##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K





(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2007

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to
.

Commission File Number: 000-51798





NTELOS Holdings Corp.

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 36-4573125                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

401 Spring Lane, Suite 300, PO Box 1990, Waynesboro, Virginia 22980

(Address of principal executive offices) (Zip Code)

(540) 946-3500

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



|                              |  |                                          
|----------------------------- |  | -----------------------------------------
|Title of each class           |  | Name of each exchange on which registered
|Common stock, $0.01 par value |  | The NASDAQ Stock Market LLC              

Securities registered pursuant to Section 12(g) of the Act:

None





Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    x  Yes     ̈  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     ̈  Yes    x  No

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    x  Yes     ̈  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer
or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer   ̈    Non-accelerated filer   ̈    Smaller reporting company   ̈

(Do not check if a smaller reporting company)

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     ̈  Yes    x  No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2007 was $815,979,843
(based on the closing price for shares of the registrants common stock as reported on the NASDAQ Global Market on that date). In determining this figure, the registrant has assumed that all of its directors, executive officers and persons
owning 10% or more of the outstanding common stock are affiliates. This assumption shall not be deemed conclusive for any other purpose.

There were
42,063,680 shares of the registrants common stock outstanding as of the close of business on February 22, 2008.

DOCUMENTS
INCORPORATED BY REFERENCE



|                                                            |  |                  
|----------------------------------------------------------- |  | -----------------
|Document                                                    |  | Incorporated Into
|Proxy statement for the 2008 Annual Meeting of Stockholders |  | Part III         









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##### Table of Contents

NTELOS HOLDINGS CORP.

2007 ANNUAL REPORT ON FORM 10-K

INDEX



|           |  |                                                                                                              |  |    
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | ---
|Part I.    |  |                                                                                                             
|           |  |                                                                                                             
|Item 1.    |  | Business                                                                                                     |  | 2  
|           |  |                                                                                                             
|Item 1A.   |  | Risk Factors                                                                                                 |  | 19 
|           |  |                                                                                                             
|Item 1B.   |  | Unresolved Staff Comments                                                                                    |  | 32 
|           |  |                                                                                                             
|Item 2.    |  | Properties                                                                                                   |  | 32 
|           |  |                                                                                                             
|Item 3.    |  | Legal Proceedings                                                                                            |  | 33 
|           |  |                                                                                                             
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 33 
|           | 
|Part II.   |  |                                                                                                             
|           |  |                                                                                                             
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 33 
|           |  |                                                                                                             
|Item 6.    |  | Selected Financial Data                                                                                      |  | 36 
|           |  |                                                                                                             
|Item 7     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 37 
|           |  |                                                                                                             
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 65 
|           |  |                                                                                                             
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |  | 67 
|           |  |                                                                                                             
|Item 9.    |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 116
|           |  |                                                                                                             
|Item 9A.   |  | Controls and Procedures                                                                                      |  | 116
|           |  |                                                                                                             
|Item 9B.   |  | Other Information                                                                                            |  | 117
|           | 
|Part III.  |  |                                                                                                             
|           |  |                                                                                                             
|Item 10.   |  | Directors, Executive Officers and Corporate Governance                                                       |  | 118
|           |  |                                                                                                             
|Item 11.   |  | Executive Compensation                                                                                       |  | 118
|           |  |                                                                                                             
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 118
|           |  |                                                                                                             
|Item 13.   |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 118
|           |  |                                                                                                             
|Item 14.   |  | Principal Accountant Fees and Services                                                                       |  | 118
|           | 
|Part IV.   |  |                                                                                                             
|           |  |                                                                                                             
|Item 15.   |  | Exhibits, Financial Statement Schedules                                                                      |  | 119
|           | 
|Signatures |  | 121                                                                                                         



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PART I

FORWARD-LOOKING STATEMENTS

Any statements contained in this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words
anticipates, believes, expects, intends, plans, estimates, targets, projects, should, may, will and similar words and
expressions are intended to identify forward-looking statements. These forward-looking statements are contained throughout this report, for example in Business, Risk Factors, and Managements Discussion and
Analysis of Financial Condition and Results of Operations. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and
unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. All
forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report. Because of these risks, uncertainties and assumptions, you should
not place undue reliance on these forward-looking statements. These risks and other factors include those listed under Risk Factors and elsewhere in this report. Furthermore, forward-looking statements speak only as of the date they are
made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.



|Item 1. | Business.
|------- | ---------

Overview

We are a leading provider of wireless and wireline communications services to consumers and businesses primarily in Virginia and West Virginia under the
NTELOS brand name. Our wireless operations are composed of an NTELOS-branded retail business and a wholesale business that we operate under an exclusive contract with Sprint Spectrum L.P, an indirect wholly owned subsidiary of Sprint Nextel
Corporation (hereinafter collectively referred to as Sprint Nextel). We believe our regional focus and contiguous service area provide us with a differentiated competitive position relative to our primary wireless competitors, all of
whom are national providers. Our wireless revenues have experienced a 16.1% compound annual growth rate from 2005 to 2007 and accounted for 75% of our total revenues in 2007. We hold digital PCS licenses to operate in 29 basic trading areas with a
licensed population of approximately 8.8 million, and we have deployed a network using code division multiple access technology, or CDMA, in 20 basic trading areas which currently covers a total population of approximately 5.2 million
potential subscribers. As of December 31, 2007, our wireless retail business had approximately 407,000 NTELOS-branded subscribers, representing a 7.8% penetration of our total covered population.

We made significant investments in our wireless network in 2005, 2006 and 2007, adding 186 new wireless cell sites and increasing our total cell sites to 1,023 at the
end of 2007. These investments and other initiatives, including the increased take rate of national rate plans and enhanced data service offerings, contributed to a 10.8% increase in subscribers, a $2.39 increase in ARPU, and a 35 basis point
reduction in churn during 2007. We also amended our agreement with Sprint Spectrum L.P. during 2007 to act as their exclusive wholesale provider of network services through July 31, 2015. Under this arrangement, which we refer to as the
Strategic Network Alliance, we are the exclusive PCS service provider in our western Virginia and West Virginia service area for all Sprint Nextel CDMA wireless customers (see Business  Wireless Business  Our Strategic Network
Alliance with Sprint Nextel). Under the terms of the Agreement, we are committed to upgrading our wireless network to Evolution-Data Optimized Revision A (EV-DO) in the territory covered by the Agreement. We expect our aggregate
incremental capital expenditures for 2007 through 2009 for the upgrade to EV-DO in all of our markets to be approximately $65 million, of which $25 million was spent in 2007 and $35 million is expected to be spent in 2008. For the year ended
December 31, 2007, we realized wholesale revenues of $96.0 million, primarily related to the Strategic Network Alliance, representing an increase of 23.4% over the same period in 2006.

Founded in 1897, our wireline incumbent local exchange carrier business is conducted through two subsidiaries that qualify as rural local exchange carriers
(RLECs) under the Telecommunications Act. These two RLECs provide wireline communications services to residential and business customers in the western Virginia communities of Waynesboro, Covington, Clifton Forge and portions of
Botetourt and Augusta counties. As of December 31, 2007, we operated approximately 44,000 RLEC telephone access lines. We also own a 2,110-mile regional fiber optic



2



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network and participate in partnerships that directly connect our networks with many of the largest markets in the mid-Atlantic region. We leverage our
wireline network infrastructure to offer competitive voice and data communication services in Virginia and West Virginia outside our RLEC coverage area. Within our Competitive segment, we market and sell local and long distance, voice and data
services almost exclusively to business customers through our competitive local exchange carrier, or CLEC, and Internet Service Provider, or ISP, operation. As of December 31, 2007, we served customers with approximately 49,000 CLEC access line
connections. We also offer DSL services in over 95% of our RLEC service area and as of December 31, 2007 we operated approximately 20,000 broadband access connections in our markets, representing an increase of 17.4% in 2007. The wireline
Competitive segment strategic products (local phone services, broadband voice and data services and high-capacity network access and transport services) experienced revenue growth of 13.3% over 2006. In 2007 and 2006, our wireline operating income
margins were 31.4% and 33.2%, respectively. In late 2007, we introduced NTELOS video in selected neighborhoods within our two RLEC service areas. The product provides an alternative to cable and satellite TV, offering video entertainment services
with more than 200 all-digital channels and 18 high-definition channels. It is delivered via fiber to the home which allows us to deliver video, local and long distance telephone services, plus Internet access at speeds up to 20 megabits per second.
Revenues from this product are included in the Competitive wireline segment.

We were formed in January 2005 by Citigroup Venture Capital
Equity Partners, L.P., or CVC, and certain of its affiliates, collectively referred to herein as the CVC Entities, and Quadrangle Capital Partners LP, or Quadrangle, and certain of its affiliates, collectively referred to herein as the Quadrangle
Entities, for the purpose of acquiring NTELOS Inc. On January 18, 2005, we entered into a transaction agreement with NTELOS Inc. and certain of its shareholders to acquire NTELOS Inc. In accordance with this agreement, we acquired 24.9% of the
NTELOS Inc. common stock and stock warrants on February 24, 2005. We completed our acquisition of all of NTELOS Inc.s remaining common stock, warrants and vested options by means of a cash merger on May 2, 2005. Following the merger
transaction on May 2, 2005, NTELOS Inc. became our wholly-owned subsidiary.

Our principal executive offices are located at 401 Spring
Lane, Suite 300, Waynesboro, Virginia 22980. The telephone number at that address is (540) 946-3500. Our internet address is www.ntelos.com. We conduct all of our business through our wholly-owned subsidiary NTELOS Inc. and its
subsidiaries.

Wireless Business

Overview

Our wireless business operates a 100% CDMA digital PCS network in Virginia, West Virginia, and portions of Kentucky, Maryland, Ohio and North Carolina
with a total covered population, or POPs, of 5.2 million people. We began acquiring PCS spectrum in western Virginia and West Virginia in June 1995 and began operations in Virginia in late 1997 and in West Virginia in late 1998. We entered
eastern Virginia in July 2000 with the acquisition of the eastern Virginia assets of PrimeCo Personal Communications, L.P., or PrimeCo, following the Bell Atlantic/GTE merger. As of December 31, 2007, we served approximately 407,000
NTELOS-branded retail subscribers.

Our wireless business in Virginia covers Richmond, Hampton Roads/Norfolk, Roanoke, Lynchburg, Charlottesville,
Staunton, Harrisonburg, Winchester, Danville and Martinsville, as well as our headquarters in Waynesboro. The coverage of our wireless business also includes Charleston, Huntington, Morgantown, Clarksburg, Fairmont, Beckley and Bluefield in West
Virginia, Ashland, Kentucky, Portsmouth, Ohio and the Outer Banks of North Carolina.

Spectrum Holdings

PCS

We hold licenses for all of the 1900 MHz PCS spectrum used in our
network. At December 31, 2007, we operated our CDMA network in 20 basic trading areas with licensed POPs of 7.4 million with an average spectrum depth of 23 MHz. We also hold licenses in nine additional basic trading areas which are
currently classified as excess spectrum. The following table shows a breakdown of our 1900 MHz PCS spectrum position.



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NTELOS Spectrum Position (POPs in thousands)

as of December 31, 2007



|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|------------------ |  | ------------------------------ |  | ----------------- |  | ---------------- | --- |  | --------------- |  | --- | ---
|Basic Trading Area |  |                                |  |                   |  |                  |     |  |                 | 
|Number             |  | Name                           |  | PCS SpectrumBlock |  | LicensedPOPs (1) |     |  | CoveredPOPs (1) |  | MHz |    
|Virginia East      |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|156                |  | Fredericksburg, VA             |  | E                 |  | 210.7            |     |  | 90.8            |  | 10  |    
|324                |  | Norfolk, VA                    |  | B                 |  | 1,954.1          |     |  | 1,718.3         |  | 20  |    
|374                |  | Richmond, VA                   |  | B                 |  | 1,357.9          |     |  | 1,018.1         |  | 20  |    
|374                |  | Richmond, VA  Partitioned     |  | B                 |  | 51.6             | (4) |  |                |  | 30  |    
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|                   |  | Subtotal                       |  |                   |  | 3,522.7          |     |  | 2,827.2         |  | 19  | (2)
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|Virginia West      |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|75                 |  | Charlottesville, VA            |  | C                 |  | 252.4            |     |  | 165.4           |  | 20  |    
|104                |  | Danville, VA                   |  | B                 |  | 169.8            |     |  | 96.5            |  | 30  |    
|179                |  | Hagerstown, MD                 |  | E/F               |  | 409.9            |     |  | 185.4           |  | 20  |    
|183                |  | Harrisonburg, VA               |  | D/E               |  | 160.3            |     |  | 107.9           |  | 20  |    
|266                |  | Lynchburg, VA                  |  | B                 |  | 165.6            |     |  | 135.8           |  | 30  |    
|284                |  | Martinsville, VA               |  | B                 |  | 91.4             |     |  | 64.7            |  | 30  |    
|376                |  | Roanoke, VA                    |  | B                 |  | 682.7            |     |  | 525.1           |  | 30  |    
|430                |  | Staunton, VA                   |  | B                 |  | 118.8            |     |  | 105.5           |  | 30  |    
|479                |  | Winchester, VA                 |  | C                 |  | 187.0            |     |  | 156.4           |  | 20  |    
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|                   |  | Subtotal                       |  |                   |  | 2,237.9          |     |  | 1,542.7         |  | 25  | (2)
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|West Virginia      |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|35                 |  | Beckley, WV                    |  | B                 |  | 166.9            |     |  | 61.4            |  | 30  |    
|48                 |  | Bluefield, WV                  |  | B                 |  | 162.5            |     |  | 50.3            |  | 30  |    
|73                 |  | Charleston, WV(3)              |  | A/B               |  | 483.9            |     |  | 259.3           |  | 30  |    
|82                 |  | Clarksburg, VA                 |  | C/E               |  | 192.0            |     |  | 92.3            |  | 20  |    
|137                |  | Fairmont, WV                   |  | C/F               |  | 56.8             |     |  | 40.9            |  | 40  |    
|197                |  | Huntington, WV                 |  | B                 |  | 368.9            |     |  | 226.1           |  | 30  |    
|306                |  | Morgantown, WV                 |  | C/F               |  | 116.9            |     |  | 69.4            |  | 25  |    
|359                |  | Portsmouth, OH                 |  | B                 |  | 90.1             |     |  | 40.1            |  | 30  |    
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|                   |  | Subtotal                       |  |                   |  | 1,638.0          |     |  | 839.8           |  | 29  | (2)
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|                   |  | Total Operating Spectrum       |  |                   |  | 7,398.6          |     |  | 5,209.7         |  | 23  |    
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|Excess             |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|471                |  | Wheeling, WV                   |  | C                 |  | 205.2            |     |  | N/A             |  | 30  |    
|474                |  | Williamson, WV  Pikeville, KY |  | B                 |  | 174.8            |     |  | N/A             |  | 30  |    
|23                 |  | Athens, OH                     |  | A                 |  | 135.8            |     |  | N/A             |  | 15  |    
|80                 |  | Chillicothe, OH                |  | A                 |  | 103.6            |     |  | N/A             |  | 15  |    
|100                |  | Cumberland, MD                 |  | C/D               |  | 165.3            |     |  | N/A             |  | 40  |    
|259                |  | Logan, WV                      |  | B                 |  | 36.4             |     |  | N/A             |  | 30  |    
|342                |  | Parkersburg, WV  Marietta, OH |  | C                 |  | 179.9            |     |  | N/A             |  | 30  |    
|487                |  | Zanesville  Cambridge, OH     |  | A                 |  | 192.5            |     |  | N/A             |  | 15  |    
|12                 |  | Altoona, PA                    |  | C                 |  | 223.2            |     |  | N/A             |  | 15  |    
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|                   |  | Subtotal                       |  |                   |  | 1,416.7          |     |  |                 |  | 24  | (2)
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    
|                   |  | Total                          |  |                   |  | 8,815.3          |     |  | 5,209.7         |  | 23  |    
|                   |  |                                |  |                   |  |                  |     |  |                 |  |     |    



|(1) | Source: Map Info: Custom Data, Population Current Year and Five Year By Block Group: Entire U.S., SO #206956 ©
2006. For purposes of this disclosure, Covered POPs represents people within the network coverage area.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Weighted average MHz based on licensed POPs.
|--- | --------------------------------------------

|(3) | A block excludes Kanawha, Putnam and Fayette counties.
|--- | --------------------------------------------------------

|(4) | Partitioned POPs not included in subtotal.
|--- | ------------------------------------------



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AWS

During September
2006, we purchased seven Advanced Wireless Services (AWS) licenses. The AWS spectrum is potentially operable in seven cellular market areas with licensed POPs of 1.3 million, all of which are within our existing PCS licensed markets. The
following table presents a breakdown of our AWS spectrum position at December 31, 2007.



|                     |  |                     |  |                  |  |                                |  |    
|-------------------- |  | ------------------- |  | ---------------- |  | ------------------------------ |  | ---
|Cellular Market Area |  |                     |  |                  |  |                               
|Number               |  | Name                |  | AWSSpectrumBlock |  | LicensedPOPs (inthousands) (1) |  | MHz
|157                  |  | Roanoke, VA         |  | A                |  | 241.0                          |  | 20 
|203                  |  | Lynchburg, VA       |  | A                |  | 161.9                          |  | 20 
|683                  |  | Giles, VA           |  | A                |  | 213.8                          |  | 20 
|684                  |  | Bedford, VA         |  | A                |  | 187.3                          |  | 20 
|256                  |  | Charlottesville, VA |  | A                |  | 159.6                          |  | 20 
|685                  |  | Bath, VA            |  | A                |  | 62.6                           |  | 20 
|686                  |  | Highland, VA        |  | A                |  | 234.2                          |  | 20 
|                     |  |                     |  |                  |  |                                |  |    
|                     |  | Total               |  |                  |  | 1,260.4                        |  | 20 
|                     |  |                     |  |                  |  |                                |  |    



|(1) | Source: FCC Auction No. 66 License Data.
|--- | ----------------------------------------

Other Spectrum

In addition to PCS and AWS spectrum, we hold wireless
communications service, or WCS, licenses in Columbus, OH, Broadband Radio Service (BRS), licenses in western Virginia (BRS was formerly known as multichannel multipoint distribution service) and local multipoint distribution service, or LMDS,
licenses in portions of Virginia, Kentucky, West Virginia and Maryland. With the exception of our BRS licenses, other spectrum is non-operational.

Wireless Operations

Wireless Retail Business

Overview. We offer wireless voice and data services to retail customers throughout our service area under the NTELOS brand name. Our service plans target the local value segment, focusing on customers who will use their wireless
phone primarily in their home market. We offer these customers value by providing unlimited and large numbers of minutes, data features and premier customer service across our network. In 2005, we began to offer national voice and data plans for
those customers who wish to use their phones on a nationwide footprint. Our relationships with Sprint Nextel and other carriers allow us to provide these national plans at competitive prices. We offer customers a variety of Postpay and Prepay plans.
In 2007, Postpay represented 48% of gross additions and, as of December 31, 2007, 72% of total subscribers. We plan to continue to emphasize marketing to Postpay customers due to their better lifetime value, higher ARPU and lower churn than
traditional Prepay customers.

Service Offerings. The chart below briefly describes the plans and provides a breakdown of subscribers as of
December 31, 2007:



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|        |  |                   |  |                 |   |  |                                                                                                                                                                                                                                                     
|------- |  | ----------------- |  | --------------- | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Product |  | RetailSubscribers |  | % ofSubscribers |   |  | Description                                                                                                                                                                                                                                         
|Postpay |  | 291,727           |  | 72              | % |  |      1- or 2-Year Service Agreement       Nation and Unlimited
Plans       Long
Distance, Roaming, Data Features                                                                                                                                 
|        |  |                   | 
|Prepay  |  | 115,068           |  | 28              | % |  |      Postpay-Like Plans with Unlimited or Buckets of Minutes       1-or 2-year Service
Agreement required on some plans       Long Distance, Roaming, Data Features       Traditional Pay-As-You-Go Prepay with No Service Agreement
available



| |  |  | Postpay.
| | - |  | --------



| |  |  | Traditional Postpay plans are our most popular service offerings and account for approximately 72% of the base of our wireless customers. The current family of
Postpay service offerings include UNLIMITED minute plans which offer customers unlimited day, night, and weekend calling from anywhere on our network. This popular family of rate plans may include nationwide long distance and nationwide roaming
minutes, and certain plans may be shared for an additional fee.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We also offer additional Postpay service plans called NTELOS NATION plans, which were introduced in 2005, and account for approximately 33% of the base of our
wireless customers. These plans feature no roaming charges via buckets of daytime, mobile-to-mobile, and night and weekend minutes that can be used anywhere in the country. All NATION plans include nationwide long distance, no roaming charges, low
overage charges, and may be shared to address family plan scenarios.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All Postpay plans are available with one- or two-year service agreements and most can accommodate up to four shared lines for an additional monthly service fee.
Plans may include nationwide long distance calling, roaming, and a variety of added-value features like Caller ID and integrated voicemail. Additionally, users can take advantage of all data service offerings such as text and picture messaging, and
downloading of games, ring tones, and other mobile applications.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | PrepayPay in advance type plans include the following separate categories of plans:
| | - |  | ------------------------------------------------------------------------------------



| |  |  | Pay in Advance. Pay in Advance represents 27% of the base and is a hybrid alternative positioned to look like Postpay but operate like Prepay. Pay in
Advance targets credit-challenged and no-credit customers, including teens and students. Customers pay their monthly charges in advance by credit card, bank draft, or cash, thus eliminating credit checks and bad debt exposure. Pay in Advance
customers can also prepay to have access to certain data features.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Prepay (nStant Minutes). A traditional pay-as-you-go Prepay service which currently comprises only 1% of the customer base. nStant Minutes
provides an affordable, convenient PCS service with no monthly fees, no annual contract and no credit check. Minutes are replenished as needed by cash, credit card or prepaid cards.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales, Marketing and Customer Care. We target value-conscious customers by advertising the best value available in a wireless provider. We primarily
target persons between the ages of 21 and 54, including individuals and families. Our belief is that many customers use their phone primarily in and around their home area; however, our NTELOS NATION plans allow us to address consumer needs for
nationwide travel. We do not target heavy roamers such as national corporations, and our national plans take advantage of our access to the national Sprint Nextel wireless network under the Strategic Network Alliance.



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We promote our Postpay products almost exclusively in our marketing communications. Prepay plans target only certain
segments where a majority of the population would not want or qualify for Postpay service.

Advertising is focused on driving traffic to the companys
retail locations, inside sales representatives and our website. Company-owned distribution is a key component of our wireless growth strategy, with strong supporting distribution from indirect agent locations which extend our wireless retail points
of presence. The focus on company-owned distribution is evidenced by wireless customer acquisitions. In the year ended December 31, 2007, 78% of gross additions were acquired through direct channels and, at December 31, 2007, we had 75
retail point-of-sale locations. Our direct distribution is supplemented by 163 regional agents with a total of 328 locations.

Our wireless customer care
call centers are located in Waynesboro, Covington and Daleville, Virginia. We operate a single virtual call center, minimizing headcount and supporting uniform customer service across our region. Business operations are supported by an integrated
systems infrastructure. We provide customer care and operations representatives with incentives to up-sell additional products and features. Also, we utilize a retention team to focus on either renewing or maintaining our customers.

Wireless Wholesale Business

Overview. We provide digital PCS
services on a wholesale basis to other PCS providers, most notably Sprint Nextel. In June 2004, Sprint bought out Horizon PCSs (to whom we formerly provided wholesale services) interest in the approximately 97,000 Sprint-branded subscribers in
Horizon PCSs territories which are serviced by our network. We subsequently entered into the Strategic Network Alliance with Sprint Nextel.

Our
Strategic Network Alliance with Sprint Nextel. In 2004, we entered into a seven-year exclusive network agreement to be a wholesale provider of network services for Sprint Spectrum L.P. Effective as of July 1, 2007, we amended and restated
this network agreement with Sprint Spectrum L.P. The amended and restated network agreement, which we refer to as the Strategic Network Alliance, superseded and replaced the 2004 network agreement. Under the Strategic Network Alliance, we will
continue as the exclusive provider of PCS services through July 31, 2015, a four year extension of the network agreement, and then subject to automatic three-year extensions unless the notice provisions are exercised, to all Sprint Nextel
wireless customers in its western Virginia and West Virginia service area, including the following markets, which we refer to as the Market: Charlottesville, Danville, Lynchburg, Martinsville, Roanoke and Staunton-Waynesboro, Virginia;
Beckley, Bluefield, Charleston, Clarksburg/Elkins, Fairmont, Huntington and Morgantown, West Virginia; and Ashland, Kentucky. In addition to PCS services, the Strategic Network Alliance gives us exclusivity for all other CDMA services in the Market.
We will also be the exclusive provider of roaming/travel services in the Market to all Sprint Nextel PCS customers.

We have agreed under the Strategic
Network Alliance to upgrade our network in the Market to EV-DO. Subject to certain limited exceptions, we have agreed to achieve 95% EV-DO deployment in the Market by January 31, 2010 and 98% EV-DO deployment in the Market by January 31,
2011. We plan for the EV-DO network upgrade to be 98% completed by mid-year 2009. If we fail to achieve either of these EV-DO deadlines, it will constitute an event of default under the amended and restated agreement and give Sprint Nextel the right
to terminate the Strategic Network Alliance.

The amended and restated network agreement specifies a series of rates for various types of services. The
voice rate pricing under the amended and restated network agreement is comparable to the rates in the 2004 network agreement, but provides for greater volume discounts in the future to provide incentives for the migration of additional traffic onto
the network. Generally, the data rate pricing is lower under the amended and restated network agreement compared to the rates agreed to in the 2004 network agreement in recognition of the significant growth experience in data usage and anticipated
growth from the introduction of higher speed data services as a result of the network upgrade and to also provide incentives for the migration of additional traffic onto the network.

Specifically, there are separate rate structures for each of the PCS services to be provided as follows:



| |  |  | voice rate pricing tiers for Sprint Nextel home subscribers within the Market are fixed through July 1, 2008, and then reset semi-annually based on Sprint
Nextels retail voice revenue yield;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | voice rate pricing for Sprint Nextel subscribers, Mobile Virtual Network Operators, or MVNO, partners of Sprint Nextel and Sprint Network Managers, who use our
network for voice service while traveling in the Market is fixed through July 1, 2008, and then reset semi-annually based on Sprint Nextels retail voice revenue yield;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | home data pricing is per customer for each Sprint Nextel PCS customer in the Market and the per customer amount is based upon 60% of Sprint
Nextels national 3G and EV-DO data ARPU; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | data rate for each megabit of data service consumed by Sprint Nextel travel subscribers and all Sprint MVNO customers within the Market is based on a schedule
through July 1, 2009, and then reset quarterly thereafter based on Sprint Nextels 3G and EV-DO data yield.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Strategic
Network Alliance also permits our NTELOS-branded customers to access Sprint Nextels national wireless network at reciprocal rates as the Sprint Nextel travel rates.

In addition, Sprint Nextel will pay us the greater of (i) $8.0 million per calendar month (or $9.0 million per calendar month in the calendar month after we achieve 98% completion of EV-DO deployment in the
Market) or (ii) any and all monthly usage charges associated with the use of the PCS services by Sprint Nextel customers.

The amended and restated
network agreement provides that the PCS service we provide to Sprint Nextel customers will be of a quality and clarity no worse than what we provide to our retail customers in similar rural markets. Except for the EV-DO deployment described above,
we are not required under the Strategic Network Alliance to make any future investment in any subsequent high speed data transfer technology or any other significant network upgrade requested by Sprint Nextel to support its customers unless mutually
agreed upon.

The amended and restated network agreement prohibits Sprint Nextel from directly or indirectly commencing construction of, contracting for or
launching its own wireless communications network that provides PCS services provided by us in the Market until 18 months prior to the termination of the amended and restated network agreement or renewals thereof. Sprint Nextel may construct its own
cell sites or take such other action to provide geographic coverage in a portion of a market served by us where Sprint Nextels network does not offer coverage, and Sprint Nextel requests that we provide coverage and we decline.

Wireless Network

Network Technology. We have 3G 1xRTT
CDMA digital PCS technology deployed in each of our geographic regions. In connection with the planned EV-DO network upgrade pursuant to the terms of the Amended and Restated Resale Agreement with Sprint Spectrum L.P. and based on our plan to
upgrade substantially all of our current service coverage areas outside our wholesale territory, we have entered into a three-year agreement with Alcatel-Lucent to purchase approximately $88 million of network equipment. We expect to spend an
incremental $65 million related to this technology upgrade.

Switching Centers. We employ four Mobile Switching Centers, or MSCs: two in the
Virginia East region, one in the Virginia West region and one in West Virginia. The following table shows our switching center equipment:



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Switching Center Equipment



|              |  |                |  |                                                                        
|------------- |  | -------------- |  | -----------------------------------------------------------------------
|Region        |  | Location       |  | Equipment                                                              
|Virginia East |  | Richmond, VA   |  |         Lucent 5ESS and ECP Switch Complex                            
|              |  |                |  |         Alcatel 3-1-0 1630 DACS & Tellabs NGX 5500 WB DACS            
|              |  |                |  |         Glenayre HDMU voicemail platform                              
|              |  |                |  |         VeriSign prepay platform                                      
|              |  |                |  |         Company-owned facility                                        
|              |  |               
|              |  | Norfolk, VA    |  |         Lucent 5ESS and ECP Switch Complex                            
|              |  |                |  |         Alcatel 3-1-0 1630 DACS & Tellabs NGX 5500 w/ 7120
Tributaries
|              |  |                |  |         Glenayre HDMU voicemail platform                              
|              |  |                |  |         VeriSign prepay platform                                      
|              |  |                |  |         Company-owned facility                                        
|              |  |               
|Virginia West |  | Waynesboro, VA |  |         Nortel MTX Switch(1)                                          
|              |  |                |  |         Motorola Cell Site Base Station Controllers (five)(1)         
|              |  |                |  |         Tellabs 3-1-0 532L DACS & NGX 5500 WB DACS                    
|              |  |                |  |         Glenayre 4240 voicemail platform and Glenayre HDMU Platform   
|              |  |                |  |         PVI Ring Back Platform supporting all MSCs                   
|              |  |                |  |         VeriSign prepay platform                                      
|              |  |                |  |         Company-owned facility                                        
|              |  |               
|West Virginia |  | Charleston, WV |  |         Nortel MTX Switch(1)                                          
|              |  |                |  |         Motorola Cell Site Base Station Controllers (four)(1)         
|              |  |                |  |         Tellabs 3-1-0 532L DACS                                       
|              |  |                |  |         Glenayre 4240 voicemail platform and Glenayre HDMU Platform   
|              |  |                |  |         VeriSign prepay platform                                      
|              |  |                |  |         Leased facility (current term through 2013)                   



|(1) | This switching center equipment is planned to be replaced in 2008 and 2009 in connection with our EV-DO upgrade.
|--- | ----------------------------------------------------------------------------------------------------------------

Intelligent Network. We have deployed a Lucent Intelligent Network solution consisting of a mated pair Mi-Life Application Server and an Enhanced Services
Manager, or ESM. Our mated Stand-alone Home Location Register functionality resides on this platform. Additionally, we have deployed a Short Messaging Service Center (SMSC) platform, Over-the-Air-Function (OTAF) platform, and Multimedia
Messaging Service (MMS) platform, all provided by Airwide Solutions. The SMSC platform supports text messaging, the OTAF platform supports network and subscriber initiated Preferred Roaming List downloads, and the MMS platform supports picture
messaging.

Cell Sites. As of December 31, 2007, there were 1,023 cell sites in operation, of which 61 were repeaters. We own 97 of these cell
sites and lease the remaining 926, or 91%. Of the leased cell sites, 449, or 48%, are installed on facilities owned by Crown Communications and American Tower. We entered into master lease agreements with Crown Communications in 2000 and 2001,
respectively. These master lease agreements had initial 5-year lease terms and were renewed for second 5-year lease terms in 2005 and 2006, respectively. Additionally, we entered into a master lease agreement with American Tower in 2001 with an
initial lease term of 12 years. These master agreements with Crown Communications and American Tower contain additional options to renew. 100% of our cell sites are 3G 1xRTT data capable.

Network Performance. We currently process approximately 67 million calls per week and demonstrate strong network operational performance metrics. For the
year ended December 31, 2007, network performance has averaged less than 0.85% daily dropped calls and less than 0.10% bouncing busy hour blocked calls. Cell site availability as of December 31, 2007 exceeds 99.85%. We currently exceed
Sprint Nextels network performance standards, as established in the agreement, in the regions underlying the Strategic Network Alliance.



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Wireline Business

Overview

Founded in 1897 as the Clifton Forge-Waynesboro Telephone Company, our wireline business and its predecessor organizations have a
long history of providing exceptional telephone service in the rural Virginia areas of Waynesboro, Covington, Clifton Forge and, with the acquisition of R&B Communications in 2001, Botetourt County. We divide our wireline business into two
operations: RLEC and Competitive Wireline (CLEC/Network and internet). As an RLEC, we own and operate two local telephone companies and serve three rural Virginia regions. As a CLEC, we provide service to 21 areas in Virginia and West Virginia.
Additionally, we offer both dial-up internet and high-speed broadband services in Virginia, West Virginia and Tennessee. As of December 31, 2007, we had approximately 135,000 access lines and data connections.

Our wireline business is supported by an extensive 2,110-mile fiber optic network. The network gives us the ability to originate, transport and terminate much of our
customers communications traffic in many of our service areas. We utilize the network to backhaul communications traffic for retail services and to serve as a carriers carrier network, providing transport services to third parties for
long distance, internet, wireless and private network services. Our fiber optic network is connected to and marketed with adjacent fiber optic networks in the mid-Atlantic region.

Wireline Operations

RLEC.We provide RLEC services to business and residential customers in three rural
Virginia areas. We have owned and operated a 110-year-old telephone company in western Virginia since its inception in 1897. Additionally, we acquired a 107-year-old telephone company in southwestern Virginia through our acquisition of R&B
Communications in 2001.

Competitive Wireline. The Competitive segment includes the results of our CLEC, internet and wholesale carriers
carrier network businesses. The CLEC business was launched in 1998 and currently serves 21 areas in Virginia and West Virginia. We market exclusively to business customers. As of December 31, 2007, we had approximately 49,000 CLEC lines in
service, virtually all of which were business lines.

The CLEC operations are based on an edge-out strategy that seeks to take advantage of our
fiber network and RLEC back-office systems in order to deliver a high incremental return on investment to our core wireline business. Technicians, vehicles, operations and support systems, network planning and engineering, billing and core network
assets are shared between the wireline segments.

In addition to utilizing a successful edge-out strategy, our CLEC business has also benefited
from a commitment to an on-net access strategy for a true facilities-based approach. We have been careful in our decision to expand the CLEC network and generally require proven customer demand to dictate such investment choices. In
addition to the higher-margin revenues that are characteristic of on-net expansion, we have also been able to deliver other competitive services such as high-bandwidth internet access and metro transport services as a direct result of on-net
connectivity growth. Our dedication to the facilities-based strategy, combined with our commitment to customer service, has proven successful in attracting large customers in key vertical markets. Specifically, the education, healthcare, financial,
and government sectors have been particularly receptive to our CLEC business model.

Through our wholesale carriers carrier network, we offer other
carriers access to our 2,110-route-mile fiber network which provides connectivity to major retail cities. We sell backhaul services to major carriers. Through interconnections with other regional fiber networks, we are able to extend our network
east to Richmond, Virginia, north to Carlisle, Pennsylvania, and Washington, D.C., and to areas south of Greensboro, North Carolina.

We launched our
internet business in Virginia in 1995. Presently, we provide internet services in Virginia, West Virginia and Tennessee. As of December 31, 2007, we had approximately 20,000 broadband connections, including DSL, dedicated internet access,
wireless broadband, broadband over fiber, and Metro Ethernet. We also finished the year with over 95% DSL capability in our RLEC markets.

In the third
quarter of 2007, we began to offer IPTV video services within our RLEC market to approximately 2,900 households that we have passed with fiber optics.



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Products and Services

We offer a wide variety of voice services to our RLEC and CLEC customers, including:



|                           |  |                                                                                                       
|-------------------------- |  | ------------------------------------------------------------------------------------------------------
|Voice Service              |  |      Business and residential telephone service                                                      
|                           | 
|Centrex                    |  |      Replaces customers private branch exchange (PBX) system                                        
|                           | 
|                           |  |      Provides the switching function, along with multiple access lines                               
|                           | 
|Primary Rate ISDN Services |  |      High capacity connections between customers PBX equipment and public switched telephone
network
|                           | 
|Long Distance Service      |  |      Domestic and international long distance services to RLEC and CLEC customers                    
|                           | 
|                           |  |      Uses network facilities or provides through resale arrangements with interexchange
carriers     
|                           | 
|Customer Calling Features  |  |      Call waiting       Caller
ID                                                                   
|                           | 
|                           |  |      Voice mail (can be integrated with our PCS service)                                             

In addition to traditional voice services, we provide internet access and data services including:



|                              |  |                                                                                                                                                                                                                                                                                      
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|High-Speed DSL Access         |  |      DSL technology enables a customer to receive high-speed internet access through a copper telephone line                                                                                                                                                                        
|                              | 
|Broadband XL                  |  |      High speed internet access over fiber available in portions of our RLEC markets at speeds from 6 to 20
Mbps                                                                                                                                                                    
|                              | 
|Video                         |  |      IPTV-based video services with up to 240 channels including high
definition and video-on-demand       Available in new subdivisions and overbuild areas within the RLEC and in one area in Lynchburg, VA       Powered by Microsoft Mediaroom                                
|                              | 
|Metro Ethernet                |  |      Ethernet connectivity among multiple locations in the same city or region                                                                                                                                                                                                      
|                              | 
|                              |  |      Speed ranging from 1.5 Mbps to 1 Gbps                                                                                                                                                                                                                                          
|                              | 
|IP Services                   |  |      New IP-enabled product offerings that combine voice and data services
over a dedicated broadband facility       Allows customers to dynamically allocate bandwidth to maximize voice and data transmissions       Product offerings include Integrated Access and IP Trunking
|                              | 
|Hi-cap Private Line Service   |  |      High-capacity, non-switched facilities provided to end users and carriers for voice and data applications                                                                                                                                                                      
|                              | 
|Web Hosting                   |  |      Domain services, collocation agreements and internet marketing services                                                                                                                                                                                                        
|                              | 
|Local Dial-Up Internet Access |  |      Offers multiple e-mail accounts and personal web space                                                                                                                                                                                                                         
|                              | 
|Portable Broadband Access     |  |      Wireless offering to customers providing a portable broadband connection at download speeds up to 1.5Mbps                                                                                                                                                                      



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Sales, Marketing and Customer Care

We focus our wireline marketing efforts on residential customers in the RLEC segment and larger business customers in the Competitive segment. In particular, residential marketing is centered on selling bundles and
higher revenue-generating services to maximize penetration, average monthly revenues-per-unit-in-service, or ARPU, and retention. We seek to capitalize on the NTELOS brand name, technology leadership, positive service reputation and local presence
of sales and service personnel in our Competitive marketing efforts. In the third quarter of 2007, we began to offer video services within our RLEC market to approximately 2,900 households that we have passed with fiber optics.

We utilize our own personnel to sell wireline products and services to our customers. We retain account executives to cultivate relationships with mid-size to large
business customers in our RLEC and Competitive market areas. We use an inside sales group to handle residential and small business voice and broadband sales. We maintain a wireline retail presence in Waynesboro, Daleville, and Covington, Virginia,
to allow walk-in payments and provide new services to RLEC customers.

Our wireline customer care call centers are located in Waynesboro and Daleville,
Virginia. Business operations are supported by an integrated systems infrastructure. We provide customer care and operations representatives with incentives to up-sell additional products and features and retain current customers that may disconnect
services.

The wholesale business is supported by a dedicated channel team and the Valley Network Partnership (ValleyNet) resources. Much of
our network is connected and marketed through ValleyNet, a partnership of three nonaffiliated communications companies that have interconnected their networks to form a nonswitched, fiber optic network. The ValleyNet network is connected to and
marketed with other adjacent fiber networks creating a connected fiber optic network serving the ten-state mid-Atlantic region, stretching from Pennsylvania to Florida north to south and west as far as Ashland, KY.

Plant and Equipment

Our wireline network includes two Alcatel-Lucent
5ESS digital switches, which provide end-office functions for both the RLEC and Competitive businesses in Virginia. Our Waynesboro, Virginia switch also acts as an access tandem for our RLEC, Competitive and portions of our wireless traffic. Another
Alcatel-Lucent 5ESS digital switch, located in Charleston, supports the Competitive business in West Virginia. We have twelve remote switching modules deployed throughout our RLEC territory and three more supporting our Competitive areas. VITAL, a
company for which we serve as the managing partner, acts as a regional node on VeriSigns nationwide SS7 network using a pair of Tekelec signal transfer points located on our premises.

We use Alcatel-Lucent, Tellabs and Ciena digital loop carriers throughout our RLEC and Competitive access network. For DSL service in the RLEC and Competitive areas, we
primarily use Cisco, Adtran and Pannaway equipment. Our centralized network operations center monitors wireline, wireless and data networks on a continuous basis using a Harris network management system. We provide metro Ethernet and IP-enabled
voice and transport services using a soft switch, routers and other equipment from Cisco Systems, Inc and feature servers from Broadsoft. We have also deployed a Tandberg Head-End and utilize Microsofts Mediaroom software to deliver IPTV-based
video services.

Competition

Many communications
services can be provided without incurring a short-run incremental cost for an additional unit of service. As a result, once there are several facilities-based carriers providing a service in a given market, price competition is likely and can be
severe. We have experienced price competition, which is expected to continue. In each of our service areas, additional competitors could build facilities. If additional competitors build facilities in our service areas, this price competition may
increase significantly.

Wireless

We compete in our
territory with digital service providers. Several wireless carriers compete in portions of our market areas, including Sprint Nextel and its affiliates, Verizon Wireless, Alltel, AT&T Wireless, T Mobile and U.S. Cellular, and affiliates of some
of these companies. Many of these competitors have financial resources and customer bases greater than ours. Many of them have more established infrastructures, marketing programs and brand recognition. We expect these competitors will continue to
build and upgrade their own networks in areas in which we operate. We also face competition from resellers, which provide wireless service to customers but do not hold FCC licenses or own facilities.



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Wireline

Several
factors have resulted in increased competition in the landline telephone market, including:



| |  |  | expansion of wireless networks and pricing plans which offer very high usage at a fixed cost, resulting in wireless substitution;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | growing customer demand for alternative products and services;
| | - |  | --------------------------------------------------------------



| |  |  | technological advances in the transmission of voice, data and video;
| | - |  | --------------------------------------------------------------------



| |  |  | development of fiber optics, wireless data, and IP technology; and
| | - |  | ------------------------------------------------------------------



| |  |  | legislation and regulations, including the Telecommunications Act, designed to promote competition.
| | - |  | ---------------------------------------------------------------------------------------------------

As the RLEC for Waynesboro, Clifton Forge, Covington and portions of Botetourt and Augusta Counties, Virginia, we are subject to competition, today from wireless
carriers and cable companies. A portion of the residential customers moving into our service area do not purchase landline phone service. We expect to encounter voice competition in our RLEC from Comcast, which serves Waynesboro and a portion of
Botetourt and Augusta Counties, in 2008. Voice over Internet Protocol, or VoIP, based carriers like Vonage could take voice customers from our RLECs using existing broadband connections (such as DSL or cable modem connections). Although no CLECs
have entered our incumbent markets to compete with us, it is possible that one or more may enter our markets. The regulatory environment governing RLEC operations has been, and we believe will likely continue to be, very liberal in its approach to
promoting competition and network access.

Our Competitive operations compete primarily with ILECs and, to a lesser extent, other CLECs. ILECs in our
markets, Verizon and Embarq, have initiated aggressive win-back strategies. Although certain CLEC companies have exited from our markets, we continue to face competition in our Competitive markets from several other CLECs, including
Level 3, Fibernet, Paetec and Cox. We also face competition from other current and potential future market entrants.

The internet industry is
characterized by the absence of significant barriers to entry and the rapid growth in internet usage among customers. As a result, we expect that our competition will increase from market entrants offering high-speed data services, including DSL,
cable, and wireless access. Our competition includes:



| |  |  | local, regional and national internet service providers such as AT&T, Verizon (including Verizon Business) and Embarq;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | cable modem services offered by incumbent cable providers such as Comcast, Cox, Rapid and Charter; and,
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | wireless providers offering EV-DO-based services.
| | - |  | -------------------------------------------------

Many of our competitors have financial resources, corporate backing, customer bases, marketing programs and brand names that are greater than ours. Additionally, competitors may charge less than we do for internet services, causing us to
reduce, or preventing us from raising our fees.

Employees

As of December 31, 2007, we employed 1,355 full-time and 53 part-time persons. Of these employees, 76 are covered by a collective bargaining agreement for a portion of our wireline operation. This agreement expires June 30, 2008.
We believe that we have good relations with our employees.

Regulation

The following summary does not describe all present and proposed federal and state legislation and regulations affecting the telecommunications industry. Some legislation and regulations are currently the subject
of judicial proceedings, legislative hearings and administrative proposals which could change the manner in which this industry operates. Neither the outcome of any of these developments, nor their potential impact on us, can be predicted at this
time. Regulation can change rapidly in the telecommunications industry, and such changes may have an adverse effect on us in the future. See Risk Factors elsewhere in this report.

Regulation Overview

Our communications services are subject to
varying degrees of federal, state and local regulation. Under the Communications Act, as amended by the Telecommunications Act of 1996, the Federal Communications



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Commission, or FCC, has jurisdiction over interstate and international common carrier services, over certain aspects of interconnection between carriers for
the provision of competitive local services, and over the allocation, licensing, and regulation of wireless services. Our common carrier services are regulated to different degrees by state public service commissions, and local authorities have
jurisdiction over public rights-of-way and antenna structures. The Federal Aviation Administration, or FAA, regulates the location, lighting and construction of antenna structures. For many years, the regulation of the communications industry has
been in a state of transition as Congress and state legislatures have passed laws seeking to foster greater competition in communications markets and various of these measures have been challenged in court.

