6,667 shares of Common Stock was issued to the partners of the
Partnership in connection with the initial capitalization of the Company. As a
result, prior to and independent of the Exchange and the IPO, PCI beneficially
owned 5,000 shares of Class B Common Stock and the partners of the Partnership,
other than PCI, beneficially owned an aggregate of 1,667 shares of Class A
Common Stock.

USE OF PROCEEDS

The net proceeds of the Offering are estimated to be approximately $94.5
million (approximately $108.8 million if the Underwriters' over-allotment option
is exercised in full), after deducting the estimated underwriting discount,
transaction fees and expenses of the Offering payable by the Company. The net
proceeds of the Offering will be used to reduce amounts outstanding under the
Credit Facility. Such reduction will create additional borrowing capacity under
the Credit Facility, subject to the limitations thereunder, to finance future
acquisitions. The aggregate purchase price of the Proposed Acquisitions is $66.5
million, subject to certain adjustments, the entire amount of which will be
financed through borrowings under the Credit Facility. At March 31, 1996, the
outstanding balance under the Credit Facility was $345.0 million and the
effective interest rates on such outstanding indebtedness ranged from 7.39% to
10.23%. Borrowings under the Credit Facility may be made on a revolving basis,
with pre-scheduled quarterly commitment reductions commencing on September 30,
1998 and terminating on the maturity date, June 30, 2004. Borrowings under the
Credit Facility have been used to repay all amounts outstanding under a prior
line of credit, to fund the Georgia Acquisition and the GTE Acquisition, to
repay indebtedness to Palmer Broadcasting Limited Partnership (a subsidiary of
PCI), to discharge advances from PCI for the acquisition of Alabama-8 RSA and to
acquire certain minority interests. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Credit Facility".

18
<PAGE> 19

PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDEND POLICY

The Class A Common Stock is quoted and traded on the Nasdaq National Market
under the symbol "PWIR". The following table sets forth for the periods
indicated the high and low closing prices per share of the Class A Common Stock
as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
CALENDAR YEAR 1995 HIGH LOW
---------------------------------------------------------------- ------ ------
<S> <C> <C>
Quarter ended March 31(1)....................................... $15 7/8 $14 1/4
Quarter ended June 30........................................... 18 7/8 14 1/4
Quarter ended September 30...................................... 24 1/2 16 1/2
Quarter ending December 31...................................... 24 1/4 19 3/4

<CAPTION>
CALENDAR YEAR 1996 HIGH LOW
---------------------------------------------------------------- ------ ------
<S> <C> <C>
Quarter ended March 31.......................................... $22 1/2 $16 1/4
Quarter ended June 30 (through June 11, 1996)................... $21 1/2 $20 7/8
</TABLE>

- ---------------
(1) The Class A Common Stock was not publicly traded prior to March 15,
1995.

On June 12, 1996, the last reported sales price of the Class A Common Stock
on the Nasdaq National Market was $20.50 per share. At June 12, 1996, there were
63 holders of record of the Class A Common Stock.

The Company has not declared or paid any cash dividends or distributions on
its capital stock since its IPO in March 1995. The Company does not anticipate
paying dividends on the Common Stock, cash or otherwise, in the foreseeable
future. In addition, the Credit Facility prohibits the payment of cash dividends
by the Company without consent of the lenders. Future dividends, if any, will be
at the discretion of the Company's board of directors and will depend upon,
among other things, the Company's operations, capital requirements and surplus,
general financial condition, contractual restrictions and such other factors as
the board of directors may deem relevant.

19
<PAGE> 20

CAPITALIZATION

The following table sets forth at March 31, 1996 (i) the historical
capitalization of the Company and (ii) the pro forma combined capitalization of
the Company as adjusted for the Offering (including the application of the
estimated net proceeds of the Offering of $94.5 million to reduce amounts
outstanding under the Credit Facility) and the Proposed Acquisitions. See "Use
of Proceeds". This table should be read in conjunction with the Pro Forma
Financial Statements, the Historical Financial Statements and related notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
-----------------------
ACTUAL PRO FORMA(1)
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Current installments of long-term debt -- purchase obligations.... $ 7,603 $ 7,603
Long-term debt:
Bank debt(2)...................................................... 345,000 315,250
--------- ---------
Total debt..................................................... $ 352,603 $ 322,853
Minority interests.................................................. 5,193 5,193
Stockholders' equity:
Preferred Stock, $.01 par value: 10,000,000 shares authorized;
No shares issued and outstanding............................... -- --
Class A Common Stock, $.01 par value: 73,000,000 shares
authorized; 6,095,772 shares issued and outstanding (11,095,772
shares on a pro forma basis)................................... 61 111
Class B Common Stock, $.01 par value: 18,000,000 shares
authorized; 17,293,578 shares issued and outstanding........... 173 173
Paid-in capital................................................... 72,466 166,916
Retained earnings................................................. 1,929 1,929
--------- ---------
Total stockholders' equity..................................... $ 74,629 $ 169,129
--------- ---------
Total capitalization................................................ $ 432,425 $ 497,175
========= =========
</TABLE>

- ---------------
(1) Gives effect to the Offering (including the application of the estimated net
proceeds of the Offering to reduce amounts outstanding under the Credit
Facility) and the Proposed Acquisitions, as if each such transaction had
occurred on March 31, 1996. For information relating to pro forma
assumptions and adjustments, see the Pro Forma Financial Statements and the
related notes thereto included in this Prospectus.
(2) Represents amounts outstanding under the Credit Facility. As of March 31,
1996, $345.0 million was outstanding under the Credit Facility and $155.0
million was available to be borrowed. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Credit Facility".

20
<PAGE> 21

SELECTED CONSOLIDATED FINANCIAL DATA

Set forth below are (i) selected consolidated financial data as of and for
the four years ended December 31, 1995, which data have been derived from the
Company's Consolidated Financial Statements that have been audited by KPMG Peat
Marwick LLP; (ii) selected consolidated financial data as of and for the year
ended December 31, 1991, which data have been derived from the Partnership's
consolidated financial statements that have been audited by KPMG Peat Marwick
LLP; (iii) selected pro forma combined summary of operations data for the year
ended December 31, 1995, which data have been derived from the Company's pro
forma combined summary of operations for such period; (iv) selected condensed
consolidated statement of operations data for the three months ended March 31,
1995 and 1996, which data have been derived from the Company's unaudited
condensed consolidated statements of operations for such periods; (v) selected
pro forma combined summary of operations data and pro forma combined balance
sheet data for the three months ended and as of March 31, 1996, which data have
been derived from the Company's pro forma combined summary of operations for
such period and pro forma combined balance sheet at such date; and (vi) selected
condensed consolidated balance sheet data as of March 31, 1996, which data have
been derived from the Company's unaudited condensed consolidated balance sheet
at that date. The selected consolidated financial data set forth below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Pro Forma Financial Statements and the
Historical Financial Statements and related notes thereto included elsewhere in
this Prospectus. There were no cash dividends or distributions declared or made
by the Company or the Partnership during the periods presented (other than fees
paid to PCI under the Management Agreement (as defined)).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1991 1992 1993 1994(1) 1995(2) 1995
----------- ----------- ----------- ----------- ----------- -----------
PRO FORMA(3)
($ IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenue
Service................................ $ 16,579 $ 23,017 $ 35,173 $ 61,021 $ 96,686 $ 123,673
Equipment sales and installation....... 3,532 4,284 6,285 7,958 8,220 9,285
----------- ----------- ----------- ----------- ----------- -----------
Total revenue........................ $ 20,111 $ 27,301 $ 41,458 $ 68,979 $ 104,906 $ 132,958
----------- ----------- ----------- ----------- ----------- -----------
Operating expenses:
Engineering, technical and other
direct............................... $ 4,404 $ 5,395 $ 7,343 $ 12,776 $ 18,184 $ 22,044
Cost of equipment...................... 3,727 5,071 7,379 11,546 14,146 16,783
Selling, general and administrative.... 7,308 9,458 13,886 19,757 30,990 40,893
Depreciation and amortization.......... 11,513 11,687 10,689 9,817 15,004 22,186
----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses............. $ 26,952 $ 31,611 $ 39,297 $ 53,896 $ 78,324 $ 101,906
----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss)................. $ (6,841) $ (4,310) $ 2,161 $ 15,083 $ 26,582 $ 31,052
Other income (expense):
Interest, net.......................... (8,218) (8,290) (9,006) (12,715) (21,213) (30,190)
Other, net............................. (25) (5) (590) (70) (687) (673)
----------- ----------- ----------- ----------- ----------- -----------
Total other expense.................. $ (8,243) $ (8,295) $ (9,596) $ (12,785) $ (21,900) $ (30,863)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before minority interest
share of income (loss) and income
taxes.................................. $ (15,084) $ (12,605) $ (7,435) $ 2,298 $ 4,682 $ 189
Minority interest share of (income)
losses................................. 818 377 83 (636) (1,078) (968)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes....... $ (14,266) $ (12,228) $ (7,352) $ 1,662 $ 3,604 $ (779)
Income taxes............................ 0 0 0 0 2,650 (2,650)
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)....................... $ (14,266) $ (12,228) $ (7,352) $ 1,662 $ 954 $ (3,429)
=========== =========== =========== =========== =========== ===========
PER SHARE DATA:
Net income (loss) per share of common
stock(4)............................... $ (0.79) $ (0.68) $ (0.41) $ 0.09 $ 0.04 $ (0.12)
Average shares of common stock
outstanding(5)......................... 17,993,333 17,993,333 17,993,333 18,000,000 22,326,613 28,369,350
OTHER DATA:
Capital expenditures.................... $ 2,647 $ 3,835 $ 13,304 $ 22,541 $ 36,564 $ 39,332
Total subscribers at end of period(6)... 22,536 37,209 65,761 117,224 211,985 217,676
Operating income before depreciation and
amortization ("EBITDA")(7)............. $ 4,672 $ 7,377 $ 12,850 $ 24,900 $ 41,586 $ 53,238
EBITDA margin on service revenue........ 28.2% 32.1% 36.5% 40.8% 43.0% 43.0%

<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------
1995 1996 1996
--------------- --------------- -------------
PRO FORMA(3)
($ IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenue
Service................................ $ 20,408 $ 33,856 $ 35,497
Equipment sales and installation....... 1,966 2,035 2,096
------------- ------------- -----------
Total revenue........................ $ 22,374 $ 35,891 $ 37,593
------------- ------------- -----------
Operating expenses:
Engineering, technical and other
direct............................... $ 3,860 $ 6,624 $ 6,586
Cost of equipment...................... 3,144 3,931 4,084
Selling, general and administrative.... 7,131 10,924 11,592
Depreciation and amortization.......... 3,367 5,898 6,456
------------- ------------- -----------
Total operating expenses............. $ 17,502 $ 27,377 $ 28,718
------------- ------------- -----------
Operating income (loss)................. $ 4,872 $ 8,514 $ 8,875
Other income (expense):
Interest, net.......................... (5,730) (7,945) (7,348)
Other, net............................. (328) -- 1
------------- ------------- -----------
Total other expense.................. $ (6,058) $ (7,945) $ (7,347)
------------- ------------- -----------
Income (loss) before minority interest
share of income (loss) and income
taxes.................................. $ (1,186) $ 569 $ 1,528
Minority interest share of (income)
losses................................. (122) (452) (431)
------------- ------------- -----------
Income (loss) before income taxes....... $ (1,308) $ 117 $ 1,097
Income taxes............................ (2,650) (41) (263)
------------- ------------- -----------
Net income (loss)....................... $ (3,958) $ 76 $ 834
============= ============= ===========
PER SHARE DATA:
Net income (loss) per share of common
stock(4)............................... $ (0.21) $ 0.00 $ 0.03
Average shares of common stock
outstanding(5)......................... 18,611,111 23,561,923 28,561,923
OTHER DATA:
Capital expenditures.................... $ 4,442 $ 6,618 $ 6,983
Total subscribers at end of period(6)... 128,661 227,400 233,622
Operating income before depreciation and
amortization ("EBITDA")(7)............. $ 8,239 $ 14,412 $ 15,331
EBITDA margin on service revenue........ 40.4% 42.6% 43.2%
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------------
1991 1992 1993 1994(8) 1995(9)
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash..................................... $ 257 $ 443 $ 1,670 $ 2,998 $ 3,436
Working capital (deficit)................ 2,816 (740) 799 2,490 (1,435)
Property, plant, and equipment, net...... 19,113 17,371 23,918 51,884 100,936
Licenses and other intangibles, net...... 102,001 103,901 114,955 199,265 332,850
Total assets............................. 127,507 127,867 150,054 273,020 462,871
Total debt(11)........................... 94,921 106,811 131,361 245,609 350,441
Equity................................... 22,887 10,659 3,244 4,915 74,553

<CAPTION>
AS OF MARCH 31, 1996
--------------------------------
ACTUAL PRO FORMA(10)
--------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash..................................... $ 4,553 $ 4,553
Working capital (deficit)................ (2,542) (2,085)
Property, plant, and equipment, net...... 103,885 112,399
Licenses and other intangibles, net...... 333,284 389,063
Total assets............................. 466,041 531,905
Total debt(11)........................... 352,603 322,853
Equity................................... 74,629 169,129
</TABLE>

(Footnotes on following page)

21
<PAGE> 22

(Footnotes from previous page)
- ---------------
(1) Includes the Georgia Acquisition, which occurred on October 31, 1994. For
the two months ended December 31, 1994, the Georgia Acquisition resulted in
revenues to the Company of $1,803 and operating income (loss) of $(645).
(2) Includes the GTE Acquisition, which occurred on December 1, 1995. For the
one month ended December 31, 1995, the GTE Acquisition resulted in revenues
to the Company of $2,126 and operating income of $208.
(3) For the year ended December 31, 1995, adjusted to reflect the pro forma
effects, as applicable, of the IPO and the Offering (including the
application of the net proceeds of the IPO and the estimated net proceeds
of the Offering to reduce amounts outstanding under the Credit Facility and
related interest expense), the GTE Acquisition, the Proposed Acquisitions
and the acquisition of certain minority interests in the Company's cellular
systems (assuming each such transaction occurred at the beginning of the
period). For the three months ended March 31, 1996, adjusted to reflect the
pro forma effects, as applicable, of the Offering (including the
application of the estimated net proceeds of the Offering to reduce amounts
outstanding under the Credit Facility and related interest expense), the
Proposed Acquisitions and the acquisition of certain minority interests in
the Company's cellular systems (assuming each such transaction occurred at
the beginning of the period). For information relating to pro forma
assumptions and adjustments, see the Pro Forma Financial Statements and
related notes thereto included in this Prospectus.
(4) Net income (loss) for the period divided by the weighted average number of
shares of Common Stock outstanding.
(5) Excludes 2,065,000 shares of Class A Common Stock reserved for issuance
under the Company's existing stock option and stock purchase plans;
however, for the year ended December 31, 1995, the three months ended March
31, 1996 and the pro forma three months ended March 31, 1996, stock options
outstanding have been considered common stock equivalents and have
increased the average shares of Common Stock outstanding by 147,620,
172,573 and 172,573 shares, respectively (computed using the treasury stock
method).
(6) Amounts at December 31, 1991, 1992 and 1993 include the subscribers in the
Alabama-7 RSA where the Company had interim operating authority from June
4, 1991 through July 1, 1994. The number of subscribers served in the
Alabama-7 RSA was 335, 955 and 2,576 at December 31, 1991, 1992 and 1993,
respectively. In 1994, the Company entered into an agreement to sell the
accounts of its subscribers in the Alabama-7 RSA to the third party
licensee of this RSA.
(7) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income (loss),
operating income (loss) or any other measure of performance under GAAP. The
Company believes that operating income before depreciation and amortization
is viewed as a relevant supplemental measure of performance in the cellular
telephone industry.
(8) Includes the Georgia Acquisition, which occurred on October 31, 1994.
(9) Includes the GTE Acquisition, which occurred on December 1, 1995.
(10) Adjusted to reflect the pro forma effects of the Offering (including the
application of the estimated net proceeds of the Offering to reduce amounts
outstanding under the Credit Facility) and the Proposed Acquisitions
(assuming each such transaction occurred on March 31, 1996). For
information relating to pro forma assumptions and adjustments, see the Pro
Forma Financial Statements and related notes thereto included in this
Prospectus.
(11) Includes current installments of long-term debt and amounts due PCI.

22
<PAGE> 23

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

The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes thereto included elsewhere in this Prospectus.

OVERVIEW

PCI, the Company's parent, entered the cellular telephone business in 1987
when it executed a management agreement with the owner of the non-wireline
cellular permit to construct and operate a cellular telephone system for the
Fort Myers, Florida MSA. The Fort Myers system became operational in August
1987, and PCI purchased the system in March 1988. In 1989, PCI transferred all
of its cellular telephone interests to the Company. As a result of acquisitions
of additional cellular telephone systems, as well as internal subscriber growth,
the Company's operations have grown to serve 227,400 subscribers as of March 31,
1996 in Florida, Georgia, Alabama and South Carolina in a total of 15 licensed
service areas composed of nine MSAs and six RSAs.

The Company's revenues consist of service revenue and equipment sales and
installation. Service revenue includes access charges (generally a monthly
charge), usage charges (based upon per minute usage rates), roaming charges
(fees charged for providing services to subscribers of other cellular telephone
systems when such subscribers or "roamers" place or receive a phone call within
one of the Company's service areas), long distance charges derived from long
distance calls placed by the Company's subscribers and other charges, including,
among other things, connection charges for initial activation on the cellular
telephone system, and feature services such as voicemail, call forwarding and
call waiting.

The Company has increased its revenues primarily by increasing the number
of its subscribers, both by improving the penetration rate (determined by
dividing the aggregate number of subscribers by estimated population) in
cellular telephone systems owned by the Company and by acquiring or constructing
new cellular telephone systems. The Company's subscribers increased from 15,538
at the beginning of 1991 to 227,400 as of March 31, 1996. During the same
period, the Company's penetration rate increased from 1.11% to 6.88%. The
Company also made several acquisitions between 1991 and April 23, 1996, as
described below.

On average, new subscribers use less airtime and generate less revenue per
subscriber than existing subscribers. Therefore, airtime usage and service
revenue generally do not increase proportionately with increases in numbers of
subscribers. As a result, although the Company's total revenue has increased
each year, its average minutes of usage per subscriber and its average monthly
revenue per subscriber have decreased over time as new subscribers have been
added. The Company expects these trends to continue in its existing cellular
telephone systems as its penetration rate increases.

The Company believes that its cost to add a net subscriber continues to be
among the lowest in the cellular telephone industry, primarily because of its
in-house, direct sales and marketing staff. Although much of the cellular
telephone industry markets through third-party agents, since 1991, the Company
has sold its products and services almost exclusively through an internal sales
force that works principally out of retail stores in which the Company offers a
full line of cellular telephone products and services. The Company's shift to
nearly exclusive use of an internal sales force resulted in significant
decreases in its cost to add a net subscriber during 1991 to 1993. Beginning in
1994, those decreases have been offset to some extent by increased losses from
the Company's sales of cellular telephones. The Company anticipates that its
cost to add a net subscriber will continue to increase at a modest rate as
savings associated with its nearly exclusive use of an internal sales force are
fully realized and other components of its calculation of cost to add a net
subscriber continue to increase. In addition to sales and marketing expenses,
the Company's computation of its cost to add a net subscriber includes losses on
cellular telephone sales, installation services, credit reference services and
an allocation of rental expenses related to the Company's retail stores.

23
<PAGE> 24

The Company currently has a microwave network in Alabama which connects the
Montgomery, Alabama MSA and the Alabama-8 RSA with the mobile telephone
switching office ("MTSO") in Dothan, Alabama. This microwave network connects
cellular switching equipment to cell sites without utilizing local landline
telephone carriers, thereby reducing or eliminating fees paid to landline
carriers. During 1995, the Company spent approximately $1.5 million to build
additional microwave connections between Dothan and Montgomery, Alabama, and
between Brunswick and Savannah, Georgia, as well as to complete a network in
Fort Myers, Florida. The Company recently completed a fiber optic network
between Dothan, Alabama and Panama City, Florida at a cost of approximately $2.6
million. The operation of this fiber optic network will result in significant
savings to the Company in the future by the substantial reduction or elimination
of fees paid to landline carriers. In addition, this network will provide the
Company with excess capacity to lease to third parties or trade for alternate
fiber optic routes. The fiber network is being tested and is expected to be
operational presently.

Prior to 1994, the Company's customer billing was performed by a
third-party vendor. In January 1994, the Company began performing billing
functions in-house, which significantly reduced customer service costs. The
conversion to the in-house customer billing system reduced annual billing costs
per subscriber from approximately $39 in 1993 to approximately $22 in 1994 and
$17 in 1995. This conversion required capital expenditures of $1.1 million,
substantially all of which were incurred in 1993. The software utilized for
in-house billings is leased from its previous third-party vendor. Therefore, no
change has occurred in billing function, accuracy or operation.

The Company made significant acquisitions between 1991 and 1995. In July
1991, the Company invested $13.6 million to increase its ownership from a
minority to a controlling interest in the cellular telephone system serving the
Panama City, Florida MSA. In June 1992, the Company invested $6.0 million for a
100% interest in the license to construct and operate the non-wireline cellular
telephone system serving the Georgia-9 RSA. In April 1993, the Company invested
$10.9 million for a 100% interest in the license to construct and operate the
non-wireline cellular telephone system serving the Alabama-8 RSA. In October
1994, the Company invested $91.7 million for a 100% interest in the non-wireline
cellular telephone systems serving Georgia-7 RSA, Georgia-8 RSA, Georgia-10 RSA
and Georgia-12 RSA.

On December 1, 1995, the Company acquired the cellular telephone systems
serving the Augusta and Savannah MSAs for an aggregate purchase price of $158.4
million. In the GTE Acquisition, the Company also acquired the interim authority
to provide cellular service to the southern portions of South Carolina RSA
Market Nos. 631 and 632, otherwise known as South Carolina-7 RSA and South
Carolina-8 RSA, respectively. The Company has no subscribers and has not
constructed any cell sites in South Carolina-7 RSA and South Carolina-8 RSA,
however it provides roaming access to its own subscribers and others when they
travel in these two service areas by utilizing its existing cell sites in
adjacent service areas.

During 1992-1995, the Company made various purchases of minority interests
in its existing cellular telephone systems aggregating $9.1 million. These
acquisitions have had no effect on combined total revenues or expenses, other
than amortization and interest, but have decreased the minority interests'
participation in the Company's results for succeeding periods. The Company
expects to acquire additional minority interests in the future.

On March 22, 1996, two of the Company's subsidiaries (Columbus and Macon)
entered into the definitive agreement with respect to the Proposed GA-6
Acquisition to acquire the cellular telephone system of Horizon for a purchase
price of $35 million, subject to certain adjustments. This system serves a
geographic territory that is adjacent to the Company's existing markets in the
Macon and Columbus, Georgia MSAs. On April 23, 1996, the Company entered into
the definitive agreement with respect to the Proposed GA-1 Acquisition under
which it will acquire the cellular telephone system of USCOC for a purchase
price of $31.5 million, subject to certain adjustments. This system serves a
geographic territory in northwestern Georgia, north of the city of Atlanta.
Also, during the three-month period ended March 31, 1996, the Company acquired
additional minority interests in four of its MSAs for an aggregate purchase
price of $0.7 million.

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<PAGE> 25

The acquisitions and related capital expenditures described above are
reflected in the Company's increased total revenue, total expenses and operating
income before depreciation and amortization. Because the Company's acquisitions
included systems with only construction permits rather than operating systems,
and partially built operating systems, substantial capital expenditures were
required to construct cell sites in the acquired cellular telephone systems.
Currently, small portions of the RSAs acquired in the Georgia Acquisition do not
have cellular telephone service. The Company spent $9.5 million on capital
expenditures in the Georgia Acquisition cellular telephone systems in 1995 and
$0.5 million on capital expenditures in the GTE Acquisition cellular telephone
systems in 1995 and will spend approximately $4.8 million in 1996 to provide
service to the previously unserved areas of the cellular telephone systems
acquired in the Georgia Acquisition and $4.2 million in 1996 in the cellular
telephone systems acquired in the GTE Acquisition. The Company expects to
generate sufficient operating cash flow in the future to finance these planned
capital expenditures. See "Liquidity and Capital Resources".

Acquisitions and related capital expenditures have required the Company to
incur considerable additional debt, which has increased the Company's interest
expense for periods subsequent to its incurrence. The Company and its lenders
amended and restated the Credit Facility effective as of December 1, 1995 to
increase the lenders' commitment thereunder from $275.0 million to $500.0
million and to make certain other changes, including providing for: (i) an
extension of the loan maturity date to June 30, 2004; (ii) a consent permitting
the transactions contemplated by the GTE Acquisition; (iii) the incurrence by
the Company of up to $200.0 million in structurally subordinated debt, on terms
and conditions reasonably satisfactory to the Majority Banks (as defined in the
Credit Facility); and (iv) the application of the net proceeds of the Offering
to reduce amounts outstanding under the Credit Facility without reducing the
lenders' commitments thereunder. See "-- Liquidity and Capital Resources --
Credit Facility".

25
<PAGE> 26

RESULTS OF OPERATIONS

The following table sets forth the percentage which certain amounts bear to
the Company's total revenue.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Service...................... 82.4% 84.3% 84.8% 88.5% 92.2% 91.2% 94.3%
Equipment sales and
installation............... 17.6 15.7 15.2 11.5 7.8 8.8 5.7
----- ----- ----- ----- ----- ----- -----
Total revenue.............. 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Operating expenses:
Engineering, technical and
other direct:
Engineering and
technical(1)............. 11.4 10.3 8.8 8.1 7.6 8.0 9.2
Other direct costs of
services(2).............. 10.5 9.4 8.9 10.5 9.7 9.3 9.2
Cost of equipment(3)......... 18.5 18.6 17.8 16.7 13.5 14.1 11.0
Selling, general and
administrative:
Sales and marketing(4)..... 10.6 10.3 9.4 8.8 8.7 9.2 8.8
Customer service(5)........ 6.9 7.0 7.2 5.6 6.0 6.7 5.9
General and
administrative(6)........ 18.9 17.4 16.9 14.2 14.9 15.9 15.8
Depreciation and
amortization............... 57.2 42.8 25.8 14.2 14.3 15.0 16.4
----- ----- ----- ----- ----- ----- -----
Total operating expenses... 134.0 115.8 94.8 78.1 74.7 78.2 76.3
----- ----- ----- ----- ----- ----- -----
Operating income (loss)........ (34.0)% (15.8)% 5.2% 21.9% 25.3% 21.8% 23.7%
===== ===== ===== ===== ===== ===== =====
Operating income before
depreciation and
amortization(7).............. 23.2% 27.0% 31.0% 36.1% 39.6% 36.8% 40.1%
===== ===== ===== ===== ===== ===== =====
</TABLE>

- ---------------
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of roaming, costs of long distance, costs of
interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, employee and agent commissions and advertising and promotional
expenses.
(5) Consists primarily of salaries and benefits of customer service personnel,
costs of printing and mailing billings generated in-house in 1994 and 1995
and for the three months ended March 31, 1995 and 1996, and fees paid to a
third-party vendor of customer service billing prior to 1994.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income (loss), operating
income (loss) or any other measure of performance under GAAP. The Company
believes that operating income before depreciation and amortization is
viewed as a relevant supplemental measure of performance in the cellular
telephone industry.

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995

REVENUE. Service revenues totaled $33.9 million for the three months ended
March 31, 1996, an increase of $13.5 million, or 65.9%, over $20.4 million for
the same period in 1995. This increase was primarily due to a 76.7% increase in
the number of subscribers to 227,400 as of March 31, 1996 versus 128,661 as of
March 31, 1995. The increase in subscribers is the result of internal growth,
which the

26
<PAGE> 27

Company attributes primarily to its strong sales and marketing efforts, and the
GTE Acquisition. The cellular telephone systems acquired in the GTE Acquisition
accounted for 35,685 subscribers at March 31, 1996. Service revenue attributable
to the cellular systems acquired in the GTE Acquisition totaled $6.2 million for
the three months ended March 31, 1996.

Average monthly revenue per subscriber decreased 8.0% to $52.10 for the
three months ended March 31, 1996 from $56.64 for the same period in 1995. This
is due to a common trend in the cellular telephone industry, where, on average,
new customers use less airtime than existing subscribers. Therefore, service
revenues generally do not increase proportionately with the increase in
subscribers.

Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, remained flat at $2.0 million for the three
months ended March 31, 1996 and 1995. As a percentage of total cellular revenue,
however, equipment sales and installation revenue decreased to 5.7% for 1996
from 8.8% for 1995, reflecting the increased recurring revenue base as well as
lower cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $0.2 million for the three months ended March 31,
1996.

OPERATING EXPENSES. Engineering and technical expenses increased by 85.5%
to $3.3 million for the three months ended March 31, 1996 from $1.8 million in
the same period in 1995, due primarily to the increase in subscribers and the
GTE Acquisition. As a percentage of revenue, engineering and technical expenses
increased to 9.2% from 8.0% due primarily to additional costs incurred for the
GTE Acquisition. The Company expects engineering and technical expenses to
decrease as a percentage of revenue due to its large component of fixed costs
except for extraordinary expenses incurred in cases of acquisitions. Engineering
and technical expenses attributable to the cellular telephone systems acquired
in the GTE Acquisition totaled $0.8 million for the three months ended March 31,
1996.

Other direct costs of services increased 59.7% to $3.3 million for the
three months ended March 31, 1996 from $2.1 million in the same period in 1995.
As a percentage of revenue, however, other direct costs of service remained
relatively flat at 9.2% and 9.3% for the three months ended March 31, 1996 and
1995, respectively. Other direct costs of services attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $0.6 million for the
three months ended March 31, 1996.

The cost of equipment sales increased 25.0% to $3.9 million for the three
months ended March 31, 1996 from $3.1 million for the same period in 1995, due
primarily to the increase in gross subscriber activations for the same period.
The equipment sales margin decreased to (93.2%) for the three months ended March
31, 1996 from (59.9%) for the same period in 1995. In an effort to address
market competition and improve market share, the Company sold more telephones
below cost in the first quarter of 1996 than in the same period of 1995. The
cost of equipment attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $0.4 million for the three months ended March 31, 1996.

Sales and marketing costs increased 53.4% to $3.2 million for the three
months ended March 31, 1996 from $2.1 million for the same period in 1995. This
increase is primarily due to the 49.1% increase in gross subscriber activations
and the resulting increase in salaries and commissions. As a percentage of total
revenue, sales and marketing costs decreased to 8.8% from 9.2% for the three
months ended March 31, 1996 and 1995, respectively. The decrease is due to a
significant portion of sales and marketing costs being fixed. The Company's cost
to add a net subscriber, including loss on telephone sales, increased to $357
for the three months ended March 31, of 1996 from $315 for the same period in
1995. This increase in cost to add a net subscriber was caused primarily by
increased losses from the Company's sales of cellular telephones. The sales and
marketing costs attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $0.6 million for the three months ended March 31, 1996.

Customer service costs increased 41.3% to $2.1 million for the three months
ended March 31, 1996 from $1.5 million for the same period in 1995, but
decreased as a percentage of total revenue to 5.9% from 6.7% for the 1995
period. This decrease is due to a significant portion of customer service costs

27
<PAGE> 28

being fixed. The customer service costs attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $0.5 million for the three
months ended March 31, 1996.

General and administrative expenditures increased 58.0% to $5.6 million for
the three months ended March 31, 1996 from $3.6 million for the same period in
1995, due primarily to the increase in the number of subscribers and the GTE
Acquisition. General and administrative expenses remained relatively flat as a
percentage of total revenue at 15.8% for the three months ended March 31, 1996
and 15.9% for the same period in 1995. As the Company continues to add more
subscribers and generate associated revenue, general and administrative expenses
should decrease as a percentage of total revenues. The general and
administrative costs attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $1.0 million for the three months ended March 31,
1996.

Depreciation and amortization increased 75.2% to $5.9 million for the three
months ended March 31, 1996 from $3.4 million for the same period in 1995. This
increase was primarily due to the depreciation and amortization associated with
the GTE Acquisition and additional capital expenditures. Depreciation and
amortization attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $1.5 million for the three months ended March 31, 1996.

Operating income increased 74.8% to $8.5 million in the three months ended
March 31, 1996, from $4.9 million for the same period in 1995. This improvement
in operating results is attributable primarily to increases in revenue which
exceeded increases in operating expenses. Operating income attributable to the
cellular telephone systems acquired in the GTE Acquisition totaled $1.0 million
for the three months ended March 31, 1996.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUE. Service revenue totaled $96.7 million for 1995, an increase of
$35.7 million or 58.4% over $61.0 million for 1994. This increase was due
primarily to a 80.8% increase in the number of subscribers to 211,985 at
December 31, 1995 from 117,224 at December 31, 1994. The increase in subscribers
is the result of internal growth, which the Company attributes primarily to its
sales and marketing efforts, and the GTE Acquisition. During 1995, the Company
added 13,098 net subscribers to systems acquired in the Georgia Acquisition,
bringing the total subscribers served by these systems to 25,238 at December 31,
1995. Service revenue attributable to the cellular telephone systems acquired in
the Georgia Acquisition totaled $12.3 million for 1995 as compared to $1.6
million for the two months ended December 31, 1994. The GTE Acquisition
increased the Company's subscribers by 34,904 at December 31, 1995. Service
revenue attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $2.0 million for the one month ended December 31, 1995, and
is included in the Company's 1995 results of operations. Average monthly service
revenue per subscriber decreased to $56.68 for 1995 from $60.02 for 1994. This
decrease occurred because, on average, new subscribers used less airtime and
generated less revenue per subscriber than existing subscribers, as is customary
in the cellular telephone industry. Therefore, airtime usage and service revenue
did not increase in proportion to the increase in subscribers.

Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.2 million for 1995 from
$8.0 million for 1994, a 3.3% increase, due primarily to the increase in
subscriber activations offset by lower cellular phone prices. While equipment
sales and installation revenue increased slightly for 1995 from 1994, it
decreased as a percentage of total cellular revenue to 7.8% for 1995 from 11.5%
for 1994, reflecting the increased recurring annual revenue base as well as
lower cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired in
the Georgia Acquisition totaled $1.1 million for 1995 as compared to $0.2
million for the two months ended December 31, 1994. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $0.1 million for the one month ended December 31,
1995 and are included in the Company's results of operations for 1995.

OPERATING EXPENSES. Engineering and technical expenses increased by 43.2%
to $8.0 million for 1995 from $5.6 million for 1994, due primarily to the
increase in subscribers. As a percentage of revenue,

28
<PAGE> 29

engineering and technical expenses decreased to 7.6% for 1995 from 8.1% for
1994. The Company expects that engineering and technical expenses will continue
to decrease as a percentage of revenue due to its large fixed cost component,
with the exception of extraordinary expenses incurred in connection with
acquisitions. Engineering and technical expenses attributable to the cellular
telephone systems acquired in the Georgia Acquisition totaled $2.4 million for
1995 as compared to $0.3 million for the two months ended December 31, 1994.
Engineering and technical expenses attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $0.2 million for the one month
ended December 31, 1995 and are included in the Company's results of operations
for 1995.

Other direct costs of services increased 41.7% to $10.2 million for 1995
from $7.2 million for 1994. As a percentage of revenue, other direct costs of
services decreased to 9.7% for 1995 from 10.5% for 1994. This decrease in other
direct costs of services as a percentage of revenue was due primarily to the
Company improving its roaming agreements with neighboring cellular service
providers, spreading its fixed charges over a larger revenue base and bringing
its intramarket roaming settlements in-house. Other direct costs of service
attributable to the cellular telephone systems acquired in the Georgia
Acquisition totaled $1.1 million for 1995 as compared to $0.2 million for the
two months ended December 31, 1994. Other direct costs of service attributable
to the cellular telephone systems acquired in the GTE Acquisition totaled $0.2
million for the one month ended December 31, 1995 and are included in the
Company's results of operations for 1995.

The cost of equipment increased 22.5% to $14.1 million for 1995 from $11.5
million for 1994, due primarily to the increase in gross subscriber activations
for the same period. The equipment sales margin decreased to (72.1%) for 1995
from (45.1%) for 1994. In an effort to address market competition and improve
market share, the Company sold more telephones below cost in 1995 than in 1994.
The cost of equipment attributable to the cellular telephone systems acquired in
the Georgia Acquisition totaled $2.4 million for 1995 as compared to $0.3
million for the two months ended December 31, 1994. The cost of equipment
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.2 million for the one month ended December 31, 1995 and is included
in the Company's results of operations for 1995.

Sales and marketing costs increased 51.5% to $9.1 million for 1995 from
$6.0 million for 1994. This increase is primarily due to the 49.1% increase in
gross subscriber activations and the resulting increase in salaries and
commissions. Sales and marketing costs as a percentage of total revenue remained
relatively flat at 8.7% for 1995 and 8.8% for 1994. The Company's cost to add a
net subscriber, including losses on telephone sales, increased to $276 for 1995
from $247 for 1994. This increase in cost to add a net subscriber was caused
primarily by increased losses from the Company's sales of cellular telephones.
Sales and marketing costs attributable to the cellular telephone systems
acquired in the Georgia Acquisition totaled $1.7 million for 1995 as compared to
$0.3 million for the two months ended December 31, 1994. Sales and marketing
costs attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $0.2 million for the one month ended December 31, 1995 and
are included in the Company's results of operations for 1995.

Customer service costs increased 62.0% to $6.3 million for 1995 from $3.9
million for 1994 and increased as a percentage of total revenue to 6.0% for 1995
from 5.6% for 1994. This increase is primarily due to an increase in
subscribers, to operating costs associated with the newly established regional
customer service call centers in Montgomery, Alabama, and Savannah, Georgia, and
to non-recurring expenditures incurred in connection with the implementation of
new area codes in the Company's Alabama and Ft. Myers, Florida, service areas.
Customer service costs attributable to the cellular telephone systems acquired
in the Georgia Acquisition totaled $0.9 million for 1995 as compared to $0.2
million for the two months ended December 31, 1994. Customer service costs
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.2 million for the one month ended December 31, 1995 and are included
in the Company's results of operations for 1995.

General and administrative expenses increased 58.2% to $15.6 million for
1995 from $9.8 million for 1994 and increased as a percentage of total revenue
to 14.9% for 1995 from 14.2% for 1994 due primarily to the increase in the
number of subscribers, the Georgia Acquisition and the GTE Acquisition. Fixed

29
<PAGE> 30

general and administrative costs attributable to the acquisitions are incurred
prior to the development of the subscriber base and the generation of associated
revenue. As the Company continues to add more subscribers and generate
associated revenue, general and administrative expenses should decrease as a
percentage of total revenues. The general and administrative costs attributable
to the cellular telephone systems acquired in the Georgia Acquisition totaled
$3.2 million for 1995 as compared to $0.4 million for the two months ended
December 31, 1994. The general and administrative costs attributable to the
cellular telephone systems acquired in the GTE Acquisition totaled $0.4 million
for the one month ended December 31, 1995 and are included in the Company's
results of operations for 1995.

Depreciation and amortization increased 52.8% to $15.0 million for 1995
from $9.8 million for 1994. This increase is primarily due to the depreciation
and amortization associated with the acquisitions and additional capital
expenditures. Depreciation and amortization attributable to the cellular
telephone systems acquired in the Georgia Acquisition totaled $3.6 million for
1995 as compared to the $0.7 million for the two months ended December 31, 1994.
Depreciation and amortization attributable to the cellular telephone systems
acquired in the GTE Acquisition totaled $0.5 million for the one month ended
December 31, 1995 and are included in the Company's results of operations for
1995.

Operating income for 1995 increased $11.5 million, or 76.2%, to $26.6
million. This improvement in operating results is attributed primarily to
increases in revenue which exceeded increases in operating expenses. Operating
income (loss) attributable to the cellular telephone systems acquired in the
Georgia Acquisition totaled $(2.0) million for 1995 as compared to $(0.6)
million for the two months ended December 31, 1994. Operating income
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.2 million for the one month ended December 31, 1995 and is included
in the Company's results of operations for 1995.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

REVENUE. Service revenue totaled $61.0 million for 1994, an increase of
$25.8 million or 73.5% over $35.2 million for 1993. This increase was due
primarily to a 78.3% increase in the number of subscribers to 117,224 at
December 31, 1994 from 65,761 at December 31, 1993. The increase in subscribers
was due to internal growth, which the Company attributes primarily to its sales
and marketing efforts, and to the Georgia Acquisition. The Georgia Acquisition
increased the Company's subscribers by 12,140 at December 31, 1994. Service
revenue attributable to the cellular telephone systems acquired in the Georgia
Acquisition totaled $1.6 million for the two months ended December 31, 1994 and
is included in the Company's results of operations for 1994. Average monthly
service revenue per subscriber decreased to $60.02 for 1994 from $62.69 for
1993. This decrease occurred because, on average, new subscribers used less
airtime and generated less revenue per subscriber than existing subscribers as
is customary in the cellular telephone industry. Therefore, airtime usage and
service revenue did not increase proportionately with the increase in
subscribers.

Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.0 million for 1994 from
$6.3 million for 1993, a 26.6% increase, due primarily to the 78.3% increase in
subscribers. While equipment sales and installation revenue increased
significantly for 1994 from 1993, it decreased as a percentage of total cellular
revenue to 11.5% for 1994 from 15.2% for 1993, reflecting the increasing
recurring annual revenue base as well as lower cellular equipment prices charged
to customers. Equipment sales and installation revenue attributable to the
cellular telephone systems acquired in the Georgia Acquisition totaled $0.2
million for the two months ended December 31, 1994 and is included in the
Company's results of operations for 1994.

OPERATING EXPENSES. Engineering and technical expenses increased by 52.6%
to $5.6 million for 1994 from $3.7 million for 1993, due primarily to the
increase in subscribers. As a percentage of revenue, engineering and technical
expenses decreased to 8.1% for 1994 from 8.8% for 1993. The Company expects that
engineering and technical expenses will continue to decrease as a percentage of
revenue due to a large component of fixed costs, with the exception of
extraordinary expenses incurred in connection with acquisitions. Engineering and
technical expenses attributable to the cellular telephone

30
<PAGE> 31

systems acquired in the Georgia Acquisition totaled $0.3 million for the two
months ended December 31, 1994 and are included in the Company's results of
operations for 1994.

Other direct costs of services increased 95.3% to $7.2 million for 1994
from $3.7 million for 1993. As a percentage of revenue, other direct costs of
services increased to 10.5% for 1994 from 8.9% for 1993. This increase in other
direct costs of services was due primarily to the increase in the number of the
Company's subscribers and high roaming rates charged by adjacent cellular
service providers. For competitive reasons, the Company subsidizes its customers
for a substantial portion of these high roaming rates. Commencing in 1994,
adjacent cellular service providers have accelerated the process of building out
their cellular telephone systems, and the Company's subscribers' ability to use
cellular services of adjacent cellular providers has increased. The Company
expects that as adjacent cellular service areas become more fully built out and
as adjacent cellular service providers reduce roaming rates, other direct costs
of services as a percentage of revenue will level off and then decrease. Other
direct costs of service attributable to the cellular telephone systems acquired
in the Georgia Acquisition totaled $0.2 million for the two months ended
December 31, 1994 and are included in the Company's results of operations for
1994.

