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  • 1. FINAL TRANSCRIPTConference Call TranscriptAT - Q2 2005 Alltel Corp. Earnings Conference CallEvent Date/Time: Aug. 04. 2005 / 8:30AM ETEvent Duration: N/A Thomson StreetEvents streetevents@thomson.com 617.603.7900 www.streetevents.com 1 2005 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

2. FINAL TRANSCRIPTAug. 04. 2005 / 8:30AM, AT - Q2 2005 Alltel Corp. Earnings Conference CallCORPORATE PARTICIPANTS Rob Clancy Alltel Corp. - VP, IR Scott Ford Alltel Corp. - President, CEO Kevin Beebe Alltel Corp. - Group President, Operations Jeff Gardner Alltel Corp. - CFO, EVP CONFERENCE CALL PARTICIPANTS Frank Louthan Raymond James - Analyst Thomas J. Lee J.P. Morgan - Analyst Tom Seitz Lehman Brothers - Analyst Collette Fleming UBS - Analyst David Janazzo Merrill Lynch - Analyst Mike McCormack Bear Stearns - Analyst Viktor Shvets Deutsche Bank - Analyst Donna Jaegers Janco Partners - AnalystPRESENTATIONOperatorGood morning. My name is Aileen and I will be your conference facilitator today. At this time, I would like to welcome everyone to the second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [OPERATOR INSTRUCTIONS] Mr. Clancy, you may begin, sir. Rob Clancy - Alltel Corp. - VP, IRThank you, Aileen, and good morning, everyone. Welcome to Alltel's second quarter 2005 conference call. My name Rob Clancy and I lead the Investor Relations department for Alltel Corporation. Thank you for participating in a discussion of our second quarter results this morning.Today's conference call was preceded by our second quarter 2005 earning release. This press release has been distributed on the newswires and is available from our website at www.alltel.com. Today's conference call should be considered together with our press release and related financial information.Today's discussion includes statements about expected future events and future financial results that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events or results to differ materially from those expressed in such statements. Other factors that could cause actual results of Alltel to differThomson StreetEvents streetevents@thomson.com 617.603.7900 www.streetevents.com 2 2005 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. 3. FINAL TRANSCRIPTAug. 04. 2005 / 8:30AM, AT - Q2 2005 Alltel Corp. Earnings Conference Callmaterially, many of which are beyond the control of Alltel, include, but are not limited to the items listed in the Safe Harbor statement contained in our second quarter 2005 earnings press release.Additionally, today's discussion will include certain non-GAAP financial measures. Again, we refer you to the Investor Relations section of our website where we have posted our earnings release and supplemental materials, which contain information regarding these non-GAAP financial measures. Including a reconciliation of such measure to the most directly comparable GAAP measure.Note that a live webcast is available on our website. To access the call, go to IR section and click on the "live webcast" link. This section also provides comprehensive I have financial information about the Company, electronic mail alerts, Company presentations and corporate governance information.Participating in our earnings discussion this morning are Scott Ford, Alltel President and Chief Executive Officer; Kevin Beebe, Alltel Group President, Operations; and Jeff Gardner, Alltel Executive Vice President and Chief Financial Officer. At the end of the call, we will take a few questions.WITH THAT, HERE IS SCOTT FORD.Scott Ford - Alltel Corp. - President, CEOThank you, Rob. Good morning, everybody. Glad you can join us for the call today. We have had a very busy second quarter and we've got a lot to talk about this morning. I will start with an overview of our business results for the quarter, then discuss the Western Wireless merger, and conclude with an update on three important initiatives we currently have underway. The required divestitures of certain Western Wireless domestic properties, the status of Western Wireless' international business, and our latest thinking on the long-term prospects of the U.S. wireless and wireline industries and how that drives our thinking about structure. Kevin will walk you through the operational highlights of the quarter, as well as update you on our transition plans for our recently-acquired markets and for Western Wireless, and then Jeff is going to take you through the financial overview.Now our year-over-year results are affected by a number of smaller transactions completed over the past several months. Recall that in the fourth quarter of '04 we acquired properties from U.S. Cellular and MobileTel in Georgia, Ohio, Florida and Louisiana. In the first quarter of '05, we acquired properties from Public Service Cellular in Georgia, and in the second quarter, we a acquired properties from Cingular in Oklahoma, Kentucky, Mississippi, Kansas and Connecticut. Collectively, these markets represent just under 4% of our wireless customer base, and they are each in various stages of the network, handset, branding and billing system conversion process.Consistent with past acquisitions that require technology change, we have a track record of improving the operational and financial performance after we make the necessary investments in the business. The newly acquired properties I just mentioned are no different, and while we have much work ahead of us we are encouraged with the opportunities these new markets present. In discussing our results this morning, we will give you additional insight into our business by making reference to our Heritage markets, which will exclude the effect of these acquisitions.Let me start with our GAAP results. We are pleased to report that for the second quarter of '05, Alltel achieved $1.27 of fully-diluted earnings per share on a GAAP basis. Which includes a gain from the sale of our Fidelity National stock and a gain resulting from the exchange of wireless partnership interest with Cingular, which were part of the recent acquisitions I just mentioned. These gains were partially offset by prepayment charges on a $450 million bond issue that we retired early. Excluding these items, Alltel achieved fully-diluted earnings per share of $0.90 from current businesses, an increase of 6% year-over-year.This quarter, consolidated revenues and operating income grew 11% and 3% respectively, led by strong performance in our wireless business, which had revenue growth of 16% year-over-year, and segment income growth of 17%. In our Heritage wireless markets, revenue and operating income grew 11% and 14% respectively. In our wireline business, revenue declined 2% year-over-year and segment income declined 8%. The wireline group continues to produce industry-leading margin, cash cost per customer and return on capital numbers. But on this largely fixed cost business, any customer decline, however slight, is margin effecting.Our Heritage business has performed well for the first half of the year. We have been able expand our wireless operations while continuing to finance our business conservatively. In fact, at the end of the quarter, our net debt to operating income before depreciation and amortization or OBITDA, as it's pronounced around here, was less than 1 times at 0.9 times, and net debt to total capital was down to only 26%. Even after the addition of Western Wireless, assuming the expected disposition of all international assets, which I will talk now a moment, our pro forma credit metrics are very healthy, with net debt to OBITDA of 1.2 times and net debt to total cap of 27%. Thomson StreetEvents streetevents@thomson.com 617.603.7900 www.streetevents.com 3 2005 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. 4. FINAL TRANSCRIPTAug. 04. 2005 / 8:30AM, AT - Q2 2005 Alltel Corp. Earnings Conference Call As most of you know, the Western Wireless merger became effective August 1st. On behalf of everyone here at Alltel, let me welcome our newest colleagues from Western Wireless. We are excited to have you on the team, grateful for the hard work you have put into building such a fine business, and look forward to a great future together. I know that the transition issues over the next couple of months will be bumpy, they always are, but stay with us, they always sort themselves out in time.Both the DOJ and SEC approvals of the transaction were conditioned upon the divestiture of 16 markets in Nebraska, Kansas and Arkansas. The DOJ has appointed a trustee to manage these markets, and with the help of Western Wireless we have established a separate team to manage and support these markets. We have begun discussions with several parties interested in purchasing these markets and currently anticipate that we will be in compliance with the order of disposal within the four-month allotted time frame.Since announcing our intent to merge with Western Wireless in January, the industry structure abroad has changed rapidly, with consolidation currently taking place in several European countries. Accordingly, as the operations in Ireland and Austria have seen significant growth over the past year and the international team at Western has delivered great financial results, these properties have drawn the interest from