Many of the services we offer are unregulated or subject only to minimal regulation. Our internet services are not considered to be common carrier services, although the
regulatory treatment of certain internet services, including VoIP services, is evolving and still uncertain. Our wireless services are generally classified as commercial mobile radio services, or CMRS, and subject to FCC regulation as common
carriage. The states are preempted from engaging in entry or rate regulation of CMRS, although the states may regulate other terms and conditions of such offerings.

Pursuant to the Communications Act, there are certain services that large ILECs are required by state and federal regulators to provide to our CLEC operations. The obligations of these ILECs to provide such services
are in flux and could be further altered or removed by new legislation, regulations or court order.

Federal Regulation of the Wireless Communications
Industry

The licensing, construction, modification, operation, sale, ownership and interconnection arrangements of wireless communications networks are
regulated to varying degrees by the FCC, Congress, state regulatory agencies, the courts and other governmental bodies. Because we operate PCS systems, decisions by such bodies could have a significant impact on the competitive market structure
among wireless providers and on the relationships between wireless providers and other carriers. These mandates may impose significant financial obligations on us and on other wireless providers. We are unable to predict the scope, pace or financial
impact of legal or policy changes that could be adopted in these proceedings. Some examples of the kinds of regulation to which we are subject are presented below.

Licensing of PCS Systems. Broadband PCS licenses, such as those held by our subsidiaries, were generally originally awarded for specific geographic market area and for one of six specific spectrum blocks. The geographic license areas
utilized included basic trading areas and collections of basic trading areas known as major trading areas, although geographic partitioning policies have permitted licensees to subdivide and transfer those original licenses into other geographic
areas. The spectrum blocks awarded were originally either 30 MHz or 10 MHz licenses, although spectrum disaggregation rules have permitted licensees to subdivide such licenses into smaller bandwidths.

All PCS licenses have a 10-year term, at the end of which they must be renewed. The FCCs rules provide a formal presumption that a PCS license will be renewed,
called a renewal expectancy, if the PCS licensee (1) has provided substantial service during its past license term, and (2) has substantially complied with applicable FCC rules and policies and the Communications Act. The FCC
defines substantial service as service which is sound, favorable and substantially above a level of mediocre service that might only minimally warrant renewal. If a licensee does not receive a renewal expectancy, then the FCC will accept competing
applications for the license renewal period and, subject to a comparative hearing, may award the license to another party. We applied for and were granted renewal of seven of these licenses in 2005, three of these licenses in 2006 and nine of these
licenses in 2007. Our remaining six PCS licenses must be renewed in mid-2009.

Under existing law, no more than 20% of an FCC PCS licensees capital
stock may be owned, directly or indirectly, or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives or by a foreign corporation. If an FCC PCS licensee is controlled by another entity, as is the case
with our ownership structure, up to 25% of that entitys capital stock may be owned or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives or by a foreign corporation. Foreign ownership above the
25% holding company level may be allowed should the FCC find such higher levels not inconsistent with the public interest. The FCC has ruled that higher levels of foreign ownership in CMRS licensees, even up to 100%, are presumptively consistent
with the public interest with respect to investors from certain nations. If our foreign ownership were to exceed the permitted level, the FCC could revoke our wireless licenses, although we could seek a declaratory ruling from the FCC allowing the
foreign ownership or take other actions to reduce our foreign ownership percentage in order to avoid the loss of our licenses. We have no knowledge of any present foreign ownership in violation of these restrictions.



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PCS Construction Requirements. All PCS licensees must satisfy buildout deadlines and geographic coverage
requirements within five and/or ten years after the license grant date. Under the FCCs original rules, these initial requirements are met for 10 MHz licenses when adequate service is offered to at least one-quarter of the population of the
licensed area, or the licensee provides substantial service, within five years, and for 30 MHz licenses when adequate service is offered to at least one-third of the population within five years and two-thirds of the population within ten years. The
FCCs policies have now been modified, however, and 30 MHz licensees are permitted to make a demonstration of substantial service to meet the ten year build-out requirement. Failure to comply with these coverage requirements could cause the
revocation of a providers wireless licenses or the imposition of fines and/or other sanctions.

Transfer and Assignment of PCS
Licenses. The Communications Act and FCC rules require the FCCs prior approval of the assignment or transfer of control of a license for a PCS system, with limited exceptions, and the FCC may prohibit or impose conditions on
assignments and transfers of control of licenses. Non-controlling interests in an entity that holds an FCC license generally may be bought or sold without FCC approval. Although we cannot assure you that the FCC will approve or act in a timely
fashion upon any future requests for approval of assignment or transfer of control applications that we file, we have no reason to believe that the FCC would not approve or grant such requests or applications in due course. Because an FCC license is
necessary to lawfully provide PCS service, if the FCC were to disapprove any such filing, our business plans would be adversely affected.

In the course of
such review, we further note that the FCC engages in a case-by-case competitive review of transactions that involve the consolidation of spectrum licenses.

AWS Licenses. In 2006, we acquired additional licenses in an auction conducted by the FCC for Advanced Wireless Services, or AWS, spectrum in the 1710-1755 MHz and 2110-2155 MHz bands. The FCC regulations applicable to these licenses
are generally similar to those applied to our PCS licenses, although our AWS licenses have a longer, 15 year, term and are not subject to any construction requirements other than the requirement that we be providing substantial service at renewal.
Like other auctioned AWS licenses, the licenses acquired by us are subject to the rights of certain incumbents, including Federal government systems and microwave radio users. For the most part, Federal government users will transition their
operations out of the band through a multiyear process funded through proceeds from the auction itself. The non-government users would have to be relocated by us if our AWS deployments would interfere, and we may incur cost-sharing obligations even
if we deploy after the links are relocated.

General FCC Obligations. The FCC has a number of other complex requirements and proceedings that affect
our operations, and that could increase the cost or diminish the revenues of our business.

For example, the FCC requires CMRS carriers to make available
emergency 911 services to subscribers, including enhanced emergency 911 services that provide the callers telephone number and detailed location information to emergency responders, as well as a requirement that emergency 911 services be made
available to users with speech or hearing disabilities. Our obligations to implement these services occur in phases and on a market-by-market basis as emergency service providers request the implementation of enhanced emergency 911 services in their
locales. In late 2006, we successfully met the requirement that 95% of all subscriber handsets in service on our system can deliver subscriber location information.

On September 11, 2007, the FCC adopted an order mandating that wireless E911 location accuracy be measured on the public safety answering point (PSAP) level, but deferred effectiveness of the mandate for five
years while requiring interim milestones. The interim milestones cover increasingly smaller geographic areas. One year following the orders release, wireless carriers must demonstrate location accuracy compliance averaged across each economic
area (EA) in which they operate. Three years following the orders release, wireless carriers must demonstrate compliance averaged across the metropolitan statistical areas (MSAs) and rural service areas (RSAs) in which they
operate. They also will have to demonstrate PSAP-level compliance in 75% of the PSAPs they serve. Full PSAP-level compliance will be due after five yearsor by September 11, 2012. The FCC has been asked to stay its
September 11 order pending appeal, but has not yet ruled on the stay request. This FCC order is expected to be appealed once it has appeared in the Federal Register and we cannot predict the outcome of the appeal.



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FCC rules also require that local exchange carriers and most CMRS providers, including PCS providers, allow customers to
change service providers without changing telephone numbers. For CMRS providers, this mandate is referred to as wireless local number portability, or WLNP. The FCC also has adopted rules governing the porting of wireline telephone numbers to
wireless carriers. Number portability may have increased positive or negative effects on our business by making it easier for customers to switch among carriers.

The FCC has the authority to order interconnection between CMRS operators and ILECs, and FCC rules provide that all local exchange carriers must enter into reciprocal compensation arrangements with CMRS carriers for the exchange of local
traffic, whereby each carrier compensates the other for terminating local traffic originating on the other carriers network. As a CMRS provider, we are required to pay reciprocal compensation under such arrangements to a wireline local
exchange carrier that transports and terminates a local call that originated on our network. Similarly, in the absence of the agreement of both parties for a bill and keep arrangement, we are entitled to receive reciprocal compensation
when we transport and terminate a local call that originated on a wireline local exchange network. We negotiate interconnection arrangements for our network with major ILECs and smaller RLECs. If an agreement cannot be reached, under certain
circumstances, parties to interconnection negotiations can submit outstanding disputes to state authorities or the FCC, as appropriate, for arbitration. Negotiated interconnection agreements are subject to state approval. The FCCs
interconnection rules and rulings, as well as state arbitration proceedings, will directly impact the nature and costs of facilities necessary for the interconnection of our network with other telecommunications networks. They will also determine
the amount of revenue we receive for terminating calls originating on the networks of local exchange carriers and other telecommunications carriers. The FCC is currently considering changes to the local exchange-CMRS interconnection and other
so-called intercarrier compensation schemes, and the outcome of such proceedings may affect the manner in which we are charged or compensated for the exchange of traffic.

Pursuant to the Communications Act, all telecommunications carriers that provide interstate telecommunications services, including CMRS providers like us, are required to make an equitable and non-discriminatory
contribution to support the cost of federal universal service programs. These programs are designed to achieve a variety of public interest goals, including affordable telephone service nationwide, as well as subsidizing telecommunications
services for schools and libraries. Contributions are calculated on the basis of each carriers interstate telecommunications revenue. The FCC is currently examining the way in which it collects carrier contributions to the federal Universal
Service Fund, or USF. The FCC is also considering placing an interim cap on the amount of USF funding distributed to competitive providers, including CMRS carriers and CLECs. In 2006, the FCC expanded the base of USF contributions by extending
universal service contribution obligations to providers of interconnected VoIP service.

The Communications Assistance for Law Enforcement of 1994, or
CALEA, requires all telecommunications carriers, including wireless carriers, to ensure that their equipment is capable of permitting the government, pursuant to a court order or other lawful authorization, to intercept any wire and electronic
communications carried by the carrier to or from its subscribers. CALEA remains subject to FCC implementation proceedings. Compliance with the requirements of CALEA, further FBI requests, and the FCCs rules could impose significant additional
direct and/or indirect costs on us and other wireless carriers.

Wireless networks also are subject to certain FCC and FAA regulations regarding the
relocation, lighting and construction of transmitter towers and antennas and are subject to regulation under the National Environmental Policy Act, the National Historic Preservation Act, and various environmental regulations. Compliance with these
provisions could impose additional direct and/or indirect costs on us and other licensees. The FCCs rules require antenna structure owners to notify the FAA of structures that may require marking or lighting, and there are specific
restrictions applicable to antennas placed near airports.

We also are subject or potentially subject to number pooling rules; rules governing billing and
subscriber privacy; rate averaging and integration requirements; rules requiring us to offer equipment and services that are accessible to and usable by persons with disabilities; and rules governing back-up power at our cell sites. Some of these
requirements pose technical and operational challenges to which we, and the industry as a whole, have not yet developed clear solutions. These requirements are all the subject of pending FCC or judicial proceedings, and we are unable to predict how
they may affect our business, financial condition or results of operations.

We also must satisfy FCC requirements relating to technical and reporting
matters. One such requirement is the coordination of proposed frequency usage with adjacent wireless users, permittees and licensees in order to avoid electrical interference between adjacent networks. In addition, the height and power of base radio
transmitting facilities of certain wireless providers and the type of signals they emit must fall within specified parameters.



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State Regulation and Local Approvals

The states in which we operate generally have agencies or commissions charged under state law with regulating telecommunications companies, and local governments generally seek to regulate placement of transmitters
and rights of way. While the powers of state and local governments to regulate wireless carriers are limited to some extent by federal law, we will have to devote resources to comply with state and local requirements. For example, state and local
governments generally may not regulate our rates or our entry into a market, but are permitted to manage public rights of way, for which they can require fair and reasonable compensation. Nevertheless, some states have attempted to assert
certification requirements that we believe are in conflict with provisions of the Communications Act that prohibit states from regulating entry of wireless carriers.

States may also impose certain surcharges on our customers that could make our service, and the service of other wireless carriers, more expensive. In addition, a number of states and localities have banned, or are
considering banning or restricting, the use of wireless phones while driving a motor vehicle.

Under the Communications Act, state and local authorities
maintain authority over the zoning of sites where our antennas are located. These authorities, however, may not legally discriminate against or prohibit our services through their use of zoning authority. Therefore, while we may need approvals for
particular sites or may not be able to choose the exact location for our sites, we do not foresee significant problems in placing our antennas at sites in our territory.

Federal Regulation of Interconnection and Interexchange Services

The Telecommunications Act requires all common
carriers (including wireless carriers) to interconnect on a non-discriminatory basis with other carriers, imposes additional requirements on wireline local exchange carriers, and imposes even more comprehensive requirements on the largest ILECs. The
latter must provide access to their networks to competing carriers. Among other things, the Communications Act requires these large ILECs to provide physical collocation to competitors to allow them to place qualifying equipment in ILEC central
offices; to unbundle certain elements of local exchange network facilities and provide these Unbundled Network Elements, or UNEs, to CLECs at forward-looking prices; and to establish reciprocal compensation for the transport
and termination of local traffic. The FCCs recent decision to eliminate the UNE Platform, or UNE-P, as well as the availability of UNE transport and high capacity UNE loops in some urban areas has had no material effect on our CLEC operations.

ILEC operating entities that serve fewer than 50,000 lines are rural telephone companies under the definition in the Communications Act and
are exempt from these additional requirements unless and until such exemption is removed by the state regulatory body. Each of our RLEC operations is considered separately and each is currently exempt from the requirements imposed on the largest
ILECs.

Interconnection Agreements and Recent Regulatory Events. In order to obtain access to an ILEC network, a CLEC must negotiate an
interconnection agreement or opt-in to an existing interconnection agreement. These agreements cover, among other items, reciprocal compensation rates and required UNEs. If the parties cannot agree on the terms of an interconnection
agreement, the matter is submitted to the applicable state public utility commission or to the FCC for binding arbitration.

Access Charges. The FCC
regulates the prices that ILECs and CLECs charge for access to their local telephone networks in originating or terminating interstate transmissions. These access charges are paid by traditional carriers, but are not paid at this time by VoIP
providers. The FCC is considering whether or not to assess access charges on VoIP providers.

The FCC has reformed and continues to reform the structure of
the federal access charge system. The FCC has an active proceeding addressing access and other intercarrier payments. During the past three years, the FCC has received comments on proposals by industry participants for reforming the intercarrier
payment system, including the so-called Missoula Plan. In its Intercarrier Compensation docket, the FCC is examining all aspects of intercarrier payments made on both the interstate and intrastate level, including access charges and
reciprocal compensation rates for both wireless and wireline carriers of all sizes. It is not known what changes the FCC may make to intercarrier compensation, in what time frame the FCC may make them, and how such changes to intercarrier payments
may affect us, or whether we will be able to recover any mandatory reductions in intercarrier charges through increased charges to our subscribers, increased universal service support, or other alternative sources of revenue.



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NTELOS Telephone Company, or NTELOS Telephone, is an average schedule company for purposes of interstate
access charges. NTELOS Telephone participates in the common line pool tariff administered by the National Exchange Carrier Association, or NECA, and therefore charges subscriber line charges computed by NECA, but files its own traffic sensitive
(i.e., per-minute) tariff to establish access rates applicable to switching and transport of telecommunications traffic. R&B Telephone Company is a rate-of-return company for purposes of interstate access charges and
participates in NECAs common line pool and NECAs traffic sensitive pool.

Universal Service. Historically, network access charges were
set at levels that subsidized the cost of providing local residential service. The Telecommunications Act requires the FCC to identify and remove such historical implicit subsidies of local service subsidy from network access rates, to
establish an explicit Universal Service Fund to ensure the continuation of service to high-cost, low-income service areas and to develop a mechanism for the arrangements for payments into that fund by all providers of interstate telecommunications.
In 1997, the FCC issued its first order implementing these directives and has continued to refine this implementation in subsequent orders since that time. The FCCs universal service order established funding mechanisms for high-cost and
low-income service areas.

Federal universal service fund high cost payments are received by our RLECs and support the high cost of operations
in rural markets. Under universal service rules adopted by the FCC, the funds may be distributed only to a carrier that is designated as an Eligible Telecommunications Carrier, or ETC, by the FCC or a state regulatory commission. Our
RLECs have been designated as ETCs. Under current FCC rules, however, competitors also can obtain the same per-line support payments as we do without regard for whether the competitors cost structure is similar to our own, if the FCC or the
SCC determines that granting such support payments to competitors would be in the public interest and the competitors offer and advertise certain telephone services as required by the Telecommunications Act. Our wireless carrier has been certified
as an ETC in Virginia, West Virginia and Kentucky and is receiving universal service fund payments in those states. Several wireless carriers have been designated as ETCs in all or part of our RLEC service territory.

The FCC is currently considering a recommendation from the Federal-State Joint Board on Universal Service, an advisory panel composed of FCC commissioners and state
telecommunications regulators, that the fund be divided into three distinct funds each with a separate distribution mechanism and funding allocation. The three funds would be a Broadband Fund, a Mobility Fund, and a Provider of Last Resort Fund.
Under the current rules, our competitors can obtain the same per-line level of federal Universal Service Fund subsidies as we do, without regard for whether their costs of providing service are similar to ours, if either the FCC or the SCC
determines that granting these subsidies to competitors would be in the public interest and the competitors offer and advertise certain telephone services as required by the Telecommunications Act. The joint boards recommendation would
eliminate this identical support rule. The joint board has also recommended that the FCC adopt an interim, emergency cap on high-cost universal service support for competitive ETCs, such as our wireless affiliates. The FCC is also
considering this joint board recommendation to place an interim cap on the amount of Universal Service Funding distributed to competitive ETCs, including CMRS carriers and CLECs. See Risk Factors. In addition to considering the joint
board recommendations, the FCC has asked for comments on a proposal to use reverse auctions as a means to distribute certain Universal Service funding. It is not known how these changes, if adopted, may affect us.

Federal Regulation of Internet and DSL

To date, the FCC has treated
internet service providers, or ISPs, as enhanced service providers, rather than common carriers. Therefore, ISPs are exempt from most federal and state regulation, including the requirement to pay access charges. In 2006, the FCC expanded the base
of USF contributors by extending contributing obligations to providers of interconnected VoIP services. As internet services expand, federal, state and local governments may adopt rules and regulations, or apply existing laws and regulations to the
internet.

State Regulation of RLEC, CLEC and Interexchange Services

Most states require telecommunications providers to obtain authority from state regulatory commissions prior to offering common carrier services. State regulatory commissions generally regulate RLEC rates for
intrastate services, including rates for intrastate access services paid by providers of intrastate long distance services. RLECs must file tariffs setting forth the terms, conditions and prices for their intrastate services. Our RLECs are subject
to



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regulation in Virginia by the SCC. Our tariffs are approved by and on file with the SCC for RLEC services in our certificated service territory in and around
Waynesboro, Covington and Clifton Forge, Virginia and in portions of Botetourt and Augusta Counties, Virginia. In addition, the SCC establishes service quality requirements applicable to RLECs, including ours, and resolves disputes involving
intrastate communications services.

Some state regulatory commissions regulate the prices that ILECs and CLECs charge for access to their local telephone
networks in originating or terminating intrastate toll transmissions. On September 28, 2007, the Virginia SCC issued a final order in a rulemaking docket that capped CLECs intrastate switched access charges, including the access charges
of our CLECs, at the higher of the CLECs interstate switched access charge or the intrastate switched access charge of the ILEC (or the average of all ILECs) providing service in the territory served by the CLEC. The cap takes effect at the
end of a transition period that began on December 1, 2007 and ends on March 31, 2008. As part of that transition, we reduced our CLEC access charges effective on January 1, 2008. We expect this rate reduction to reduce our CLEC access
revenues by a total of $1.1 million in 2008. If, in a future proceeding, the SCC were to reduce the level of switched access charges that could be charged by our RLECs, such a reduction could have a significant adverse financial effect on our RLECs
depending on the amount of the reduction. See Risk Factors.

The Telecommunications Act preempts state statutes and regulations that restrict
entry into the telecommunications market. As a result, we can provide the full range of competitive intrastate local and long distance services in all states in which we currently operate and in any states into which we may expand. We are
certificated as a CLEC in Virginia, West Virginia and Tennessee. Although we file tariffs covering our CLEC services, our rates for such CLEC services generally fluctuate based on market conditions.

Local Government Authorizations

Certain governmental authorities
require permits to open streets for construction and/or franchises to install or expand facilities. We obtain such permits and franchises as required.

On
July 1, 2006, a new Virginia law took effect that imposes certain requirements and restrictions on localities in granting cable television franchises. The purpose behind the 2006 Virginia Cable Act is to expedite the franchising process from what
would sometimes take several years to only a few months. The 2006 Virginia Cable Act provides for negotiated CATV franchises and ordinance CATV franchises. All new entrants must first attempt to negotiate a cable franchise
with a locality. Should the negotiations not result in the granting of a franchise during a 45-day negotiation period, the applicant can elect to accept a default ordinance cable franchise that authorizes the applicant to begin offering CATV
services 75 days after the initial negotiated franchise request, subject to the applicant abiding by certain requirements set forth in the new law. In September of 2006, we obtained a negotiated franchise in Waynesboro and an ordinance franchise in
Botetourt County. Augusta County does not have a franchise requirement and, accordingly, we did not need to obtain a franchise prior to offering video services in Augusta County. In October of 2007, we obtained a negotiated franchise in Lynchburg,
Virginia for a new mixed-use residential development called Cornerstone.



|Item 1A. | Risk Factors.
|-------- | -------------

RISK FACTORS

The following risk factors and other information included in this Form 10-K should be carefully considered. The risks and uncertainties described below are not the
only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may adversely impact our business operations. Our business, financial condition or results of operations could be materially
adversely affected by any or all of these risks.

Risks Relating to Our Business

The telecommunications industry is generally characterized by rapid development, introduction of new technologies, substantial regulatory changes and intense competition, any of which could cause us to suffer
price reductions, customer losses, reduced operating margins and/or loss of market share.



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The telecommunications industry has been, and we believe will continue to be, characterized by several trends, including
the following:



| |  |  | rapid development and introduction of new technologies and services, such as VoIP, location based services such as GPS mapping technology and high speed data
services, including streaming video, mobile gaming and other applications that use EV-DO, Wi-Max or other technologies;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | substantial regulatory change due to the continuing efforts of the FCC to reform intercarrier compensation, to modify USF availability, and to limit availability of
UNEs used by CLECs under the Telecommunications Act of 1996;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased competition within established markets from current and new market entrants that may provide competing or alternative services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an increase in mergers and strategic alliances that allow one telecommunications provider to offer increased services or access to wider geographic markets; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the blurring of traditional dividing lines between, and the bundling of, different services, such as local telephone, long distance, wireless, video, data and
internet services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We expect competition to intensify as a result of new competitors and the development of new technologies, products
and services. Some or all of these risks may cause us to have to spend significantly more in capital expenditures than we currently anticipate in order to keep existing, and attract new, customers. Many of our voice and data competitors, such as
cable providers, wireless service providers, internet access providers and long distance carriers have brand recognition and financial, personnel, marketing and other resources that are significantly greater than ours. In addition, due to
consolidation and strategic alliances within the telecommunications industry, we cannot predict the number of competitors that will emerge, especially as a result of existing or new federal and state regulatory or legislative actions. Such increased
competition from existing and new entities could lead to price reductions, loss of customers, reduced operating margins and/or loss of market share.

As
competition develops and technology evolves, federal and state regulation of the telecommunications industry continues to change rapidly. We anticipate that this state of regulatory flux will persist in the future, as the FCC and state regulators
respond to competitive, technological, and legislative developments by modifying their existing regulations or adopting new ones.

Taken together or
individually, new or changed regulatory requirements affecting any or all of the wireless, local, and long distance industries may harm our business and restrict the manner in which we operate our business. The enactment of adverse regulation or
regulatory requirements may slow our growth and have a material adverse effect upon our business, results of operations and financial condition. We cannot assure you that changes in current or future regulations adopted by the FCC or state
regulators, or other legislative, administrative or judicial initiatives relating to the communications industry, would not have a material adverse effect on our business, results of operations and financial condition. In addition, pending
congressional legislative efforts to reform the Communications Act may cause major industry and regulatory changes that are difficult to predict.

Our leverage could adversely affect our financial health.

As of December 31, 2007, our total outstanding debt on a
consolidated basis, including capital lease obligations, was approximately $614.2 million. Our indebtedness could adversely affect our financial health and business and future operations by, among other things:



| |  |  | making it more difficult for us to satisfy our obligations with respect to our indebtedness;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | increasing our vulnerability to adverse economic and industry conditions by making it more difficult for us to react quickly to changing conditions;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limiting our ability to obtain any additional financing we may need to operate, develop and expand our business;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | requiring us to dedicate a substantial portion of any cash flows from operations to service our debt, which reduces the funds available for operations and future
business opportunities;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potentially making us more highly leveraged than our competitors, which could potentially decrease our ability to compete in our industry;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | exposing us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which could result in higher interest
expense in the event of increases in interest rates; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limiting our flexibility in planning for, or reacting to, changes in our business, and the industry in which we operate.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

The ability to make payments on our debt will depend upon our subsidiaries future operating performance, which is subject to general economic and competitive
conditions and to financial, business and other factors, many of which we cannot control. If the cash flows from our subsidiaries operating activities are insufficient to service our debt obligations, we may take actions, such as delaying or
reducing capital expenditures, reducing or eliminating our quarterly cash dividend, attempting to restructure or refinance our debt, selling assets or operations or seeking additional equity capital. Any or all of these actions may not be sufficient
to allow us to service our debt obligations. Further, we may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. The NTELOS Inc. senior secured credit facility limits our subsidiaries ability to take
several of these actions. Our failure to generate sufficient funds to pay our debts or to successfully undertake any of these actions could, among other things, materially adversely affect our ability to repay our obligations under our indebtedness.

The NTELOS Inc. senior secured credit facility imposes operating and financial restrictions, which may prevent us from capitalizing on business
opportunities and taking some corporate actions.

The NTELOS Inc. senior secured credit facility imposes operating and financial restrictions on
our subsidiaries. These restrictions generally:



| |  |  | restrict our subsidiaries ability to incur additional indebtedness;
| | - |  | --------------------------------------------------------------------



| |  |  | restrict our subsidiaries from entering into transactions with affiliates;
| | - |  | --------------------------------------------------------------------------



| |  |  | restrict our subsidiaries ability to consolidate, merge or sell all or substantially all of their assets;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | impose financial covenants relating to the business of our subsidiaries, including leverage and interest coverage ratios;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | require our subsidiaries to use specified amounts of excess cash flow (as defined in the agreement) to repay indebtedness if our leverage ratio reaches
specified levels; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restrict our subsidiaries ability to pay dividends or make advances to us to grant dividends.
| | - |  | ----------------------------------------------------------------------------------------------

We cannot assure you that those covenants will not adversely affect our ability to pay dividends or repurchase stock, finance our future operations or capital needs or
pursue available business opportunities. A breach of any of these covenants could result in a default in respect of the NTELOS Inc. senior secured credit facility. If a default occurs, our indebtedness under the NTELOS Inc. senior secured credit
facility could be declared immediately due and payable. As a result of general economic conditions, conditions in the lending markets, the results of our business or for any other reason, we may elect or be required to amend or refinance our
indebtedness, at or prior to maturity, or enter into additional agreements for senior indebtedness.

We will require a significant amount of cash,
which may not be available to us, to service our debt and fund our other liquidity needs.

Based on our total debt outstanding as of
December 31, 2007 of $614.2 million, which includes capital lease obligations, we expect payments on our outstanding indebtedness to be approximately $6.8 million in 2008. The aggregate maturities of our long-term debt based on the contractual
terms of the instruments are $6.8 million in 2008, $6.6 million in 2009, $153.9 million in 2010, $446.8 million in 2011 and $0.1 million in 2012. Our ability to make payments on, or to refinance or repay, our debt, fund planned capital expenditures,
pay quarterly cash dividends and expand our business will depend largely upon our future operating performance. Our future operating performance is subject to general economic, financial, competitive, legislative and regulatory factors, as well as
other factors that are beyond our control. Our business may not generate enough cash flow, or future borrowings may not be available to us under the NTELOS Inc. senior secured credit facility or otherwise, in an amount sufficient to enable us to pay
our debt or fund our other liquidity needs. If we are unable to generate sufficient cash to service our debt requirements, we will be required to refinance our indebtedness. We may not be able to refinance any of our debt under such circumstances,
on commercially reasonable terms or at all. If we are unable to refinance our debt or obtain new financing under these circumstances, we would have to consider other options, including, sales of certain assets to meet our debt service requirements,
sales of equity and negotiations with our lenders to restructure the applicable debt.



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NTELOS Inc.s senior secured credit facility could restrict our ability to do some of these things. If we are forced
to pursue any of the above options under distressed conditions, our business could be adversely affected.

Wireless Telecommunications

We face substantial competition in the wireless telecommunications industry generally from competitors with substantially greater resources than we have that may
be able to offer new technologies, services covering a broader geographical area and lower prices, which could decrease our profitability and cause prices for our services to continue to decline in the future.

We operate in an increasingly competitive environment. Our wireless business faces intense competition from other wireless providers, including Verizon Wireless, Alltel,
T-Mobile, AT&T Wireless, U.S. Cellular and Sprint Nextel (including its network managers (formerly referred to as its affiliates) and resellers, such as Virgin Mobile USA). Competition for customers is based principally upon services and
features offered, system coverage, technical quality of the wireless system, price, customer service and network capacity. Our ability to compete will depend, in part, on our ability to anticipate and respond to various competitive factors affecting
the telecommunications industry.

Many of our competitors are, or are affiliated with, major communications companies that have substantially greater
financial, technical and marketing resources than we have. These competitors may have greater name recognition and more established relationships with a larger base of current and potential customers and, accordingly, we may not be able to compete
successfully. Consolidation continues in the wireless industry with the combinations of Sprint and Nextel and AT&Ts acquisition of 100% ownership of AT&T Wireless as well as its acquisition of Dobson, and the pending acquisitions by
Verizon Wireless of Rural Cellular and by T-Mobile of Suncom.

Over the last three years, the per-minute rate for wireless services has declined.
Competition and market saturation may cause the prices for wireless products and services to continue to decline in the future. As per-minute rates continue to decline, our revenues and cash flows may be adversely impacted.

The effect of aggregate penetration of wireless services in all markets, including our markets, has made it increasingly difficult to attract new customers and retain
existing ones. While recent consolidation in the wireless industry may reduce the number of carriers in our markets, the carriers resulting from such consolidation will be larger and potentially more effective in their ability to compete with
NTELOS. As a result of increased competition, we anticipate that the price per minute for wireless voice services will continue to decline while costs to acquire customers, including, without limitation, handset subsidies and advertising and
promotion costs, may increase. Our ability to continue to compete effectively will depend upon our ability to anticipate and respond to changes in technology, customer preferences, new service offerings, demographic trends, economic conditions and
competitors pricing strategies. Failure to successfully market our products and services or to adequately and timely respond to competitive factors could reduce our market share or adversely affect our revenue or net income. In the current
wireless market, our ability to compete also depends on our ability to offer regional and national calling plans to our customers. NTELOS relies on roaming agreements with other wireless carriers to provide service in areas not covered by our
network. These agreements are subject to renewal and termination if certain events occur, including, without limitation, if network standards are not maintained. If NTELOS is unable to maintain or renew these agreements, our ability to continue to
provide competitive regional and nationwide wireless service to our customers could be impaired, which, in turn, would have an adverse impact on our wireless operations.

We expect competition to intensify as a result of the rapid development of new technologies, including improvements in the capacity and quality of digital technology, such as the move to EV-DO and Wi-Max wireless
technologies. Several wireless carriers, including Verizon Wireless and Sprint Nextel, have upgraded or announced plans to upgrade all or parts of their 3G networks to include EV-DO, which provides broadband wireless services at rates faster than
the 3G one times radio transmission, or 1xRTT, technology we use in our markets today. Such technological advances and industry changes could cause the technology used on our network to become dated. While we have announced plans to upgrade our
1xRTT network to EV-DO, this upgrade will take approximately two years to complete. We may not be able to respond to future changes and implement new technology on a timely basis or at an acceptable cost. To the extent that we do not keep pace with
technological advances, fail to offer technologies comparable to those of our competitors or fail to respond timely to changes in competitive factors in our industry, we could lose existing customers and experience a decline in revenues and net
income. Each of these factors and sources of competition discussed above could have a material adverse effect on our business, financial condition and results of operations.



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If we experience a high rate of wireless customer turnover or seek to prevent significant customer turnover, our
revenues could decline and our costs could increase.

Many wireless providers in the U.S. have experienced and have sought to prevent a high rate
of customer turnover. The rate of customer turnover may be the result of several factors, including limited network coverage, reliability issues such as blocked or dropped calls, handset problems, inability to roam onto third-party networks at
competitive rates, or at all, price competition and affordability, customer care concerns, wireless number portability requirements that allow customers to keep their wireless phone number when switching between service providers and other
competitive factors. In addition, customers could elect to switch to another carrier that has service offerings dependent on newer network technology. We cannot assure you that our strategies to address customer turnover will be successful. If we
experience a high rate of wireless customer turnover or seek to prevent significant customer turnover or fail to replace lost customers, our revenues could decline and our costs could increase which could have a material adverse effect on our
business, financial condition and operating results.

The loss of our largest customer, Sprint Nextel, or a decrease in its usage may result in lower
revenues or higher expenses.

Sprint Nextel accounted for approximately 21.6% of our operating revenues for the year ended December 31, 2007.
If we were to lose Sprint Nextel as a customer, including as a result of termination of the Strategic Network Alliance as a result of our failure to upgrade to EV-DO in accordance with the terms therein, or if Sprint Nextel became financially unable
to pay our charges, our revenues would decline, which could have a material adverse effect on our business, financial condition and operating results. While the 2005 merger of Sprint and Nextel has not had a negative impact on us to date, the
ultimate impact of this merger is not known at this time. Also, Sprint Nextel acquired controlling ownership interest in Nextel Partners Inc., a wireless affiliate of Sprint Nextel, in 2006. Unlike Sprint Nextel, Nextel Partners owns a wireless
network in all of the territory covered by our Strategic Network Alliance. Any future migration by Sprint Nextel of customers to non-CDMA technology could result in a decline in the usage of our network by Sprint Nextel and could cause an adverse
impact on our business, financial condition and operating results.

A reduction in usage or a decline in year over year growth in the usage of our wireless
network by Sprint Nextel could result in Sprint Nextel not exceeding the revenue minimums under the Strategic Network Alliance. Sprint Nextel has experienced significant changes in its executive management team in recent months. A weakening of
Sprint Nextels brand name could have an adverse effect on its long-term growth, financial condition and strategic direction, which could, in turn, have an adverse effect on our wireless wholesale revenues under the Strategic Network Alliance.

The pricing arrangement under our Strategic Network Alliance with Sprint Nextel may fluctuate which could result in lower revenues or a decline in
the historical growth of our wholesale wireless revenues.

Under the Strategic Network Alliance, our wholesale revenues effective July 1,
2007, will be the greater of $8.0 million per month ($9.0 million per month in the calendar month after 98% of our cell sites are upgraded to EV-DO in this wholesale area) or the revenues derived based on voice and data usage by Sprint Nextel of our
network priced at the applicable rates and terms for each of the services categories. After an initial period, these prices will generally fluctuate for the periods specified for each service under the agreement under a formula tied to a national
wireless retail customer revenue yield and a national retail data revenue yield. Sprint Nextel prices its national calling plans based on its business objectives and it could set price levels or change other characteristics of its plans in a way
that may not be economically advantageous for our business or may result in reduction of usage from Sprint Nextel customers. Based on our historical experience and pricing resets under the agreement, we expect per unit pricing reductions will occur
over the life of the agreement relating to travel and voice minute of use and data usage.

If the roaming rates we pay for our customers usage
of third-party networks increase, our operating results may decline.

Many of our competitors have national networks which enable them to more
economically offer roaming and long-distance telephone services to their subscribers. We do not have a national network, and we must pay other carriers a per-minute charge for carrying roaming and long-distance calls made by our subscribers. To
remain competitive, we absorb a substantial portion of the roaming and long-distance charges without increasing the prices we charge to our subscribers. We have entered into roaming agreements with other communications providers that govern the
roaming rates that we are required to pay. In addition, under the terms of our Strategic Network Alliance, we have favorable roaming rates with Sprint Nextel. If these roaming agreements are terminated, the roaming rates that we are charged may
increase and, accordingly, our cash flow and operating results may decline.



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We may incur significantly higher wireless handset subsidy costs than we anticipate to upgrade existing
subscribers.

As our subscriber base grows, and technological innovations occur, more existing subscribers will begin to upgrade to new wireless
handsets. We subsidize a portion of the price of wireless handsets and incur sales commissions on the sale or upgrade of handsets. The cost of handsets increases as they are able to offer more applications. Furthermore, we generally pay more to
purchase handsets than many of our national competitors who buy from manufacturers in large volumes. If more subscribers purchase or upgrade to new wireless handsets than we project, our operating results would be adversely affected during the
period of the sale or upgrade.

Our largest competitors and Sprint Nextel may build networks in our markets or use alternative suppliers, which may
result in decreased revenues and severe price-based competition.

Our current roaming partners, larger wireless providers and Sprint Nextel
ultimately may build their own digital wireless networks in our service areas or obtain roaming services from alternative sources. In addition to controlling the iDEN network as a result of the acquisition of Nextel Partners, Sprint Nextel controls
10 MHz of spectrum within our service territory in the 1900 MHz PCS band. While the terms of our agreement generally prohibit Sprint Spectrum L.P. from directly or indirectly commencing construction of, contracting for or launching its own CDMA
network in the Strategic Network Alliance service area until 18 months prior to termination of the agreement, the initial term of which ends on July 31, 2015, it would adversely affect our revenues and operating results if Sprint Nextel or
another wireless provider were to do so. Should this occur, use of our networks would decrease and our roaming and/or wholesale revenues would be adversely affected. Once a digital wireless system is built, there are only marginal costs to carrying
an additional call, so a larger number of facility-based competitors in our service areas could stimulate significant price competition, as has occurred in many areas in the U.S., with a resulting reduction in our revenues and operating results.

The loss of our licenses could adversely affect our ability to provide wireless services.

Our wireless licenses are generally valid for ten years from the effective date of the license. Licensees may renew their licenses for additional ten-year periods by
filing renewal applications with the FCC. Our wireless licenses expire in various years. The renewal applications are subject to FCC review and potentially public comment to ensure that the licensees meet their licensing requirements and comply with
other applicable FCC mandates. We applied for and were granted renewal of seven of these licenses in 2005, three of these licenses in 2006 and nine of these licenses in 2007. We have six remaining licenses due to expire in 2009 for which we will
need to apply for renewal. If we fail to file for renewal of other of our licenses at the appropriate time or fail to meet any regulatory requirements for renewal, we could be denied a license renewal and, accordingly, our ability to continue to
provide service in that license area would be adversely affected. In addition, many of our licenses are subject to interim or final construction requirements. While the licensees have generally met safe harbor standards for ensuring such
benchmarks are met, we have relied on, and will in the future rely on, substantial service thresholds for meeting build-out requirements. In such cases, there is no guarantee that the FCC will find our construction sufficient to meet the
applicable construction requirement, in which case the FCC could terminate our license and our ability to continue to provide service in that license area would be adversely affected.

Our failure to comply with regulatory mandates could adversely affect our ability to provide wireless services.

The FCC regulates the licensing, operation, acquisition and sale of the licensed spectrum that is essential to our business. We must comply with regulatory requirements, such as Enhanced 911, or E911, and CALEA and the customer privacy
mandates of the Customer Proprietary Network Information (CPNI) rules. Failure to comply with these and other regulatory requirements may have an adverse effect on our licenses or operations and could result in sanctions, fines or other
penalties.

On September 11, 2007, the FCC adopted an order mandating that wireless E911 location accuracy be measured on the public safety answering
point (PSAP) level, but deferred effectiveness of the mandate for five years while requiring interim milestones. This FCC order is expected to be appealed but we cannot predict the outcome of that appeal and failure to comply with this new
regulatory mandate could have an adverse effect.



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The FCC, together with the FAA, also regulates tower marking and lighting. In addition, tower construction is affected by
federal, state and local statutes addressing zoning, environmental protection and historic preservation. The FCC adopted significant changes to its rules governing historic preservation review of projects, which makes it more difficult and expensive
to deploy antenna facilities. The FCC is also considering changes to its rules regarding environmental protection as related to tower construction, which, if adopted, could make it more difficult to deploy facilities.

The licensing of additional spectrum by the FCC may adversely affect our ability to compete in providing wireless services.

The FCC, from time to time, auctions additional radio spectrum that may be suitable for services that compete, directly or indirectly, with our wireless offerings. For
example, in August and September of 2006, the FCC auctioned an additional 90 MHz of radio spectrum for Advanced Wireless Services that can be used for services like our wireless offerings. In addition, the FCC is conducting an auction of
additional wireless service spectrum that began on January 24, 2008. We participated in the 2006 auction but decided not to participate in the 2008 auction. We may participate in other future auctions in order to obtain spectrum necessary to
increase the capacity of our systems or to allow us to offer new services. The auction of new spectrum may adversely impact our business by creating new competitors, enhancing the ability of our existing competitors to offer services we cannot
offer, requiring the company to expend additional funds to acquire spectrum necessary for continued growth, or restricting our growth because we cannot acquire additional necessary spectrum.

If we lose the right to install our equipment on wireless cell sites or are unable to renew expiring leases for wireless cell sites on favorable terms or at all,
our business and operating results could be adversely impacted.

As of December 31, 2007, 91% of our base stations were installed on leased
cell site facilities, with 48% installed on facilities owned by American Tower and Crown Communications. A large portion of these cell sites are leased from a small number of large cell site companies, including American Tower and Crown
Communications, pursuant to master agreements that govern the general terms of our use of that companys cell sites. If a master agreement with one of these cell site companies were to terminate, or if one of these cell site companies were
unable to support our use of its cell sites, we would have to find new sites or rebuild the affected portion of our network. In addition, the concentration of our cell site leases with a limited number of cell site companies could adversely affect
our operating results and financial condition if we are unable to renew our expiring leases with these cell site companies either on terms comparable to those we have today or at all. If any of the cell site leasing companies with which we do
business were to experience severe financial difficulties, or file for bankruptcy protection, our ability to use cell sites leased from that company could be adversely affected. If a material number of cell sites were no longer available for our
use, our financial condition and operating results could be adversely affected.

We cannot predict the effect of technological changes on our
business.

The wireless telecommunications industry is experiencing significant technological change. We believe our continued success will depend,
in part, on our ability to anticipate or adapt to technological changes and to offer, on a timely basis, services that meet customer demands. We cannot assure you that we will obtain access to new technology on a timely basis or on satisfactory
terms, which could have a material adverse effect on our business, financial condition and operating results.

For us to keep pace with these technological
changes and remain competitive, we must continue to make significant capital expenditures to our integrated communications system. Customer acceptance of the services that we offer will continually be affected by technology-based differences in our
product and service offerings. We do not yet offer data applications at speeds as high as those offered by our competitors who have upgraded to EV-DO technology. Some competitors, most notably Sprint Nextel, offer push-to-talk. We do not
offer our customers a push-to-talk service.

In addition, some competitors have announced plans to develop a Wi-Fi or Wi-Max enabled handset.
Such a handset would permit subscribers to communicate using voice and data services with their handset using VoIP technology in any area equipped with a wireless internet connection, or hot spot, potentially bypassing our network. The number of hot
spots in the U.S. is growing rapidly, with some major cities and urban areas being covered entirely. The availability of VoIP or another alternative technology to our subscribers could greatly reduce the usage of our network, which would have an
adverse effect on our financial condition and operating results.

To accommodate next generation advanced wireless products such as
push-to-talk, high-speed data and high-bandwidth streaming video, we are required to make significant technological changes to our network. We also may



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be required to purchase additional spectrum. We cannot assure you that we could make these technological changes or gain access to this spectrum at a
reasonable cost or at all. Failure to provide these services could have a material adverse effect on our ability to compete with wireless carriers offering these new technologies.

Wireline Telecommunications

Our rural local telephone company subsidiaries face substantial competition from
competitors that are less heavily regulated than we are, which could increase our expenses or force us to lower prices, causing our revenues and operating results to decline.

As the rural local telephone companies for the western Virginia communities of Waynesboro, Clifton Forge, Covington and portions of Botetourt and Augusta Counties, Virginia, we currently compete with a number of
different providers, many of which are unregulated or less heavily regulated than we are. Our rural telephone company subsidiaries qualify as rural local telephone companies under the Telecommunications Act and are, therefore, exempt from many of
the most burdensome obligations to facilitate the development of competition, such as the obligation to sell unbundled elements of our network to our competitors at forward-looking prices that the Telecommunications Act places on larger
carriers. Nevertheless, our rural telephone company subsidiaries face significant competition, particularly from competitors that do not need to rely on access to our network to reach their customers. For example, wireless providers continue to
increase their market share and pose a significant competitive risk to our business. A significant competitive development in 2006 was the acquisition by Comcast of the cable television markets in our service area previously served by Adelphia
Communications Corporation. Comcast has announced that it will introduce wireline digital voice services to its cable customers in Charlottesville and other Virginia markets. We believe it is likely that Comcast will begin providing digital voice
telephony to its customers in Waynesboro, Botetourt and Augusta Counties in 2008. Cable providers have had significant success in other markets offering wireline voice services and so this development could significantly harm our business.

Cable companies and other VoIP providers are able to compete with our rural telephone company subsidiaries even though the rural exemption
under the Telecommunications Act is in place. If our rural exemption were removed, CLECs could more easily enter our rural telephone company subsidiaries markets. Moreover, the regulatory environment governing wireline local operations has
been, and we believe will likely continue to be, very liberal in its approach to promoting competition and network access.

Consistent with the experience
of other rural telephone companies, our rural telephone company subsidiaries have experienced a reduction in access lines caused by, among other things, customer migration to broadband internet service from dial-up internet service (resulting in a
disconnection of second lines), wireless competition and business customer migration from Centrex services to IP-based and other PBX services using fewer lines. As penetration rates of these technologies increase in our markets, our
revenues could decline. Our rural telephone company subsidiaries experienced a net loss of 1,743 access lines in the year ended December 31, 2007, or 3.8% of our access lines served at the end of 2006. A continued net loss of access lines could
impact our revenues and operating results.

Our rural telephone company subsidiaries are subject to several regulatory regimes and consequently face
substantial regulatory burdens and uncertainties.