The cost of equipment increased 56.5% to $11.5 million for 1994 from $7.4
million for 1993, due primarily to the increase in subscribers for the same
period. The equipment sales margin decreased to (45.1%) for 1994 from (17.4%)
for 1993. In its effort to address market competition and improve market share,
the Company sold more telephones below cost in 1994 than in 1993. The cost of
equipment attributable to the cellular telephone systems acquired in the Georgia
Acquisition totaled $0.3 million for the two months ended December 31, 1994 and
is included in the Company's results of operations for 1994.

Sales and marketing costs increased 51.3% to $6.0 million for 1994 from
$4.0 million for 1993, but decreased as a percentage of total revenue to 8.8%
for 1994 from 9.4% for 1993. This decrease is due to a significant portion of
sales and marketing costs being fixed. The Company's cost to add a net
subscriber, including losses on telephone sales, increased to $247 for 1994 from
$203 for 1993. This increase in cost to add a net subscriber was caused
primarily by increased losses from the Company's sales of cellular telephones.
Sales and marketing costs attributable to the cellular telephone systems
acquired in the Georgia Acquisition totaled $0.3 million for the two months
ended December 31, 1994 and are included in the Company's results of operations
for 1994.

Customer service costs increased 29.4% to $3.9 million for 1994 from $3.0
million for 1993, but decreased as a percentage of total revenue to 5.6% for
1994 from 7.2% for 1993. This decrease is due largely to the impact of the
in-house customer billing system which was implemented in January 1994. Customer
service costs attributable to the cellular telephone systems acquired in the
Georgia Acquisition totaled $0.2 million for the two months ended December 31,
1994 and are included in the Company's results of operations for 1994.

General and administrative expenses increased 42.0% to $9.8 million for
1994 from $6.9 million for 1993, but decreased as a percentage of total revenue
to 14.2% for 1994 from 16.9% for 1993, due primarily to the fixed portion of
general and administrative expenses being spread over a larger customer base.
General and administrative expenses attributable to the cellular telephone
systems acquired in the Georgia Acquisition totaled $0.4 million for the two
months ended December 31, 1994 and are included in the Company's results of
operations for 1994.

Depreciation and amortization decreased 8.2% to $9.8 million for 1994 from
$10.7 million for 1993, due primarily to the expiration of several covenants not
to compete and certain assets becoming fully depreciated. Depreciation and
amortization attributable to the cellular telephone systems acquired in the
Georgia Acquisition totaled $0.7 million for the two months ended December 31,
1994 and are included in the Company's results of operations for 1994.

Operating income for 1994 was $15.1 million, an increase of $12.9 million
over operating income for 1993. This improvement in operating results is
attributed primarily to increases in revenue which exceeded increases in
operating expenses. Operating income (loss) attributable to the cellular
telephone

31
<PAGE> 32

systems acquired in the Georgia Acquisition totaled $(0.6) million for the two
months ended December 31, 1994 and is included in the Company's results of
operations for 1994.

NET INTEREST EXPENSE, OTHER EXPENSE AND INCOME TAX EXPENSE; NET INCOME (LOSS)

Net interest expense increased 66.8% to $21.2 million for 1995 from $12.7
million for 1994 due primarily to debt incurred for the Georgia Acquisition and
the GTE Acquisition, the amortization of deferred financing fees related to the
Credit Facility, and increased interest rates. For 1994, net interest expense
increased 41.2% or $3.7 million from $9.0 million for 1993 due primarily to debt
incurred for the acquisition of the license to construct and operate the
Alabama-8 RSA cellular telephone system in April 1993, debt incurred to finance
the Georgia Acquisition and the amortization of deferred financing fees related
to the Credit Facility. Net interest expense increased 38.7% to $7.9 million for
the three months ended March 31, 1996 versus $5.7 million for the three months
ended March 31, 1995. This increase is due primarily to debt incurred for the
GTE Acquisition and the amortization of deferred financing fees related to the
Credit Facility.

Other expense of $0.7 million for 1995 and $0.1 million for 1994 consists
primarily of the disposal of certain assets by the Company. For 1993, other
expense was $0.6 million, which included expenses relating to an abandoned
effort to sell certain assets and to the write-off of certain leasehold
improvements abandoned upon relocation. Other expense was none in the three
months ended March 31, 1996 and $0.3 million for the three months ended March
31, 1995, which consisted primarily of the disposal of certain assets by the
Company.

Income tax expense was $2.7 million for 1995 compared to none in 1994. The
$2.7 million is a non-recurring deferred income tax charge related to the
difference between the financial statement and income tax return basis of
certain assets and liabilities of the Partnership. In connection with the IPO,
all of the assets and liabilities of the Partnership were exchanged for stock in
the Company. Due to the exchange, a deferred tax liability was recorded to
reflect the difference between the financial statement and income tax return
bases in these assets and liabilities. Income tax expense was $0.04 million in
the three months ended March 31, 1996 and $2.7 million in the three months ended
March 31, 1995 due to the non-recurring deferred income tax charge described
above.

Net income for 1995 was $1.0 million, or $.04 per share of common stock,
compared to net income of $1.7 million, or $.09 per share of common stock for
1994. The decrease in net income is primarily attributable to interest expense
on debt incurred for the Georgia Acquisition and the GTE Acquisition and income
tax expense. Net loss for 1993 was $7.4 million, which resulted from interest
expense exceeding operating income. Net income for the three months ended March
31, 1996 was $0.1 million, or $0.00 per share, compared to a net loss of $(4.0)
million, or $(0.21) per share, for the three months ended March 31, 1995. The
increase in net income is primarily attributable to decreases in income tax
expense and other expense and increases in revenue which exceeded increases in
operating expenses and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank and
intercompany debt, and, to a lesser extent, through operating cash flow. The
Company does not anticipate that it will have access to loans or other financial
support from PCI or any of its subsidiaries (other than subsidiaries of the
Company). See "Transactions and Relationships with PCI and Its
Affiliates -- Other Arrangements with PCI". The Company intends to use the net
proceeds of the Offering to reduce amounts outstanding under the Credit Facility
by approximately $94.5 million. See "Use of Proceeds".

In 1995, the Company spent approximately $36.6 million for capital
expenditures. The Company expects to spend $35.0 million and $31.0 million for
capital expenditures for the years ended December 31, 1996, and 1997,
respectively. The Company expects to use net cash provided by operating

32
<PAGE> 33

activities to fund such capital expenditures. The Credit Facility restricts the
Company's capital expenditures to $41.0 million (plus $3.2 million of unused
1995 permitted capital expenditures) in 1996 and $35.0 million in 1997. If the
cost of proposed capital expenditures in 1996 and 1997 exceed the Company's
estimate, the Company will need to seek the consent of its lenders prior to
undertaking any such capital expenditures.

Any acquisitions by the Company of ownership interests in cellular
telephone systems may be for cash, securities or a combination of cash and
securities. To the extent that the Company uses cash for all or part of any such
acquisitions, it expects to raise such cash from borrowings under the Credit
Facility or, if feasible and attractive, issuances of Class A Common Stock. The
Credit Facility, however, places certain conditions and other restrictions on
the Company's ability to make such acquisitions. The Company will pay an
aggregate of $66.5 million for the Proposed Acquisitions, which amount will be
borrowed under the Credit Facility. See "-- Credit Facility" below.

The Company believes that operating cash flow and borrowings available
under the Credit Facility (including amounts repaid with the net proceeds of the
Offering) will provide sufficient financial resources to satisfy the Company's
debt service requirements and to meet the Company's currently anticipated
capital and other expenditure requirements over at least the next two to three
years. However, there can be no assurance that the Company will not require
future financing or that, if so required, such financing will be available, or,
if available, that the terms thereof will be attractive to the Company.

CREDIT FACILITY

The Company currently has a $500.0 million revolving credit facility with a
syndicate of 22 banks (without giving effect to two recent and/or pending
mergers involving four banks) (the "Credit Facility").

Prior to December 1, 1995, the Company had a $275.0 million revolving
credit facility with a syndicate of 14 banks (the "Prior Credit Facility"). On
December 1, 1995, the Company and its lenders amended and restated the Prior
Credit Facility to increase the lenders' commitment thereunder from $275.0
million to $500.0 million and to make certain other changes, including providing
for (i) an extension of the loan maturity date to June 30, 2004, (ii) a consent
permitting the transactions contemplated by the GTE Acquisition, (iii) the
incurrence by the Company of up to $200.0 million in structurally subordinated
debt, on terms and conditions reasonably satisfactory to the Majority Banks (as
defined in the Credit Facility) and (iv) the application of the net proceeds of
the Offering to reduce amounts outstanding under the Credit Facility without
reducing the lenders' commitments thereunder (the "Amended and Restated Credit
Facility"). References to the "Credit Facility" in the Prospectus refer to the
Prior Credit Facility with respect to any date prior to the amendment and
restatement of the Credit Facility and to the Amended and Restated Credit
Facility with respect to any date subsequent to the amendment and restatement of
the Credit Facility as the context indicates.

The Credit Facility also permits, subject to certain conditions and
restrictive covenants, the Company to invest in PCS licenses. At March 31, 1996,
$345.0 million was outstanding under the Credit Facility and $155.0 million was
available to be borrowed.

The Credit Facility is a revolving line of credit with scheduled commitment
reductions commencing September 30, 1998. Interest rates under the Credit
Facility range from 0.25% over prime or 1.5% over the London Inter Bank Offered
Rate ("LIBOR") to 1.25% over prime or 2.5% over LIBOR depending upon the
Company's leverage ratio. The Company has entered into five interest rate swap
agreements and six interest rate cap agreements for a total notional amount of
$185.0 million. Under these agreements, the maximum interest rate may range from
7.76% to 11.25%. At March 31, 1996, the effective interest rate under these
agreements ranged from 7.39% to 10.23%. The impact of these agreements has been
immaterial to the consolidated financial statements for each of the years in the
three-year period ended December 31, 1995 and for the three months ended March
31, 1995 and 1996.

The Credit Facility is secured by substantially all of the property and
assets of the Company and its subsidiaries. The subsidiaries of the Company also
guarantee all obligations of the Company under the Credit Facility.

33
<PAGE> 34

The Credit Facility requires that the Company satisfy certain financial
tests, including the maintenance of certain maximum leverage, debt service and
other financial ratios, and that the Company meet, on a quarterly basis, certain
minimum operating cash flow requirements. The Credit Facility also contains
certain restrictive covenants which impose restrictions and/or limitations on
the operations and activities of the Company including, among other things: the
incurrence of indebtedness and the terms thereof, the creation or incurrence of
liens, investments and acquisitions, sales of assets, declaration or payment of
dividends or other payments or distributions to stockholders and capital
expenditures. The Credit Facility provides for various events of default,
including interest or principal payment defaults, breach of any agreement or
covenant that (in certain cases) continues unremedied for a specified number of
days, materially adverse events, revocation of licenses, acceleration of or a
payment default on other indebtedness, the rendering of any judgment against the
Company or any of its subsidiaries not covered by insurance or indemnification
in an amount (singly or in the aggregate) equal to or in excess of $1.0 million
which is not satisfied, discharged or removed within 30 days, and certain events
relating to the bankruptcy or insolvency of the Company or any of its
subsidiaries. In addition, the Credit Facility provides for an event of default
if (i) PCI and PCI's existing stockholders and any trust the beneficiaries of
which are any of the stockholders or any of their immediate family members cease
together to own (x) at least 51.0% of all voting rights with respect to the
capital stock of the Company, (y) at least 33.0% of all the outstanding shares
of capital stock of the Company or (z) the single largest percentage of the
outstanding shares of capital stock of the Company, (ii) PCI's existing
stockholders and any trust the beneficiaries of which are any of the
stockholders or any of their immediate family members cease together to own (x)
at least 51.0% of each class of the capital stock of PCI having the right to
vote in an election of PCI's directors or (y) at least 51.0% of all the
outstanding shares of capital stock of PCI, or (iii) the Company (x) sells,
leases, abandons or otherwise disposes of any of its assets, other than in the
ordinary course of business, without the prior written consent of its lenders or
(y) merges with another corporation.

The net proceeds of the Offering will be used to reduce amounts outstanding
under the Credit Facility. The Company will be permitted to borrow amounts under
the Credit Facility for: (a) capital expenditures, to the extent that the
aggregate amount of such capital expenditures does not exceed amounts specified
in the Credit Facility; (b) the acquisition of (i) minority interests in
subsidiaries in which the Company owns a majority interest as of the date of the
acquisition, (ii) interests in additional cellular telephone systems specified
in the Credit Facility, (iii) 50.01% or more ownership interests in cellular
telephone systems located in South Carolina, Florida, Georgia and Alabama, or
within the same geographic area or contiguous to any cellular system owned by
the Company or any of its subsidiaries; (c) funding downpayments for and
interest payments on the acquisition of any licenses for broadband 10 MHz PCS
frequency blocks in the upcoming FCC auction for service areas located in
Florida, Georgia and Alabama, or within the same geographic area or contiguous
to any cellular system owned by the Company or any of its subsidiaries, in an
amount of up to $10.0 million, and (d) working capital needs and other corporate
purposes of the Company. The Credit Facility also permits the Company to issue
equity in consideration for ownership interests in additional cellular telephone
systems or in broadband PCS systems located anywhere in the United States to the
extent that such acquisition represents greater than 50.0% of the ownership
interests in any such system (or less than 50.0% if such interests are not
subject to mandatory capital contribution requirements). The Company also will
be permitted to use the cash proceeds of a subsequent issuance of equity in the
Company to fund acquisitions pursuant to which the Company acquires at least
50.01% of the ownership interests in additional cellular telephone systems or in
broadband PCS systems located within South Carolina, Florida, Georgia and
Alabama, provided that the acquisition does not cause the Company to violate the
financial ratios and other provisions of the Credit Facility, as evidenced in
pro forma projections acceptable to the Company's lenders.

PURCHASE OBLIGATIONS

In connection with the purchase of controlling interests in the
non-wireline cellular license for the Panama City, Florida MSA, the Company
incurred certain purchase obligations which aggregated approximately $7.6
million as of March 31, 1996. These purchase obligations are payable in July
1996.

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<PAGE> 35

ACCOUNTING POLICIES

For financial reporting purposes, the Company reports 100% of revenues and
expenses for the markets for which it provides cellular telephone service.
However, in several of its markets, the Company holds less than 100% of the
equity ownership. The minority stockholders' and partners' shares of income or
losses in those markets are reflected in the consolidated financial statements
as "minority interest share of (income) losses", except for losses in excess of
their capital accounts and cash call provisions which are not eliminated in
consolidation. For financial reporting purposes, the Company consolidates each
subsidiary and partnership in which it has a controlling interest (greater than
50.0%). From July 26, 1991 through March 31, 1996, the Company had controlling
interests in each of its subsidiaries and partnerships. At December 31, 1990 and
through July 25, 1991, the Company had a minority interest in the cellular
telephone system serving the Panama City, Florida MSA. The Company's investment
in this minority interest was recorded at cost as of December 31, 1990, and,
therefore, revenues and expenses associated with the Panama City, Florida MSA
are not included in the consolidated statements of operations for the period
from January 1, 1991 to July 25, 1991.

Until 1994, the Company had incurred net losses for each fiscal year since
inception on a historical basis. For 1994 and 1995 the Company had a net income
of $1.7 million and $1.0 million, respectively. The Company had a net loss of
$(3.4) million for 1995 on a pro forma basis, adjusted to reflect the effects,
as applicable, of the IPO and the Offering (including the application of the net
proceeds of the IPO and the estimated net proceeds of the Offering to reduce
amounts outstanding under the Credit Facility and related interest expense), the
GTE Acquisition, the Proposed Acquisitions and the acquisition of certain
minority interests in the Company's cellular telephone systems (assuming each
such transaction occurred at the beginning of the period).

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121"), which is effective for fiscal years beginning after December 15,
1995. SFAS 121 addresses the accounting for potential impairment of long-lived
assets. The effect of implementing SFAS 121 is expected to be immaterial to the
Company's financial position and results of operations.

In October 1995, the FASB issued Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123, which is
effective for fiscal years beginning after December 15, 1995, establishes
financial accounting and reporting requirements for stock-based employee
compensation plans. The effect of implementing SFAS 123 is expected to be
immaterial to the Company's financial position and results of operations.

35
<PAGE> 36

BUSINESS

GENERAL

The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. At
March 31, 1996, the Company provided cellular telephone service to 227,400
subscribers in Florida, Georgia, Alabama and South Carolina in a total of 15
licensed service areas composed of nine MSAs and six RSAs, with an aggregate
estimated population of 3.3 million. The Company recently has entered into
definitive agreements to acquire cellular telephone systems located in the
Georgia-6 RSA Market No. 376(A) and the Georgia-1 RSA Market No. 371(A). If
consummated, the Proposed Acquisitions will result in the Company expanding its
cellular service in Georgia by approximately 6,222 subscribers (as of March 31,
1996) and by two additional RSAs with an aggregate estimated population of 0.4
million. The Company sells its cellular telephone service as well as a full line
of cellular products, services and accessories principally through its network
of retail stores. The Company markets all of its products and services under the
nationally-recognized service mark CELLULAR ONE.

MARKETS AND SYSTEMS

The Company's cellular telephone systems serve three distinct markets. The
largest of these markets includes 13 contiguous licensed service areas in
Georgia, Alabama and South Carolina (which will increase to 15 licensed service
areas upon consummation of the Proposed Acquisitions). The Company also has
substantial cellular service areas in Fort Myers and Panama City, Florida. The
following table sets forth with respect to each service area in which the
Company owns (assuming consummation of the Proposed Acquisitions) a cellular
telephone system, the estimated population, the Company's beneficial ownership
percentage and the Net Pops as of March 31, 1996, and the date of initial
operation of such system by the Company or a predecessor operator.

<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
--------------- -------------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Georgia/Alabama
Albany, GA...................................... 117,842 82.7% 97,455 4/88
Augusta, GA..................................... 434,547 100.0 434,547 4/87
Columbus, GA.................................... 256,783 84.2 216,211 11/88
Macon, GA....................................... 311,472 98.7 307,423 12/88
Savannah, GA.................................... 279,854 98.2 274,817 3/88
Georgia-1 RSA(3)................................ 217,283 100.0 217,283 10/92
Georgia-6 RSA(4)................................ 196,660 94.4 185,647 4/93
Georgia-7 RSA................................... 132,550 100.0 132,550 9/91
Georgia-8 RSA................................... 155,516 100.0 155,516 10/91
Georgia-9 RSA................................... 118,689 100.0 118,689 9/92
Georgia-10 RSA.................................. 148,207 100.0 148,207 10/91
Georgia-12 RSA.................................. 211,720 100.0 211,720 10/91
Dothan, AL...................................... 135,209 92.1 124,527 2/89
Montgomery, AL.................................. 316,463 91.9 290,829 7/88
Alabama-8 RSA................................... 169,573 100.0 169,573 7/93
------------- ---------
Subtotal..................................... 3,202,368 3,084,994
Fort Myers, FL................................... 375,454 99.0 371,700 8/87
Panama City, FL.................................. 142,905 77.9 111,323 9/88
------------- ---------
Total...................................... 3,720,727 3,568,017
============= ========
</TABLE>

- ---------------
(1) Does not include South Carolina-7 RSA and South Carolina-8 RSA where the
Company has interim operating authority as a result of the GTE Acquisition.
The Company has no subscribers and maintains no cell sites in South
Carolina-7 RSA and South Carolina-8 RSA, but instead provides roaming access
to its own subscribers and others when they travel in these two service
areas, utilizing its existing cell sites in adjacent service areas. Does not
include Alabama-5 RSA where the Company has interim operating authority.
(2) Based on population estimates for 1995 from the CACI Sourcebook.
(3) Assumes consummation of the Proposed GA-1 Acquisition.
(4) Assumes consummation of the Proposed GA-6 Acquisition.

36
<PAGE> 37

GEORGIA/ALABAMA

In 1988, the Company acquired controlling interests in the licenses to
operate cellular telephone systems in four MSAs (Montgomery and Dothan, Alabama
and Columbus and Albany, Georgia). The Company continued to increase its
presence in this market by acquiring additional cellular service areas in 1989
(Macon, Georgia MSA), 1992 (Georgia-9 RSA), 1993 (Alabama-8 RSA), 1994
(Georgia-7 RSA, Georgia-8 RSA, Georgia-10 RSA and Georgia-12 RSA) and 1995
(Savannah and Augusta, Georgia MSAs). The Augusta, Georgia MSA includes Aiken
County in South Carolina. In 1994, the Company also received interim operating
authority from the FCC to provide service in two counties within the southern
portion of the Alabama-5 RSA. In 1995, as a result of the GTE Acquisition, the
Company received interim operating authority from the FCC to provide service to
South Carolina-7 RSA and South Carolina-8 RSA. In the aggregate, this market
(excluding the Alabama-5 RSA, South Carolina-7 RSA and South Carolina-8 RSA
where the Company has only interim operating authority), now covers a contiguous
service area of approximately 31,800 square miles that includes Montgomery, the
state capital of Alabama, prominent resort destinations in Jekyll Island, St.
Simons Island and Sea Island, Georgia, and over 600 miles of interstate highway,
including most of I-95 from Savannah, Georgia to Jacksonville, Florida. The
Company collects substantial roaming revenue from cellular telephone subscribers
from other cellular telephone systems traveling in this market from nearby
population centers such as Atlanta and Birmingham, as well as from vacation and
business traffic in the southeastern United States. Due in part to the favorable
labor environment, moderate weather and relatively low cost of land, during the
last several years there has been an influx of new manufacturing plants in this
market. As of March 31, 1996, the Company utilized 130 cell sites in this market
(including two cell sites in Alabama-5 RSA), 23 of which were placed in service
in 1995 and nine of which became operational in 1996. The Company plans to
further improve signal coverage and increase system capacity in this market by
adding 36 more cells in fiscal 1996.

FORT MYERS

The Company acquired control of the non-wireline cellular telephone system
for the Fort Myers, Florida market in 1988. The Fort Myers market is a
significant resort center, attracting both vacation and business travelers on a
year-round basis. This market also benefits from the growth and popularity of
other cities in southwest Florida, such as Naples and Sarasota. In addition, the
Fort Myers airport has recently been designated an international port of entry,
thereby increasing the area's potential for international commerce and transit.
The Company collects substantial roaming revenue in this market from subscribers
from other cellular telephone systems who visit Fort Myers. As of March 31,
1996, the Company utilized 18 cell sites in this market, three of which were
added in 1995. The Company plans to further improve signal coverage and increase
capacity in this market by adding six cell sites in fiscal 1996.

PANAMA CITY

The Company acquired control of the non-wireline cellular license for the
Panama City, Florida market in 1991. The Company collects substantial roaming
revenue in this market from subscribers from other cellular telephone systems
who visit Panama City, a popular spring and summer vacation destination. As of
March 31, 1996, the Company utilized 10 cell sites in this market, two of which
were added in 1995 and one of which was added in 1996. The Company plans to add
one additional cell site in this market in fiscal 1996.

STRATEGY

37
<PAGE> 38

GROWTH THROUGH ACQUISITIONS

ACQUISITIONS OF NEW SYSTEMS. The Company has developed its business
through the acquisition and integration of cellular telephone systems within its
three market areas, evidenced most recently in the Georgia and GTE Acquisitions.
The Company believes that, based upon its experience with acquisitions and the
likelihood of continued consolidation within the cellular telephone industry, it
is well positioned to continue to expand its markets through acquisitions of
cellular telephone systems, such as with the Proposed Acquisitions.

ACQUISITIONS OF MINORITY INTERESTS. The Company has a controlling interest
in each of the 15 licensed cellular service areas in which it operates. There
are, however, minority interests in eight of these service areas, ranging from
approximately 1.0% to 22.1%, which the Company would consider acquiring if the
minority holders were to express an interest in liquidating their investments.
During 1992 through 1995, the Company increased its holdings by purchasing
minority interests in its existing cellular telephone systems for an aggregate
purchase price of approximately $9.1 million. During the three-month period
ended March 31, 1996, the Company acquired additional minority interests in four
of its MSAs for an aggregate purchase price of $0.7 million.

REVENUE GROWTH IN EXISTING SERVICE AREAS

INCREASED PENETRATION. The Company utilizes a broad-based, multimedia
marketing strategy designed to enhance public awareness of and demand for its
cellular telephone services. The Company also uses a variety of targeted pricing
plans, subsidized phone sales and conveniently located retail stores to attract
new subscribers in the increasingly segmented wireless marketplace.

INCREASED REVENUES FROM ADDITIONAL FEATURE SERVICES. The Company seeks to
increase cellular telephone revenue among its existing customers through the
offering of additional, customized features and services which encourage greater
cellular telephone usage.

CUSTOMER SERVICE

An important aspect of the Company's effort to differentiate itself from
its competitors is its focus on providing high-quality customer service in order
to create and maintain customer loyalty. In this regard, the Company seeks to
control all major points of contact with new and existing customers by utilizing
an in-house direct sales and marketing staff along with a network of
Company-owned, retail CELLULAR ONE stores. The Company generally does not
utilize agents to enlist new subscribers or provide service to existing
accounts. The Company believes that, by controlling its distribution channels,
it is better able to target desirable customers and ensure their continuing
satisfaction through implementation of such practices as utilization of sound
and consistent credit policies in the customer approval process, linkage of
sales commissions to subscriber retention, initiation of effective post-sale
contacts with new subscribers and maintenance of reliable cellular telephone
systems and ongoing customer service.

OPERATING EFFICIENCIES

ECONOMIES OF SCALE. The Company believes that, by operating clusters of
cellular telephone systems within a region, it realizes significant cost savings
through economies of scale, such as central switching capacities (where one MTSO
serves multiple cellular service areas), reduced landline leasing costs through
utilization of a microwave network that connects cellular switching equipment to
multiple cell sites, reduced roaming fees paid to adjacent cellular service
providers and centralized marketing, purchasing and administrative functions.

LOW CUSTOMER ACQUISITION COSTS. The Company seeks to maintain a low cost
to add a new subscriber by minimizing its rate of subscriber churn and
controlling costs through its utilization of an in-house direct sales and
marketing staff. The Company believes its cost to add a net subscriber continues
to be among the lowest in the cellular telephone industry.

NATIONAL BRAND RECOGNITION. The Company seeks to leverage the significant
national advertising exposure provided by Cellular One Group's support of the
CELLULAR ONE service mark to attract new

38
<PAGE> 39

customers while maintaining advertising expenditures at a lower level than the
Company believes would be required if it marketed its services under a local
service mark.

OPERATIONS

GENERAL

The Company has concentrated its efforts on creating an integrated network
of cellular telephone systems in the southeastern United States, principally to
date in Florida, Georgia and Alabama. At March 31, 1996, the Company provided
cellular telephone service to 227,400 subscribers in its three market areas in a
total of 15 licensed service areas composed of nine MSAs and six RSAs. If
consummated, the Proposed Acquisitions will result in the Company expanding its
cellular service by approximately 6,222 subscribers in Georgia and adding two
RSAs with an aggregate estimated population of 0.4 million. Through its
participation in the NACN, the Company is able to offer seven-digit dialing
access to its subscribers when they travel outside the Company's service areas,
providing them with convenient call delivery throughout large areas of the
United States, Canada, Mexico and Puerto Rico currently served by other NACN
participants.

The following table sets forth information, at the dates indicated,
regarding the Company's subscribers, penetration rate, cost to add a net
subscriber, average monthly churn rate and average monthly service revenue per
subscriber.
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------------------------------------- -------------------------------------
1991 1992 1993 1994(1) 1995(2) 1995 1996 1996
------- ------- ------- ---------- -------- --------- --------- ---------
PRO
FORMA(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Subscribers(4).............. 22,536 37,209 65,761 117,224 211,985 128,661 227,400 233,622
Penetration(5).............. 1.45% 2.20% 3.48% 4.58% 6.41% 5.01% 6.88% 6.28%
Cost to add a net
subscriber(6)............. $ 405 $ 283 $ 203 $ 247 $ 276 $ 315 $ 357 $ 369
Average monthly churn
rate(7)................... 2.49% 1.69% 1.37% 1.55% 1.55% 1.51% 1.51% 1.53%
Average monthly service
revenue per
subscriber(8)............. $ 78.81 $ 68.30 $62.69 $ 60.02 $ 56.68 $ 56.64 $ 52.10 $ 52.95
</TABLE>

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

(1) Includes the Georgia Acquisition. At December 31, 1994, the Georgia
Partnerships' Estimated Population, Net Pops, Subscribers and Penetration
were 640,624, 640,624, 12,140 and 1.90%, respectively. For the two months
ended December 31, 1994, the Georgia Partnerships' Cost to add a net
subscriber, Average monthly churn rate and Average monthly service revenue
per subscriber were $322, 3.21% and $74.56, respectively.
(2) Includes the GTE Acquisition, which occurred on December 1, 1995. At
December 31, 1995, the GTE Companies' Estimated Population, Net Pops,
Subscribers and Penetration were 714,401, 708,524, 34,904 and 4.89%,
respectively. For the one month ended December 31, 1995, the GTE Companies'
Average monthly churn rate and Average monthly service revenue per
subscriber were 5.40% and $58.04, respectively.
(3) Adjusted to reflect the Proposed Acquisitions (assuming each such
acquisition occurred at the beginning of the period). For the three months
ended March 31, 1996, Horizon's Cost to add a net subscriber, Penetration,
Average monthly churn rate and Average monthly service revenue per
subscriber for Georgia-6 RSA were $577, 2.46%, 1.85% and $92.07,
respectively. For the three months ended March 31, 1996, USCOC's Cost to
add a net subscriber, Penetration, Average monthly churn rate and Average
monthly service revenue per subscriber for Georgia-1 RSA were $1,098,
0.63%, 4.23% and $188.39, respectively.
(4) Each billable telephone number in service represents one subscriber, not
including test, demonstration or other telephone numbers for which payment
is not expected. Amounts at December 31, 1991, 1992 and 1993 include the
subscribers in the Alabama-7 RSA where the Company had interim operating
authority from June 4, 1991 through July 1, 1994. The number of subscribers
served in the Alabama-7 RSA was 335, 955 and 2,576 at December 31, 1991,
1992 and 1993, respectively. In 1994, the Company entered into an agreement
to sell the accounts of its subscribers in the Alabama-7 RSA to the third
party licensee of this RSA.

(Footnotes continued on following page)

39
<PAGE> 40

(Footnotes continued from previous page)

(5) Determined by dividing the aggregate number of subscribers by the estimated
population.
(6) Determined for the 12-month period ended December 31, 1991, 1992, 1993, 1994
and 1995 and for the three months ended March 31, 1995 and 1996 (including
the pro forma three months ended March 31, 1996) by dividing (i) the amount
of all costs of sales and marketing, including salaries, commissions and
employee benefits paid to all sales and marketing personnel, travel and
accommodations, meals and entertainment expenses incurred by sales and
marketing personnel, training and education of such personnel, all
advertising and promotional expenses (including cash or trade), agent
commissions, credit reference expenses, losses on cellular telephone sales,
rental expenses allocated to retail operations, net installation expenses
and other miscellaneous sales and marketing charges for such period
including fees paid for use of the "CELLULAR ONE" service mark, by (ii) the
net subscribers added during such period. Cost to add a net subscriber does
not include engineering and technical expenses, interconnect charges or
general and administrative expenses.
(7) Determined for the 12-month periods ended December 31, 1991, 1992, 1993,
1994 and 1995 and for the three months ended March 31, 1995 and 1996
(including the pro forma three months ended March 31, 1996) by dividing
total subscribers discontinuing service during such period by the average
subscribers for such period (beginning subscribers plus ending subscribers,
divided by two), and dividing that result by the number of months in such
period.
(8) Determined for the 12-month periods ended December 31, 1991, 1992, 1993,
1994 and 1995 and for the three months ended March 31, 1995 and 1996
(including the pro forma three months ended March 31, 1996) by dividing the
sum of the access, airtime, roaming, long distance, features, connection,
disconnection and other revenues for such period by average subscribers for
such period (the sum of the number of subscribers at the beginning of each
month in such period divided by the number of months in such period), and
dividing that result by the number of months in such period.

SUBSCRIBERS AND SYSTEM USAGE

The Company's subscribers have increased from 15,538 at January 1, 1991 to
227,400 at March 31, 1996. Reductions in the cost of cellular telephone services
and equipment at the retail level have led to an increase in cellular telephone
usage by general consumers for non-business purposes. In addition, the Company
believes that several categories of its subscribers will develop requirements
for specialized cellular applications, such as packet-switching technology. As a
result, the Company believes that there is an opportunity for significant growth
in each of its existing service areas. The Company will continue to seek to
broaden its subscriber base for basic cellular telephone services as well as to
increase its offering of customized services. The sale of custom calling
features typically results in increased usage of cellular telephones by
subscribers, thereby further enhancing revenues. In 1995 and for the three
months ended March 31, 1996, cellular telephone service revenues represented
92.2% and 94.3%, respectively, of the Company's total revenues, with equipment
sales and installation representing the balance.

MARKETING

The Company markets all of its products and services under the name
CELLULAR ONE. See "-- Service Marks". At April 26, 1996, CELLULAR ONE, the first
national brand name in the cellular telephone industry, was utilized by cellular
operators in over 533 service areas with a combined estimated population of 192
million. The national advertising campaign conducted by Cellular One Group
enhances the Company's advertising exposure at a fraction of what could be
achieved by the Company alone. The Company also obtains substantial marketing
benefits from the name recognition associated with this widely used service
mark, both with existing subscribers traveling outside the Company's service
areas and with potential new subscribers moving into the Company's service
areas. In addition, travelers who subscribe to CELLULAR ONE service in other
markets may be more likely to use the Company's service when they travel in the
Company's service areas. Cellular telephones of non-wireline subscribers are
either programmed to select the non-wireline carrier (such as the Company) when
roaming, unless the non-wireline carrier in the roaming area is not yet
operational, or the subscriber dials a special code or has a cellular telephone
equipped with an "A/B" (non-wireline/wireline) switch and selects the wireline
carrier.

40
<PAGE> 41

Through its membership in NACN and other special networking arrangements,
the Company provides extended regional and national service to subscribers in
this market, thereby allowing them to make and receive calls while in other
cellular service areas without dialing special access codes. This service
distinguishes the Company's call delivery features from those of many of its
competitors.

The Company's marketing strategy is designed to generate continued net
subscriber growth by focusing on subscribers who are likely to generate lower
than average deactivations and delinquent accounts, while simultaneously
maintaining a low cost of adding net subscribers. Management has implemented its
marketing strategy by training and compensating its sales force in a manner
designed to stress the importance of high penetration levels and minimum costs
per net subscriber addition. The Company's sales staff has a two-tier structure.
A retail sales force handles walk-in traffic, and a targeted sales staff
solicits certain industries and government subscribers. The Company's management
believes that its internal sales force is more likely to select and screen new
subscribers and select pricing plans that realistically match subscriber means
and needs than are independent agents. In addition, the Company motivates its
direct sales force to sell appropriate rate plans to subscribers, thereby
reducing churn, by linking payment of commissions to subscriber retention. As a
result, the Company's use of an internal sales force keeps marketing costs low,
both directly because commissions are lower, and indirectly because subscriber
retention is higher than when using independent agents. For 1995 and the three
months ended March 31, 1996, the Company's cost to add a net subscriber was $276
and $357, respectively. The Company believes its cost to add a net subscriber
continues to be among the lowest in the cellular telephone industry, principally
because of its in-house direct sales and marketing staff.

The Company also maintains its low churn rate through an after-sale
telemarketing program implemented through its sales force and a telemarketing
service specializing in cellular customer services. This program not only
enhances customer loyalty, which reduces churn, but also increases add-on sales
and customer referrals. The telemarketing program allows the sales staff to
check customer satisfaction as well as to offer additional calling features,
such as voicemail, call waiting and call forwarding.

The Company's sales force works principally out of retail stores in which
the Company offers its cellular products and services. As of March 31, 1996, the
Company maintained 31 retail stores and four offices, 30 in the Georgia/Alabama
service areas, four in Fort Myers, Florida and one in Panama City, Florida.
Retail stores, which range in size up to 11,000 square feet, are fully equipped
to handle customer service and the sale of cellular services, telephones and
accessories. Ten of the newer and larger stores are promoted by the Company as
"Superstores", eight of which are located in the Company's Georgia/Alabama
service areas, one of which is located in the Fort Myers, Florida service area,
and one in the Panama City, Florida service area. Each Superstore has an
authorized warranty repair center and provides cellular telephone installation
and maintenance services. Most of the Company's larger markets currently have at
least one Superstore and the Company plans to open Superstores in all of its
larger markets. In addition, to enhance convenience for its customers, the
Company has begun to open smaller stores in locations such as shopping malls.
During the three months ended March 31, 1996, the Company remodeled one
Superstore in the Georgia/Alabama service area. During the remainder of 1996,
the Company plans to open one additional store in its Georgia/Alabama service
area and will remodel or relocate five retail stores, including the relocation
of one retail store to a Superstore. In addition, the Company plans to relocate
one administrative office to an existing retail location. In 1996, the Company
plans to open three new retail stores and relocate one store in its Ft. Myers
service area. The Company's stores provide subscriber-friendly retail
environments -- extended hours, a large selection of phones and accessories, an
expert sales staff and convenient locations -- which make the sales process
quick and easy for the subscriber.

PRODUCTS AND SERVICES

In addition to providing high-quality cellular telephone service in each of
its markets, the Company also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer and busy transfer. Several rate plans are presented to prospective
subscribers so that they may choose the plan that will best fit their expected
calling needs. Generally,

41
<PAGE> 42

these rate plans include a high user plan, a medium user plan, a basic plan and
an economy plan. Most rate plans combine a fixed monthly access fee, per minute
usage charges and additional charges for custom-calling features in a package
that offers value to the subscriber while enhancing airtime use and revenues for
the Company. In general, rate plans which include a higher monthly access fee
typically include a lower usage rate per minute. An ongoing review of equipment
and service pricing is maintained to ensure the Company's competitiveness. As
appropriate, revisions to pricing of service plans and equipment are made to
meet the demands of the local marketplace.

The following table sets forth a breakdown of the Company's revenues from
the sale of its services and equipment for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------------- ---------------------------------------------
1991 1992 1993 1994(1) 1995(2) 1995 1995 1996 1996
------- ------ ------ -------- ---------- ------------- ------------ ----------- --------------
PRO FORMA(3) PRO FORMA(4)
(IN THOUSANDS) ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service
revenue:
Access
and
usage(5)... $ 11,378 $ 16,305 $ 25,929 $ 45,175 $ 72,816 $ 91,904 $ 15,306 $ 26,284 $26,947
Roaming(6)... 3,595 4,561 6,165 9,928 16,551 21,000 3,457 5,036 5,744
Long
distance(7)... 1,094 1,361 1,770 2,927 4,418 6,767 958 1,690 1,890
Other(8)... 512 790 1,309 2,991 2,901 4,002 687 846 916
-------- -------- -------- -------- --------- ------------ ------------- ------------ ----------
Total
service
revenue.. $ 16,579 $ 23,017 $ 35,173 $ 61,021 $ 96,686 $ 123,673 $ 20,408 $ 33,856 $35,497
Equipment
sales
and
installa-
tion(9)... 3,532 4,284 6,285 7,958 8,220 9,285 1,966 2,035 2,096
-------- -------- -------- -------- --------- ------------ ------------- ------------ ----------
Total... $ 20,111 $ 27,301 $ 41,458 $ 68,979 $ 104,906 $ 132,958 $ 22,374 $ 35,981 $37,593
======== ======== ======== ======== ========= ============ ============= ============ ==========
</TABLE>

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

(1) Includes the Georgia Acquisition from the date of purchase, which occurred
on October 31, 1994.
(2) Includes the GTE Acquisition from the date of purchase, which occurred on
December 1, 1995.
(3) Adjusted to reflect the pro forma effects of the GTE Acquisition and the
Proposed Acquisitions (assuming each such transaction occurred at the
beginning of the period). For information relating to pro forma assumptions
and adjustments, see the Pro Forma Financial Statements and notes thereto
included in this Prospectus.
(4) Adjusted to reflect the pro forma effects of the Proposed Acquisitions
(assuming each such transaction occurred at the beginning of the period).
For information relating to pro forma assumptions and adjustments, see the
Pro Forma Financial Statements and notes thereto included in this
Prospectus.
(5) Access and usage revenues include monthly access fees for providing service
and usage fees based on per minute usage rates.
(6) Roaming revenues are fees charged for providing services to subscribers of
other cellular telephone systems when such subscribers or "roamers" place
or receive a telephone call within one of the Company's service areas.
(7) Long distance revenue is derived from long distance telephone calls placed
by the Company's subscribers.
(8) Other revenue includes, among other things, connect fees charged to
subscribers for initial activation on the cellular telephone system and
fees for feature services such as voicemail, call forwarding and call
waiting.
(9) Equipment sales and installation revenue includes revenue derived from the
sale of cellular telephones and fees for the installation of such
telephones.

Reciprocal agreements between each of the Company's cellular telephone
systems and the cellular telephone systems of other operators allow their
respective subscribers to place calls in most cellular service areas throughout
the country. Roamers are charged usage fees which are generally higher than a
given cellular telephone system's regular usage fees, thereby resulting in a
higher profit margin on roaming revenue. Roaming revenue is a substantial source
of incremental revenue for the Company. For the three months ended March 31,
1996, roaming revenue accounted for 14.9% of the Company's service revenues and
14.0% of the Company's total revenue. This level of roaming revenue is due in
part to the fact that both of the Company's markets in Florida are regional
shopping and vacation destinations and a number of the Company's cellular
telephone systems in the Georgia and Alabama market are located along major
interstate travel corridors.

In order to develop the market for cellular telephone service, the Company
provides retail distribution of cellular telephones and maintains inventories of
cellular telephones. The Company negotiates volume

42
<PAGE> 43

discounts for the purchase of cellular telephones and, in many cases, passes
such discounts on to its customers. The Company believes that earning an
operating profit on the sale of cellular telephones is of secondary importance
to offering cellular telephones at competitive prices to potential subscribers.
To respond to competition and to enhance subscriber growth, the Company has
historically sold cellular telephones below cost.

The Company is currently developing several new services which it believes
will provide additional revenue sources. Packet-switching technology will allow
data to be transmitted much more quickly and efficiently than the current
circuit-switching technology. Packet-switching uses the intervals between voice
traffic on cellular channels to send packets of data instead of tying up
dedicated cellular channels. The packets of information, which may be
transmitted using several different channels, are subsequently reassembled and
directed to the correct party at the receiving end. It is expected that the
development of this technology will make it possible for cellular carriers to
offer a broad range of cost-effective wireless data services, including
facsimile and electronic mail transmissions, point-of-sale credit
authorizations, package tracking, remote meter reading, alarm monitoring and
communications between laptop computer units and local area computer networks or
other computer databases. During 1996, the Company began offering data
transmission services using packet-switching technology in some of its markets
during 1996. In addition, the Company expects to begin to implement the use of
microcells during 1996. Microcells are low powered transmitters, typically
constructed on a pole or the roof of a building, which provide reduced radius
service within a specific area, such as large office buildings, underground
facilities or areas shielded by topographical obstructions. Microcell service
could be used, for instance, to provide wireless service within an office
environment that was also integrated with wireless service to the home.

CUSTOMER SERVICE

The Company is committed to attracting new subscribers and retaining
existing subscribers by providing consistently high-quality customer service. In
each of its cellular service areas, the Company maintains a local staff,
including a market manager, customer service representatives, technical and
engineering staff, sales representatives and installation and repair facilities.
Each cellular service area handles its own customer-related functions such as
credit evaluation, customer activations, account adjustments and rate plan
changes. Local offices and installation and repair facilities enable the Company
to better service customers, schedule installations and repairs and monitor the
technical quality of the cellular service areas.

In addition, subscribers are able to report cellular telephone service or
account problems to the Company 24 hours a day. Through the use of sophisticated
monitoring equipment, technicians at the Company's headquarters are able to
monitor the technical performance of its service areas.

To ensure high-quality service, Cellular One Group authorizes a third-party
marketing research firm to perform customer satisfaction surveys of each of its
licensees. Licensees must achieve a minimum customer satisfaction level in order
to be permitted to continue using the CELLULAR ONE service mark. In 1995, the
Company was awarded the #1 MSA and #1 RSA rankings in CELLULAR ONE's National
Customer Satisfaction Survey. The Company has held number one rankings in three
out of the last four years. The Company believes it has achieved this first
place rating through effective implementation of its direct sales and customer
service support strategy.

The Company has implemented a new software package to combat cellular
telephone service fraud. This new software system can detect counterfeit
cellular telephones while they are being operated and enables the Company to
terminate service to the fraudulent user of the counterfeit cellular telephone.
The Company also helps protect itself from fraud with pre-call customer
validation and subscriber profiles specifically designed to combat the
fraudulent use of subscriber accounts.

NETWORKS

The Company strives to provide its subscribers with virtually seamless
coverage throughout its three market areas, thereby permitting subscribers to
travel freely within this region and have their calls and custom calling
features, such as voicemail, call waiting and call forwarding, follow them
automatically

43
<PAGE> 44

without having to notify callers of their location or to rely on special access
codes. The Company has been able to offer virtually seamless coverage in this
area by implementing a switch interconnection plan to MTSOs located in adjoining
markets. The Company's equipment is built by NORTEL, formerly Northern Telecom,
Inc. ("NTI"), and interconnection between MTSOs has been achieved using NTI's
internal software and hardware.

Through its participation in NACN since 1992 and other special networking
arrangements, the Company has pursued its goal of offering seamless regional and
national cellular service to its subscribers. NACN is the largest wireless
telephone network system in the world -- linking non-wireline cellular operators
throughout the United States and Canada. Membership in NACN has aided the
Company in integrating its cellular telephone systems within its region, and has
permitted the Company to offer cellular telephone service to its subscribers
throughout a large portion of the United States and Canada. NACN has provided
the Company with a number of distinct advantages: (i) lower costs for roaming
verification, (ii) increased roaming revenue, (iii) more efficient roaming
service and (iv) integration of the Company's markets with 4,600 cities in more
than 40 states in the United States, Canada, Mexico and Puerto Rico.

SYSTEM DEVELOPMENT AND EXPANSION

The Company develops its service areas by adding channels to existing cell
sites and by building new cell sites. Such development is done for the purpose
of increasing capacity and improving coverage in direct response to projected
subscriber demand. Projected subscriber demand is calculated for each cellular
service area on a cell by cell basis. These projections involve a traffic
analysis of usage by existing subscribers and an estimation of the number of
additional subscribers in each such area. In calculating projected subscriber
demand, the Company builds into its design assumptions a maximum call "blockage"
rate of 2.0% (percentage of calls that are not connected on first attempt at
peak usage time during the day).

The following table sets forth, by market, at the dates indicated, the
number of the Company's operational cell sites.

<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994(1) 1995(6) 1996(2)(8)
---- ---- ---- ---- ---- ----
Georgia/Alabama.......................... 21(3) 28(4) 39(4) 70(5) 121(6) 166(7)
Fort Myers, FL........................... 8 9 13 15 18 24
Panama City, FL.......................... 3 4 7 7 9 11
--- --- --- --- --- ----
Total............................... 32(3) 41(4) 59(4) 92(5) 148(6) 201(7)
=== === === === === ====
</TABLE>

- ---------------
(1) Includes the Georgia Acquisition.
(2) Projected.
(3) Includes one cell site in the Alabama-7 RSA where the Company had interim
operating authority from June 4, 1991 through June, 1994.
(4) Includes two cell sites in the Alabama-7 RSA where the Company had interim
operating authority from June 4, 1991 through June, 1994.
(5) Includes one cell site in the Alabama-5 RSA where the Company has interim
operating authority for two counties of such RSA.
(6) Includes two existing cell sites in the Alabama-5 RSA where the Company has
interim operating authority for two counties of such RSA and 28 existing
cell sites that were purchased in the GTE Acquisition.
(7) Includes one additional cell site in the Alabama-5 RSA and two cell sites in
the South Carolina-8 RSA.
(8) Excludes 18 existing and three new cell sites planned for the Georgia-1 and
Georgia-6 RSAs, pending consummation of the Proposed Acquisitions.

The Company estimates that in 1995, the capacity of its existing cellular
telephone systems increased 80.7%. During 1995, the Company spent approximately
$33.0 million and, based on projected

44
<PAGE> 45

growth in subscriber demand, expects to spend approximately $30.0 million in
1996 in order to build out its cellular service areas, install an additional
microwave network and implement certain digital radio technology. In addition to
the 10 new cell sites made operational during the first quarter of 1996, the
Company plans to construct 43 additional cell sites with respect to its existing
cellular systems during 1996 to meet projected subscriber demand and improve the
quality of service. Cell site expansion is expected to enable the Company to
continue to add subscribers, enhance use of its cellular telephone systems by
existing subscribers, increase services used by subscribers of other cellular
telephone systems due to the larger geographic area covered by the cellular
telephone network and further enhance the overall efficiency of the network. The
Company believes that the increased cellular telephone coverage will have a
positive effect on market penetration and subscriber usage.

Microwave networks enable the Company to connect switching equipment and
cell sites without making use of local landline telephone carriers, thereby
reducing or eliminating fees paid to landline carriers. During 1995, the Company
spent approximately $1.5 million to build additional microwave connections
between Dothan and Montgomery, Alabama, and Brunswick and Savannah, Georgia, and
to complete a network in Fort Myers, Florida. The Company recently completed a
fiber optic network between Dothan, Alabama and Panama City, Florida, at the
cost of approximately $2.6 million. The operation of this fiber optic network
will result in significant savings to the Company in the future by the
substantial reduction or elimination of fees paid to landline carriers. In
addition, this network will provide the Company with excess capacity to lease to
third parties or trade for alternate fiber optic routes. The fiber network is
being tested and is expected to be operational presently.

ACQUISITIONS

The Company also continues to evaluate expansion through acquisitions of
both (i) other cellular properties located in Florida, Georgia, Alabama and
South Carolina that will further enhance its network and (ii) minority interests
in its existing cellular properties. On October 31, 1994, the Company acquired
the cellular telephone systems of the Georgia Partnerships for an aggregate
purchase price of $91.7 million. See "The Company". On December 1, 1995, the
Company acquired the GTE Companies for an aggregate purchase price of $158.4
million. See "The Company". On March 22, 1996, the Company entered into a
definitive agreement to acquire the cellular telephone system of Horizon for a
purchase price of $35 million, subject to certain adjustments. On April 23, 1996
the Company entered into a definitive agreement to acquire the cellular
telephone system of USCOC for a purchase price of $31.5 million, subject to
certain adjustments. In 1993 through 1995, the Company acquired minority
interests in three, six and six MSAs, respectively, and during the three months
ended March 31, 1996, the Company acquired minority interests in four MSAs. In
evaluating acquisition targets, the Company considers, among other things,
demographic factors, including population size and density, geographic proximity
to existing service areas, traffic patterns, cell site coverage and required
capital expenditures.

DIGITAL CELLULAR TECHNOLOGY

Over the next decade, it is expected that cellular telephones will
gradually convert from analog to digital technology. This conversion is due in
part to capacity constraints in many of the largest cellular markets, such as
Los Angeles, New York and Chicago. As carriers reach limited capacity levels,
certain calls may be unable to be completed, especially during peak hours.
Digital technology increases system capacity and offers other advantages over
analog technology, including improved overall average signal quality, improved
call security, potentially lower incremental costs for additional subscribers
and the ability to provide data transmission services. The conversion from
analog to digital technology is expected to be an industry-wide process that
will take a number of years. The exact timing and overall costs of such
conversion are not yet known.

The Company is in the process of upgrading its cellular telephone systems
from analog to digital technology and provides digital cellular telephone
service in most of its cellular telephone markets to roamers. The implementation
of digital technology will be fundamentally directed by subscriber demand for
secure and confidential communications, the introduction of new cellular
telephone services such as message waiting and calling line identification, and
the delivery of data communications. Where cell sites

45
<PAGE> 46

are not yet at their maximum capacity of radio channels, the Company is adding
digital channels to the network incrementally based on the relative demand for
digital and analog channels. Where cell sites are at full capacity, analog
channels are being removed and redeployed to expand capacity elsewhere within
the network and replaced in such cell sites by digital channels. The
implementation of digital cellular technology over a period of several years
will involve modest incremental expenditures for switch software and possible
significant cost reductions as a result of reduced purchases of radio channels
and a reduced requirement to split existing cells. However, as indicated above,
the extent of any implementation of digital radio channels and the amount of any
cost savings ultimately to be derived therefrom will depend primarily on
subscriber demand. In the ordinary course of business, equipment upgrades at the
cell sites have involved purchasing dual mode radios capable of using both
analog and digital technology.

The benefits of digital radio channels can only be achieved if subscribers
purchase cellular telephones that are capable of transmitting and receiving
digital signals. Currently, such telephones are more costly than analog
telephones. The widespread use of digital cellular telephones is likely to occur
only over a substantial period of time and there can be no assurance that this
technology will replace analog cellular telephones. In addition, since most of
the Company's existing subscribers currently have cellular telephones that
exclusively utilize analog technology, it will be necessary to continue to
support, and if necessary increase, the number of analog radio channels within
the network for many years.

COMPETITION

The cellular telephone service industry in the United States is highly
competitive. Cellular telephone systems compete principally on the basis of
services and enhancements offered, the technical quality of the cellular system,
customer service, coverage capacity and price. The Company's primary competition
in each of its service areas is the other cellular licensee -- the wireline
carrier. The table below lists the wireline competitor in each of the Company's
existing service areas:

<TABLE>
<CAPTION>
WIRELINE
MARKET COMPETITOR
- ---------------------------------------------------- --------------------------------------
<S> <C>
Georgia/Alabama
Albany, GA........................................ ALLTEL
Augusta, GA....................................... ALLTEL
Columbus, GA...................................... Public Service Cellular
Macon, GA......................................... BellSouth
Savannah, GA...................................... ALLTEL
Georgia-7 RSA..................................... Cellular Plus and BellSouth(1)
Georgia-8 RSA..................................... ALLTEL
Georgia-9 RSA..................................... ALLTEL and Public Service Cellular(1)
Georgia-10 RSA.................................... Cellular Plus and ALLTEL(1)
Georgia-12 RSA.................................... ALLTEL
Dothan, AL........................................ 360 degrees Communications Company
(formerly Sprint Cellular)
Montgomery, AL.................................... ALLTEL
Alabama-8 RSA..................................... ALLTEL and Intercel(1)
Fort Myers, FL...................................... GTE Mobilnet
Panama City, FL..................................... 360 degrees Communications Company
(formerly Sprint Cellular)
</TABLE>

- ---------------
(1) The wireline service area has been subdivided into two service areas by the
purchasers of the authorization for the RSA.

The Company believes that its technological expertise, emphasis on customer
service, large coverage area, and development of new products and services make
it a strong competitor with the wireline carrier in each of its service areas.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, SMR and ESMR systems
and paging services. ESMR is a "cellular-like" communications service supplied
by converting analog

46
<PAGE> 47

SMR services into an integrated, digital transmission system providing for call
hand-off, frequency reuse and wide call delivery networks. The Company will also
face competition from PCS. PCS is a digital, wireless communications system
supported by high-density call transmitters. Broadband PCS, when fully
implemented, will involve a network of small, low-powered transceivers placed
throughout a neighborhood, business complex, community or metropolitan area to
provide customers with mobile and portable voice and data communications. PCS
subscribers could have dedicated personal telephone numbers and would
communicate using small digital radio handsets that could be carried in a pocket
or purse. At such time as either ESMR or broadband PCS systems are constructed
in the Company's cellular service areas, these multi-site configuration systems
are expected to offer interconnected mobile telephone service which would
compete with the Company's cellular telephone service.

The FCC has promulgated rules for the licensing of operators to provide
ESMR and broadband PCS services. The FCC has licensed current SMR operators to
construct ESMR systems on existing SMR frequencies in many major metropolitan
areas throughout the United States. The FCC also has allocated 120 MHz of
spectrum for licensed broadband PCS and has decided to offer over 2,000 licenses
for broadband PCS use in separate competitive bidding auctions. The allocations
for licensed PCS services are split into six blocks of frequencies -- blocks "A"
and "B" being two 30 MHz allocations for each of the 51 MTAs throughout the
United States; block "C" being one 30 MHz allocation in each of 493 BTAs in the
United States; and blocks "D", "E" and "F" being three 10 MHz allocations in
each of the BTAs. The FCC concluded the auction of broadband PCS frequency
blocks "A" and "B" and issued PCS licenses to operators in each of the 51 MTAs.
The winning bidders for PCS Blocks "A" and "B" for the Atlanta MTA were AT&T
Wireless PCS, Inc. and GTE Macro Communications Corp. ("GTE"), respectively.
Subsequent to the auction, GTE sold its license for the PCS block B spectrum for
the Atlanta MTA to Powertel PCS Partners L.P. The Atlanta MTA includes the
following cellular markets of the Company: Columbus, Georgia MSA, Macon, Georgia
MSA, Albany, Georgia MSA, Georgia-7-10 RSAs and a portion of the Georgia-12 RSA.
The winning PCS blocks "A" and "B" bidders for the Birmingham MTA were Wireless
Co., L.P. and Powertel PCS Partners, L.P., respectively. The Birmingham MTA
includes the following cellular markets of the Company: Montgomery, Alabama MSA,
Dothan, Alabama MSA and Alabama-8 RSA. The winning bidders for PCS blocks "A"
and "B" for the Jacksonville, Florida MTA were Powertel PCS Partners, L.P. and
PCS Primeco, L.P., respectively. The Jacksonville, Florida MTA includes the
following cellular markets of the Company: Panama City, Florida MSA and a
portion of the Georgia-12 RSA. The winning bidders for PCS blocks "A" and "B"
for the Miami, Florida MTA were Wireless Co., L.P. and PCS Primeco, L.P.,
respectively. The Miami, Florida MTA includes the Company's Fort Myers, Florida
MSA cellular market.

47
<PAGE> 48

The second broadband PCS auction, which concluded on May 6, 1996, involved
PCS frequency block "C" in each of 493 BTAs. The winning bidders in BTAs which
cover all or portions of the Company's MSA and RSA cellular markets are as
follows:

<TABLE>
<CAPTION>
CELLULAR MARKET BTA NO. BTA AUCTION WINNER
- -------------------- -------- -----------------------------------------
<S> <C> <C>
Dothan, AL MSA BTA 115 Enterprise Communications Partnership
Montgomery, AL MSA BTA 305 Central Alabama Partnership, L.P. 132
Alabama-8 RSA BTA 92 R&S PCS, Inc.
BTA 305 Central Alabama Partnership, L.P. 132
BTA 334 Enterprise Communications Partnership
Ft. Myers, FL MSA BTA 151 GWI PCS, Inc.
Panama City, FL MSA BTA 340 Southeast Wireless Communications, L.P.
Albany, GA MSA BTA 6 Enterprise Communications Partnership
Augusta, GA MSA BTA 26 Southern Wireless, L.P.
Columbus, GA MSA BTA 92 R&S PCS, Inc.
Macon, GA MSA BTA 271 Georgia Independent PCS Corporation
Savannah, GA MSA BTA 410 Savannah Independent PCS Corporation
Georgia-RSA 7 BTA 271 Georgia Independent PCS Corporation
Georgia-RSA 8 BTA 26 Southern Wireless, L.P.
BTA 410 Savannah Independent PCS Corporation
Georgia-RSA 9 BTA 6 Enterprise Communications Partnership
BTA 92 R&S PCS, Inc.
Georgia-RSA 10 BTA 6 Enterprise Communications Partnership
BTA 271 Georgia Independent PCS Corporation
Georgia-RSA 12 BTA 58 KMTel, L.L.C.
BTA 410 Savannah Independent PCS Corporation
</TABLE>

PCS broadband frequency block "C" and "F" are referred to as the
"Entrepreneurs' Block". The auction of the Entrepreneurs' Block frequencies is
limited to companies with annual gross revenues of less than $125.0 million.
Frequency blocks "D" and "E" are two 10 MHz allocations in each of the 493 BTAs.
The auction of blocks "D", "E" and "F" is expected to take place during the
third quarter of 1996. The FCC generally will allow current cellular providers
to obtain licenses for only 10 MHz of PCS spectrum within their current cellular
service areas, although cellular providers are eligible for licenses for other
PCS spectrum outside their cellular service areas; however, there is currently
pending, before the FCC, a proposed rulemaking to allow cellular carriers to
obtain up to 20 MHz of PCS spectrum in their current cellular service areas. The
Company presently intends to participate in the FCC auction of broadband PCS
frequencies. The Company's primary objective is to supplement its existing
spectrum capacity and, as a result, the Company intends to focus its bidding on
PCS frequencies in areas currently served by or adjacent to its cellular
operations. The Company may borrow up to $10.0 million under the Credit
Facility, subject to certain conditions and restrictive covenants, to fund
downpayments for and interest payments on the acquisition of licenses for
broadband 10 MHz PCS frequency block "F" spectrum in the upcoming FCC auction.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Facility".

In addition, the FCC has allocated radio frequencies and established rules
to govern a mobile satellite service in which transmissions from mobile units to
satellites would augment or replace transmissions to land-based stations.
Although such a system is designed primarily to serve remote areas and is
subject to transmission delays inherent in satellite communications, a mobile
satellite system could augment or replace communications with segments of
land-based cellular systems. Based on current technologies, however, satellite
transmission services are not expected to be competitively priced with cellular
telephone services.

48
<PAGE> 49

SERVICE MARKS

CELLULAR ONE is a registered service mark with the U.S. Patent and
Trademark Office. The service mark is owned by Cellular One Group, a Delaware
general partnership of Cellular One Marketing, Inc., a subsidiary of
Southwestern Bell Mobile Systems, Inc., together with Cellular One Development,
Inc., a subsidiary of AT&T and Vanguard Cellular Systems, Inc. The Company uses
the CELLULAR ONE service mark to identify and promote its cellular telephone
service pursuant to licensing agreements with Cellular One Group (the
"Licensor"). In 1995 and the three months ended March 31, 1996, the Company paid
$178,000 and $59,200, respectively, in licensing and advertising fees under
these agreements. Licensing and advertising fees are determined based upon the
population of the licensed areas. The licensing agreements require the Company
to provide cellular telephone service to its customers, and to maintain a
certain minimum overall customer satisfaction rating in surveys commissioned by
the Licensor. The Company's customer satisfaction ratings have consistently far
exceeded this required minimum. The licensing agreements which the Company has
entered into are for original five-year terms expiring on various dates ranging
from July 1996 to March 1998. These agreements may be renewed at the Company's
option for three additional five-year terms.

REGULATION

As a provider of cellular telephone services, the Company is subject to
extensive regulation by the federal government.

The licensing, construction, operation, acquisition and transfer of
cellular telephone systems in the United States are regulated by the FCC
pursuant to the Communications Act of 1934, as amended (the "Communications
Act"). The FCC has promulgated rules governing the construction and operation of
cellular telephone systems and licensing and technical standards for the
provision of cellular telephone service ("FCC Rules"). For cellular licensing
purposes, the United States is divided into MSAs and RSAs. In each market, the
frequencies allocated for cellular telephone use are divided into two equal
blocks designated as Block A and Block B. Block A licenses were initially
reserved for non-wireline companies, such as the Company, while Block B licenses
were initially reserved for entities affiliated with a local wireline telephone
company. Under current FCC Rules, a Block A or Block B license may be
transferred with FCC approval without restriction as to wireline affiliation,
but generally, no entity may own any substantial interest in both systems in any
one MSA or RSA. The FCC may prohibit or impose conditions on sales or transfers
of licenses.

Initial operating licenses are generally granted for terms of up to 10
years, renewable upon application to the FCC. Licenses may be revoked and
license renewal applications denied for cause after appropriate notice and
hearing. The Company's cellular licenses expire in the following years with
respect to the following number of service areas: 1996 (two); 1997 (four); 1998
(three); 2001 (five); and 2002 (one). The FCC has issued a decision confirming
that current licensees will be granted a renewal expectancy if they have
complied with their obligations under the Communications Act during their
license terms and provided substantial public service. A potential challenger
will bear a heavy burden to demonstrate that a license should not be renewed if
the licensee's performance merits a renewal expectancy. The Company believes
that the licenses controlled by the Company will be renewed in the ordinary
course upon application.

Under FCC rules, each cellular licensee was given the exclusive right to
construct one of two cellular telephone systems within the licensee's MSA or RSA
during the initial five-year period of its authorization. At the end of such
five-year period, other persons are permitted to apply to serve areas within the
licensed market that are not served by the licensee. Current FCC Rules provide
that competing "unserved area" applications are to be resolved through the
auction process. The Company has no unserved areas in any of its cellular
telephone systems that have been licensed for more than five years; however, the
Company does have unserved areas in several of its cellular service areas that
have been licensed for less than five years. Although the Company intends to
satisfy the five year service requirement for each of these unserved cellular
service areas, there can be no assurance that it will be successful in doing so.

49
<PAGE> 50

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

The Communications Act prohibits the holding of a common carrier license
(such as the Company's cellular licenses) by a corporation of which more than
20.0% of the capital stock is owned directly or beneficially by aliens. Where a
corporation such as the Company controls another entity that holds an FCC
license, such corporation may not have more than 25.0% of its capital stock
owned directly or beneficially by aliens, in each case, if the FCC finds that
the public interest would be served by such prohibitions. Failure to comply with
these requirements may result in the FCC issuing an order to the Company
requiring divestiture of alien ownership to bring the Company into compliance
with the Communications Act. In addition, fines or a denial of renewal, or
revocation of the license are possible. The Company's Restated Certificate of
Incorporation permits the redemption of the Company's Common Stock from
stockholders where necessary to protect the Company's regulatory licenses.

From time to time, legislation which could potentially affect the Company,
either beneficially or adversely, may be proposed by federal and state
legislators. On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecom Act") was signed into law, revising the Communications Act to eliminate
unnecessary regulation and to increase competition among providers of
communications services. The Company cannot predict the future impact of this or
other legislation on its operations.

The major provisions of the Telecom Act potentially affecting the Company
are as follows:

Reciprocal termination charges. The Telecom Act requires state public
utilities commissions and/or the FCC to implement policies that mandate
cost-based reciprocal compensation between cellular carriers and local exchange
carriers ("LEC") for interconnection services. The Company believes that
implementation of these policies may result in a substantial decrease in
interconnection expenses incurred by the Company.

Facilities siting for personal wireless services. The siting and
construction of cellular transmitter towers, antennas and equipment shelters are
often subject to state or local zoning, land use and other regulation. Such
regulation may include zoning, environmental and building permit approvals or
other state or local certification. The Telecom Act provides that state and
local authority over the placement, construction and modification of personal
wireless services (including cellular and other CMRS and unlicensed wireless
services) shall not prohibit or have the effect of prohibiting personal wireless
services or unreasonably discriminate among providers of functionally equivalent
services. Although state and local zoning authorities retain their rights over
land use, their actions cannot have the effect of banning wireless services or
picking and choosing among similar wireless providers. In addition, localities
must act on requests made for siting in a reasonable period of time and any
decision to deny must be in writing and supported by substantial evidence.
Appeals of zoning decisions that fail to comply with the provisions of the
Telecom Act can be made on an expedited basis to a court of competent
jurisdiction which can be either federal district or state court. In addition,
the Telecom Act codified the Presidential memorandum on the use of federal lands
for siting wireless facilities by requiring the President or his designee to
establish procedures whereby federal agencies will make available their
properties, rights of ways and other easements at a fair and reasonable price
for service dependent upon federal spectrum. The Company anticipates that as a
result of this provision, it will more readily receive local zoning approval for
proposed cellular base stations.

Environmental effect of radio frequency emissions. The Telecom Act
provides that state and local authorities cannot regulate personal wireless
facilities based on the environmental effects of radio frequency emissions if
those facilities comply with the federal standard. In this regard, the FCC must

50
<PAGE> 51

complete its pending rulemaking on RF emissions within 180 days after the
Telecom Act was signed into law.

EMPLOYEES

At March 31, 1996, the Company had 542 full-time equivalent employees, none
of whom is represented by a labor organization. Management considers its
relations with employees to be good.

PROPERTIES

For each market served by the Company's operations, the Company maintains
at least one sales or administrative office and operates a number of cell
transmitter and antenna sites. As of March 31, 1996, the Company had 29 leases
for retail stores used in conjunction with its operations and four leases for
administrative offices. As of March 31, 1996, the Company also had 94 leases to
accommodate operating cell transmitters and antennas.

LEGAL PROCEEDINGS AND CONTINGENCIES

The Company is not currently involved in any pending legal proceedings
likely to have a material adverse impact on the Company.

The Company conducts operations of its cellular telephone system in the
Macon, Georgia MSA through a New Hampshire limited partnership. As a technical
matter, the limited partnership agreement must be amended to permit the
partnership to conduct operations outside New Hampshire, even though the
partnership commenced operations in Georgia more than five years ago. Amendment
of the limited partnership agreement requires the unanimous consent of the
limited partners. Because of the amount of time that has passed since the
partnership began operations in Georgia, and since all but one of the limited
partners have consented to the amendment of the limited partnership agreement,
the Company does not believe that the partnership's failure to comply with the
technical requirements of the limited partnership agreement will have a material
adverse effect on the Company.

51
<PAGE> 52

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information concerning the directors and
executive officers of the Company. The Company's board of directors is divided
into three classes serving staggered three-year terms.

<TABLE>
<CAPTION>
TERM AS
NAME AGE POSITION AND OFFICES HELD DIRECTOR EXPIRES
- ------------------------------------- ---- ------------------------------------- -----------------
<S> <C> <C> <C>
William J. Ryan...................... 64 Director, President and Chief 1999
Executive Officer
Robert G. Engelhardt................. 62 Director, Executive Vice President 1998
and Secretary
M. Wayne Wisehart.................... 50 Vice President, Treasurer and Chief
Financial Officer
Leon J. Hensen....................... 48 Senior Vice President-General Manager
K. Patrick Meehan.................... 38 Vice President-General Counsel and
Assistant Secretary
Thomas D. McCloskey, Jr.............. 49 Director 1997
Vickie A. Palmer..................... 43 Director 1997
Kermit S. Sutton..................... 48 Director 1999
James S. Cownie...................... 51 Director 1998
Clark R. Mandigo..................... 52 Director 1998
</TABLE>

WILLIAM J. RYAN, Director, President and Chief Executive Officer. Mr. Ryan
served as Chief Executive Officer and President of PCI, the managing general
partner of the Partnership, from 1984 until July 1995. Mr. Ryan was Chief
Operating Officer and President of PCI from 1982 to 1984. Mr. Ryan continues to
serve as a director of PCI. Mr. Ryan has over 40 years of communications and
telecommunications experience. He joined PCI in 1970 following that company's
acquisition of certain radio and cable properties which Mr. Ryan had partially
owned and operated since 1955. In his capacity as Chief Executive Officer, Mr.
Ryan has successfully led the Company through 15 acquisitions of cellular
telephone systems. Mr. Ryan is a director of the Cellular Telecommunications
Industry Association, the founding chairman of Cable Television Advertising
Bureau, Inc. and a former president of the Florida Cable Association, the
Florida Broadcasters Association and the Southern Cable Association.

ROBERT G. ENGELHARDT, Director, Executive Vice President and Secretary. Mr.
Engelhardt served as Executive Vice President and Secretary of PCI, the managing
general partner of the Partnership, from 1982 until July 1995. Mr. Engelhardt
continues to serve as a director of PCI. Mr. Engelhardt has over 39 years of
communications and telecommunications experience. After joining PCI in 1972 as
Chief Engineer of WHO Broadcasting Company in Des Moines, Iowa, Mr. Engelhardt
was made Technical Director of PCI in 1976 and was promoted to Vice
President-Technical Director in 1979. Mr. Engelhardt initiated PCI's entry into
the cellular business in 1987. Mr. Engelhardt's broadcasting career began in
1954 with the construction and operation of KWWL-TV in Waterloo, Iowa. From 1955
to 1967, he served in a variety of engineering roles for KVTV Channel 9 in Sioux
City, Iowa. From 1967 to 1972, Mr. Engelhardt served as Technical
Director/Assistant Manager of KMEG-TV in Sioux City.

M. WAYNE WISEHART, Vice President, Treasurer and Chief Financial Officer.
Mr. Wisehart served as Chief Financial Officer of PCI, the managing general
partner of the Partnership, from 1982 until July 1995. He was promoted to
Treasurer of PCI in 1983 and to Vice President in 1987. Mr. Wisehart continues
to serve as a director of PCI. Mr. Wisehart has over 10 years of communications
and telecommunications experience. In his capacity as Chief Financial Officer of
PCI, he has been instrumental in the financial management and direction of the
Company. Prior to joining PCI, Mr. Wisehart served as Treasurer of the Des
Moines Register & Tribune Company of Des Moines, Iowa, for approximately five
years. He began his career in 1972 with Peat, Marwick, Mitchell & Co. in St.
Louis, Missouri, where he became a Certified Public Accountant. Mr. Wisehart
then served as a tax specialist for three years with General Dynamics
Corporation in St. Louis, Missouri.

52
<PAGE> 53

LEON J. HENSEN, Senior Vice President-General Manager. Mr. Hensen served as
General Manager of PCI, the managing general partner of the Partnership, from
1987 until July 1995. Mr. Hensen has over 24 years of communications and
telecommunications experience. In 1984, he joined American Cellular Telephone
Company ("ACTC") in Fort Myers, Florida as Vice President of Engineering and
Operations. After the sale of ACTC to BellSouth in 1986, Mr. Hensen provided
consulting services to BellSouth and McCaw Cellular Communications. From 1973 to
1984, Mr. Hensen served as Vice President of Engineering and Operations of
Rogers Radio Communications Services Inc., in Chicago, Illinois. From 1970 to
1973, he was employed by Motorola, Inc. in the Area Systems Engineering Group.

K. PATRICK MEEHAN, Vice President-General Counsel and Assistant Secretary.
Mr. Meehan served as General Counsel and Assistant Secretary of PCI, the
managing general partner of the Partnership, from 1991 until July 1995. As an
attorney with the law firm of Leibowitz & Spencer in Miami, Florida, from 1985
to May 1991, Mr. Meehan represented clients before the FCC and handled corporate
transactions involving broadcast, paging and cellular telephone companies. He is
a 1985 graduate of the Columbus School of Law and The Institute for
Communications Law Studies at The Catholic University of America in Washington,
D.C. Mr. Meehan is a member of the Florida Bar, the District of Columbia Bar and
the American Bar Association.

THOMAS D. MCCLOSKEY, Jr., Director. Mr. McCloskey served as Director of
PCI, the managing general partner of the Partnership, during 1991. Mr. McCloskey
served as President from 1984 to 1988 and Chairman since 1988 of McCloskey
Enterprises, Inc., which is a real estate development firm located in Aspen,
Colorado. Mr. McCloskey is a 1972 graduate of The Wharton School of Finance &
Commerce of the University of Pennsylvania. Mr. McCloskey's wife, Bonnie P.
McCloskey, is the sister of Vickie A. Palmer, a director of the Company. Bonnie
P. McCloskey is also a principal beneficial stockholder of the Company. See
"Principal Stockholders".

VICKIE A. PALMER, Director. Ms. Palmer has served as Director of PCI, the
managing general partner of the Partnership, since 1991. She will continue to
serve in that capacity following completion of the Offering. In addition, Ms.
Palmer has owned and served in various capacities, including as President and
Chairman of the Board, of Signal Hill Communications, Inc., located in
Davenport, Iowa, since 1989. Until January 1996, Signal Hill Communications,
Inc. owned and operated several radio stations in Iowa. Ms. Palmer currently
serves on the board of directors of Firstar Bank Davenport, N.A., a wholly-owned
subsidiary of Firstar Iowa, which is in turn wholly owned by Firstar Corp.

KERMIT S. SUTTON, Director. Mr. Sutton served as Director of PCI, the
managing general partner of the Partnership, during 1991. Mr. Sutton has served
as President of Sutton Companies, a private investment firm in Naples, Florida,
since 1988. In addition, Mr. Sutton practiced law with the firm of Whitfield,
Musgrave, Selvy, Kelly and Eddy in Des Moines, Iowa from 1974 to 1988, serving
as a Partner of that firm from 1978 to 1988. Mr. Sutton's wife, Jenny W. Sutton,
is the sister of Vickie A. Palmer, a director of the Company. Jenny W. Sutton is
also a principal beneficial stockholder of the Company. See "Principal
Stockholders".

JAMES S. COWNIE, Director. Mr. Cownie was elected to the board of directors
of the Company in 1994. Mr. Cownie has served as Chairman of New Heritage
Associates, a cable television operator located in Des Moines, Iowa, since 1991.
Mr. Cownie served as President of Heritage Communications, Inc., a cable
television operator located in Des Moines, Iowa, from 1971 to 1990. He currently
serves on the board of directors of Heritage Media Corporation, a broadcasting
and in-store advertising and promotion company, Capital Value Fund, Inc., an
asset management company and MaceRich Company, a real estate investment trust.

CLARK R. MANDIGO, Director. Mr. Mandigo was elected to the board of
directors of the Company in 1994. Mr. Mandigo is currently self-employed as a
business consultant. From 1986 to 1991, he was President, Chief Executive
Officer and Director of Intelogic Trace, Inc., which provides technical support
and on-site service for computer and telecommunication systems throughout the
United States and Canada. He currently serves on the board of directors of
Physician Corporation of America and Lone Star Steakhouse & Saloon Inc., and as
a Trustee of Accolade Funds, United Services Insurance Funds and Pauze/Swanson
United Services Funds.

53
<PAGE> 54

DIRECTOR COMPENSATION AND RELATED TRANSACTIONS

Directors who are officers or employees of the Company or any subsidiary of
the Company receive no additional compensation for serving on the board of
directors or its committees. Directors who are not officers or employees of the
Company or any subsidiary of the Company receive an annual fee of $10,000, plus
$1,000 for each board meeting attended or committee meeting attended on a day
other than a board meeting and reimbursement for travel costs and other
out-of-pocket expenses incurred in attending such meetings. In addition, such
directors also receive options to purchase Class A Common Stock. See
"-- Executive Compensation -- Stock Options" and "-- Stock Purchase Plans".

COMMITTEES

The Company has an Audit Committee and a Compensation and Stock Option
Committee (the "Compensation Committee"). Messrs. Cownie, Mandigo and McCloskey
serve on the Audit Committee. Messrs. Cownie, Mandigo and Sutton serve on the
Compensation Committee. The Audit Committee examines and considers matters
relating to the financial affairs of the Company, including reviewing the
Company's annual financial statements, the scope of the independent annual audit
and the independent auditors' letter to management concerning the effectiveness
of the Company's internal financial and accounting controls. The Compensation
Committee considers and makes recommendations to the Company's board of
directors with respect to programs for human resource development and management
organization and succession, approves changes in senior executive compensation,
considers and makes recommendations to the Company's board of directors with
respect to compensation matters and policies and employee benefit and incentive
plans and exercises authority granted to it to administer such plans and
administers the Company's stock option and one of the Company's stock purchase
plans and grants stock options under the stock option plans.

54
<PAGE> 55

EXECUTIVE COMPENSATION

SUMMARY

The following table discloses total compensation, including bonuses, paid
to the Chief Executive Officer and the four other most highly paid executive
officers (the "named executive officers") for services in all capacities to PCI,
the Company and its subsidiaries for the year ended December 31, 1995.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
---------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) UNDERLYING OPTIONS COMPENSATION(1)
- ----------------------------------------- --------- --------- ------------------
<S> <C> <C> <C> <C>
William J. Ryan, President and Chief
Executive Officer...................... $ 331,651 $ 119,880 130,000 $ 55,356
Robert G. Engelhardt, Executive Vice
President and Secretary................ $ 239,019 $ 57,600 120,000 $ 26,073
M. Wayne Wisehart, Vice President,
Treasurer and Chief Financial
Officer................................ $ 145,256 $ 34,800 75,000 $ 33,417
Leon J. Hensen, Senior Vice President-
General Manager........................ $ 163,862 $ 39,188 75,000 $ 22,764
K. Patrick Meehan, Vice President-General
Counsel and Assistant Secretary........ $ 109,936 $ 26,400 65,000 $ 15,108
</TABLE>

- ---------------
(1) Includes the following: for Mr. Ryan, PCI 401(k) Profit Sharing Plan and
Trust ("401(k) Plan") contributions of $15,000, auto allowance of $6,998
(including insurance and license), tax services of $6,282, club dues of
$4,425 and medical reimbursements of $22,651; for Mr. Engelhardt, 401(k)
Plan contributions of $15,000, auto allowance of $6,677 (including insurance
and license), tax services of $850, club dues of $1,543 and medical
reimbursements of $2,003; for Mr. Wisehart, 401(k) Plan contributions of
$14,526, auto allowance of $6,834 (including insurance and license), tax
services of $1,225, club dues of $5,708 and medical reimbursements of
$5,124; for Mr. Hensen, 401(k) Plan contributions of $15,000, auto allowance
of $6,588 (including insurance and license), and club dues of $1,176; for
Mr. Meehan, 401(k) Plan contributions of $5,497, auto allowance of $6,912
(including insurance and license), tax services of $275, club dues of $1,176
and medical reimbursements of $1,248.

STOCK OPTIONS

Option Grants. The following table contains information with respect to
grants of stock options for Class A Common Stock to each of the Named Executive
Officers during the year ended December 31, 1995. All such grants are made under
the Company's Option Plan. There are 1.6 million shares of Class A Common Stock
reserved for issuance under the Option Plan. In March 1995, the Board of
Directors granted non-incentive options to purchase a total of 655,000 shares of
Class A Common Stock to 11 employees of the Company, including to the Named
Executive Officers.

<TABLE>
<CAPTION>
OPTIONS GRANTS IN LAST FISCAL YEAR POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------------- ANNUAL RATE
NUMBER OF % OF TOTAL OF STOCK
SECURITIES SECURITIES UNDERLYING PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5% 10%
- ------------------------ ---------- --------------------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan......... 130,000 19.9% $14.25 Feb. 3, 2005 $ 1,165,027 $ 2,952,408
Robert G. Engelhardt.... 120,000 18.3 14.25 Feb. 3, 2005 1,075,410 2,725,300
M. Wayne Wisehart....... 75,000 11.5 14.25 Feb. 3, 2005 672,131 1,703,312
Leon J. Hensen.......... 75,000 11.5 14.25 Feb. 3, 2005 672,131 1,703,312
K. Patrick Meehan....... 65,000 9.9 14.25 Feb. 3, 2005 582,514 1,476,204
</TABLE>

- ---------------
(1) All options included in this table will vest in equal installments over a
three-year period beginning one year after February 3, 1995, the date of
grant.

55
<PAGE> 56

Option Exercises and Year-end Values. The following table provides
information regarding the value of all unexercised options held at December 31,
1995 by the Named Executive Officers. No Named Executive Officer exercised any
stock options during the fiscal year.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1995 DECEMBER 31, 1995(1)
----------------------------- -----------------------------
NAME UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
William J. Ryan............................ 130,000 0 $ 1,007,500 $0
Robert G. Engelhardt....................... 120,000 0 930,000 0
M. Wayne Wisehart.......................... 75,000 0 581,250 0
Leon J. Hensen............................. 75,000 0 581,250 0
K. Patrick Meehan.......................... 65,000 0 503,750 0
</TABLE>

- ---------------
(1) Based on a per share price of $14.25 on February 3, 1995.

The Company has also adopted a Directors Stock Option Plan (the "Directors
Plan"). Under the Directors Plan, options to purchase up to an aggregate of
300,000 shares of Class A Common Stock are available for grants to directors of
the Company who are not officers or employees of the Company or any subsidiary
of the Company (each an "Eligible Director"). Under the Directors Plan, each
Eligible Director is granted an initial option to purchase 7,500 shares of Class
A Common Stock. An Eligible Director is also granted an additional option to
purchase 1,500 shares of Class A Common Stock for each year that the Eligible
Director continues to be an Eligible Director. Messrs. McCloskey, Sutton,
Mandigo and Cownie and Ms. Palmer have each been granted options to purchase
9,000 shares of Class A Common Stock under the Directors Plan. The Directors
Plan will terminate in 2005, unless terminated at an earlier date by the board
of directors.

STOCK PURCHASE PLANS

The Company has recently adopted a stock purchase plan for employees (the
"Employee Purchase Plan"). Under the Employee Purchase Plan, 160,000 shares of
Class A Common Stock are available for purchase by eligible employees of the
Company or any of its subsidiaries. The Employee Purchase Plan permits eligible
employees to elect to have a portion of their pay deducted by the Company or, on
a quarterly basis, to make lump sum contributions to purchase shares of Class A
Common Stock of the Company. In the event there is any increase or decrease in
Common Stock without receipt of consideration by the Company (for instance, by a
recapitalization or stock split), there may be a proportionate adjustment to the
number and kinds of shares that may be purchased under the Employee Purchase
Plan. Generally, payroll deductions and other payments will be accumulated
during the period beginning on the first day of the first payroll period
commencing in November of each year and ending on the last day of the last
payroll period ending in September of the following year (the "Payroll Deduction
Period"). The purchase price of each share of Class A Common Stock purchased
under the Employee Purchase Plan will be the lesser of 90.0% of the fair market
value of the Class A Common Stock (i) on the first trading day of the Payroll
Deduction Period or (ii) on the last day of such Payroll Deduction Period;
provided, however, that in no event shall the purchase price be less than the
par value of the stock. The Employee Stock Purchase Plan will terminate in 2005,
unless terminated at an earlier date by the board of directors.