Many of our competitors are unregulated or less heavily regulated than we are. For example, VoIP
technology is used to carry voice communications services over a broadband internet connection. The FCC has ruled that VoIP services are jurisdictionally interstate and that some VoIP arrangements (those not using the Public Switched Telephone
Network) are not subject to regulation as telephone services. In 2006, the FCC expanded the base of USF contributions by extending universal service contribution obligations to providers of interconnected VoIP service. The United States Supreme
Court upheld the FCCs ruling that cable broadband internet services are not subject to common carrier telecommunications regulation. In addition, the Virginia State Corporation Commission, or SCC, imposes service quality obligations on our
rural telephone company subsidiaries and requires us to adhere to prescribed service quality standards, but many of our competitors are not subject to these standards. These standards measure the performance of various aspects of our business. If we
fail to meet these standards, the SCC may impose fines or penalties or take other actions that may impact our revenues or increase our costs.

Regulatory developments at the FCC and the Virginia SCC could reduce revenues that our rural telephone company and CLEC subsidiaries receive from network access charges.

For the year ended December 31, 2007, approximately $37.1 million of our rural telephone company subsidiaries revenues came from network access charges, which
are paid to us by long distance carriers for originating and



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terminating calls in the areas we serve. These revenues are highly profitable for us. The amount of access charge revenues that we receive is based on rates
set by the FCC for interstate long distance calls and the SCC for intrastate long distance calls. Such access rates are subject to change. Our federal access charges are periodically reset by the FCC. The SCC could conduct an access reform
proceeding or rate cases and earnings reviews, all of which could result in rate changes.

The FCC has reformed and continues to reform the structure of
the federal access charge system. The FCC has an active proceeding addressing access and other intercarrier payments, which reduce the revenues we receive from other carriers. In the past three years, the FCC received comments on proposals by
industry participants for reforming the intercarrier payment system, including the so-called Missoula Plan. Various members of the FCC have indicated an intention to further reform the intercarrier compensation system.

On September 28, 2007, the Virginia SCC issued a final order in a rulemaking docket that capped CLECs intrastate switched access charges, including the access
charges of our CLECs, at the higher of the CLECs interstate switched access charge or the intrastate switched access charge of the ILEC (or the average of all ILECs) providing service in the territory served by the CLEC. The cap takes effect
at the end of a transition period that began on December 1, 2007 and ends on March 31, 2008. As part of that transition, we reduced our CLEC access rates effective on January 1, 2008. We expect these lower rates to reduce our CLEC
access revenues by a total of $1.1 million in 2008. If, in a future proceeding, the SCC were to reduce the level of switched access charges that could be charged by our RLECs, such a reduction could have a significant adverse financial effect on our
RLECs depending on the amount of the reduction.

Currently, VoIP providers generally do not pay us access charges for calls that originate or terminate on
our network. Therefore, expanded use of VoIP technology could reduce the access or intercarrier revenues received by rural telephone companies like ours. The FCC is currently considering the extent to which VoIP providers should be obligated to pay,
or entitled to receive, access charges, but we cannot predict the timing or ultimate result of this proceeding. If VoIP providers continue not to pay access charges to us, our revenues and operating results could be adversely affected to the extent
that users substitute VoIP calls for traditional wireline communications.

Regulatory developments at the FCC could reduce revenues that our rural
telephone company subsidiaries and our wireless subsidiaries receive from the Federal Universal Service Fund.

For the year ended December 31,
2007, we received approximately $5.0 million in payments from the federal Universal Service Fund in connection with our rural telephone company subsidiaries operations. The FCC is examining its Universal Service Fund rules and may change the
amount of Universal Service Fund support available to carriers. The FCC may change its rules and reduce the amount of funding ultimately available to our rural telephone company subsidiaries. There can be no assurance that we will continue to
receive the current level of Universal Service Fund revenues in the future. Loss of Universal Service Fund revenues could adversely affect our operating results.

The FCC is currently considering a recommendation from the Federal-State Joint Board on Universal Service, an advisory panel composed of FCC commissioners and state telecommunications regulators, that the fund be divided into three distinct
funds each with a separate distribution mechanism and funding allocation. The three funds would be a Broadband Fund, a Mobility Fund, and a Provider of Last Resort Fund. Under the current rules, our competitors can obtain the same per-line level of
federal Universal Service Fund subsidies as we do, without regard for whether their costs of providing service are similar to ours, if either the FCC or the SCC determines that granting these subsidies to competitors would be in the public interest
and the competitors offer and advertise certain telephone services as required by the Telecommunications Act. The joint boards recommendation would eliminate this identical support rule. The joint board has also recommended that
the FCC adopt an interim, emergency cap on high-cost universal service support for competitive ETCs, such as our wireless affiliates. In addition to considering the joint board recommendations, the FCC has asked for comments on a proposal to use
reverse auctions as a means to distribute certain Universal Service funding. It is not known how these changes, if adopted, may affect us.

The
FCC is also currently examining the way in which it collects carrier contributions to the federal Universal Service Fund. Today, as a telecommunications carrier, we contribute a percentage of our interstate revenues to the Universal Service Fund,
which supports the delivery of services to high-cost areas and low-income consumers, as well as to schools, libraries and rural health care providers. In 2006, the FCC expanded the base of USF contributions by extending universal service
contribution obligations to providers of interconnected VoIP service.



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In December 2004, Congress suspended the application of a law called the Antideficiency Act to the Universal Service Fund
until December 31, 2005 and has repeatedly extended this exemption, most recently, on December 19 2007, extending it until December 31, 2008. The Antideficiency Act prohibits government agencies from making financial commitments in
excess of their funds on hand. Currently, the Universal Service Fund administrator makes commitments to fund recipients in advance of collecting the contributions from carriers that will pay for these commitments. The FCC has not determined whether
the Antideficiency Act would apply to payments to our rural telephone company subsidiaries. If Congress does not continue to extend the exemption, the Universal Service Fund support may be delayed or reduced in the future, or contributors to the
fund, including us, could see their contribution obligations rise significantly.

Our CLEC operations face substantial competition and uncertainty
relating to their interconnection agreements with the ILEC networks covering the CLEC markets we serve.

Our CLEC operations compete primarily with
ILECs, including Verizon (including Verizon Business) and Embarq, and, to a lesser extent, other CLECs, including Level 3 (which purchased TelCove in 2006), Fibernet, Paetec and Cox. We will continue to face competition from other current and future
market entrants.

We have interconnection agreements with the ILEC networks covering each market in which our CLEC serves. From time to time, we are
required to negotiate amendments to, extensions of, or replacements for these agreements. Additionally, we may be required to negotiate new interconnection agreements in order to enter new markets in the future. We may not be able to successfully
negotiate amendments to existing agreements, negotiate new interconnection agreements, renew our existing interconnection agreements, opt in to new agreements or successfully arbitrate replacement agreements for interconnection on terms and
conditions acceptable to us. Our inability to do so would adversely affect our existing operations and opportunities to expand our CLEC business in existing and new markets. As the FCC modifies, changes and implements rules related to unbundling of
ILEC network elements and collocation of competitive facilities at ILEC central offices, we generally have to renegotiate our interconnection agreements to implement those new or modified rules.

Our competitors have substantial business advantages over our CLEC operations, and we may not be able to compete successfully.

The regional Bell operating companies and other large ILECs such as Embarq dominate the current market for business and consumer telecommunications services and have a
virtual monopoly on telephone lines. These companies represent the dominant competition in much of our target service areas, and we expect this competition to intensify. The large ILECs have established brand names and reputations for high quality
service in their service areas, possess sufficient capital to upgrade existing and deploy new equipment, own their telephone lines and can bundle digital data services with their existing analog voice services and other services, such as
long-distance, wireless and video services, to achieve economies of scale in serving customers. Moreover, the large ILECs are aggressively implementing win-back programs to regain access line customers lost to competitors and use bundled
services to assist in those programs. We pose a competitive risk to the large ILECs that serve our CLEC markets and, as both our competitors and our suppliers, they have no motivation to respond in a timely manner to our requests or to assist in the
enhancement of the services we provide to our CLEC customers.

We face substantial competition in our internet and data services business and face
regulatory uncertainty, each of which may adversely affect our business and results of operations.

We currently offer our internet and data
services in rural markets and face competition from other internet and data service providers, including cable companies. The internet industry is characterized by the absence of significant barriers to entry and rapid growth in internet usage among
customers. As a result, we expect that our competition will increase from market entrants offering high-speed data services, including DSL, cable and wireless access. Our competition includes:



| |  |  | cable modem services offered by cable providers;
| | - |  | ------------------------------------------------



| |  |  | ILECs, such as Verizon and Embarq in our CLEC territories; and
| | - |  | --------------------------------------------------------------



| |  |  | local, regional and national ISPs, both wireline and wireless.
| | - |  | --------------------------------------------------------------

Many of our competitors have financial resources, corporate backing, customer bases, marketing programs and brand names that are greater than ours. Additionally, competitors may charge less than we do for internet
services, causing us to reduce, or preventing us from raising, our fees.



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A significant portion of our dial-up internet customer base has transitioned to broadband services. We expect this trend
to continue. Where we offer incumbent local exchange service or, to some extent, CLEC services, we have been able to maintain service to some of these customers through DSL services or service bundles. In those areas of our internet coverage area
where we provide neither incumbent local exchange service nor CLEC service, we have been unable to retain dial-up internet customers who migrate to broadband services. In 2007 we experienced a 21.1% loss in the number of dial-up internet customers
from 2006. Our dial-up internet service revenues for the year ended December 31, 2007 decreased to approximately $3.8 million from approximately $5.0 million for the year ended December 31, 2006.

In connection with our internet access offerings, we could become subject to laws and regulations as they are adopted or applied to the internet. To date, the FCC has
treated ISPs as enhanced or information service providers, rather than common carriers, although it has subjected ISPs, such as providers of broadband, to many obligations formerly placed on common carriers, such as the requirements of the
Communications Assistance for Law Enforcement Act. As internet services expand, federal, state and local governments may adopt rules and regulations, or apply existing laws and regulations to the internet. The FCC recently issued a decision that
harmonizes the regulatory frameworks that apply to broadband access to the internet through telephone and cable providers communications networks.

General Matters

We require additional capital to respond to customer demand and to competition, and if we fail to raise the capital
or fail to have continued access to the capital required to build out and operate our planned networks, we may experience a material adverse effect on our business.

We require additional capital to build out and operate our wireless and wireline networks and for general working capital needs. Our aggregate capital expenditures for 2007 were $109.6 million, of which $25 million
represented incremental capital expenditures related to our network upgrade to EV-DO.

We expect our aggregate capital expenditures for 2008 to be in the
range of $118 million to $121 million, including incremental capital expenditures for an upgrade to our wireless network relating to EV-DO. We expect our aggregate incremental capital expenditures for 2007 through 2009 for the upgrade to EV-DO in
all of our markets to be approximately $65 million, of which $25 million was spent in 2007 and $35 million is expected to be spent in 2008. Furthermore, because of our intensely competitive market, we may be required, including under the terms of
the Strategic Network Alliance, to expand the technical requirements of our wireless or wireline network or to build out additional areas within our territories that could result in increased capital expenditures. Any such unplanned capital
expenditures may adversely affect our business, financial condition and operating results.

We are subject to numerous surcharges and fees from
federal, state and local governments, and the applicability and amount of these fees is subject to great uncertainty.

Telecommunications providers
pay a variety of surcharges and fees on their gross revenues from interstate and intrastate services. Interstate fees include federal Universal Service Fund fees and common carrier regulatory fees. In addition, state regulators and local governments
impose surcharges, taxes and fees on our services and the applicability of these surcharges and fees to our services is uncertain in many cases and jurisdictions may argue as to whether we have correctly assessed and remitted those monies. The
division of our services between interstate services and intrastate services is a matter of interpretation and may in the future be contested by the FCC or state authorities. In addition, periodic revisions by state and federal regulators may
increase the surcharges and fees we currently pay. In 2004, the Virginia General Assembly passed legislation that required us to pay state sales taxes on purchases that were previously exempt from those taxes. As a result, we have added a surcharge
to our customer bills to recover this increase in our taxes. It also is unknown if our tax burden will be similar to competitors using different technologies to provide similar services.

Virginia legislation that significantly revised the taxation of communications services in Virginia took effect on January 1, 2007. The new law applied a uniform, statewide, sales and use tax to retail
communications and video services on a competitively neutral basis. The communications sales and use tax rate is 5%. The sales and use tax is remitted by communications providers to the Virginia Department of Taxation, which administers the
distribution of the Communications Sales and Use Tax Trust Fund. The redistribution of taxes and fees from the trust fund to the localities is intended to be revenue neutral and replaces franchise fees and utility taxes set by localities.

The Federal government and many states apply transaction-based taxes to sales of our products and services and to our purchases of telecommunications
services from various carriers. It is possible that our transaction-based tax liabilities could change in the future. We may or may not be able to recover some or all of those taxes from our customers.



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We rely on a limited number of key suppliers and vendors for timely supply of equipment and services relating to
our network infrastructure. If these suppliers or vendors experience problems or favor our competitors, we could fail to obtain sufficient quantities of the products and services we require to operate our businesses successfully.

We depend on a limited number of suppliers and vendors for equipment and services relating to our network infrastructure. If these suppliers experience interruptions
or other problems delivering these network components on a timely basis, our subscriber growth and operating results could suffer significantly, and we may not be able to complete the EV-DO upgrade as required by the terms of our Strategic Network
Alliance. Our initial choice of a network infrastructure supplier can, where proprietary technology of the supplier is an integral component of the network, cause us effectively to be locked into one or a few suppliers for key network components. As
a result, we have become reliant upon a limited number of network equipment manufacturers, including Alcatel-Lucent, who is the exclusive provider of the equipment for our EV-DO upgrade, Motorola Inc. and Cisco Systems, Inc. If alternative suppliers
and vendors become necessary, we may not be able to obtain satisfactory and timely replacement supplies on economically attractive terms, or at all.

A system failure could cause delays or interruptions of service, which could cause us to lose customers.

To be successful, we must
provide our customers reliable network service. Some of the risks to our network and infrastructure include:



| |  |  | physical damage to outside plant facilities;
| | - |  | --------------------------------------------



| |  |  | power surges or outages;
| | - |  | ------------------------



| |  |  | software defects;
| | - |  | -----------------



| |  |  | human error;
| | - |  | ------------



| |  |  | disruptions beyond our control, including disruptions caused by terrorist activities or severe weather; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | failures in operational support systems.
| | - |  | ----------------------------------------

Network
disruptions may cause interruptions in service or reduced capacity for customers, either of which could cause us to lose customers and incur expenses.

We are dependent on third-party vendors for our information and billing systems. Any significant disruption in our relationship with these vendors could increase our cost and affect our operating efficiencies.

Sophisticated information and billing systems are vital to our ability to monitor and control costs, bill customers, process customer orders, provide customer service
and achieve operating efficiencies. We currently rely on internal systems and third-party vendors to provide all of our information and processing systems. Some of our billing, customer service and management information systems have been developed
by third parties and may not perform as anticipated or the third parties may experience interruptions or other problems delivering these systems. In addition, our plans for developing and implementing our information and billing systems rely to some
extent on the delivery of products and services by third-party vendors. Our right to use these systems is dependent upon license agreements with third-party vendors. Some of these agreements are cancelable by the vendor, and the cancellation or
nonrenewable nature of these agreements could impair our ability to process customer information and/or bill our customers. Since we rely on third-party vendors to provide some of these services, any switch in vendors could be costly and affect
operating efficiencies.

If we lose our senior management, our business may be adversely affected.

The success of our business is largely dependent on our executive officers, as well as on our ability to attract and retain other highly qualified technical and
management personnel. We believe that there is, and will continue to be, intense competition for qualified personnel in the telecommunications industry, and we cannot assure you that we will be able to attract and retain the personnel necessary for
the development of our business. The unexpected loss of key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition and operating results.



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Unauthorized use of, or interference with, our network could disrupt service and increase our costs.

We may incur costs associated with the unauthorized use of our network including administrative and capital costs associated with detecting,
monitoring and reducing the incidence of fraud. Fraudulent use of our network may impact interconnection costs, capacity costs, administrative costs, fraud prevention costs and payments to other carriers for fraudulent roaming.

Security breaches related to our physical facilities, computer networks, and informational databases may cause harm to our business and reputation and result in a
loss of customers.

Our physical facilities and information systems may be vulnerable to physical break-ins, computer viruses, theft, attacks by
hackers, or similar disruptive problems. If hackers gain improper access to our databases, they may be able to steal, publish, delete or modify confidential personal information concerning our subscribers. In addition, misuse of our customer
information could result in more substantial harms perpetrated by third parties. This could damage our business and reputation, and result in a loss of customers.

We may not be able to pay dividends on our common stock in the future.

We intend to continue to pay regular quarterly dividends on
our common stock. Any decision to declare future dividends will be made at the discretion of the board of directors and will depend on, among other things, our results of operations, cash requirements, investment opportunities, financial condition,
contractual restrictions and other factors that our board of directors may deem relevant. We are a holding company that does not operate any business of our own. As a result, we are dependent on cash dividends and distributions and other transfers
from our subsidiaries to make dividend payments or to make other distributions to our stockholders, including by means of a stock repurchase. Amounts that can be made available to us to pay cash dividends or repurchase stock are restricted by the
NTELOS Inc. Amended Credit Agreement.

Our stock price has historically been volatile and may continue to be volatile.

The trading price of our common stock has been and may continue to be subject to fluctuations. Our stock price may fluctuate in response to a number of events and
factors. Events and factors that could cause fluctuations in our stock price may include, among other things:



| |  |  | actual or anticipated variations in quarterly and annual operating results;
| | - |  | ---------------------------------------------------------------------------



| |  |  | changes in financial estimates by us or changes in financial estimates or recommendations by any securities analysts who might cover our stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | conditions or trends in our industry or regulatory changes;
| | - |  | -----------------------------------------------------------



| |  |  | conditions, trends or changes in the securities marketplace, including trading volumes;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | changes in the market valuations of other companies operating in our industry;
| | - |  | ------------------------------------------------------------------------------



| |  |  | technological innovations by us or our competitors;
| | - |  | ---------------------------------------------------



| |  |  | announcements by us or our competitors of significant acquisitions, strategic partnerships, significant contracts or divestitures;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | announcements of investigations, regulatory scrutiny of our operations or lawsuits filed against us;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | changes in general conditions in the United States and global economy, including those resulting from war, incidents of terrorism or responses to such events;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | loss of one or more significant customers, including Sprint Nextel;
| | - |  | -------------------------------------------------------------------



| |  |  | sales of large blocks of our common stock;
| | - |  | ------------------------------------------



| |  |  | changes in accounting principles;
| | - |  | ---------------------------------



| |  |  | additions or departures of key personnel; and
| | - |  | ---------------------------------------------



| |  |  | sales of our common stock, including sales of our common stock by our directors, executive officers or affiliates.
| | - |  | ------------------------------------------------------------------------------------------------------------------



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The Quadrangle Entities continue to have significant influence over our business and could delay, deter or prevent
a change of control, change in management or business combination that may be beneficial to our stockholders and as a result, may depress the market price of our stock.

As of December 31, 2007, the Quadrangle Entities beneficially owned 11,306,102 shares of our common stock, or 26.9% of our outstanding common stock. In addition, three of the eight directors that serve on our
board of directors are representatives or designees of Quadrangle. By virtue of such stock ownership and representation on the board of directors, the Quadrangle Entities continue to have a significant influence over day-to-day corporate and
management policies and all matters submitted to our stockholders, including the election of the directors, and to exercise significant control over our business, policies and affairs. Such concentration of voting power could have the effect of
delaying, deterring or preventing a change of control, change in management or business combination that might otherwise be beneficial to our stockholders and as a result, may depress the market price of our stock.

Our stock price may decline due to the large number of shares eligible for future sale.

Sales of substantial amounts of our common stock, or the possibility of such sales, may adversely affect the market price of our common stock. These sales may also make it more difficult for us to raise capital
through the issuance of equity securities at a time and at a price we deem appropriate.

We have granted certain of our stockholders, including the
Quadrangle Entities, the right to require us to register their shares of our common stock, representing approximately 12.3 million shares of our common stock. Accordingly, the number of shares subject to registration rights is substantial and
the sale of these shares may have a negative impact on the market price for our common stock.

Provisions in our charter documents and the General
Corporation Law of Delaware could discourage potential acquisition proposals, could delay, deter or prevent a change in control and could limit the price certain investors might be willing to pay for our common stock.

Certain provisions of the General Corporation Law of Delaware, the state in which we are organized, and our certificate of incorporation and by-laws may inhibit a change
of control not approved by our board of directors or changes in the composition of our board of directors, which could result in the entrenchment of current management. These provisions include:



| |  |  | advance notice requirements for stockholder proposals and director nominations;
| | - |  | -------------------------------------------------------------------------------



| |  |  | limitations on the ability of stockholders to amend, alter or repeal our by-laws;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | limitations on the removal of directors;
| | - |  | ----------------------------------------



| |  |  | the inability of the stockholders to act by written consent; and
| | - |  | ----------------------------------------------------------------



| |  |  | the authority of the board of directors to issue, without stockholder approval, preferred stock with such terms as the board of directors may determine and
additional shares of our common stock.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 1B. | Unresolved Staff Comments.
|-------- | --------------------------

Not applicable.



|Item 2. | Properties.
|------- | -----------

We are headquartered in Waynesboro, Virginia and own
offices and facilities in a number of locations within our operating markets. We believe that our current facilities are adequate to meet our needs in our existing markets for the foreseeable future. The table below provides the location,
description and approximate square footage of our material owned properties.



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|                  |  |                                              |  |                           |  
|----------------- |  | -------------------------------------------- |  | ------------------------- | -
|Location          |  | Property Description                         |  | Approximate SquareFootage |  
|Harrisonburg, VA  |  | CLEC POP                                     |  | 2,500                     |  
|Waynesboro, VA    |  | Retail Store                                 |  | 4,000                     |  
|Richmond, VA      |  | Wireless Switch Building                     |  | 4,608                     |  
|Norfolk, VA       |  | Wireless Switch Building                     |  | 4,970                     |  
|Troutville, VA    |  | Wireline Switch and Video Headend Building   |  | 8,400                     | 1
|Clifton Forge, VA |  | Wireline Switch Building                     |  | 12,000                    |  
|Covington, VA     |  | Wireline Service Center                      |  | 13,000                    |  
|Waynesboro, VA    |  | Wireless Switch Building                     |  | 15,000                    |  
|Clifton Forge, VA |  | Call Center Building (leased to third party) |  | 15,620                    |  
|Waynesboro, VA    |  | Wireline Service Center                      |  | 20,000                    |  
|Daleville, VA     |  | Regional Operations Center                   |  | 21,000                    |  
|Covington, VA     |  | Wireline Switch Building                     |  | 30,000                    |  
|Waynesboro, VA    |  | Corporate Headquarters                       |  | 30,000                    |  
|Waynesboro, VA    |  | Wireline Switch Building                     |  | 33,920                    |  
|Waynesboro, VA    |  | Customer Care Building                       |  | 31,000                    |  
|Waynesboro, VA    |  | Corporate Support Building                   |  | 51,000                    |  
|Daleville, VA     |  | Wireline Service Center                      |  | 9,400                     |  

We also lease the following material properties:



| |  |  | Our Charleston, West Virginia regional operations center (wireless and wireline switching) under an Office Lease Agreement with Option to Purchase by and between
Eagan Management Company and CFW Communications Company d/b/a NTELOS Inc., dated December 11, 1998. On November 1, 2006, we executed a sublease agreement with GAI Consultants Inc. for approximately 8,000 square feet of this space; and,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Daleville, Virginia customer care facility under a Lease Agreement by and between The Layman Family LLC and R&B Communications, Inc., dated May 1,
2000, and First Amendment to Lease Agreement, dated May 30, 2003.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|1 | Facility is currently being expanded by 3,000 square feet. Renovation expected to be completed by March 31, 2008.
|- | -----------------------------------------------------------------------------------------------------------------



|Item 3. | Legal Proceedings.
|------- | ------------------

We are involved in routine litigation in the
ordinary course of our business. We do not believe that any pending or threatened litigation of which we are aware would have a material adverse effect on our financial condition, results of operations or cash flows.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

No matter was
submitted to a vote of security holders during the fourth quarter of 2007.

PART II



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|------- | -------------------------------------------------------------------------------------------------------------

Market Information

Our common stock has been traded on the NASDAQ
Global Market under the symbol NTLS since February 9, 2006. Prior to that time, there was no established public trading market for our common stock. On February 22, 2008, the last reported sale price for our common stock was
$18.79 per share.



33



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##### Table of Contents

The following tables set forth the high and low prices per share of our common stock and the cash dividends declared per
common share for the four quarters in each of 2007 and 2006, which correspond to our quarterly fiscal periods for financial reporting purposes:



|               |                       |      |                                      |  |   |       |  |   |     
|-------------- | --------------------- | ---- | ------------------------------------ |  | - | ----- |  | - | ----
|               |                       | 2006
|               | Stock Price per Share |      | CashDividendsDeclared perCommonShare
|               | High                  |      | Low                                  | 
|First Quarter  |                       | $    | 15.80                                |  | $ | 10.97 |  | $ |    
|Second Quarter |                       | $    | 15.64                                |  | $ | 12.18 |  | $ |    
|Third Quarter  |                       | $    | 14.88                                |  | $ | 12.63 |  | $ |    
|Fourth Quarter |                       | $    | 18.02                                |  | $ | 11.39 |  | $ |    
|               |                      
|               |                       | 2007
|               | Stock Price per Share |      | CashDividendsDeclared perCommonShare
|               | High                  |      | Low                                  | 
|First Quarter  |                       | $    | 20.59                                |  | $ | 16.60 |  | $ | 0.15
|Second Quarter |                       | $    | 27.97                                |  | $ | 18.75 |  | $ |    
|Third Quarter  |                       | $    | 30.60                                |  | $ | 23.30 |  | $ | 0.15
|Fourth Quarter |                       | $    | 33.02                                |  | $ | 25.01 |  | $ | 0.21

Stock Performance Graph

The following indexed line graph indicates our total return to stockholders from our initial public offering on February 8, 2006 to December 31, 2007, as compared to the total return for the Nasdaq
Composite Index and the Nasdaq Telecommunications Index for the same period. The calculations in the graph assume that $100 was invested on February 8, 2006 in our Common Stock and each index and also assume dividend reinvestment.

Cumulative Total Shareholder Return

NTELOS, NASDAQ Stock Market

and Nasdaq Telecommunications Index

(02/8/06 - 12/31/07)

LOGO



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##### Table of Contents

|                                |  |                 |     |                  |   |                  |  |   |    
|------------------------------- |  | --------------- | --- | ---------------- | - | ---------------- |  | - | ---
|                                |  | February 8,2006 |     | December 31,2006 |   | December 31,2007
|NTELOS Holdings Corp.           |  | $               | 100 |                  | $ | 149              |  | $ | 250
|NASDAQ Composite Index          |  | $               | 100 |                  | $ | 107              |  | $ | 117
|NASDAQ Telecommunications Index |  | $               | 100 |                  | $ | 116              |  | $ | 127

Holders

There
were approximately 10,088 holders of our common stock on February 20, 2008.

Dividends/Dividend Policy

We intend to continue to pay regular quarterly dividends on our common stock. On February 28, 2008, we declared a dividend to be paid on April 11, 2008 to
common stock shareholders of record on March 20, 2008 at a rate of $0.21 per share. Any decision to declare future dividends will be made at the discretion of the board of directors and will depend on, among other things, our results of
operations, cash requirements, investment opportunities, financial condition, contractual restrictions and other factors that the board of directors may deem relevant. We are a holding company that does not operate any business of our own. As a
result, we are dependent on cash dividends and distributions and other transfers from our subsidiaries to make dividend payments or to make other distributions to our stockholders, including by means of a stock repurchase. Amounts that can be made
available to us to pay cash dividends or repurchase stock are restricted by the NTELOS Inc. Amended Credit Agreement.

In June 2006, we paid a $30 million
cash dividend on our Class B common stock. The payment of the dividend represented the payment in full of the $30 million Class B distribution preference provided for in our Restated Certificate of Incorporation. In the fourth quarter of 2006, all
of the 27,000,000 authorized shares of Class B common stock were retired. As a result, the Companys Restated Certificate of Incorporation was amended so as to effect a reduction in the authorized number of shares of the Company by the
elimination of the Class B common stock.



35



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##### Table of Contents

|Item 6. | Selected Financial Data
|------- | -----------------------

SELECTED HISTORICAL
FINANCIAL INFORMATION



|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------ |  | ------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | -------------------------- |  | - | ------------------------------- | - |  | ---------------------------------------------------- | ------- | - | -------------------------- | - | ------- | -------------------------- |  | - | ------- | - |  | - | ------- | -
|                                                                         |  | NTELOS Inc.(1)                        |         |   | NTELOS Holdings Corp.                    |  
|                                                                         |  | PREDECESSORCOMPANY                    |         |   | PREDECESSOR REORGANIZEDCOMPANY           |   |         |                            |  |   |                                 |   |  |                                                      |        
|(In thousands)                                                           |  | January 1,2003throughSeptember 9,2003 |         |   | September 10,2003throughDecember 31,2003 |   |         | Year EndedDecember 31,2004 |  |   | January 1,2005throughMay 1,2005 |   |  | January 14,2005(inception)throughDecember 31,2005(2) |         |   | Year EndedDecember 31,2006 |   |         | Year EndedDecember 31,2007 | 
|Consolidated Statements of Operations Data                               |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Operating Revenues                                                       |  | $                                     | 208,672 |   |                                          | $ | 100,611 |                            |  | $ | 343,310                         |   |  | $                                                    | 126,360 |   |                            | $ | 265,859 |                            |  | $ | 440,076 |   |  | $ | 500,394 |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|                                                                         |  |                                       |         |   |                                          |   |        
|Operating Expenses                                                       |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Cost of sales and services(3)(exclusive
of items shown separately below) |  |                                       | 74,775  |   |                                          |   | 34,343  |                            |  |   | 112,339                         |   |  |                                                      | 40,470  |   |                            |   | 85,403  |                            |  |   | 146,429 |   |  |   | 161,344 |  
|Customer operations(3)                                                   |  |                                       | 58,041  |   |                                          |   | 30,233  |                            |  |   | 82,812                          |   |  |                                                      | 29,270  |   |                            |   | 63,330  |                            |  |   | 99,998  |   |  |   | 108,848 |  
|Corporate operations(3)                                                  |  |                                       | 18,342  |   |                                          |   | 6,272   |                            |  |   | 26,942                          |   |  |                                                      | 8,259   |   |                            |   | 22,434  |                            |  |   | 34,398  |   |  |   | 32,090  |  
|Depreciation and amortization                                            |  |                                       | 51,224  |   |                                          |   | 18,860  |                            |  |   | 65,175                          |   |  |                                                      | 23,799  |   |                            |   | 59,103  |                            |  |   | 84,921  |   |  |   | 97,061  |  
|Gain on sale of assets                                                   |  |                                       |        |   |                                          |   |        |                            |  |   |                                |   |  |                                                      | (8,742  | ) |                            |   |        |                            |  |   |        |   |  |   |        |  
|Asset impairment charge                                                  |  |                                       | 545     |   |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   |        |   |  |   |        |  
|Accretion of asset retirement obligations                                |  |                                       | 437     |   |                                          |   | 225     |                            |  |   | 680                             |   |  |                                                      | 252     |   |                            |   | 489     |                            |  |   | 816     |   |  |   | 818     |  
|Capital and operational restructuring charges                            |  |                                       | 2,427   |   |                                          |   |        |                            |  |   | 798                             |   |  |                                                      | 15,403  |   |                            |   | 183     |                            |  |   |        |   |  |   |        |  
|Termination of advisory agreements(4)                                    |  |                                       |        |   |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   | 12,941  |   |  |   |        |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|                                                                         |  |                                       | 205,791 |   |                                          |   | 89,933  |                            |  |   | 288,746                         |   |  |                                                      | 108,711 |   |                            |   | 230,942 |                            |  |   | 379,503 |   |  |   | 400,161 |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Operating Income                                                         |  |                                       | 2,881   |   |                                          |   | 10,678  |                            |  |   | 54,564                          |   |  |                                                      | 17,649  |   |                            |   | 34,917  |                            |  |   | 60,573  |   |  |   | 100,233 |  
|                                                                         |  |                                       |         |   |                                          |   |        
|Other Income (Expenses)                                                  |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Equity share of net loss from NTELOS Inc.                                |  |                                       |        |   |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   | (1,213  | )                          |  |   |        |   |  |   |        |  
|Interest expense                                                         |  |                                       | (26,010 | ) |                                          |   | (6,427  | )                          |  |   | (15,740                         | ) |  |                                                      | (10,839 | ) |                            |   | (34,338 | )                          |  |   | (59,850 | ) |  |   | (43,021 | )
|(Loss) gain on interest rate swap                                        |  |                                       |        |   |                                          |   |        |                            |  |   |                                |   |  |                                                      | (660    | ) |                            |   | 4,780   |                            |  |   | (246    | ) |  |   | (3,527  | )
|Gain on sale of investment                                               |  |                                       |        |   |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   | 1,723   |   |  |   |        |  
|Other income (expenses)                                                  |  |                                       | (436    | ) |                                          |   | 768     |                            |  |   | 374                             |   |  |                                                      | 270     |   |                            |   | 1,595   |                            |  |   | 2,833   |   |  |   | 3,146   |  
|Reorganization items, net                                                |  |                                       | 169,036 |   |                                          |   | (145    | )                          |  |   | 81                              |   |  |                                                      |        |   |                            |   |        |                            |  |   |        |   |  |   |        |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|                                                                         |  |                                       | 142,590 |   |                                          |   | (5,804  | )                          |  |   | (15,285                         | ) |  |                                                      | (11,229 | ) |                            |   | (29,176 | )                          |  |   | (55,540 | ) |  |   | (43,402 | )
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|                                                                         |  |                                       | 145,471 |   |                                          |   | 4,874   |                            |  |   | 39,279                          |   |  |                                                      | 6,420   |   |                            |   | 5,741   |                            |  |   | 5,033   |   |  |   | 56,831  |  
|Income Tax Expense                                                       |  |                                       | 706     |   |                                          |   | 258     |                            |  |   | 1,001                           |   |  |                                                      | 8,150   |   |                            |   | 4,591   |                            |  |   | 12,190  |   |  |   | 24,411  |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|                                                                         |  |                                       | 144,765 |   |                                          |   | 4,616   |                            |  |   | 38,278                          |   |  |                                                      | (1,730  | ) |                            |   | 1,150   |                            |  |   | (7,157  | ) |  |   | 32,420  |  
|Minority Interests in Losses (Earnings) of Subsidiaries                  |  |                                       | 15      |   |                                          |   | 54      |                            |  |   | 34                              |   |  |                                                      | 13      |   |                            |   | (52     | )                          |  |   | (28     | ) |  |   | 33      |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Net Income (Loss) Before Cumulative Effect of Accounting Change          |  |                                       | 144,780 |   |                                          |   | 4,670   |                            |  |   | 38,312                          |   |  |                                                      | (1,717  | ) |                            |   | 1,098   |                            |  |   | (7,185  | ) |  |   | 32,453  |  
|Cumulative Effect of Accounting Change                                   |  |                                       | (2,754  | ) |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   |        |   |  |   |        |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Net Income (Loss)                                                        |  |                                       | 142,026 |   |                                          |   | 4,670   |                            |  |   | 38,312                          |   |  |                                                      | (1,717  | ) |                            |   | 1,098   |                            |  |   | (7,185  | ) |  |   | 32,453  |  
|Dividend Distribution Preference on Class B Shares                       |  |                                       |        |   |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   | (30,000 | ) |  |   |        |  
|Dividend Requirements on Predecessor Preferred Stock                     |  |                                       | (3,757  | ) |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   |        |   |  |   |        |  
|Reorganization Items  Predecessor Preferred Stock                       |  |                                       | 286,772 |   |                                          |   |        |                            |  |   |                                |   |  |                                                      |        |   |                            |   |        |                            |  |   |        |   |  |   |        |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Income (Loss) Applicable to Common Shares                                |  | $                                     | 425,041 |   |                                          | $ | 4,670   |                            |  | $ | 38,312                          |   |  | $                                                    | (1,717  | ) |                            | $ | 1,098   |                            |  | $ | (37,185 | ) |  | $ | 32,453  |  
|                                                                         |  |                                       |         |   |                                          |   |         |                            |  |   |                                 |   |  |                                                      |         |   |                            |   |         |                            |  |   |         |   |  |   |         |  
|Income (Loss) per Share  Basic(5)                                       |  |                                       | N/M     |   |                                          |   | N/M     |                            |  |   | N/M                             |   |  |                                                      | N/M     |   |                            | $ | 0.05    |                            |  | $ | (0.95   | ) |  | $ | 0.78    |  
|Income (Loss) per Share  Diluted(5)                                     |  |                                       | N/M     |   |                                          |   | N/M     |                            |  |   | N/M                             |   |  |                                                      | N/M     |   |                            | $ | 0.05    |                            |  | $ | (0.95   | ) |  | $ | 0.77    |  
|Cash Dividends Declared per Share  Common Stock(5)                      |  |                                       | N/M     |   |                                          |   | N/M     |                            |  |   | N/M                             |   |  |                                                      | N/M     |   |                            |   | N/M     |                            |  | $ |        |   |  | $ | 0.51    |  



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|                                       |  |                       |         |                       |   |                       |  |                       |         |                       |   |         |  |   |        
|-------------------------------------- |  | --------------------- | ------- | --------------------- | - | --------------------- |  | --------------------- | ------- | --------------------- | - | ------- |  | - | -------
|                                       |  | NTELOS Inc.(1)        |         | NTELOS Holdings Corp.
|(In thousands)                         |  | As ofDecember 31,2003 |         | As ofDecember 31,2004 |   | As ofDecember 31,2005 |  | As ofDecember 31,2006 |         | As ofDecember 31,2007
|Balance Sheet Data:                    |  |                       |         |                       |   |                       |  |                       |         |                       |   |         |  |   |        
|Cash and cash equivalents              |  | $                     | 48,722  |                       | $ | 34,187                |  | $                     | 28,134  |                       | $ | 44,180  |  | $ | 53,467 
|Property and equipment, net            |  |                       | 360,698 |                       |   | 356,129               |  |                       | 360,142 |                       |   | 376,772 |  |   | 402,904
|Total assets                           |  |                       | 650,223 |                       |   | 620,457               |  |                       | 895,843 |                       |   | 900,847 |  |   | 918,488
|Total debt                             |  |                       | 310,303 |                       |   | 180,251               |  |                       | 759,384 |                       |   | 626,523 |  |   | 614,206
|Redeemable convertible preferred stock |  |                       |        |                       |   |                      |  |                       |        |                       |   |        |  |   |       
|Total stockholders equity             |  | $                     | 205,547 |                       | $ | 318,181               |  | $                     | 1,098   |                       | $ | 151,765 |  | $ | 171,340



|(1) | On March 4, 2003, NTELOS Inc. and certain of its subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia (the Bankruptcy Court). NTELOS Inc. and certain of its subsidiaries emerged from the Bankruptcy Court proceedings
pursuant to the terms of the Plan of Reorganization on September 9, 2003 (the Effective Date). As a consequence of the implementation of fresh start accounting, the financial information presented above for periods subsequent to the
Effective Date is generally not comparable to the financial information presented for the periods prior to the Effective Date.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We acquired 24.9% of the NTELOS Inc. common stock and stock warrants on February 24, 2005. We completed our
acquisition of all of NTELOS Inc.s remaining common stock, warrants and vested options by means of a cash merger on May 2, 2005. We had no operating activities prior to the merger date. From February 24, 2005 through May 1,
2005, we accounted for our investment in NTELOS Inc. under the equity method, resulting in a $1.2 million equity share of net loss from NTELOS Inc. in our consolidated statement of operations for 2005.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For NTELOS Holdings Corp., cost of sales and services, customer operations and corporate operations expense include $0.4
million, $0.6 million and $3.3 million, respectively, of non-cash compensation expense for the year ended December 31, 2007 ($4.3 million in the aggregate). For the year ended December 31, 2006, cost of sales and services, customer
operations and corporate operations expense include $1.1 million, $1.4 million and $10.7 million, respectively, of non-cash compensation expense ($13.2 million in the aggregate). For the period January 14, 2005 (inception) through
December 31, 2005, cost of sales and services, customer operations and corporate operations expense include $0.3 million, $0.4 million and $3.0 million, respectively, of non-cash compensation expense ($3.7 million in the aggregate).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | In May 2005, we (through NTELOS Inc.) entered into advisory agreements with CVC Management LLC and Quadrangle Advisors
LLC (the Advisors) whereby the Advisors agreed to provide advisory and other services to us for a period of ten years for a combined annual advisory fee of $2.0 million payable quarterly at the beginning of each quarter. Under certain
conditions set forth in these agreements, we could terminate these agreements prior to expiration. On February 13, 2006, concurrent with our IPO, we terminated these agreements, paying a $12.9 million termination fee on that date.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Periods designated as N/M indicate that the measure is not meaningful, as the capital structure under the
predecessor company is not comparable to our current capital structure.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

You should read the following discussion of our financial condition in conjunction with our consolidated financial statements and the related notes included herein (Item 8). This discussion contains forward looking
statements that involve risks and uncertainties. For additional information regarding some of these risks and uncertainties that affect our business and the industry in which we operate, please see Risk Factors and Forward-Looking
Statements elsewhere in this report.

Overview

For purposes of this discussion relative to the financial and operational results and cash flows for the years ended



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December 31, 2007 and 2006 in comparison to the year ended December 31, 2005, we have combined the financial and operational results and cash flows
for the period January 1, 2005 to May 1, 2005 of NTELOS Inc. with our financial and operational results and cash flows for the period May 2, 2005 to December 31, 2005. We had no operating activities prior to the completion of our
acquisition of NTELOS Inc. on May 2, 2005. We believe this comparison provides the most practical way to comment on the results of operations and cash flows.

We are a leading provider of wireless and wireline communications services to consumers and businesses primarily in Virginia and West Virginia under the NTELOS brand name. Our wireless operations are composed of an NTELOS-branded retail
business and a wholesale business that we operate under an exclusive contract with Sprint Spectrum L.P., an indirect wholly-owned subsidiary of Sprint Nextel Corporation (hereinafter collectively referred to as Sprint Nextel). We believe
our regional focus and contiguous service area provide us with a differentiated competitive position relative to our primary wireless competitors, all of whom are national providers. Our wireless revenues have experienced a 16.1% compound annual
growth rate from 2005 to 2007 and accounted for 75% of our total revenues in 2007. We hold digital PCS licenses to operate in 29 basic trading areas with a licensed population of approximately 8.8 million, and we have deployed a network using
code division multiple access technology, or CDMA, in 20 basic trading areas which currently covers a total population of approximately 5.2 million potential subscribers. As of December 31, 2007, our wireless retail business had
approximately 407,000 NTELOS-branded subscribers, representing a 7.8% penetration of our total covered population.

We made significant investments in our
wireless network in 2005, 2006 and 2007, adding 186 new wireless cell sites and increasing our total cell sites to 1,023 at the end of 2007. These investments and other initiatives, including the increased take rate of national rate plans and
enhanced data service offerings, contributed to a 10.8% increase in subscribers, a $2.39 increase in ARPU, and a 35 basis point reduction in churn during 2007. We also amended our agreement with Sprint Spectrum L.P. during 2007 to act as their
exclusive wholesale provider of network services through July 31, 2015. Under this arrangement, which we refer to as the Strategic Network Alliance, we are the exclusive PCS service provider in our western Virginia and West Virginia service
area for all Sprint Nextel CDMA wireless customers (see Business  Wireless Business  Our Strategic Network Alliance with Sprint Nextel in Part I, Item 1 of this 2007 10-K). Under the terms of the Agreement, we are
committed to upgrading our wireless network to Evolution-Data Optimized Revision A (EV-DO) in the territory covered by the Agreement. We expect our aggregate incremental capital expenditures for 2007 through 2009 for the upgrade to EV-DO
in all of our markets to be approximately $65 million, of which $25 million was spent in 2007 and $35 million is expected to be spent in 2008. For the year ended December 31, 2007, we realized wholesale revenues of $96.0 million, primarily
related to the Strategic Network Alliance, representing an increase of 23.4% over the same period in 2006.

Founded in 1897, our wireline incumbent local
exchange carrier business is conducted through two subsidiaries that qualify as RLECs under the Telecommunications Act. These two RLECs provide wireline communications services to residential and business customers in the western Virginia
communities of Waynesboro, Covington, Clifton Forge and portions of Botetourt and Augusta counties. As of December 31, 2007, we operated approximately 44,000 RLEC telephone access lines. We also own a 2,110-mile regional fiber optic network and
participate in partnerships that directly connect our networks with many of the largest markets in the mid-Atlantic region. We leverage our wireline network infrastructure to offer competitive voice and data communication services in Virginia and
West Virginia outside our RLEC coverage area. Within our Competitive segment, we market and sell local and long distance, voice and data services almost exclusively to business customers through our competitive local exchange carrier, or CLEC, and
Internet Service Provider, or ISP, operation. As of December 31, 2007, we served customers with approximately 49,000 CLEC access line connections. We also offer DSL services in over 95% of our RLEC service area and as of December 31, 2007
we operated approximately 20,000 broadband access connections in our markets, representing an increase of 17.4% in 2007. In 2007, the wireline Competitive segment strategic products (local phone services, broadband voice and data services and
high-capacity network access and transport services) experienced revenue growth of 13.3% over 2006. In 2007 and 2006, our wireline operating income margins were 31.4% and 33.2%, respectively. In late 2007, we introduced NTELOS video in selected
neighborhoods within our two RLEC service areas. The product provides an alternative to cable and satellite TV, offering video entertainment services with more than 200 all-digital channels and 18 high-definition channels. It is delivered via fiber
to the home which allows us to deliver video, Internet access at speeds up to 20 megabits per second and local and long distance telephone services. At December 31, 2007, we passed approximately 2,900 homes with fiber. Revenues from the video
and high speed Internet product are included in the Competitive wireline segment.

We were formed in January 2005 by the CVC Entities and the Quadrangle
Entities for the purpose of acquiring



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NTELOS Inc. On January 18, 2005, we entered into an agreement with NTELOS Inc. and certain of its shareholders to acquire the common stock of NTELOS
Inc., making an initial investment on February 24, 2005. On May 2, 2005, we acquired all of NTELOS Inc.s remaining common shares, warrants and vested options by means of a merger at which time NTELOS Inc. became a wholly-owned
subsidiary.