The Company has also recently adopted a stock purchase plan for
non-employee directors (the "Director Purchase Plan"). Under the Director
Purchase Plan, 25,000 shares of Class A Common Stock are available for purchase
by non-employee directors of the Company. In the event there is any increase or
decrease in Common Stock without receipt of consideration by the Company (for
instance, by a recapitalization or stock split), there may be a proportionate
adjustment to the number and kinds of shares that may be purchased under the
Director Purchase Plan. The Director Purchase Plan permits non-employee
directors to elect to have their fees as directors retained by the Company and
used to purchase shares of Class A Common Stock of the Company. Generally,
retained fees will be accumulated

56
<PAGE> 57

during the period commencing on October 1 of each year and ending on September
30 of the following year (the "Accumulation Period"). The purchase price of each
share of Class A Common Stock purchased under the Director Purchase Plan will be
the lesser of 90.0% of the fair market value of the Class A Common Stock (i) on
the first trading day of the Accumulation Period or (ii) on the last trading day
of such Accumulation Period; provided, however, that in no event shall the
purchase price be less than the par value of the stock. The Director Purchase
Plan will terminate in 2005, unless terminated at an earlier date by the board
of directors.

EMPLOYMENT AGREEMENTS

In 1995, the Company entered into employment agreements with each of
Messrs. Ryan and Engelhardt, for an initial term of three years, and Wisehart,
Hensen and Meehan, for an initial term of two years. Each agreement has an
automatic one-year renewal on each anniversary date thereof. The agreements
provide for initial annual base salaries of $333,000, $240,000, $145,000,
$165,000 and $110,000, respectively, and specify that if the executive officer
is terminated by the Company without cause (as defined therein), or if the
executive officer terminates the agreement for good reason (as defined therein,
including if the employment of the executive officer is terminated within one
year of a change in control of the Company), the Company will pay to the
executive officer the full base salary and benefits which would otherwise have
been paid to such officer during the remaining term of the agreement (to be paid
at the time such payments are due). The Compensation Committee approved 1996
base salaries under these agreements as follows: $340,000 for Mr. Ryan; $252,000
for Mr. Engelhardt; $152,500 for Mr. Wisehart; $173,500 for Mr. Hensen; and
$125,000 for Mr. Meehan.

Each agreement also provides that for one year following termination of
employment, the executive officer will not, in any state in which the Company is
engaged or plans to engage in business, (i) compete with the Company on behalf
of the executive officer or any third party, (ii) participate as a director,
agent, representative, stockholder or partner or have any direct or indirect
financial interest in any enterprise which engages in the business in which the
Company is engaged, or (iii) participate as an employee or officer in any
enterprise in which such officer's responsibilities relate to the cellular
business or any other business in which the Company is engaged; provided,
however, that ownership by such officer of less than 5.0% of the outstanding
stock of any corporation listed on a national securities exchange conducting any
such business will not be deemed a violation of such non-competition provision.

COMPOSITION OF THE BOARD OF DIRECTORS

The Bylaws provide that the number of directors constituting the board of
directors shall be at least three but not more than 11. The Restated Certificate
of Incorporation provides that at least two of the directors shall be Special
Directors. For purposes of the Restated Certificate of Incorporation, "Special
Director" is defined to mean a director of the Company who is not (a) with
respect to the Company or any subsidiary of the Company, an employee, former
employee whose employment ended within five years, officer, former officer whose
term as an officer ended within five years, or holder or beneficial owner
directly or indirectly of 5.0% or more of the capital stock of the Company or
any subsidiary of the Company, (b) with respect to a holder or beneficial owner
directly or indirectly of 5.0% or more of the capital stock of the Company, an
employee, former employee whose employment ended within five years, officer,
former officer whose term as an officer ended within five years, director,
former director whose term as a director ended within five years, trustee or
partner, (c) a member of the immediate family of a person listed in (a) or (b)
above or (d) any other person having a relationship with the Company which, in
the opinion of the board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director.

The board of directors is currently comprised of seven directors. The
Special Directors are James S. Cownie and Clark R. Mandigo. See "-- Directors
and Executive Officers".

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TRANSACTIONS AND RELATIONSHIPS WITH PCI AND ITS AFFILIATES

The following is a summary of certain transactions and relationships among
the Company and its associated entities, and among the directors, executive
officers and stockholders of the Company and its associated entities.

EXCHANGE AGREEMENT

In March 1995, contemporaneously with the IPO, the partners of the
Partnership contributed their collective 100% interest in the Partnership for
stock in Palmer Wireless. Pursuant to the Exchange Agreement, (a) the
partnership interests in the Partnership, all of the assets and liabilities of
the Partnership and certain other assets were transferred to Palmer Wireless in
exchange for (i) 704,755 shares of Class A Common Stock, all of which were
distributed to the partners of the Partnership other than PCI, and (ii)
17,288,578 shares of Class B Common Stock, all of which were distributed to PCI,
and (b) the Partnership was liquidated. As a result of these transfers, PCI
owned all of the outstanding shares of Class B Common Stock, which represents
75.0% of the combined voting power of both classes of Common Stock. See "Risk
Factors -- Control of the Company by PCI" and "-- Relationship with PCI;
Potential Conflicts of Interest". Because the Exchange was structured to qualify
as tax-free under Section 351 of the Internal Revenue Code of 1986, as amended,
the tax basis of the assets held by Palmer Wireless after the Exchange is the
same as the tax basis of the assets in the hands of the Partnership immediately
before the Exchange, and Palmer Wireless has added to its holding period for
certain assets the period for which the Partnership held such assets. The
Exchange Agreement also provided that Palmer Wireless would transfer to Holdings
certain assets, including its ownership interests in cellular licenses, together
with certain related liabilities. The Exchange Agreement required Palmer
Wireless to indemnify the partners of the Partnership against all of the
obligations and liabilities associated with the Partnership's operations. In
addition, Palmer Wireless was required to bear all of the costs incurred by the
Partnership and its partners (excluding PCI), and all transfer taxes and related
fees, in connection with the Exchange.

COST SHARING ARRANGEMENTS

The Company has shared office space, office equipment and towers with PCI
since the Partnership's formation in August 1989. During 1993, the Partnership
transferred such sites to PCI. PCI has allocated such costs between PCI and the
Company as it has deemed appropriate. The aggregate amount of the Company's
allocation of such cost for the period between January 1, 1991 and December 31,
1993 was approximately $4.6 million.

In connection with the IPO, the Company and PCI entered into a computer
services agreement, a transitional management and administrative services
agreement and a tax consulting agreement. Pursuant to the computer services
agreement, the Company provides PCI access to the Company's computer and
provides certain computer-related services for fees from PCI at an annual rate
of $205,500 in 1995. Pursuant to the transitional management and administrative
services agreement, certain management personnel and other employees of the
Company provided transitional management services to PCI through six months
after the date of the IPO relating to the move of PCI's headquarters from
Florida to Iowa and the retention of new executive management. PCI paid the
Company $229,300 in 1995 for such transitional management services. In addition,
under this agreement, the Company provided certain administrative services,
principally related to human resource management functions, to PCI. PCI paid the
Company $57,600 for such administrative services in 1995. Pursuant to the tax
consulting agreement, PCI has been providing various tax consulting services to
the Company, for fees from the Company. Such fees equaled $84,400 in 1995. While
none of these agreements are the result of arm's length negotiations, each such
agreement is designed to reimburse the providing party for its costs in
providing such services (including costs of personnel), and the Company believes
that the terms of such agreements are reasonable.

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LEASING ARRANGEMENTS WITH PCI

In addition to the office space and towers which the Company has shared
with PCI, with the associated expenses being allocated between the two entities
(See "-- Cost Sharing Arrangements" above), the Company paid PCI an aggregate of
$555,000 during the three years ended December 31, 1995 for the rental of a
building and certain towers and cell sites. The Company's annual rental payments
under the leases outstanding with PCI at December 31, 1995 totaled $269,000.
Pursuant to one such lease, FMT, Ltd., a subsidiary of the Company which
operates the Fort Myers, Florida cellular telephone system, leases a tower, land
and building from PCI, which lease provides for annual rental payments of
$119,600 and expires in January 1999, subject to FMT, Ltd.'s right to renew for
up to three consecutive five-year terms.

MANAGEMENT AGREEMENT

PCI and the Company's predecessor entity, the Partnership, were parties to
a management agreement dated as of July 1989, pursuant to which PCI performed
and provided management services in connection with, and supervised, managed and
directed the acquisition, disposition, financing, business affairs and
day-to-day operations of the Partnership and its subsidiaries (the "Management
Agreement"). The Management Agreement provided for a management fee of 1.0% of
revenues, paid quarterly. However, this fee was not charged by PCI after June
30, 1993, because of the transfer to the Partnership in 1993 of certain
administrative functions. The fees paid by the Partnership to PCI pursuant to
the Management Agreement amounted to $185,000, $256,000 and $173,000 for the
years ended December 31, 1991, 1992 and 1993, respectively, and are included in
the Company's general and administrative expenses. The Management Agreement was
terminated effective August 19, 1994.

CORPORATE OPPORTUNITY

Concurrently with the IPO, PCI and the Company entered into the PCI
Non-Competition Agreement. By doing so, the Company believes that the potential
for conflicts of interest between the Company and PCI and for directors of PCI
who are also directors or officers of the Company have been reduced. Under the
PCI Non-Competition Agreement, if PCI has an opportunity to acquire a business
that is "primarily" a cellular telephone or broadband PCS business, other than
certain investments of not more than 5.0% in publicly-traded companies (the
"Excepted Opportunities"), the Company will have the first opportunity to
acquire such business. The PCI Non-Competition Agreement defines "primarily" to
mean that 80.0% of revenues or assets are derived from or dedicated to such
business.

PCI has also agreed with the Company pursuant to the PCI Non-Competition
Agreement that if PCI acquires (through one or more transactions) a controlling
interest in assets or operations which represent all or a significant part of a
cellular telephone or broadband PCS business, other than the Excepted
Opportunities and subject to any required lender, regulatory or similar
approval, PCI will as promptly as practicable offer to transfer such interest to
the Company for a purchase price equal to PCI's cost, if readily determinable,
or PCI's reasonable determination of the fair value thereof, if PCI's cost is
not readily determinable, plus, in either case, costs and expenses incurred by
PCI in carrying and transferring such interest to the Company, including PCI's
cost of capital. If PCI's determination of the fair value with respect to any
such offer is in excess of $10.0 million and if the Special Directors of the
Company disagree with such determination, then the fair value shall be
determined by an independent appraiser chosen by the Special Directors and
approved by PCI.

The PCI Non-Competition Agreement automatically terminates at such time as
PCI or a successor no longer holds, directly or indirectly, Common Stock
representing more than 50.0% of the voting power in the Company.

ADVANCES FROM PCI

In April 1993, PCI advanced $3.5 million to the Partnership in connection
with the purchase of the Alabama-8 RSA. The entire balance of such advance was
paid in full by the Partnership on July 13, 1993.

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<PAGE> 60

During 1994, PCI advanced $1.6 million to the Company for payment of
deferred offering costs, interest expense and other administrative costs. The
entire balance of such advance was paid in full by the Company with the proceeds
of the IPO.

REGISTRATION RIGHTS AGREEMENT

Pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement") among the Company and PCI, MINC, PINC and SINC, as stockholders of
the Company (the "Palmer Shareholders"), if the Company proposes to make a
registered public offering of any of its securities under the Securities Act of
1933, as amended (the "Securities Act"), other than certain specified types of
offerings, the Company will be obligated to give written notice of the proposed
registration to each Palmer Shareholder. Upon receipt of such written notice,
each Palmer Shareholder will be entitled to request that all or a portion of its
Common Stock be included in such registration and offering (a "Piggyback
Registration"), and the Company will be required to effect a Piggyback
Registration except in certain specified circumstances. No Palmer Shareholder
has requested a Piggyback Registration in connection with the Offering.

The Registration Rights Agreement also provides that, at any time, a Palmer
Shareholder will be entitled to request registration for sale under the
Securities Act of all or any portion of its Common Stock (a "Demand
Registration"), provided that (i) the Company will only be obligated to effect
three Demand Registrations for PCI and one Demand Registration for each of MINC,
PINC and SINC, and (ii) the Company will not be obligated to effect a Demand
Registration unless the Palmer Shareholders request registration for sale of
shares of Common Stock that represent at least 10.0% of the aggregate amount of
Common Stock held by the Palmer Shareholders as of the date of execution of the
Registration Rights Agreement. No Palmer Shareholder has requested a Demand
Registration.

Portions of the Registration Rights Agreement automatically terminate on
the date on which the Palmer Shareholders hold, in the aggregate, less than
10.0% of the total issued and outstanding Common Stock.

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information at May 10, 1996,
regarding beneficial ownership of the Company's Common Stock by (i) each person
known by the Company to beneficially own more than 5.0% of the outstanding
Common Stock, (ii) each director of the Company, (iii) each executive officer of
the Company and (iv) all directors and executive officers as a group.

<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
TOTAL SHARES OF TOTAL SHARES OF
NUMBER OF NUMBER OF COMMON STOCK COMMON STOCK
BENEFICIAL OWNERS, DIRECTORS CLASS A CLASS B OUTSTANDING PRIOR OUTSTANDING AFTER
AND EXECUTIVE OFFICERS(2)(3) SHARES SHARES TO THE OFFERING(1)(2)(4) THE OFFERING(1)(2)(4)
- ---------------------------- --------- ----------- ------------------------ ---------------------
<S> <C> <C> <C> <C>
Palmer Communications
Incorporated(5)........... -- 17,293,578 73.9% 60.9%
Bonnie P. McCloskey......... 278,622(6) 16,017,658(4) 69.7 57.4
Jenny W. Sutton............. 278,622(7) 16,017,658(4) 69.7 57.4
Vickie A. Palmer,
Director.................. 173,178(8) 14,741,738(4) 63.7 52.5
FMR Corporation............. 2,784,600(9) -- 11.9 9.8
Thomas D. McCloskey,
Director.................. 9,125(10) -- -- --
Kermit S. Sutton,
Director.................. 16,000(11) -- -- --
James S. Cownie, Director... 19,000(12) -- -- --
Clark R. Mandigo,
Director.................. 19,000(13) -- -- --
William J. Ryan, Director,
President and Chief
Executive Officer......... 53,334(14) -- -- --
Robert G. Engelhardt,
Director, Executive Vice
President and Secretary... 53,700(15) -- -- --
Wayne Wisehart, Vice
President, Treasurer and
Chief Financial Officer... 27,622(16) -- -- --
Leon J. Hensen, Senior Vice
President-General
Manager................... 26,554(17) -- -- --
K. Patrick Meehan, Vice
President-General Counsel
and Assistant Secretary... 25,667(18) -- -- --
Directors and executive
officers as a group (10
persons).................. 423,180(19) 14,741,738(4) 64.3 53.0
</TABLE>

- ---------------
(1) Under the rules of the Securities and Exchange Commission (the
"Commission"), a person is deemed to be a "beneficial owner" of a security
if he or she has or shares the power to vote or direct the voting of such
security or the power to dispose or direct the disposition of such
security. A person is also deemed to be a beneficial owner of any
securities of which that person has the right to acquire beneficial
ownership within 60 days. More than one person may be deemed to be a
beneficial owner of the same securities.
(2) This table is based upon information supplied by directors, executive
officers and principal stockholders. Unless otherwise indicated in the
footnotes to this table, each of the stockholders named in this table has
sole voting and investment power with respect to the shares shown as
beneficially owned.

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(3) The address of PCI is 1801 Grand Avenue, Des Moines, Iowa 50309. The
address of each of Vickie A. Palmer, Bonnie P. McCloskey and Jenny W.
Sutton is c/o Palmer Wireless, Inc., 12800 University Drive, Fort Myers,
Florida 33907-5333. The address of FMR Corporation is 82 Devonshire Street,
Boston, Massachusetts 02109.
(4) Includes interest in shares of Class B Common Stock held by PCI. See note 5
below.
(5) PCI has issued Class A voting shares and Class B non-voting shares.
Ownership of PCI is divided among 15 stockholders. Thomas D. McCloskey, Jr.
and Bonnie Palmer McCloskey, trustees of the Thomas D. and Bonnie P.
McCloskey Revocable Trust of 1994 (the "Revocable Trust"), hold an 15.347%
total stock equity interest in PCI and control 7.378% of the voting shares.
Jenny W. Sutton holds a 17.145% total stock equity interest in PCI and
controls 7.378% of the voting shares. The Bonnie P. McCloskey Trust U/T/A
David D. Palmer holds a 21.117% total stock equity interest in PCI and owns
29.632% of the voting shares. The Jenny W. Sutton Trust U/T/A David D.
Palmer holds a 21.117% total stock equity interest in PCI and owns 29.632%
of the voting shares. The Vickie A. Palmer Trust U/T/A David D. Palmer
holds a 21.117% total stock equity interest in PCI and owns 25.980% of the
voting shares. The trustees for each of the above described trusts other
than the Revocable Trust are Bonnie P. McCloskey, Jenny W. Sutton, Vickie
A. Palmer, Richard Braunstein and Norwest Bank, N.A. Each trust provides
that actions of trustees must be approved by a majority of the trustees.
Two grantor trusts created by Bonnie P. McCloskey, with Thomas D. McCloskey
as trustee, own a total of 2.666% stock equity interest and hold no voting
shares. Eight other trusts for the benefit of the Sutton and McCloskey
children own the remaining 1.491% stock equity and hold no voting shares in
PCI.
(6) Shares held through a wholly-owned company, MINC.
(7) Shares held through a wholly-owned company, SINC.
(8) Includes 149,178 shares held through a wholly-owned company, PINC, and
9,000 shares subject to options.
(9) Based on information provided in a Schedule 13G filed by FMR Corporation
("FMR") with the Securities and Exchange Commission on February 14, 1996.
FMR, through its control of Fidelity Management & Research Company
("FMRC"), has the sole power to dispose of the 2,591,400 Class A shares
owned by FMRC. FMR does not have the power to vote or direct the voting of
these shares. In addition, FMR, through its control of Fidelity Management
Trust Company ("FMT"), has the sole power to dispose of the 193,200 Class A
shares owned by FMT. FMR has the power to vote or direct the voting of
185,300 Class A shares which are owned by FMT, and no power to vote or
direct the voting of the remaining 7,900 Class A shares owned by FMT. The
Schedule 13G filed by FMR Corporation also reports that Edward C. Johnson
3d has the sole power to dispose, but not to vote or direct the voting, of
the 2,591,400 Class A shares owned by FMRC. In addition, Mr. Johnson has
the sole power to dispose of the 193,200 Class A shares owned by FMT. Mr.
Johnson has the power to vote or direct the voting of 185,300 Class A
shares which are owned by FMT, and no power to vote or direct the voting of
the remaining 7,900 Class A shares owned by FMT.
(10) Includes 9,000 shares subject to options. Includes 125 shares held in the
name of Mr. McCloskey's minor child. Thomas D. McCloskey, Jr. is married to
Bonnie P. McCloskey.
(11) Includes 9,000 shares subject to options. Kermit S. Sutton is married to
Jenny W. Sutton.
(12) Includes 9,000 shares subject to options.
(13) Includes 9,000 shares subject to options.
(14) Includes 43,334 shares subject to options.
(15) Includes 40,000 shares subject to options.
(16) Includes 25,000 shares subject to options and 1,715 shares held by Mr.
Wisehart as trustee for a minor child. Does not include 623 shares held by
Mr. Wisehart's wife.
(17) Includes 25,000 shares subject to options. Does not include 1,384 shares
held by Mr. Hensen's wife.
(18) Includes 21,667 shares subject to options.
(19) Includes 200,001 shares subject to options.

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DESCRIPTION OF CAPITAL STOCK

The following summary description of the capital stock of the Company is
based, in part, on the provisions of the Company's Restated Certificate of
Incorporation and Bylaws. The authorized capital stock of the Company consists
of 73,000,000 shares of Class A Common Stock, 18,000,000 shares of Class B
Common Stock, and 10,000,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock").

COMMON STOCK

The Company has two classes of authorized Common Stock, Class A Common
Stock, which is being offered hereby, and Class B Common Stock. The Class A
Common Stock has one vote per share. The Class B Common Stock, which may be
owned only by PCI or a successor of PCI, has five votes per share, provided,
however, that, so long as any Class A Common Stock is issued and outstanding,
the holders of the outstanding Class B Common Stock are entitled to cast only
that number of votes per share such that, in the aggregate, the vote of the
holders of Class B Common Stock is no more than 75.0% of the total votes cast on
any matters on which holders of outstanding Common Stock are permitted to vote.

All outstanding shares of Class A Common Stock and Class B Common Stock
are, and all shares of Class A Common Stock and Class B Common Stock to be
outstanding upon consummation of the Offering will be, validly issued, fully
paid and nonassessable. At June 12, 1996, there were 6,102,438 shares of Class A
Common Stock issued and outstanding which were held of record by 63 stockholders
and 17,293,578 shares of Class B Common Stock issued and outstanding which were
held of record by one stockholder (PCI).

PCI owns all the outstanding shares of Class B Common Stock, which
represents 75.0% of the combined voting power of both classes of Common Stock.
As a result, PCI has the ability to elect all of the Company's directors and
controls the Company. See "Risk Factors -- Control of the Company by PCI". The
Class B Common Stock, which has effective control of the Company, is not being
offered by this Prospectus. Except as otherwise required by law, shares of Class
A Common Stock and Class B Common Stock vote together on all matters, including
the election of directors.

Shares of Class B Common Stock shall be converted into Class A Common Stock
on a share-for-share basis: (i) at any time at the option of the holder; (ii)
immediately upon the transfer of shares of Class B Common Stock to any holder
other than certain successors of PCI; (iii) immediately if the shares of Class B
Common Stock held by PCI or certain of its successors constitute 33.0% or less
of the outstanding shares of common stock of the Company; (iv) at the end of 20
years from the original issuance of those shares of Class B Common Stock; or (v)
if more than 50.0% of the shares of capital stock of PCI become beneficially
owned by persons other than (I) beneficial owners of PCI as of January 1, 1995
("Current PCI Beneficial Owners"), (II) affiliates of Current PCI Beneficial
Owners provided 100% of the equity of such affiliate is beneficially owned by
Current PCI Beneficial Owners, PCI Beneficial Heirs or PCI Trust Beneficiaries,
(III) heirs or devisees of any individual Current PCI Beneficial Owner ("PCI
Beneficial Heirs"), successors of any corporation or partnership which is a
Current PCI Beneficial Owner provided 100% of the equity of such successor is
beneficially owned by Current PCI Beneficial Owners, PCI Beneficial Heirs or PCI
Trust Beneficiaries, and beneficiaries of any trust which is a Current PCI
Beneficial Owner ("PCI Trust Beneficiaries"), and (IV) any lineal descendant,
spouse or lineal descendant of a spouse of any Current PCI Beneficial Owner.

Holders of Common Stock will have no cumulative voting rights and no
preemptive, subscription, or sinking fund rights. Subject to preferences that
may be applicable to any then outstanding Preferred Stock, holders of Common
Stock will be entitled to receive ratably such dividends as may be declared by
the board of directors out of funds legally available therefor. See "Price Range
of Class A Common Stock and Dividend Policy". In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock will be
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any then outstanding Preferred Stock.

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The Communications Act prohibits the holding of a common carrier license
(such as the Company's cellular licenses) by a corporation of which more than
20.0% of the capital stock is owned directly or beneficially by aliens. Where a
corporation such as the Company controls another entity that holds an FCC
license, such corporation may not have more than 25.0% of its directors as
aliens and may not have more than 25.0% of its capital stock owned directly or
beneficially by aliens, in each case, if the FCC finds that the public interest
would be served by such prohibitions. Failure to comply with these requirements
may result in the FCC issuing an order to the Company requiring divestiture of
alien ownership to bring the Company into compliance with the Communications
Act. In addition, fines or a denial of renewal, or revocation of the license are
possible. The Company's Restated Certificate of Incorporation permits the
redemption of Common Stock from stockholders where necessary to protect the
Company's regulatory licenses.

PREFERRED STOCK

The Restated Certificate of Incorporation authorizes the board of directors
to issue, from time to time and without further stockholder action, one or more
series of Preferred Stock, and to fix the relative rights and preferences of the
shares, including voting powers, dividend rights, liquidation preferences,
redemption rights and conversion privileges. The issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders. Preferred Stock issued with
voting, conversion or redemption rights may adversely affect the voting power of
the holders of Common Stock, and could discourage any attempt to obtain control
of the Company. As of the date of this Prospectus, the board of directors has
not authorized any series of Preferred Stock, and there are presently no
agreements or understandings for the issuance of any shares of Preferred Stock.

CERTAIN ANTI-TAKEOVER EFFECTS

In addition to the dual class capital structure described above under
"-- Common Stock", the Restated Certificate of Incorporation and Bylaws contain
certain other provisions that are intended to enhance the likelihood of
continuity and stability in the composition of the Company's board of directors
and in the policies formulated by the board of directors, and to discourage an
unsolicited takeover of the Company if the board of directors determines that
such a takeover is not in the best interest of the Company and its stockholders.
However, these provisions could have the effect of discouraging certain attempts
to acquire the Company or remove incumbent management even if some or a majority
of the Company's stockholders were to deem such an attempt to be in their best
interest, including those attempts that might result in a premium over the
market price for the shares of Common Stock held by stockholders.

CLASSIFIED BOARD OF DIRECTORS; REMOVAL; VACANCIES

The Restated Certificate of Incorporation and Bylaws provide that the board
of directors of the Company is divided into three classes of directors serving
staggered three-year terms. The classification of directors has the effect of
making it more difficult for stockholders to change the composition of the board
of directors in a relatively short period of time. The Restated Certificate of
Incorporation and Bylaws further provide that directors may be removed only for
cause and then only by the affirmative vote of the holders of at least 66 2/3%
of the outstanding voting power of shares of stock generally entitled to vote,
voting as a class at a special meeting of the stockholders called for such
purpose. In addition, interim vacancies or vacancies created by the increase in
the number of directors may be filled only by a vote of a majority of directors
then in office, whether or not a quorum. The foregoing provisions would prevent
stockholders from removing incumbent directors without cause and filling the
resulting vacancies with their own nominees.

LIMITATIONS ON STOCKHOLDER ACTION BY WRITTEN CONSENT

The Restated Certificate of Incorporation also provides that any action
required or permitted to be taken by the stockholders of the Company must be
taken at an annual or special meeting of stockholders, and prohibits stockholder
action by written consent, unless such consent is unanimous.

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ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER PROPOSALS AND STOCKHOLDER
NOMINATIONS OF DIRECTORS

The Bylaws establish an advance notice procedure with regard to the
nomination, other than by the board of directors, of candidates for election as
directors (the "Nomination Procedure") and with regard to certain matters to be
brought before an annual meeting of stockholders of the Company (the "Business
Procedure"). The Nomination Procedure requires that a stockholder give prior
written notice, in specified form, of a planned nomination to the Company's
board of directors to the Secretary of the Company. Any person who is not so
nominated will not be eligible for election as a director under the Nomination
Procedure. Under the Business Procedure, a stockholder seeking to have any
business conducted at an annual meeting must give prior written notice, in
specified form, to the Secretary of the Company. If business is not properly
brought before such meeting in accordance with the Business Procedure, such
business will not be transacted at such meeting. Although the Bylaws do not give
the Company's board of directors any power to approve or disapprove stockholder
nominations for the election of directors or of any other business desired by
stockholders to be conducted at an annual or any other meeting, the Bylaws (i)
may have the effect of precluding a nomination for the election of directors or
precluding the conduct of business at a particular annual meeting if the proper
procedures are not followed or (ii) may discourage or deter a third party from
conducting a solicitation of proxies to elect its own slate of directors or
otherwise attempting to obtain control of the Company, even if the conduct of
such solicitation or such attempt might be beneficial to the Company and its
stockholders.

SPECIAL STOCKHOLDERS' MEETINGS

The Restated Certificate of Incorporation and Bylaws allow only the
chairman of the board, a majority of the board of directors in office, whether
or not a quorum, or stockholders owning not less than 35.0% of all shares issued
and outstanding to call a special stockholders' meeting.

LIMITATION OF LIABILITY

As permitted by the Delaware General Corporation Law ("Delaware Law"), the
Restated Certificate of Incorporation provides that no director of the Company
will be liable to the Company or its stockholders for monetary damages for
breach of a fiduciary duty as a director, except for (i) any breach of the
director's duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law; (iii) approval of certain unlawful dividends or stock
purchases or redemptions; and (iv) any transaction from which the director
derived an improper personal benefit. In appropriate circumstances equitable
remedies such as an injunction or other forms of non-monetary relief would
remain available under Delaware Law.

ANTI-GREENMAIL PROVISIONS

The Restated Certificate of Incorporation prohibits the Company from
purchasing any shares of the Company's capital stock from any person, entity or
group that beneficially owns 5.0% or more of the Company's capital stock unless
a majority of the Company's disinterested stockholders approve the transaction.
This restriction on purchases of capital stock by the Company will not apply to
any offer to purchase shares of a class of the Company's capital stock which is
made on the same terms and conditions to all holders of that class of capital
stock, to any purchase of capital stock owned by such a 5.0% stockholder
occurring more than two years after such stockholder's last acquisition of the
Company's capital stock, to any purchase of the Company's capital stock in
accordance with the terms of any stock option or employee benefit plan or to any
purchase at a price per share determined by the board of directors not to exceed
such share's average closing price for the 20 trading days prior to the purchase
date.

CRITERIA FOR EVALUATING CERTAIN OFFERS

The Restated Certificate of Incorporation authorizes the board of
directors, when evaluating a tender or exchange offer, or a merger,
consolidation or acquisition proposal, to take into account certain factors in
addition to potential economic benefits to stockholders, including, but not
limited to (i) a comparison of the proposed consideration to be received by the
stockholders in relation to the then current market price

65
<PAGE> 66

of the capital stock, the estimated current value of the Company in a freely
negotiated transaction and the estimated future value of the Company as an
independent entity; and (ii) the impact of such a transaction on the
subscribers, suppliers and employees of the Company, and its effect on the
communities in which the Company operates. Provided the consideration of these
factors by the board of directors is upheld under Delaware Law, this provision
could have the effect of discouraging an unsolicited takeover of the Company and
would allow the board of directors to consider factors in addition to the
short-term interests of stockholders when evaluating an offer for the Company
even if a majority of stockholders otherwise favored such an offer.

AMENDMENTS

The approval of holders of at least 66 2/3% of the Common Stock is required
to amend the Company's Bylaws and certain provisions of the Restated Certificate
of Incorporation. Provisions of the Restated Certificate of Incorporation
requiring approval by 66 2/3% of the stockholders include those described above.
In addition, approval of a majority of the holders of the outstanding Class A
Common Stock is required to amend the provisions of the Restated Certificate of
Incorporation related to the authorized capital stock of the Company.

The foregoing summary is qualified in its entirety by reference to the
provisions of the Restated Certificate of Incorporation and Bylaws.

SECTION 203 OF DELAWARE LAW

The Company is subject to the provisions of Section 203 of Delaware Law
("Section 203"). Under Section 203, a Delaware corporation may not engage in a
business combination with an interested stockholder for a period of three years
after the date such person became an interested stockholder, unless (i) prior to
such date, the board of directors approved either the business combination or
the transaction which resulted in the stockholder becoming an interested
stockholder; (ii) upon consummation of the transaction which resulted in such
person becoming an interested stockholder, the interested stockholder owned at
least 85.0% of the corporation's voting stock outstanding at the time the
transaction commenced (excluding the number of outstanding shares owned by (a)
persons who are directors and officers and (b) employee stock plans, in certain
instances); or (iii) on or subsequent to such date, the business combination is
approved by the board of directors and authorized by the affirmative vote of at
least two-thirds of the outstanding voting stock which is not owned by the
interested stockholder. Section 203 defines the term "business combination" to
encompass a wide variety of transactions with or caused by an interested
stockholder in which the interested stockholder receives or could receive a
benefit on other than a pro rata basis with other stockholders, including
certain mergers, consolidations, asset sales, transfers and other transactions
resulting in a financial benefit to the interested stockholder. "Interested
stockholder" means a person who owns (or within the three-year period
immediately prior to the date of such determination, did own) 15.0% or more of
the corporation's outstanding voting stock, and the affiliates and associates of
such person.

LISTING

The Company's Class A Common Stock is traded on the Nasdaq National Market
under the trading symbol "PWIR".

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock is First
Union National Bank of North Carolina.

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<PAGE> 67

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, the Company will have outstanding
11,102,438 shares of Class A Common Stock (11,852,438 shares if the
Underwriters' over-allotment option is exercised in full) and 17,293,578 shares
of Class B Common Stock. All of the 5,000,000 shares of Class A Common Stock
sold in the Offering will be, and all of the 5,369,350 shares of Class A Common
Stock sold in the IPO and 26,666 shares of Class A Common Stock issued under the
Option Plan are, freely transferable by persons other than "affiliates" of the
Company without restriction or further registration under the Securities Act.
The remaining 18,000,000 shares of Class A Common Stock and Class B Common Stock
currently outstanding (the "Restricted Shares") are "restricted securities"
within the meaning of Rule 144 under the Securities Act and may only be sold if
they are registered under the Securities Act or if an exemption from
registration is available, including an exemption afforded by Rule 144 of the
Securities Act.

Under Rule 144, a person who holds Restricted Shares that were acquired
from the Company or an affiliate of the Company at least two years prior to any
proposed resale of such securities is entitled to sell, within any three-month
period, that number of such shares that does not exceed the greater of (i) 1.0%
of the then outstanding shares of Class A Common Stock or (ii) the average
weekly trading volume in the over-the-counter market of the then outstanding
shares of Class A Common Stock during the four calendar weeks preceding each
such sale. However, a person who is not an affiliate of the Company and who has
held Restricted Shares that were acquired from the Company or an affiliate of
the Company for at least three years prior to any proposed resale is entitled to
sell such shares under Rule 144 without regard to the volume limitations
described above. Under Rule 144, the Company's existing stockholders will be
deemed to have acquired the Class A Common Stock and Class B Common Stock
currently held by them upon their acquisition of shares in Palmer Wireless.
Accordingly, no existing stockholder will be able to commence any public sale of
any of its currently-held Class A Common Stock until December, 1996 or
thereafter, absent registration of such Class A Common Stock to be sold. The
Commission has proposed to reduce the holding period requirements of Rule 144 to
permit sales in accordance with such rule after two years and one year,
respectively, as opposed to the three-year and two-year periods currently
permitted, as referenced above.

In connection with the Offering, the Company's current officers and
directors and PCI have agreed, subject to certain exceptions, not to offer,
sell, contract to sell or otherwise dispose of any shares of Class A Common
Stock or Class B Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Goldman, Sachs & Co. See
"Underwriting".

Any sale of substantial amounts of Class A Common Stock in the open market
may adversely affect the market price of the Class A Common Stock offered
hereby.

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<PAGE> 68

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co., Salomon Brothers Inc and
Wheat, First Securities, Inc. are acting as representatives, has severally
agreed to purchase from the Company, the respective number of shares of Class A
Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CLASS A
UNDERWRITER COMMON STOCK
- -------------------------------------------------------------------------------- ----------------
<S> <C>
Goldman, Sachs & Co. ........................................................... 1,075,000
Salomon Brothers Inc............................................................ 1,075,000
Wheat, First Securities, Inc. .................................................. 1,075,000
Bear, Stearns & Co. Inc. ....................................................... 200,000
Cowen & Company................................................................. 125,000
Donaldson, Lufkin & Jenrette Securities Corporation............................. 200,000
EVEREN Securities, Inc. ........................................................ 200,000
Furman Selz LLC................................................................. 125,000
Lehman Brothers Inc. ........................................................... 200,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................. 200,000
PaineWebber Incorporated........................................................ 200,000
Principal Financial Securities, Inc. ........................................... 125,000
Prudential Securities Incorporated.............................................. 200,000
---------
Total...................................................................... 5,000,000
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all shares offered hereby (other
than those covered by the Underwriters' over-allotment option described below),
if any are taken.

The Underwriters propose to offer the shares of Class A Common Stock in
part directly to the public at the public offering price set forth on the cover
page of this Prospectus, and in part to certain dealers at such price less a
concession of $0.60 per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $0.10 per share to certain brokers and
dealers. After the shares of Class A Common Stock are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 750,000
additional shares of Class A Common Stock solely to cover over-allotments, if
any. If the Underwriters exercise their overallotment option, the Underwriters
have severally agreed, subject to certain conditions, to purchase approximately
the same percentage thereof that the number of shares to be purchased by each of
them, as shown on the foregoing table, bears to the 5,000,000 shares of Class A
Common Stock offered.

The Company, its current officers and directors and PCI have agreed that
during the period beginning from the date of this Prospectus and continuing to
and including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell or otherwise dispose of any securities of the Company
(other than pursuant to stock option or stock purchase plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus) that are substantially similar to the shares of the
Class A Common Stock or that are convertible or exchangeable into securities
that are substantially similar to the shares of the Class A Common Stock without
the prior written consent of Goldman, Sachs & Co., except for the shares of
Class A Common Stock offered in connection with the Offering.

The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "PWIR".

68
<PAGE> 69

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

In connection with the Offering, certain Underwriters and selling group
members who are qualifying registered market makers on the Nasdaq National
Market may engage in passive market making transactions in the Class A Common
Stock on the Nasdaq National Market in accordance with Rule 10b-6A under the
Exchange Act during the two-business day period before commencement of offers or
sales of the Class A Common Stock offered hereby. Passive market making
transactions must comply with certain volume and price limitations and be
identified as such. In general, a passive market maker may display its bid at a
price not in excess of the highest independent bid for the security, and if all
independent bids are lowered below the passive market maker's bid, then such bid
must be lowered when certain purchase limits are exceeded.

LEGAL MATTERS

The validity of the shares of Class A Common Stock offered hereby is being
passed upon for the Company by Hogan & Hartson L.L.P., Washington, D.C. and for
the Underwriters by Cravath, Swaine & Moore, New York, N.Y.

EXPERTS

The consolidated financial statements of Palmer Wireless as of December 31,
1994 and 1995, and for each of the years in the three-year period ended December
31, 1995 included herein and elsewhere in the Registration Statement have been
included herein and in the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
herein and in the Registration Statement, and upon the authority of said firm as
experts in accounting and auditing. With respect to the pro forma adjustments
appearing in Palmer Wireless' pro forma combined balance sheet as of March 31,
1996, and in the pro forma combined summaries of operations for the year ended
December 31, 1995 and for the three months ended March 31, 1996, included
herein, KPMG Peat Marwick LLP has reported that they applied limited procedures
in accordance with professional standards for a review of such information.
However, their report with respect thereto, appearing elsewhere herein, states
that they did not examine and they do not express an opinion on such pro forma
adjustments. Accordingly, the degree of reliance on their report on such pro
forma adjustments should be restricted in light of the limited nature of the
review procedures applied. The accountants are not subject to the liability
provisions of Section 11 of the Securities Act for their report on such pro
forma adjustments because that report is not a "report" or a "part" of the
Registration Statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act. With respect to the
unaudited interim financial information as of March 31, 1996 and for the periods
ended March 31, 1995 and 1996, included herein, KPMG Peat Marwick LLP has
reported that they applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
included herein, states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information because that report
is not a "report" or a "part" of the Registration Statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.

The combined statements of operations, combined statements of changes in
partners' capital and combined statements of cash flows of Southeast Georgia
Cellular Limited Partnership (formerly Georgia Seven Nonwireline Cellular
Limited Partnership, Georgia 8 Cellular Limited Partnership, Georgia 10 Cellular
Limited Partnership) and Georgia 12 Cellular Limited Partnership, for the year
ended December 31, 1993 and the ten-month period ended October 31, 1994, and the
financial statements of Augusta Metronet, Inc. and Georgia Metronet, Inc. and
its subsidiaries for the years ended December 31, 1993 and 1994, and the
financial statements of USCOC of Georgia RSA #1, Inc. as of and for the year
ended December 31, 1995, included herein and elsewhere in the Registration
Statement, have been audited by

69
<PAGE> 70

Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein and in the Registration
Statement in reliance upon the authority of said firm as experts in accounting
and auditing. With respect to the unaudited interim financial information of
Augusta Metronet, Inc. and Georgia Metronet, Inc. and its subsidiaries for the
eleven-month period ended November 30, 1995, and of USCOC of Georgia RSA #1,
Inc. as of March 31, 1996 and for the three-month periods ended March 31, 1995
and 1996, Arthur Andersen LLP has applied limited procedures in accordance with
professional standards for a review of that information. However, their separate
reports thereon state that they did not audit and they do not express an opinion
on that interim financial information. Accordingly, the degree of reliance on
their reports on that information should be restricted in light of the limited
nature of the review procedures applied. In addition, the accountants are not
subject to the liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.

The financial statements of Horizon Cellular Telephone Company of Spalding,
L.P. at December 31, 1994 and 1995, and for the years then ended, appearing
herein and elsewhere in the Registration Statement, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. With respect to
the unaudited condensed interim financial information of Horizon Cellular
Telephone Company of Spalding, L.P. for the three-month periods ended March 31,
1995 and 1996 included herein and elsewhere in the Registration Statement, Ernst
& Young LLP have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report included in this Prospectus and Registration
Statement states that they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted considering the limited nature
of the review procedures applied. The independent auditors are not subject to
the liability provisions of Section 11 of the Securities Act for a report on the
unaudited interim financial information because that report is not a "report" or
a "part" of the Registration Statement prepared or certified by the auditors
within the meaning of Sections 7 and 11 of the Securities Act.

70
<PAGE> 71

ADDITIONAL INFORMATION

The Company is subject to the information requirements of the Exchange Act,
and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copied, at prescribed rates, at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, Room 1024, and at the Commission's New York Regional Office at 75
Park Place, New York, New York 10007 and at the Commission's Chicago Regional
Office at Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material also can be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such reports, proxy statements and other
information concerning the Company are also available for inspection at the
offices of The Nasdaq National Market, Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
Class A Common Stock offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Class A Common Stock, reference is hereby made to the Registration Statement,
including the exhibits and schedules thereto. Statements contained in this
Prospectus concerning the provisions or contents of any contract, agreement or
any other document referred to herein are not necessarily complete. With respect
to each such contract, agreement or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matters involved, and each such statement shall be deemed
qualified in its entirety by such reference to the copy of the applicable
document filed with the Commission. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the principal
office of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such material or any part thereof may be obtained from such office
upon payment of the fees prescribed by the Commission.

71
<PAGE> 72

(This page intentionally left blank)
<PAGE> 73

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Pro Forma Financial Statements:
Independent Auditors' Report............................................................... F-3
Pro Forma Combined Summary of Operations year ended December 31, 1995...................... F-4
Notes to Pro Forma Combined Summary of Operations year ended December 31, 1995............. F-5
Pro Forma Combined Summary of Operations three months ended March 31, 1996................. F-6
Notes to Pro Forma Combined Summary of Operations three months ended
March 31, 1996.......................................................................... F-7
Pro Forma Combined Balance Sheet March 31, 1996............................................ F-8
Notes to Pro Forma Combined Balance Sheet March 31, 1996................................... F-9
Palmer Wireless, Inc.:
Independent Auditors' Report............................................................... F-10
Consolidated Balance Sheets December 31, 1994 and 1995..................................... F-11
Consolidated Statements of Operations years ended December 31, 1993, 1994, and 1995........ F-12
Consolidated Statements of Stockholders' Equity years ended December 31, 1993, 1994, and
1995.................................................................................... F-13
Consolidated Statements of Cash Flows years ended December 31, 1993, 1994, and 1995........ F-14
Notes to Consolidated Financial Statements................................................. F-16
Independent Auditors' Report............................................................... F-28
Condensed Consolidated Balance Sheets December 31, 1995 and March 31, 1996 (Unaudited)..... F-29
Condensed Consolidated Statements of Operations three months ended March 31, 1995 and 1996
(Unaudited)............................................................................. F-30
Condensed Consolidated Statements of Stockholders' Equity three months ended March 31, 1995
and 1996 (Unaudited).................................................................... F-31
Condensed Consolidated Statements of Cash Flows three months ended March 31, 1995 and 1996
(Unaudited)............................................................................. F-32
Notes to Condensed Consolidated Financial Statements (Unaudited)........................... F-33
The Georgia Partnerships:
Independent Auditors' Report............................................................... F-34
Combined Statements of Operations year ended December 31, 1993 and ten months ended October
31, 1994................................................................................ F-35
Combined Statements of Changes in Partners' Capital (Deficit) year ended December 31, 1993
and ten months ended October 31, 1994................................................... F-36
Combined Statements of Cash Flows year ended December 31, 1993 and ten months ended October
31, 1994................................................................................ F-37
Notes to Combined Financial Statements..................................................... F-38
Augusta Metronet, Inc.:
Independent Auditors' Report............................................................... F-45
Statements of Operations years ended December 31, 1993 and 1994............................ F-46
Statements of Changes in Stockholder's Equity years ended December 31, 1993 and 1994....... F-47
Statements of Cash Flows years ended December 31, 1993 and 1994............................ F-48
Notes to Financial Statements.............................................................. F-49
Independent Auditors' Report............................................................... F-53
Statement of Operations eleven months ended November 30, 1995 (Unaudited).................. F-54
Statement of Changes in Stockholder's Equity eleven months ended November 30, 1995
(Unaudited)............................................................................. F-55
</TABLE>

F-1
<PAGE> 74

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Statement of Cash Flows eleven months ended November 30, 1995 (Unaudited).................. F-56
Notes to Financial Statements (Unaudited).................................................. F-57
Georgia Metronet, Inc. and Subsidiaries:
Independent Auditors' Report............................................................... F-58
Consolidated Statements of Operations years ended December 31, 1993 and 1994............... F-59
Consolidated Statements of Changes in Stockholder's Equity years ended December 31, 1993
and 1994................................................................................ F-60
Consolidated Statements of Cash Flows years ended December 31, 1993 and 1994............... F-61
Notes to Consolidated Financial Statements................................................. F-62
Independent Auditors' Report............................................................... F-67
Consolidated Statement of Operations eleven months ended November 30, 1995 (Unaudited)..... F-68
Consolidated Statement of Changes in Stockholders' Equity eleven months ended November 30,
1995 (Unaudited)........................................................................ F-69
Consolidated Statement of Cash Flows eleven months ended November 30, 1995 (Unaudited)..... F-70
Notes to Consolidated Financial Statements (Unaudited)..................................... F-71
USCOC of Georgia RSA #1, Inc.:
Independent Auditors' Report............................................................... F-72
Balance Sheet December 31, 1995............................................................ F-73
Statement of Operations year ended December 31, 1995....................................... F-74
Statement of Cash Flows year ended December 31, 1995....................................... F-75
Statement of Retained Earnings year ended December 31, 1995................................ F-76
Notes to Financial Statements.............................................................. F-77
Independent Auditors' Report............................................................... F-81
Condensed Balance Sheets December 31, 1995 and March 31, 1996 (Unaudited).................. F-82
Condensed Statements of Operations and Retained Earnings three months ended March 31, 1995
and 1996 (Unaudited).................................................................... F-83
Condensed Statements of Cash Flows three months ended March 31, 1995 and 1996
(Unaudited)............................................................................. F-84
Notes to Condensed Financial Statements (Unaudited)........................................ F-85
Horizon Cellular Telephone Company of Spalding, L.P.:
Independent Auditors' Report............................................................... F-86
Balance Sheets December 31, 1994 and 1995.................................................. F-87
Statements of Operations years ended December 31, 1994 and 1995............................ F-88
Statements of Partners' Equity years ended December 31, 1994 and 1995...................... F-89
Statements of Cash Flows years ended December 31, 1994 and 1995............................ F-90
Notes to Financial Statements.............................................................. F-91
Independent Accountants' Review Report..................................................... F-95
Condensed Balance Sheets December 31, 1995 and March 31, 1996 (Unaudited).................. F-96
Condensed Statements of Operations three months ended March 31, 1995 and 1996
(Unaudited)............................................................................. F-97
Condensed Statements of Cash Flows three months ended March 31, 1995 and 1996
(Unaudited)............................................................................. F-98
Notes to Condensed Financial Statements (Unaudited)........................................ F-99
</TABLE>

F-2
<PAGE> 75

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors
Palmer Wireless, Inc.:

We have reviewed the pro forma adjustments reflecting the transactions
described on page F-4 and the application of those adjustments to the historical
amounts in the accompanying pro forma combined summary of operations of Palmer
Wireless, Inc. for the year ended December 31, 1995. The historical combined
financial statements are derived from the historical financial statements of
Palmer Wireless, Inc. and subsidiaries, which were audited by us; the historical
financial statements of USCOC of Georgia RSA #1, Inc. and Horizon Cellular
Telephone Company of Spalding, L.P., which were audited by other accountants;
and the historical unaudited financial statements of Augusta Metronet, Inc. and
Georgia Metronet, Inc. and subsidiaries, which were reviewed by other
accountants, appearing elsewhere herein. Such pro forma adjustments are based
upon management's assumptions described in the notes to Unaudited Pro Forma
Combined Summary of Operations on page F-5. Our review was made in accordance
with standards established by the American Institute of Certified Public
Accountants.

In addition, we have reviewed the pro forma adjustments reflecting the
transactions described on pages F-6 and F-8 and the application of those
adjustments to the historical amounts in the accompanying pro forma combined
balance sheet of Palmer Wireless, Inc. as of March 31, 1996, and the pro forma
combined summary of operations for the three months then ended. The historical
combined financial statements are derived from the historical unaudited
financial statements of Palmer Wireless, Inc. and subsidiaries, which were
reviewed by us, and USCOC of Georgia RSA #1, Inc. and Horizon Cellular Telephone
Company of Spalding, L.P., which were reviewed by other accountants, appearing
elsewhere herein. Such pro forma adjustments are based upon management's
assumptions described in the notes to Unaudited Pro Forma Combined Summary of
Operations on page F-7 and the notes to Unaudited Pro Forma Combined Balance
Sheet on page F-9. Our review was made in accordance with standards established
by the American Institute of Certified Public Accountants.

A review is substantially less in scope than an examination, the objective
of which is the expression of an opinion on management's assumptions, the pro
forma adjustments, and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion.

The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transactions occurred at an earlier date. However, the pro forma combined
financial statements are not necessarily indicative of the results of operations
or related effects on financial position that would have been attained had the
above-mentioned transactions actually occurred earlier.

Based on our review, nothing came to our attention that caused us to
believe that management's assumptions do not provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transactions described on pages F-4, F-6, and F-8, that the related pro forma
adjustments do not give appropriate effect to those assumptions, or that the pro
forma columns do not reflect the proper application of those adjustments to the
historical financial statement amounts in the pro forma combined summary of
operations for the year ended December 31, 1995, the pro forma combined balance
sheet as of March 31, 1996 and the pro forma combined summary of operations for
the three months ended March 31, 1996.

/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP

Des Moines, Iowa
May 14, 1996

F-3
<PAGE> 76

PALMER WIRELESS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED SUMMARY OF OPERATIONS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
YEAR ENDED DECEMBER 31, 1995

The following unaudited pro forma combined summary of operations for the
year ended December 31, 1995 gives effect to: (i) the issuance of 5,369,350
shares of Class A Common Stock by Palmer Wireless, Inc. ("Palmer Wireless")
pursuant to an initial public offering (the "IPO") and the application of the
net proceeds therefrom of $68.4 million to reduce amounts outstanding under the
$500 million credit facility with a syndicate of banks (the "Credit Facility"),
(ii) the completion of the issuance of 5,000,000 shares of Class A Common Stock
by Palmer Wireless pursuant to this offering (the "Offering") and the
application of the estimated net proceeds therefrom of $94.5 million to reduce
amounts outstanding under the Credit Facility, (iii) the acquisition of Augusta
Metronet, Inc. and Georgia Metronet, Inc. (the "GTE Companies") for aggregate
consideration of approximately $158.4 million and the borrowing of this amount
under the Credit Facility, (iv) the completion of the acquisition of the
cellular telephone system serving the Georgia-6 RSA from Horizon Cellular
Telephone Company of Spalding, L.P. (the "Proposed Georgia-6 Acquisition") for
aggregate consideration of approximately $35.0 million and the borrowing of this
amount under the Credit Facility, (v) the completion of the acquisition of the
cellular telephone system serving the Georgia-1 RSA from USCOC of Georgia RSA
#1, Inc. (the "Proposed Georgia-1 Acquisition") for aggregate consideration of
approximately $31.5 million and the borrowing of this amount under the Credit
Facility, and (vi) the completion of the acquisition of certain minority
interests in Palmer Wireless' cellular telephone systems, as if each of (i)
through (vi) above had occurred on January 1, 1995.

The following unaudited pro forma financial data may not be indicative of
what the results of operations of Palmer Wireless would have been, had the
transactions to which such data gives effect been completed on the date assumed,
nor are such data necessarily indicative of the results of operations of Palmer
Wireless that may exist in the future. The following unaudited pro forma
information should be read in conjunction with the notes thereto, the other pro
forma financial statements and notes thereto, and the historical financial
statements and notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PALMER AUGUSTA GEORGIA
WIRELESS, METRONET, METRONET, GEORGIA-6 GEORGIA-1 PRO FORMA PRO FORMA
INC. INC. INC. RSA RSA ADJUSTMENTS COMBINED
--------- --------- --------- --------- --------- ----------- -----------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Service........................... $ 96,686 $11,559 $11,660 $ 3,915 $ 2,266 $(2,750)(1) $ 123,673
337(9)
Equipment sales and
installation.................... 8,220 385 494 149 37 -- 9,285
--------- --------- --------- --------- --------- ----------- -----------
Total revenue................... $ 104,906 $11,944 $12,154 $ 4,064 $ 2,303 $(2,413) $ 132,958
--------- --------- --------- --------- --------- ----------- -----------
Operating expenses:
Engineering, technical, and other
direct.......................... 18,184 2,384 2,514 760 657 (2,750)(1) 22,044
295(9)
Cost of equipment................. 14,146 1,133 875 419 210 -- 16,783
Selling, general, and
administrative:
Related party................... (408) -- -- -- -- -- (408)
Other........................... 31,398 4,379 3,059 1,538 735 150(2) 41,301
42(9)
Depreciation and amortization..... 15,004 2,793 2,071 1,047 535 704(3) 22,186
32(4)
--------- --------- --------- --------- --------- ----------- -----------
Total operating expenses........ $ 78,324 $10,689 $ 8,519 $ 3,764 $ 2,137 $(1,527) $ 101,906
--------- --------- --------- --------- --------- ----------- -----------
Operating income.................... $ 26,582 $ 1,255 $ 3,635 $ 300 $ 166 $ (886) $ 31,052
Interest expense, net............... 21,213 1,926 1,702 1,444 204 163(4) 30,190
12,781(5)
(1,324)(6)
(7,919)(7)
Other expense (income), net......... 687 (4) (3) -- (7) -- 673
--------- --------- --------- --------- --------- ----------- -----------
Income (loss) before minority
interest share of income and
income taxes...................... $ 4,682 $ (667) $ 1,936 $(1,144) $ (31) $(4,587) $ 189
Minority interest share of income... (1,078) -- -- -- -- 110(4) (968)
--------- --------- --------- --------- --------- ----------- -----------
Income (loss) before income taxes... $ 3,604 $ (667) $ 1,936 $(1,144) $ (31) $(4,477) $ (779)
Income tax expense.................. 2,650 368 1,250 -- 108 (1,726)(8) 2,650
--------- --------- --------- --------- --------- ----------- -----------
Net income (loss)................... $ 954 $(1,035) $ 686 $(1,144) $ (139) $(2,751) $ (3,429)
========= ======== ======== ======== ======== ========== ===========
Average shares of common stock
outstanding(10)................... 28,369,350
Net loss per share of common
stock(10)......................... $ (0.12)
===========
</TABLE>

F-4
<PAGE> 77

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED SUMMARY OF OPERATIONS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
YEAR ENDED DECEMBER 31, 1995
($ IN THOUSANDS)

(1) To record the elimination of certain revenue and operating expenses
relating to transactions amongst Palmer Wireless, Augusta Metronet, Inc.,
Georgia Metronet, Inc., Georgia-6 RSA, and Georgia-1 RSA, which would have
been intercompany transactions if the GTE Acquisition, which occurred on
December 1, 1995, the Proposed Georgia-6 Acquisition and the Proposed
Georgia-1 Acquisition had occurred on January 1, 1995.

(2) To record additional administrative expenses and other expenses that, in
the opinion of management, would have been necessary to operate Palmer
Wireless as a separate publicly owned operating entity from January 1, 1995
to March 21, 1995, the date of the IPO.

(3) To adjust depreciation and amortization for the increase in the basis of
property, plant and equipment and licenses, net of historical depreciation
and amortization of the GTE Companies, Georgia-6 RSA, and Georgia-1 RSA,
which would have occurred had the GTE Acquisition, the Proposed Georgia-6
Acquisition, and the Proposed Georgia-1 Acquisition been completed January
1, 1995.

<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
DEPRECIATION DEPRECIATION PRO FORMA
AND AMORTIZATION AND AMORTIZATION ADJUSTMENT
---------------- ---------------- ----------
<S> <C> <C> <C>
GTE Companies......................................... $4,972 $4,864 $108
Georgia-6 RSA......................................... 1,224 1,047 177
Georgia-1 RSA......................................... 954 535 419
------- ------- ----------
$7,150 $6,446 $704
============= ============= =========
</TABLE>

(4) To adjust for the acquisition of certain minority interests in six cellular
subsidiaries during 1995 for $1,994 and in four cellular subsidiaries
during 1996 for $670 and to adjust the related interest expense, license
amortization, and minority interest share of income.

(5) To record additional interest expense relating to amounts outstanding under
the Credit Facility incurred to consummate the GTE Acquisition (including
$4,118 of amendment fees relating to the Credit Facility), the Proposed
Georgia-6 Acquisition, and the Proposed Georgia-1 Acquisition, net of
historical interest of the GTE Companies, Georgia-6 RSA, and Georgia-1 RSA.

<TABLE>
<CAPTION>
AMOUNTS BORROWED
UNDER PRO FORMA HISTORICAL PRO FORMA
THE CREDIT FACILITY INTEREST EXPENSE INTEREST EXPENSE ADJUSTMENT
------------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
GTE Companies....................... $ 162,515 $ 12,484 $3,628 $ 8,856
Georgia-6 RSA....................... 35,000 2,933 1,444 1,489
Georgia-1 RSA....................... 31,500 2,640 204 2,436
------------------- ---------------- ------- ----------
$ 229,015 $ 18,057 $5,276 $ 12,781
============== ============= ============= =========
</TABLE>

(6) To record a reduction in interest expense resulting from the application of
the net proceeds of the IPO to reduce amounts outstanding under the Credit
Facility by $68,399.

(7) To record a reduction in interest expense resulting from the application of
the net proceeds of the Offering to reduce amounts outstanding under the
Credit Facility by $94,500.

(8) To eliminate income taxes of the GTE Companies and Georgia-1 RSA that would
not have been incurred in the consolidated tax returns of Palmer Wireless.

(9) To reclassify certain revenues and expenses of Georgia-6 RSA to be
consistent with classifications used by Palmer Wireless.

(10) For purposes of determining pro forma loss per common share, the issuance
of 5,369,350 shares of Class A Common Stock in the IPO and the proposed
issuance of 5,000,000 shares of Class A Common Stock in the Offering were
considered to have been outstanding from January 1, 1995.

F-5
<PAGE> 78

PALMER WIRELESS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED SUMMARY OF OPERATIONS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
THREE MONTHS ENDED MARCH 31, 1996

The following unaudited pro forma combined summary of operations for the
three months ended March 31, 1996 gives effect to: (i) the completion of the
Offering and the application of the estimated net proceeds therefrom of $94.5
million to reduce amounts outstanding under the Credit Facility, (ii) the
completion of the Proposed Georgia-6 Acquisition for aggregate consideration of
approximately $35.0 million and the borrowing of this amount under the Credit
Facility, (iii) the completion of the Proposed Georgia-1 Acquisition for
aggregate consideration of approximately $31.5 million and the borrowing of this
amount under the Credit Facility, and (iv) the completion of the acquisition of
certain minority interests in Palmer Wireless' cellular telephone systems, as if
each of (i) through (iv) above had occurred on January 1, 1996.

<TABLE>
<CAPTION>
PALMER
WIRELESS, GEORGIA-6 GEORGIA-1 PRO FORMA PRO FORMA
INC. RSA RSA ADJUSTMENTS COMBINED
--------- --------- --------- ----------- ----------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenue:
Service.......................................... $33,856 $ 1,331 $ 724 $ (498)(1) $ 35,497
84(7)
Equipment sales and installation................. 2,035 54 7 -- 2,096
--------- --------- --------- ----------- ----------
Total revenue.................................. $35,891 $ 1,385 $ 731 $ (414) $ 37,593
--------- --------- --------- ----------- ----------
Operating expenses:
Engineering, technical, and other direct......... 6,624 239 147 (498)(1) 6,586
74(7)
Cost of equipment................................ 3,931 90 63 -- 4,084
Selling, general, and administrative:
Related party.................................. (52) -- -- -- (52)
Other.......................................... 10,976 425 233 10(7) 11,644
Depreciation and amortization.................... 5,898 267 141 147(2) 6,456
3(3)
--------- --------- --------- ----------- ----------
Total operating expenses....................... $27,377 $ 1,021 $ 584 $ (264) $ 28,718
--------- --------- --------- ----------- ----------
Operating income................................... $ 8,514 $ 364 $ 147 $ (150) $ 8,875
Interest expense, net.............................. 7,945 372 61 12(3) 7,348
1,013(4)
(2,055)(5)
Other expense (income), net........................ -- -- (1) -- (1)
--------- --------- --------- ----------- ----------
Income (loss) before minority interest share of
income and income taxes.......................... $ 569 $ (8) $ 87 $ 880 $ 1,528
Minority interest share of income.................. (452) -- -- 21(3) (431)
--------- --------- --------- ----------- ----------
Income (loss) before income taxes.................. $ 117 $ (8) $ 87 $ 901 $ 1,097
Income tax expense................................. 41 -- 64 158(6) 263
--------- --------- --------- ----------- ----------
Net income (loss).................................. $ 76 $ (8) $ 23 $ 743 $ 834
========= ========== ========== ============ ===========
Average shares of common stock outstanding(8)...... 28,561,923
Net income per share of common stock(8)............ $ 0.03
===========
</TABLE>

F-6
<PAGE> 79

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED SUMMARY OF OPERATIONS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
THREE MONTHS ENDED MARCH 31, 1996
($ IN THOUSANDS)

(1) To record the elimination of certain revenue and operating expenses relating
to transactions amongst Palmer Wireless, Georgia-6 RSA, and Georgia-1 RSA,
which would have been intercompany transactions if the Proposed Georgia-6
Acquisition and the Proposed Georgia-1 Acquisition had occurred on January
1, 1996.

(2) To adjust depreciation and amortization for the increase in the basis of
property, plant and equipment and licenses, net of historical depreciation
and amortization of Georgia-6 RSA and Georgia-1 RSA, which would have
occurred had the Proposed Georgia-6 Acquisition and the Proposed Georgia-1
Acquisition been completed January 1, 1996.

<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
DEPRECIATION DEPRECIATION PRO FORMA
AND AMORTIZATION AND AMORTIZATION ADJUSTMENT
---------------- ---------------- ----------
<S> <C> <C> <C>
Georgia-6 RSA.......................................... $313 $267 $ 46
Georgia-1 RSA.......................................... 242 141 101
---- ---- ----
$555 $408 $147
==== ==== ====
</TABLE>

(3) To adjust for the acquisition of certain minority interests in four cellular
subsidiaries during 1996 for $670 and to adjust the related interest
expense, license amortization, and minority interest share of income.

(4) To record additional interest expense relating to amounts outstanding under
the Credit Facility incurred to consummate the Proposed Georgia-6
Acquisition and the Proposed Georgia-1 Acquisition, net of historical
interest of Georgia-6 RSA and Georgia-1 RSA.

<TABLE>
<CAPTION>
AMOUNTS BORROWED
UNDER PRO FORMA HISTORICAL PRO FORMA
THE CREDIT FACILITY INTEREST EXPENSE INTEREST EXPENSE ADJUSTMENT
------------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
Georgia-6 RSA........................... $35,000 $ 761 $372 $ 389
Georgia-1 RSA........................... 31,500 685 61 624
------- ------ ---- ------
$66,500 $1,446 $433 $1,013
======= ====== ==== ======
</TABLE>

(5) To record a reduction in interest expense resulting from the application of
the net proceeds of the Offering to reduce amounts outstanding under the
Credit Facility by $94,500.

(6) To record additional income taxes that would have been incurred in the
consolidated tax returns of Palmer Wireless.

(7) To reclassify certain revenues and expenses of Georgia-6 RSA to be
consistent with classifications used by Palmer Wireless.

(8) For purposes of determining pro forma earnings per common share, the
proposed issuance of 5,000,000 shares of Class A Common Stock in the
Offering were considered to have been outstanding from January 1, 1996. In
addition, stock options have been considered common stock equivalents and
have increased the average shares of common stock outstanding by 172,573
shares (computed using the treasury stock method).

F-7
<PAGE> 80

PALMER WIRELESS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
MARCH 31, 1996

The following unaudited pro forma combined balance sheet as of March 31,
1996 gives effect to: (i) the completion of the Offering and the application of
the estimated net proceeds therefrom of $94.5 million to reduce amounts
outstanding under the Credit Facility, (ii) the completion of the Proposed
Georgia-6 Acquisition for aggregate consideration of approximately $35.0 million
and the borrowing of this amount under the Credit Facility, and (iii) the
completion of the Proposed Georgia-1 Acquisition for aggregate consideration of
approximately $31.5 million and the borrowing of this amount under the Credit
Facility as if each of (i) through (iii) above had occurred on March 31, 1996.

The following unaudited pro forma financial data may not be indicative of
what the financial condition of Palmer Wireless would have been, had the
transactions to which such data gives effect been completed on the date assumed,
nor are such data necessarily indicative of the financial condition of Palmer
Wireless that may exist in the future. The following unaudited pro forma
information should be read in conjunction with the notes thereto, the other pro
forma financial statements and notes thereto, and the historical financial
statements and notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PALMER
WIRELESS, GEORGIA-6 GEORGIA-1 PRO FORMA PRO FORMA
INC. RSA RSA ADJUSTMENTS COMBINED
--------- --------- --------- ----------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 4,553 $ 39 $ -- $ 64,750(1) $ 4,553
(64,750)(2)
(39)(2)
94,500(3)
(94,500)(4)
Trade receivables, net of allowance for doubtful
accounts......................................... 17,297 998 437 -- 18,732
Receivables from other cellular carriers........... 2,267 -- -- -- 2,267
Prepaid expenses and deposits...................... 1,750 37 11 -- 1,798
Inventory.......................................... 2,056 67 21 -- 2,144
Deferred income taxes.............................. 949 -- 9 (9)(2) 949
-------- ------- ------- -------- --------
Total current assets............................. $ 28,872 $ 1,141 $ 478 $ (48) $ 30,443
Net property, plant and equipment.................... 103,885 3,791 2,513 2,210(2) 112,399
Licenses, net of amortization........................ 319,284 15,520 12,102 29,907(2) 376,813
Other intangible assets, net of amortization......... 14,000 12 24 (1,786)(2) 12,250
-------- ------- ------- -------- --------
$ 466,041 $20,464 $15,117 $ 30,283 $ 531,905
======== ======= ======= ======== ========
Current liabilities:
Current installments of long-term debt............. $ 7,603 $ -- $ 2,344 $ (2,344)(2) $ 7,603
Accounts payable................................... 9,522 339 153 -- 10,014
Accrued expenses................................... 10,837 367 52 -- 11,256
Other liabilities.................................. 3,452 160 43 -- 3,655
-------- ------- ------- -------- --------
Total current liabilities........................ $ 31,414 $ 866 $ 2,592 $ (2,344) $ 32,528
Long-term debt....................................... 345,000 14,350 -- 64,750(1) 315,250
(14,350)(2)
(94,500)(4)
Deferred income taxes................................ 9,805 -- 130 (130)(2) 9,805
Minority interests................................... 5,193 -- -- -- 5,193
-------- ------- ------- -------- --------
Total liabilities................................ $ 391,412 $15,216 $ 2,722 $ (46,574) $ 362,776
-------- ------- ------- -------- --------
Equity:
Common stock....................................... 234 -- -- 50(3) 284
Additional paid-in capital......................... 72,466 -- 13,262 (13,262)(2) 166,916
94,450(3)
Retained earnings (accumulated deficit)............ 1,929 -- (867) 867(2) 1,929
Partners' equity................................... -- 5,248 -- (5,248)(2) --
-------- ------- ------- -------- --------
Total equity..................................... $ 74,629 $ 5,248 $12,395 $ 76,857 $ 169,129
-------- ------- ------- -------- --------
$ 466,041 $20,464 $15,117 $ 30,283 $ 531,905
======== ======= ======= ======== ========
</TABLE>

F-8
<PAGE> 81

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
MARCH 31, 1996
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNT)

(1) To record borrowings under the Credit Facility necessary to effect the
Proposed Georgia-6 Acquisition and the Proposed Georgia-1 Acquisition (an
escrow deposit of $1,750 was made prior to March 31, 1996).

(2) To record the Proposed Georgia-6 Acquisition and the Proposed Georgia-1
Acquisition for approximately $35,000 and $31,500, respectively, less $1,750
deposited in escrow prior to March 31, 1996. The excess of the cumulative
purchase price over the cumulative net book value of the assets acquired has
been assigned to property, plant and equipment and licenses. The assets not
acquired and the liabilities not assumed have been eliminated.

(3) To record the receipt of the net proceeds from the Offering of the Class A
Common Stock at an offering price of $20 per share net of offering costs of
$5,500.

(4) To record the application of the net proceeds of the Offering to reduce
amounts outstanding under the Credit Facility by $94,500.

F-9
<PAGE> 82

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Palmer Wireless, Inc.:

We have audited the accompanying consolidated balance sheets of Palmer
Wireless, Inc. and subsidiaries as of December 31, 1994 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1995.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Palmer
Wireless, Inc. and subsidiaries at December 31, 1994 and 1995, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.

/s/ KPMG PEAT MARWICK LLP

KPMG PEAT MARWICK LLP

Des Moines, Iowa
January 31, 1996

F-10
<PAGE> 83

PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1995
--------- ------------
<S> <C> <C>
ASSETS (NOTE 4)
Current assets:
Cash and cash equivalents....................................................... $ 2,998 $ 3,436
Trade accounts receivable, net of allowance for doubtful accounts of $1,567 in
1994 and $1,880 in 1995....................................................... 11,110 17,347
Receivable from other cellular carriers......................................... 516 3,936
Prepaid expenses and deposits................................................... 920 1,111
Inventory....................................................................... 6,327 2,434
Deferred income taxes (note 5).................................................. -- 821
------- -------
Total current assets.......................................................... $ 21,871 $ 29,085
------- -------
Property, plant and equipment:
Land and improvements........................................................... 1,168 3,796
Buildings and improvements...................................................... 4,280 5,120
Equipment, communication systems, and furnishings............................... 72,773 127,140
------- -------
$ 78,221 $136,056
Less accumulated depreciation and amortization.................................. 26,337 35,120
------- -------
Net property, plant and equipment............................................. $ 51,884 $100,936
------- -------
Licenses and goodwill, at cost less accumulated amortization of $15,414 in 1994
and $20,828 in 1995 (note 3).................................................... 188,274 321,053
Other intangible assets, at cost less accumulated amortization of $1,920 in 1994
and $4,540 in 1995 (note 3)..................................................... 10,991 11,797
------- -------
$ 273,020 $462,871
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 4)................................. $ 85 $ 7,441
Due to related party............................................................ 1,650 --
Accounts payable................................................................ 7,931 10,795
Accrued interest payable........................................................ 2,522 2,508
Accrued salaries and employee benefits.......................................... 1,889 2,267
Other accrued liabilities....................................................... 2,724 4,058
Deferred revenue................................................................ 2,097 2,860
Customer deposits............................................................... 483 591
------- -------
Total current liabilities..................................................... $ 19,381 $ 30,520
Long-term debt, excluding current installments (note 4)........................... 243,874 343,000
Deferred income taxes (note 5).................................................... -- 9,636
Minority interests................................................................ 4,850 5,162
------- -------
Total liabilities............................................................. $ 268,105 $388,318
------- -------
Stockholders' equity (note 7):
Preferred stock par value $.01 per share; 10,000,000 shares authorized; none
issued........................................................................ -- --
Class A Common Stock par value $.01 per share; 73,000,000 shares authorized;
706,422 shares issued in 1994 and 6,095,772 shares issued in 1995 and Class B
Common Stock par value $.01 per share; 18,000,000 shares authorized;
17,293,578 shares issued in 1994 and 1995..................................... 180 234
Additional paid-in capital...................................................... 4,902 72,466
(Accumulated deficit) retained earnings......................................... (167) 1,853
------- -------
Total stockholders' equity.................................................... $ 4,915 $ 74,553
Commitments and contingencies (note 8)
------- -------
$ 273,020 $462,871
======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-11
<PAGE> 84

PALMER WIRELESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Service................................................. $ 35,173 $ 61,021 $ 96,686
Equipment sales and installation........................ 6,285 7,958 8,220
----------- ----------- -----------
Total revenue...................................... $ 41,458 $ 68,979 $ 104,906
----------- ----------- -----------
Operating expenses:
Engineering, technical, and other direct................ 7,343 12,776 18,184
Cost of equipment....................................... 7,379 11,546 14,146
Selling, general, and administrative:
Related party, net (note 6).......................... 840 (442) (408)
Other................................................ 13,046 20,199 31,398
Depreciation and amortization........................... 10,689 9,817 15,004
----------- ----------- -----------
Total operating expenses........................... $ 39,297 $ 53,896 $ 78,324
----------- ----------- -----------
Operating income.......................................... $ 2,161 $ 15,083 $ 26,582
----------- ----------- -----------
Other income (expense):
Interest income:
Investment........................................... 21 93 211
Related party (note 6)............................... -- 78 --
Interest expense:
Long-term debt....................................... (7,509) (11,158) (21,424)
Related party (note 6)............................... (1,518) (1,728) --
----------- ----------- -----------
Interest expense, net.............................. $ (9,006) $ (12,715) $ (21,213)
Other expense, net...................................... (590) (70) (687)
----------- ----------- -----------
Total other expense................................ $ (9,596) $ (12,785) $ (21,900)
----------- ----------- -----------
(Loss) income before minority interest share
of losses (income) and income tax expense............... $ (7,435) $ 2,298 $ 4,682
Minority interest share of losses (income)................ 83 (636) (1,078)
----------- ----------- -----------
(Loss) income before income tax expense................... $ (7,352) $ 1,662 $ 3,604
Income tax expense........................................ -- -- 2,650
----------- ----------- -----------
Net (loss) income......................................... $ (7,352) $ 1,662 $ 954
=========== =========== ===========
Net (loss) income per share of common stock............... $ (0.41) $ 0.09 $ 0.04
=========== =========== ===========
Average shares outstanding................................ 17,993,333 18,000,000 22,326,613
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-12
<PAGE> 85

PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
($ IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK (ACCUMULATED
CLASS A CLASS B ADDITIONAL DEFICIT) TOTAL
------------------ ------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ------ ---------- ------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1992..... 704,755 $ 7 17,288,578 $173 $ 10,479 $ -- $10,659
Partnership loss before business
combination..................... -- -- -- -- (7,352) -- (7,352)
Capital distribution, net before
business combination............ -- -- -- -- (163) -- (163)
Issuance of common stock.......... 1,667 -- 5,000 -- 100 -- 100
--------- --- ---------- ---- ------- ------ -------
Balances at December 31, 1993..... 706,422 $ 7 17,293,578 $173 $ 3,064 $ -- $ 3,244
Partnership earnings before
business combination............ -- -- -- -- 1,829 -- 1,829
Net loss.......................... -- -- -- -- -- (167) (167)
Capital contribution, net before
business combination............ -- -- -- -- 9 -- 9
--------- --- ---------- ---- ------- ------ -------
Balances at December 31, 1994..... 706,422 $ 7 17,293,578 $173 $ 4,902 $ (167) $ 4,915
Partnership loss before business
combination..................... -- -- -- -- (1,066) -- (1,066)
Public offering, net of issuance
costs of $8,114................. 5,369,350 54 -- -- 68,345 -- 68,399
Exercise of stock options......... 20,000 -- -- -- 285 -- 285
Net income........................ -- -- -- -- -- 2,020 2,020
--------- --- ---------- ---- ------- ------ -------
Balances at December 31, 1995..... 6,095,772 $ 61 17,293,578 $173 $ 72,466 $1,853 $74,553
========= === ========== ==== ======= ====== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-13
<PAGE> 86

PALMER WIRELESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1993 1994 1995
-------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income........................................................ $ (7,352) $ 1,662 $ 954
-------- --------- ---------
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation and amortization.......................................... 10,689 9,817 15,004
Minority interest share of (losses) income............................. (83) 636 1,078
Deferred income taxes.................................................. -- -- 2,650
Increase in trade accounts receivable.................................. (2,716) (4,195) (2,741)
(Increase) decrease in inventory....................................... (1,094) (3,672) 4,076
Increase in accounts payable........................................... 3,879 2,508 2,623
Increase (decrease) in accrued interest payable........................ 365 1,184 (14)
Interest deferred and added to related party borrowings................ 1,518 1,611 --
Deferred interest paid to related party................................ -- (6,475) --
Interest deferred and added to other debt.............................. 599 537 607
Increase in accrued salaries and employee benefits..................... 818 466 241
Increase in other accrued liabilities.................................. 1,066 895 583
Increase in deferred revenue........................................... 452 1,163 658
Increase (decrease) in customer deposits............................... 52 191 (53)
Change in other accounts............................................... 915 910 1,994
-------- --------- ---------
Total adjustments.................................................... $ 16,460 $ 5,576 $ 26,706
-------- --------- ---------
Net cash provided by operating activities............................ $ 9,108 $ 7,238 $ 27,660
-------- --------- ---------
Cash flows from investing activities:
Cash payment for purchase of non-wireline cellular telephone system and
licenses (note 3)...................................................... (10,875) (91,720) (158,397)
Purchases of minority interests.......................................... (2,854) (3,097) (1,543)
Capital expenditures..................................................... (13,304) (22,541) (36,564)
Proceeds from sales of property, plant and equipment..................... 86 150 38
(Increase) decrease in other intangible assets........................... (415) 358 (310)
-------- --------- ---------
Net cash used in investing activities................................ $(27,362) $(116,850) $(196,776)
-------- --------- ---------
Cash flows from financing activities:
Advances from Palmer Communications Incorporated......................... 6,910 4,176 --
Payments on advances from Palmer Communications Incorporated............. (6,409) (2,359) (1,650)
Proceeds from long-term debt............................................. 107,610 137,000 171,000
Repayment of long-term debt.............................................. (85,125) (75) (65,125)
Repayment of related party borrowings.................................... -- (20,000) --
Public offering proceeds, net............................................ -- -- 71,144
Exercise of stock options................................................ -- -- 285
Payment of debt issuance costs........................................... (3,505) (6,454) (4,803)
Payments of deferred offering costs...................................... -- (1,448) (1,297)
Collection of common stock subscriptions receivable...................... -- 100 --
-------- --------- ---------
Net cash provided by financing activities............................ $ 19,481 $ 110,940 $ 169,554
-------- --------- ---------
Net increase in cash................................................. $ 1,227 $ 1,328 $ 438
Cash and cash equivalents at beginning of year............................. 443 1,670 2,998
-------- --------- ---------
Cash and cash equivalents at end of year................................... $ 1,670 $ 2,998 $ 3,436
======== ========= =========
</TABLE>

F-14
<PAGE> 87

PALMER WIRELESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
($ IN THOUSANDS)

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

During 1993 and 1994, certain assets net of certain liabilities were
transferred between Palmer Wireless, Inc. and Palmer Communications
Incorporated. These transfers were treated as contributions to and distributions
from equity and amounted to a net distribution of $163 and a net contribution of
$9 for the years ended December 31, 1993 and 1994, respectively (note 6).

During 1993, Palmer Wireless, Inc. received certain property and equipment
totaling $472 from Palmer Communications Incorporated by decreasing the due from
related party.

During 1993, Palmer Communications Incorporated and its stockholders
subscribed to $100 in common stock of Palmer Wireless, Inc. (note 7).

During 1994, Palmer Wireless, Inc. accrued $188 for unpaid deferred
offering costs.

During 1995, Palmer Wireless, Inc. committed to purchase certain minority
interests in 1996. This commitment totaling $451 was accrued in 1995 and paid in
January 1996.

Acquisitions of non-wireline cellular telephone systems in 1994 and 1995
(note 3):

<TABLE>
<CAPTION>
1994 1995
-------- ---------
<S> <C> <C>
Cash payment..................................................... $ 91,720 $ 158,397
======= =======
Allocated to:
Fixed assets................................................... $ 11,332 $ 22,846
Licenses....................................................... 79,383 136,940
Deferred income taxes.......................................... -- (6,165)
Current assets and liabilities, net............................ 1,005 4,776
------- -------
$ 91,720 $ 158,397
======= =======
</TABLE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1993 1994 1995
------- -------- --------
<S> <C> <C> <C>
Cash paid for interest................................ $ 5,816 $ 15,199 $ 18,435
</TABLE>

See accompanying notes to consolidated financial statements.

F-15
<PAGE> 88

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Palmer
Wireless, Inc. and its subsidiaries (the "Company"), all of which the Company
has an ownership interest in greater than 50 percent.

Palmer Wireless, Inc. ("Wireless") is a Delaware corporation and was
incorporated on December 15, 1993 to effect an initial public offering of its
Class A Common Stock. At December 31, 1995, Palmer Communications Incorporated
("PCI") owned 74 percent of the outstanding common stock of Wireless and
therefore Wireless is a subsidiary of PCI.

In March of 1995, Wireless issued common stock for 100 percent of the
partnership interests of Palmer Cellular Partnership ("the Partnership") (see
note 2). Since this exchange was between related parties it has been accounted
for in a manner similar to a pooling of interests. Therefore, the balance sheet
as of December 31, 1994 and the statements of operations, stockholders' equity
and cash flows for each of the years in the two-year period ended December 31,
1994 have been restated to include the accounts of the Partnership.

Losses in subsidiaries, attributable to minority stockholders and partners,
in excess of their capital accounts and cash capital call provisions are not
eliminated in consolidation.

Significant intercompany accounts and transactions have been eliminated in
the consolidation.

OPERATIONS

The Company has majority ownership in corporations and partnerships which
operate the non-wireline cellular telephone systems in nine Metropolitan
Statistical Areas ("MSA") in three states: Florida (two), Georgia (five) and
Alabama (two). The Company's ownership percentages in these entities range from
approximately 78 percent to 100 percent. The Company owns directly and operates
six non-wireline cellular telephone systems in Rural Service Areas in Georgia
(five) and Alabama (one).

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statements of cash flows, the Company considers cash
and repurchase agreements with a maturity of three months or less to be cash
equivalents.

TRADE ACCOUNTS RECEIVABLE

The Company grants credit to its customers. Substantially all of the
customers are residents of the local areas served by the Company. Generally, the
Company discontinues service to customers whose accounts are 60 days past due.

F-16
<PAGE> 89

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The activity in the Company's allowance for doubtful accounts for the years
ended December 31, 1993, 1994, and 1995 consisted of the following:

<TABLE>
<CAPTION>
ADDITIONS --
BALANCE AT ADDITIONS ALLOWANCE AT DEDUCTIONS,
BEGINNING CHARGED TO DATES OF NET OF BALANCE AT
OF YEAR EXPENSES ACQUISITIONS RECOVERIES END OF YEAR
---------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993................. $ 663 $ 500 -$- $ 482 $ 681
======== ========= ========== ========= =========
Year ended December 31, 1994................. $ 681 $1,453 $211 $ 778 $ 1,567
======== ========= ========== ========= =========
Year ended December 31, 1995................. $1,567 $2,078 $432 $ 2,197 $ 1,880
======== ========= ========== ========= =========
</TABLE>

INVENTORY

Inventory consisting primarily of cellular telephones and telephone parts
is stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation is provided
principally by the straight-line method over the estimated useful lives, ranging
from 5 to 20 years for buildings and improvements and 5 to 10 years for
equipment, communications systems and furnishings.

ACQUISITIONS AND LICENSES

The cost of acquired companies is allocated first to the identifiable
assets, including licenses, based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management of
the Company). The excess of the total consideration over the amounts assigned to
identifiable assets is recorded as goodwill.

Also included in licenses are expenditures related directly to acquiring
licenses which were not developed or operating at the time of purchase. Licenses
and goodwill are being amortized from the date of acquisition on a straight-line
basis over a 40-year period.