During the first quarter of 2006, we completed an initial public offering (the IPO) of 15,375,000 shares of our common stock at an
offering price of $12.00 per share. We received proceeds from the offering of approximately $172.5 million, net of $12.0 million in underwriting fees and other closing costs of $2.7 million. On April 4, 2007, in a secondary offering of our
common stock, CVC and Quadrangle and certain of their affiliates sold an aggregate of 12,650,000 shares priced at $18.25 per share. This resulted in their combined ownership declining from 58% to approximately 27%. The Company did not receive any
proceeds from the offering and the Companys total shares outstanding did not change as a result of this offering. Direct costs of this offering, primarily legal, printing and accounting fees, totaled $0.6 million. These costs were charged to
corporate operations expense.

We used approximately $12.9 million of the IPO net proceeds to terminate our advisory agreements with CVC and Quadrangle and
$143.9 million to redeem our Floating Rate Senior Notes in full (including unpaid accrued interest of $4.6 million) on April 15, 2006. The remaining proceeds, combined with available cash, were used to pay a $30 million dividend on our
26,493,000 shares of Class B common stock on June 6, 2006. The payment of the dividend represented the payment in full of the $30 million Class B distribution preference provided for in our Restated Certificate of Incorporation. All Class B
common stock was subsequently converted to common stock by the end of 2006.

On September 25, 2007, Quadrangle agreed to acquire all of the shares of
NTELOS common stock owned by CVC and certain affiliated limited partnerships. With this acquisition, private equity funds affiliated with Quadrangle own approximately 27% of our outstanding common stock.

We began paying cash dividends on our common stock during 2007. The board of directors declared cash dividends in the amount of $0.51 per share during 2007, which
amounted to $21.4 million.

Other Overview Discussion

To supplement our financial statements presented under generally accepted accounting principles, or GAAP, throughout this document we reference non-GAAP measures, such as average monthly revenues per handset/unit in service, or ARPU, to
measure operating performance for which our operating managers are responsible and upon which we evaluate their performance.

ARPU is a telecommunications
industry metric that measures service revenues per period divided by the weighted average number of handsets in service during that period. ARPU as defined below may not be similar to ARPU measures of other companies, is not a measurement under GAAP
and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statements of operations. We closely monitor the effects of new rate plans and service offerings on ARPU in order to determine their
effectiveness. We believe ARPU provides management useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high-value customers. The table below provides a reconciliation of
operating revenue from our wireless segment (Note 3 in our Notes to Consolidated Financial Statements) to subscriber revenues used to calculate average monthly ARPU for the years ended December 31, 2007, 2006 and 2005.



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|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|(Dollars in thousands, other than average monthly ARPU data) |  | 2007 |          |   | 2006 |   |          | 2005 | 
|Wireless communications revenues                             |  | $    | 377,761  |   |      | $ | 322,329  |      |  | $ | 280,303  |  
|Less: equipment revenues from sales to new customers         |  |      | (13,797  | ) |      |   | (15,063  | )    |  |   | (11,997  | )
|Less: equipment revenues from sales to existing customers    |  |      | (7,524   | ) |      |   | (5,079   | )    |  |   | (4,135   | )
|Less: wholesale revenues                                     |  |      | (95,976  | ) |      |   | (77,747  | )    |  |   | (62,651  | )
|Plus: other revenues and adjustments                         |  |      | 687      |   |      |   | 778      |      |  |   | 1,192    |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Wireless gross subscriber revenues                           |  | $    | 261,151  |   |      | $ | 225,218  |      |  | $ | 202,712  |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Average number of subscribers                                |  |      | 388,778  |   |      |   | 350,235  |      |  |   | 321,719  |  
|Total ARPU                                                   |  | $    | 55.98    |   |      | $ | 53.59    |      |  | $ | 52.51    |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|                                                             |  |      |         
|Wireless gross subscriber revenues                           |  | $    | 261,151  |   |      | $ | 225,218  |      |  | $ | 202,712  |  
|Less: paid in advance and prepay subscriber revenues         |  |      | (70,471  | ) |      |   | (52,648  | )    |  |   | (42,104  | )
|(Less): adjustments                                          |  |      | (765     | ) |      |   | (1,124   | )    |  |   | (1,422   | )
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Wireless gross postpay subscriber revenues                   |  | $    | 189,915  |   |      | $ | 171,446  |      |  | $ | 159,186  |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Average number of postpay subscribers                        |  |      | 279,620  |   |      |   | 260,530  |      |  |   | 243,772  |  
|Postpay ARPU                                                 |  | $    | 56.60    |   |      | $ | 54.84    |      |  | $ | 54.42    |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|                                                             |  |      |         
|Wireless gross subscriber revenues                           |  | $    | 261,151  |   |      | $ | 225,218  |      |  | $ | 202,712  |  
|Less: wireless voice and other features revenues(1)          |  |      | (239,385 | ) |      |   | (213,824 | )    |  |   | (195,591 | )
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Wireless data revenues(1)                                    |  | $    | 21,766   |   |      | $ | 11,394   |      |  | $ | 7,121    |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Average number of subscribers                                |  |      | 388,778  |   |      |   | 350,235  |      |  |   | 321,719  |  
|Total data ARPU(1)                                           |  | $    | 4.67     |   |      | $ | 2.71     |      |  | $ | 1.84     |  
|                                                             |  |      |          |   |      |   |          |      |  |   |          |  



|(1) | In September of 2007, we launched a new prepay billing platform which enhanced product offerings to customers and allowed the Company to separately identify certain data revenues
previously bundled into blended ARPU, and certain of the underlying plans were modified to offer data services. Accordingly, beginning in the fourth quarter of 2007, this revenue is included in data revenue. This contributed to accelerated growth in
year-over-year data ARPU.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating Revenues

Our revenues are generated from the following categories:



| |  |  | wireless PCS, consisting of retail revenues from network access, data services, equipment revenues and feature services; and wholesale revenues from the Strategic
Network Alliance and roaming from other carriers;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | RLEC segment revenues, including local service, network access, toll and directory advertising;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | Competitive segment revenues, including revenues from our key strategic products (local services, broadband voice and data services, and high-capacity network
access and transport services), IPTV-based video services (recently launched in selected neighborhoods within our two RLEC service areas), long distance and dial-up Internet services; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | other communications services revenues, including primarily revenues from paging and revenue from leasing excess building space.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------

Operating Expenses

Our operating expenses are incurred from the
following categories:



| |  |  | cost of sales and services, including digital PCS handset equipment costs which, in keeping with industry practice, we generally sell to our customers at a price
below our cost, and usage-based access charges, including long distance, roaming charges, and other direct costs incurred in accessing other
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | telecommunications providers networks in order to provide telecommunication services to our end-use customers, leased facility expenses for connection
to other carriers, cell sites and switch locations and engineering and other expenses for service related property, plant and equipment;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | customer operations expenses, including marketing, product management, product advertising, selling, billing, publication of regional telephone directories,
customer care, directory services and bad debt expenses;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | corporate operations expenses, including taxes other than income, executive, accounting, legal, purchasing, information technology, human resources and other
general and administrative expenses, including earned bonuses above target achievement levels, non-cash compensation expense related to the original Class A common stock and option instruments held by certain members of corporate management and
secondary offering costs;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | depreciation and amortization, including depreciable long-lived property, plant and equipment and amortization of intangible assets where applicable;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | accretion of asset retirement obligations, or ARO;
| | - |  | --------------------------------------------------



| |  |  | capital restructuring charges associated with our acquisition of NTELOS Inc.; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | termination of advisory agreements.
| | - |  | -----------------------------------

Other Income
(Expenses)

Our other income (expenses) are generated (incurred) from interest expense on debt instruments, including changes in fair value of our
interest rate swap instrument, our equity share of the net loss of NTELOS Inc. from our 24.9% investment in NTELOS Inc. for the period February 24, 2005 through May 1, 2005, other income, which includes interest income, and gain on sale of
investment.

Income Taxes

Our income tax expense and
effective tax rate increases or decreases based upon changes in a number of factors, including our pre-tax income or loss, net operating losses and related carryforwards, valuation allowances, alternative minimum tax credit carryforwards, state
minimum tax assessments, gain or loss on the sale of assets and investments, write-down of assets and investments, non-deductible expenses and other tax deductible amounts.

Minority Interests in Losses (Earnings) of Subsidiaries

Our minority interest relates to a 53.7% RLEC segment
investment in a partnership that owns certain signaling equipment and provides service to a number of small RLECs and to Verisign. We also have a 97% majority interest in the Virginia PCS Alliance L.C., or the VA Alliance, that provides PCS services
to a 1.9 million populated area in central and western Virginia. The VA Alliance has incurred significant cumulative operating losses since it initiated PCS services in 1997. Given that the total of minority member contributions and cumulative
operating results are negative during all periods reported, we recognize a credit to minority interest only to the extent of capital contributions from the 3% minority owners. No such contributions were made during the years ended December 31,
2007, 2006 and 2005.

Results of Operations

Year
ended December 31, 2007 compared to year ended December 31, 2006

OVERVIEW

Operating revenues increased $60.3 million, or 13.7%, from the year ended December 31, 2006 to the year ended December 31, 2007. Wireless PCS accounted for 91.9% of the increase, with growth occurring from
subscriber revenues, wholesale revenues and equipment sales. Wireline contributed the remaining revenue increase primarily from minute-driven increases in RLEC access revenues and increases in key strategic products in the Competitive segment,
partially offset by declines in other revenues from the Competitive segment (dial-up Internet services, switched access and reciprocal compensation).

Operating income increased $39.7 million over the comparative years, from $60.6 million for the year ended December 31, 2006 to $100.2 million for the year ended December 31, 2007. Operating margin, before non-cash compensation,
advisory fees and termination of advisory agreements, increased from 19.6% for the year ended December 31, 2006 to 20.9% for the year ended December 31, 2007.



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Net income increased $39.6 million from a net loss of $7.2 million for the year ended December 31, 2006 to net
income of $32.5 million for the year ended December 31, 2007. Included in net loss for the year ended December 31, 2006 was a charge of $12.9 million for the termination of advisory agreements and interest expense that was $16.8 million
higher during 2006 than 2007, which related to interest on the Floating Rate Notes (retired in April 2006), $8.7 million of non-recurring interest expense charges related to the early retirement of debt and lower interest during 2007 as a result of
the refinancing transaction in June 2006. Non-cash compensation charges were $8.9 million higher during 2006 than 2007 driven by expense recognition commensurate with the IPO. In addition, there was a $12.2 million year-over-year increase in income
tax expense, which was primarily driven by the significant change in taxable income.

OPERATING REVENUES

The following table identifies our external operating revenues on a business segment basis for the years ended December 31, 2007 and 2006:



|                       |  |                        |         |      |   |            |  |   |            |   |  |       |   
|---------------------- |  | ---------------------- | ------- | ---- | - | ---------- |  | - | ---------- | - |  | ----- | --
|                       |  | Year EndedDecember 31, |         |      |   |            |  |  
|Operating Revenues     |  | 2007                   |         | 2006 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands) |  |                        |         |      |   |            |  |   |            |  
|Wireless PCS           |  | $                      | 377,761 |      | $ | 322,329    |  | $ | 55,432     |   |  | 17.2  | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Wireline               |  |                        |         |      |   |            |  |   |            |   |  |       |   
|RLEC                   |  |                        | 61,458  |      |   | 60,767     |  |   | 691        |   |  | 1.1   | % 
|Competitive wireline   |  |                        | 60,467  |      |   | 56,158     |  |   | 4,309      |   |  | 7.7   | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Total wireline         |  |                        | 121,925 |      |   | 116,925    |  |   | 5,000      |   |  | 4.3   | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Other                  |  |                        | 708     |      |   | 822        |  |   | (114       | ) |  | (13.9 | )%
|                       |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Total                  |  | $                      | 500,394 |      | $ | 440,076    |  | $ | 60,318     |   |  | 13.7  | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |       |   

WIRELESS COMMUNICATIONS REVENUESWireless communications revenues increased $55.4 million from the year ended
December 31, 2006 to the year ended December 31, 2007 primarily due to an increase in our NTELOS-branded net subscriber revenue of $35.8 million, or 16.0%, an $18.2 million, or 23.4%, increase in wholesale and roaming revenues, and a $1.2
million, or 5.8%, increase in equipment sales revenues related to a 4.4% increase in gross subscriber additions.

Subscriber revenues reflected subscriber
growth of 10.8%, or approximately 39,600 subscribers, from approximately 367,200 subscribers as of December 31, 2006 to approximately 406,800 subscribers as of December 31, 2007.

For the comparative years, subscriber revenues reflected the subscriber growth described above and also reflect an increase in ARPU of 4.5%, from $53.59 to $55.98 for
the years ended December 31, 2006 and 2007, respectively. This increase in ARPU is primarily attributable to the continued growth in data services, data packages and higher-priced product offerings. Total data ARPU was $4.67 for the year ended
December 31, 2007, up from $2.71 for the year ended December 31, 2006 (see footnote to the ARPU Reconciliation table above). Gross subscriber additions were 4.4% higher for 2007, at approximately 171,700, compared to gross subscriber
additions of approximately 164,400 for 2006. This increase in gross additions combined with the introduction of more feature-rich handsets sold in the 2007 period as compared to the 2006 period led to an increase in equipment sales revenue of $1.2
million, or 5.8%, from the year ended December 31, 2006 to the year ended December 31, 2007. Also contributing to the revenue increase was a 35 basis point decrease in total subscriber churn, from 3.18% for the year ended December 31,
2006 (approximately 133,500 subscribers) to 2.83% for the year ended December 31, 2007 (approximately 132,100 subscribers), due to network and service quality improvements and the continued increase in the number of national and unlimited
postpay subscriber plans and other program improvements in 2007.

The increase in wholesale revenues for the twelve month comparative periods was driven by
increased voice and data usage under the Strategic Network Alliance. Wholesale revenues grew 23.4% for the year, from $77.7 million for the year ended December 31, 2006 to $96.0 million for the year ended December 31, 2007. Our wholesale
revenues are derived primarily from the voice usage by Sprint Nextel customers who live in the Strategic Network Alliance service area (home minutes of use), those customers of Sprint Nextel who use our network for voice



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services while traveling through the Strategic Network Alliance service area (travel minutes of use) and data usage by Sprint Nextel customers
who live in or travel through the Strategic Network Alliance service area. In addition to volume increases experienced on existing cell sites, we have added 70 cell sites within this wholesale service area over the last two years, improving existing
service and extending this coverage area.

Wholesale pricing reductions under the Strategic Network Alliance went into effect on July 1, 2006 relating
to travel minutes of use and data usage in accordance with the annual pricing reset provisions of this wholesale agreement. The impact of the July 2006 pricing reductions was more than offset by increased usage.

On July 31, 2007, we entered into an Amended and Restated Resale Agreement (Agreement) with Sprint Spectrum L.P, which became effective as of
July 1, 2007. The Agreement supersedes and replaces the original 2004 Resale Agreement and extends the term of the original 2004 Resale Agreement, commits us to perform network upgrades and changes pricing structures, including the addition of
revenue minimum guarantees.

Under the terms of the Agreement, we are committed to upgrading our wireless network to EV-DO in the territory covered by the
Agreement. Relative to this upgrade, we are required to be 95% complete by January 31, 2010 and 98% complete by January 31, 2011. Failure by us to achieve these deadlines will constitute an event of default and may give Sprint Nextel the
right to terminate the Agreement. We currently expect that the upgrade will be 98% completed by mid-year 2009.

Beginning in July 2007, we are guaranteed a
minimum monthly revenue of $8.0 million and, upon achieving 98% completion of the network upgrade to EV-DO, the monthly minimum increases to $9.0 million. The term of the Agreement was extended four years over the 2004 Resale Agreement, to
July 31, 2015, subject to automatic three-year extensions unless certain notice provisions are exercised. The Agreement prohibits Sprint Nextel from directly or indirectly commencing construction of, contracting for or launching its own
wireless communications network in the Agreement territory until 18 months prior to end of the Agreement. The Agreement specifies a series of usage rates for various types of services. The voice rate pricing under the Agreement is fixed through
July 1, 2008, at rates comparable to the rates in the 2004 Resale Agreement, but provides for greater volume discounts in the future to provide incentives for the migration of additional traffic onto the network. After July 1, 2008, the
voice rates will be reset semi-annually based on Sprint Nextels voice revenue yield. Generally, the data rate pricing is lower under the Agreement compared to the rates agreed to in the 2004 Resale Agreement in recognition of the significant
growth experience in data usage and anticipated growth from the introduction of higher speed data services as a result of the network upgrade and to also provide incentives for the migration of additional traffic onto the network. Data rates for
Sprint Nextel in-market home subscribers are on a per subscriber basis. The data rate for Sprint Nextel customers that are traveling through the territory covered by the Agreement and use the network are on a per kilobyte basis, reset quarterly
beginning July 1, 2009. The Strategic Network Alliance also permits our NTELOS-branded customers to access Sprint Nextels national wireless network at reciprocal rates as the Sprint Nextel travel rates.

WIRELINE COMMUNICATIONS REVENUESWireline communications revenues increased $5.0 million over the comparative years.



| |  | RLEC Revenues.RLEC revenues, which include local service, network access, toll service, directory advertising and calling feature revenues from our RLEC
customers, increased $0.7 million over the comparative years despite a 3.8% access line decrease, with lines totaling approximately 43,500 as of December 31, 2007 compared to approximately 45,300 as of December 31, 2006. The revenue
increase was due primarily to increased access revenues of $1.1 million, or 3.1% over the comparative years driven by an increase in carrier access minutes of 17.2% from the year ended December 31, 2006 to the year ended December 31, 2007
due primarily to growth in usage by wireless carriers. This increase was offset by a $0.5 million lump-sum cash receipt in September 2006 from the Universal Service Administrative Company (USAC) pursuant to an FCC order related to our safety net
support dispute for the period January 2003 through September 2006. NTELOS Telephone Companys interstate access rates were subject to a biennial reset on July 1, 2007. The rate reset resulted in a $1.2 million reduction of this revenue
for the year. We anticipate that continued minute growth will partially offset the net revenue reduction we are experiencing related to this reset.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The access line loss noted above is reflective primarily of residential wireless substitution, second line losses and PBX displacement of Centrex lines. These line losses, to date, do not reflect the introduction of
competitive voice service offerings, such as from cable companies or CLECs, in our markets. While still uncertain, we anticipate competitive voice service competition from Comcast in certain of our markets to commence in early 2008. We expect that
this competition will primarily be for residential customers. We have estimated that our access line losses may be between 4% and 7% in 2008.



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| |  | Competitive Wireline Revenues.Competitive wireline revenue increased $4.3 million in 2007 driven by revenues from our key strategic products (local
services, broadband voice and data services, and high-capacity network access and transport services) in the Competitive wireline segment which grew $5.5 million, or 13.3%, over the comparative years, offset by declines in other Competitive revenues
(dial-up Internet services, switched access and reciprocal compensation). Revenues from broadband, integrated access and Metro Ethernet services increased $3.6 million, or 28.5%, from the year ended December 31, 2006 to the year ended
December 31, 2007 due primarily to customer growth of 17.4% with the broadband products, particularly in the products with higher bandwidth. Revenues from the remaining key strategic products collectively increased $1.9 million, or 6.7%, over
the comparative years primarily from new circuit additions with carriers and increased customers. Dial-up revenue declined $1.2 million from continued customer erosion, with approximately 5,800 fewer customers, or 21.1%, from approximately 27,600 at
December 31, 2006 to approximately 21,800 at December 31, 2007, with dial-up revenues of $3.8 million for 2007.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On September 28, 2007, the Virginia SCC issued a final order in a rulemaking docket that capped CLECs intrastate switched access charges, including the access charges of our CLECs, at the higher of the CLECs interstate
switched access charges or the intrastate switched access charges of the ILEC (or the average of all ILECs) providing service in the geographic area served by the CLEC. The cap takes effect at the end of a transition period that began on
December 1, 2007 and ends on March 31, 2008. As part of that transition, we reduced our CLEC access rates effective on January 1, 2008. We expect these lower rates to reduce our CLEC access revenues by a total of $1.1 million in 2008.

OPERATING EXPENSES

The following table identifies our
operating expenses on a business segment basis, consistent with the table presenting operating revenues above, for the years ended December 31, 2007 and 2006:



|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ---- | - | ---------- |  | - | ---------- | - |  | ----- | --
|                                                                                                                                                                                                    |  | Year EndedDecember 31, |         |      |   |            |  |  
|Operating Expenses                                                                                                                                                                                  |  | 2007                   |         | 2006 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands)                                                                                                                                                                              |  |                        |         |      |   |            |  |   |            |  
|Wireless PCS                                                                                                                                                                                        |  | $                      | 235,575 |      | $ | 210,287    |  | $ | 25,288     |   |  | 12.0  | % 
|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Wireline                                                                                                                                                                                            |  |                        |         |      |   |            |  |   |            |   |  |       |   
|RLEC                                                                                                                                                                                                |  |                        | 17,033  |      |   | 14,155     |  |   | 2,878      |   |  | 20.3  | % 
|Competitive wireline                                                                                                                                                                                |  |                        | 39,561  |      |   | 37,723     |  |   | 1,838      |   |  | 4.9   | % 
|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Total wireline                                                                                                                                                                                      |  |                        | 56,594  |      |   | 51,878     |  |   | 4,716      |   |  | 9.1   | % 
|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Other                                                                                                                                                                                               |  |                        | 5,215   |      |   | 5,423      |  |   | (208       | ) |  | (3.8  | )%
|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Operating expenses, before depreciation and amortization, accretion of asset retirement obligations, termination of advisory agreements,
secondary offering costs and non-cash compensation charges |  |                        | 297,384 |      |   | 267,588    |  |   | 29,796     |   |  | 11.1  | % 
|                                                                                                                                                                                                    |  |                        |         |     
|Depreciation and amortization                                                                                                                                                                       |  |                        | 97,061  |      |   | 84,921     |  |   | 12,140     |   |  | 14.3  | % 
|Accretion of asset retirement obligations                                                                                                                                                           |  |                        | 818     |      |   | 816        |  |   | 2          |   |  | 0.2   | % 
|                                                                                                                                                                                                    |  |                        |         |     
|Termination of advisory agreements                                                                                                                                                                  |  |                        |        |      |   | 12,941     |  |   | (12,941    | ) |  | (100  | )%
|Secondary offering costs                                                                                                                                                                            |  |                        | 570     |      |   |           |  |   | 570        |   |  | N/M   |   
|Non-cash compensation                                                                                                                                                                               |  |                        | 4,328   |      |   | 13,237     |  |   | (8,909     | ) |  | (67.3 | )%
|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   
|Total operating expenses                                                                                                                                                                            |  | $                      | 400,161 |      | $ | 379,503    |  | $ | 20,658     |   |  | 5.4   | % 
|                                                                                                                                                                                                    |  |                        |         |      |   |            |  |   |            |   |  |       |   



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OPERATING EXPENSES  The following describes our operating expenses by segment and on a basis consistent with our
financial statement presentation.

The primary drivers of the year-over-year increases in our operating expenses before depreciation and amortization,
accretion of asset retirement obligations, secondary offering costs, termination of advisory agreements and non-cash compensation are described in detail by segment as follows:



| |  |  | Wireless Communications  Of the increase in wireless communications operating expenses noted in the table above, increased variable cost of sales and
services accounted for $8.9 million. As described in the Cost of Sales and Services (COS) operating expense discussion below, this increase is primarily attributable to increased roaming COS, data and features COS and equipment COS. We
expect continued growth in these expenses as our customer base grows, sales of national plans increase and usage of data features increases.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The remaining operating expense increases in wireless communications over the comparative periods were due to increased costs of improving and maintaining our network, combined with direct and indirect costs of sales
and services expenses. Specifically, cell site expenses increased $2.3 million related to additional capacity due to the increased subscriber base and a 4.0% increase in the number of cell sites in service from December 31, 2006 to
December 31, 2007. Also increasing was customer retention associated with increased wireless PCS customer additions between the comparative periods, existing customer handset upgrades and the increased subscriber base. These costs increased
$3.9 million over the comparative years. Compensation expenses also increased $4.6 million over the comparative years reflecting inflationary growth in wages and an increase in personnel to support subscriber growth. Wireless communications
experienced a $2.4 million increase in bad debt expense over the comparative years primarily due to an increased level of subscriber revenues and accounts receivable. The remaining increase is due primarily to increased advertising and marketing
expense, professional fees, rent expense, repairs and maintenance expense, license and regulatory fees, collection expense and bank fees primarily related to subscriber and revenue growth.



| |  |  | Wireline Communications  The increase in wireline operating expenses noted in the table above is primarily attributable to increased access expense,
which increased $2.3 million over the comparative years and accounted for 49.0% of the total increase. This increase in access expense was due primarily to supporting the growth of the strategic wireline Competitive services, particularly broadband
voice and data services. As a percent of the related Competitive revenues, Competitive access expense declined from 31.4% to 29.6% for the years ended December 31, 2006 and 2007, respectively, from improved network utilization. Also
contributing to the increases over the comparative periods were increased compensation expenses of $2.3 million and increased bad debt expense of $0.3 million.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other  As noted in the table above, operating expenses from the corporate and other communication service businesses decreased $0.2 million over the
comparative years primarily due to a decrease of $0.5 million in advisory fees. These costs were eliminated after the first quarterly payment in 2006 as a result of the termination of our advisory agreements in February 2006. The remaining corporate
operating expenses increased $0.3 million over the comparative years, primarily attributable to legal, accounting and other professional expenses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

COST OF SALES AND SERVICESCost of sales and services increased $14.9 million, or 10.2%, over the comparative years. Roaming COS increased $5.4 million related primarily to increased sales of national plans and
other plans which contain more roaming minutes, partially offset by a decline in roaming rates and in-network roaming savings related to continued cell site expansion. The percentage of subscribers with a national plan increased from 25.5% as of
December 31, 2006 to 32.8% as of December 31, 2007. Data and other features COS increased $1.8 million over the comparative years consistent with increased data usage. Access and toll COS increased $0.8 million collectively over the
comparative years due to volume from fixed rate plans. Equipment COS increased $0.8 million over the comparative years due to approximately 7,300 more wireless gross customer additions in 2007 than 2006, combined with sales of feature-rich, more
expensive handsets to new customers and upgrades by existing customers.

The remaining increase in cost of sales and services of $6.1 million, or 7.8%, is
attributable to increased network related expenses, including cell site costs for wireless and wireline transport and access expense, as discussed above,



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and increases in other support expenses, such as rent, repairs and maintenance, utilities, long distance wholesale, insurance, and personnel and contracted
labor expenses. Partially offsetting the increase over the comparative periods was a decrease in non-cash compensation of $0.7 million related to the original Class A common stock and option instruments held by certain members of operations and
engineering management. In connection with the 2008 planned network expansion and enhancements, we are planning an additional 15% to 18% increase in the number of cell sites in 2008. Accordingly, when these and future cell sites are placed in
service, we expect these costs to increase. Additionally, the EV-DO upgrade will result in us adding additional access expenses for every cell site just prior to their upgrade. Revenue generation related to this upgrade will lag these increased
expenses.

CUSTOMER OPERATIONS EXPENSESCustomer operations expenses increased $8.9 million, or 8.9%, from the year ended December 31, 2006 to
the year ended December 31, 2007. This increase is primarily related to the direct costs associated with increased wireless customer additions between the comparative periods and the related increase in the customer base, as discussed above.
The remaining increase is primarily attributable to increased bad debt expenses, as described above, and increases in other collection and customer care driven expenses. The increase over the comparative years was primarily offset by a decrease in
non-cash compensation expense of $0.8 million related to the original Class A common stock and option instruments held by certain members of sales, marketing and customer care executive management.

CORPORATE OPERATIONS EXPENSESCorporate operations expenses decreased $2.3 million, or 6.7% from the year ended December 31, 2006 to the year ended
December 31, 2007. This decrease primarily relates to a decrease of $7.4 million of non-cash compensation charges, a decrease in advisory fee charges of $0.5 million and a $1.2 million reduction in operating tax reserves based on a favorable
ruling from tax authorities, which was refunded in January 2008. Offsetting these decreases was an increase in compensation expenses of $4.3 million, or 38.5%, due primarily to the increase in performance-based bonus expense and inflationary wage
increases, and an increase of $0.6 million relating to legal, accounting and other costs associated with the secondary stock offering discussed in the overview section above. The remaining increase is primarily attributable to increases in
regulatory fees, other professional fees and sponsorships.

DEPRECIATION AND AMORTIZATION EXPENSESDepreciation and amortization expenses increased
$12.1 million, or 14.3%, over the comparative years. Of this increase, $15.9 million is attributable to accelerated depreciation for the period August 1, 2007 through December 31, 2007 related to 3G-1xRTT and other equipment scheduled to
be replaced early related to the EV-DO upgrade discussed below. This is offset by accelerated depreciation recorded in 2006 related to other network upgrades. Amortization expense for our customer relationship intangible related to our Strategic
Network Alliance with Sprint Nextel decreased $0.7 million over the comparative years related to the re-evaluation of the intangible assets remaining useful life due to the extension of the Sprint contract from April 2012 to July 2015. The
remaining decrease of $1.9 million over the comparative years relates to assets becoming fully depreciated, retired or whose life was extended (and future depreciation reduced) as they continued in service beyond the original expected life.

As discussed above in the wireless communications revenue section, we entered into the amended and restated contract with Sprint Spectrum L.P.
which included a requirement for a technological upgrade of the network from 3G-1xRTT to EV-DO technology by 2009 in the Sprint Nextel overlap territory. Additionally, we are also upgrading a majority of our other coverage areas with EV-DO. Some of
the equipment is planned for redeployment to fringe areas of the network or contiguous markets where we own spectrum but currently do not provide service. In all cases, we will record additional accelerated depreciation on the 3G-1xRTT assets as
they are planned for disposal prior to their previously planned useful lives. The total net book value of the related equipment subject to early retirement is approximately $80 million on August 1, 2007, the date we made the decision regarding
the technology upgrade. The expected incremental capital expenditures related to the upgrade to EV-DO are $65 million. Based on this network upgrade plan, we expect to record approximately $21 million and $6 million of additional depreciation during
2008 and 2009, respectively.

ACCRETION OF ASSET RETIREMENT OBLIGATIONSAccretion of asset retirement obligations is recorded in order to accrete the
estimated asset retirement obligation over the life of the related asset up to its future expected settlement cost. This charge was $0.8 million for the years ended December 31, 2006 and 2007.

TERMINATION OF ADVISORY AGREEMENTSOn February 13, 2006, commensurate with its IPO, the Company terminated the advisory agreements, paying a $12.9 million
termination fee on that date.



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OTHER INCOME (EXPENSES)

Interest expense on debt instruments decreased $16.8 million, or 28.1%, over the comparative years due primarily to the repayment of the Floating Rate Notes in April 2006. Prior to their repayment, we recorded $5.3 million of interest on
the Floating Rate Notes. Additionally, in the second quarter of 2006, we incurred $5.1 million and $1.3 million of interest charges related to the write-off of the high yield Floating Rate Notes deferred issuance costs and discount, respectively,
when the Notes were repaid and a $2.3 million prepayment penalty recorded as an interest charge related to the second lien term loan repayment.

In
addition to the factors causing the decrease in interest expense noted above, interest on our senior credit facilities decreased due to the reduced interest rates associated with the debt refinancing in June 2006 where the $225 million second lien
credit facility, which bore interest at 5.0% above the Eurodollar rate, was refinanced with a new first lien credit facility bearing interest at 2.25% above the Eurodollar rate. The blended rate improvement realized from this refinancing is
approximately 0.94%, or a $6.2 million annual savings at the current level of senior debt.

Our swap agreement is not designated as an interest rate hedge
instrument for accounting purposes and, therefore, the changes in the fair value of the swap agreement are recorded as a charge or credit to (loss) gain on interest rate swap. The fair value of the current interest rate swap agreement of $0.3
million at December 31, 2007 has been recorded as interest rate swap on the consolidated balance sheets. The interest rate swap agreement matures in February 2008.

Other income primarily relates to interest income from cash and cash equivalents. Other income totaled $3.1 million for the year ended December 31, 2007, $1.4 million lower than the prior year due to lower cash
balances after our IPO proceeds were used to repay obligations in the second quarter of 2006. We also recorded a gain on sale of investment totaling $1.7 million during the year ended December 31, 2006 related to the redemption of the Rural
Telephone Bank (RTB) stock in April 2006.

INCOME TAXES

Income tax expense for the year ended December 31, 2007 was $24.4 million, representing the statutory tax rate applied to pre-tax income and the effects of non-deductible, non-cash stock based compensation, state minimum taxes and
non-deductible secondary offering transaction costs. We expect our recurring non-deductible expenses to relate primarily to certain non-cash stock based compensation. The annual amounts of these charges based on equity-based awards outstanding as of
December 31, 2007 are projected to be approximately $1.5 million in 2008. Income tax expense for the year ended December 31, 2006 was $12.2 million. The primary permanent differences relate to the effects of non-deductible, non-cash stock
based compensation, non-deductible transaction costs and interest cost in excess of Internal Revenue Code defined yields.

Our unused Net Operating Losses
(NOLs), approximately $175.7 million, are subject to an annual utilization limitation of $1.6 million (prior to adjustment for realization of built-in gains that existed as of the 2005 merger). Based on this limitation and the
adjustments required for certain built-in gains realized during the five year period immediately following our May 2, 2005 merger, we expect to use NOLs of approximately $9.2 million per year in 2009 through 2020, $7.4 million in 2021 and $1.6
million per year from 2022 through 2027.

Year ended December 31, 2006 compared to year ended December 31, 2005

OVERVIEW

Operating revenues increased $47.9 million, or 12.2% from $392.2
million for the year ended December 31, 2005 to $440.1 million for the year ended December 31, 2006. Wireless PCS accounted for 87.8% of this increase, with growth occurring from both subscriber revenues and wholesale revenues. Wireline
contributed the remaining revenue increase primarily from minute-driven increases in access revenues and increases in key strategic products from the Competitive segment, partially offset by declines in revenues of other Competitive segment
products.

Operating income increased $8.0 million over the comparative years, from $52.6 million for the year ended December 31, 2005 to $60.6
million for the year ended December 31, 2006. Net income decreased $7.8 million from net income of $0.6 million for the year ended December 31, 2005 to a net loss of $7.2 million for the year ended December 31, 2006. Included in the
net loss for the year ended December 31, 2006 was a charge of $12.9 million for the termination of advisory agreements and an increase in interest expense of $14.7 million, primarily due to transaction-related charges of $8.6 million, $5.5
million of interest on our Floating Rate Notes, which were paid off in April 2006, and significantly lower interest during 2005 prior to the refinancing and merger transactions in late February 2005. Included in net income for the period ended
December 31, 2005 was a gain on the interest



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rate swap instrument of $4.1 million. In addition, non-cash compensation charges were $3.7 million in 2005 and $13.2 million in 2006. Finally, income tax
expense was $12.7 million and $12.2 million for the year ended December 31, 2005 and December 31, 2006, respectively.

OPERATING REVENUES

The following table identifies our operating revenues on a business segment basis for the years ended December 31, 2006 and December 31, 2005,
inclusive of NTELOS Inc.s revenues on a business segment basis for the period January 1, 2005 through May 1, 2005:



|                       |  |                        |         |      |   |            |  |   |            |   |  |      |   
|---------------------- |  | ---------------------- | ------- | ---- | - | ---------- |  | - | ---------- | - |  | ---- | --
|                       |  | Year EndedDecember 31, |         |      |   |            |  |  
|Operating Revenues     |  | 2006                   |         | 2005 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands) |  |                        |         |      |   |            |  |   |            |  
|Wireless PCS           |  | $                      | 322,329 |      | $ | 280,303    |  | $ | 42,026     |   |  | 15.0 | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |      |   
|Wireline               |  |                        |         |      |   |            |  |   |            |   |  |      |   
|RLEC                   |  |                        | 60,767  |      |   | 56,986     |  |   | 3,781      |   |  | 6.6  | % 
|Competitive wireline   |  |                        | 56,158  |      |   | 54,017     |  |   | 2,141      |   |  | 4.0  | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |      |   
|Total wireline         |  |                        | 116,925 |      |   | 111,003    |  |   | 5,922      |   |  | 5.3  | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |      |   
|Other                  |  |                        | 822     |      |   | 912        |  |   | (90        | ) |  | (9.9 | )%
|                       |  |                        |         |      |   |            |  |   |            |   |  |      |   
|Total                  |  | $                      | 440,076 |      | $ | 392,218    |  | $ | 47,858     |   |  | 12.2 | % 
|                       |  |                        |         |      |   |            |  |   |            |   |  |      |   

WIRELESS COMMUNICATIONS REVENUESWireless communications revenues increased $42.0 million from the year ended
December 31, 2005 to the year ended December 31, 2006 due to an increase in our NTELOS-branded net subscriber revenue of $22.8 million, or 11.4%, a $15.1 million, or 24.1%, increase in wholesale and roaming revenues, and a $4.0 million, or
24.9%, increase in equipment sales revenues.

Subscriber revenues reflected subscriber growth of 9.2% over the comparative years, or 30,891 subscribers,
from 336,306 subscribers as of December 31, 2005 to 367,197 subscribers as of December 31, 2006. As of December 31, 2006, postpay subscribers represented 73.1% of total subscribers, a decline of 3.1% from 76.2% as of December 31,
2005.

For the comparative years, subscriber revenues reflected the subscriber growth described above and an increase in ARPU of 2.1%, from $52.51 to
$53.59 for the year ended December 31, 2005 and December 31, 2006, respectively. The increase in ARPU was driven in part by increased data revenue per subscriber which increased from $1.84 for the year ended December 31, 2005 to $2.71
for the year ended December 31, 2006. Additionally, ARPU increased due to the continued increase in higher service rate plans including the national plans. Other subscriber revenue increased 15.5% related in large part to growth in data
services including data bundle packages introduced during the second quarter of 2006. Gross subscriber additions were 3.6% higher for 2006, at 164,375, than 2005 gross subscriber additions of 158,728. This increase in gross adds combined with the
introduction of more feature-rich handsets sold in the 2006 period as compared to the 2005 period led to an increase in equipment sales revenue of $4.0 million, or 24.9%, from the year ended December 31, 2005 to the year ended December 31,
2006. Total subscriber churn decreased 1.3%, from 3.22% for 2005 (124,413 subscribers) to 3.18% for 2006 (133,484 subscribers), due to year-over-year improvement in both postpay and prepay churn due primarily to an increased take-rate of the
national plans and other program improvements in 2006.

The increase in wholesale revenues for the comparative periods was driven by increased voice and
data usage under the Strategic Network Alliance. Wholesale revenues grew 24.1%, from $62.7 million for the year ended December 31, 2005 to $77.7 million for the year ended December 31, 2006. Pricing reductions went into effect on
July 1, 2005 and July 1, 2006 relating to travel minutes of use (minutes from Sprint Nextel customers from outside our region) and July 1, 2006 relating to data usage in accordance with the annual pricing reset provisions of this
wholesale agreement. Similar to this past year, the impact of the July 2006 pricing reductions was more than offset by increased usage. Our wholesale revenues are derived primarily from the voice usage (or home minutes of use) by Sprint
Nextel customers who live in the Strategic Network Alliance service area, those customers of Sprint Nextel who use our voice services (travel minutes of use) while traveling through the Strategic Network Alliance service area and data
usage by Sprint Nextel customers who live in or travel through the Strategic Network Alliance service area. In addition to volume increases experienced on existing cell sites, we have added 61 cell sites within this wholesale service area since
December 2005 (27 during the fourth quarter of 2006), improving existing service and



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extending this coverage area. Based on notification from Sprint Nextel of its retail yield for voice usage and data usage for 2006, pursuant to the terms of
our Strategic Network Agreement, further pricing reductions are expected to go into effect on July 1, 2007 relating to travel minutes of use and, for the first time since entering into the contract in 2004, for home minutes of use. Sprint
Nextels proposed data revenue yield is significantly lower than the comparable rate for the prior year. We have experienced significant growth in data usage in 2006 and expect continued growth in 2007. Our discussions with Sprint Nextel as to
the appropriate voice and data rates to commence on July 1, 2007 continue at this time. We expect continued growth in voice and data usage which should result in continued growth in wholesale revenue for 2007 compared to 2006.

We entered into a seven-year exclusive wholesale agreement with Sprint Spectrum L.P. in 2004. While the 2005 merger of Sprint and Nextel has not had a negative impact on
us to date, the ultimate impact of this merger is not known at this time. Further, Sprint Nextel acquired controlling ownership interest in Nextel Partners Inc., a wireless affiliate of Sprint Nextel, in 2006 and the potential impact of any such
consolidation is unknown. See Risk Factors contained in Item 1A. of this Annual Report on Form 10-K for the year ended December 31, 2006.

WIRELINE COMMUNICATIONS REVENUESWireline communications revenues increased $5.9 million from $111.0 million for the year ended December 31, 2005 to $116.9 million for the year ended December 31, 2006.



| |  | RLEC Revenues.RLEC revenues, which include local service, access and toll service, directory advertising and calling feature revenues from our RLEC
customers increased over the comparative years despite a 3.3% access line decrease, with lines totaling 45,281 as of December 31, 2006 compared to 46,810 as of December 31, 2005. Revenues for the comparative years increased $3.8 million,
or 6.6%, from $57.0 million for the year ended December 31, 2005 to $60.8 million for the year ended December 31, 2006. This increase was due primarily to an increase in access revenues of $4.1 million, or 11.0%, over the respective
periods driven by an increase in carrier access minutes of 22% from 2005 to 2006 due primarily to growth in usage by wireless carriers, coupled with a $0.5 million lump-sum cash receipt in September 2006 from the Universal Service Administrative
Company (USAC) pursuant to an FCC order related to our safety net support dispute for the period January 2003 through September 2006. Our interstate access rates will be subject to a biennial reset (reduction) on July 1, 2007.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The access line loss noted above is reflective primarily of a reduction in Centrex lines, a loss of second lines due to
migration away from dial-up internet access, wireless substitution and the loss of PRI lines serving our own and other ISP operations within the RLEC service area. These line losses, to date, do not reflect the introduction of competitive voice
service offerings, such as from cable companies or CLECs, in our markets. While still uncertain, we do anticipate cable competition from Comcast to commence in 2007. We have estimated that our access line losses may be between 5% and 9% in 2007,
assuming cable competition does occur which would impact RLEC revenues, principally from residential consumers.



| |  | Competitive Wireline Revenues.Competitive wireline total operating revenues, including revenues from local and long distance, voice and data, Internet
access and network access and transport services increased $2.1 million, or 4.0%, from $54.0 million for the year ended December 31, 2005 to $56.2 million for the year ended December 31, 2006.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenues from our key strategic products in the Competitive wireline segment grew $4.0 million, or 10.8%, over the comparative years, offset by declines
in other Competitive revenues. Local access and PRI revenues increased $0.3 million, or 1.9%, due to an increase in PRI and local access lines of 4.1%, from 44,948 lines as of December 31, 2005 to 46,781 lines as of December 31, 2006,
partially offset by increased sales of business advantage bundle packages and longer term contracts which are sold at prices below our current overall blended average. Revenue from Broadband and integrated access services increased $1.8 million, or
20.9%, from 2005 to 2006 due primarily to customer growth of 22.3% with the Broadband products. Revenue from private line, CAP and transport increased $1.9 million, or 13.5%, over the comparative years from new circuit additions with carriers. Long
distance revenue increased $0.2 million, or 6.5%, from 2005 to 2006 customers due to an increase in customers of 12.4% over the comparable periods, from 40,263 as of December 31, 2005 to 45,237 as of December 31, 2006, partially offset by
a decrease in ARPU. Offsetting this were declines in internet, switched access and reciprocal compensation revenues. Dial-up revenue declined $1.8 million from continued customer erosion, with 5,450 fewer customers, or 16.5%, from 33,078 at
December 31, 2005 to 27,628 at December 31, 2006. In addition, switched access and reciprocal compensation revenues declined $0.6 million due to rate and volume reductions, offset by an increase in wireless transport revenues of $0.3
million.

OTHER COMMUNICATIONS SERVICES REVENUESOther communications services revenue decreased $0.1 million due to continued decline in our paging
business, from $0.9 million for the year ended December 31, 2005 to $0.8 million for the year ended December 31, 2006.



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OPERATING EXPENSES

The
following table identifies our operating expenses on a business segment basis, consistent with the table presenting operating revenues above, for the years ended December 31, 2006 and December 31, 2005, inclusive of NTELOS Inc.s
operating expenses on a business segment basis for the period January 1, 2005 through May 1, 2005:



|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ------- | ---- | - | ------- | ---------- |  | - | ---------- | - |  | ----- | --
|                                                                                                                                                                                                                         |  | Year EndedDecember 31, |         |      |   |         |            |  |  
|Operating Expenses                                                                                                                                                                                                       |  | 2006                   |         | 2005 |   |         | $ Variance |  |   | % Variance |  
|(dollars in thousands)                                                                                                                                                                                                   |  |                        |         |      |   |         |            |  |   |            |  
|Wireless PCS                                                                                                                                                                                                             |  | $                      | 210,287 |      | $ | 190,595 |            |  | $ | 19,692     |   |  | 10.3  | % 
|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|Wireline                                                                                                                                                                                                                 |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|RLEC                                                                                                                                                                                                                     |  |                        | 14,155  |      |   | 14,147  |            |  |   | 8          |   |  | 0.1   | % 
|Competitive wireline                                                                                                                                                                                                     |  |                        | 37,723  |      |   | 35,053  |            |  |   | 2,670      |   |  | 7.6   | % 
|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|Total wireline                                                                                                                                                                                                           |  |                        | 51,878  |      |   | 49,200  |            |  |   | 2,678      |   |  | 5.4   | % 
|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|Other                                                                                                                                                                                                                    |  |                        | 5,423   |      |   | 5,638   |            |  |   | (215       | ) |  | (3.8  | )%
|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|Operating expenses, before depreciation and amortization, gain on sale of assets, accretion of asset retirement obligations, termination of
advisory agreements, non-cash compensation and capital restructuring charges |  |                        | 267,588 |      |   | 245,433 |            |  |   | 22,155     |   |  | 9.0   | % 
|                                                                                                                                                                                                                         |  |                        |         |     
|Depreciation and amortization                                                                                                                                                                                            |  |                        | 84,921  |      |   | 82,902  |            |  |   | 2,019      |   |  | 2.4   | % 
|Gain on sale of assets                                                                                                                                                                                                   |  |                        |        |      |   | (8,742  | )          |  |   | 8,742      |   |  | N/M   |   
|Accretion of asset retirement obligations                                                                                                                                                                                |  |                        | 816     |      |   | 741     |            |  |   | 75         |   |  | 10.1  | % 
|                                                                                                                                                                                                                         |  |                        |         |     
|Termination of advisory agreements                                                                                                                                                                                       |  |                        | 12,941  |      |   |        |            |  |   | 12,941     |   |  | 100   | % 
|Non-cash compensation                                                                                                                                                                                                    |  |                        | 13,237  |      |   | 3,731   |            |  |   | 9,506      |   |  | 254.8 | % 
|Capital restructuring charges                                                                                                                                                                                            |  |                        |        |      |   | 15,587  |            |  |   | (15,587    | ) |  | N/M   |   
|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   
|Total operating expenses                                                                                                                                                                                                 |  | $                      | 379,503 |      | $ | 339,652 |            |  | $ | 39,851     |   |  | 11.7  | % 
|                                                                                                                                                                                                                         |  |                        |         |      |   |         |            |  |   |            |   |  |       |   

The following describes our operating expenses on an aggregate basis and on a basis consistent with our financial
statement presentation.