Subsequent to the acquisition of the licenses, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of licenses may warrant revision or that the
remaining balance of the license rights may not be recoverable. The Company has
undergone an annual independent appraisal of its licenses' value. The Company
utilizes projected undiscounted cash flows over the remaining life of the
licenses and sales of comparable businesses to evaluate the recorded value of
licenses. The assessment of the recoverability of the remaining balance of the
license rights will be impacted if projected cash flows are not achieved.

OTHER INTANGIBLE ASSETS

Other intangibles consist of deferred financing costs, covenants not to
compete, subscriber base, deferred offering costs and other items. With the
exception of deferred offering costs, these costs are being amortized by the
interest or straight-line method over their respective useful lives, which range
from 5 to 10 years. Deferred offering costs at December 31, 1994, as well as
those through March 21, 1995, were offset against the proceeds of the Offering
(as defined in note 2).

F-17
<PAGE> 90

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
INCOME TAXES

The Company accounts for income taxes under the provisions of the Financial
Accounting Standards Board's Statement No. 109 (SFAS 109), "Accounting for
Income Taxes," which requires the use of the asset and liability method of
accounting for deferred income taxes. Under the asset and liability method of
SFAS 109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

The 1993 and 1994 consolidated financial statements made no provision for
income taxes, due to the fact that the losses of the Partnership were included
in the income tax returns of the individual partners. Also, the consolidated
financial statements made no provision for income taxes of the corporations
owned by the Company since the corporations had approximately $16,182 of net
operating loss carryforwards at December 31, 1994 for federal income tax
purposes. In addition, the 1994 consolidated financial statements made no
provision for income taxes on the loss of Wireless due to the non-utilization of
Wireless' net operating loss for the year.

INTEREST RATE SWAP AGREEMENTS

The differential to be paid or received in connection with interest rate
swap agreements is accrued as interest rates change and is recognized over the
life of the agreements.

REVENUE RECOGNITION

Service revenue includes local subscriber revenue and roamer revenue.

The Company earns local subscriber revenue by providing access to the
cellular network ("access revenue") or, as applicable, for usage of the cellular
network ("airtime revenue"). Access revenue is billed one month in advance and
is recognized when earned. Airtime revenue is recognized when the service is
rendered.

Roamer revenue represents revenue earned by the Company for usage of its
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.

Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.

OPERATING EXPENSES -- ENGINEERING, TECHNICAL AND OTHER DIRECT

Engineering, technical and other direct operating expenses represent
certain costs of providing cellular telephone service to customers. These costs
include cost of incollect roaming service. Incollect roaming is the result of
the Company's subscribers using cellular networks of other cellular carriers.
Incollect roaming revenue is netted against the cost of incollect roaming
service to determine net incollect roaming expense.

COMPUTATION OF NET (LOSS) INCOME PER SHARE

The computation of net (loss) income per share is based on the weighted
average number of common and dilutive common equivalent shares (common stock
options using the treasury stock method) outstanding

F-18
<PAGE> 91

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

during the periods presented. Average shares of common stock outstanding has
been computed assuming that the 704,755 shares of Class A Common Stock and
17,288,578 shares of Class B Common Stock issued in the Exchange (as defined in
note 2) have been outstanding since January 1, 1993 and the 1,667 shares of
Class A Common Stock and the 5,000 shares of Class B Common Stock issued in the
initial capitalization of Wireless have been outstanding since January 1, 1994.

2. OFFERING AND EXCHANGE

On March 21, 1995 and April 18, 1995, Wireless issued 5,000,000 and 369,350
shares, respectively, of Class A Common Stock in an initial public offering (the
"Offering") for net proceeds of $68,399. In connection with the Offering, on
March 21, 1995, Wireless issued 704,755 shares of Class A Common Stock and
17,288,578 shares of Class B Common Stock in exchange for 100 percent of the
Partnership interests of the Partnership (the "Exchange"). The assets and
liabilities received in the Exchange were recorded at their historical cost to
the Partnership and not revalued at fair value on the date of transfer. Since
the Exchange was between related parties, it has been accounted for in a manner
similar to a pooling of interests (see note 1).

3. ACQUISITIONS AND PURCHASE OF LICENSES

In 1993, the Company acquired the license to construct and operate the
non-wireline cellular telephone system serving the Rural Service Area Market No.
8, Alabama 8 -- Lee, for $10,875. This system had no prior operations;
therefore, no assets other than the license were purchased nor were any
liabilities assumed.

On October 31, 1994, the Company acquired the assets of and the licenses to
operate the non-wireline cellular telephone systems serving the Georgia Rural
Service Area Market Nos. 377, 378, 380 and 382, otherwise known as Georgia-7
RSA, Georgia-8 RSA, Georgia-10 RSA and Georgia-12 RSA for an aggregate purchase
price of $91,720. The acquisition was accounted for by the purchase method of
accounting. In connection with this acquisition, $79,383 of the purchase price
was allocated to licenses. From the date of acquisition to December 31, 1994,
revenue, depreciation and amortization, operating loss and net loss before
interest expense related to the purchase price of the non-wireline cellular
telephone systems purchased were $1,803, $744, $(645) and $(644), respectively.

On December 1, 1995, the Company purchased all of the outstanding stock of
Augusta Metronet, Inc. and Georgia Metronet, Inc., which own either directly (or
in the case of Georgia Metronet, Inc., through its 97.9 percent interest in the
Savannah Cellular Limited Partnership) the licenses to operate the non-wireline
cellular telephone systems in the Savannah and Augusta, Georgia MSAs,
respectively, for an aggregate purchase price of $158,397. The acquisition was
accounted for by the purchase method of accounting. In connection with this
acquisition, $136,940 of the purchase price was allocated to licenses. From the
date of acquisition to December 31, 1995, revenue, depreciation and
amortization, operating income and net income before interest expense related to
the purchase price of the non-wireline cellular telephone systems purchased were
$2,126, $508, $208 and $202, respectively. Assuming this acquisition had
occurred on January 1, 1995, unaudited pro forma revenue, net loss and net loss
per share for the year ended December 31, 1995 would have been $127,602,
$(6,947), and $(.31), respectively. These pro forma amounts assume that the
financing requirements were met by the incurrence of bank debt.

F-19
<PAGE> 92

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

4. NOTES PAYABLE AND LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
--------- ---------
<S> <C> <C>
Line of credit(a)............................................... $ -- $ --
Credit agreement(b)............................................. 237,000 343,000
Purchase obligations(c)......................................... 6,959 7,441
-------- --------
$ 243,959 $ 350,441
Less current installments.................................. 85 7,441
-------- --------
Long-term debt, excluding current installments............. $ 243,874 $ 343,000
======== ========
</TABLE>

-----------------------
(a) On December 1, 1995, the Company entered into a loan agreement with
a bank which provides for a revolving line of credit of up to $5,000
to facilitate day-to-day cash management needs. The loan agreement
provides for interest at the bank's prime rate and matures November
30, 1997. There were no borrowings under this loan agreement at
December 31, 1995.

(b) On December 1, 1995, the Company entered into an amended and
restated credit agreement with 21 banks which provides for a
revolving line of credit of up to $500,000, subject to certain
limitations through June 30, 2004. This credit agreement increased
the Company's previously existing $275,000 revolving line of credit.
The credit agreement provides for quarterly commitment reductions
commencing September 30, 1998 and commitment reductions of 25 to 50
percent of Excess Cash Flow (as defined in the credit agreement), if
any, are required on April 15, 1998 and annually thereafter.
Interest is payable at variable rates and under various interest
rate options. The interest rate at December 31, 1995 ranged from
7.88 to 9.38 percent before the effect of the interest rate swap and
cap agreements outlined below. The credit agreement also provides
for a commitment fee of .5 percent per year on any unused amounts of
the credit agreement. Amounts outstanding are secured by the assets
of the Company.

The credit agreement provides for various compliance covenants
and restrictions, including items related to mergers or acquisition
transactions, the declaration or payment of dividends or other
payments to stockholders, capital expenditures and maintenance of
certain financial ratios.

F-20
<PAGE> 93

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

4. NOTES PAYABLE AND LONG-TERM DEBT -- (CONTINUED)

(b) (Continued)
The Company has entered into interest rate swap and cap agreements
to reduce the impact of changes in interest rates on its floating debt
and thus were entered into for purposes other than trading. At December
31, 1995, the Company had outstanding five interest rate swap agreements
and six interest rate cap agreements having a total notional value of
$185,000. These interest rate swap and cap agreements effectively change
the Company's interest rate exposure on a quarterly basis on $185,000 of
credit. The cap and swap agreements are summarized as follows:

<TABLE>
<CAPTION>
MAXIMUM NOTIONAL
TYPE OF AGREEMENT MATURITY LIBOR(1) VALUE
------------------------------------------------- ------------ ------- --------
<S> <C> <C> <C>
Cap.............................................. Aug 3 1996 6.0% $ 25,000
Cap.............................................. Aug 10 1996 6.0 15,000
Cap.............................................. Nov 17 1997 8.0 10,000
Swap............................................. Nov 17 1997 8.1 10,000
Swap............................................. Nov 17 1997 7.48 20,000
Participating Cap(2)............................. Nov 23 1997 8.75 15,000
Participating Swap(3)............................ Nov 24 1997 8.29 15,000
Trigger Cap(4)................................... Nov 28 1997 7.5/8.5 15,000
Pay Later Cap(5)................................. Jan 12 1998 8.5 20,000
Swap............................................. Aug 3 1998 5.2625 25,000
Participating Swap(6)............................ Aug 10 1998 5.98 15,000
--------
$185,000
=========
</TABLE>

-----------------------
(1) The maximum interest rate is 2.5 percent over the LIBOR stated in the
table below. The 2.5 percent interest rate over such LIBOR decreases
if certain leverage ratios are met by the Company.

(2) On 36 percent ($5,400) the interest rate is set at 8.75 percent, the
balance is set at the three-month LIBOR up to a maximum 8.75 percent.

(3) When the three-month LIBOR is less than 8.29 percent the Company
participates in 50 percent of the difference.

(4) When LIBOR is below 8.5 percent the rate is 7.5 percent, when LIBOR
is 8.5 percent or above the rate is 8.5 percent.

(5) When the three-month LIBOR rate is 8.5 percent or higher the Company
receives a quarterly payment of $98.

(6) When the six-month LIBOR is less than 5.98 percent the Company
participates in 45 percent of the difference.

Fees in the amount of $544 were incurred in connection with certain
of the cap agreements and are being amortized over the lives of the
respective cap agreements.

The market value of the swap and cap agreements above, which has not
been reflected in the consolidated financial statements as of December
31, 1995, is a loss of $2,221.

F-21
<PAGE> 94

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The Company is exposed to interest rate risk in the event of
nonperformance by the other party to the interest rate swap and cap
agreements. However, the Company does not anticipate nonperformance by
any of the banks.

(c) In connection with the purchase of controlling interest in a
non-wireline cellular telephone system in 1991, the Company incurred
certain purchase obligations. The obligations, which are subordinate
to the credit agreement, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
OBLIGATIONS 1994 1995
------------------------------------------------------------------- ------- -------
<S> <C> <C>
Payable in 1996.................................................... $ 403 $ 403
Payable in quarterly installments of $25, including interest at
12.33 percent per annum.......................................... 156 48
Payable in July 1996, including interest at 10 percent per annum... 2,456 2,702
Payable in quarterly installments of interest only at 10 percent
per annum with the balance due July 1996......................... 500 500
$3,994, discounted at 10 percent per annum, payable in July 1996... 3,444 3,788
------ ------
$ 6,959 $ 7,441
====== ======
</TABLE>

Based upon current borrowing rates, the fair value approximates the
carrying value of the long-term debt outstanding under the credit
agreement described in (b) above and the purchase obligations described
in (c) above.

The aggregate maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
------------------------------------------------------------ ---------
<S> <C>
1996........................................................ $ 7,441
1997........................................................ --
1998........................................................ --
1999........................................................ --
2000........................................................ --
Thereafter.................................................. 343,000
--------
$ 350,441
========
</TABLE>

5. INCOME TAXES

Components of income tax expense for the year ended December 31, 1995
consist of the following:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
------- ----- ------
<S> <C> <C> <C>
Current.............................................................. $ -- $ -- $ --
Deferred............................................................. 2,550 100 2,650
------ ---- ------
$ 2,550 $ 100 $2,650
====== ==== ======
</TABLE>

Income tax expense of $2,650 differs from the amount of income tax expense
computed by applying the maximum federal income tax rate of 34 percent to net
income before income taxes due to utilization of net operating losses and the
recognition of deferred income taxes (in the amount of $2,650) relating to the
difference between financial statement and income tax return basis of certain
assets and liabilities in connection with the Exchange.

F-22
<PAGE> 95

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

5. INCOME TAXES -- (CONTINUED)

The components of the deferred income tax assets and liabilities as of
December 31, 1995 are as follows:

<TABLE>
<S> <C>
Deferred tax assets:
Allowance for doubtful accounts......................................... $ 658
Nondeductible accruals.................................................. 163
Net operating loss carryforward......................................... 5,600
---------
Total deferred tax assets............................................ $ 6,421
Valuation allowance....................................................... (5,184)
---------
$ 1,237
---------
Deferred tax liabilities:
Property, plant and equipment........................................... (7,323)
Licenses................................................................ (2,729)
---------
$ (10,052)
---------
Deferred tax liability, net.......................................... $ (8,815)
=========
</TABLE>

The net change in the total valuation allowance for the year ended December
31, 1995 was an increase of $5,184. A valuation allowance has been recorded
primarily to offset the gross deferred tax assets created by net operating loss
carryforwards. Management believes that it is more likely than not that the
results of future operations will generate sufficient taxable income to realize
that portion of the deferred tax asset related to the net operating loss
carryforwards in excess of the valuation allowance. The net operating loss
carryforwards totaled approximately $16,000 at December 31, 1995 and expire in
amounts ranging from approximately $400 to $4,100 through 2010. For
carryforwards of approximately $14,000, generated in periods prior to the
Exchange, utilization is limited to the subsidiary that generated the
carryforwards.

6. RELATED PARTY TRANSACTIONS

During 1993 and 1994, the Company had a subordinated demand note of $20,000
with Palmer Broadcasting Limited Partnership, a majority-owned subsidiary of
PCI. Interest expense under the note was $1,518 and $1,611 for the years ended
December 31, 1993 and 1994, respectively. The note was paid off in 1994.

PCI had previously extended the Company a line of credit in the amount of
$3,000 that was used for the initial operations of the Company, to pay
organization expenses and to pay expenses of the Offering. The line of credit
bore interest at 2 percent above the prime rate (10.5 percent at December 31,
1994). Interest expense on the line of credit amounted to $117 for the year
ended December 31, 1994. The borrowings under the line of credit were $1,615 at
December 31, 1994, of which $1,448 related to offering expenses through December
31, 1994. The borrowings were repaid with the proceeds of the Offering.

During 1994, the Company earned $78 of interest income from advances to
PCI.

The Company had a management agreement with PCI for management of the
day-to-day operations of the Company. The agreement provided for a management
fee of 1 percent of revenues, paid quarterly, however this fee was not charged
by PCI after June 30, 1993, because of the transfer to the Company in 1993 of
certain administrative functions, and the agreement was terminated on August 19,
1994. The fee amounted to $173 for the year ended December 31, 1993 and is
included in selling, general and administrative expenses.

During 1994, the Company performed certain management functions for PCI.
These functions included general management, human resources administration,
accounting, and computer services. PCI was charged a fee based on the Company's
estimate of its time spent managing PCI and usage of its computer.

F-23
<PAGE> 96

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6. RELATED PARTY TRANSACTIONS -- (CONTINUED)

Concurrently with the Offering and the Exchange, the Company and PCI entered
into each of a transitional management and administrative services agreement and
a computer services agreement that extend each December 31 for additional
one-year periods unless and until either party notifies the other. The
transitional management agreement was in effect through September 30, 1995. The
fees from these arrangements amounted to a total of $509 and $492 for the years
ended December 31, 1994 and 1995, respectively, and are included as a reduction
of selling general and administrative expenses.

During 1994, PCI provided certain tax consulting services to the Company.
Concurrently with the Offering and the Exchange, the Company and PCI entered
into a tax consulting agreement that extends each December 31 for additional
one-year periods unless and until either party notifies the other. The fees for
tax consulting services amounted to a total of $67 and $84 for the years ended
December 31, 1994 and 1995, respectively, and are included in selling general
and administrative expenses.

During 1993, the responsibility for all selling, general, and
administrative functions previously performed for the Company by a division of
PCI were transferred to the Company. In addition, certain administrative assets,
fixed assets, and current assets in the amount of $1,582 net of administrative
liabilities of $738 were transferred to the Company as a contribution of equity.
Under the management agreement between the Company and PCI, PCI was to be
reimbursed for out-of-pocket costs and expenses related to the management of the
Company. Certain expenses related to the operations of the systems have been
allocated from PCI to the Company. Operating expenses were allocated based on
PCI's estimate of its time spent managing the subsidiaries, and are included in
selling, general, and administrative expenses. Management believes that the
estimated time spent managing the subsidiaries provides a reasonable basis for
the allocation of such operating expenses. The out-of-pocket operating expenses
allocated to the Company were $667 for 1993.

During 1993, the Company transferred certain tower sites, utilized by the
Company, PCI and unrelated parties, in the amount of $1,007 to PCI as a
distribution of equity.

PCI has a 401(k) plan with a noncontributory retirement feature and a
matching provision for employees who meet length of service and other
requirements. The Company participates in this plan and was allocated 401(k)
retirement and matching expense of $234, $305 and $493 for the years ended
December 31, 1993, 1994 and 1995, respectively.

7. COMMON STOCK AND STOCK PLANS

On December 22, 1993, 3,000 shares of common stock of the Company were
subscribed to by PCI and 1,000 shares by stockholders of PCI. Cash in the amount
of $100 was collected by the Company on January 10, 1994 which represented the
full amount of the subscriptions.

On February 4, 1994, the Company issued a stock dividend in the amount of
2,667 shares of common stock to the then existing stockholders. Such stock
dividend has been reflected in the accompanying financial statements as of
December 31, 1993.

During 1994, the Company amended its certificate of incorporation to
increase the number of authorized shares of common stock from 60,000,000 to
91,000,000 and to provide for Class A Common Stock and Class B Common Stock. The
Class A Common Stock has one vote per share. The Class B Common Stock, which may
be owned only by PCI or certain successors of PCI and of which no shares may be
issued subsequent to the Offering, has five votes per share, provided, however,
that, so long as any Class A Common Stock is issued and outstanding, at no time
will the total outstanding Class B Common Stock have the right to cast votes
having more than 75 percent of the total voting power of the common stock in the
aggregate. Shares of Class B Common Stock shall be converted into Class A Common
Stock on a share-for-share basis:

F-24
<PAGE> 97

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. COMMON STOCK AND STOCK PLANS -- (CONTINUED)

(i) at any time at the option of the holder; (ii) immediately upon the transfer
of shares of Class B Common Stock to any holder other than a successor of PCI;
(iii) immediately if the shares of Class B Common Stock held by PCI or its
successors constitute 33 percent or less of the outstanding shares of the
Company; (iv) at the end of 20 years from original issuance of those shares of
Class B Common Stock; or (v) if more than 50 percent of the equity interests in
PCI become beneficially owned by persons other than: (i) beneficial owners of
PCI as of December 29, 1994 ("Current PCI Beneficial Owners"); (ii) affiliates
of Current PCI Beneficial Owners; (iii) heirs or devisees of any individual
Current PCI Beneficial Owner, successors of any corporation or partnership which
is a Current PCI Beneficial Owner and beneficiaries of any trust which is a
Current PCI Beneficial Owner; and (iv) any relative, spouse or relative of a
spouse of any Current PCI Beneficial Owner.

The Company has adopted a Stock Option Plan in connection with the
Offering, under which options for an aggregate of 1,600,000 shares of Class A
Common Stock are available for grants to key employees. The Company also has
adopted a Directors Stock Option Plan in connection with the Offering, under
which options for an aggregate of 300,000 shares of Class A Common Stock are
available for grants to directors who are not officers or employees of the
Company.

The Company initially granted options to purchase 655,000 shares of Class A
Common Stock of the Company to eleven employees under the Stock Option Plan. The
exercise price of the options granted is $14.25 per share, the same price as the
Class A Common Stock was sold to the public in connection with the Offering. The
options generally vest and become exercisable in equal installments over a
three-year period from the date of grant. During the year ended December 31,
1995, options to purchase 20,000 shares of Class A Common Stock of the Company
were exercised. Options to purchase 635,000 shares of Class A Common Stock
remain outstanding at December 31, 1995. In January 1996, the Company granted
options to purchase an additional 65,000 shares of Class A Common Stock to three
employees at an exercise price of $17.25 per share, the fair market value at the
date of grant.

The Company granted options to purchase 37,500 shares of Class A Common
Stock to five directors under the Directors Stock Option Plan. The exercise
price of the options granted is $14.25 per share, the same price as the Class A
Common Stock was sold to the public in connection with the Offering. The options
vested and became exercisable upon the date of the Offering (March 21, 1995).
The options to purchase 37,500 shares of Class A Common Stock remain outstanding
at December 31, 1995.

The option plans terminate 10 years after the effective date, unless
terminated at an earlier date by the board of directors.

The Company has adopted a stock purchase plan for employees (the "Employee
Stock Purchase Plan") and a stock purchase plan for non-employee directors ("the
Non-Employee Director Stock Purchase Plan"). Under the Employee Stock Purchase
Plan, 160,000 shares of Class A Common Stock are available for purchase by
eligible employees of the Company or any of its subsidiaries. Under the
Non-Employee Director Stock Purchase Plan, 25,000 shares of Class A Common Stock
are available for purchase by non-employee directors of the Company. The
purchase price of each share of Class A Common Stock purchased under the
Employee Stock Purchase Plan or the Non-Employee Director Stock Purchase Plan
will be the lesser of 90 percent of the fair market value of the Class A Common
Stock on the first trading day of the plan year or on the last day of such plan
year; provided, however, that in no event shall the purchase price be less than
the par value of the stock. Both plans will terminate in 2005, unless terminated
at an earlier date by the board of directors.

F-25
<PAGE> 98

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

8. COMMITMENTS AND CONTINGENCIES

LEASES

The Company occupies certain buildings and uses certain tower sites, cell
sites and equipment under noncancelable operating leases which expire through
2013. The operating leases for a building and certain tower sites and cell sites
are with related parties.

Future minimum lease payments under noncancelable operating leases as of
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
RELATED
PARTIES OTHERS
------- -------
<S> <C> <C>
Year ending December 31:
1996...................................................................... $ 273 $ 2,657
1997...................................................................... 273 2,296
1998...................................................................... 273 2,125
1999...................................................................... 51 1,884
2000...................................................................... 14 1,469
Later years through 2013.................................................. -- 3,646
---- -------
Total minimum lease payments...................................... $ 884 $14,077
==== =======
</TABLE>

Rental expense was $1,165, $1,609, and $2,487 for the years ended December
31, 1993, 1994 and 1995, respectively, of which $33, $253, and $269 was paid to
related parties for 1993, 1994 and 1995, respectively.

CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial statements.

EMPLOYMENT AGREEMENTS

The Company has employment agreements with six officers of the Company. The
agreements have terms of two or three years and provide for aggregate annual
salaries of $1,148 in 1996. Each employment agreement provides that if the
officer is terminated by the Company without cause (as defined therein) or
terminates the agreement for good reason (as defined therein), the Company will
pay the officer, the full base salary and benefits which would have been paid to
such officer during the remaining term of the agreement.

COMMITMENTS

In 1994, the Company entered into an agreement to license customer billing
software and to receive related support maintenance on the software through
December 31, 1996. Future payments under this agreement are $512 for the year
ending December 31, 1996. The Company has the option to extend the agreement
through December 31, 1999.

F-26
<PAGE> 99

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
---------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Total Revenue.................................... $ 13,798 $16,364 $17,628 $21,189 $ 68,979
======= ======= ======= ======= ========
Operating Income................................. $ 2,688 $ 4,015 $ 5,046 $ 3,334 $ 15,083
======= ======= ======= ======= ========
Net Income (Loss)................................ $ 176 $ 1,127 $ 1,695 $(1,336) $ 1,662
======= ======= ======= ======= ========
Net Income (Loss) Per Share*..................... $ 0.01 $ 0.06 $ 0.09 $ (0.07) $ 0.09
======= ======= ======= ======= ========
</TABLE>

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER(A) QUARTER QUARTER QUARTER TOTAL
---------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995
Total Revenue.................................... $ 22,374 $25,931 $26,055 $30,546 $104,906
======= ======= ======= ======= ========
Operating Income................................. $ 4,872 $ 6,892 $ 8,152 $ 6,666 $ 26,582
======= ======= ======= ======= ========
Net (Loss) Income................................ $ (3,958) $ 1,620 $ 2,801 $ 491 $ 954
======= ======= ======= ======= ========
Net (Loss) Income Per Share*..................... $ (0.21) $ 0.07 $ 0.12 $ 0.02 $ 0.04
======= ======= ======= ======= ========
</TABLE>

- ---------------
(a) First quarter loss was increased by $2,650 due to the recognition of
deferred income taxes relating to the difference between financial statement
and income tax return basis of certain assets and liabilities in connection
with the Exchange.

* Weighted average shares outstanding for the quarters are calculated
independent of the weighted average shares outstanding for the year;
therefore, quarterly net income (loss) per share may not total to annual net
income per share.

F-27
<PAGE> 100

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors
Palmer Wireless, Inc.:

We have reviewed the condensed consolidated balance sheet of Palmer
Wireless, Inc. and subsidiaries as of March 31, 1996, and the related condensed
consolidated statements of operations, stockholders' equity and cash flows for
the three-month periods ended March 31, 1996 and 1995. These condensed
consolidated financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Palmer Wireless, Inc. and
subsidiaries as of December 31, 1995, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended; and in
our report dated January 31, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 1995,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.

/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP

Des Moines, Iowa
May 14, 1996

F-28
<PAGE> 101

PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
($ IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................. $ 3,436 $ 4,553
Trade accounts receivable, net of allowance for doubtful accounts.......... 17,347 17,297
Receivable from other cellular carriers.................................... 3,936 2,267
Deferred income taxes...................................................... 821 949
Prepaid expenses and deposits.............................................. 1,111 1,750
Inventory.................................................................. 2,434 2,056
------- -------
Total current assets.................................................... $ 29,085 $ 28,872
------- -------
Net property, plant and equipment............................................ 100,936 103,885
Licenses, net of amortization................................................ 321,053 319,284
Other intangible assets, net of amortization................................. 11,797 14,000
------- -------
$462,871 $ 466,041
======= =======
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt..................................... $ 7,441 $ 7,603
Accounts payable........................................................... 10,795 9,522
Accrued expenses........................................................... 8,833 10,837
Other liabilities.......................................................... 3,451 3,452
------- -------
Total current liabilities............................................... $ 30,520 $ 31,414
Long-term debt, excluding current installments............................... 343,000 345,000
Deferred income taxes........................................................ 9,636 9,805
Minority interests........................................................... 5,162 5,193
------- -------
Total liabilities....................................................... $388,318 $ 391,412
------- -------
Stockholders' equity......................................................... 74,553 74,629
------- -------
$462,871 $ 466,041
======= =======
</TABLE>

Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.

See accompanying notes to condensed consolidated financial statements.

F-29
<PAGE> 102

PALMER WIRELESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------
1995 1996
----------- -----------
<S> <C> <C>
Revenue:
Service................................................................ $ 20,408 $ 33,856
Equipment sales and installation....................................... 1,966 2,035
----------- -----------
Total revenue..................................................... $ 22,374 $ 35,891
----------- -----------
Operating expenses:
Engineering, technical and other direct................................ 3,860 6,624
Cost of equipment...................................................... 3,144 3,931
Selling, general and administrative.................................... 7,131 10,924
Depreciation and amortization.......................................... 3,367 5,898
----------- -----------
Total operating expenses.......................................... $ 17,502 $ 27,377
----------- -----------
Operating income......................................................... $ 4,872 $ 8,514
----------- -----------
Other income (expense):
Interest expense, net.................................................. (5,730) (7,945)
Other expense, net..................................................... (328) --
----------- -----------
Total other expense............................................... $ (6,058) $ (7,945)
----------- -----------
(Loss) income before minority interest share
of income and income tax expense....................................... (1,186) 569
Minority interest share of income........................................ (122) (452)
----------- -----------
(Loss) income before income taxes........................................ $ (1,308) $ 117
Income tax expense....................................................... (2,650) (41)
----------- -----------
Net (loss) income........................................................ $ (3,958) $ 76
=========== ===========
Net (loss) income per share of common stock.............................. $ (0.21) $ 0.00
=========== ===========
Average shares outstanding............................................... 18,611,111 23,561,923
=========== ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

F-30
<PAGE> 103

PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
($ IN THOUSANDS)
(UNAUDITED)

See accompanying notes to condensed consolidated financial statements.

F-31
<PAGE> 104

PALMER WIRELESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
($ IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
1995 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income............................................................. $ (3,958) $ 76
-------- ---------
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Depreciation and amortization.............................................. 3,367 5,898
Minority interest share of income.......................................... 122 452
Deferred income taxes...................................................... 2,650 41
Loss on disposal of property............................................... 325 --
Interest deferred and added to long-term debt.............................. 149 187
(Increase) decrease in trade accounts receivable........................... (497) 50
Decrease in inventory...................................................... 2,416 378
(Decrease) increase in accounts payable and accrued expenses............... (3,824) 40
Change in other accounts................................................... 547 (343)
-------- ---------
Total adjustments........................................................ $ 5,255 $ 6,703
-------- ---------
Net cash provided by operating activities................................ $ 1,297 $ 6,779
-------- ---------
Cash flows from investing activities:
Capital expenditures.......................................................... (4,442) (6,618)
Purchases of minority interests............................................... -- (1,224)
Collection of purchase price adjustment....................................... -- 2,452
Increase in other intangible assets........................................... (614) (2,247)
-------- ---------
Net cash used in investing activities.................................... $ (5,056) $ (7,637)
-------- ---------
Cash flows from financing activities:
Advances to Palmer Communications Incorporated, net........................... (1,603) --
Repayment of long-term debt................................................... (60,025) (25)
Proceeds from long-term debt.................................................. 5,000 2,000
Public offering proceeds, net................................................. 66,250 --
-------- ---------
Net cash provided by financing activities................................ $ 9,622 $ 1,975
-------- ---------
Net increase in cash and cash equivalents................................ $ 5,863 $ 1,117
Cash and cash equivalents at the beginning of period............................ 2,998 3,436
-------- ---------
Cash and cash equivalents at the end of period.................................. $ 8,861 $ 4,553
======== =========
Supplemental disclosure of cash flow information:
Cash paid for interest........................................................ $ 5,483 $ 7,033
======== =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

F-32
<PAGE> 105

PALMER WIRELESS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(SEE ACCOMPANYING INDEPENDENT AUDITORS' REVIEW REPORT)
($ IN THOUSANDS)
(UNAUDITED)

(1) BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of Palmer
Wireless, Inc. and subsidiaries (the "Company") have been prepared without audit
pursuant to Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission (SEC). Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financials. In the opinion of management, all adjustments (none of which were
other than normal recurring items) considered necessary for a fair presentation
have been included. The results of operations for the interim periods reported
are not necessarily indicative of results to be expected for the year.

(2) ACQUISITIONS

On March 22, 1996, the Company announced that two of its majority-owned
subsidiaries entered into a definitive agreement to purchase the non-wireline
cellular telephone system serving Georgia-6 RSA for a total purchase price of
$35 million, subject to certain adjustments.

On April 23, 1996, the Company entered into a definitive agreement to
purchase the non-wireline cellular telephone system serving the Georgia-1 RSA
for a total purchase price of $31.5 million, subject to certain adjustments.

F-33
<PAGE> 106

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Southeast Georgia Cellular
Limited Partnership and Georgia 12
Cellular Limited Partnership:

We have audited the accompanying combined statements of operations, changes
in partners' capital (deficit), and cash flows of SOUTHEAST GEORGIA CELLULAR
LIMITED PARTNERSHIP (a Georgia limited partnership) (formerly GEORGIA SEVEN
NONWIRELINE CELLULAR LIMITED PARTNERSHIP, GEORGIA 8 CELLULAR LIMITED
PARTNERSHIP, AND GEORGIA 10 CELLULAR LIMITED PARTNERSHIP) AND GEORGIA 12
CELLULAR LIMITED PARTNERSHIP (a Delaware limited partnership) for the year ended
December 31, 1993 and the ten months ended October 31, 1994. These financial
statements are the responsibility of the Partnerships' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of operations, changes in
partners' capital (deficit), and cash flows are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the statements of operations, changes in partners' capital
(deficit), and cash flows. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the statements of operations, changes in partners' capital
(deficit), and cash flows referred to above present fairly, in all material
respects, the results of operations, changes in partners' capital (deficit), and
cash flows of Southeast Georgia Cellular Limited Partnership and Georgia 12
Cellular Limited Partnership for the year ended December 31, 1993 and the ten
months ended October 31, 1994 in conformity with generally accepted accounting
principles.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Atlanta, Georgia
December 30, 1994

F-34
<PAGE> 107

SOUTHEAST GEORGIA CELLULAR LIMITED PARTNERSHIP
(FORMERLY GEORGIA SEVEN NONWIRELINE CELLULAR LIMITED PARTNERSHIP,
GEORGIA 8 CELLULAR LIMITED PARTNERSHIP, AND GEORGIA 10 CELLULAR LIMITED
PARTNERSHIP)
AND GEORGIA 12 CELLULAR LIMITED PARTNERSHIP

COMBINED STATEMENTS OF OPERATIONS

(NOTE 1)
(IN THOUSANDS)

<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, OCTOBER 31,
1993 1994
------------ ------------
<S> <C> <C>
Revenue (Note 2):
Service................................................................... $ 4,401 $ 7,681
Equipment sales and installation.......................................... 425 426
-------- --------
Total revenue.......................................................... $ 4,826 $ 8,107
-------- --------
Operating expenses:
Cost of equipment......................................................... 822 754
Operations expenses -- nonaffiliates (Note 2)............................. 1,265 1,878
Operations expenses -- affiliates (Note 5)................................ 212 126
Selling, general, and administrative expenses -- nonaffiliates............ 2,931 3,661
Selling, general, and administrative expenses -- affiliates (Note 5)...... 1,182 615
Depreciation and amortization............................................. 1,787 2,169
-------- --------
Total operating expenses............................................... $ 8,199 $ 9,203
-------- --------
Net operating loss.......................................................... $ (3,373) $ (1,096)
Interest expense, net (Note 2).............................................. 1,946 2,437
Other income, net........................................................... -- 62
Loss on disposal of assets (Note 2)......................................... 279 --
-------- --------
Net loss.................................................................... $ (5,598) $ (3,471)
======== ========
</TABLE>

The accompanying notes are an integral part of these combined statements.

F-35
<PAGE> 108

COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)

(NOTE 1)
(IN THOUSANDS)

<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------- -------- --------
<S> <C> <C> <C>
Balance, December 31, 1992............................................... $ (745) $ 5,445 $ 4,700
Capital contributions.................................................. 36 3,585 3,621
Net loss for the year ended December 31, 1993.......................... (2,736) (2,862) (5,598)
Restructuring adjustment at July 30, 1993 (Note 1)..................... 1,200 (1,200) --
------- ------- -------
Balance, December 31, 1993............................................... $ (2,245) $ 4,968 $ 2,723
Net loss for the ten months ended October 31, 1994..................... (1,792) (1,679) (3,471)
------- ------- -------
Balance, October 31, 1994................................................ $ (4,037) $ 3,289 $ (748)
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these combined statements.

F-36
<PAGE> 109

COMBINED STATEMENTS OF CASH FLOWS

(NOTE 1)
(IN THOUSANDS)

<TABLE>
<CAPTION>
TEN MONTHS
ENDED
YEAR ENDED OCTOBER
DECEMBER 31, 31,
------------ ----------
1993 1994
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................................. $ (5,598) $ (3,471)
------- -------
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization.......................................... 1,787 2,169
Loss on disposal of assets............................................. 279 --
Increase in current operating assets................................... (634) (980)
Increase in current operating liabilities.............................. 1,164..... 16
Deferred interest...................................................... 950 558
Other operating activities............................................. 30 43
------- -------
Total adjustments.................................................... $ 3,576 $ 1,806
------- -------
Net cash used in operating activities................................ $ (2,022) $ (1,665)
------- -------
Cash flows from investing activities:
Proceeds from sale of property............................................ -- 188
Capital expenditures...................................................... (3,134) (1,071)
Payment for license rights................................................ (5,964) --
Payment of other deferred charges......................................... (184) (164)
------- -------
Net cash used in investing activities................................ $ (9,282) $ (1,047)
------- -------
Cash flows from financing activities:
Issuance of long-term obligations......................................... 4,909 3,715
Repayment of long-term obligations........................................ (28) (464)
Capital contributions..................................................... 3,621 --
Issuance of notes payable -- affiliates................................... 2,541 1,651
Payment of notes payable -- affiliates.................................... -- (2,251)
Deferred interest on notes payable -- affiliates.......................... 87 37
------- -------
Net cash provided by financing activities............................ $ 11,130 $ 2,688
------- -------
Net decrease in cash........................................................ $ (174) $ (24)
Cash at beginning of period................................................. 344 170
------- -------
Cash at end of period....................................................... $ 170 $ 146
======= =======
Supplemental disclosure of noncash investing and financing activities:
Long-term obligations issued in exchange for property and equipment......... $ 3,191 $ 660
Cash paid for interest...................................................... $ 835 $ 680
</TABLE>

The accompanying notes are an integral part of these combined statements.

F-37
<PAGE> 110

1. ORGANIZATION AND NATURE OF BUSINESS

On January 31, 1994, the partners of Georgia Seven Nonwireline Cellular
Partnership (the "Georgia 7 Partnership"), Georgia 8 Cellular Limited
Partnership (the "Georgia 8 Partnership"), and Georgia 10 Cellular Limited
Partnership (the "Georgia 10 Partnership") agreed to merge the Georgia 7
Partnership and the Georgia 8 Partnership into the Georgia 10 Partnership and
change the name of the Georgia 10 Partnership to Southeast Georgia Cellular
Limited Partnership ("SEGA").

On May 26, 1994, SEGA and Georgia 12 Cellular Limited Partnership (the
"Georgia 12 Partnership") (collectively, the "Georgia Partnerships") entered
into an agreement to be acquired by Palmer Cellular Partnership ("Palmer"), an
Iowa general partnership, and BJV L.P. ("BJV"), a Delaware limited partnership
formed by Palmer to effect the merger. The accompanying combined statements of
operations, changes in partners' capital (deficit), and cash flows present the
result of operations, changes in partners' capital (deficit), and cash flows for
the year ended or, as applicable, for the period from inception (June 25, 1993
for the Georgia 10 Partnership) to December 31, 1993 and for the ten months
ended October 31, 1994.

On October 31, 1994, SEGA and the Georgia 12 Partnership were acquired by
and merged into BJV as of the close of business on October 31, 1994, and the
separate existence of SEGA and the Georgia 12 Partnership ceased. The purchase
price was (a) $90,000,000, plus (b) any cash advanced after June 1, 1994 to any
of the Georgia Partnerships by Sterling Cellular Limited Partnership
("Sterling") or Sterling Cellular Holdings Limited Partnership ("Holdings") to
fund operating cash deficits, as defined, for the period from June 1, 1994
through the closing date, as defined, for the period from June 1, 1994 through
the closing date, plus (c) any capital expenditures actually made and funded
through increases in the market debt, as defined, or partner debt, as defined,
by any of the Georgia Partnerships, less (d) certain debts due upon sale or
change in control of the Georgia Partnerships (Notes 4 and 5). The purchase
price, as adjusted, exceeded the carrying value of the net assets.

The Georgia Partnerships were originally formed, started operations, and
served rural statistical areas ("RSA") as follows:

<TABLE>
<CAPTION>
DATE
DATE OPERATIONS RSA
FORMED BEGAN SERVED
------------------ ------------------- -----------
<S> <C> <C> <C>
Partnership:
SEGA, formerly:
Georgia 7 Partnership............... December 27, 1990 September 19, 1991 Georgia 7
Georgia 8 Partnership............... August 24, 1992 September 30, 1992 Georgia 8
Georgia 10 Partnership.............. June 25, 1993 June 25, 1993 Georgia 10
Georgia 12 Partnership.............. May 10, 1991 October 17, 1991 Georgia 12
</TABLE>

Prior to the acquisition by BJV, the Georgia Partnerships were owned by
various corporations and partnerships, most of which were related entities, and
had been managed by FGI Cellular Management, Inc. ("FGICM"), a related entity.

During 1993, certain restructuring between the entities which owned the
general and limited partner units took place and ownership representing
$1,200,000 of partnership capital was transferred from limited partners to
general partners.

F-38
<PAGE> 111

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

1. ORGANIZATION AND NATURE OF BUSINESS -- (CONTINUED)
The Georgia Partnerships' losses are allocated on a separate partnership
basis to the partners in proportion to their partnership interest, as defined in
the partnership agreements, until the aggregate capital accounts of the limited
partners are reduced to zero. The balance (excess loss), if any, is allocated to
the general partners. The Georgia Partnerships' profits are allocated on a
separate partnership basis first to the general partners in an amount equal to
total excess losses, if any, previously allocated to the general partners and
then to the partners in proportion to their partnership interests, as defined.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION

The financial statements include the accounts of SEGA (formerly the Georgia
7 Partnership, the Georgia 8 Partnership and the Georgia 10 Partnership) and the
Georgia 12 Partnership. All significant intercompany balances and transactions
have been eliminated.

REVENUE RECOGNITION

Service revenue includes local subscriber revenue and roamer revenue.

The Georgia Partnerships earn local subscriber revenue by providing access
to the cellular network ("access revenue") or, as applicable, for usage of the
cellular network ("airtime revenue"). Access revenue is billed one month in
advance and is recognized when earned. Airtime revenue is recognized when the
service is rendered.

Roamer revenue represents revenue earned by the Georgia Partnerships for
usage of the cellular network by subscribers of other cellular carriers. Roamer
revenue is recognized when the services are rendered. The roamer accounts
receivable represents roamer revenue that has been billed to the roamer partners
and roamer services that have been rendered but are unbilled.

Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.

OPERATIONS EXPENSES -- NONAFFILIATES

Operations expenses -- nonaffiliates represent certain costs of providing
cellular telephone service to customers. These costs include cost of
roamer-incollect services. Roamer-incollect is the result of the Georgia
Partnerships' subscribers using cellular networks of other carriers.
Roamer-incollect revenue is netted against the cost of roamer-incollect services
to determine net roamer-incollect expense.

EXPENSE ALLOCATION

Expenses included in the statements of operations represent direct expenses
incurred by the individual partnerships of certain operations, marketing, and
administrative expenses incurred in conjunction with the Georgia Partnerships
and an allocation of certain operations, marketing, and administrative expenses
from FGICM (Note 5).