TOTAL OPERATING EXPENSESAs noted above, total operating expenses increased $39.9 million, or 11.7%, over the comparative
years. Operating expenses before depreciation and amortization, gain on sale of assets, accretion of asset retirement obligations, termination of advisory agreements, non-cash compensation and capital restructuring charges increased $22.2 million,
or 9.0%, from the year ended December 31, 2005 to the year ended December 31, 2006.

Total wireless operating expenses before depreciation and
amortization, accretion of asset retirement obligations, termination of advisory agreements, non-cash compensation charges and capital restructuring charges grew $19.7 million, or 10.3%, over the comparative years. Increased cost of sales,
particularly roaming costs, handsets, handset insurance and features, accounted for $11.1 million of the increase. Excluding cost of sales, the remaining increase of $8.6 million, or 6.4%, over the comparative years was primarily due to increased
retention costs of the larger subscriber base, an increase in agent commissions due to increased sales and an increase in cell site expense related to a 9.7% increase in the number of cell sites and the increased subscriber base. These increases
were offset by improvement in bad debt expense of $1.8 million, or 23.0%, over the comparative years due to improved collections experience.



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Wireline operating expenses before depreciation and amortization, accretion of asset retirement obligations, termination
of advisory agreements, non-cash compensation charges and capital restructuring charges increased $2.7 million, or 5.4%, over the comparative years. This increase was largely related to increased access expense, repairs and maintenance expense, long
distance wholesale expense, sales commissions and increased salary, wage and benefit expense due primarily to increased average headcount year over year.

Other operating expenses, before depreciation and amortization, accretion of asset retirement obligations, termination of advisory agreements, non-cash compensation and capital restructuring charges from the other communication service
businesses decreased $0.2 million from the year ended December 31, 2005 to the year ended December 31, 2006 due primarily to a decrease of $0.8 million in advisory fees. These costs were eliminated during the first quarter of 2006 as a
result of the termination of our advisory agreement with CVC Management LLC and Quadrangle Advisors LLC (the Advisors) in February 2006. Absent the decrease in advisory fees, these operating expenses increased $0.6 million over the
comparative years. This increase was primarily due to increased unallocated corporate costs associated with the Company becoming a publicly traded company in 2006.

COST OF SALES AND SERVICESCost of sales and services increased $20.6 million, or 16.3%, from $125.9 million for the year ended December 31, 2005 to $146.4 million for the year ended December 31, 2006. Equipment cost of
sales, or COS, increased $2.5 million in 2006 compared to 2005 primarily due to 5,647 more wireless gross customer additions over the comparative years and sales of feature-rich, more expensive handsets. Roaming costs related to increased sales for
national plans and other plans which contain more package roaming minutes increased $5.5 million over the twelve month comparative periods. Subscribers with a national plan represented 9.1% and 25.5% of the subscriber base at December 31, 2005
and 2006, respectively. The Company expects continued growth in roaming costs from sales of national plans which commenced in late September 2005. Other feature cost of sales increased $3.5 million in 2006 compared to 2005, driven primarily by a
$2.7 million increase in the cost of handset insurance and a $0.8 million increase in the cost of advanced data features and the related take rates. These increases were primarily offset by a $0.6 million decrease in toll cost of sales for 2006
compared to 2005 due to long distance rate reductions partially offset by higher usage.

The remaining increase in cost of sales and services is primarily
attributable to increases in expenses related to network facilities of $9.4 million, or 13.7%, from $68.6 million to $78.0 million for the years ended December 31, 2005 and 2006, respectively. Cell site costs for wireless increased $4.7 million
over the comparative years as a result of the larger subscriber base and a 9.7% increase in cell sites placed in service between December 31, 2005 and December 31, 2006. Transport and access expenses increased $1.5 million over the
comparative years due to the wireless PCS growth and growth of the strategic wireline Competitive services and CLEC access line charge increases. Repairs and maintenance expense increased $0.9 million from 2005 to 2006 due to new equipment
maintenance contracts and required maintenance on existing routes. In addition to these increases, we recorded $1.1 million of non-cash compensation charges during 2006 and $0.3 million during 2005 related to the original Class A common stock
and option instruments held by certain members of operations and engineering management. The remaining increase is primarily attributable to increased long distance and compensation expenses related to an increased workforce year over year.

CUSTOMER OPERATIONS EXPENSESCustomer operations expenses increased $7.4 million, or 8.0%, from $92.6 million for 2005 to $100.0 million for 2006.
During the years ended December 31, 2005 and 2006, we recorded $0.4 million and $1.4 million of non-cash compensation charges, respectively, related to the original Class A common stock and option instruments held by certain members of
sales, marketing and customer care executive management. The remainder of the increase is primarily related to the direct costs associated with an increased wireless PCS customer base and the rapidly changing competitive environment in wireless
during the comparative periods, including a $4.1 million increase in customer retention costs and a $1.8 million increase in employee and agent sales commissions and other selling expenses due to volume and incentives. Compensation and other
customer operation expenses increased $2.1 million, or 3.7%, over the comparative periods related primarily to the 9.2% growth in wireless subscribers. These increases were primarily offset by an improvement in bad debt expense of $1.6 million over
the comparative years.

CORPORATE OPERATIONS EXPENSESFor the comparative periods, corporate operations expenses increased $3.7 million, or 12.1%,
from $30.7 million for the year ended December 31, 2005 to $34.4 million for the year ended December 31, 2006. This increase primarily relates to an increase of $7.7 million of non-cash compensation charges and a $1.0 million increase in
certain insurance expenses and wireless regulatory fees. These increases were primarily offset by a decrease in advisory fee charges of $0.8 million, a $2.5 million decrease in compensation related expenses due primarily to lower bonus and medical
claims expenses and a $2.0 million decrease related to favorable settlements of operating tax matters and favorable developments resulting in reductions to other operating tax reserve.



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DEPRECIATION AND AMORTIZATION EXPENSESDepreciation and amortization expenses increased $2.0 million, or 2.4%, from
$82.9 million for the year ended December 31, 2005 to $84.9 million for the year ended December 31, 2006. As of the May 2, 2005 merger date, the Company revalued its long-lived assets. As a result, depreciable fixed assets decreased
$12.2 million and other intangibles increased $46.5 million. The increase in other intangibles resulted in a monthly increase in amortization expense of approximately $0.8 million for the periods after May 1, 2005 as compared to amortization of
other intangibles for the period ended May 1, 2005 and before, and it accounts for $3.1 million of the total increase in depreciation and amortization expense for the comparative years. Depreciation expense related to fixed asset additions was
more than offset by assets that became fully depreciated during a period subsequent to December 31, 2005 and by accelerated depreciation related to the 3G-1xRTT network upgrade which commenced in 2005 and was completed during the second quarter
of 2006.

GAIN ON SALE OF ASSETSFor the year ended December 31, 2005, we recognized a gain of approximately $8.7 million on the sale of certain
inactive PCS licenses covering populations in Pennsylvania.

ACCRETION OF ASSET RETIREMENT OBLIGATIONSAccretion of asset retirement obligations is
recorded in order to accrete the estimated asset retirement obligation over the life of the related asset up to its future expected settlement cost. This charge increased $0.1 million over the comparative years, from $0.7 million for the year ended
December 31, 2005 to $0.8 million for the year ended December 31, 2006.

CAPITAL RESTRUCTURING CHARGESCapital restructuring charges of
$15.6 million were recorded in 2005 for legal, financial and consulting costs, accelerated payment of certain retirement obligations and employee retention related costs, all of which are directly attributable to the refinancing merger transactions,
the initial closing of which occurred on February 24, 2005 with NTELOS Inc. borrowing $625 million from the new $660 million senior secured credit facilities and using these proceeds to refinance substantially all of its existing indebtedness
and repurchase, pursuant to a tender offer for $440 million, or approximately 75% of its existing common stock, warrants and options. On May 2, 2005, we acquired all of NTELOS Inc.s remaining common shares, warrants and options by means
of a merger.

TERMINATION OF ADVISORY AGREEMENTThe Company (through NTELOS Inc.) entered into advisory agreements with the Advisors, whereby the
Advisors would provide advisory and other services to the Company for a period of ten years for a combined annual advisory fee of $2.0 million payable quarterly at the beginning of each quarter. Under certain conditions set forth in these
agreements, the Company could terminate these agreements prior to expiration. On February 13, 2006, commensurate with its IPO, the Company terminated the advisory agreements, paying a $12.9 million termination fee on that date.

OTHER INCOME (EXPENSES)

Interest expense on debt instruments for the
comparative years increased $14.7 million, or 32.5%, from $45.2 million to $59.9 million due primarily to the low interest expense during the 2005 period prior to the merger and refinancing transactions in February 2005 when the Company added $445
million of debt. Interest during this period was approximately $6.4 million lower than it would have been if the transactions had occurred on January 1, 2005. Also, in 2006, we incurred a total of approximately $8.7 million of one-time interest
charges and penalties associated with the financing activities discussed in the preceding 2006 to 2007 interest expense section. We also incurred approximately $1.0 million more interest expense related to the high yield Floating Rate Notes in 2006
as compared to 2005. This increase was offset by decreased interest rates associated with the debt refinancing in June 2006 which resulted in a $6.2 million annual savings at the current level of senior debt.

The change in fair value of interest rate swap instrument was a loss of $0.2 million for the year ended December 31, 2006 compared with a gain of $4.1 million for
the year ended December 31, 2005. Our swap agreement, entered into in connection with the February 24, 2005 financing transactions, was not designated as an interest rate hedge instrument for accounting purposes and therefore the changes
in the fair value of the swap agreement are recorded as a charge or credit to (loss) gain on interest rate swap. For the period January 1, 2005 through February 24, 2005, we had a swap agreement with a notional amount of $162.5 million,
$150 million less than our current swap agreement. The fair value of the current interest rate swap agreement at December 31, 2006 has been recorded as deferred asset  interest rate swap of $3.9 million. The interest rate swap
agreement matures in February 2008.

Other income primarily relates to interest income from cash and cash equivalents. Other income totaled $2.8 million
for the year ended December 31, 2006, $1.0 million higher than the prior year due to an increase in cash, due



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primarily to cash proceeds from the IPO and cash generated from operations in 2006. We also realized interest rate improvements between the comparable
periods. We recorded gains on sale of investments totaling $1.7 million for the year ended December 31, 2006 related to the redemption of the RTB stock for which we received the cash in April 2006 (see Note 8 to the consolidated financial
statements included in Part II, Item 8. Financial Statements and Supplementary Data of the Annual Report on Form 10-K for the year ended December 31, 2006). This has been classified in other income below operating income due to the
fact that the RTB stock was of a non-operational nature.

INCOME TAXES

Income tax expense for the year ended December 31, 2006 was $12.2 million, representing primarily the effects of non-deductible, non-cash stock based compensation, non-deductible transaction costs and interest cost in excess of
Internal Revenue Code defined yields. We expect our recurring non-deductible expenses to relate primarily to certain non-cash stock based compensation. The annual amounts of these charges are projected to be approximately $4 million in 2007. Income
taxes for the year ended December 31, 2005 were $12.7 million, driven by non-cash stock based compensation which is non-deductible.

The Company had
NOLs of approximately $227.5 million, of which approximately $168.1 million (as adjusted for realized built-in losses occurring post-confirmation of NTELOS Inc.) originated from the NTELOS Inc. subsidiary group and existed at emergence from its
bankruptcy. The NOLs existing at emergence, and the adjustments related to realized built-in losses, were subject to an annual utilization limitation of approximately $9.2 million. Subsequent to NTELOS Inc.s emergence from bankruptcy and
through May 2, 2005, the NTELOS Inc. subsidiary group incurred additional NOLs of approximately $78.9 million. All of the NOLs existing at May 2, 2005 (the merger date), including the amounts which were subject to the first limitation, are
now subject to an annual limitation of $1.6 million (prior to adjustment for realized built-in gains occurring after the merger). Built-in gains existing at the merger date, which are realized subsequent to that date, increase the annual limitation,
and could be significant. Due to the limited carry forward life of NOLs and the amount of the annual limitation, it is likely that we will not realize a benefit from all of our NOLs.

Quarterly Results

The following table sets forth selected unaudited consolidated quarterly statement of operations
data for the four quarters in 2006 and 2007. This unaudited information has been prepared on substantially the same basis as our consolidated financial statements appearing elsewhere in this report and includes all adjustments (consisting of normal
recurring adjustments) we believe necessary for a fair statement of the unaudited consolidated quarterly data. The unaudited consolidated quarterly statement of operations data should be read together with the consolidated financial statements and
related notes thereto included elsewhere in this report. The results for any quarter are not necessarily indicative of results for any future period, and you should not rely on them as such.



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|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ------------ | - | ------- | ----------------- |  | - | ---------------- | - |  | ------------- | ------- | - | ------------ | - | ------- | ----------------- |  | - | ---------------- | - |  | - | ------- | - |  | - | ------- | ---
|Summary Operating Results (In thousands)                                                                                                                                                   |  | March 31,2006 |         |   | June 30,2006 |   |         | September 30,2006 |  |   | December 31,2006 |   |  | March 31,2007 |         |   | June 30,2007 |   |         | September 30,2007 |  |   | December 31,2007 |  
|Operating Revenues                                                                                                                                                                         |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Wireless PCS operations                                                                                                                                                                    |  | $             | 77,575  |   |              | $ | 79,588  |                   |  | $ | 81,233           |   |  | $             | 83,933  |   |              | $ | 91,592  |                   |  | $ | 93,493           |   |  | $ | 96,152  |   |  | $ | 96,524  |    
|Wireline operations                                                                                                                                                                        |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|RLEC                                                                                                                                                                                       |  |               | 14,720  |   |              |   | 14,843  |                   |  |   | 15,711           |   |  |               | 15,493  |   |              |   | 15,379  |                   |  |   | 15,460           |   |  |   | 15,264  |   |  |   | 15,355  |    
|Competitive wireline                                                                                                                                                                       |  |               | 13,784  |   |              |   | 14,081  |                   |  |   | 14,077           |   |  |               | 14,216  |   |              |   | 14,406  |                   |  |   | 14,846           |   |  |   | 15,337  |   |  |   | 15,878  |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Wireline total                                                                                                                                                                             |  |               | 28,504  |   |              |   | 28,924  |                   |  |   | 29,788           |   |  |               | 29,709  |   |              |   | 29,785  |                   |  |   | 30,306           |   |  |   | 30,601  |   |  |   | 31,233  |    
|Other operations                                                                                                                                                                           |  |               | 188     |   |              |   | 227     |                   |  |   | 203              |   |  |               | 204     |   |              |   | 198     |                   |  |   | 171              |   |  |   | 178     |   |  |   | 161     |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Total Operating Revenues                                                                                                                                                                   |  |               | 106,267 |   |              |   | 108,739 |                   |  |   | 111,224          |   |  |               | 113,846 |   |              |   | 121,575 |                   |  |   | 123,970          |   |  |   | 126,931 |   |  |   | 127,918 |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Operating Expenses                                                                                                                                                                         |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Wireless PCS operations                                                                                                                                                                    |  |               | 49,622  |   |              |   | 51,876  |                   |  |   | 53,831           |   |  |               | 54,958  |   |              |   | 56,731  |                   |  |   | 57,498           |   |  |   | 58,921  |   |  |   | 62,425  | (1)
|Wireline operations                                                                                                                                                                        |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|RLEC                                                                                                                                                                                       |  |               | 3,377   |   |              |   | 3,581   |                   |  |   | 3,663            |   |  |               | 3,534   |   |              |   | 4,067   |                   |  |   | 4,366            |   |  |   | 4,247   |   |  |   | 4,353   |    
|Competitive wireline                                                                                                                                                                       |  |               | 9,398   |   |              |   | 9,186   |                   |  |   | 9,461            |   |  |               | 9,678   |   |              |   | 9,567   |                   |  |   | 9,795            |   |  |   | 9,972   |   |  |   | 10,227  |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Wireline total                                                                                                                                                                             |  |               | 12,775  |   |              |   | 12,767  |                   |  |   | 13,124           |   |  |               | 13,212  |   |              |   | 13,634  |                   |  |   | 14,161           |   |  |   | 14,219  |   |  |   | 14,580  |    
|Other operations                                                                                                                                                                           |  |               | 1,474   |   |              |   | 1,347   |                   |  |   | 1,264            |   |  |               | 1,338   |   |              |   | 1,224   |                   |  |   | 1,207            |   |  |   | 1,458   |   |  |   | 1,326   |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Operating expenses, before depreciation and amortization, accretion of asset retirement obligations, termination of advisory agreements,
non-cash compensation and secondary offering fees |  |               | 63,871  |   |              |   | 65,990  |                   |  |   | 68,219           |   |  |               | 69,508  |   |              |   | 71,589  |                   |  |   | 72,866           |   |  |   | 74,598  |   |  |   | 78,331  |    
|Depreciation and amortization                                                                                                                                                              |  |               | 20,647  |   |              |   | 21,345  |                   |  |   | 21,769           |   |  |               | 21,160  |   |              |   | 20,099  |                   |  |   | 20,579           |   |  |   | 26,863  |   |  |   | 29,520  |    
|Accretion of asset retirement obligations                                                                                                                                                  |  |               | 197     |   |              |   | 230     |                   |  |   | 237              |   |  |               | 152     |   |              |   | 175     |                   |  |   | 217              |   |  |   | 230     |   |  |   | 196     |    
|Termination of advisory agreements                                                                                                                                                         |  |               | 12,941  |   |              |   |        |                   |  |   |                 |   |  |               |        |   |              |   |        |                   |  |   |                 |   |  |   |        |   |  |   |        |    
|Non-cash compensation                                                                                                                                                                      |  |               | 10,456  |   |              |   | 924     |                   |  |   | 925              |   |  |               | 932     |   |              |   | 1,019   |                   |  |   | 1,096            |   |  |   | 1,094   |   |  |   | 1,119   |    
|Secondary offering fees                                                                                                                                                                    |  |               |        |   |              |   |        |                   |  |   |                 |   |  |               |        |   |              |   | 500     |                   |  |   | 66               |   |  |   | 4       |   |  |   |        |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Total Operating Expenses                                                                                                                                                                   |  |               | 108,112 |   |              |   | 88,489  |                   |  |   | 91,150           |   |  |               | 91,752  |   |              |   | 93,382  |                   |  |   | 94,824           |   |  |   | 102,789 |   |  |   | 109,166 |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Operating Income (Loss)                                                                                                                                                                    |  |               | (1,845  | ) |              |   | 20,250  |                   |  |   | 20,074           |   |  |               | 22,094  |   |              |   | 28,193  |                   |  |   | 29,146           |   |  |   | 24,142  |   |  |   | 18,752  |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                  
|Other Income (Expenses)                                                                                                                                                                    |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Interest expense                                                                                                                                                                           |  |               | (16,746 | ) |              |   | (21,149 | )                 |  |   | (10,994          | ) |  |               | (10,961 | ) |              |   | (11,030 | )                 |  |   | (10,671          | ) |  |   | (11,020 | ) |  |   | (10,300 | )  
|(Loss) gain on interest rate swap                                                                                                                                                          |  |               | 1,938   |   |              |   | 1,005   |                   |  |   | (2,800           | ) |  |               | (389    | ) |              |   | (928    | )                 |  |   | (455             | ) |  |   | (1,265  | ) |  |   | (879    | )  
|Gain on sale of investment                                                                                                                                                                 |  |               | 1,723   |   |              |   |        |                   |  |   |                 |   |  |               |        |   |              |   |        |                   |  |   |                 |   |  |   |        |   |  |   |        |    
|Other income                                                                                                                                                                               |  |               | 1,221   |   |              |   | 774     |                   |  |   | 542              |   |  |               | 296     |   |              |   | 742     |                   |  |   | 759              |   |  |   | 839     |   |  |   | 806     |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|                                                                                                                                                                                           |  |               | (11,864 | ) |              |   | (19,370 | )                 |  |   | (13,252          | ) |  |               | (11,054 | ) |              |   | (11,216 | )                 |  |   | (10,367          | ) |  |   | (11,446 | ) |  |   | (10,373 | )  
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|                                                                                                                                                                                           |  |               | (13,709 | ) |              |   | 880     |                   |  |   | 6,822            |   |  |               | 11,040  |   |              |   | 16,977  |                   |  |   | 18,779           |   |  |   | 12,696  |   |  |   | 8,379   |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                  
|Income Tax Expense                                                                                                                                                                         |  |               | 3,610   |   |              |   | 627     |                   |  |   | 3,071            |   |  |               | 4,882   |   |              |   | 7,222   |                   |  |   | 7,958            |   |  |   | 5,180   |   |  |   | 4,051   |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|                                                                                                                                                                                           |  |               | (17,319 | ) |              |   | 253     |                   |  |   | 3,751            |   |  |               | 6,158   |   |              |   | 9,755   |                   |  |   | 10,821           |   |  |   | 7,516   |   |  |   | 4,328   |    
|Minority Interests in Losses (Earnings) of Subsidiaries                                                                                                                                    |  |               | (3      | ) |              |   | (15     | )                 |  |   | (7               | ) |  |               | (3      | ) |              |   | 4       |                   |  |   |                 |   |  |   | 35      |   |  |   | (6      | )  
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Net Income (Loss)                                                                                                                                                                          |  |               | (17,322 | ) |              |   | 238     |                   |  |   | 3,744            |   |  |               | 6,155   |   |              |   | 9,759   |                   |  |   | 10,821           |   |  |   | 7,551   |   |  |   | 4,322   |    
|Dividend Distribution Preference on Class B Shares                                                                                                                                         |  |               |        |   |              |   | (30,000 | )                 |  |   |                 |   |  |               |        |   |              |   |        |                   |  |   |                 |   |  |   |        |   |  |   |        |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Income (Loss) Applicable to Common Shares                                                                                                                                                  |  | $             | (17,322 | ) |              | $ | (29,762 | )                 |  | $ | 3,744            |   |  | $             | 6,155   |   |              | $ | 9,759   |                   |  | $ | 10,821           |   |  | $ | 7,551   |   |  | $ | 4,322   |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Basic and Diluted Earnings (Loss) per Common Share:                                                                                                                                        |  |               |         |   |              |   |         |                   |  |   |                  |   |  |               |         |   |              |   |         |                   |  |   |                  |   |  |   |         |   |  |   |         |    
|Income (loss) per share  basic                                                                                                                                                            |  | $             | (0.52   | ) |              | $ | (0.72   | )                 |  | $ | 0.09             |   |  | $             | 0.15    |   |              | $ | 0.24    |                   |  | $ | 0.26             |   |  | $ | 0.18    |   |  | $ | 0.10    |    
|Income (loss) per share  diluted                                                                                                                                                          |  | $             | (0.52   | ) |              | $ | (0.72   | )                 |  | $ | 0.09             |   |  | $             | 0.15    |   |              | $ | 0.23    |                   |  | $ | 0.26             |   |  | $ | 0.18    |   |  | $ | 0.10    |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                  
|Weighted average shares outstanding  basic                                                                                                                                                |  |               | 33,471  |   |              |   | 41,081  |                   |  |   | 41,109           |   |  |               | 41,160  |   |              |   | 41,185  |                   |  |   | 41,464           |   |  |   | 41,630  |   |  |   | 41,661  |    
|Weighted average shares outstanding  diluted                                                                                                                                              |  |               | 33,471  |   |              |   | 41,081  |                   |  |   | 42,109           |   |  |               | 42,170  |   |              |   | 42,212  |                   |  |   | 42,304           |   |  |   | 42,361  |   |  |   | 42,377  |    
|                                                                                                                                                                                           |  |               |         |   |              |   |         |                  
|Cash dividends declared per share  common stock                                                                                                                                           |  | $             |        |   |              | $ |        |                   |  | $ |                 |   |  | $             |        |   |              | $ | 0.15    |                   |  | $ |                 |   |  | $ | 0.15    |   |  | $ | 0.21    |    



|(1) | Amount includes an operating tax recovery of $1.2 million related to a favorable ruling from tax authorities.
|--- | -------------------------------------------------------------------------------------------------------------



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Liquidity and Capital Resources

For the years ended December 31, 2006 and 2007, we funded our working capital requirements and capital expenditures from net cash provided from operating activities and long-term debt, as applicable. We believe
our cash from operations will continue to grow in the future as we continue to execute on our business strategy and increase our subscriber base, particularly in our wireless segment. In addition, the predictability of our cash flow is enhanced by
our long-term Strategic Network Alliance with Sprint Nextel which was amended on July 31, 2007 and extended to July 31, 2015 (see overview section above).

As of December 31, 2007, we had $661.9 million in aggregate long term liabilities, consisting of $607.5 million in outstanding long-term debt ($614.2 million including the current portion) and $54.4 million in
other long-term liabilities. Our Amended Credit Agreement also includes a revolving credit facility of $35 million (the Revolving Credit Facility), none of which has been used. The Revolving Credit Facility is available for our working
capital requirements and other general corporate purposes. Our blended interest rate on our long-term debt as of December 31, 2007 is 6.5%. In addition to the long-term debt from the Amended Credit Agreement, we also enter into capital leases
on vehicles used in our operations with lease terms of four to five years. At December 31, 2007, the net present value of these future minimum lease payments was $1.4 million. The aggregate maturities of our long-term debt based on the
contractual terms of the instruments are $6.8 million in 2008, $6.6 million in 2009, $153.9 million in 2010, $446.8 million in 2011 and $0.1 million thereafter.

As discussed in the overview to this section, we entered into a new contract with Sprint Nextel which included a requirement for a technological upgrade of the network from 3G-1xRTT to EV-DO technology by 2009 in the Sprint overlap
territory. Additionally, we are also upgrading a majority of our other coverage areas with EV-DO. The expected incremental capital expenditures related to the upgrade to EV-DO (expenditures in excess of the previously anticipated capital
expenditures without considering this technology upgrade) are $65 million.

On March 9, 2007, NTELOS Inc. amended its Amended Credit Agreement.
The principal purpose of the amendment was to establish a restricted payment basket, initially set at $30.0 million, which can be used to make certain restricted payments, as defined under the Credit Agreement, including the ability to pay
dividends, repurchase stock or advance funds to the Company. This restricted payment basket is increased by $6.5 million per quarter commencing with the quarter ending March 31, 2007 and is decreased by any actual restricted payments during the
quarter. In addition, on an annual basis, the restricted payment basket will be increased by the amount, if any, by which 50% (or, if the leverage ratio, as defined, as of the most recently ended calendar year, was less than 3.25:1:00, 75%) of the
excess cash flow, as defined, for the most recently ended fiscal year, exceeds $26.0 million. Based on results for the year ended December 31, 2007, the excess cash flow for 2007 was below $26.0 million and thus did not affect the restricted
payment basket. The amount of the restricted payment basket was $43.4 million as of December 31, 2007. Following the $8.8 million dividend declared on October 25, 2007 and paid on January 10, 2008, the restricted payment basket was
further reduced to $34.6 million.

Under the amendment, mandatory debt repayment of 50% of the excess cash flow, as defined, for the most recently ended
calendar year (beginning with the year ended December 31, 2007) must be made by March 31 of the following year, if the leverage ratio is above 3.25:1.00. The leverage ratio for the year ended December 31, 2007 was 2.95:1.00;
therefore, an additional mandatory debt repayment is not required by March 31, 2008. NTELOS Inc. incurred an amendment fee and costs of approximately $0.9 million in connection with this amendment which will be amortized to interest expense
over the remaining life of the Amended Credit Agreement.

We are a holding company that does not operate any business of our own. As a result, we are
dependent on cash dividends and distributions and other transfers from our subsidiaries to make dividend payments or repurchase our common stock. Amounts that can be made available to us to pay cash dividends or repurchase stock are restricted by
the NTELOS Inc. Amended Credit Agreement.

Under the Amended Credit Agreement, NTELOS Inc. is also bound by certain financial covenants, specifically a
maximum ratio of total debt outstanding to EBITDA (as defined under the Amended Credit Agreement) and a minimum interest coverage ratio. Noncompliance with any one or more of the debt covenants may have an adverse effect on our financial condition
or liquidity in the event such noncompliance cannot be cured or should we be unable to obtain a waiver from the lenders of the NTELOS Inc. senior secured credit facilities. As of December 31, 2007, we are in compliance with all of our debt
covenants, and our ratios at December 31, 2007 would be in compliance with any future period financial covenant ratio requirement under the Amended Credit Agreement. Our ratios under the foregoing restrictive covenants as of December 31,
2007 are as follows:



|                                 |  |        |  |  |  |                                           |  | 
|-------------------------------- |  | ------ |  |  |  | ----------------------------------------- |  | 
|                                 |  | Actual |  |  |  | Covenant Requirement at December 31, 2007 |  | 
|Total debt outstanding to EBITDA |  | 2.95   |  |  |  | Not more than 5.50                        |  | 
|Minimum interest coverage ratio  |  | 4.84   |  |  |  | Not less than 2.25                        |  | 



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On October 17, 2005, we issued $135 million in aggregate principal amount of Floating Rate Notes. On the same day,
we paid approximately $125 million of the net proceeds from this offering as a dividend to the holders of our Class L common stock. The Floating Rate Notes were repaid in full on April 15, 2006 with approximately $143.9 million in proceeds from
our February 13, 2006 IPO.

During the year ended December 31, 2007, net cash provided by operating activities was approximately $143.9 million.
Net income during this period was $32.5 million. We recognized $131.9 million of depreciation, amortization, deferred taxes and other non-cash charges (net). Total net changes in operating assets and liabilities used $20.5 million. The principal
changes in operating assets and liabilities from December 31, 2006 to December 31, 2007 were as follows: accounts receivable increased by $7.1 million due to increased revenues of 14%; inventories and supplies increased $2.2 million driven
by an increase in demand and thus inventory on hand of higher-priced handsets and increases due to attractive volume purchase incentives; other current assets increased $1.9 million largely related to increases in prepaid maintenance contracts;
income tax receivable increased by $11.6 million, representing excess estimated payments resulting after favorable resolution of certain NOL limitation calculations; accounts payable increased by $6.3 million; and other current liabilities increased
$2.9 million due primarily to increased advance billings and accrued compensation primarily related to an increase in unpaid annual incentive compensation. Retirement benefit payments for 2007 were approximately $6.9 million which includes a $6.0
million pension plan funding.

During the year ended December 31, 2006, net cash provided by operating activities was approximately $97.0 million. Net
loss during this period was $7.2 million. We recognized $119.5 million of depreciation, amortization and other non-cash charges (net), including $13.2 million in Class A common stock and stock options non-cash compensation charges and a $2.3
million prepayment penalty associated with the debt refinancing in June 2006 which was recorded as interest expense. Total net changes in operating assets and liabilities used $15.3 million. The principal changes in operating assets and liabilities
from December 31, 2005 to December 31, 2006 were as follows: accounts receivable increased by $0.7 million, or 1.9%, due to increased revenues partially offset by improved accounts receivable aging; inventories and supplies increased $2.1
million driven by a number of new handsets introduced late in 2006 and related bulk purchases with favorable pricing; other current assets increased $0.9 million largely related to increases in prepaid rents; accounts payable decreased by $4.9
million related to operating activities with a significantly higher amount of purchases occurring at the end of 2005 (paid for after year-end) as compared to 2006 year-end purchase activity; and other current liabilities decreased $2.3 million due
primarily to a $1.1 million reduction in accrued compensation primarily related to a reduction in unpaid annual incentive compensation, $0.3 million payment of deferred compensation related to early retirement, and a $1.0 million reduction in
certain tax reserves from favorable settlements. Retirement benefit payments for 2006 were approximately $7.0 million due primarily to the $6.3 million pension plan funding.

During the year ended December 31, 2005, net cash provided by operating activities was approximately $97.7 million. The primary sources of our net cash provided by operating activities included: approximately
$0.6 million of net income, which is net of $97.1 million of depreciation, amortization and other non-cash charges (net). This amount is net of $15.6 million in capital restructuring charges related to the tender offer and merger transactions. The
total change in net operating assets and liabilities was less than a $0.1 million use of funds. The principal changes in operating assets and liabilities from December 31, 2004 to December 31, 2005 were as follows: accounts receivable
increased by $8.6 million, or 29%, due primarily to a 17% increase in revenues for the relevant period prior to December 31, 2005 and December 31, 2004 and a slight decline in the accounts receivable aging; inventories and supplies
decreased $0.2 million; other current assets increased $0.6 million; accounts payable increased by $6.3 million due primarily to higher expenditures late in 2005, paid for after year-end, as compared to the purchasing activity late in 2004; and,
other current liabilities increased $5.8 million due to increases in advance billings and customer deposits associated with continued NTELOS-branded subscriber growth and the increase in NTELOS-branded service offerings that require a deposit and
increases in accrued incentive compensation related to performance above plan. Retirement benefit payments during the year ended December 31, 2005 were approximately $9.7 million due primarily to accumulated benefit obligation payments under
our non-qualified pension plan made in connection with the acquisition of NTELOS Inc. and increases in contributions to the pension plan.



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Our cash flows used in investing activities for the year ended December 31, 2007 were approximately $109.6 million
used for the purchase of property and equipment comprised of (i) approximately $77.6 million related to our wireless business, including approximately $24.7 million of incremental capital expenditures related to our network upgrade to EV-DO,
approximately $16.1 million of continued network coverage expansion and enhancements within our coverage area, approximately $24.2 million of expenditures for additional capacity to support our projected growth in our NTELOS-branded subscribers and
increased usage by existing subscribers and growth in voice and data usage under the Strategic Network Alliance, and approximately $12.6 million to maintain and support our existing networks and other business needs, (ii) approximately $24.6
million for routine capital outlays and facility upgrades supporting our RLEC operations, for the actual and projected growth of our Competitive wireline voice and data offerings, and for fiber deployment in the RLEC territory related to an
infrastructure upgrade to offer, among other services, an enhanced broadband service offering which commenced in the fourth quarter of 2006 and the third quarter 2007 launch of a new IPTV-based video service offering, and (iii) approximately
$7.4 million related to information technology and corporate expenditures to enhance and maintain the back office support systems.

Our cash flows used in
investing activities for the year ended December 31, 2006 were approximately $83.8 million and include the following:



| |  | $86.6 million used for the purchase of property and equipment comprised of (i) approximately $59.4 million related completion of the network-wide 3G 1xRTT
upgrade and continued incremental network coverage expansion and enhancements within our coverage area for improved in-building penetration to support our growing subscriber base and increased wholesale usage, (ii) approximately $21.0 million
for routine capital outlays and facility upgrades supporting our RLEC operations, for the actual and projected growth of our Competitive wireline voice and data offerings, and for fiber deployment in the RLEC territory related to an infrastructure
upgrade to offer, among other services, an enhanced broadband service offering which commenced in the fourth quarter and the planned launch of a new video service offering in 2007, and (iii) approximately $6.2 million related to information
technology and corporate expenditures to enhance and maintain the back office support systems; and,
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $2.3 million used for the purchase of AWS spectrum as part of FCC Auction 66 which concluded during the third quarter of 2006, covering a total population of
approximately 1.3 million people in western Virginia; offset by,
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $4.5 million proceeds received from the liquidation of the Companys investment in the Class C stock of RTB;
|- |  | ------------------------------------------------------------------------------------------------------------



| |  | $0.4 million proceeds received from the sale of certain assets; and
|- |  | -------------------------------------------------------------------



| |  | $0.2 million proceeds received from the sale of MCI stock.
|- |  | ----------------------------------------------------------

Our net cash flows used in investing activities for 2005 were approximately $85.0 million and include the following:



| |  | $89.2 million for the purchase of property and equipment comprised of (i) approximately $56.2 million related to purchases of equipment and infrastructure to
support our growing subscriber base and increase wholesale usage, and maintenance and expansion of our network to support such growth and subscriber base, (ii) approximately $24.8 million to support the growth of the wireline equipment and
infrastructure to support the growth in competitive wireline CLEC and broadband data customers and usage and maintenance of the plant and network infrastructure, and (iii) approximately $8.2 million related to information technology and
corporate expenditures to enhance and maintain the back office support systems in order to support the continued growth and introduction of new service offerings and applications; offset by,
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $29.1 million proceeds from the following (i) the sale of excess PCS spectrum in Pennsylvania for $15.5 million, (ii) the sale of MMDS spectrum in
Richmond, Virginia for $4.8 million, (iii) the redemption of RTFC subordinated capital certificates of $7.2 million in connection with the pay-off of the senior credit facility on February 24, 2005; (iv) $1.2 million relating to the
sale of a building in Winchester, Virginia; and (v) the sale of excess PCS spectrum in West Virginia for $0.4 million; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $25.0 million investment in restricted cash that we subsequently disbursed to fund part of the purchase of the remaining equity securities of NTELOS Inc. in
connection with the merger.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We currently expect capital expenditures for 2008 to be in the range of $118 million to $121 million, including
incremental capital expenditures for an upgrade to our wireless network related to EV-DO. We expect that our capital expenditures associated with our wireless business in 2008 will be in the range of $82 million to $84 million, of which
approximately $35 million represents incremental capital expenditures related to our network upgrade to EV-DO, $16 million represents continued network coverage expansion and enhancements within our coverage area, $17 million to $18 million
represents expenditures for additional capacity to support our projected growth in our NTELOS-branded subscribers and increased usage by existing subscribers and growth in voice and data usage under the Strategic Network Alliance, and the remaining
$14 million to $15 million is targeted to maintain and support our existing networks and other business needs. We expect that our capital expenditures associated with our wireline business in 2008 will be in the range of $27 million to $28 million,
which is targeted to provide normal network facility upgrades for our RLEC operations, to support the projected growth of our Competitive wireline voice and data offerings, including strategic fiber builds, and fiber deployment in the RLEC territory
related to an infrastructure upgrade to offer, among other services, an enhanced broadband service which commenced in the fourth quarter of 2006 and the launch of a new IPTV-based video service offering in the third quarter of 2007. In addition, we
expect to invest a total of approximately $9 million in 2008 for enhancements and upgrades to our information technology and corporate expenditures to enhance and maintain the back office support systems to support the continued growth and
introduction of new service offerings and applications.

Net cash used in financing activities for the year ended December 31, 2007 aggregated $25.1
million, which primarily represents the following:



| |  | $12.5 million in payments on our senior secured term loan;
|- |  | ----------------------------------------------------------



| |  | a total of $12.6 million for two common stock cash dividends ($0.15 per share) made on July 12, 2007 and October 11, 2007;
|- |  | --------------------------------------------------------------------------------------------------------------------------



| |  | $0.9 million in debt issuance costs; and,
|- |  | -----------------------------------------



| |  | $0.8 million proceeds and tax benefits primarily related to the exercise of stock options.
|- |  | ------------------------------------------------------------------------------------------

Net cash provided by financing activities for the year ended December 31, 2006 aggregated $2.8 million, which primarily represents the following:



| |  | $172.5 million in gross proceeds from the initial public offering of common stock;
|- |  | ----------------------------------------------------------------------------------



| |  | $235.0 million in proceeds from the issuance of long-term debt;
|- |  | ---------------------------------------------------------------



| |  | $139.3 million used to pay off the high yield Floating Rate Notes and accrued interest;
|- |  | ---------------------------------------------------------------------------------------



| |  | $227.3 million used to retire the $225 million second lien credit facility and pay a $2.3 million prepayment penalty;
|- |  | ---------------------------------------------------------------------------------------------------------------------



| |  | $30.0 million used for the payment of a dividend to the Class B stockholders;
|- |  | -----------------------------------------------------------------------------



| |  | $2.9 million used for the payment of debt and equity issuance costs;
|- |  | --------------------------------------------------------------------



| |  | $5.8 million in payments on senior secured term loans;
|- |  | ------------------------------------------------------



| |  | $0.2 million in excess tax benefits from share-based compensation;
|- |  | ------------------------------------------------------------------



| |  | $0.2 million net borrowings under capital leases and other debt instruments; and
|- |  | --------------------------------------------------------------------------------



| |  | $0.1 million in proceeds from the exercise of stock options and the issuance of stock through the Employee Stock Purchase Plan.
|- |  | -------------------------------------------------------------------------------------------------------------------------------

Net cash used in financing activities for 2005 aggregated $15.8 million for NTELOS Inc., which primarily represents the following:



| |  | $625.0 million in proceeds from the NTELOS Inc. senior secured credit facilities entered into in February 2005;
|- |  | ---------------------------------------------------------------------------------------------------------------



| |  | $171.3 million in payments related to the pay-off in February 2005 of the former NTELOS Inc. credit facilities that were replaced by the NTELOS Inc. senior secured
credit facilities;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $440.0 million in payments related to our self-tender offer for common stock, warrants and options in connection with the restructuring;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------



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| |  | $6.7 million in payments on the NTELOS Inc. former credit facilities in connection with certain asset sales and scheduled repayments that were subsequently
refinanced in February 2005;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $4.0 million in scheduled repayments on the NTELOS Inc. first lien senior secured credit facility entered into in February 2005;
|- |  | --------------------------------------------------------------------------------------------------------------------------------



| |  | $4.7 million in payments related to interest paid on certain interest rate swap obligations that were subsequently refinanced in February 2005 in connection with
the restructuring;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $12.8 million in payments related to debt issuance costs related to the NTELOS Inc. senior secured credit facilities entered into in February 2005; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $1.1 million in payments under other debt instruments and $0.1 million of other payments related to financing activities.
|- |  | -------------------------------------------------------------------------------------------------------------------------

As noted above, the cash flows for the period ended December 31, 2005 are for NTELOS Inc. In addition, NTELOS Holdings Corp. invested $125.7 million for the
purchase of NTELOS Inc. This was financed by the sale of $120.0 million of common stock and the issuance of $5.7 million in convertible notes. In addition to this, NTELOS Holdings Corp. received $133.7 million from the issuance of Floating Rate
Notes which were used to pay a $125.0 million dividend to Class L common stockholders. Finally, the $5.7 million convertible notes were repaid with the proceeds received from agreed upon sale of certain assets from NTELOS Inc.

As of December 31, 2006 and 2007, we had approximately $44.2 million and $53.5 million, respectively, in cash and cash equivalents and working capital (current
assets minus current liabilities) of approximately $25.0 million and $45.8 million, respectively. Of the cash and cash equivalents on hand on December 31, 2007, $50.8 million was held by NTELOS Inc. and its subsidiaries which are subject to
usage restrictions pursuant to the Amended Credit Agreement.

We intend to continue to pay regular quarterly dividends on our common stock. We paid a
dividend of $0.21 per share on January 10, 2008, which was declared during the fourth quarter of 2007 and totaled $8.8 million. On February 28, 2008, the board of directors declared a dividend to be paid on April 11, 2008 to common
stock shareholders of record on March 20, 2008 at a rate of $0.21 per share. Any decision to declare future dividends will be made at the discretion of the board of directors and will depend on, among other things, our results of operations,
cash requirements, investment opportunities, financial condition, contractual restrictions and other factors that the board of directors may deem relevant. We are a holding company that does not operate any business of our own. As a result, we are
dependent on cash dividends and distributions and other transfers from our subsidiaries to make dividend payments or to make other distributions to our stockholders, including by means of a stock repurchase. Amounts that can be made available to us
to pay cash dividends or repurchase stock are restricted by the NTELOS Inc. Amended Credit Agreement (as discussed earlier in this section).

We believe
that our existing borrowing availability, our current cash balances and our cash flow from operations will be sufficient to satisfy our foreseeable working capital and capital expenditures for at least the next 24 months. This takes into account
higher capital expenditure levels during this period than we had in 2005 and 2006 as we commenced in 2007 making capital expenditures in connection with the EV-DO network upgrade, which will continue over the next 24 months, and as we continue to
grow our business and evaluate additional growth opportunities. If our growth opportunities result in unforeseeable capital expenditures during this period, we may seek additional financing in the future. However, as noted above, we have a cash
balance of $53.5 million at December 31, 2007 and we believe our cash flow from operations will continue to grow.



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Contractual Obligations and Commercial Commitments

We have contractual obligations and commercial commitments that may affect our financial condition. The following table summarizes our significant contractual obligations and commercial commitments as of
December 31, 2007:



|                              |  |                           |         |     |                   |   |                   |  |                   |         |                 |   |         |  |   |       
|----------------------------- |  | ------------------------- | ------- | --- | ----------------- | - | ----------------- |  | ----------------- | ------- | --------------- | - | ------- |  | - | ------
|                              |  | Payments Due by Period(4)
|(In thousands)                |  | Total(2)                  |         |     | Less than oneyear |   | Two to threeyears |  | Four to fiveyears |         | After fiveyears
|Long-term debt obligations(3) |  | $                         | 612,773 | (1) |                   | $ | 6,287             |  | $                 | 159,873 |                 | $ | 446,613 |  | $ |      
|Capital lease obligations(3)  |  |                           | 1,433   |     |                   |   | 464               |  |                   | 652     |                 |   | 317     |  |   |      
|Operating lease obligations   |  |                           | 103,568 |     |                   |   | 23,431            |  |                   | 38,102  |                 |   | 19,532  |  |   | 22,503
|Purchase obligations(5)       |  |                           | 69,968  |     |                   |   | 53,313            |  |                   | 16,655  |                 |   |        |  |   |      



|(1) | Represents the first-lien term loan facility. See Note 4 to our audited consolidated financial statements contained in
Part II, Item 8. of our Annual Report on Form 10-K contained herein.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Excludes certain accumulated benefit obligation payments under our non-qualified pension plan made in connection with
the acquisition of NTELOS Inc. See Note 11 to our audited consolidated financial statements contained in Part II, Item 8. of our Annual Report filed on Form 10-K contained herein.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Excludes interest.
|--- | ------------------

|(4) | On January 1, 2007 we adopted FIN No. 48, Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement 109. As of December 31, 2007, we have recognized a liability of $3.3 million, including accrued interest. This amount is excluded from the amounts represented in the table as the timing of the settlement is
not estimable.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | We entered into a three year vendor agreement in the third quarter of 2007 to purchase approximately $88 million of
network equipment, approximately $38 million of which was purchased in 2007. Approximately $65 million of this $88 million represents incremental capital expenditures associated with our EV-DO technology upgrade.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Off Balance Sheet Arrangements

We do not have any off balance sheet
arrangements or financing activities with special purpose entities.

Critical Accounting Policies and Estimates

The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend our business activities. To aid in that
understanding, management has identified our critical accounting policies for discussion herein. These policies have the potential to have a more significant impact on our financial statements, either because of the significance of the financial
statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events which are continuous in nature.

Principles of Consolidation

We purchased a 24.9% ownership interest
in NTELOS Inc. and its subsidiaries on February 24, 2005 and purchased the remaining 75.1% ownership interest on May 2, 2005. We accounted for the results of operations for NTELOS Inc. from February 24 through May 1, 2005 using
the equity method of accounting. For the period commencing on May 2, 2005, we consolidated the financial statements of NTELOS Inc. The consolidated financial statements include the accounts of the Company, NTELOS Inc. and all of its
wholly-owned subsidiaries and those limited liability corporations where NTELOS Inc., as managing member, exercises control. All significant intercompany accounts and transactions have been eliminated.

Revenue Recognition Policies

We recognize revenue when services are
rendered or when products are delivered, installed and functional, as applicable. Certain of our services require payment in advance of service performance. In such cases, we record a service liability at the time of billing and subsequently
recognize revenue over the service period. We are required to bill customers certain transactional taxes on service revenues. These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers
are billed.

With respect to our wireline and wireless businesses, we earn revenue by providing access to and usage of our



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networks. Local service and airtime revenues are recognized as services are provided. Wholesale revenues are earned by providing switched access and other
switched and dedicated services, including wireless roamer management, to other carriers. Revenues for equipment sales are recognized at the point of sale. PCS handset equipment sold with service contracts are sold at prices below cost, based on the
terms of the service contracts. We recognize the entire cost of the handsets at the time of sale, rather than deferring such costs over the service contract period.

We evaluate related transactions to determine whether they should be viewed as multiple deliverable arrangements which impacts revenue recognition. Multiple deliverable arrangements are presumed to be bundled
transactions and the total consideration is measured and allocated to the separate units based on their relative fair value with certain limitations. We have determined that sales of handsets with service contracts related to these sales generated
from Company-owned retail stores are multiple deliverable arrangements. Accordingly, substantially all of the nonrefundable activation fee revenues (as well as the associated direct costs) are recognized at the time of the related wireless handset
is sold. However, revenue and certain associated direct costs for activations at third party retail locations are deferred and amortized over the estimated life of the customer relationship as we are not a principal in the transaction to sell the
handset. Nonrefundable activation fee revenue and certain associated direct costs for transactions in segments other than wireless are deferred as they are not associated with multiple deliverable arrangements. In all cases, the direct activation
costs exceed the related activation revenues. When deferral is appropriate, we defer these direct activation costs up to but not in excess of the related deferred revenue.

We periodically make claims for recovery of access charges on certain minutes of use terminated by us on behalf of other carriers. We recognize revenue in the period that we are able to estimate and are assured of the
collection of these claims.

Accounts Receivable

We
sell our services to residential and commercial end-users and to other communication carriers primarily in Virginia and West Virginia. We have credit and collection policies to ensure collection of trade receivables and require deposits on certain
sales. We maintain an allowance for doubtful accounts based on historical results, current and expected trends and changes in credit policies. Management believes the allowance adequately covers all anticipated losses with respect to trade
receivables. Actual credit losses could differ from such estimates.

Inventories and Supplies

Our inventories and supplies consist primarily of items held for resale such as PCS handsets, pagers, wireline business phones and accessories. We value our inventory at
the lower of cost or market. Inventory cost is computed on a currently adjusted standard cost basis (which approximates actual cost on a first-in, first-out basis). Market value is determined by reviewing current replacement cost, marketability and
obsolescence.

Long-lived Asset Recovery

Long-lived
assets include property and equipment, radio spectrum licenses, long-term deferred charges and intangible assets to be held and used. Long-lived assets, excluding intangible assets with indefinite useful lives, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount should be addressed pursuant to Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
No. 144). Impairment is determined by comparing the carrying value of these long-lived assets to managements best estimate of future undiscounted cash flows expected to result from the use of the assets. If the carrying value
exceeds the estimated undiscounted cash flows, the impairment is measured as the excess of carrying value over the estimated fair value.

Depreciation of
property, plant and equipment is calculated on a straight-line basis over the estimated useful lives of the assets, which we review and update based on historical experiences and future expectations. Buildings are depreciated over a 50-year life and
leasehold improvements, which are categorized with land and building, are depreciated over the shorter of the estimated useful lives or the remaining lease terms. Network plant and equipment are depreciated over various lives from 4 to 40 years,
with a weighted average life of approximately 10 years. Furniture, fixtures and other equipment are depreciated over various lives from 5 to 18 years.

Because we applied purchase accounting on the May 2, 2005 merger date, property, plant and equipment and other long-lived assets were adjusted to fair market value on that date and accumulated depreciation and amortization was reset to
zero.



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We tested for impairment of our wireless segment assets in accordance with SFAS No. 144 based on the planned EV-DO
upgrade. No impairment existed and we believe that no other impairment indicators exist as of December 31, 2007 that would require us to perform further impairment testing. In the event that there are changes in the planned use of our
long-lived assets or our expected future undiscounted cash flows are reduced significantly, our assessment of our ability to recover the carrying value of these assets under SFAS No. 144 could change.

Goodwill and Indefinite-Lived Intangibles

Goodwill, franchise rights
and radio spectrum licenses are considered indefinite-lived intangible assets. Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset
might be impaired. We assess the recoverability of indefinite-lived assets whenever adverse events or changes in circumstances indicate that impairment may have occurred and annually on October 1. Based on the results of this testing, goodwill
and indefinite-lived intangible assets were determined to be unimpaired at October 1, 2007. The Company reviewed the results of this testing as of December 31, 2007 and concluded that no material changes would have been made to the
underlying assumptions that would have resulted in materially different test results from those performed as of October 1, 2007.

Pension Benefits
and Retirement Benefits Other Than Pensions

NTELOS Inc. sponsors a non-contributory defined benefit pension plan (Pension Plan) covering all employees
who meet eligibility requirements and were employed by NTELOS Inc. prior to October 1, 2003. The Pension Plan was closed to NTELOS Inc. employees hired on or after October 1, 2003. Pension benefits vest after five years of service and are
based on years of service and average final compensation subject to certain reductions if the employee retires before reaching age 65 and elects to receive the benefit prior to age 65. Section 412 of the Internal Revenue Code and ERISA
Section 302 establishes minimum funding requirements for defined benefit pension plans, historically requiring that the funded current liability percentage must be at least 90% of the current liability in order to prevent noticing to members of
an underfunded plan. Our policy is to make contributions to stay at or above this threshold and is intended to provide not only for benefits based on service to date, but also for those expected to be earned in the future.

We also sponsor a contributory defined contribution plan under Internal Revenue Code Section 401(k) for substantially all employees. Our policy is to match 60% of
each participants annual contribution for contributions up to 6% of each participants annual compensation. Company contributions to this plan vest after three years of service. Effective January 1, 2008, our policy is to match 100%
of each participants annual contributions for contributions up to 1% of each participants annual compensation and 50% of each participants annual contributions up to an additional 5% of each participants annual compensation.
Company contributions made on or after January 1, 2008 will vest after two years of service. Also, we have nonqualified pension plans that we account for similar to the Pension Plan.

NTELOS Inc. provides certain health care and life insurance benefits for retired employees that meet eligibility requirements. Employees hired after April 1993 are not
eligible for these benefits. Our share of the estimated costs of benefits that will be paid after retirement is generally being accrued by charges to expense over the eligible employees service periods to the dates they are fully eligible for
benefits.

In September 2006, the FASB issued FASB Statement No. 158 (SFAS No. 158), Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires an employer to recognize in its statement of financial position the overfunded or underfunded
status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation. Related to this, employers must recognize as a component of other comprehensive income, net of tax, the
actuarial gains and losses and the prior service costs and credits. The Company adopted the provisions of SFAS No. 158 for fiscal year 2006. The adoption of this standard resulted in a net reduction to accrued retirement benefits of $0.8
million, the amount of the previously unrecognized gain, offset by a $0.5 million credit to other comprehensive income, net of $0.3 million of the deferred tax liability.

Income Taxes

Deferred income taxes are provided on an asset and liability method whereby deferred tax assets are
recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We accrue interest and penalties related to unrecognized tax benefits in interest expense and income tax expense,
respectively.



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Accounting for Share-Based Payments

We account for stock-based employee compensation plans under SFAS No. 123 (revised 2004), Share-Based Payment, or SFAS No. 123R, effective January 1, 2006. Prior to January 1, 2006, we
accounted for stock-based employee compensation plans under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations and followed the disclosure provisions of
SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure.

Upon adoption of SFAS No. 123R, we were required to account for the Class A shares and options as liability-classified awards under the fair value approach. Under this approach, we determined the fair value
of these instruments on January 1, 2006 as a basis for recognizing non-cash compensation over the service period (period of employment over which the instruments vest). Prior to implementing SFAS No. 123R, we recorded non-cash compensation
based on the instruments intrinsic value as of the financial statement date, recording an adjustment in each period in order to reflect the cumulative amount to be recognized at that date considering the life to date service period earned and
the current intrinsic value of the instrument over a graded vesting schedule. This variable accounting and non-cash compensation recognition continued to be required as long as these instruments were classified as liabilities. The difference in the
cumulative non-cash compensation calculated at January 1, 2006 as compared to the non-cash compensation recorded under the rules in effect prior to January 1, 2006 was not material.

On the February 8, 2006 IPO date, the Class A shares and Class L shares were converted into Class B shares and the Class A options were converted into
common stock options. In each case, the instruments changed from a liability-based classification to an equity-based classification as a result of the modifications to the awards. The fair value of the unvested Class A shares was $11.31 per
share on February 8, 2006 prior to conversion. Immediately after conversion, the related Class B shares fair value was $12.00 per share. The difference in fair value before and after the conversion (approximately $0.3 million) is being
recognized in non-cash compensation over the remaining vesting period. Future compensation became fixed based on the post conversion fair value of both the unvested Class B shares and common stock options. We have elected to recognize this
compensation ratably over the future service period.

Significant Factors, Assumptions and Methodologies Used in Determining Fair Value

The primary factor in determining the fair value of the initial sale of Class A common stock and the exercise price of the Class A common stock options
granted was our enterprise value as of the closing of our acquisition of NTELOS Inc. in May 2005. This value was derived after a competitive bidding process. We valued all of our assets and liabilities utilizing a combination of methods such as a
market approach, cost approach and income approach. These valuations were prepared based on a number of projections, assumptions, risk assessments, industry and economic tables and other factors. Our total equity value was determined by subtracting
the long-term debt, net of cash, from our enterprise value. We then determined the residual equity value that is apportioned to the Class L common stock and Class A common stock based on their respective ownership percentages, by
subtracting from the total equity value the liquidation preference associated with the Class L common stock. The per share value of the Class A common stock was then derived by dividing the residual equity apportioned to the Class A
common stock by the number of shares of Class A common stock outstanding.

The per share values used for the September and October 2005 equity
transactions were determined based on the formula used to value our acquisition of NTELOS Inc. However, because the September 2005 stock issuance and option grant were during the third quarter 2005, they were based on our operating results for the
June 30, 2005 trailing year. Therefore, the increase in valuation of the Class A common stock in September 2005 compared to the valuation when we acquired NTELOS Inc. in May 2005 was due in part to an increase in our operating performance
during such period, which exceeded our performance goals. The October 2005 option grant was valued based on the September valuation as adjusted to estimate the additional increase expected in the trailing year operating performance through
September 30, 2005.

In conjunction with applying the foregoing valuation methodology and analysis, we also considered numerous objective and
subjective factors to determine the value of shares of Class A common stock on each grant date, including the factors described below:



| |  |  | our performance and operating results at the time of the subsequent equity transactions and the absence of material events or significant changes that would require
a change in the methods used to determine the value of our common equity;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the stock sale and option grants involved illiquid securities for a minority interest in a nonpublic company; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | the shares of Class A common stock underlying the options and the shares of Class A common stock held are subject to repurchase rights generally over a
four-year period and that if an employee is terminated with or without cause, we have the right to repurchase any Class A shares that have not vested at the lower of original cost and fair market value.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

This valuation methodology was deemed appropriate based on the fact that there was no significant change in operations or material event that would warrant a different
valuation multiple from that which was used in our acquisition of NTELOS Inc. which closed in the prior quarter.

For purposes of recording compensation
expense related to our Class A common stock and options, we determined the pre-split fair value to be $1.53, $9.20 and $13.66 per share as of June 30, 2005, September 30, 2005 and December 31, 2005, respectively. This
resulted in non-cash compensation expense of approximately $3.7 million for the period May 2, 2005 through December 31, 2005. We performed these valuations retrospectively. While these values are consistent with the transaction date
valuations discussed above, the reporting date valuation method concentrated on the income approach. Various assumptions, including discount rates, were adjusted at each period to account for the changes in our operating plan, changes in the market
and the progress of our initial public offering as we engaged underwriters during the third quarter and subsequently filed the registration statement covering such initial public offering. We believe this valuation approach is consistent with
valuation methodologies applied to other similar companies for financial reporting purposes pursuing an initial public offering.

Significant factors
contributing to the difference between fair value as of the date of the sale of our Class A common stock and each of our grants of options to purchase Class A common stock and the initial public offering price include the following: our
improved operating results, which results in a disproportionately higher increase in the value of our common equity; our successful completion of our Floating Rate Senior Notes offering in October 2005, which offers an indication of the
markets demand for our securities; the fact that there would be a public market for our common equity upon consummation of this proposed initial public offering; improved market valuations of comparable companies in our markets since the
September and October option grants; and significant recent merger activity in the wireless industry.

The fair value of the common stock options granted
in 2006 and 2007 were estimated at the respective measurement date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected terms (Note 9).

Recent Accounting Pronouncements

In September 2006, the FASB issued
FASB Statement No. 157, Fair Value Measurement(SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for the measurement of fair value, and enhances disclosures about fair value measurements. SFAS
No. 157 does not require any new fair value measures. SFAS No. 157 is effective for fair value measures already required or permitted by other standards for fiscal years beginning after November 15, 2007. The Company is required to
adopt SFAS No. 157 beginning on January 1, 2008. However, the effective date of SFAS No. 157 as it relates to fair value measurement requirements for nonfinancial assets and liabilities that are not re-measured at fair value on a
recurring basis has been deferred to fiscal years beginning after December 15, 2008. SFAS No. 157 is required to be applied prospectively, except for certain financial instruments. Any transition adjustment will be recognized as an
adjustment to opening retained earnings in the year of adoption. The Company is currently evaluating the impact of adopting SFAS No. 157 on its results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities  Including an amendment of FASB Statement
No. 115.SFAS No. 159 permits entities to choose to measure certain financial assets and liabilities at fair value (the fair value option). Unrealized gains and losses, arising subsequent to adoption, are reported in
earnings. The Company is required to adopt SFAS 159 in the first quarter of 2008. The Company is currently evaluating the impact of adopting SFAS No. 159 on its results of operations and financial position.



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In December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R requires most
identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at full fair value. Statement 141R applies to all business combinations, including combinations among mutual
entities and combinations by contract alone. Under SFAS No. 141R, all business combinations will be accounted for by applying the acquisition method. Statement 141R is effective for periods beginning on or after December 15, 2008. SFAS
No. 141R will be applied to business combinations occurring after the effective date.

In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51. Statement 160 will require noncontrolling interests (previously referred to as minority interests) to be treated as a separate component of
equity, not as a liability or other item outside of permanent equity. The Statement applies to the accounting for noncontrolling interests and transactions with noncontrolling interest holders in the consolidated financial statements. Statement 160
is effective for periods beginning on or after December 15, 2008. Statement 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date except that comparative period information will be
recast to classify noncontrolling interests in equity, attributable to net income and other comprehensive income to noncontrolling interests, and provide other disclosures required by SFAS No. 160.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

We are
exposed to market risks primarily related to interest rates. As of December 31, 2007, $612.8 million was outstanding under the First Lien Term Loan. As of December 31, 2007, NTELOS Inc. achieved a leverage ratio of 2.95:1.00 and an
interest coverage ratio of 4.84:1.00, both of which are favorable to any future covenant requirement. This facility bears interest at 2.25% above the Eurodollar rate or 1.25% above the Federal Funds rate. We have other fixed rate, long-term debt
totaling $1.4 million as of December 31, 2007.

We have a $312.5 million interest rate swap agreement which is used to manage our exposure to interest
rate market risks and to comply with the terms and conditions of the First Lien Term Loan. This swap agreement helps minimize our exposure to interest rate movements by effectively converting a portion of our long-term debt from variable rate debt
to fixed rate debt. Our fixed rate payments due under the swap agreement are calculated at a per annum rate of 4.1066%. Our swap counterpartys variable rate payments are based on three month U.S. Dollar LIBOR, which was 4.84% as of
December 31, 2007. Interest rate differentials paid or received under the swap agreement are recognized for GAAP purposes over the three month maturity periods as adjustments to our interest expense. We have interest rate risk on borrowings
under the First Lien Term Loan in excess of the $312.5 million covered by the swap agreement and we are exposed to loss if the counterparty to the swap agreement defaults. This swap agreement matures in February 2008.

At December 31, 2007, we had a $0.3 million exposure to credit loss on interest rate swaps as the swap agreement had a fair value of $0.3 million above its face
value. At December 31, 2007, our senior bank debt of $612.8 million is $300.3 million over the swap agreement.

At December 31, 2007, our
financial assets included cash and cash equivalents of $53.5 million, of which $52.7 million was invested in a temporary business investment deposit account. This deposit account is placed with a high credit quality financial institution. Other
securities and investments totaled $0.5 million at December 31, 2007.

Our primary investment at December 31, 2005 was a $2.8 million investment
in RTB stock. Redemption certificates were filed during the first quarter of 2006 which resulted in a $1.7 million gain. In April 2006, $4.5 million of proceeds were received.



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The following sensitivity analysis indicates the impact at December 31, 2007, on the fair value of certain financial
instruments, which are potentially subject to material market risks, assuming a ten percent increase and a ten percent decrease in the levels of our interest rates or, in the case of the swap agreement, a one percent increase and a one percent
decrease in the interest rates:



|                          |  |            |       |            |   |                                                            |  |   |                                                            |   |  |   |      
|------------------------- |  | ---------- | ----- | ---------- | - | ---------------------------------------------------------- |  | - | ---------------------------------------------------------- | - |  | - | -----
|(In millions)             |  | Book Value |       | Fair Value |   | Estimated fairvalue assumingnoted decreasein marketpricing |  |   | Estimated fairvalue assumingnoted increasein marketpricing
|Senior credit facility    |  | $          | 612.8 |            | $ | 605.1                                                      |  | $ | 618.6                                                      |   |  | $ | 592.0
|Capital lease obligations |  |            | 1.4   |            |   | 1.4                                                        |  |   | 1.6                                                        |   |  |   | 1.3  
|Interest rate swaps       |  |            | 0.3   |            |   | 0.3                                                        |  |   | (0.1                                                       | ) |  |   | 0.8  

A ten percent increase or decrease in interest rates would result in a change of $2.8 million in interest expense
for 2008, based on an assumption that the LIBOR rate at December 31, 2007 remained unchanged throughout 2008.



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|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

NTELOS HOLDINGS CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                                                         |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                                                                         |  | Page
|Audited Consolidated Financial Statements                                                                                                                                |  |     
|                                                                                                                                                                         | 
|NTELOS Holdings Corp.                                                                                                                                                    |  |     
|                                                                                                                                                                         | 
|Independent Registered Public Accountants Report                                                                                                                        |  | 68  
|                                                                                                                                                                         | 
|Consolidated Balance Sheets as of December 31, 2007 and 2006                                                                                                             |  | 69  
|                                                                                                                                                                         | 
|Consolidated Statements of Operations for the years ended December 31, 2007 and 2006 and for the period January 14, 2005 (inception) through December 31, 2005           |  | 71  
|                                                                                                                                                                         | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2007 and 2006 and for the period January 14, 2005 (inception) through December 31, 2005           |  | 72  
|                                                                                                                                                                         | 
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2007 and 2006 and for the period January 14, 2005 (inception) through December 31, 2005 |  | 74  
|                                                                                                                                                                         | 
|Notes to Consolidated Financial Statements                                                                                                                               |  | 76  
|                                                                                                                                                                         | 
|NTELOS Inc.                                                                                                                                                              |  |     
|                                                                                                                                                                         | 
|Independent Registered Public Accountants Report                                                                                                                        |  | 99  
|                                                                                                                                                                         | 
|Consolidated Statements of Operations for the Predecessor Company for the period January 1, 2005 through May 1, 2005                                                     |  | 100 
|                                                                                                                                                                         | 
|Consolidated Statements of Cash Flows for the Predecessor Company for the period January 1, 2005 through May 1, 2005                                                     |  | 101 
|                                                                                                                                                                         | 
|Consolidated Statements of Shareholders Equity (Deficit) for the Predecessor Company for the period January 1, 2005 through May 1, 2005                                 |  | 102 
|                                                                                                                                                                         | 
|Notes to Consolidated Financial Statements                                                                                                                               |  | 103 



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

NTELOS Holdings Corp.:

We have audited the accompanying consolidated balance
sheets of NTELOS Holdings Corp. (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, cash flows, and stockholders equity for the years ended December 31, 2007 and 2006 and the period
January 14, 2005 (inception) through December 31, 2005. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 NTELOS Holdings Corp. as of December 31, 2007 and 2006, and the results of their operations and their cash flows for the years ended December 31, 2007 and 2006 and the period January 14, 2005
(inception) through December 31, 2005, in conformity with U.S. generally accepted accounting principles.

As discussed in notes 2, 10 and 11 to the
accompanying consolidated financial statements, effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, effective January 1, 2006,
the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment, and effective December 31, 2006, the Company adopted SFAS No. 158, Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Companys internal control over financial reporting as of December 31, 2007, based on criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated February 28, 2008 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

/s/ KPMG LLP

Richmond, Virginia

February 28, 2008



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Consolidated Balance Sheets

NTELOS Holdings Corp.



|                                                                              |  |                   |         |                   |   |        
|----------------------------------------------------------------------------- |  | ----------------- | ------- | ----------------- | - | -------
|(In thousands)                                                                |  | December 31, 2007 |         | December 31, 2006
|Assets                                                                        |  |                   |         |                   |   |        
|                                                                              |  |                  
|Current Assets                                                                |  |                   |         |                   |   |        
|Cash and cash equivalents                                                     |  | $                 | 53,467  |                   | $ | 44,180 
|Accounts receivable, net of allowance of $14,004 ($11,412 in 2006)            |  |                   | 45,543  |                   |   | 38,396 
|Inventories and supplies                                                      |  |                   | 7,693   |                   |   | 5,471  
|Other receivables                                                             |  |                   | 4,184   |                   |   | 3,777  
|Income tax receivable                                                         |  |                   | 11,753  |                   |   |       
|Prepaid expenses and other                                                    |  |                   | 7,944   |                   |   | 6,562  
|                                                                              |  |                   |         |                   |   |        
|                                                                              |  |                   | 130,584 |                   |   | 98,386 
|                                                                              |  |                   |         |                   |   |        
|Securities and Investments                                                    |  |                   |         |                   |   |        
|Interest rate swap                                                            |  |                   | 347     |                   |   | 3,874  
|Securities and investments                                                    |  |                   | 523     |                   |   | 294    
|                                                                              |  |                   |         |                   |   |        
|                                                                              |  |                   | 870     |                   |   | 4,168  
|                                                                              |  |                   |         |                   |   |        
|Property, Plant and Equipment                                                 |  |                   |         |                   |   |        
|Land and buildings                                                            |  |                   | 38,513  |                   |   | 36,736 
|Network plant and equipment                                                   |  |                   | 458,874 |                   |   | 402,393
|Furniture, fixtures and other equipment                                       |  |                   | 44,422  |                   |   | 38,312 
|                                                                              |  |                   |         |                   |   |        
|Total in service                                                              |  |                   | 541,809 |                   |   | 477,441
|Under construction                                                            |  |                   | 54,401  |                   |   | 12,370 
|                                                                              |  |                   |         |                   |   |        
|                                                                              |  |                   | 596,210 |                   |   | 489,811
|Less accumulated depreciation                                                 |  |                   | 193,306 |                   |   | 113,039
|                                                                              |  |                   |         |                   |   |        
|                                                                              |  |                   | 402,904 |                   |   | 376,772
|                                                                              |  |                   |         |                   |   |        
|Other Assets                                                                  |  |                   |         |                   |   |        
|Goodwill                                                                      |  |                   | 127,637 |                   |   | 151,976
|Franchise rights                                                              |  |                   | 32,000  |                   |   | 32,000 
|Other intangibles, less accumulated amortization of $37,149 ($23,671 in 2006) |  |                   | 85,901  |                   |   | 99,379 
|Radio spectrum licenses in service                                            |  |                   | 114,180 |                   |   | 114,102
|Radio spectrum licenses not in service                                        |  |                   | 19,641  |                   |   | 19,594 
|Deferred charges and other assets                                             |  |                   | 4,771   |                   |   | 4,470  
|                                                                              |  |                   |         |                   |   |        
|                                                                              |  |                   | 384,130 |                   |   | 421,521
|                                                                              |  |                   |         |                   |   |        
|                                                                              |  | $                 | 918,488 |                   | $ | 900,847
|                                                                              |  |                   |         |                   |   |        

See accompanying Notes to Consolidated Financial Statements



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##### Table of Contents

Consolidated Balance Sheets

NTELOS Holdings Corp.



|                                                                                                                        |  |                   |         |                   |   |         |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ----------------- | - | ------- | -
|(In thousands, except par value per share amounts)                                                                      |  | December 31, 2007 |         | December 31, 2006 |  
|Liabilities and Stockholders Equity                                                                                    |  |                   |         |                   |   |         |  
|                                                                                                                        |  |                  
|Current Liabilities                                                                                                     |  |                   |         |                   |   |         |  
|Current portion of long-term debt                                                                                       |  | $                 | 6,751   |                   | $ | 13,152  |  
|Accounts payable                                                                                                        |  |                   | 31,525  |                   |   | 25,209  |  
|Dividend payable                                                                                                        |  |                   | 8,833   |                   |   |        |  
|Advance billings and customer deposits                                                                                  |  |                   | 17,809  |                   |   | 16,709  |  
|Accrued payroll                                                                                                         |  |                   | 12,929  |                   |   | 10,021  |  
|Accrued interest                                                                                                        |  |                   | 70      |                   |   | 305     |  
|Deferred revenue                                                                                                        |  |                   | 622     |                   |   | 683     |  
|Accrued operating taxes                                                                                                 |  |                   | 3,067   |                   |   | 3,584   |  
|Other accrued liabilities                                                                                               |  |                   | 3,214   |                   |   | 3,749   |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|                                                                                                                        |  |                   | 84,820  |                   |   | 73,412  |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|Long-term Liabilities                                                                                                   |  |                   |         |                   |   |         |  
|Long-term debt                                                                                                          |  |                   | 607,455 |                   |   | 613,371 |  
|Retirement benefits                                                                                                     |  |                   | 27,860  |                   |   | 33,062  |  
|Deferred income taxes                                                                                                   |  |                   | 4,042   |                   |   | 7,799   |  
|Other long-term liabilities                                                                                             |  |                   | 19,218  |                   |   | 18,405  |  
|Income tax payable                                                                                                      |  |                   | 3,325   |                   |   | 2,576   |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|                                                                                                                        |  |                   | 661,900 |                   |   | 675,213 |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|Minority Interests                                                                                                      |  |                   | 428     |                   |   | 457     |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|Commitments and Contingencies                                                                                           |  |                   |         |                   |   |         |  
|                                                                                                                        |  |                  
|Stockholders Equity                                                                                                    |  |                   |         |                   |   |         |  
|Preferred Stock, par value $.01 per share, authorized 100 shares, none issued                                           |  |                   |        |                   |   |        |  
|Common stock, par value $.01 per share, authorized 55,000 shares; 42,063 shares issued and outstanding (41,965 in 2006) |  |                   | 421     |                   |   | 420     |  
|Additional paid in capital                                                                                              |  |                   | 162,304 |                   |   | 156,956 |  
|Retained earnings (accumulated deficit)                                                                                 |  |                   | 6,603   |                   |   | (6,087  | )
|Accumulated other comprehensive income                                                                                  |  |                   | 2,012   |                   |   | 476     |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|                                                                                                                        |  |                   | 171,340 |                   |   | 151,765 |  
|                                                                                                                        |  |                   |         |                   |   |         |  
|                                                                                                                        |  | $                 | 918,488 |                   | $ | 900,847 |  
|                                                                                                                        |  |                   |         |                   |   |         |  

See accompanying Notes to Consolidated Financial Statements.



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##### Table of Contents

Consolidated Statements of Operations

NTELOS Holdings Corp.



|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ------- | - | -------------------------- | - | ------- | ---------------------------------------------------- |  | - | ------- | -
|(In thousands except per share amounts)                                                                                                                                  |  | Year EndedDecember 31,2007 |         |   | Year EndedDecember 31,2006 |   |         | January 14, 2005(inception) throughDecember 31, 2005 | 
|Operating Revenues                                                                                                                                                       |  | $                          | 500,394 |   |                            | $ | 440,076 |                                                      |  | $ | 265,859 |  
|                                                                                                                                                                         |  |                            |        
|Operating Expenses                                                                                                                                                       |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|Cost of sales and services (exclusive of items shown separately below); (inclusive of non-cash compensation expense of $403 for 2007, $1,087
for 2006 and $305 for 2005) |  |                            | 161,344 |   |                            |   | 146,429 |                                                      |  |   | 85,403  |  
|Customer operations (inclusive of non-cash compensation expense of $603 for 2007, $1,448 for 2006 and $389 for 2005)                                                     |  |                            | 108,848 |   |                            |   | 99,998  |                                                      |  |   | 63,330  |  
|Corporate operations (inclusive of non-cash compensation expense of $3,322 for 2007, $10,702 for 2006 and $3,036 for 2005)                                               |  |                            | 32,090  |   |                            |   | 34,398  |                                                      |  |   | 22,434  |  
|Depreciation and amortization                                                                                                                                            |  |                            | 97,061  |   |                            |   | 84,921  |                                                      |  |   | 59,103  |  
|Accretion of asset retirement obligations                                                                                                                                |  |                            | 818     |   |                            |   | 816     |                                                      |  |   | 489     |  
|Capital restructuring charges                                                                                                                                            |  |                            |        |   |                            |   |        |                                                      |  |   | 183     |  
|Termination of advisory agreements                                                                                                                                       |  |                            |        |   |                            |   | 12,941  |                                                      |  |   |        |  
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|                                                                                                                                                                         |  |                            | 400,161 |   |                            |   | 379,503 |                                                      |  |   | 230,942 |  
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|Operating Income                                                                                                                                                         |  |                            | 100,233 |   |                            |   | 60,573  |                                                      |  |   | 34,917  |  
|                                                                                                                                                                         |  |                            |        
|Other Income (Expenses)                                                                                                                                                  |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|Equity share of net loss from NTELOS Inc.                                                                                                                                |  |                            |        |   |                            |   |        |                                                      |  |   | (1,213  | )
|Interest expense                                                                                                                                                         |  |                            | (43,021 | ) |                            |   | (59,850 | )                                                    |  |   | (34,338 | )
|(Loss) gain on interest rate swap                                                                                                                                        |  |                            | (3,527  | ) |                            |   | (246    | )                                                    |  |   | 4,780   |  
|Gain on sale of investment                                                                                                                                               |  |                            |        |   |                            |   | 1,723   |                                                      |  |   |        |  
|Other income                                                                                                                                                             |  |                            | 3,146   |   |                            |   | 2,833   |                                                      |  |   | 1,595   |  
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|                                                                                                                                                                         |  |                            | (43,402 | ) |                            |   | (55,540 | )                                                    |  |   | (29,176 | )
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|                                                                                                                                                                         |  |                            | 56,831  |   |                            |   | 5,033   |                                                      |  |   | 5,741   |  
|                                                                                                                                                                         |  |                            |        
|Income Tax Expense                                                                                                                                                       |  |                            | 24,411  |   |                            |   | 12,190  |                                                      |  |   | 4,591   |  
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|                                                                                                                                                                         |  |                            | 32,420  |   |                            |   | (7,157  | )                                                    |  |   | 1,150   |  
|Minority Interests in Losses (Earnings) of Subsidiaries                                                                                                                  |  |                            | 33      |   |                            |   | (28     | )                                                    |  |   | (52     | )
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|Net Income (Loss)                                                                                                                                                        |  |                            | 32,453  |   |                            |   | (7,185  | )                                                    |  |   | 1,098   |  
|                                                                                                                                                                         |  |                            |        
|Dividend distribution preference on Class B shares                                                                                                                       |  |                            |        |   |                            |   | (30,000 | )                                                    |  |   |        |  
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|Income (Loss) Applicable to Common Shares                                                                                                                                |  | $                          | 32,453  |   |                            | $ | (37,185 | )                                                    |  | $ | 1,098   |  
|                                                                                                                                                                         |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|                                                                                                                                                                         |  |                            |        
|Basic and Diluted Earnings (Loss) per Common Share:                                                                                                                      |  |                            |         |   |                            |   |         |                                                      |  |   |         |  
|Income (Loss) per share  basic                                                                                                                                          |  | $                          | 0.78    |   |                            | $ | (0.95   | )                                                    |  | $ | 0.05    |  
|Income (Loss) per share  diluted                                                                                                                                        |  | $                          | 0.77    |   |                            | $ | (0.95   | )                                                    |  | $ | 0.05    |  
|Weighted average shares outstanding  basic                                                                                                                              |  |                            | 41,487  |   |                            |   | 39,231  |                                                      |  |   | 20,646  |  
|Weighted average shares outstanding  diluted                                                                                                                            |  |                            | 42,315  |   |                            |   | 39,231  |                                                      |  |   | 22,434  |  
|Cash dividends declared per share  common stock                                                                                                                         |  | $                          | 0.51    |   |                            | $ |        |                                                      |  | $ |        |  

See accompanying Notes to Consolidated Financial Statements.



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##### Table of Contents

Consolidated Statements of Cash Flows

NTELOS Holdings Corp.



|                                                                                                             |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | -------------------------- | -------- | - | -------------------------- | - | ------- | ---------------------------------------------------- |  | - | -------- | -
|(In thousands)                                                                                               |  | Year EndedDecember 31,2007 |          |   | Year EndedDecember 31,2006 |   |         | January 14, 2005(inception) throughDecember 31, 2005 | 
|Cash flows from operating activities                                                                         |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Net income (loss)                                                                                            |  | $                          | 32,453   |   |                            | $ | (7,185  | )                                                    |  | $ | 1,098    |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:                     |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Gain on sale of investment                                                                                   |  |                            |         |   |                            |   | (1,723  | )                                                    |  |   |         |  
|Depreciation                                                                                                 |  |                            | 83,583   |   |                            |   | 70,739  |                                                      |  |   | 49,633   |  
|Amortization                                                                                                 |  |                            | 13,478   |   |                            |   | 14,182  |                                                      |  |   | 9,470    |  
|Accretion of asset retirement obligations                                                                    |  |                            | 818      |   |                            |   | 816     |                                                      |  |   | 489      |  
|Deferred income taxes                                                                                        |  |                            | 21,779   |   |                            |   | 8,611   |                                                      |  |   | 3,954    |  
|Loss (gain) on interest rate swap instrument                                                                 |  |                            | 3,527    |   |                            |   | 246     |                                                      |  |   | (4,780   | )
|Interest paid-in-kind on the floating rate notes                                                             |  |                            |         |   |                            |   | 677     |                                                      |  |   | 3,579    |  
|Prepayment penalty from early debt repayment recorded in interest expense                                    |  |                            |         |   |                            |   | 2,250   |                                                      |  |   |         |  
|Common stock and stock options non-cash compensation expense                                                 |  |                            | 4,328    |   |                            |   | 13,237  |                                                      |  |   | 3,730    |  
|Excess tax benefits from share-based compensation                                                            |  |                            | (444     | ) |                            |   | (155    | )                                                    |  |   |         |  
|Amortization and write-off of loan origination costs and debt discount                                       |  |                            | 343      |   |                            |   | 6,778   |                                                      |  |   |         |  
|Equity share of net loss from NTELOS Inc.                                                                    |  |                            |         |   |                            |   |        |                                                      |  |   | 1,213    |  
|Retirement benefits and other                                                                                |  |                            | 4,530    |   |                            |   | 3,841   |                                                      |  |   | 5,492    |  
|Changes in assets and liabilities from operations:                                                           |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Increase in accounts receivable                                                                              |  |                            | (7,147   | ) |                            |   | (705    | )                                                    |  |   | (5,223   | )
|(Increase) decrease in inventories and supplies                                                              |  |                            | (2,222   | ) |                            |   | (2,052  | )                                                    |  |   | 677      |  
|(Increase) decrease in other current assets                                                                  |  |                            | (1,867   | ) |                            |   | (929    | )                                                    |  |   | 451      |  
|Changes in income taxes                                                                                      |  |                            | (11,551  | ) |                            |   | 2,576   |                                                      |  |   | 6,402    |  
|Increase (decrease) in accounts payable                                                                      |  |                            | 6,316    |   |                            |   | (4,940  | )                                                    |  |   | 9,254    |  
|Increase (decrease) in other current liabilities                                                             |  |                            | 2,902    |   |                            |   | (2,272  | )                                                    |  |   | (2,351   | )
|Retirement benefit contributions and distributions                                                           |  |                            | (6,887   | ) |                            |   | (6,962  | )                                                    |  |   | (1,699   | )
|                                                                                                             |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Net cash provided by operating activities                                                                    |  |                            | 143,939  |   |                            |   | 97,030  |                                                      |  |   | 81,389   |  
|                                                                                                             |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Cash flows from investing activities                                                                         |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Purchases of property, plant and equipment                                                                   |  |                            | (109,604 | ) |                            |   | (86,607 | )                                                    |  |   | (69,073  | )
|Proceeds from sale of investments                                                                            |  |                            |         |   |                            |   | 4,648   |                                                      |  |   | 483      |  
|Purchase of ownership interest in NTELOS Inc. including closing costs of $12.1 million, net of cash acquired |  |                            |         |   |                            |   |        |                                                      |  |   | (103,765 | )
|Purchase of radio spectrum licenses                                                                          |  |                            |         |   |                            |   | (2,295  | )                                                    |  |   |         |  
|Other                                                                                                        |  |                            | 7        |   |                            |   | 464     |                                                      |  |   |         |  
|                                                                                                             |  |                            |          |   |                            |   |         |                                                      |  |   |          |  
|Net cash used in investing activities                                                                        |  | $                          | (109,597 | ) |                            | $ | (83,790 | )                                                    |  | $ | (172,355 | )
|                                                                                                             |  |                            |          |   |                            |   |         |                                                      |  |   |          |  

See accompanying Notes to Consolidated Financial Statements



72



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Consolidated Statements of Cash Flows

NTELOS Holdings Corp.

continued



|                                                                           |  |                            |         |   |                            |   |          |                                                      |  |   |          |  
|-------------------------------------------------------------------------- |  | -------------------------- | ------- | - | -------------------------- | - | -------- | ---------------------------------------------------- |  | - | -------- | -
|(In thousands)                                                             |  | Year EndedDecember 31,2007 |         |   | Year EndedDecember 31,2006 |   |          | January 14, 2005(inception) throughDecember 31, 2005 | 
|Cash flows from financing activities                                       |  |                            |         |   |                            |   |          |                                                      |  |   |          |  
|Proceeds from initial public offering of common stock, net                 |  | $                          |        |   |                            | $ | 172,500  |                                                      |  | $ |         |  
|Proceeds from issuance of long-term debt                                   |  |                            |        |   |                            |   | 235,000  |                                                      |  |   |         |  
|Payment of high yield notes                                                |  |                            |        |   |                            |   | (139,257 | )                                                    |  |   |         |  
|Loan repayment and prepayment penalty associated with early debt repayment |  |                            |        |   |                            |   | (227,250 | )                                                    |  |   |         |  
|Repayments on senior secured term loans                                    |  |                            | (12,464 | ) |                            |   | (5,763   | )                                                    |  |   | (3,000   | )
|Payment of dividend distribution preference to Class B stockholders        |  |                            |        |   |                            |   | (30,000  | )                                                    |  |   |         |  
|Proceeds from membership contributions                                     |  |                            |        |   |                            |   |         |                                                      |  |   | 119,979  |  
|Proceeds from issuance of convertible notes                                |  |                            |        |   |                            |   |         |                                                      |  |   | 5,755    |  
|Payment of convertible notes and accrued interest                          |  |                            |        |   |                            |   |         |                                                      |  |   | (5,755   | )
|Proceeds from issuance of floating rate notes                              |  |                            |        |   |                            |   |         |                                                      |  |   | 133,650  |  
|Preference dividend to Class L common stockholders                         |  |                            |        |   |                            |   |         |                                                      |  |   | (124,999 | )
|Cash dividends paid on common stock                                        |  |                            | (12,610 | ) |                            |   |         |                                                      |  |   |         |  
|Debt and equity issuance costs                                             |  |                            | (930    | ) |                            |   | (2,855   | )                                                    |  |   | (5,882   | )
|Excess tax benefits from share-based compensation                          |  |                            | 444     |   |                            |   | 155      |                                                      |  |   |         |  
|Proceeds from stock option exercises and employee stock purchase plan      |  |                            | 358     |   |                            |   | 109      |                                                      |  |   |         |  
|Other                                                                      |  |                            | 147     |   |                            |   | 167      |                                                      |  |   | (648     | )
|                                                                           |  |                            |         |   |                            |   |          |                                                      |  |   |          |  
|Net cash (used in) provided by financing activities                        |  |                            | (25,055 | ) |                            |   | 2,806    |                                                      |  |   | 119,100  |  
|                                                                           |  |                            |         |   |                            |   |          |                                                      |  |   |          |  
|Increase in cash and cash equivalents                                      |  |                            | 9,287   |   |                            |   | 16,046   |                                                      |  |   | 28,134   |  
|Cash and cash equivalents:                                                 |  |                            |         |   |                            |   |          |                                                      |  |   |          |  
|Beginning of period                                                        |  |                            | 44,180  |   |                            |   | 28,134   |                                                      |  |   |         |  
|                                                                           |  |                            |         |   |                            |   |          |                                                      |  |   |          |  
|End of period                                                              |  | $                          | 53,467  |   |                            | $ | 44,180   |                                                      |  | $ | 28,134   |  
|                                                                           |  |                            |         |   |                            |   |          |                                                      |  |   |          |  

See accompanying Notes to Consolidated Financial Statements.



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Consolidated Statements of Stockholders Equity

NTELOS Holdings Corp.



|                                                                                                                          |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------- | ------ | ------ | - | ------- | --------------------------------------- | - | ------- | ------- | - |  | ------- | ------- | - | ----------- | - | ------------------------ | - |  | ------------------------------------ | ------- | - | ----------------------------------- | - | ------------------------ |  | - | ------- | - |  | - | ------ | - |  | - | --- |  | - | -------- | -
|(In thousands)                                                                                                            |        | Shares |   |         | MembershipInterests ProjectHoldingsLLC |   |         | Class L |   |  | Class B |         |   | CommonStock |   | AdditionalPaid-inCapital |   |  | RetainedEarnings(AccumulatedDeficit) |         |   | AccumulatedOtherComprehensiveIncome |   | TotalStockholdersEquity | 
|                                                                                                                          | Common |        |   | Class L |                                         |   | Class B |         |   |  |         |         |   |             |   |                         
|Balance, January 14, 2005 (inception)                                                                                     |        |       |   |         |                                        |   |         |        |   |  | $       |        |   |             | $ |                         |   |  | $                                    |        |   |                                     | $ |                         |  | $ |        |   |  | $ |       |   |  | $ |    |  | $ |         |  
|Sale of membership interests                                                                                              |        | 100    |   |         |                                         |   |         |         |   |  |         | 35,690  |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   | 35,690   |  
|Conversion of membership interests of Project Holdings LLC to Class L shares in NTELOS Holdings Corp.                     |        | (100   | ) |         | 3,245                                   |   |         |         |   |  |         | (35,690 | ) |             |   | 35,690                   |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |         |  
|Purchase of the remaining 75.1% equity interest in NTELOS Inc.                                                            |        |        |   |         | 8,119                                   |   |         |         |   |  |         |         |   |             |   | 89,309                   |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   | 89,309   |  
|Preference dividend to Class L common stockholders                                                                        |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   | (124,999                 | ) |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   | (124,999 | )
|Comprehensive income: Net income                                                                                          |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   | 1,098  |   |  |   |     |  |   | 1,098    |  
|                                                                                                                          |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |          |  
|Balance, December 31, 2005                                                                                                |        |       |   |         | 11,364                                  |   |         |        |   |  | $       |        |   |             | $ |                         |   |  | $                                    |        |   |                                     | $ |                         |  | $ |        |   |  | $ | 1,098  |   |  | $ |    |  | $ | 1,098    |  
|                                                                                                                          |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |          |  
|Initial public offering of common stock, net of closing costs                                                             |        | 15,375 |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   | 154                      |  |   | 169,610 |   |  |   |        |   |  |   |     |  |   | 169,764  |  
|Conversion of Class L shares, Class A non-substantive equity shares and Class L distribution preference to Class B shares |        |        |   |         | (11,364                                 | ) |         | 26,493  |   |  |         |         |   |             |   |                          |   |  |                                      | 13,970  |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   | 13,970   |  
|Class B common stock dividend distribution preference                                                                     |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   | (30,000 | ) |  |   |        |   |  |   |     |  |   | (30,000  | )
|Conversion of shares of Class B common stock to shares of common stock                                                    |        | 26,493 |   |         |                                         |   |         | (26,493 | ) |  |         |         |   |             |   |                          |   |  |                                      | (15,491 | ) |                                     |   | 265                      |  |   | 15,226  |   |  |   |        |   |  |   |     |  |   |         |  
|Non-cash compensation                                                                                                     |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      | 1,521   |   |                                     |   |                          |  |   | 1,857   |   |  |   |        |   |  |   |     |  |   | 3,378    |  
|Excess tax deduction related to non-cash compensation recorded for non-qualified stock option exercises                   |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   | 155     |   |  |   |        |   |  |   |     |  |   | 155      |  
|Shares issued through the Employee Stock Purchase Plan and stock options exercised                                        |        | 97     |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   | 1                        |  |   | 108     |   |  |   |        |   |  |   |     |  |   | 109      |  
|Comprehensive Loss:                                                                                                       |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |          |  
|Net loss                                                                                                                  |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   | (7,185 | ) |  |   |     |  |   | (7,185   | )
|Unrecognized gain from defined benefit plans, net of $304 of deferred income taxes                                        |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   | 476 |  |   | 476      |  
|                                                                                                                          |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |          |  
|Balance, December 31, 2006                                                                                                |        | 41,965 |   |         |                                        |   |         |        |   |  | $       |        |   |             | $ |                         |   |  | $                                    |        |   |                                     | $ | 420                      |  | $ | 156,956 |   |  | $ | (6,087 | ) |  | $ | 476 |  | $ | 151,765  |  
|                                                                                                                          |        |        |   |         |                                         |   |         |         |   |  |         |         |   |             |   |                          |   |  |                                      |         |   |                                     |   |                          |  |   |         |   |  |   |        |   |  |   |     |  |   |          |  

See accompanying Notes to Consolidated Financial Statements.