F-39
<PAGE> 112

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

INVENTORY

The Georgia Partnerships maintain inventories of cellular telephones for
resale. Inventory is valued at the lower of cost or market using the first-in,
first-out method.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost, including certain engineering
costs and capitalized interest.

The Georgia Partnerships record depreciation using the straight-line method
over the estimated useful lives of the assets as follows:

<TABLE>
<S> <C>
Buildings and towers................................................. 15 years
Leasehold improvements............................................... 5 years
Machinery and equipment.............................................. 3 to 7 years
Office furniture and equipment....................................... 3 to 7 years
</TABLE>

Depreciation expense for the year ended or, as applicable, for the period
from inception to December 31, 1993 and for the ten months ended October 31,
1994 totaled approximately $869,000 and $1,314,000, respectively. The Georgia
Partnerships' policy is to remove the cost and accumulated depreciation of
retirements from the accounts and to recognize the related gain or loss upon the
disposition of assets. During 1993, the Georgia Partnerships retired certain
equipment resulting in losses of approximately $279,000. The loss from disposal
of equipment is included in loss on disposal of assets in the accompanying
statements of operations. Also during 1993, the Georgia 7 Partnership retired
its cellular switch as a result of reaching a switch-sharing agreement with the
Georgia 12 Partnership. The net book value of this equipment totaled $260,000.
During 1994, this equipment was transferred, at its net book value, to another
cellular partnership which is owned by the partners of Sterling. There were no
other significant asset retirements or disposals during 1993 or the ten months
ended October 31, 1994.

OTHER NONCURRENT ASSETS

Included in other noncurrent assets charges are legal fees incurred in
conjunction with the procurement of long-term financing and organization costs
associated with the formation of the Georgia Partnerships. Debt issuance costs
are amortized over the term of the related long-term debt facility, and
organization costs are amortized over five years. Amortization of the debt
issuance costs and the organization costs for the year ended or, as applicable,
for the period from inception to December 31, 1993 and for the ten months ended
October 31, 1994 was approximately $67,000 and $85,000, respectively, and is
included in interest expense in the accompanying statements of operations.

INTEREST EXPENSE, NET

A portion of the interest expense on the Georgia Partnerships' outstanding
long-term debt (Note 4) is capitalized during the construction period as a cost
of construction. Interest capitalized was not significant during 1993 or the ten
months ended October 31, 1994. Payment of interest is partially deferred for two
years on the SAR promissory note (the "SAR Note") (Note 4) and the limited
partners' notes (the "Limited Partners Notes") (Note 4) and is deferred for the
first year on the Montana Cellular Telephone Company promissory note (the "MCTC
Note") (Note 4).

F-40
<PAGE> 113

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

INCOME TAXES

The Georgia Partnerships are not considered taxable entities for federal or
state income tax purposes. All taxable income or loss is included in the
separate tax returns of the partners in accordance with the terms of the
partnership agreements. Accordingly, no provision for income taxes is included
in the accompanying financial statements.

3. LICENSE RIGHTS

On December 27, 1990, the Georgia 7 Partnership was formed with Hetafi
Cellular, Inc. ("HCI") as the general partner with a 1% interest and Hetafi,
Inc. ("Hetafi") and Sterling as limited partners with ownership interests of 71%
and 28%, respectively. As consideration for the original partnership interest,
HCI and Hetafi contributed to the Georgia 7 Partnership the Federal
Communications Commission's authorization to operate the Georgia 7 RSA and
Sterling paid $2,500,000 in cash to Hetafi.

On August 25, 1992, the Georgia 8 Partnership acquired the rights to
provide cellular mobile telephone service to the Georgia 8 RSA from First-Cell
for $4,250,000. The total purchase was paid in cash.

On June 25, 1993, the Georgia 10 Partnership acquired certain assets and
the rights to provide cellular mobile telephone service to the Georgia 10 RSA
from JWT Partnership II for $6,500,000. Of the total purchase, $3,500,000 was
paid in cash and $3,000,000 was financed through the issuance of a five-year
note to Montana Cellular Telephone Company (Note 4).

On July 29, 1991, the Georgia 12 Partnership acquired the rights to provide
cellular telephone service to the Georgia 12 RSA from SAR for $14,425,000. Of
the total purchase, $4,500,000 was paid in cash, $3,000,000 was financed through
notes to the limited partners, and $6,925,000 was financed through the issuance
of a five-year note to SAR (Note 4).

The Georgia Partnerships have recorded the portion of the purchase price
relating to the Georgia 8 RSA, the Georgia 10 RSA, and the Georgia 12 RSA
licenses as license rights. The amount recorded for these license rights totaled
approximately $24,638,000 and is being amortized over 25 years. Amortization
expense for the year ended or, as applicable, for the period from inception to
December 31, 1993 and for the ten months ended October 31, 1994 was
approximately $867,000 and $821,000, respectively, and is included in
depreciation and amortization in the accompanying statements of operations.

Subsequent to the acquisition of the licenses, the Georgia Partnerships
continually evaluate whether later events and circumstances have occurred that
indicate the remaining estimated useful lives of licenses may warrant revision
or that the remaining balances of the license rights may not be recoverable.
When factors indicate that a license should be evaluated for possible
impairment, the Georgia Partnerships use an estimate of undiscounted net income
over the remaining life of the license in measuring whether the license rights
are recoverable.

F-41
<PAGE> 114

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM OBLIGATIONS

Long-term obligations at December 31, 1993 and October 31, 1994 are as
follows:

<TABLE>
<CAPTION>
1993 1994
----------- -----------
<S> <C> <C>
Promissory notes................................................. $10,923,000 $14,857,000
MCTC Note, including deferred interest of $117,000 and $231,000
at December 31, 1993 and October 31, 1994, respectively........ 3,117,000 3,231,000
Limited Partners Notes, including deferred interest of $1,088,000
and $1,447,000 at December 31, 1993 and October 31, 1994,
respectively................................................... 4,088,000 4,447,000
SAR Note, including deferred interest of $868,000 and $953,000 at
December 31, 1993 and October 31, 1994, respectively........... 7,793,000 7,879,000
Bank installment contracts....................................... 94,000 69,000
Less current maturities.......................................... (379,000) (1,081,000)
------------ ------------
$25,636,000 $29,402,000
============ ============
</TABLE>

The promissory notes represent various borrowings by the Georgia
Partnerships from equipment vendors. Interest on these notes is payable monthly
in arrears at a rate based upon the 90-day commercial paper rate, as defined, on
the last business day of the previous calendar quarter, plus 4.35% to 4.5% per
annum. During the year ended December 31, 1993 and the ten months ended October
31, 1994, the rates on these notes ranged from 7.44% to 7.75% and 7.57% to
9.64%, respectively, with the December 31, 1993 and October 31, 1994 rates
equaling 7.56% and 9.64%, respectively (Note 7).

The MCTC Note was issued by the Georgia 10 Partnership in June 1993 as part
of the payment for the purchase of the Georgia 10 RSA License. The MCTC Note
bears interest per annum at a rate equal to 1.5% above the prime rate, as
defined in the note agreement. The prime rate was 6% at December 31, 1993 and
7.75% at October 31, 1994. Interest compounds annually, and payment of interest
is deferred for the initial year of the note. Quarterly interest payments began
on September 25, 1994 (Note 7).

The Limited Partners Notes represent funds borrowed from the limited
partners in connection with the acquisition of the Georgia 12 RSA license. In
1992, the limited partners agreed to change the basic interest rate on the
Limited Partners Notes from 30% to 13%, effective retroactively to July 29,
1991. The holders of the Limited Partners Notes are entitled to an additional
interest payment of up to 17% contingent upon the sale or refinancing of certain
assets of the Georgia 12 Partnership (Note 7). Payment of interest has been
deferred through October 31, 1994. Deferred interest of $1,447,000 is added to
the principal amount due of $3,000,000 and is payable on the earlier of the sale
of the Georgia 12 RSA license or July 29, 1996.

The SAR Note was issued in July 1991 as partial payment for the purchase of
the Georgia 12 RSA license. The SAR Note bears interest at 8.5% per annum.
Interest is due quarterly in amounts of $66,000 for the initial two years and
quarterly in amounts of $100,000 in the third year. Interest in years four and
five is due quarterly at the 8.5% rate. Deferred interest during the first three
years of the SAR Note is compounded quarterly. Principal of $6,925,000 and
accrued but unpaid interest of $953,000 will be due on the earlier of the sale
of the Georgia 12 RSA license or July 29, 1996 (Note 7).

Bank installment contracts were issued during 1993 for the purchase of
several vehicles to be used by the Georgia Partnerships. These contracts call
for 36 equal monthly payments on each contract and carry stated annual interest
rates ranging from 6.75% to 8.25% (Note 7).

F-42
<PAGE> 115

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. RELATED PARTIES

NOTES PAYABLE -- AFFILIATES

During 1993 and the ten months ending October 31, 1994, the Georgia
Partnerships borrowed funds from Sterling Cellular Limited Partnership ("SCLP")
for construction and working capital needs of the Georgia Partnerships. Interest
on the notes accrues at 10%. Both principal of $1,941,000 and deferred interest
of $124,000 are due on demand but not earlier than allowed by the covenants
under the notes payable to certain equipment vendors (Note 4).

These notes are secured solely by a preferred security interest in or lien
on all present and future real and personal property, assets, and revenues of
the Georgia Partnerships. SCLP's right to the payment of all indebtedness due
pursuant to these notes is subordinate to all long-term creditors.

EXPENSE ALLOCATION

FGICM allocates expenses to the Georgia Partnerships based on FGICM's
estimate of the percentage of services devoted directly to the Georgia
Partnerships. Management believes that this method of expense allocation is
reasonable. Allocated costs totaled approximately $1,022,000 and $665,000 for
the year ended or, as applicable, for the period from inception to December 31,
1993 and the ten months ended October 31, 1994, respectively, and are included
in operations expenses -- affiliates and selling, general, and administrative
expense -- affiliates in the accompanying statements of operations.

MARKETING SERVICES

FGI, Inc., which is owned by principals of FGICM, provides marketing
services to the Georgia Partnerships, including market research, creative and
design work, and advertising placement. Marketing fees paid to FGI, Inc. totaled
approximately $298,000 and $76,000 for the year ended or, as applicable, for the
period from inception to December 31, 1993 and the ten months ended October 31,
1994, respectively, and are included in selling, general, and administrative
expenses -- affiliates in the accompanying statements of operations.

MANAGEMENT SERVICES

On December 27, 1990, the Georgia 7 Partnership entered into a five-year
management agreement with FGICM whereby FGICM provided turnkey management and
computer services to the Georgia 7 Partnership. As compensation for its
services, FGICM earned a construction period management fee of $150,000 during
the initial construction period, as defined, and a monthly management fee. In
addition, certain incentive payments could be earned by FGICM based on
performance, as defined in the agreement. This management agreement was
terminated effective with the restructuring of the Georgia 7 Partnership on July
30, 1993 (Note 1). For the year ended December 31, 1993, management fees and
incentives totaled approximately $74,000 and are included in selling, general,
and administrative expenses -- affiliates in the accompanying statements of
operations.

OTHER

Certain other direct expenses incurred by the Georgia Partnerships have
been paid by FGICM on behalf of the Georgia Partnerships.

In addition, Palmer incurred expenses on behalf of the Georgia Partnerships
prior to October 31, 1994.

F-43
<PAGE> 116

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS

The Georgia Partnerships have entered into certain noncancelable operating
lease agreements for the use of cellular towers, land to construct and maintain
cellular towers, and office space. The leases vary in length, but all expire
before 2008. Several of the cell site leases contain provisions whereby lease
payments in later years increase at a fixed rate or based on a published price
index. For the year ended or, as applicable, for the period from inception to
December 31, 1993 and for the ten months ended October 31, 1994, approximately
$225,000 and $313,000, respectively, were expensed related to these leases.
Future minimum rental commitments as of October 31, 1994 are as follows:

<TABLE>
<S> <C>
1994 (November and December)............................................. $ 63,000
1995..................................................................... 354,000
1996..................................................................... 277,000
1997..................................................................... 213,000
1998..................................................................... 172,000
1999..................................................................... 166,000
Thereafter............................................................... 605,000
----------
$1,850,000
==========
</TABLE>

7. SUBSEQUENT EVENT

On October 31, 1994, SEGA and the Georgia 12 Partnership were acquired by
and merged into BJV as of the close of business on October 31, 1994. In
connection with this acquisition, all outstanding debt of the Georgia
Partnerships as of the close of business on October 31, 1994 was repaid out of
the proceeds of the sale. This subsequent early extinguishment of debt is not
reflected in the accompanying financial statements and is expected to result in
an extraordinary loss related to the write-off of deferred financing costs of
approximately $304,000 as of October 31, 1994, the payment of additional
interest on the Limited Partners Notes of approximately $3,144,000 (Note 4), and
other costs incurred in connection with the early extinguishment.

F-44
<PAGE> 117

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Augusta Metronet, Inc.:

We have audited the accompanying statements of operations, changes in
stockholder's equity, and cash flows of Augusta Metronet, Inc. (an Arkansas
corporation and a wholly owned subsidiary of GTE Mobile Communications, Inc.)
for the years ended December 31, 1993 and 1994. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Augusta
Metronet, Inc. for the years ended December 31, 1993 and 1994 in conformity with
generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Atlanta, Georgia
September 29, 1995

F-45
<PAGE> 118

AUGUSTA METRONET, INC.

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(THOUSANDS)

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Revenues and Sales:
Service revenues............................................................... $ 7,114 $ 10,202
Equipment sales................................................................ 488 561
Other revenue.................................................................. 12 16
-------- --------
Total revenues and sales.................................................... 7,614 10,779
-------- --------
Costs and Expenses:
Cost of services............................................................... 1,753 2,538
Cost of equipment sales........................................................ 964 993
Selling, general and administrative............................................ 3,383 4,125
Depreciation................................................................... 902 984
Amortization................................................................... 1,932 1,932
-------- --------
Total operating expenses.................................................... 8,934 10,572
-------- --------
Net operating income (loss)................................................. (1,320) 207
Interest Expense, Net............................................................ (1,158) (1,453)
Other Income, Net................................................................ -- 3
-------- --------
Net Loss before Income Taxes..................................................... (2,478) (1,243)
(Benefit from) Provision for Income Taxes........................................ (165) 222
-------- --------
Net Loss......................................................................... $ (2,313) $ (1,465)
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-46
<PAGE> 119

AUGUSTA METRONET, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(THOUSANDS)

<TABLE>
<CAPTION>
COMMON TOTAL
STOCK PAID-IN ACCUMULATED STOCKHOLDER'S
$1 PAR VALUE CAPITAL DEFICIT EQUITY
------------ ------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992........................ -- $52,393 $ (7,364) $45,029
Net loss for the year ended
December 31, 1993............................ -- -- (2,313) (2,313)
------------ ------- ----------- -------------
Balance, December 31, 1993........................ -- 52,393 (9,677) 42,716
Net loss for the year ended
December 31, 1994............................ -- -- (1,465) (1,465)
------------ ------- ----------- -------------
Balance, December 31, 1994........................ -- $52,393 $ (11,142) $41,251
========== ======== ========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-47
<PAGE> 120

AUGUSTA METRONET, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(THOUSANDS)

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss....................................................................... $ (2,313) $ (1,465)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation................................................................ 902 984
Amortization................................................................ 1,932 1,932
Increase in deferred income taxes........................................... 71 55
Increase in postretirement benefit obligation............................... 19 5
Increase in postemployment benefit obligation............................... 2 --
Changes in current assets and current liabilities:
Increase in accounts receivable........................................... (321) (672)
Decrease in income taxes receivable....................................... 603 450
Increase in inventories................................................... (17) (38)
Increase in other current assets.......................................... -- (98)
Increase in current liabilities, net of capital expenditures.............. 299 454
Other, net.................................................................. (3) 15
-------- --------
Net cash provided by operating activities................................... 1,174 1,622
-------- --------
Cash Flows from Investing Activities:
Capital expenditures........................................................... (348) (2,564)
-------- --------
Net cash used in investing activities....................................... (348) (2,564)
-------- --------
Cash Flows from Financing Activities:
(Decrease) increase in advances from GTE Mobilnet Incorporated................. (826) 942
-------- --------
Net cash provided by (used in) financing activities......................... (826) 942
-------- --------
Change in Cash................................................................... -- --
Cash at Beginning of Year........................................................ 1 1
-------- --------
Cash at End of Year.............................................................. $ 1 $ 1
======== ========
Supplemental Schedule of Noncash Investing Activities:
Transfer of equipment to an affiliate, net..................................... -- $ 336
Increase in accrual for capital expenditures................................... $ 101 $ 421
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-48
<PAGE> 121

AUGUSTA METRONET, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994

1. ORGANIZATION AND NATURE OF BUSINESS

Augusta Metronet, Inc. (the "Company"), a wholly owned subsidiary of GTE
Mobile Communications Incorporated ("GTEMCI"), was incorporated in Arkansas on
May 27, 1987. GTEMCI is a wholly owned subsidiary of GTE Corporation. The
Company provides cellular telephone services in Columbia, McDuffie and Richmond
counties, Georgia and Aiken county, South Carolina.

A definitive agreement dated as of August 24, 1995 was executed between
GTEMCI and Palmer Wireless Holdings, Inc. ("Palmer"). Under the terms of the
agreement, GTEMCI will sell 100 percent of the stock of the Company to Palmer.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

The Company earns service revenues primarily by providing access to the
cellular network (access revenue) and for usage of the cellular network (airtime
and toll revenues). Access revenue is recognized when earned. Airtime (including
roaming) and toll revenues are recognized when the services are rendered. Other
service revenues are recognized after services are performed and include
activation fees and custom calling feature revenues.

Equipment sales are recognized upon delivery of the equipment to the
customer.

OPERATING EXPENSES

Operating expenses include expenses incurred directly by the Company, as
well as an allocation of administrative and other costs incurred by GTEMCI or
its affiliates. Refer to Note 4 for additional discussion of allocated and
affiliated expenses.

INTEREST EXPENSE, NET

The statements of operations reflect total interest expense, net of
interest expense capitalized, as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
----------------------
1993 1994
-------- --------
(THOUSANDS)
<S> <C> <C>
Interest expense................................................ $ (1,179) $ (1,466)
Interest capitalized............................................ 21 13
-------- --------
Interest expense, net........................................... $ (1,158) $ (1,453)
======== ========
</TABLE>

Interest expense includes charges to the Company for funds advanced by GTE
Mobilnet Incorporated ("GTEMI"), an affiliate of GTEMCI. The interest rate on
funds advanced to the Company is equivalent to GTEMI's incremental borrowing
rate, which fluctuated between 3.33% and 4.21% during 1993 and between 3.32% and
5.47% during 1994.

INCOME TAXES

The Company is included in the consolidated federal income tax return of
GTE. In accordance with GTE's tax sharing policy, the Company computes its
federal income taxes on a separate company basis without regard to separate
company utilization of operating losses. GTE reimburses its subsidiaries for the
utilization of taxable losses when the consolidated federal income tax returns
are filed, and GTEMCI, in turn, reimburses the Company.

F-49
<PAGE> 122

AUGUSTA METRONET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The components of the net (benefit) expense from income taxes are as
follows:
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
-----------------
1993 1994
------ -----
(THOUSANDS)
<S> <C> <C>
Current............................................................. $ (282) $ 162
Deferred............................................................ 117 60
------ -----
Total..................................................... $ (165) $ 222
====== =====
</TABLE>

The following is a summary of the items which caused recorded income taxes
to differ from taxes computed using the statutory federal income tax rate:
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
------------------
1993 1994
------ ------
(THOUSANDS)
<S> <C> <C>
Income tax benefit at statutory rate............................... $ (867) $ (435)
Increase in tax expense/decrease in tax benefit
resulting from:
Amortization of goodwill......................................... 655 655
Retroactive impact of change in statutory federal
tax rate...................................................... 46 --
Other, net....................................................... 1 2
------ ------
Actual income tax expense (benefit)................................ $ (165) $ 222
====== ======
</TABLE>

The Omnibus Budget Reconciliation Act of 1993 was enacted on August 10,
1993 and included a provision for an increase in the corporate federal income
tax rate by 1% to 35%, retroactive to January 1, 1993. As a result, $46,000 of
additional deferred tax expense was recorded in September 1993.

Deferred tax expense results from the recognition of deferred tax assets
and liabilities for the estimated future tax effects attributed to temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and their respective tax bases. The Company's net deferred
taxes primarily relate to temporary differences from the Company's use of
accelerated depreciation methods for income tax purposes.

A summary of the components of the deferred income tax provisions is as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
----------------
1993 1994
----- -----
(THOUSANDS)
<S> <C> <C>
Depreciation and amortization....................................... $ 94 $ 74
Retroactive impact of federal rate change........................... 46 --
Other, net.......................................................... (23) (14)
----- -----
Total.......................................................... $ 117 $ 60
===== =====
</TABLE>

F-50
<PAGE> 123

AUGUSTA METRONET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

and other deferred tax assets over deferred state income tax liabilities has
been reserved in a valuation allowance in accordance with Statement of Financial
Accounting Standards No. 109. The state income tax loss carryforwards expire
over the period from 2003 to 2008.

INVENTORIES

Inventories include cellular telephones and accessories held for sale and
are valued at the lower of cost or market. Cost of cellular telephones is
determined using the specific identification method.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and include certain capitalized
overheads (primarily engineering) and capitalized interest. The Company records
depreciation using the straight-line method over the estimated useful lives of
the assets, which are twenty years for buildings and towers, seven to ten years
for cell and switching equipment, and three to five years for furniture and
fixtures and other equipment. When property is retired, the cost of the property
and the related accumulated depreciation are removed from the balance sheet and
any gain or loss on the transaction is included in income.

See Note 4 concerning the transfer of equipment to an affiliate in 1994.
There were no other retirements or transfers in the years presented.

Assets under construction represent costs incurred for network expansion
and improvements and include allocated overheads (primarily engineering) and
capitalized interest. When these assets are placed in service, they are recorded
to the appropriate property and equipment accounts and depreciation begins.

EMPLOYEE BENEFIT PLANS

The Company's employees participate in a defined benefit pension plan
administered by GTE Service Corporation (the "Service Corporation"), an
affiliate of GTEMCI. The benefits paid under this plan are generally based on
years of credited service and average final earnings. The Service Corporation
funds the plan in accordance with minimum funding requirements of employee
benefit and tax laws. These costs are allocated to the Company based on total
payroll expense.

Costs allocated to the Company for this plan were $30,000 and $33,000 in
1993 and 1994, respectively.

The Service Corporation also allocates other postretirement and
postemployment expenses to the Company. The costs allocated in 1993 and 1994
were not material.

OTHER ASSETS, NET

In 1990, GTEMCI purchased 100 percent of the stock of the Company. Costs
incurred in connection with the acquisition of the Company in excess of the net
tangible assets acquired are capitalized as Federal Communications Commission
license costs, customer base, noncompete agreement and goodwill and are
amortized on a straight-line basis over 40 years.

3. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases office space and network sites under long-term operating
leases. The leases have options for renewal with provisions for increased rent
upon renewal. Rent expense for the years ended December 31, 1993 and 1994 was
$105,000 and $197,000, respectively, and is included in cost of services and
selling, general and administrative in the accompanying statements of
operations.

F-51
<PAGE> 124

AUGUSTA METRONET, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
As of December 31, 1994, future minimum lease payments under noncancelable
operating leases were as follows:

<TABLE>
<S> <C>
1995...................................................................... $ 162,000
1996...................................................................... 164,000
1997...................................................................... 136,000
1998...................................................................... 117,000
1999...................................................................... 31,000
Subsequent years.......................................................... 135,000
---------
Total................................................................ $ 745,000
=========
</TABLE>

LEGAL AND REGULATORY MATTERS

The Company is subject to legal and regulatory matters in the normal course
of business. In the opinion of management, the outcome of such matters will not
have a material effect on the financial position or the results of operations of
the Company.

4. RELATED-PARTY TRANSACTIONS

All transactions of the Company are authorized by GTEMCI. Many management
and administrative services are performed by the Service Corporation and GTEMI.
Services provided to the Company include support in major functional areas such
as accounting, information and cash management, human resources, legal,
marketing, billing, and technology planning. Costs attributable to these support
functions are included in cost of services and selling, general and
administrative in the accompanying statements of operations. These costs are
allocated to the Company based on various factors, which are modified
periodically to closely align costs with services received. Costs allocated to
the Company for these services were $1,677,000 and $2,155,000 in 1993 and 1994,
respectively.

Amounts paid by the Company to GTEMI for inventory purchases amounted to
$565,000 and $527,000 in 1993 and 1994, respectively.

GTEMI advances funds to the Company. Funds advanced to the Company are used
to cover construction and working capital requirements. Interest is calculated
on this balance as described in Note 2.

In 1994, the Company transferred its switch equipment with a cost of
$584,000 and accumulated depreciation of $248,000 to an affiliate. The transfer
was made at the Company's net book value at the date of the transaction. The
affiliate traded in this equipment, along with the equipment from several other
affiliates, for new switch equipment capable of serving each participating
company. The Company now makes payments to this affiliate for use of the new
switch. These payments cover maintenance, toll and interconnect charges. This
expense amounted to $79,000 in 1994 and is included in cost of services in the
accompanying statements of operations.

The Company makes payments to an affiliate of GTEMCI for construction of
cell sites and other system property. Amounts paid or payable to this affiliate
were $77,000 in 1994. No payments were made in 1993.

The Company purchases roamer administration, advertising, facilities, and
other operating services from affiliates whose business is the provision of such
services. GTEMCI believes the cost of these services to the Company of $91,000
and $83,000 in 1993 and 1994, respectively, was equivalent to the cost charged
by the affiliates to any of their external customers.

F-52
<PAGE> 125

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Augusta Metronet, Inc.:

We have reviewed the accompanying statements of operations, changes in
stockholder's equity, and cash flows of Augusta Metronet, Inc. (an Arkansas
corporation and a wholly owned subsidiary of GTE Mobile Communications, Inc.)
for the eleven-month period ended November 30, 1995. These financial statements
are the responsibility of the Company's management.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Atlanta, Georgia
January 29, 1996

F-53
<PAGE> 126

AUGUSTA METRONET, INC.
STATEMENT OF OPERATIONS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1995
(THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED
NOVEMBER 30, 1995
-----------------
<S> <C>
Revenues and Sales:
Service revenues................................................................... $11,559
Equipment sales.................................................................... 379
Other revenue...................................................................... 6
-----------------
Total revenues and sales........................................................ 11,944
-----------------
Costs and Expenses:
Costs of services.................................................................. 2,384
Cost of equipment sales............................................................ 1,133
Selling, general and administrative................................................ 4,379
Depreciation....................................................................... 1,022
Amortization....................................................................... 1,771
-----------------
Total operating expenses........................................................ 10,689
-----------------
Net operating income............................................................ 1,255
Interest Expense, Net................................................................ (1,926)
Other Income, Net.................................................................... 4
-----------------
Net Loss before Income Taxes......................................................... (667)
Provision for Income Taxes........................................................... (368)
-----------------
Net Loss............................................................................. $(1,035)
===============
</TABLE>

The accompanying notes are an integral part of this statement.

F-54
<PAGE> 127

AUGUSTA METRONET, INC.

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1995
(THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
COMMON TOTAL
STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
$1 PAR VALUE CAPITAL DEFICIT EQUITY
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994........................ -- $ 52,393 $ (11,142) $ 41,251
Net loss for the eleven months ended November
30, 1995..................................... -- -- (1,035) (1,035)
----- ------------ ----------- ------------
Balance, November 30, 1995........................ $0 $ 52,393 $ (12,177) $ 40,216
========== ======== ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-55
<PAGE> 128

AUGUSTA METRONET, INC.

STATEMENT OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1995
(THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED
NOVEMBER 30,
1995
-------------
<S> <C>
Cash Flows from Operating Activities:
Net loss.............................................................................. $(1,035)
-------------
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation....................................................................... 1,022
Amortization....................................................................... 1,771
Decrease in postretirement benefit obligation...................................... (93)
Decrease in postemployment benefit obligation...................................... (2)
Increase in deferred income taxes.................................................. 4
Changes in current assets and current liabilities:
Increase in accounts receivable.................................................. (100)
Decrease in income taxes receivable.............................................. 135
Decrease in inventories.......................................................... 64
Decrease in other current assets................................................. 46
Decrease in current liabilities, net of capital expenditures..................... (467)
-------------
Net cash provided by operating activities........................................ 1,345
-------------
Cash Flows from Investing Activities:
Capital expenditures.................................................................. (739)
-------------
Net cash used in investing activities............................................ (739)
-------------
Cash Flows from Financing Activities:
Decrease in advances from GTE Mobilnet Incorporated................................... (606)
-------------
Net cash used in financing activities............................................ (606)
-------------
Increase in Cash........................................................................ --
-------------
Cash at Beginning of Period............................................................. 1
-------------
Cash at End of Period................................................................... $ 1
============
</TABLE>

The accompanying notes are an integral part of this statement.

F-56
<PAGE> 129

AUGUSTA METRONET, INC.

NOTES TO FINANCIAL STATEMENTS

NOVEMBER 30, 1995
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited interim financial statements as of November 30,
1995 have been prepared by Augusta Metronet, Inc. pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. Although management believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these interim financial statements be read in conjunction with
the Company's most recent audited financial statements and notes thereto. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the results of operations and
cash flows for the interim period presented have been made. Operating results
for the interim period presented are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995.

2. ACQUISITION AGREEMENT

On December 1, 1995, Augusta Metronet, Inc., which owned the license to
operate the non-wireline cellular system in the Augusta Metropolitan Statistical
Area, was acquired by Palmer Wireless Holdings, Inc. (a Delaware corporation)
for a purchase price of approximately $95,000,000.

F-57
<PAGE> 130

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Georgia Metronet, Inc.:

We have audited the accompanying consolidated statements of operations,
changes in stockholder's equity, and cash flows of Georgia Metronet, Inc. (a
Georgia corporation and a wholly owned subsidiary of GTE Mobile Communications,
Inc.) and subsidiaries for the years ended December 31, 1993 and 1994. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Georgia
Metronet, Inc. and subsidiaries for the years ended December 31, 1993 and 1994
in conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Atlanta, Georgia
September 29, 1995

F-58
<PAGE> 131

GEORGIA METRONET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(THOUSANDS)

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Revenues and Sales:
Service revenues............................................................... $ 7,314 $ 10,102
Equipment sales................................................................ 375 510
Other revenue.................................................................. 10 7
-------- --------
Total revenues and sales.................................................... 7,699 10,619
-------- --------
Costs and Expenses:
Cost of services............................................................... 1,873 3,255
Cost of equipment sales........................................................ 603 836
Selling, general and administrative............................................ 3,516 3,767
Depreciation................................................................... 1,022 1,055
Amortization................................................................... 1,218 1,231
-------- --------
Total operating expenses.................................................... 8,232 10,144
-------- --------
Net operating income (loss)................................................. (533) 475
Interest Expense, Net............................................................ (959) (1,269)
Other Income, Net................................................................ 37 3
-------- --------
Net Loss before Minority Interests............................................... (1,455) (791)
Minority Interests in Earnings of Partnerships................................... (1) (5)
-------- --------
Net Loss before Income Taxes..................................................... (1,456) (796)
Benefit from Income Taxes........................................................ (224) (15)
-------- --------
Net Loss......................................................................... $ (1,232) $ (781)
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-59
<PAGE> 132

GEORGIA METRONET, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(THOUSANDS)

<TABLE>
<CAPTION>
COMMON TOTAL
STOCK PAID-IN ACCUMULATED STOCKHOLDER'S
$1 PAR VALUE CAPITAL DEFICIT EQUITY
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992............................ -- $ 29,540 $(3,776) $25,764
Transfer of partner's interest...................... -- -- (1,241) (1,241)
Net loss for the year ended December 31, 1993....... -- -- (1,232) (1,232)
--
---------- ----------- ------------
Balance, December 31, 1993............................ -- 29,540 (6,249) 23,291
Net loss for the year ended December 31, 1994 -- -- (781) (781)
--
---------- ----------- ------------
Balance, December 31, 1994............................ -- $ 29,540 $(7,030) $22,510
========== ========== ========== ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-60
<PAGE> 133

GEORGIA METRONET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
(THOUSANDS)

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss....................................................................... $ (1,232) $ (781)
-------- --------
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation................................................................ 1,022 1,055
Amortization................................................................ 1,218 1,231
Losses from retirements of property and equipment........................... -- 191
Increase (decrease) in deferred income taxes................................ (65) 51
Increase in postretirement benefit obligation............................... 20 4
Increase in postemployment benefit obligation............................... 2 --
Minority interests in earnings of partnerships.............................. 1 5
Changes in current assets and current liabilities:
Decrease in income taxes receivable....................................... 784 373
Increase in accounts receivable........................................... (235) (928)
Decrease (increase) in inventories........................................ (66) 54
Increase in other current assets.......................................... -- (72)
Increase (decrease) in current liabilities, net of capital expenditures... (71) 674
Other, net.................................................................. (22) 6
-------- --------
Net cash provided by operating activities................................. 1,356 1,863
-------- --------
Cash Flows from Investing Activities:
Capital expenditures........................................................... (1,265) (2,095)
Purchase of additional partnership interests................................... (99) (64)
-------- --------
Net cash used in investing activities..................................... (1,364) (2,159)
-------- --------
Cash Flows from Financing Activities:
Repayment of note payable...................................................... (3,000) --
Increase in advances from GTE Mobilnet Incorporated............................ 3,008 296
-------- --------
Net cash provided by financing activities................................. 8 296
-------- --------
Change in Cash................................................................... -- --
Cash at Beginning of Year........................................................ 1 1
-------- --------
Cash at End of Year.............................................................. $ 1 $ 1
======== ========
Supplemental Schedule of Noncash Investing Activities:
Transfer of equipment to an affiliate, net..................................... $ 245 --
Increase (decrease) in accrual for capital expenditures........................ $ 225 $ (243)
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-61
<PAGE> 134

GEORGIA METRONET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994

1. ORGANIZATION AND NATURE OF BUSINESS

Georgia Metronet, Inc. (the "Company"), a wholly owned subsidiary of GTE
Mobile Communications Incorporated ("GTEMCI"), was incorporated in Georgia on
June 22, 1987. GTEMCI is a wholly owned subsidiary of GTE Corporation. The
Company, through its ownership interest in the Savannah Cellular Limited
Partnership ("SCLP"), provides cellular telephone services in Bryan, Chatham and
Effingham counties, Georgia.

As of December 31, 1993 and 1994, the Company held its interest in SCLP
both directly as a limited partner, and indirectly as a partner in the Savannah
Cellular General Partnership ("SGP"), the general partner of SCLP. As of
December 31, 1993, the Company held a 47.32 percent limited partnership interest
in SCLP and a 49.76 percent general partnership interest in SCLP. In 1994, the
Company purchased an additional .30 percent limited partnership interest giving
it a 97.38 percent ownership interest in SCLP. Effective March 6, 1995, GTE
Mobilnet Incorporated ("GTEMI"), an affiliate of GTEMCI, transferred its 1
percent ownership interest in SGP (which represented .50 percent of SCLP) to the
Company and dissolved SGP. As a result, the Company became the holder of a 97.88
percent interest in SCLP.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of both
partnerships in which the Company holds a controlling interest. Significant
intercompany transactions are eliminated in consolidation.

REVENUE RECOGNITION

OPERATING EXPENSES

Operating expenses include expenses directly by the Company, as well as an
allocation of administrative and other costs incurred by GTEMCI or its
affiliates. Refer to Note 4 for additional discussion of allocated and
affiliated expenses.

F-62
<PAGE> 135

GEORGIA METRONET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
INTEREST EXPENSE, NET

The statements of operations reflect total interest expense, net of
interest expense capitalized, as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
---------------------
1993 1994
------- --------
(THOUSANDS)
<S> <C> <C>
Interest expense................................................ $ (968) $ (1,282)
Interest capitalized............................................ 9 13
------- --------
Interest expense, net........................................... $ (959) $ (1,269)
======= ========
</TABLE>

Interest expense includes charges to the Company for funds advanced by
GTEMI. The interest rate on funds advanced to the Company is equivalent to
GTEMI's incremental borrowing rate, which fluctuated between 3.33% and 4.21%
during 1993 and between 3.32% and 5.47% during 1994.

INCOME TAXES

The components of the net benefit from income taxes are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
-----------------
1993 1994
------ -----
(THOUSANDS)
<S> <C> <C>
Current............................................................. $ (188) $ (67)
Deferred............................................................ (36) 52
------ -----
Total..................................................... $ (224) $ (15)
====== =====
</TABLE>

The following is a summary of the items which caused recorded income taxes
to differ from taxes computed using the statutory federal income tax rate:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
------------------
1993 1994
------ ------
(THOUSANDS)
<S> <C> <C>
Income tax benefit at statutory rate............................... $ (509) $ (279)
Decrease in tax benefit resulting from:
Amortization of goodwill......................................... 255 263
Retroactive impact of change in statutory federal tax rate....... 29 --
Other, net....................................................... 1 1
------ ------
Actual income tax benefit.......................................... $ (224) $ (15)
====== ======
</TABLE>

F-63
<PAGE> 136

GEORGIA METRONET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The Omnibus Budget Reconciliation Act of 1993 was enacted on August 10,
1993 and included a provision for an increase in the corporate federal income
tax rate by 1% to 35%, retroactive to January 1, 1993. As a result, $29,000 of
additional deferred tax expense was recorded in September 1993.

A summary of the components of the deferred income tax provision is as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
DECEMBER 31,
------------------
1993 1994
------ ------
(THOUSANDS)
<S> <C> <C>
Depreciation and amortization...................................... $ 217 $ 174
Gain/loss on sale of assets........................................ (45) (145)
Partnership book vs. tax differences............................... (217) 39
Bad debt expense................................................... 1 (31)
Retroactive impact of federal rate change.......................... 29 --
Other, net......................................................... (21) 15
------ ------
Total.................................................... $ (36) $ 52
====== ======
</TABLE>

As of December 31, 1993 and 1994, the Company had net operating loss
carryforwards for state tax purposes that exceeded its deferred state income tax
liabilities. Due to the uncertainty involved in realizing the tax benefit from
these loss carryforwards prior to expiration, the excess of state income tax
loss carryforwards and other deferred tax assets over deferred state income tax
liabilities has been reserved in a valuation allowance in accordance with
Statement of Financial Accounting Standards No. 109. The state income tax loss
carryforwards expire over the period from 2003 to 2009.

INVENTORIES

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and include certain capitalized
overheads (primarily engineering) and capitalized interest. The Company records
depreciation using the straight-line method over the estimated useful lives of
the assets, which are ten to twenty years for buildings and towers, seven to ten
years for cell equipment, and three to five years for furniture and fixtures and
other equipment. When property is retired, the cost of the property and the
related accumulated depreciation are removed from the balance sheet and any gain
or loss on the transaction is included in income.

See Note 4 concerning the transfer of equipment to an affiliate in 1993.
Retirements amounted to $303,000 of cost and $112,000 of accumulated
depreciation in 1994. There were no other retirements or transfers in the years
presented.

F-64
<PAGE> 137

GEORGIA METRONET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Assets under construction represent costs incurred for network expansion
and improvements and include allocated overheads (primarily engineering) and
capitalized interest. When these assets are placed in service, they are recorded
to the appropriate property and equipment accounts and depreciation begins.

EMPLOYEE BENEFIT PLANS

Costs allocated to the Company for this plan were $26,000 and $38,000 in
1993 and 1994, respectively.

The Service Corporation also allocates other postretirement and
postemployment expenses to the Company. The costs allocated in 1993 and 1994
were not material.

OTHER ASSETS, NET

3. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases office space and network sites under long-term operating
leases. The leases have options for renewal with provisions for increased rent
upon renewal. Rent expense for the years ended December 31, 1993 and 1994 was
$119,000 and $157,000, respectively, and is included in cost of services and
selling, general and administrative in the accompanying statements of
operations.

As of December 31, 1994, future minimum lease payments under noncancelable
operating leases were as follows:

<TABLE>
<S> <C>
1995...................................................................... $ 49,000
1996...................................................................... 40,000
1997...................................................................... 22,000
1998...................................................................... 14,000
1999...................................................................... 14,000
Subsequent years.......................................................... 45,000
---------
Total................................................................ $ 184,000
=========
</TABLE>

LEGAL AND REGULATORY MATTERS

F-65
<PAGE> 138

GEORGIA METRONET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
NOTE PAYABLE

Until March 1993, SCLP had a credit agreement with a finance corporation
that provided for borrowings up to $3,000,000. Borrowings under the agreement
were subject to interest at the 90-day United States Treasury bill rate plus
2.75%. The amount outstanding under the credit agreement was $3,000,000 at
December 31, 1992. The amount was paid in full in March 1993.

4. RELATED-PARTY TRANSACTIONS

On December 3, 1993, GTEMCI transferred its separate 23.77 percent interest
in SCLP to the Company. This transfer is reflected in the accompanying
consolidated statements of changes in stockholder's equity.

All transactions of the Company are authorized by GTEMCI. Many management
and administrative services are performed by the Service Corporation and GTEMI.
Services provided to the Company include support in major functional areas such
as accounting, information and cash management, human resources, legal,
marketing, billing, and technology planning. Costs attributable to these support
functions are included in cost of services and selling, general and
administrative in the accompanying statements of operations. These costs are
allocated to the Company based on various factors, which are modified
periodically to closely align costs with services received. Costs allocated to
the Company for these services were $1,692,000 and $1,941,000 in 1993 and 1994,
respectively.

Amounts paid by the Company to GTEMI for inventory purchases amounted to
$389,000 and $478,000 in 1993 and 1994, respectively.

GTEMI advances funds to the Company. Funds advanced to the Company are used
to cover construction and working capital requirements. Interest is calculated
on this balance as described in Note 2.

In 1993, the Company transferred its switch equipment with a cost of
$306,000 and accumulated depreciation of $61,000 to an affiliate. The transfer
was made at the Company's net book value at the date of the transaction. The
affiliate traded in this equipment, along with the equipment from several other
affiliates, for new switch equipment capable of serving each participating
company. The Company now makes payments to this affiliate for use of the new
switch. These payments cover maintenance, toll and interconnect charges. This
expense amounted to $61,000 and $224,000 in 1993 and 1994, respectively, and is
included in cost of services in the accompanying statements of operations.

The Company makes payments to an affiliate of GTEMCI for construction of
cell sites and other system property. Amounts paid or payable to this affiliate
were $6,000 and $23,000 in 1993 and 1994, respectively.