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Consolidated Statements of Stockholders Equity

NTELOS Holdings Corp.

continued



|                                                                                                        |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   |       |  |   |         |  
|------------------------------------------------------------------------------------------------------- | ------ | ------ | ------- | - | ------- | - | --------------------------------------- | - | ------- |  | ------- | - | ----------- | - | ------------------------ |  | ------------------------------------ | --- |  | ----------------------------------- | ------- | ------------------------ | - | ------- | - |  | - | ----- |  | - | ------- | -
|(In thousands)                                                                                          |        | Shares |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                    
|                                                                                                        | Common |        | Class L |   | Class B |   | MembershipInterests ProjectHoldingsLLC |   | Class L |  | Class B |   | CommonStock |   | AdditionalPaid-inCapital |  | RetainedEarnings(AccumulatedDeficit) |     |  | AccumulatedOtherComprehensiveIncome |         | TotalStockholdersEquity |  
|Balance, December 31, 2006                                                                              |        | 41,965 |         |  |         |  |                                         | $ |        |  | $       |  |             | $ |                         |  | $                                    | 420 |  | $                                   | 156,956 |                          | $ | (6,087  | ) |  | $ | 476   |  | $ | 151,765 |  
|                                                                                                        |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   |       |  |   |         |  
|Adjustment for the adoption of FASB Interpretation No. 48                                               |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   | 1,680   |   |  |   |       |  |   | 1,680   |  
|Non-cash compensation                                                                                   |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     | 4,328   |                          |   |         |   |  |   |       |  |   | 4,328   |  
|Expiration of former Class A common stock repurchase rights                                             |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     | 219     |                          |   |         |   |  |   |       |  |   | 219     |  
|Excess tax deduction related to non-cash compensation recorded for non-qualified stock option exercises |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     | 444     |                          |   |         |   |  |   |       |  |   | 444     |  
|Shares issued through the Employee Stock Purchase Plan and stock options exercised                      |        | 98     |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      | 1   |  |                                     | 357     |                          |   |         |   |  |   |       |  |   | 358     |  
|Cash dividends declared ($0.51 per share)                                                               |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   | (21,443 | ) |  |   |       |  |   | (21,443 | )
|Comprehensive Income:                                                                                   |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   |       |  |   |         |  
|Net income                                                                                              |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   | 32,453  |   |  |   |       |  |   |         |  
|Amortization of actuarial loss from a defined benefit plan, net of $36 of deferred income tax benefit   |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   | 56    |  |   |         |  
|Unrecognized gain from defined benefit plans, net of $942 of deferred income taxes                      |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   | 1,480 |  |   |         |  
|Total Comprehensive Income                                                                              |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   |       |  |   | 33,989  |  
|                                                                                                        |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   |       |  |   |         |  
|Balance, December 31, 2007                                                                              |        | 42,063 |         |  |         |  |                                         | $ |        |  | $       |  |             | $ |                         |  | $                                    | 421 |  | $                                   | 162,304 |                          | $ | 6,603   |   |  | $ | 2,012 |  | $ | 171,340 |  
|                                                                                                        |        |        |         |   |         |   |                                         |   |         |  |         |   |             |   |                          |  |                                      |     |  |                                     |         |                          |   |         |   |  |   |       |  |   |         |  

See accompanying Notes to Consolidated Financial Statements.



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Notes to Consolidated Financial Statements

NTELOS Holdings Corp.

Note 1. Organization

NTELOS Holdings Corp. (hereafter referred to as
Holdings Corp. or the Company), through NTELOS Inc. and its subsidiaries, is an integrated communications provider that offers a broad range of products and services to businesses, telecommunications carriers and residential
customers in Virginia, West Virginia and surrounding states. The Companys primary services are wireless digital personal communications services (PCS), local and long distance telephone services, high capacity network services and
broadband Internet access (such as DSL and dedicated access). Holdings Corp. does not have any independent operations.

Holdings Corp. was formed in
January 2005 by Citigroup Venture Capital Equity Partners, L.P. and certain of its affiliates, collectively CVC, and Quadrangle Capital Partners LLP and certain of its affiliates, collectively Quadrangle, for the purpose of
acquiring NTELOS Inc. On January 18, 2005, Holdings Corp. entered into an agreement with NTELOS Inc. and certain of its shareholders to acquire the common stock of NTELOS Inc. On February 24, 2005, Holdings Corp. purchased 24.9% of NTELOS
Inc. common stock and stock warrants. On May 2, 2005, the Company acquired all of NTELOS Inc.s remaining common shares, warrants and vested options by means of a merger at which time NTELOS Inc. became a wholly-owned subsidiary of
Holdings Corp.

During the first quarter of 2006, Holdings Corp. completed an initial public offering (the IPO) of 15,375,000 shares of its
common stock at a price of $12.00 per share. The Company received proceeds from the offering of approximately $172.5 million, net of $12.0 million of underwriting fees and $2.7 million of other closing cost. The Company used approximately $12.9
million of the net proceeds to terminate advisory agreements with CVC and Quadrangle. The Company used $143.9 million of the net proceeds to redeem its Floating Rate Senior Notes in full (including unpaid accrued interest of $4.6 million) on
April 15, 2006. The remaining proceeds, combined with available cash, were used to pay a $30 million dividend on the Companys Class B common stock on June 6, 2006. All Class B common stock was subsequently converted to common stock
during 2006.

Note 2. Significant Accounting Policies

Accounting Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in
the United States of America 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 periods. Actual results could differ from those estimates.

Financial Statement
Classification

Certain amounts in the prior year financial statements have been reclassified, with no effect on net income, to conform with current
year presentation. On its statement of operations, the Company combined the wireless communications, wireline communications and other communication services revenue line items into one line entitled operating revenues. Additionally, the Company
combined the cost of wireless sales and maintenance and support line items into one line labeled cost of sales and services for all periods presented.

Principles of Consolidation

The Company purchased a 24.9% ownership interest in NTELOS Inc. and its subsidiaries on February 24, 2005
and purchased the remaining 75.1% ownership interest on May 2, 2005. The Company accounted for the results of operations for NTELOS Inc. from February 24 through May 1, 2005 using the equity method of accounting. For the period
commencing on May 2, 2005, the Company consolidated the financial statements of NTELOS Inc. The consolidated financial statements include the accounts of the Company, NTELOS Inc. and all of its wholly-owned subsidiaries and those limited
liability corporations where NTELOS Inc., as managing member, exercises control. All significant intercompany accounts and transactions have been eliminated.



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Summarized financial information for NTELOS Inc. for the period February 24, 2005 through May 1, 2005 is
contained in the following table:



|                                                                     |  |                                     |        |  
|-------------------------------------------------------------------- |  | ----------------------------------- | ------ | -
|Summarized Statement of Operations Information                       |  |                                     |       
|(In thousands, except loss per share amount)                         |  | February 24, 2005throughMay 1, 2005 |       
|Operating revenues                                                   |  | $                                   | 70,453 |  
|Operating income                                                     |  |                                     | 6,293  |  
|Net loss                                                             |  |                                     | (4,873 | )
|Companys share of net loss recorded as equity loss from NTELOS Inc. |  | $                                   | (1,213 | )
|Basic and Diluted Earnings per Class L common share:                 |  |                                     |        |  
|Loss per share                                                       |  | $                                   | (0.17  | )
|Average shares outstanding  basic and diluted                       |  |                                     | 6,972  |  

Revenue Recognition

The Company recognizes revenue when services are rendered or when products are delivered, installed and functional, as applicable. Certain services of the Company require payment in advance of service performance. In such cases, the Company
records a service liability at the time of billing and subsequently recognizes revenue over the service period. The Company is required to bill customers certain transactional taxes on service revenues. These transactional taxes are not included in
reported revenues as they are recognized as liabilities at the time customers are billed.

With respect to the Companys wireline and wireless
businesses, the Company earns revenue by providing access to and usage of its networks. Local service and airtime revenues are recognized as services are provided. Wholesale revenues are earned by providing switched access and other switched and
dedicated services, including wireless roamer management, to other carriers. Revenues for equipment sales are recognized at the point of sale. PCS handset equipment sold with service contracts are generally sold at prices below cost, based on the
terms of the service contracts. The Company recognizes the entire cost of the handsets at the time of sale, rather than deferring such costs over the service contract period.

The Company evaluates related transactions to determine whether they should be viewed as multiple deliverable arrangements which impacts revenue recognition. Multiple deliverable arrangements are presumed to be
bundled transactions and the total consideration is measured and allocated to the separate units based on their relative fair value with certain limitations. The Company has determined that sales of handsets with service contracts related to these
sales generated from Company owned retail stores are multiple deliverable arrangements. Accordingly, substantially all of the nonrefundable activation fee revenues (as well as the associated direct costs) are recognized at the time of the related
wireless handset is sold based on the fact that the handsets are generally sold below cost and on the relative fair value evaluation. However, revenue and certain associated direct costs for activations at third party retail locations are deferred
and amortized over the estimated life of the customer relationship as the Company is not a principal in the transaction to sell the handset. Nonrefundable activation fee revenue and certain associated direct costs for transactions in segments other
than wireless are deferred as they are not associated with multiple deliverable arrangements. In all cases, the direct activation costs exceed the related activation revenues. When deferral is appropriate, the Company defers these direct activation
costs up to but not in excess of the related deferred revenue.

The Company periodically makes claims for recovery of access charges on certain minutes of
use terminated by the Company on behalf of other carriers. The Company recognizes revenue in the period that it is able to estimate and is assured of the collection of these claims.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of
three months or less to be cash equivalents. The Company places its temporary cash investments with high credit quality financial institutions with a maturity date of not greater than 90 days from acquisition and all are investments in commercial
banks. At times, such investments may be in excess of the FDIC insurance limit. At December 31, 2007 and 2006, total cash equivalents, consisting of amounts invested in a temporary business investment deposit account, were $52.7 million



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and $40.2 million, respectively. Total interest income related to cash and cash equivalents was $3.2 million and $2.8 million for the years ended
December 31, 2007 and 2006, respectively, and $1.4 million for the period January 14, 2005 (inception) through December 31, 2005.

Trade
Accounts Receivable

The Company sells its services to residential and commercial end-users and to other communication carriers primarily in Virginia
and West Virginia. The Company has credit and collection policies to ensure collection of trade receivables and requires deposits on certain sales. The Company maintains an allowance for doubtful accounts based on historical results, current and
expected trends and changes in credit policies. Management believes the allowance adequately covers all anticipated losses with respect to trade receivables. Actual credit losses could differ from such estimates. The Company includes bad debt
expense in customer operations expense in the consolidated statements of operations. Bad debt expense for the years ended December 31, 2007 and 2006 was $8.9 million and $6.3 million, respectively, and bad debt expense for the period
January 14, 2005 (inception) through December 31, 2005 was $5.7 million. The Companys allowance for doubtful accounts was $14.0 million, $11.4 million, $13.0 million and $12.8 million for the periods ending December 31, 2007,
2006, 2005 and May 2, 2005, respectively.

Property, Plant and Equipment and Other Long-Lived Assets

Long-lived assets include property, plant and equipment, radio spectrum licenses, long-term deferred charges and intangible assets to be held and used. Long-lived assets,
excluding intangible assets with indefinite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be addressed pursuant to Statement of Financial Accounting Standard
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144). Impairment is determined by comparing the carrying value of these long-lived assets to managements best estimate of future
undiscounted cash flows expected to result from the use of the assets. If the carrying value exceeds the estimated undiscounted cash flows, the impairment is measured as the excess of carrying value over the estimated fair value. We tested for
impairment of our wireless segment assets in accordance with SFAS No. 144 based on the planned Evolution-Data Optimized Revision A (EV-DO) upgrade. No impairment existed and we believe that no other impairment indicators exist as of
December 31, 2007 that would require us to perform further impairment testing.

Depreciation of property, plant and equipment is calculated on a
straight-line basis over the estimated useful lives of the assets, which we review and update based on historical experiences and future expectations. Buildings are depreciated over a 50-year life and leasehold improvements, which are categorized
with land and building, are depreciated over the shorter of the estimated useful lives or the remaining lease terms. Network plant and equipment are depreciated over various lives from 4 to 40 years, with a weighted average life of approximately 10
years. Furniture, fixtures and other equipment are depreciated over various lives from 5 to 18 years.

During the period August 1, 2007 through
December 31, 2007, the Company recorded approximately $15.9 million of accelerated depreciation related to equipment scheduled to be replaced or redeployed in connection with the Companys planned Evolution-Data Optimized Revision A
(EV-DO) network upgrade pursuant to the terms of the Amended and Restated Resale Agreement with Sprint Spectrum L.P., an indirect wholly-owned subsidiary of Sprint Nextel Corporation (hereinafter collectively referred to as Sprint
Nextel), and based on the Companys plan to upgrade substantially all of its current service coverage areas outside its wholesale territory by 2009. The impact of this accelerated depreciation was a reduction of $15.9 million to income
from continuing operations, a reduction of $9.7 million to net income and a reduction of $0.23 to basic and diluted earnings per share. The total net book value of the related equipment subject to early retirement was approximately $80 million as of
August 1, 2007 and is approximately $60 million as of December 31, 2007.

Goodwill, franchise rights and radio spectrum licenses are considered
indefinite-lived intangible assets. Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset might be impaired. The Company assesses the
recoverability of indefinite-lived assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred. Based on the results of the Companys testing at October 1, 2007, goodwill
and indefinite-lived intangible assets were determined to be unimpaired. The Company reviewed the results of this testing as of December 31, 2007 and concluded that no material changes would have been made to the underlying assumptions that
would have resulted in materially different test results from those performed as of October 1, 2007.



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The following table presents the activity in goodwill:



|                                                              |  |   |         |  
|------------------------------------------------------------- |  | - | ------- | -
|(In thousands)                                                |  |   |        
|Goodwill, December 31, 2006                                   |  | $ | 151,976 |  
|Section 382 deferred tax pre-acquisition adjustment (Note 10) |  |   | (23,853 | )
|Other valuation adjustment                                    |  |   | (486    | )
|                                                              |  |   |         |  
|Goodwill, December 31, 2007                                   |  | $ | 127,637 |  
|                                                              |  |   |         |  

Intangibles with a finite life are classified as other intangibles on the consolidated balance sheets. At
December 31, 2007 and 2006, other intangibles were comprised of the following:



|                       |  |                |  |             |         |                         |   |             |  |                         |         |  |   |       
|---------------------- |  | -------------- |  | ----------- | ------- | ----------------------- | - | ----------- |  | ----------------------- | ------- |  | - | ------
|                       |  |                |  | 2007        |         | 2006                   
|(Dollars in thousands) |  | Estimated Life |  | GrossAmount |         | AccumulatedAmortization |   | GrossAmount |  | AccumulatedAmortization
|Customer relationships |  | 3 to 15 yrs.   |  | $           | 113,400 |                         | $ | 35,430      |  | $                       | 113,400 |  | $ | 22,597
|Trademarks             |  | 14 to 15 yrs.  |  | $           | 9,650   |                         | $ | 1,719       |  | $                       | 9,650   |  | $ | 1,074 

The Company amortizes its definite-lived intangible assets using the straight-line method. Amortization expense
for the year ended December 31, 2007 and 2006 was $13.5 million and $14.2 million, respectively, and was $9.5 million for the period January 14, 2005 (inception) through December 31, 2005.

Amortization expense for the next five years is as follows:



|               |  |                       |        |            |   |       |  |   |       
|-------------- |  | --------------------- | ------ | ---------- | - | ----- |  | - | ------
|(In thousands) |  | CustomerRelationships |        | Trademarks |   | Total
|2008           |  | $                     | 11,106 |            | $ | 645   |  | $ | 11,751
|2009           |  |                       | 10,750 |            |   | 645   |  |   | 11,395
|2010           |  |                       | 10,750 |            |   | 645   |  |   | 11,395
|2011           |  |                       | 10,750 |            |   | 645   |  |   | 11,395
|2012           |  |                       | 10,093 |            |   | 645   |  |   | 10,738

Accounting for Asset Retirement Obligations

The Company records a liability for an asset retirement obligation and the associated asset retirement cost at the time an asset is acquired. Subsequent to the initial measurement of the asset retirement obligation,
the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation.

The Company enters into long-term leasing arrangements primarily for tower sites and retail store locations in its wireless segment. Additionally, in its wireline operations, the Company enters into various facility co-location agreements
and is subject to locality ordinances. In both cases, the Company constructs assets at these locations and, in accordance with the terms of many of these agreements, the Company is obligated to restore the premises to their original condition at the
conclusion of the agreements, generally at the demand of the other party to these agreements. The Company recognizes the fair value of a liability for an asset retirement obligation and capitalized that cost as part of the cost basis of the related
asset, depreciating it over the useful life of the related asset.

Included in certain of the franchise ordinances under which the RLECs and CLECs operate
are clauses that require the removal of the RLECs and CLECs equipment at the termination of the franchise agreement. The Company has not recognized an ARO for these liabilities as the removal of the equipment is not estimable due to
an indeterminable end date and the fact that the equipment is part of the public switched telephone network and it is not reasonable to assume the jurisdictions would require its removal.



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The following table indicates the changes to the Companys asset retirement obligation liability, which is included
in other long-term liabilities:



|                                                      |  |                            |        |                            |   |      
|----------------------------------------------------- |  | -------------------------- | ------ | -------------------------- | - | -----
|(In thousands)                                        |  | Year EndedDecember 31,2007 |        | Year EndedDecember 31,2006
|Asset retirement obligations, beginning               |  | $                          | 9,843  |                            | $ | 8,419
|Additional asset retirement obligations recorded, net |  |                            | 287    |                            |   | 608  
|Accretion of asset retirement obligations             |  |                            | 818    |                            |   | 816  
|                                                      |  |                            |        |                            |   |      
|Asset retirement obligations, ending                  |  | $                          | 10,948 |                            | $ | 9,843
|                                                      |  |                            |        |                            |   |      

Inventories and Supplies

The Companys inventories and supplies consist primarily of items held for resale such as PCS handsets and accessories, and wireline business phones and accessories. The Company values its inventory at the lower
of cost or market. Inventory cost is computed on a currently adjusted standard cost basis (which approximates actual cost on a first-in, first-out basis). Market value is determined by reviewing current replacement cost, marketability and
obsolescence.

Deferred Financing Costs

Deferred
financing costs are amortized using the straight-line method, which approximates the effective interest method, over a period equal to the term of the related debt instrument.

Advertising Costs

The Company expenses advertising costs and marketing production costs as incurred. Advertising
expense for the year ended December 31, 2007 and 2006 was $12.5 million and $12.3 million, respectively, and $8.7 million for the period May 2, 2005 through December 31, 2005.

Pension Benefits and Retirement Benefits Other Than Pensions

NTELOS
Inc. sponsors a non-contributory defined benefit pension plan (Pension Plan) covering all employees who meet eligibility requirements and were employed by NTELOS Inc. prior to October 1, 2003. The Pension Plan was closed to NTELOS Inc.
employees hired on or after October 1, 2003. Pension benefits vest after five years of service and are based on years of service and average final compensation subject to certain reductions if the employee retires before reaching age 65 and
elects to receive the benefit prior to age 65. Section 412 of the Internal Revenue Code and ERISA Section 302 establishes minimum funding requirements for defined benefit pension plans, historically requiring that the funded current
liability percentage must be at least 90% of the current liability in order to prevent noticing to members of an underfunded plan. The Companys policy is to make contributions to stay at or above this threshold and is intended to provide not
only for benefits based on service to date, but also for those expected to be earned in the future. Also, NTELOS Inc. has nonqualified pension plans that are accounted for similar to its Pension Plan.

NTELOS Inc. provides certain health care and life benefits for retired employees that meet eligibility requirements. Employees hired after April 1993 are not eligible
for these benefits. The Companys share of the estimated costs of benefits that will be paid after retirement is generally being accrued by charges to expense over the eligible employees service periods to the dates they are fully
eligible for benefits.

The Company measures applicable assets and liabilities of these plans on September 30 of each year. In accordance with the
requirements of FASB Statement No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R)SFAS No. 158, the Company will begin
measuring these plans assets and liabilities on December 31 beginning in 2008.

NTELOS Inc. also sponsors a contributory defined contribution plan
under Internal Revenue Code Section 401(k) for substantially all employees. The Companys policy has been to match 60% of each participants annual contribution for contributions up to 6% of each participants annual
compensation. Company contributions to this plan vest after three years of service. Effective January 1, 2008, the Companys policy is to match 100% of each participants annual contributions for contributions up to 1% of each
participants annual compensation and 50% of each participants annual contributions up to an additional 5% of each participants annual compensation. Company contributions made on or after January 1, 2008 will vest after two
years of service.



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Operating Leases

The
Company has operating leases for administrative office space, retail space, tower space, channel rights and equipment, certain of which have renewal options. The leases for retail and tower space have initial lease periods of one to thirty years.
These leases are associated with the operation of wireless digital PCS services primarily in Virginia and West Virginia. These leases, with few exceptions, provide for automatic renewal options and escalations that are either fixed or based on the
consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The Companys minimum lease term for most leases includes the
initial non-cancelable term plus at least one renewal period, as the exercise of the related renewal option or options is reasonably assured. Our cell site leases generally provide for an initial non-cancelable term of 5 to 7 years with up to 5
renewal options of 5 years each. Leasehold improvements are depreciated over the shorter of the assets useful life or the lease term, including renewal option periods that are reasonably assured.

The leases for channel rights related to the Companys BRS/EBS (formerly known as MMDS/ITFS) spectrum, formerly used by the wireless cable operations and currently
used to deliver portable broadband internet service in certain markets, have initial terms of three to ten years. The equipment leases have an initial term of three years.

Income Taxes

Deferred income taxes are provided on an asset and liability method whereby deferred tax assets are
recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We accrue interest and penalties related to unrecognized tax benefits in interest expense and income tax expense,
respectively.

Stock-based Compensation

The Company
accounts for stock-based employee compensation plans under SFAS No. 123 (revised 2004), Share-Based Payment, or SFAS No. 123R, effective January 1, 2006. Prior to January 1, 2006, the Company accounted for stock-based
employee compensation plans under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations and followed the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure.

Upon adoption of SFAS No. 123R, the Company was required to account for the Class A shares and options as liability-classified awards under the fair value approach. Under this approach, the Company determined the fair value of
these instruments on January 1, 2006 as a basis for recognizing non-cash compensation over the service period (period of employment over which the instruments vest). Prior to implementing SFAS No. 123R, the Company recorded non-cash
compensation based on the instruments intrinsic value as of the financial statement date, recording an adjustment in each period in order to reflect the cumulative amount to be recognized at that date considering the life to date service
period earned and the current intrinsic value of the instrument over a graded vesting schedule. This variable accounting and non-cash compensation recognition continued to be required as long as these instruments were classified as liabilities. The
difference in the cumulative non-cash compensation calculated at January 1, 2006 as compared to the non-cash compensation recorded under the rules in effect prior to January 1, 2006 was not material.

On the February 8, 2006 IPO date, the Class A shares and Class L shares were converted into Class B shares and the Class A options were converted into
common stock options. In each case, the instruments changed from a liability-based classification to an equity-based classification as a result of the modifications to the awards. The fair value of the unvested Class A shares was $11.31 per
share on February 8, 2006 prior to conversion. Immediately after conversion, the related Class B shares fair value was $12.00 per share. The difference in fair value before and after the conversion (approximately $0.3 million) is being
recognized in non-cash compensation over the remaining vesting period. Future compensation became fixed based on the post conversion fair value of both the unvested Class B shares and common stock options. The Company has elected to recognize this
compensation ratably over the future service period.



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The fair value of the common stock options granted in 2006 and 2007 were estimated at the respective measurement date
using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected terms (Note 9).

Earnings (Loss) Per Common Share

Earnings per share is calculated based on the relative terms of the underlying stock agreements and,
therefore, the weighted average share counts have been adjusted to reflect the series of conversions and the split which occurred commensurate with the IPO.

For purposes of calculating weighted average shares to be used in both the basic and diluted earnings per share calculation for 2005, the Companys calculations are based on the period beginning on February 24, 2005, the date of
our initial investment in NTELOS Inc. and commencement of our operations.

Fair Value Of Financial Instruments

Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are reflected in the consolidated financial statements at cost which approximates
fair value because of the short-term maturity of these instruments. The fair values of other financial instruments are based on quoted market prices or discounted cash flows based on current market conditions.

The Company measures all derivatives at fair value based on dealer quotes and recognizes them as either assets or liabilities on the Companys balance sheet.
Changes in the fair values of derivative instruments are recognized in either earnings or comprehensive income, depending on the designated use and effectiveness of the instruments (Note 6).

Recent Accounting Pronouncements

In September 2006, the FASB issued
FASB Statement No. 157, Fair Value Measurement(SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for the measurement of fair value, and enhances disclosures about fair value measurements. SFAS
No. 157 does not require any new fair value measures. SFAS No. 157 is effective for fair value measures already required or permitted by other standards for fiscal years beginning after November 15, 2007. The Company is required to
adopt SFAS No. 157 beginning on January 1, 2008. However, the effective date of SFAS No. 157 as it relates to fair value measurement requirements for nonfinancial assets and liabilities that are not re-measured at fair value on a
recurring basis has been deferred to fiscal years beginning after December 15, 2008. SFAS No. 157 is required to be applied prospectively, except for certain financial instruments. Any transition adjustment will be recognized as an
adjustment to opening retained earnings in the year of adoption. The Company is currently evaluating the impact of adopting SFAS No. 157 on its results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities  Including an amendment of FASB Statement
No. 115. SFAS No. 159 permits entities to choose to measure certain financial assets and liabilities at fair value (the fair value option). Unrealized gains and losses, arising subsequent to adoption, are reported in
earnings. The Company is required to adopt SFAS No. 159 in the first quarter of 2008. The Company is currently evaluating the impact of adopting SFAS No. 159 on its results of operations and financial position.

Note 3. Disclosures About Segments of an Enterprise and Related Information

The Company manages its business segments with separate products and services, as described below.

Wireless PCS:The Companys
wireless PCS business carries digital phones and services, marketed in retail stores, telesales, on-line at www.ntelos.com and business-to-business channels throughout much of Virginia and West Virginia. The Companys wireless PCS segment
operates in three primary markets: Virginia East, Virginia West and West Virginia. The Virginia East market covers a populated area of 3.5 million people primarily in the Richmond and Hampton Roads areas of Virginia through Richmond 20MHz, LLC,
a wholly owned subsidiary. The region was added in July 2000 from the PrimeCo VA acquisition. The Virginia West market currently serves a populated area of 2.2 million people in central and western Virginia primarily through the Virginia PCS
Alliance, L.C. (VA Alliance), a 97% majority owned Limited Liability Company. The West Virginia market is served by



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West Virginia PCS Alliance, L.C. (WV Alliance), a wholly owned Limited Liability Company, and currently covers a populated area of
1.6 million people primarily in West Virginia, but extending to parts of eastern Kentucky, southwestern Virginia and eastern Ohio. In addition to the markets indicated above, the Company has licenses, which are not currently active, that cover
a populated area of approximately 1.4 million people.

In addition to the end-user customer business, the Company provides roaming services to other
PCS providers and has a Strategic Network Alliance with Sprint Nextel, which West Virginia PCS Alliance, L.C., Virginia PCS Alliance, L.C. and NTELOS Inc. entered into in June 2004 and which was amended in July 2007 (Note 2). Revenue from this
wholesale service agreement was $94.8 million for the year ended December 31, 2007, $76.7 million for the year ended December 31, 2006 and $43.0 million for the period May 2, 2005 through December 31, 2005.

RLEC: The Company has two RLEC businesses subject to the regulations of the State Corporation Commission of Virginia. These businesses serve several areas in
western Virginia, are fully integrated and are managed as one consolidated operation. Principal products offered by this segment are local wireline telephone service, which includes advanced calling features, network access, long distance toll and
directory advertising. In the third quarter of 2007, the Company began to offer video services within its RLEC market via fiber to the home. Fiber to the home allows the Company to deliver video and Internet access at speeds up to 20 megabits per
second in addition to providing local and long distance telephone service. As of December 31, 2007, the Company passed approximately 2,900 households with fiber. Revenues related to video and Internet are reported in the Competitive wireline
segment.

Competitive wireline: In addition to the RLEC services, the Company directly or indirectly owns 2,110 route-miles of fiber optic network
and provides transport services for long distance, Internet and private network services. Much of this network is located within regions in which the Company sells products and services or provides connections for and between markets the Company
serves. Much of the Companys network is connected and marketed through Valley Network Partnership (ValleyNet), a partnership of three nonaffiliated communications companies that have interconnected their networks to form a
nonswitched, fiber optic network. The ValleyNet network is connected to and marketed with other adjacent fiber networks creating a connected fiber optic network serving the ten-state mid-Atlantic region, stretching from Pennsylvania to Florida north
to south and west as far as Ashland, KY.

The Company also offers competitive local exchange carrier (CLEC) services. Through its wholly owned
subsidiaries certified in Virginia and West Virginia, it currently provides CLEC service in 21 geographic markets. The Company has a facilities-based strategy, offering broadband service applications such as Ethernet, PRI connections and competitive
access utilizing its fiber network. Also within this segment, the Company provides Internet access services through a local presence in 54 markets in Virginia, West Virginia and Tennessee. The Companys focus with Internet is on broadband
service offerings. Metro Ethernet, dedicated high-speed access, integrated access, digital subscriber line (DSL) and portable broadband are the primary broadband products. These operations are managed as one consolidated operation within
a single segment due to the interdependence of network and other assets and functional support. As noted in the RLEC section above, revenue from customers in the RLEC service areas that relate to unregulated services, such as integrated access, DSL
and video, are reported in the Competitive wireline segment.

Other:Other communications services ( Other) includes certain unallocated
corporate related items that do not provide direct benefit to the operating segments and non-cash compensation charges, as well as results from the Companys paging and other communication services businesses, which are not considered separate
reportable segments. Total unallocated corporate operating expenses were $4.5 million for the year ended December 31, 2007. Additionally, the Company recorded $4.3 million of non-cash compensation expense and $0.6 million of secondary offering
costs during the year ended December 31, 2007, which were not allocated. Total unallocated corporate operating expenses were $4.2 million for the year ended December 31, 2006. Additionally, the Company recorded $0.5 million of advisory
fees, a termination of the advisory agreement fee of $12.9 million, and non-cash compensation of $13.2 million for the year ended December 31, 2006, none of which was allocated. Total unallocated corporate operating expenses were $2.3 million
for the period May 2, 2005 through December 31, 2005. Additionally, the Company recorded $1.3 million of advisory fees and $3.7 million of non-cash compensation charges during this period.

Depreciation related to corporate assets is allocated to the operating segments and was $4.2 million and $3.2 million for the year ended December 31, 2007 and 2006,
respectively, and was $1.5 million for the period May 2, 2005 through December 31, 2005.



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Revenues from Sprint Nextel accounted for 21.6% and 20.1% of the Companys total revenue for the year ended
December 31, 2007 and 2006, respectively, and 18% of its revenue for the period May 2, 2005 through December 31, 2005. Revenue from Sprint Nextel was derived from a wireless PCS wholesale contract and RLEC and Competitive wireline
segments network access.

Summarized financial information concerning the Companys reportable segments is shown in the following table.



|                                               |  |             |         |      |   |                     |  |       |         |  |               |        |   |       |   |        |   |  |   |        
|---------------------------------------------- |  | ----------- | ------- | ---- | - | ------------------- |  | ----- | ------- |  | ------------- | ------ | - | ----- | - | ------ | - |  | - | -------
|(In thousands)                                 |  | WirelessPCS |         | RLEC |   | CompetitiveWireline |  | Other |         |  | Elim-inations |        |   | Total
|As of and for the year ended December 31, 2007 |  |             |         |      |   |                     |  |       |         |  |               |        |   |       |   |        |  
|Operating revenues                             |  | $           | 377,761 |      | $ | 61,458              |  | $     | 60,467  |  | $             | 708    |   |       | $ |       |   |  | $ | 500,394
|Intersegment revenues(2)                       |  |             | 188     |      |   | 5,685               |  |       | 3,617   |  |               | 42     |   |       |   | (9,532 | ) |  |   |       
|Operating income (loss)                        |  |             | 71,398  |      |   | 30,249              |  |       | 8,097   |  |               | (9,511 | ) |       |   |       |   |  |   | 100,233
|Depreciation and amortization                  |  |             | 70,052  |      |   | 14,160              |  |       | 12,754  |  |               | 95     |   |       |   |       |   |  |   | 97,061 
|Accretion of asset retirement obligations      |  |             | 736     |      |   | 16                  |  |       | 55      |  |               | 11     |   |       |   |       |   |  |   | 818    
|Non-cash compensation charges                  |  |             |        |      |   |                    |  |       |        |  |               | 4,328  |   |       |   |       |   |  |   | 4,328  
|Secondary offering costs                       |  |             |        |      |   |                    |  |       |        |  |               | 570    |   |       |   |       |   |  |   | 570    
|                                               |  |             |         |      |   |                    
|Capital expenditures                           |  |             | 77,640  |      |   | 9,318               |  |       | 15,314  |  |               | 7,332  |   |       |   |       |   |  |   | 109,604
|                                               |  |             |         |      |   |                    
|Goodwill                                       |  |             | 77,769  |      |   | 33,348              |  |       | 16,520  |  |               |       |   |       |   |       |   |  |   | 127,637
|                                               |  |             |         |      |   |                    
|Total segment assets                           |  |             | 516,162 |      |   | 193,902             |  |       | 102,496 |  |               | 1,056  |   |       |   |       |   |  |   | 813,616
|Corporate assets                               |  |             |         |      |   |                     |  |       |         |  |               |        |   |       |   |        |   |  |   | 104,872
|                                               |  |             |         |      |   |                     |  |       |         |  |               |        |   |       |   |        |   |  |   |        
|Total assets                                   |  |             |         |      |   |                     |  |       |         |  |               |        |   |       |   |        |   |  | $ | 918,488
|                                               |  |             |         |      |   |                     |  |       |         |  |               |        |   |       |   |        |   |  |   |        



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|                                                        |  |             |         |      |   |                     |  |       |         |  |               |         |   |       |   |        |   |  |   |        
|------------------------------------------------------- |  | ----------- | ------- | ---- | - | ------------------- |  | ----- | ------- |  | ------------- | ------- | - | ----- | - | ------ | - |  | - | -------
|(In thousands)                                          |  | WirelessPCS |         | RLEC |   | CompetitiveWireline |  | Other |         |  | Elim-inations |         |   | Total
|As of and for the year ended December 31, 2006          |  |             |         |      |   |                     |  |       |         |  |               |         |   |       |   |        |   |  |   |        
|Operating revenues                                      |  | $           | 322,329 |      | $ | 60,767              |  | $     | 56,158  |  | $             | 822     |   |       | $ |       |   |  | $ | 440,076
|Intersegment revenues(2)                                |  |             | 175     |      |   | 5,662               |  |       | 3,515   |  |               | 48      |   |       |   | (9,400 | ) |  |   |       
|Operating income (loss)                                 |  |             | 52,799  |      |   | 32,243              |  |       | 6,598   |  |               | (31,067 | ) |       |   |       |   |  |   | 60,573 
|Depreciation and amortization                           |  |             | 58,453  |      |   | 14,356              |  |       | 11,800  |  |               | 312     |   |       |   |       |   |  |   | 84,921 
|Accretion of asset retirement obligations               |  |             | 790     |      |   | 13                  |  |       | 37      |  |               | (24     | ) |       |   |       |   |  |   | 816    
|Termination of advisory agreements                      |  |             |        |      |   |                    |  |       |        |  |               | 12,941  |   |       |   |       |   |  |   | 12,941 
|Non-cash compensation charges                           |  |             |        |      |   |                    |  |       |        |  |               | 13,237  |   |       |   |       |   |  |   | 13,237 
|                                                        |  |             |         |      |   |                    
|Capital expenditures                                    |  |             | 59,409  |      |   | 8,862               |  |       | 12,103  |  |               | 6,233   |   |       |   |       |   |  |   | 86,607 
|                                                        |  |             |         |      |   |                    
|Goodwill                                                |  |             | 97,951  |      |   | 33,348              |  |       | 20,677  |  |               |        |   |       |   |       |   |  |   | 151,976
|                                                        |  |             |         |      |   |                    
|Total segment assets                                    |  |             | 518,720 |      |   | 195,595             |  |       | 102,859 |  |               | 1,105   |   |       |   |       |   |  |   | 818,279
|Corporate assets                                        |  |             |         |      |   |                     |  |       |         |  |               |         |   |       |   |        |   |  |   | 82,568 
|                                                        |  |             |         |      |   |                     |  |       |         |  |               |         |   |       |   |        |   |  |   |        
|Total assets                                            |  |             |         |      |   |                     |  |       |         |  |               |         |   |       |   |        |   |  | $ | 900,847
|                                                        |  |             |         |      |   |                     |  |       |         |  |               |         |   |       |   |        |   |  |   |        
|                                                        |  |             |         |     
|For the period May 2, 2005 through December 31, 2005(1) |  |             |         |      |   |                     |  |       |         |  |               |         |   |      
|Operating revenues                                      |  | $           | 190,477 |      | $ | 38,153              |  | $     | 36,660  |  | $             | 569     |   |       | $ |       |   |  | $ | 265,859
|Intersegment revenues(2)                                |  |             | 72      |      |   | 3,527               |  |       | 2,503   |  |               | 41      |   |       |   | (6,143 | ) |  |   |       
|Operating income (loss)                                 |  |             | 20,082  |      |   | 18,036              |  |       | 5,231   |  |               | (8,432  | ) |       |   |       |   |  |   | 34,917 
|Depreciation and amortization                           |  |             | 40,005  |      |   | 10,560              |  |       | 7,809   |  |               | 729     |   |       |   |       |   |  |   | 59,103 
|Accretion of asset retirement obligations               |  |             | 468     |      |   | 9                   |  |       | 28      |  |               | (16     | ) |       |   |       |   |  |   | 489    
|Non-cash compensation charges                           |  |             |        |      |   |                    |  |       |        |  |               | 3,730   |   |       |   |       |   |  |   | 3,730  
|Capital restructuring charges                           |  |             |        |      |   |                    |  |       |        |  |               | 183     |   |       |   |       |   |  |   | 183    
|                                                        |  |             |         |      |   |                    
|Capital expenditures                                    |  |             | 43,815  |      |   | 6,580               |  |       | 12,993  |  |               | 5,685   |   |       |   |       |   |  |   | 69,073 



|(1) | For the period January 14, 2005 through May 1, 2005, the only activity on the Holdings Corp. statement of
operations was the 24.9% equity share of NTELOS Inc.s results of operations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Intersegment revenues consist primarily of telecommunications services such as local exchange services, inter-city and
local transport of voice and data traffic, and leasing of various network elements. Intersegment revenues are primarily recorded at tariff and prevailing market rates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Note 4. Long-Term Debt

As of December 31, 2007 and December 31, 2006, the Companys outstanding long-term debt consisted of the following:



|                                        |  |                  |         |                  |   |        
|--------------------------------------- |  | ---------------- | ------- | ---------------- | - | -------
|(In thousands)                          |  | December 31,2007 |         | December 31,2006
|First lien term loan                    |  | $                | 612,773 |                  | $ | 625,237
|Capital lease obligations               |  |                  | 1,433   |                  |   | 1,286  
|                                        |  |                  |         |                  |   |        
|                                        |  |                  | 614,206 |                  |   | 626,523
|                                        |  |                 
|Less: current portion of long-term debt |  |                  | 6,751   |                  |   | 13,152 
|                                        |  |                  |         |                  |   |        
|Long-term debt                          |  | $                | 607,455 |                  | $ | 613,371
|                                        |  |                  |         |                  |   |        

Long-term debt, excluding capital lease obligations

On June 1, 2006, NTELOS Inc. entered into a first lien Restated and Amended Credit Agreement (Amended Credit Agreement or First Lien Term
Loan). Borrowings under the First Lien Term Loan amount to $630 million, consisting of (i) $235 million of new borrowings, the proceeds of which were used to retire the prior $225 million second lien credit facility (which carried an
interest rate of 5.0% above the Eurodollar rate), (ii) the refinancing of $395 million of prior first lien borrowings and (iii) the payment of other costs associated with the borrowing, including a $2.25 million prepayment penalty on the
second lien credit facility which is included in interest expense for the year ended December 31, 2006. The First Lien Term Loan also includes a $35 million first lien revolving credit facility (the Revolving Credit Facility), none
of which has ever been drawn upon.

The First Lien Term Loan matures in August 2011, with quarterly payments of $1.6 million through September 30,
2010, and the remainder due in four equal quarterly installments over the year prior to maturity. For the year ended December 31, 2006, the Company was required to make a mandatory excess cash flow payment of $6.2 million on
March 31, 2007 which was included in current portion of long-term debt on the December 31, 2006 consolidated balance sheet.

The First Lien Term
Loan bears interest at rates 2.25% above the Eurodollar rate or 1.25% above the Federal Funds rate for periods in which NTELOS Inc.s leverage ratio is equal to or less than 4.00:1.00 as measured at the end of each quarter and interest at rates
25 basis points higher if the leverage ratio exceeds 4:00:1:00. NTELOS Inc.s leverage ratio was below 4.00:1.00 as of March 31, 2006 and thereafter. At December 31, 2007, NTELOS Inc.s leverage ratio (as defined under the
Amended Credit Agreement) was 2.95:1.00.

The First Lien Term Loan and Revolving Credit Facility are secured by a first priority pledge of substantially
all property and assets of NTELOS Inc. and all material subsidiaries, as guarantors, excluding the RLECs. The First Lien Term Loan includes various restrictions and conditions including covenants relating to leverage and interest coverage ratio
requirements.

On March 9, 2007, NTELOS Inc. amended its First Lien Term Loan. The principal purpose of the amendment was to establish a restricted
payment basket, initially set at $30.0 million, which can be used to make certain restricted payments, as defined under the Credit Agreement, including the ability to pay dividends, repurchase stock or advance funds to the Company. This
restricted payment basket will be increased by $6.5 million per quarter commencing with the quarter ending March 31, 2007 and will be decreased by any actual restricted payments during the quarter. In addition, on an annual basis, the
restricted payment basket will be increased by the amount, if any, by which 50% (or, if the leverage ratio, as defined, as of the most recently ended calendar year, was less than 3.25:1:00, 75%) of the excess cash flow, as defined, for the most
recently ended fiscal year, exceeds $26.0 million. Based on results for the year ended December 31, 2007, the excess cash flow for 2007 was below $26.0 million and thus did not affect the restricted payment basket. The amount of the restricted
payment basket was $43.4 million as of December 31, 2007. Following the $8.8 million dividend declared on October 25, 2007 and paid on January 10, 2008, the restricted payment basket was further reduced to $34.6 million.

Under the amendment, mandatory debt repayments of 50% of the excess cash flow, as defined, for the most recently ended calendar year (beginning with the year ended
December 31, 2007) must be made by March 31 of the following year, if the leverage ratio is above 3.25:1.00. If the leverage ratio exceeds 4.25:1.00, the mandatory payment increases to 75% of calculated excess cash flow. As NTELOS
Inc.s leverage ratio was below 3.25:1.00 as of December 31, 2007, NTELOS Inc. is not required to make an excess cash flow payment in 2008.



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NTELOS Inc. incurred an amendment fee and transaction costs of approximately $0.9 million in connection with this
amendment and $0.9 million related to the First Lien Term Loan, the total of which are being amortized to interest expense over the remaining life of the First Lien Term Loan. Accordingly, NTELOS Inc. recorded a charge to interest expense of $0.3
and $0.1 million, respectively, for the year ended December 31, 2007 and the period from June 1, 2006 to December 31, 2006.

On
October 17, 2005, the Company issued $135 million in Floating Rate Senior Notes (the Floating Rate Notes) at 99% of par. The Floating Rate Notes bore interest at a rate per annum, reset quarterly, equal to 12.9% for the period from
October 17, 2005 to January 15, 2006. Interest due on January 15, 2006 was paid in kind resulting in a $4.3 million increase to the par value of the Floating Rate Notes. The interest rate was reset and the Floating Rate Notes bore
interest at a rate per annum of 13.35% for the period from January 16, 2006 to April 15, 2006. The Company completed its IPO on February 8, 2006 and a portion of the proceeds from this offering were used to repay the Floating Rate
Notes in full on April 15, 2006, including unpaid interest thereon, totaling $143.9 million. The $1.3 million balance of the original $1.4 million discount associated with the issue price was written-off in connection with the repayment. The
Company incurred $5.4 million of related deferred debt issuance costs that were being amortized to interest expense over the life of the Floating Rate Notes. Amortization relating to these costs from January 1, 2006 through the repayment date
was $0.1 million and was $0.1 million from October 17, 2005 through December 31, 2005, and the $5.1 million balance of deferred issuance costs was written off on the repayment date. All of these accretions and write-offs which totaled
approximately $6.8 million in 2006 are reflected in interest expense in the consolidated statement of operations.