The Company purchases roamer administration, advertising, and other
operating services from affiliates whose business is the provision of such
services. GTEMCI believes the cost of these services to the Company of $124,000
and $98,000 in 1993 and 1994, respectively, was equivalent to the cost charged
by the affiliates to any of its external customers.

F-66
<PAGE> 139

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Georgia Metronet, Inc.:

We have reviewed the accompanying consolidated statements of operations,
changes in stockholder's equity, and cash flows of Georgia Metronet, Inc. (a
Georgia corporation and a wholly owned subsidiary of GTE Mobile Communications,
Inc.) and subsidiaries for the eleven-month period ended November 30, 1995.
These financial statements are the responsibility of the Company's management.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Atlanta, Georgia
January 29, 1996

F-67
<PAGE> 140

GEORGIA METRONET, INC.

CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1995
(THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED
NOVEMBER 30, 1995
-----------------
<S> <C>
Revenues and Sales:
Service revenues....................................................... $11,660
Equipment sales........................................................ 482
Other revenue.......................................................... 12
-----------------
Total revenues and sales............................................ 12,154
-----------------
Costs and Expenses:
Cost of services....................................................... 2,514
Cost of equipment sales................................................ 875
Selling, general and administrative.................................... 3,059
Depreciation........................................................... 938
Amortization........................................................... 1,133
-----------------
Total operating expenses............................................ 8,519
-----------------
Net operating income................................................ 3,635
Interest Expense, Net.................................................... (1,702)
Other Income, Net........................................................ 3
-----------------
Net Income before Income Taxes........................................... 1,936
-----------------
Provision for Income Taxes............................................... (1,250)
-----------------
Net Income............................................................... $ 686
===============
</TABLE>

The accompanying notes are an integral part of this statement.

F-68
<PAGE> 141

GEORGIA METRONET, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1995
(THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
COMMON TOTAL
STOCK PAID-IN ACCUMULATED STOCKHOLDER'S
$1 PAR VALUE CAPITAL DEFICIT EQUITY
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994............................. -- $ 29,540 $(7,030) $ 22,510
Contribution of minority interest.................... -- 179 -- 179
Net income for the eleven months ended November 30,
1995.............................................. -- -- 686 686
--
------------ ----------- ------------
Balance, November 30, 1995............................. -- $ 29,719 $(6,344) $ 23,375
========== ======== ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-69
<PAGE> 142

GEORGIA METRONET, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1995
(THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED
NOVEMBER 30, 1995
-----------------
<S> <C>
Cash Flows from Operating Activities:
Net income......................................................................... $ 686
-----------------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation.................................................................... 938
Amortization.................................................................... 1,133
Decrease in postretirement benefit obligation................................... (98)
Decrease in postemployment benefit obligation................................... (3)
Increase in deferred income taxes............................................... 216
Changes in current assets and current liabilities:
Increase in accounts receivable............................................... (117)
Decrease in income taxes receivable........................................... 256
Increase in inventories....................................................... (32)
Decrease in other current assets.............................................. 23
Decrease in current liabilities, net of capital expenditures.................. (78)
Other, net...................................................................... 1
-----------------
Net cash provided by operating activities..................................... 2,925
-----------------
Cash Flows from Investing Activities:
Capital expenditures............................................................... (40)
-----------------
Net cash used in investing activities......................................... (40)
-----------------
Cash Flows from Financing Activities:
Decrease in advances from GTE Mobilnet Incorporated................................ (2,885)
-----------------
Net cash used in financing activities......................................... (2,885)
-----------------
Increase in Cash..................................................................... --
-----------------
Cash at Beginning of Period.......................................................... 1
-----------------
Cash at End of Period................................................................ $ 1
===============
</TABLE>

The accompanying notes are an integral part of this statement.

F-70
<PAGE> 143

GEORGIA METRONET, INC.

NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated interim financial statements as of
November 30, 1995 have been prepared by Georgia Metronet, Inc. pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. Although management believes
that the disclosures are adequate to make the information presented not
misleading, it is suggested that these consolidated interim financial statements
be read in conjunction with the Company's most recent audited financial
statements and notes thereto. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary for a fair
presentation of the results of operations and cash flows for the interim period
presented have been made. Operating results for the interim period presented are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1995.

2. ACQUISITION AGREEMENT

On December 1, 1995, Georgia Metronet, Inc., which owned the license to
operate the non-wireline cellular system in the Savannah Metropolitan
Statistical Area, was acquired by Palmer Wireless Holdings, Inc. (a Delaware
corporation) for a purchase price of approximately $63,000,000.

F-71
<PAGE> 144

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholder of
USCOC OF GEORGIA RSA #1, INC.:

We have audited the accompanying balance sheet of USCOC OF GEORGIA RSA #1,
INC. (the "Company") (a Georgia Corporation) as of December 31, 1995, and the
related statements of operations, cash flows and retained earnings for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of USCOC OF GEORGIA RSA #1,
INC. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Chicago, Illinois
February 1, 1996

F-72
<PAGE> 145

USCOC OF GEORGIA RSA #1, INC.

BALANCE SHEET
DECEMBER 31, 1995
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ASSETS

<TABLE>
<S> <C>
Cash and cash equivalents................................................................. $ 45
Accounts receivable
Customers, less allowance of $5......................................................... 99
Affiliates.............................................................................. 246
Roaming................................................................................. 279
Other................................................................................... 1
Deferred tax asset -- current............................................................. 9
Inventory................................................................................. 40
Other current assets...................................................................... 7
--------
Total current assets................................................................. 726
Property, plant and equipment, net of accumulated depreciation of $378.................... 2,418
Deferred start-up costs, net of accumulated amortization of $36........................... 22
Other deferred charges, net of accumulated amortization of $4............................. 5
Investments in licenses, net of accumulated amortization of $1,078........................ 12,185
--------
Total asset.......................................................................... $ 15,356
========
</TABLE>

LIABILITIES AND SHAREHOLDER'S EQUITY

<TABLE>
<S> <C>
Accounts payable and accrued expenses..................................................... $ 142
Accounts payable and accrued interest -- affiliates....................................... 181
Notes payable -- affiliates............................................................... 2,480
Deferred revenues and customer deposits................................................... 27
Other current liabilities................................................................. 35
--------
Total current liabilities............................................................ 2,865
Deferred tax liability -- noncurrent...................................................... 119
--------
Total liabilities.................................................................... 2,984
Common stock, $1 par value, 1,000 shares authorized, 100 shares issued.................... --
Additional paid-in capital................................................................ 13,262
Retained earnings (deficit)............................................................... (890)
--------
Total shareholder's equity........................................................... 12,372
--------
Total liabilities and shareholder's equity........................................... $ 15,356
========
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-73
<PAGE> 146

USCOC OF GEORGIA RSA #1, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
($ IN THOUSANDS)

<TABLE>
<S> <C>
Revenues:
Service.................................................................................... $ 2,266
Equipment sales............................................................................ 37
------
Total revenues.......................................................................... 2,303
------
Expenses:
Cost of goods sold......................................................................... 210
Engineering and facilities................................................................. 657
Marketing and selling...................................................................... 306
Administrative............................................................................. 429
Depreciation and amortization.............................................................. 535
------
Total expenses.......................................................................... 2,137
------
Operating income............................................................................. 166
Other income................................................................................. 7
Interest expense............................................................................. (204)
------
Loss before income taxes..................................................................... (31)
Income tax expense........................................................................... (108)
------
Net loss..................................................................................... $ (139)
======
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-74
<PAGE> 147

USCOC OF GEORGIA RSA #1, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
($ IN THOUSANDS)

<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net loss from operations.................................................................. $ (139)
Add (deduct) adjustments to reconcile net loss from operations to net cash provided by
operating activities:
Depreciation and amortization.......................................................... 535
Change in accounts receivable.......................................................... (300)
Change in inventory.................................................................... (6)
Change in accounts payable/accrued expenses and accrued interest....................... 288
Change in deferred revenues and customer deposits...................................... 9
Change in deferred tax asset and liability, net........................................ 108
Change in other assets and liabilities................................................. 19
--------
Net cash provided by operating activities................................................. 514
--------
Cash Flows from Financing Activities:
Change in notes payable -- affiliates..................................................... 590
--------
Net cash provided by financing activities................................................. 590
--------
Cash Flows from Investing Activities:
Net additions to property, plant and equipment............................................ (1,137)
--------
Net cash required by investing activities................................................. (1,137)
--------
Net Decrease in Cash and Cash Equivalents................................................... (33)
Cash and Cash Equivalents
Beginning of period....................................................................... 78
--------
End of period............................................................................. $ 45
========
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-75
<PAGE> 148

USCOC OF GEORGIA RSA #1, INC.

STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
($ IN THOUSANDS)

<TABLE>
<S> <C>
Retained earnings (deficit) at December 31, 1994............................................ $ (751)
1995 Net loss............................................................................... (139)
------
Retained earnings (deficit) at December 31, 1995............................................ $ (890)
======
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-76
<PAGE> 149

USCOC OF GEORGIA RSA #1, INC.

NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)

1. ORGANIZATION

USCOC of Georgia RSA #1, Inc. (the "Company") was formed on December 16,
1991, under the laws of the State of Georgia for the purpose of providing
cellular telephone service in the Georgia Rural Service Area No. 1. The Company
commenced operations in October 1992.

The Company is a 100%-owned subsidiary of United States Cellular
Corporation ("USCC"), an 80.8%-owned subsidiary of Telephone and Data Systems,
Inc. ("TDS").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

a. Depreciation -- Depreciation is computed using the straight-line
method over the useful lives of the assets, which are estimated to be 3 to
25 years.

b. Operating Revenues -- Operating revenues primarily consist of
charges to customers for monthly access, cellular airtime usage, roamer
charges, equipment sales, toll charges and vertical services. The Company
recognizes revenues as services are rendered. Revenues earned but unbilled
at December 31, 1995 were $117 and are included in accounts receivable.
Unbilled revenues result from cellular service provided from the billing
cycle date to the end of each month and from other cellular carriers'
customers using the Company's cellular system for the last half of
December.

c. Cash and Cash Equivalents -- Cash and cash equivalents include cash
and those short-term, highly liquid investments with original maturities of
three months or less. The carrying amount reported in the balance sheet for
cash and cash equivalents approximates its fair value.

d. Accounts Receivable -- Accounts receivable consists of amounts owed
by customers for both service provided and equipment sales, by affiliated
entities and by other cellular carriers as a result of these carriers'
customers using the Company's cellular system.

e. Inventory -- Inventory is stated at the lower of cost or market,
using the specific identification method to determine cost.

f. Deferred Start-up Costs -- Deferred start-up costs represent
expenses for the costs incurred by the Company for the acquisition of site
locations, zoning approvals, and technical and other services including
related interest and other expenses, related to constructing and obtaining
necessary approvals and licenses to operate and prepare to operate the
cellular system. These costs are capitalized and are being amortized over
five years. Amortization of these costs began in November 1992, the first
full month of operations.

g. Investments in Licenses -- Investment in licenses consists of the
costs of acquiring Federal Communications Commission licenses. These costs
include amounts paid for legal, engineering and consulting services and
amounts incurred by the Company in acquiring these interests. License costs
are being amortized over 40 years. Amortization expense was $332 during
1995.

h. Deferred Revenues -- Deferred revenues primarily represent monthly
access fees billed in advance. Such revenues are recognized in the
following month when service is provided.

F-77
<PAGE> 150

USCOC OF GEORGIA RSA #1, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
i. Pension Plan -- USCC's employees, who manage the daily operations
of the Company, are eligible for United States Cellular Corporation's
Employees Pension Trust I (the "Pension Trust"). The Pension Trust is a
qualified noncontributory defined contribution pension plan, which began
effective January 1, 1994. It provides pension benefits for all employees
of USCC and its subsidiaries. Under this plan, pension benefits and costs
are calculated separately for each participant and are funded currently.
The Company's pension costs were $2 in 1995.

j. Accounting for the Impairment of Long-Lived Assets -- The Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, in March
1995, which became effective in January 1996. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be held and used
by any entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS No. 121 also requires that long-lived assets and certain
identifiable intangibles to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. The carrying amount of the
Company's long-lived assets at December 31, 1995 primarily represents the
original amounts invested less the recorded depreciation and amortization.
Management believes the carrying amount of these investments is not
impaired.

k. Supplemental Cash Flow Disclosures -- The Company paid an
immaterial amount of interest and converted $181 of accrued interest into
notes payable -- affiliates during 1995.

3. LEASE COMMITMENTS

The Company leases cell site locations and retail locations under operating
leases. Rent expense totaled $40 for the year ended December 31, 1995. Rent
expense for cell site locations is included in engineering and facilities
expense and rent expense for the retail locations is included in marketing and
selling expense.

Future minimum rental payments required under these operating leases, which
have an initial noncancellable lease term of more than one year as of December
31, 1995, are as follows:

<TABLE>
<S> <C>
1996.......................................................................... $ 40
1997.......................................................................... 26
1998.......................................................................... 23
1999.......................................................................... 19
2000.......................................................................... 19
Thereafter.................................................................... 105
-----
$ 232
=====
</TABLE>

F-78
<PAGE> 151

USCOC OF GEORGIA RSA #1, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS)

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost and consists of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Land and land improvements.............................................. $ 334
Leasehold improvements.................................................. 89
Buildings and equipment................................................. 2,276
Furniture and office equipment.......................................... 77
Vehicles................................................................ 20
------------
2,796
Less accumulated depreciation........................................... 378
------------
$2,418
===========
</TABLE>

5. NOTES PAYABLE -- AFFILIATES

The Company has notes payable to USCC of $2,480 at December 31, 1995. These
notes bear interest at a rate of prime plus one and one-half percent and become
due in 1996. The carrying value of the Company's borrowings from USCC
approximates its fair value, as the notes payable -- affiliates are variable
debt with the interest rate based on the prime rate.

6. INCOME TAXES

The Company records all deferred tax liabilities and assets for the
deferred tax consequences of all temporary differences. Additionally, deferred
tax balances are adjusted to reflect any new tax rates when they are enacted
into law.

The Company is included in a consolidated federal income tax return with
other members of the USCC consolidated group, and has available at December 31,
1995, unused operating loss carryforwards for state and federal purposes of
approximately $19, which may be applied against future taxable income, expiring
between 2007 and 2010.

The components of the income tax provisions charged to expenses are
summarized below:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Federal Income Taxes
Deferred.............................................................. $ 92
State Income Taxes
Deferred.............................................................. 16
------
Income Tax Expense...................................................... $108
===========
</TABLE>

Deferred income tax expense results primarily from temporary differences
caused by the change in the book and tax basis of property, plant and equipment
due to the use of different depreciation methods and lives from financial
reporting and income tax purposes.

The Company had noncurrent deferred tax liabilities totaling $126,
resulting primarily from accelerated depreciation on property, plant and
equipment and noncurrent deferred tax assets totaling $7, resulting from

F-79
<PAGE> 152

USCOC OF GEORGIA RSA #1, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
($ IN THOUSANDS)

6. INCOME TAXES -- (CONTINUED)
net operating loss carryforwards. The Company had current deferred tax assets of
$9 at December 31, 1995, resulting primarily from the allowance for customer
receivables.

7. CONCENTRATION OF CREDIT RISK

The Company provides cellular service and sells cellular telephones to a
diversified group of consumers within a concentrated geographical area. The
Company performs credit evaluations of the Company's customers and generally
does not require collateral. Receivables are generally due within 30 days.
Credit losses related to customers have been within management's expectations.

8. TRANSACTIONS WITH RELATED PARTIES

USCC and certain affiliates of TDS provide the Company with centralized
management, accounting, consulting and computer services which resulted in
billings to the Company of $279 during 1995. The Company earned roaming revenue
of $8 and incurred roaming expenses of $6 from certain affiliates of USCC during
1995. The Company incurred switching fees of $102 from certain affiliates of
USCC during 1995. The Company also received administrative and other services
from certain affiliates of USCC which resulted in net billings from those
affiliates of $73 during 1995.

F-80
<PAGE> 153

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholder of USCOC of GEORGIA RSA #1, INC.:

We have reviewed the accompanying condensed balance sheet of USCOC of
GEORGIA RSA #1, INC. (the "Company") (a Georgia Corporation) as of March 31,
1996, and the related condensed statements of operations, cash flows and
retained earnings for the three-month periods ended March 31, 1995 and 1996.
These financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of USCOC of GEORGIA RSA #1, INC. as of December 31,
1995, and the related statements of operations, cash flows and retained earnings
for the year then ended, and in our report dated February 1, 1996, we expressed
an unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of December
31, 1995, is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Chicago, Illinois,
May 6, 1996

F-81
<PAGE> 154

USCOC OF GEORGIA RSA #1, INC.
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents.................................................. $ 45 $ --
Accounts receivable
Customers, less allowance of $5 and $5, respectively..................... 99 102
Affiliates............................................................... 246 --
Roaming.................................................................. 279 335
Other.................................................................... 1 --
Deferred tax asset -- current.............................................. 9 9
Inventory.................................................................. 40 21
Other current assets....................................................... 7 11
------- -------
Total current assets................................................ 726 478
Property, plant and equipment, net of accumulated depreciation of $378 and
$434, respectively....................................................... 2,418 2,513
Deferred start-up costs, net of accumulated amortization of $36 and $41,
respectively............................................................. 22 19
Other deferred charges, net of accumulated amortization of $4 and $5,
respectively............................................................. 5 5
Investments in licenses, net of accumulated amortization of $1,078 and
$1,160, respectively..................................................... 12,185 12,102
------- -------
Total assets........................................................ $ 15,356 $15,117
======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable and accrued expenses...................................... $ 142 $ 153
Accounts payable and accrued interest -- affiliates........................ 181 63
Notes payable -- affiliates................................................ 2,480 2,281
Deferred revenues and customer deposits.................................... 27 29
Accrued taxes.............................................................. -- 52
Other current liabilities.................................................. 35 14
------- -------
Total current liabilities........................................... 2,865 2,592
Deferred tax liability -- noncurrent....................................... 119 130
------- -------
Total liabilities................................................... 2,984 2,722
Common stock, $1 par value, 1,000 shares authorized, 100 shares issued..... -- --
Additional paid-in capital................................................. 13,262 13,262
Retained earnings (deficit)................................................ (890) (867)
------- -------
Total shareholder's equity.......................................... 12,372 12,395
------- -------
Total liabilities and shareholder's equity.......................... $ 15,356 $15,117
======= =======
</TABLE>

The accompanying notes to the condensed financial statements are an integral
part of these condensed financial statements.

F-82
<PAGE> 155

USCOC OF GEORGIA RSA #1, INC.

CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
-----------------
1995 1996
------ ------
<S> <C> <C>
Revenues:
Service........................................................................... $ 511 $ 724
Equipment sales................................................................... 10 7
------- -------
---- ----
Total revenues............................................................... 521 731
------- -------
---- ----
Expenses:
Cost of goods sold................................................................ 42 63
Engineering and facilities........................................................ 133 147
Marketing and selling............................................................. 73 112
Administrative.................................................................... 93 121
Depreciation and amortization..................................................... 124 141
------- -------
---- ----
Total expenses............................................................... 465 584
------- -------
---- ----
Operating income.................................................................... 56 147
Other income........................................................................ 1 1
Interest expense.................................................................... (45) (61)
------- -------
---- ----
Income before income taxes.......................................................... 12 87
Income tax expense.................................................................. (43) (64)
------- -------
---- ----
Net income (loss)................................................................... $ (31) $ 23
======= =======
</TABLE>

CONDENSED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<S> <C> <C>
Retained earnings (deficit) at December 31, 1994 and 1995........................... $ (751) $ (890)
Net income (loss) for the three months ended March 31, 1995 and 1996................ (31) 23
------- -------
---- ----
Retained earnings (deficit) at March 31, 1995 and 1996.............................. $ (782) $ (867)
======= =======
</TABLE>

The accompanying notes to the condensed financial statements are an integral
part of these condensed financial statements.

F-83
<PAGE> 156

USCOC OF GEORGIA RSA #1, INC.

CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
-----------------
1995 1996
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) from operations................................................. $ (31) $ 23
Add (deduct) adjustments to reconcile net income (loss) from operations to net
cash provided by operating activities
Depreciation and amortization.................................................. 124 141
Change in accounts receivable.................................................. 7 188
Change in inventory............................................................ (1) 19
Change in accounts payable/accrued expenses and accrued interest............... -- (46)
Change in deferred revenues and customer deposits.............................. 3 2
Change in accrued taxes........................................................ -- 52
Change in deferred tax asset and liability, net................................ 43 11
Change in other assets and liabilities......................................... (3) (25)
------- -------
- --
Net cash provided by operating activities......................................... 142 365
------- -------
- --
Cash flows from financing activities:
Change in notes payable-affiliates................................................ -- (260)
------- -------
- --
Net cash required by financing activities......................................... -- (260)
------- -------
- --
Cash flows from investing activities:
Net additions to property, plant and equipment.................................... (115) (150)
------- -------
- --
Net cash required by investing activities......................................... (115) (150)
------- -------
- --
Net increase (decrease) in cash and cash equivalents................................ 27 (45)
Cash and cash equivalents
Beginning of period............................................................... 78 45
------- -------
- --
End of period..................................................................... $ 105 $ --
====== =======
</TABLE>

The accompanying notes to the condensed financial statements are an integral
part of these condensed financial statements.

F-84
<PAGE> 157

USCOC OF GEORGIA RSA #1, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(1)

The financial statements as of March 31, 1996, included herein have been
prepared by USCOC of Georgia RSA #1, Inc. (the "Company"), without audit.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to rules and regulations of the
Securities and Exchange Commission, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest audited
financial statements.

The accompanying unaudited financial statements as of March 31, 1996,
contain all adjustments (consisting of only normal recurring items) necessary to
present fairly the financial position as of March 31, 1996 and the results of
operations and cash flows for the three months ended March 31, 1995 and 1996.
The results of operations for the three months ended March 31, 1996, are not
necessarily indicative of the results to be expected for the full year.

(2)

The Company was formed on December 16, 1991, under the laws of the State of
Georgia for the purpose of providing cellular telephone service in the Georgia
Rural Service Area No. 1. The Company commenced operations in October 1992.

The Company is a 100%-owned subsidiary of United States Cellular
Corporation ("USCC"), an 80.8%-owned subsidiary of Telephone and Data Systems,
Inc. ("TDS").

On April 23, 1996, USCC and the Company entered into a Sale and Purchase
Agreement with Palmer Wireless Holdings, Inc.("Palmer") in which Palmer agreed
to purchase substantially all of the assets of the Company for cash
consideration.

F-85
<PAGE> 158

REPORT OF INDEPENDENT AUDITORS

The Board of Horizon, G.P., Inc.

We have audited the accompanying balance sheets of Horizon Cellular
Telephone Company of Spalding, L.P., a majority-owned subsidiary of Horizon
Cellular Telephone Company, L.P., as of December 31, 1994 and 1995, and the
related statements of operations, partners' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Horizon Cellular Telephone
Company of Spalding, L. P. at December 31, 1994 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
April 5, 1996

F-86
<PAGE> 159

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................................... $ 119 $ 2
Accounts receivable, net of allowance for doubtful accounts of $16 and $66..... 614 1,027
Inventory...................................................................... 86 43
Prepaid expenses............................................................... 55 35
------- -------
Total current assets................................................... 874 1,107
Property and equipment:
Cellular system................................................................ 4,223 4,908
Other.......................................................................... 270 437
------- -------
4,493 5,345
Accumulated depreciation......................................................... (990) (1,609)
------- -------
3,503 3,736
License, net of accumulated amortization of $668 and $1,092...................... 16,050 15,626
Other assets, net of accumulated amortization of $5 and $8....................... 16 13
------- -------
Total assets........................................................... $20,443 $20,482
======= =======
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 142 $ 200
Accrued expenses............................................................... 273 355
Deferred revenue............................................................... 71 122
Customer deposits.............................................................. 16 36
------- -------
Total current liabilities.............................................. 502 713
Advances from affiliates......................................................... 13,541 14,513
Commitments and contingencies
Partners' equity:
Partners' contributions........................................................ 9,221 9,221
Cumulative net loss............................................................ (2,821) (3,965)
------- -------
Total partners' equity................................................. 6,400 5,256
------- -------
Total liabilities and partners' equity................................. $20,443 $20,482
======= =======
</TABLE>

See accompanying notes.

F-87
<PAGE> 160

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Revenues and sales:
Subscriber revenues............................................................ $ 1,016 $ 1,708
Roaming revenues............................................................... 1,168 2,207
Equipment sales................................................................ 93 149
------- -------
Total revenues and sales............................................... 2,277 4,064
Cost and expenses:
Cost of services............................................................... 506 760
Cost of equipment sales........................................................ 303 419
General and administrative expenses............................................ 620 801
Selling........................................................................ 337 737
Depreciation and amortization.................................................. 907 1,047
------- -------
2,673 3,764
------- -------
(Loss) income from operations.................................................... (396) 300
Interest expense................................................................. 1,287 1,444
------- -------
Net loss............................................................... $(1,683) $(1,144)
======= =======
</TABLE>

See accompanying notes.

F-88
<PAGE> 161

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

STATEMENTS OF PARTNERS' EQUITY

<TABLE>
<CAPTION>
HORIZON
CELLULAR
TELEPHONE
COMPANY, L.P. KCCGP, L.P. TOTAL
------------- ----------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Partners' equity at December 31, 1993............................... $ 8,002 $ 81 $ 8,083
Net loss.......................................................... (1,666) (17) (1,683)
------- ---- -------
Partners' equity at December 31, 1994............................... 6,336 64 6,400
Net loss.......................................................... (1,133) (11) (1,144)
------- ---- -------
Partners' equity at December 31, 1995............................... $ 5,203 $ 53 $ 5,256
======= ==== =======
</TABLE>

See accompanying notes.

F-89
<PAGE> 162

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-------------------
1994 1995
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss......................................................................... $(1,683) $(1,144)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization.................................................. 907 1,047
Provision for bad debts........................................................ 92 64
Noncash interest expense....................................................... 1,287 1,444
Changes in operating assets and liabilities:
Accounts receivable......................................................... (395) (477)
Inventory................................................................... (58) 43
Prepaid expenses............................................................ (43) 20
Accounts payable, accrued expenses, and customer deposits................... 120 160
Deferred revenue............................................................ 45 51
------- -------
Net cash provided by operating activities........................................ 272 1,208
INVESTING ACTIVITIES
Purchases of property and equipment.............................................. (740) (852)
Other............................................................................ (3) --
------- -------
Net cash used in investing activities............................................ (743) (852)
FINANCING ACTIVITIES
Advances from affiliates, net.................................................... 256 (473)
------- -------
Net cash provided by (used in) financing activities.............................. 256 (473)
------- -------
Net decrease in cash............................................................. (215) (117)
Cash at beginning of period...................................................... 334 119
------- -------
Cash at end of period............................................................ $ 119 $ 2
======= =======
</TABLE>

See accompanying notes.

F-90
<PAGE> 163

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

1. DESCRIPTION OF BUSINESS

Horizon Cellular Telephone Company of Spalding, L.P. (the "Company" or
"Spalding") is a limited partnership in which KCCGP, L.P. ("KCCGP") is the
managing and sole general partner, and Horizon Cellular Telephone Company, L.P.
("HCTC") is the sole limited partner. The Company was formed in 1992 to own,
design, develop, and operate a cellular communications system in the Georgia
non-wireline Rural Service Area No. 6 ("GA-6").

In March 1993, HCTC acquired the Federal Communications Commission ("FCC")
GA-6 Construction Permit (the "Construction Permit") pursuant to an acquisition
Agreement dated March 8, 1993 between HCTC and the holder (the "Seller") of the
Construction Permit, for $6.5 million in cash, a $7.5 million subordinated note
payable to the seller and issuance of 25 HCTC limited partnership units with a
stated value of $2.5 million. Also in March 1993, HCTC contributed the
Construction Permit to Spalding in exchange for a 99.0% interest in the Company
valued at approximately $9.1 million (based on total acquisition cost to HCTC).
KCCGP contributed approximately $92,000 to Spalding for a 1.0% interest in the
Company.

Pursuant to the partnership agreement, the Company's net profits and losses
are allocated proportionately to the partners based upon their respective
ownership interests. The partnership shall terminate in December 2002, however,
the partners may extend the term of the partnership for up to three consecutive
one-year periods.

The GA-6 system became operational in April 1993, at which time the Company
obtained the applicable FCC Operating License.

2. BASIS OF PRESENTATION

The accompanying financial statements reflect the financial position,
results of operations and cash flows of Spalding for the periods presented.
KCCGP performs certain administrative functions for Spalding and, accordingly,
certain expenses of KCCGP (see Note 5) have been allocated to the Company on a
basis which, in the opinion of management, is reasonable. However, such
expenditures are not necessarily indicative of, and it is not practicable for
management to estimate, the nature and level of expenses which might have been
incurred had the system been operating as a separate independent company.

3. ACCOUNTING POLICIES

INVENTORIES

Inventories are carried at the lower of cost (using the first-in, first-out
method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated over their
estimated useful lives (three to twelve years) using the straight-line method.

Depreciation expense amounted to approximately $478,000 in 1994 and
$620,000 in 1995.

LICENSE

License primarily represents the acquisition cost of the Construction
Permit. Such costs are being amortized over a period of 40 years using the
straight-line method.

The Company periodically reviews the carrying value of its license to
determine whether such amount is recoverable based on undiscounted future cash
flows and whether a reduction to fair value is necessary. There have been no
such reductions through December 31, 1995.

F-91
<PAGE> 164

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. ACCOUNTING POLICIES -- (CONTINUED)
ADVANCES FROM AFFILIATES

Advances from affiliates primarily represent cash advances from HCTC and
KCCGP which provided funds for investing and operating activities, and have no
specific repayment terms. Interest expense is charged monthly at a rate of
11 3/8% of the ending balance payable to HCTC. Also included in advances from
affiliates are direct costs, including payroll and related benefits, charged by
an affiliated system, as incurred (see Note 5).

REVENUE AND EXPENSE RECOGNITION

Cellular airtime revenue and access charges are recognized as service is
provided. Cellular airtime is billed in arrears and a majority of access charges
are billed in advance. Subscriber acquisition costs (mainly commissions and loss
on equipment sales) are expensed when incurred. Accounts receivable consist
mainly of amounts due from subscribers and other cellular companies whose
subscribers use the Company's cellular service.

Approximately 25% of the Company's 1995 roaming revenues were generated
from subscribers of a cellular company serving an adjacent market when such
subscribers place or receive calls on the Company's system.

ADVERTISING EXPENSES

Advertising expenses are charged to operations as incurred and amounted to
approximately $64,000 and $87,000 in 1994 and 1995, respectively.

INCOME TAXES

The Company is a limited partnership organized under the laws of Delaware.
Accordingly, federal and state income taxes are not paid at the partnership
level but by the ultimate partners of the Company. The tax basis of the
Company's assets amounted to approximately $16.1 million and $15.6 million at
December 31, 1994 and 1995, respectively.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NEW ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. The Company will adopt SFAS 121 in the first quarter of 1996
and, based upon current circumstances, does not believe the effect of the
adoption will be material.

SFAS No. 123, "Accounting for Stock-Based Compensation," is effective for
fiscal years beginning after December 15, 1995. SFAS 123 provides companies with
a choice to follow the provisions of SFAS 123 in determining stock-based
compensation expense or to continue with the provisions of APB 25, "Accounting
for Stock Issued to Employees." The Company expects to continue to follow APB 25
in respect to the LPAR Plan

F-92
<PAGE> 165

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. ACCOUNTING POLICIES -- (CONTINUED)
(see Note 6) and will provide disclosures as required by SFAS 123 in the
December 31, 1996 notes to the financial statements.

4. COMMITMENTS AND CONTINGENCIES

The Company leases office space, office equipment and cellular sites and
facilities under operating leases with initial terms ranging from 1 to 20 years.
Most cellular sites contain renewal options ranging up to 25 years.

Future minimum payments under noncancelable operating leases with initial
terms of one year or more consisted of the following at December 31, 1995,
assuming cellular site leases are renewed through the year 2000:

<TABLE>
<CAPTION>
CELLULAR
SITES OTHER
-------- -----
(IN THOUSANDS)
<S> <C> <C>
1996....................................................... $ 98 $27
1997....................................................... 102 25
1998....................................................... 110 6
1999....................................................... 117 --
2000....................................................... 118 --
---
$58
===
</TABLE>

The minimum lease payments for cellular sites in the year 2000 are expected
to approximate the minimum payments thereafter, subject to contractual increases
and payments for additional sites.

Rental expense amounted to approximately $86,000 in 1994 and $115,000 in
1995.

The Company has guaranteed and pledged substantially all of its assets as
collateral for certain debt of HCTC.

5. RELATED PARTY TRANSACTIONS

KCCGP provides various administrative services to the Company, including
accounting, engineering, and marketing and advertising services, in addition to
funding working capital requirements and capital expenditures as necessary.
These expenses are charged, first on the basis of direct usage when
identifiable, with the remainder allocated equally among its operating systems.
Allocated expenses amounted to $40,000 and $50,000 in 1994 and 1995,
respectively.

The Company is operated jointly with an affiliated system. Operating
expenses, including depreciation and amortization, repairs and maintenance,
advertising, telephone, utilities, and other direct costs are charged directly
to operations as incurred. Certain costs of managerial and accounting personnel
centrally located for the benefit of both systems are allocated equally among
the two systems, and amounted to $35,000 and $263,000 in 1994 and 1995,
respectively.

6. BENEFIT PLANS

HCTC has granted an officer of the Company limited partnership appreciation
rights in HCTC pursuant to a Limited Partnership Unit Appreciation Rights Plan
("LPAR Plan") that was adopted September 1, 1994 to be effective January 1,
1993. Upon the occurrence of certain events as specified therein ("Termination
Events"), participants are entitled to share in the amounts, if any, of
distributions to HCTC's partners after all capital contributions made by HCTC's
partners have been repaid, together with a fixed return on such contributions.
Such rights vest over a period of five years, however vesting is automatically
accelerated upon the occurrence

F-93
<PAGE> 166

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. BENEFIT PLANS -- (CONTINUED)
of a Termination Event. Compensation expense will be recognized when
distributions become probable under the LPAR Plan.

Effective July 1, 1994, KCCGP established an employee savings plan (the
"Plan") that qualifies as a deferred salary arrangement under Section 401(k) of
the Internal Revenue Code. Under the Plan, which covers employees of the Company
who have met certain eligibility requirements, participating employees may defer
up to 15% of their pretax earnings, up to the Internal Revenue Service annual
contribution limit ($9,240 for calendar year 1995). The Company matches up to
50% of the employee's contributions, up to a maximum of 3% of the employee's
earnings. Employees who participate in the LPAR Plan are excluded from matching
contributions. Matching Plan contributions, which vest equally over five years,
amounted to approximately $3,000 and $4,000 in 1994 and 1995, respectively.

7. SUBSEQUENT EVENT

On March 22, 1996, the Company entered into a definitive agreement to sell
the GA-6 FCC Operating license, together with certain operating assets and
liabilities, to affiliates of Palmer Wireless, Inc. for approximately $35
million. The financial statements do not reflect either the estimated gain, or
any expenses incurred or expected to be incurred related to the sale of the
system. The sale is expected to close during the third quarter of 1996, and is
subject to certain regulatory and other approvals.

F-94
<PAGE> 167

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

The Board of Horizon, G.P., Inc.

We have reviewed the accompanying condensed balance sheet of Horizon
Cellular Telephone Company of Spalding, L.P., a majority-owned subsidiary of
Horizon Cellular Telephone Company, L.P., as of March 31, 1996 and the related
condensed statements of operations, and cash flows for the three-month periods
ended March 31, 1995 and 1996. These financial statements are the responsibility
of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, which has as its
objective expressing an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed financial statements referred to
above for them to be in accordance with generally accepted accounting
principles.

We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Horizon Cellular Telephone Company of Spalding,
L.P. as of December 31, 1995, and the related statements of operations,
partners' equity, and cash flows for the year then ended, and in our report
dated April 5, 1996, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.

/s/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
May 13, 1996

F-95
<PAGE> 168

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
1996
-----------
DECEMBER 31,
1995 (UNAUDITED)
------------
(NOTE)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash..................................................................... $ 2 $ 39
Accounts receivable, net of allowance for doubtful accounts of $66 and
$80................................................................... 1,027 998
Inventory................................................................ 43 67
Prepaid expenses......................................................... 35 37
------- -------
Total current assets.................................................. 1,107 1,141
Property and equipment:
Cellular system.......................................................... 4,908 5,113
Other.................................................................... 437 454
------- -------
5,345 5,567
Accumulated depreciation................................................... (1,609) (1,776)
------- -------
3,736 3,791
License, net of accumulated amortization of $1,092 and $1,198.............. 15,626 15,520
Other assets, net of accumulated amortization of $8 and $9................. 13 12
------- -------
Total assets.......................................................... $ 20,482 $20,464
======= =======
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable......................................................... $ 200 $ 339
Accrued expenses......................................................... 355 367
Deferred revenue......................................................... 122 128
Customer deposits........................................................ 36 32
------- -------
Total current liabilities............................................. 713 866
Advances from affiliates................................................... 14,513 14,350
Partners' equity:
Partners' contributions.................................................. 9,221 9,221
Cumulative net loss...................................................... (3,965) (3,973)
------- -------
Total partners' equity................................................ 5,256 5,248
------- -------
Total liabilities and partners' equity................................ $ 20,482 $20,464
======= =======
</TABLE>

See accompanying notes.

F-96
<PAGE> 169

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
----------------
1995 1996
----- ------
(IN THOUSANDS)
<S> <C> <C>
Revenues and sales:
Subscriber revenues............................................................. $ 372 $ 602
Roaming revenues................................................................ 367 729
Equipment sales................................................................. 23 54
------ ------
Total revenues and sales................................................... 762 1,385
Costs and expenses:
Cost of services................................................................ 152 239
Cost of equipment sales......................................................... 70 90
General and administrative...................................................... 186 254
Selling......................................................................... 138 171
Depreciation and amortization................................................... 251 267
------ ------
797 1,021
------ ------
(Loss) income from operations..................................................... (35) 364
Interest expense.................................................................. 345 372
------ ------
Net loss.......................................................................... $(380) $ (8)
====== ======
</TABLE>

See accompanying notes.

F-97
<PAGE> 170

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
---------------
1995 1996
----- -----
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss............................................................................ $(380) $ (8)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization..................................................... 251 267
Provision for bad debts........................................................... 8 5
Noncash interest expense.......................................................... 345 372
Changes in operating assets and liabilities:
Accounts receivable............................................................ 113 24
Inventory...................................................................... 10 (24)
Prepaid expenses............................................................... 19 (2)
Accounts payable, accrued expenses and customer deposits....................... (230) (45)
Deferred revenue............................................................... 8 6
----- -----
Net cash provided by operating activities........................................... 144 595
INVESTING ACTIVITIES
Purchases of property and equipment, net of $192 purchased on account in 1996....... (318) (23)
----- -----
Net cash used in investing activities............................................... (318) (23)
FINANCING ACTIVITIES
Advances from affiliates, net....................................................... 223 (535)
----- -----
Net cash provided by (used in) financing activities................................. 223 (535)
----- -----
Net increase in cash................................................................ 49 37
Cash at beginning of period......................................................... 119 2
----- -----
Cash at end of period............................................................... $ 168 $ 39
====== ======
</TABLE>

See accompanying notes.

F-98
<PAGE> 171

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)

1. BASIS OF PRESENTATION

Horizon Cellular Telephone Company of Spalding, L.P. (the "Company" or
"Spalding") is a limited partnership in which KCCGP, LP, ("KCCGP") is the
managing and sole general partner, and Horizon Cellular Telephone Company, LP,
("HCTC") is the sole limited partner. The Company was formed in 1992 to own,
design, develop, and operate a cellular communications system in the Georgia
non-wireline Rural Service Area No. 6 ("GA-6").

The accompanying unaudited financial statements reflect the financial
position, results of operations and cash flows of the Company for the periods
presented. KCCGP performs certain administrative functions for Spalding and,
accordingly, certain expenses have been allocated to the Company on a basis
which, in the opinion of management, is reasonable (see Note 5). However, such
expenditures are not necessarily indicative of, and it is not practicable for
management to estimate, the nature and level of expenses which might have been
incurred had the system been operating as a separate independent company.

The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three-month period ended March 31,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996.

2. USE OF ESTIMATES

3. NEW ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the asset's
carrying amount. The Company adopted SFAS 121 in the first quarter of 1996 and
the effect of the adoption was not material.

4. ADVANCES FROM AFFILIATES

F-99
<PAGE> 172

HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.

NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

4. ADVANCES FROM AFFILIATES -- (CONTINUED)
monthly at a rate of 11 3/8% of the ending balance payable to HCTC. Also
included in advances from affiliates are direct costs, including payroll and
related benefits, charged by an affiliated system, as incurred.

5. RELATED PARTY TRANSACTIONS

Effective September, 1995, the Company began operating jointly with an
affiliated system. Operating expenses, including depreciation and amortization,
repairs and maintenance, advertising, telephone, utilities, and other direct
costs are charged directly to operations as incurred. Certain costs of
managerial and accounting personnel centrally located for the benefit of both
systems are allocated equally among the two systems, and amounted to
approximately $34,000 for the three months ended March 31, 1996.

6. RECENT DEVELOPMENTS

On March 22, 1996, the Company entered into a definitive agreement to sell
the GA-6 FCC operating license, together with certain operating assets and
liabilities, to affiliates of Palmer Wireless, Inc. for approximately $35
million. The financial statements do not reflect either the estimated gain, or
any expenses incurred or expected to be incurred related to the sale of the
system. The sale is expected to close during the third quarter of 1996, and is
subject to certain regulatory and other approvals.

F-100
<PAGE> 173

(This page intentionally left blank)
<PAGE> 174

(This page intentionally left blank)
<PAGE> 175
The photographs depict individuals using their cellular telephones in various
settings.
<PAGE> 176

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary....................... 3
Risk Factors............................. 11
The Company.............................. 16
The Exchange............................. 17
Use of Proceeds.......................... 18
Price Range of Class A Common Stock and
Dividend Policy........................ 19
Capitalization........................... 20
Selected Consolidated Financial Data..... 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 23
Business................................. 36
Management............................... 52
Transactions and Relationships with PCI
and Its Affiliates..................... 58
Principal Stockholders................... 61
Description of Capital Stock............. 63
Shares Eligible for Future Sale.......... 67
Underwriting............................. 68
Legal Matters............................ 69
Experts.................................. 69
Additional Information................... 71
Index to Financial Statements............ F-1
</TABLE>

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

5,000,000 SHARES

PALMER WIRELESS, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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

LOGO

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

GOLDMAN, SACHS & CO.

SALOMON BROTHERS INC
WHEAT FIRST BUTCHER SINGER
REPRESENTATIVES OF THE UNDERWRITERS

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