The aggregate maturities of long-term
debt outstanding at December 31, 2007, excluding capital lease obligations, based on the contractual terms of the instruments are $6.3 million per year in 2008 and 2009, $153.6 million in 2010 and $446.6 million in 2011.

The Companys blended average interest rate on its long-term debt as of December 31, 2007 and 2006 was 6.5% and 6.9%, respectively.

Capital lease obligations

In addition to the long-term debt
discussed above, the Company has entered into capital leases on vehicles used in its operations with lease terms of four to five years. At December 31, 2007, the net present value of these future minimum lease payments is $1.4 million. As of
December 31, 2007, the principal portion of these obligations are due as follows: $0.5 million in 2008, $0.3 million per year in 2009 and 2010, $0.2 million in 2011 and $0.1 million thereafter.

Note 5. Supplementary Disclosures of Cash Flow Information

The
following information is presented as supplementary disclosures for the consolidated statements of cash flows for the periods indicated below.



|                                      |  |                             |        |                             |   |                                                      |  |   |       
|------------------------------------- |  | --------------------------- | ------ | --------------------------- | - | ---------------------------------------------------- |  | - | ------
|(In thousands)                        |  | Year EndedDecember 31, 2007 |        | Year EndedDecember 31, 2006 |   | January 14, 2005(inception) throughDecember 31, 2005
|Cash payments for:                    |  |                             |        |                             |   |                                                      |  |   |       
|Interest (net of amounts capitalized) |  | $                           | 42,982 |                             | $ | 50,421                                               |  | $ | 30,862
|Income taxes                          |  |                             | 14,385 |                             |   | 1,140                                                |  |   | 965   
|Cash received from income tax refunds |  |                             |       |                             |   | 220                                                  |  |   | 7,469 
|Supplemental financing disclosure:    |  |                             |        |                             |   |                                                      |  |   |       
|Dividend declared not paid            |  |                             | 8,833  |                             |   |                                                     |  |   |      

Interest payments in the above table are net of $3.9 million and $3.1 million related to net interest received on
the interest rate swap agreements for the year ended December 31, 2007 and 2006, respectively, and include $1.4 million related to interest paid on the interest rate swap agreements for the period January 14, 2005 through December 31,
2005. The amount of interest capitalized in the periods ending December 31, 2007, 2006 and 2005 was $0.6 million, $0.6 million and $0.3 million, respectively.



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Note 6. Financial Instruments

The Company is exposed to market risks with respect to certain of the financial instruments that it holds. The following is a summary by balance sheet category:

Cash and Cash Equivalents

The carrying amount approximates fair value because of the short-term maturity of those
instruments. All cash equivalents are temporary cash investments with high credit quality financial institutions.

Long-Term Investments

At December 31, 2007 and 2006, the Company had an investment in CoBank, ACB (CoBank) of $0.4 million and $0.2 million, respectively, and miscellaneous
other investments. All of the investments are carried under the cost method at December 31, 2007 and 2006.

Interest Rate Swaps

In February 2005, NTELOS Inc. entered into an interest rate swap agreement with a notional amount of $312.5 million in order to manage its exposure to interest rate
movements by effectively converting a portion of its long-term debt from variable to fixed rates. This swap agreement matures in February 2008 and involves the exchange of fixed rate payments for variable rate payments without the effect of leverage
and without the exchange of the underlying face amount. Fixed interest rate payments are at a per annum rate of 4.1066%. Variable rate payments are based on three month U.S. Dollar LIBOR. The weighted average LIBOR rate applicable to this
agreement was 5.36% on December 31, 2006 and 4.84% on December 31, 2007. The notional amounts do not represent amounts exchanged by the parties, and thus are not a measure of exposure to the Company. The amounts exchanged are based on the
notional amounts and other terms of the swap.

On December 31, 2007 and December 31, 2006, the swap agreement had a fair value of $0.3 million
and $3.9 million, respectively. The Company did not designate this swap as a cash flow hedge for accounting purposes and, therefore, records the changes in market value of the swap agreement as gain or loss on interest rate swap instrument for the
applicable periods.

The fair value of the interest rate swap agreement is based on a dealer quote. Neither the Company nor the counterparties, which are
prominent banking institutions, are required to collateralize their respective obligations under these swaps. The Company is exposed to loss if the counterparty defaults. The Company is exposed to credit loss on its interest rate swap agreement to
the extent the fair value of the swap is an asset. Therefore, at December 31, 2007, the Companys credit exposure was $0.3 million.

The Company
does not believe that any reasonably likely change in interest rates would have a material adverse effect on the financial position, the results of operations or cash flows of the Company. All interest rate swaps are reviewed with and, when
necessary, are approved by the board of directors.

Debt Instruments

On December 31, 2007, the Companys First Lien Term Loan totaled $612.8 million. Of this amount, $300.3 million was not subject to the swap agreement. Therefore, the Company has variable interest rate
exposure related to this amount.



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The following table indicates the difference between face amount, carrying amount and fair value of the Companys
financial instruments at December 31, 2007 and 2006.



|                                                                             |  |            |         |   |                |   |           |  |   |        
|---------------------------------------------------------------------------- |  | ---------- | ------- | - | -------------- | - | --------- |  | - | -------
|Financial Instruments (In thousands)                                         |  | FaceAmount |         |   | CarryingAmount |   | FairValue
|December 31, 2007                                                            |  |            |         |   |                |   |           |  |   |        
|Nonderivatives:                                                              |  |            |         |   |                |   |           |  |   |        
|Financial assets:                                                            |  |            |         |   |                |   |           |  |   |        
|Cash and cash equivalents                                                    |  | $          | 53,467  |   |                | $ | 53,467    |  | $ | 53,467 
|Long-term investments for which it is not practicable to estimate fair value |  |            | N/A     |   |                |   | 523       |  |   | 523    
|Financial liabilities:                                                       |  |            |         |   |                |   |           |  |   |        
|Senior credit facility                                                       |  |            | 612,773 |   |                |   | 612,773   |  |   | 605,113
|Capital lease obligations                                                    |  |            | 1,433   |   |                |   | 1,433     |  |   | 1,433  
|Derivatives relating to debt:                                                |  |            |         |   |                |   |           |  |   |        
|Interest rate swaps  asset                                                  |  |            | 312,500 | * |                |   | 347       |  |   | 347    
|                                                                             |  |            |        
|December 31, 2006                                                            |  |            |         |   |                |   |           |  |   |        
|Nonderivatives:                                                              |  |            |         |   |                |   |           |  |   |        
|Financial assets:                                                            |  |            |         |   |                |   |           |  |   |        
|Cash and cash equivalents                                                    |  |            | 44,180  |   |                |   | 44,180    |  |   | 44,180 
|Long-term investments for which it is not practicable to estimate fair value |  |            | N/A     |   |                |   | 294       |  |   | 294    
|Financial liabilities:                                                       |  |            |         |   |                |   |           |  |   |        
|Senior credit facility                                                       |  |            | 625,237 |   |                |   | 625,237   |  |   | 626,800
|Capital lease obligations                                                    |  |            | 1,286   |   |                |   | 1,286     |  |   | 1,286  
|Derivatives relating to debt:                                                |  |            |         |   |                |   |           |  |   |        
|Interest rate swaps  asset                                                  |  | $          | 312,500 | * |                | $ | 3,874     |  | $ | 3,874  



|* | Notional amount
|- | ---------------

Note 7. Securities and Investments

At December 31, 2007 and 2006, the Company had an investment in CoBank, ACB (CoBank) with a carrying value of $0.4 million and $0.2 million,
respectively, primarily related to patronage distributions of restricted equity. This is a required investment related to the portion of the First Lien Term Loan held by CoBank.

During 2006, the Company recognized a $1.7 million gain on sale of its Class C stock holdings in the Rural Telephone Bank for the stated liquidation value of $4.5 million.

Note 8. Stockholders Equity

During the first quarter of 2006,
the Company completed an IPO of 15.4 million shares of its common stock. Prior to the IPO, the Companys only common stock instrument was a Class L common stock. Additionally, the Company had a Class A common stock instrument that was
classified as a liability based on its attributes. In conjunction with the IPO, each share of Class L common stock and Class A common stock was converted into approximately 2.15 shares of Class B common stock, or 26.5 million shares of
Class B common stock, and each option to purchase Class A common stock was converted into approximately 2.15 options to purchase common stock. Additionally, on February 13, 2006, a $6.0 million outstanding Class L share distribution
preference was converted into additional Class B shares.

The Class B common stock was issued with a $30 million ($1.13 per share) distribution preference
which was paid in June 2006. All of the Class B shares were converted into shares of common stock on a one-for-one basis by December 31, 2006. In the fourth quarter of 2006, the Class B common stock was eliminated.

In connection with the IPO, 50% of the repurchase rights expired related to a majority of the Class A common stock and substantially all of the options became 25%
vested on that date. The repurchase rights continued related to the remaining 50% of the original Class A instruments that were converted to common stock, with half expiring on May 2, 2007. The remaining repurchase rights expire in May
2008.



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As a result of the acceleration in the expiration of the repurchase rights and option vesting, coupled with the continued
increase in these instruments fair value up to the IPO price, the Company recorded a $9.9 million non-cash compensation charge related to the former Class A shares and options on February 13, 2006. Non-cash compensation charges after the
IPO were determined on the IPO date and are being recognized over the remaining period for which the repurchase rights relate or the options vest. Total charges for non-cash compensation (including charges relating to other options to purchase
common stock, discussed in Note 9) were $4.3 million for the year ended December 31, 2007, $13.2 million for the year ended December 31, 2006 and $3.7 million for the period May 2, 2005 through December 31, 2005. Future charges
for non-cash compensation related to instruments outstanding at December 31, 2007 for the years 2008 through 2011 are estimated to be $2.0 million, $0.8 million, $0.6 million and $0.1 million, respectively.

The common shares for which the repurchase rights continue have the same conditions related to termination of an employee as did the converted Class A shares. Until
such time as the repurchase rights expire, the unvested portion of the common shares continues to be classified as a long-term liability. The Company and/or, if approved by the board of directors, the holders of the former Class B shares have the
right and option to repurchase within 90 days of the termination date (on a pro-rata basis) the unvested portion of the employees former Class B shares at adjusted cost price (as defined in the Companys Amended and Restated Shareholders
Agreement entered into in connection with the IPO).

The computations of basic and diluted earnings per share for the years ended December 31, 2007
and 2006 and the period January 14, 2005 (inception) through December 31, 2005 are as follows:



|                                                                                          |  |      |        |   |      |   |         |      |  |   |        |  
|----------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|(In thousands)                                                                            |  | 2007 |        |   | 2006 |   |         | 2005 | 
|Numerator:                                                                                |  |      |        |   |      |   |         |      |  |   |        |  
|Income (loss) applicable to common shares for earnings-per-share computation              |  | $    | 32,453 |   |      | $ | (37,185 | )    |  | $ | 1,098  |  
|                                                                                          |  |      |        |   |      |   |         |      |  |   |        |  
|                                                                                          |  |      |       
|Denominator:                                                                              |  |      |        |   |      |   |         |      |  |   |        |  
|Total shares outstanding (after effect of split and conversion for all periods presented) |  |      | 42,063 |   |      |   | 41,965  |      |  |   | 25,993 |  
|Less: unvested shares                                                                     |  |      | (394   | ) |      |   | (789    | )    |  |   | (1,579 | )
|Less: effect of calculating weighted average shares                                       |  |      | (182   | ) |      |   | (1,945  | )    |  |   | (3,768 | )
|                                                                                          |  |      |        |   |      |   |         |      |  |   |        |  
|Denominator for basic earnings per common share  weighted average shares outstanding     |  |      | 41,487 |   |      |   | 39,231  |      |  |   | 20,646 |  
|Plus: weighted average unvested shares                                                    |  |      | 527    |   |      |   |        |      |  |   | 1,579  |  
|Plus: common stock equivalents of stock options exercised                                 |  |      | 301    |   |      |   |        |      |  |   | 209    |  
|                                                                                          |  |      |        |   |      |   |         |      |  |   |        |  
|Denominator for diluted earnings per common share  weighted average shares outstanding   |  |      | 42,315 |   |      |   | 39,231  |      |  |   | 22,434 |  
|                                                                                          |  |      |        |   |      |   |         |      |  |   |        |  

For the year ended December 31, 2006, the denominator for diluted earnings per common share is equal to the
denominator for basic earnings per common share because the addition of unvested shares or other common stock equivalents would be anti-dilutive.

Earnings
per share is calculated based on the relative terms of the underlying stock agreements. During the period January 14, 2005 (inception) through December 31, 2005, the Company had 100 shares of membership interest that were converted to
3,245,000 shares of Class L common stock (as noted above) which were converted to 6,972,000 shares of Class B common stock on the IPO date.

For purposes
of calculating weighted average shares to be used in the earnings-per-share calculation during the period January 14 (inception) through December 31, 2005, the period begins on February 24, 2005, the date that the initial investment
was made and operations commenced.



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Note 9. Stock Plans

The Company has an Equity Incentive Plan administered by the Compensation Committee of the Companys board of directors, which permits the grant of long-term incentives to employees, including stock options, stock appreciation rights,
restricted stock awards, restricted stock units and incentive awards. The maximum number of shares of common stock available for awards under the Equity Incentive Plan is 4,050,000. The Company also has a non-employee director equity plan (the
Non-Employee Director Equity Plan). The total number of shares of common stock available for grant under the Non-Employee Director Equity Plan is 400,000. These two plans are together referred to as the Equity Incentive
Plans. Awards under these plans are issuable to employees or non-employee directors as applicable.

For the year ended December 31, 2007, the
Company issued 336,940 options under the Equity Incentive Plan, of which 219,440 were issued to officers, and 25,800 options under the Non-Employee Director Equity Plan. Options under these plans are issuable to employees or non-employee directors
as applicable. For a majority of the options issued to officers in 2007, 50% vest on the second anniversary of the grant date, with 25% vesting on each of the third and fourth anniversary dates. All other employee options vest one-fourth annually
beginning one year after the grant date and the non-employee director options cliff vest one year after the grant date. No options expired during the period.

Stock options must be granted under the Equity Incentive Plans at not less than 100% of fair value on the date of grant and have a maximum life of ten years from the date of grant. Options and other awards under the Equity Incentive Plans
may be exercised in compliance with such requirements as determined by a committee of the board of directors. New common shares are expected to be issued upon the exercise of options under the Equity Incentive Plans. All options outstanding were
issued at a strike price equal to or greater than the fair value on the date of grant.

The summary of the activity and status of the Equity Incentive
Plans for the year ended December 31, 2007 is as follows:



|                                                                                        |  |           |   |  |                              |       |                       |   |       |  
|--------------------------------------------------------------------------------------- |  | --------- | - |  | ---------------------------- | ----- | --------------------- | - | ----- | -
|(In thousands, except per share amounts)                                                |  | Shares    |   |  | WeightedAverageExercisePrice |       | ExtendedExercisePrice |  
|Stock options outstanding at January 1, 2007                                            |  | 339       |   |  | $                            | 5.26  |                       | $ | 1,786 |  
|Granted during the period                                                               |  | 363       |   |  |                              | 18.55 |                       |   | 6,734 |  
|Exercised during the period                                                             |  | (92       | ) |  |                              | 2.63  |                       |   | (242  | )
|Forfeited during the period                                                             |  | (25       | ) |  |                              | 8.09  |                       |   | (202  | )
|                                                                                        |  |           |   |  |                              |       |                       |   |       |  
|Outstanding at December 31, 2007                                                        |  | 585       |   |  | $                            | 13.80 |                       | $ | 8,076 |  
|                                                                                        |  |           |   |  |                              |       |                       |   |       |  
|Exercisable at December 31, 2007                                                        |  | 75        |   |  | $                            | 5.64  |                       | $ | 423   |  
|                                                                                        |  |           |   |  |                              |       |                       |   |       |  
|Expected to vest at December 31, 2007                                                   |  | 556       |   |  | $                            | 13.67 |                       | $ | 7,601 |  
|                                                                                        |  |           |   |  |                              |       |                       |   |       |  
|Weighted-average remaining contractual term of outstanding options at December 31, 2007 |  | 8.4 years |  
|Weighted-average remaining contractual term of exercisable options at December 31, 2007 |  | 7.8 years |  



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The weighted-average grant date fair value of stock options granted during 2007 and 2006 was $7.42 and $7.23,
respectively. The stock options granted during 2005 had a weighted-average fair value as of January 1, 2006, the date SFAS No. 123R was adopted, of $11.25. The total intrinsic value of options exercised during 2007 and 2006 was $2.5
million and $1.6 million, respectively. No options were exercised during 2005. The total fair value of shares that vested during 2007 and 2006 was $1.1 million and $1.7 million, respectively. No shares vested during 2005.

As of December 31, 2007, the aggregate intrinsic value of exercisable stock options was $1.8 million and the intrinsic value of stock options outstanding and stock
options expected to vest was $9.3 million and $8.8 million, respectively.

The summary of the activity and status of the common shares subject to
repurchase rights (Note 8) for the year ended December 31, 2007 is as follows:



|                                                                 |  |        |   |  |                                     |      
|---------------------------------------------------------------- |  | ------ | - |  | ----------------------------------- | -----
|(In thousands, except per share amounts)                         |  | Shares |   |  | WeightedAverageGrant DateFair Value
|Common shares subject to repurchase rights at January 1, 2007    |  | 789    |   |  | $                                   | 12.00
|Number of shares whose repurchase rights expired during the year |  | (395   | ) |  |                                     | 12.00
|                                                                 |  |        |   |  |                                     |      
|Common shares subject to repurchase rights at December 31, 2007  |  | 394    |   |  | $                                   | 12.00
|                                                                 |  |        |   |  |                                     |      

The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model
and the assumptions noted in the following table. The risk-free rate is based on the zero-coupon U.S. Treasury rate in effect at the time of grant, with a term equal to the expected life of the options. The Company used peer group and other
publicly available market data to estimate volatility assumptions for all years as the Company was not publicly traded until February of 2006 and did not have an adequate trading history to estimate its actual volatility. The expected option life
represents the period of time that the options granted are expected to be outstanding and is also based on historical experience. The expected dividend yield is estimated based on the Companys historical dividend yields at the date of the
grant.



|                                         |  |                |  |                |  |             
|---------------------------------------- |  | -------------- |  | -------------- |  | ------------
|                                         |  | 2007           |  | 2006           |  | 2005        
|Risk-free interest rate                  |  | 4.1% to 4.7%   |  | 4.4% to 4.8%   |  | 4.5% to 4.8%
|Expected volatility                      |  | 31.1% to 33.2% |  | 30.1% to 69.1% |  | 69.1%       
|Weighted-average expected volatility     |  | 32.3%          |  | 68.1%          |  | N/A         
|Expected dividend yield                  |  | 0% to 2.9%     |  | 0%             |  | 0%          
|Weighted-average expected dividend yield |  | 0.1%           |  | N/A            |  | N/A         
|Expected term (years)                    |  | 5 to 7 years   |  | 5 years        |  | 5 years     

In addition to the Equity Incentive Plans discussed above, the Company has an employee stock purchase plan which
began with 200,000 shares available. This plan commenced in July 2006 and new common shares are issued for purchases under this plan. Shares are priced at 85% of the closing price on the last trading day of the month and settle on the second
business day of the following month. During 2007 and 2006, 5,756 shares and 3,031 shares, respectively, were issued under the employee stock purchase plan. Compensation expense associated with the employee stock purchase plan was not material in
2007 or 2006.



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Note 10. Income Taxes

The components of income tax expense are as follows for the years ended December 31, 2007 and 2006 and for the period January 14, 2005 (inception) through December 31, 2005:



|                      |  |                  |        |                  |   |                                                 |  |   |      
|--------------------- |  | ---------------- | ------ | ---------------- | - | ----------------------------------------------- |  | - | -----
|(In thousands)        |  | December 31,2007 |        | December 31,2006 |   | January 14, 2005(inception) toDecember 31, 2005
|Current tax expense:  |  |                  |        |                  |   |                                                 |  |   |      
|Federal               |  | $                | 1,469  |                  | $ | 2,623                                           |  | $ |     
|State                 |  |                  | 1,163  |                  |   | 956                                             |  |   | 637  
|                      |  |                  |        |                  |   |                                                 |  |   |      
|                      |  |                  | 2,632  |                  |   | 3,579                                           |  |   | 637  
|                      |  |                  |        |                  |   |                                                 |  |   |      
|Deferred tax expense: |  |                  |        |                  |   |                                                 |  |   |      
|Federal               |  |                  | 18,130 |                  |   | 7,274                                           |  |   | 3,337
|State                 |  |                  | 3,649  |                  |   | 1,337                                           |  |   | 617  
|                      |  |                  |        |                  |   |                                                 |  |   |      
|                      |  |                  | 21,779 |                  |   | 8,611                                           |  |   | 3,954
|                      |  |                  |        |                  |   |                                                 |  |   |      
|                      |  | $                | 24,411 |                  | $ | 12,190                                          |  | $ | 4,591
|                      |  |                  |        |                  |   |                                                 |  |   |      

Total income tax expense was different than an amount computed by applying the graduated statutory federal income
tax rates to income before taxes. The reasons for the differences are as follows for the years ended December 31, 2007 and 2006 and for the period January 14, 2005 (inception) through December 31, 2005:



|                                                      |  |                  |        |                  |   |                                                 |  |   |      
|----------------------------------------------------- |  | ---------------- | ------ | ---------------- | - | ----------------------------------------------- |  | - | -----
|(In thousands)                                        |  | December 31,2007 |        | December 31,2006 |   | January 14, 2005(inception) toDecember 31, 2005
|Computed tax expense at statutory federal rate of 35% |  | $                | 19,891 |                  | $ | 1,752                                           |  | $ | 1,991
|Nondeductible stock compensation                      |  |                  | 1,173  |                  |   | 3,939                                           |  |   | 1,110
|Nondeductible offering cost                           |  |                  | 199    |                  |   |                                                |  |   |     
|Nondeductible equity loss                             |  |                  |       |                  |   |                                                |  |   | 425  
|Advisory agreement termination fee                    |  |                  |       |                  |   | 4,529                                           |  |   | 75   
|Nondeductible interest expense                        |  |                  |       |                  |   | 468                                             |  |   |     
|State income taxes, net of federal income tax benefit |  |                  | 3,128  |                  |   | 1,490                                           |  |   | 815  
|Other                                                 |  |                  | 20     |                  |   | 12                                              |  |   | 175  
|                                                      |  |                  |        |                  |   |                                                 |  |   |      
|                                                      |  | $                | 24,411 |                  | $ | 12,190                                          |  | $ | 4,591
|                                                      |  |                  |        |                  |   |                                                 |  |   |      

During 2007 and 2006, the Company recognized a tax benefit of approximately $0.4 million and $0.2 million,
respectively, in stockholders equity associated with the excess tax benefit to be realized by the company due to stock compensation plans. In addition, as more fully discussed in Note 11, the Company adopted FASB Statement No. 158 during
2006. During 2007 and 2006, the Company recognized a tax cost of $1.0 million and $0.3 million, respectively, in accumulated other comprehensive income associated with the reduction in various employee benefit plan liabilities in accordance with
this standard.



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Net deferred income tax assets and liabilities consist of the following components at December 31:



|                                       |  |      |        |      |   |       
|-------------------------------------- |  | ---- | ------ | ---- | - | ------
|(In thousands)                         |  | 2007 |        | 2006
|Deferred income tax assets:            |  |      |        |      |   |       
|Retirement benefits other than pension |  | $    | 4,278  |      | $ | 4,292 
|Pension                                |  |      | 3,082  |      |   | 5,486 
|Net operating loss                     |  |      | 49,257 |      |   | 47,045
|Licenses                               |  |      | 12,866 |      |   | 21,703
|Debt issuance and discount             |  |      | 2,726  |      |   | 3,491 
|Accrued expenses                       |  |      | 5,159  |      |   | 3,472 
|Other                                  |  |      | 1,358  |      |   | 262   
|                                       |  |      |        |      |   |       
|                                       |  |      | 78,726 |      |   | 85,751
|                                       |  |      |        |      |   |       
|Deferred income tax liabilities:       |  |      |        |      |   |       
|Property and equipment                 |  |      | 32,114 |      |   | 38,431
|Intangibles                            |  |      | 50,519 |      |   | 53,612
|Interest rate swap                     |  |      | 135    |      |   | 1,507 
|                                       |  |      |        |      |   |       
|                                       |  |      | 82,768 |      |   | 93,550
|                                       |  |      |        |      |   |       
|Net deferred income tax liability      |  | $    | 4,042  |      | $ | 7,799 
|                                       |  |      |        |      |   |       

The Company has unused Net Operating Losses (NOLs) totaling $175.7 million at December 31, 2007
which are subject to an annual utilization limitation of $1.6 million (prior to adjustment for realization of built-in gains that existed as of the 2005 merger). Based on this limitation and the adjustments required for certain built-in gains
realized during the five year period immediately following our May 2, 2005 merger, the Company expects to use NOLs of approximately $9.2 million per year in 2009 through 2020, $7.4 million in 2021 and $1.6 million per year from 2022 through
2027.

The Company resolved its uncertainty related to the interaction of the adjustment for realized built-in gains, built-in losses and the general
carryforward provisions for unused annual NOL limits. This uncertainty existed at the time of our merger and thus the Company did not record a deferred tax asset of approximately $23.9 million for the benefit of approximately $61.4 million of our
existing NOLs. In accordance with SFAS No. 109, this deferred tax benefit was reflected as a reduction to goodwill and an increase to the NOL deferred tax asset amount shown above. The increased available NOL amounts have also been included in
the annual NOL utilization projections discussed above. In addition, the net operating loss deferred tax asset has been adjusted in 2007 to reflect the classification of deductions, existing as of the merger, that will be allowed as a result of our
annual limitation discussed above.

The Company adopted the provisions of FIN No. 48, Accounting for Uncertainty in Income Taxes-an interpretation
of FASB Statement 109,on January 1, 2007. As a result of the implementation of Interpretation 48, the Company recognized approximately $2.2 million in previously unrecognized benefits and increased our liability for other unrecognized
benefits by $0.5 million resulting in a net increase to the January 1, 2007 retained earnings of $1.7 million. The Company accrued $0.2 million of interest on this obligation during 2007. A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:



|                                           |  |   |      
|------------------------------------------ |  | - | -----
|Balance at January 1, 2007                 |  | $ | 3,112
|Additions for tax positions of prior years |  |   |     
|                                           |  |   |      
|Balance at December 31, 2007               |  | $ | 3,112
|                                           |  |   |      

While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing
authorities could be greater than our accrued position. Accordingly, additional provisions could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. None of the unrecognized benefits
are expected to be recognized during the next twelve months.

Note 11. Pension Plans and Other Postretirement Benefits

The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans (OPEBs) for its employees. The Company has
two qualified nonpension postretirement benefit plans. The



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health care plan is contributory, with participants contributions adjusted annually. The life insurance plan is also contributory. These obligations,
along with all of the pension plans and other post retirement benefit plans, are NTELOS Inc. obligations assumed by the Company. Eligibility for the life insurance plan is restricted to active pension participants age 50-64 as of January 5,
1994. Neither plan is eligible to employees hired after April 1993. The accounting for the plans anticipates that the Company will maintain a consistent level of cost sharing for the benefits with the retirees.

The following tables provide a reconciliation of the changes in the qualified plans benefit obligations and fair value of assets and a statement of the funded
status as of and for the years ended December 31, 2007 and 2006, and the classification of amounts recognized in the consolidated balance sheets:



|                                               |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------- |  | ---------------------------- | ------ | - | --------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                               |  | Defined Benefit Pension Plan |        |   | Other Postretirement BenefitPlans |  
|(In thousands)                                 |  | 2007                         |        |   | 2006                              |   |         | 2007 |  |   | 2006    |  
|Change in benefit obligations:                 |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Benefit obligations, beginning of period       |  | $                            | 48,290 |   |                                   | $ | 46,458  |      |  | $ | 11,109  |   |  | $ | 12,480  |  
|Service cost                                   |  |                              | 2,796  |   |                                   |   | 2,881   |      |  |   | 140     |   |  |   | 164     |  
|Interest cost                                  |  |                              | 2,739  |   |                                   |   | 2,498   |      |  |   | 628     |   |  |   | 671     |  
|Actuarial gain                                 |  |                              | (290   | ) |                                   |   | (1,535  | )    |  |   | (281    | ) |  |   | (1,859  | )
|Benefits paid                                  |  |                              | (2,012 | ) |                                   |   | (2,012  | )    |  |   | (469    | ) |  |   | (347    | )
|                                               |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Benefit obligations, end of period             |  | $                            | 51,523 |   |                                   | $ | 48,290  |      |  | $ | 11,127  |   |  | $ | 11,109  |  
|                                               |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Change in plan assets:                         |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets, beginning of period |  | $                            | 33,044 |   |                                   | $ | 26,342  |      |  | $ |        |   |  | $ |        |  
|Actual return on plan assets                   |  |                              | 4,916  |   |                                   |   | 2,380   |      |  |   |        |   |  |   |        |  
|Employer contributions                         |  |                              | 6,000  |   |                                   |   | 6,335   |      |  |   | 469     |   |  |   | 347     |  
|Benefits paid                                  |  |                              | (2,012 | ) |                                   |   | (2,012  | )    |  |   | (469    | ) |  |   | (347    | )
|                                               |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets, end of period       |  | $                            | 41,948 |   |                                   | $ | 33,045  |      |  | $ |        |   |  | $ |        |  
|                                               |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Funded status:                                 |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Liability at December 31,                      |  | $                            | (9,575 | ) |                                   | $ | (15,245 | )    |  | $ | (11,127 | ) |  | $ | (11,109 | )
|                                               |  |                              |        |   |                                   |   |         |      |  |   |         |   |  |   |         |  

The accumulated benefit obligation for the defined benefit pension plan at December 31, 2007 and 2006 was
$43.9 million and $40.4 million, respectively. The accumulated benefit obligation represents the present value of pension benefits based on service and salary earned to date. The benefit obligation indicated in the table above is the projected
benefit obligation which represents the present value of pension benefits taking into account projected future service and salary increases.

The following
table provides the components of net periodic benefit cost for the plans for the year ended December 31, 2007 and 2006 and for the period May 2, 2005 through December 31, 2005:



|                                         |  |                              |        |   |                                   |   |        |      |  |   |        |   |      |   |      |  |   |     |  |   |    
|---------------------------------------- |  | ---------------------------- | ------ | - | --------------------------------- | - | ------ | ---- |  | - | ------ | - | ---- | - | ---- |  | - | --- |  | - | ---
|                                         |  | Defined Benefit Pension Plan |        |   | Other Postretirement BenefitPlans
|(In thousands)                           |  | 2007                         |        |   | 2006                              |   |        | 2005 |  |   | 2007   |   | 2006 |   | 2005
|Components of net periodic benefit cost: |  |                              |        |   |                                   |   |        |      |  |   |        |   |      |   |      |  |   |     |  |   |    
|Service cost                             |  | $                            | 2,796  |   |                                   | $ | 2,881  |      |  | $ | 1,821  |   |      | $ | 140  |  | $ | 164 |  | $ | 102
|Interest cost                            |  |                              | 2,739  |   |                                   |   | 2,498  |      |  |   | 1,646  |   |      |   | 628  |  |   | 671 |  |   | 371
|Recognized net actuarial loss            |  |                              |       |   |                                   |   |       |      |  |   |       |   |      |   |     |  |   | 87  |  |   |   
|Expected return on plan assets           |  |                              | (2,994 | ) |                                   |   | (2,519 | )    |  |   | (1,465 | ) |      |   |     |  |   |    |  |   |   
|                                         |  |                              |        |   |                                   |   |        |      |  |   |        |   |      |   |      |  |   |     |  |   |    
|Net periodic benefit cost                |  | $                            | 2,541  |   |                                   | $ | 2,860  |      |  | $ | 2,002  |   |      | $ | 768  |  | $ | 922 |  | $ | 473
|                                         |  |                              |        |   |                                   |   |        |      |  |   |        |   |      |   |      |  |   |     |  |   |    



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Prior service costs are amortized on a straight-line basis over the average remaining service period of active
participants. Gains and losses in excess of 10% of the greater of the benefit obligation and the market-related value of assets are amortized over the average remaining service period of active participants.

Unrecognized actuarial gains in 2007 were $1.4 million, net of $0.9 million of deferred tax asset, and $0.3 million, net of $0.1 million deferred tax asset, for the
defined benefit pension plan and the other postretirement benefit plans, respectively. The total amount of unrecognized actuarial gains recorded in accumulated other comprehensive income at December 31, 2007 related to these respective plans
was $2.8 million, net of $1.8 million deferred tax asset, and less than $0.1 million, net of deferred tax asset.

The assumptions used in the measurements
of the Companys benefit obligations at December 31, 2007 and 2006 are shown in the following table:



|                              |  |                             |   |  |                                   |   |  |      |   |  |      |  
|----------------------------- |  | --------------------------- | - |  | --------------------------------- | - |  | ---- | - |  | ---- | -
|                              |  | Defined BenefitPension Plan |   |  | Other PostretirementBenefit Plans |  
|                              |  | 2007                        |   |  | 2006                              |   |  | 2007 |   |  | 2006 |  
|Discount rate                 |  | 6.25                        | % |  | 5.80                              | % |  | 6.25 | % |  | 5.80 | %
|Rate of compensation increase |  | 3.50                        | % |  | 3.50                              | % |  |     | % |  |     | %

The assumptions used in the measurements of the Companys net cost for the consolidated statement of
operations for the year ended December 31, 2007 and 2006 and for the period May 2, 2005 through December 31, 2005 are:



|                               |  |                              |   |  |                                    |   |  |      |   |  |      |   |  |      |   |  |      |  
|------------------------------ |  | ---------------------------- | - |  | ---------------------------------- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|                               |  | Defined Benefit Pension Plan |   |  | Other Postretirement Benefit Plans |  
|                               |  | 2007                         |   |  | 2006                               |   |  | 2005 |   |  | 2007 |   |  | 2006 |   |  | 2005 |  
|Discount rate                  |  | 5.80                         | % |  | 5.50                               | % |  | 5.50 | % |  | 5.80 | % |  | 5.50 | % |  | 5.50 | %
|Expected return on plan assets |  | 8.50                         | % |  | 8.50                               | % |  | 8.75 | % |  |     | % |  |     | % |  |     | %
|Rate of compensation increase  |  | 3.50                         | % |  | 3.50                               | % |  | 3.50 | % |  |     | % |  |     | % |  |     | %

The Company reviews the assumptions noted in the above table annually or more frequently to reflect anticipated
future changes in the underlying economic factors used to determine these assumptions. The discount rates assumed reflect the rate at which the Company could invest in high quality corporate bonds in order to settle future obligations. In doing so,
the Company benchmarks off of the Moodys ten-year Aa bond index which reflects a reasonable estimate of the timing of the Companys estimated defined benefit payments.

For measurement purposes, a 9.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2007. The rate was assumed to decrease gradually each year to a rate of 5.0% for 2011 and
remain at that level thereafter.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The
effect to the net periodic postretirement health care benefit cost and obligation of a 1% change on the medical trend rate per future year, while holding all other assumptions constant, would be a $0.1 million increase and a $1.4 million increase,
respectively, for a 1% increase in medical trend rate and a $0.1 million decrease and $1.1 million decrease, respectively, for a 1% decrease in medical trend rate.

In developing the expected long-term rate of return assumption for the assets of the Defined Benefit Pension Plan, the Company evaluated input from its third party pension plan asset managers, including their review of asset class return
expectations and long-term inflation assumptions. The Company also considered the related historical ten-year average asset return at December 31, 2007, which was in line with the expected long-term rate of return assumptions for the respective
periods.

As of December 31, 2007, the weighted average actual asset allocations and weighted average target allocation ranges by asset category for
the Companys pension plan assets were as follows:



|                  |  |                  |   |  |                  |  
|----------------- |  | ---------------- | - |  | ---------------- | -
|Asset Category    |  | ActualAllocation |   |  | TargetAllocation |  
|Equity securities |  | 74               | % |  | 75               | %
|Bond securities   |  | 26               | % |  | 25               | %
|                  |  |                  |   |  |                  |  
|Total             |  | 100              | % |  | 100              | %



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It is the Companys policy to invest pension plan assets in a diversified portfolio consisting of an array of asset
classes. The investment risk of the assets is limited by appropriate diversification both within and between asset classes. The assets are primarily invested in investment funds that invest in a broad mix of equities and bonds. The allocation
between equity and bonds is reset quarterly to the target allocations. The assets are managed with a view to ensuring that sufficient liquidity will be available to meet expected cash flow requirements.

The Company expects to contribute $5.4 million to the pension plan in 2008.

The following estimated future pension benefit payments and other postretirement benefit plan payments which reflect expected future service, as appropriate, are expected to be paid in the years indicated:



|          |  |                             |        |                                  |   |      
|--------- |  | --------------------------- | ------ | -------------------------------- | - | -----
|Year      |  | Defined BenefitPension Plan |        | OtherPostretirementBenefit Plans
|2008      |  | $                           | 1,947  |                                  | $ | 570  
|2009      |  |                             | 2,058  |                                  |   | 605  
|2010      |  |                             | 2,170  |                                  |   | 666  
|2011      |  |                             | 2,293  |                                  |   | 707  
|2012      |  |                             | 2,451  |                                  |   | 719  
|2013-2017 |  | $                           | 15,594 |                                  | $ | 3,816

Other benefit plans

The Company also sponsors a supplemental executive retirement plan and certain other nonqualified defined benefit pension plans assumed by NTELOS Inc. in a prior merger. The accumulated benefit obligation of the Companys nonqualified
pension plans were $8.2 million and $7.7 million at December 31, 2007 and 2006, respectively. The total expense recognized related to these plans was $0.9 million for the year ended December 31, 2007, $0.5 million for the year ended
December 31, 2006 and $0.8 million for the period May 2, 2005 through December 31, 2005. These nonqualified plans have no plan assets and are also closed to new participants.

The Company recognized $0.1 million of previously unrecognized loss related to the supplemental executive retirement plan in 2007. Unrecognized actuarial losses in 2007
were less than $0.1 million, net of deferred tax liability. The total balance of unrecognized actuarial losses recorded in accumulated other comprehensive income at December 31, 2007 and 2006 related to these plans was $0.8 million, net of $0.5
million of deferred tax liability. The total expense to be recognized in 2008 for all nonqualified pension plans is approximately $0.9 million and the estimated payments are expected to be approximately $0.4 million.

The Company also sponsors a defined contribution 401(k) plan. The Companys matching contributions to this plan were $1.3 million for the year ended
December 31, 2007, $1.2 million for the year ended December 31, 2006 and $0.7 million for the period May 2, 2005 through December 31, 2005.

The Company has classified the projected amount to be paid in 2008 and 2007 of $1.0 million and $0.9 million, respectively, related to the other postretirement benefit plans and the nonqualified pension plans in current liabilities under
the caption other accrued liabilities on the Companys consolidated balance sheets at December 31, 2007 and 2006.

The incremental
effects of adopting the provisions of SFAS No. 158 on the Companys statement of financial position at December 31, 2006 is presented in the following table (in thousands). The adoption of SFAS No. 158 had no effect on
the Companys Consolidated Statements of Income for the year ended December 31, 2006 and has no effect on any prior or future period operating results of the Company.



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|                                                 |  |                                            |        |                              |   |        |             |  |   |       
|------------------------------------------------ |  | ------------------------------------------ | ------ | ---------------------------- | - | ------ | ----------- |  | - | ------
|                                                 |  | At December 31, 2006                      
|(In thousands)                                   |  | Balance Priorto the Adoptionof SFAS No.158 |        | Effect ofAdoptingSFAS No.158 |   |        | As Reported
|Defined benefit Pension Plan liability           |  | $                                          | 17,563 |                              | $ | (2,318 | )           |  | $ | 15,245
|Other Postretirement Benefit Plan liability      |  |                                            | 10,888 |                              |   | 221    |             |  |   | 11,109
|Supplemental Executive Retirement Plan liability |  |                                            | 4,000  |                              |   | 1,317  |             |  |   | 5,317 
|Long-term deferred income taxes liability        |  |                                            |       |                              |   | 304    |             |  |   | 304   
|Other comprehensive income                       |  | $                                          |       |                              | $ | 476    |             |  | $ | 476   

Note 12. Commitments and Contingencies

Operating Leases

Rental expense for all operating leases was $25.2 million for the year ended December 31,
2007, $23.2 million for the year ended December 31, 2006 and $13.9 million for the period May 2, 2005 through December 31, 2005. The total amount committed under these lease agreements at December 31, 2007 is: $23.4 million in
2008, $21.6 million in 2009, $16.5 million in 2010, $11.5 million in 2011, $8.1 million in 2012 and $22.5 million for the years thereafter.

Other
Commitments and Contingencies

In May 2005, the Company (through NTELOS Inc.) entered into advisory agreements with CVC Management LLC and Quadrangle
Advisors LLC (the Advisors) whereby the Advisors agreed to provide advisory and other services to the Company for a period of ten years for a combined annual advisory fee of $2.0 million payable quarterly at the beginning of each
quarter. The Company recognized advisory fees as corporate operations expense from the merger date through December 31, 2005 of $1.3 million and $0.5 million in the first quarter of 2006. Under certain conditions set forth in these agreements,
the Company could terminate these agreements prior to expiration. On February 13, 2006, concurrent with its IPO, the Company terminated these agreements, paying a $12.9 million termination fee on that date.

The Company periodically makes claims for recovery of access charges on certain minutes of use terminated by the Company on behalf of other carriers. The Company has not
recognized revenue related to such matters. The Company recognizes revenue in the period that it is reliably assured of the collection of these claims.

The Company is periodically involved in disputes and legal and tax proceedings and filings arising from normal business activities. While the outcome of such matters is currently not determinable, management does not expect that the
ultimate costs to resolve such matters will have a material adverse effect on the Companys consolidated financial position, results of operations or cash flows, and believes that adequate provision for any probable and estimable losses has
been made in our consolidated financial statements.

In connection with the planned EV-DO network upgrade pursuant to the terms of the Amended and Restated
Resale Agreement with Sprint Spectrum L.P. and based on the Companys plan to upgrade substantially all of its current service coverage areas outside its wholesale territory, the Company has entered into a three-year vendor agreement to
purchase network equipment. The Company expects to spend approximately $88 million under this agreement, of which approximately $34.9 million of assets have been received as of December 31, 2007. Under the vendor agreement, the Company receives
significant current purchase volume discounts which ultimately are conditional on spending at or above the $88 million noted above.

The Company has other
purchase commitments relating to capital expenditures totaling $16.6 million as of December 31, 2007, which are expected to be satisfied during 2008.



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Report of Independent Registered Public Accounting Firm

The Board of Directors

NTELOS Inc.:

We have audited the accompanying consolidated statements of
operations, cash flows, and shareholders equity (deficit) of NTELOS Inc. and subsidiaries (the Predecessor Company) for the period January 1, 2005 to May 1, 2005. These consolidated financial statements are the responsibility of the
Predecessor Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present fairly, in all material respects, the results of the Predecessor Company for the period January 1, 2005 to May 1, 2005, in conformity with U.S.
generally accepted accounting principles.

As discussed in notes 1 and 2 to the consolidated financial statements, effective May 2, 2005, the
Predecessor Company became a wholly-owned subsidiary of NTELOS Holdings Corp.



|                  
|------------------
|/s/ KPMG LLP      
|                  
|October 6, 2005   
|                  
|Richmond, Virginia



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NTELOS Inc. and Subsidiaries

(Predecessor Company)

Consolidated Statements of Operations



|                                                                       |  |                                   |         |  
|---------------------------------------------------------------------- |  | --------------------------------- | ------- | -
|(In thousands except per share amounts)                                |  | January 1, 2005throughMay 1,
2005 |        
|Operating Revenues                                                     |  | $                                 | 126,360 |  
|                                                                       |  |                                   |         |  
|Operating Expenses                                                     |  |                                   |         |  
|Cost of sales and services (exclusive of items shown separately below) |  |                                   | 40,470  |  
|Customer operations                                                    |  |                                   | 29,270  |  
|Corporate operations                                                   |  |                                   | 8,259   |  
|Depreciation and amortization                                          |  |                                   | 23,799  |  
|Gain on sale of assets                                                 |  |                                   | (8,742  | )
|Accretion of asset retirement obligations                              |  |                                   | 252     |  
|Capital and operational restructuring charges                          |  |                                   | 15,403  |  
|                                                                       |  |                                   |         |  
|                                                                       |  |                                   | 108,711 |  
|                                                                       |  |                                   |         |  
|Operating Income                                                       |  |                                   | 17,649  |  
|                                                                       | 
|Other Income (Expenses)                                                |  |                                   |         |  
|Interest expense                                                       |  |                                   | (11,499 | )
|Other income                                                           |  |                                   | 270     |  
|                                                                       |  |                                   |         |  
|                                                                       |  |                                   | (11,229 | )
|                                                                       |  |                                   |         |  
|                                                                       |  |                                   | 6,420   |  
|Income Tax Expense                                                     |  |                                   | 8,150   |  
|                                                                       |  |                                   |         |  
|                                                                       |  |                                   | (1,730  | )
|                                                                       | 
|Minority Interests in Losses of Subsidiaries                           |  |                                   | 13      |  
|                                                                       |  |                                   |         |  
|Net Loss                                                               |  | $                                 | (1,717  | )
|                                                                       |  |                                   |         |  
|Basic and Diluted Loss per Common Share:                               |  |                                   |         |  
|Loss per share  basic                                                 |  | $                                 | (0.21   | )
|Loss per share  diluted                                               |  | $                                 | (0.21   | )
|                                                                       | 
|Average shares outstanding  basic                                     |  |                                   | 8,020   |  
|Average shares outstanding  diluted                                   |  |                                   | 8,020   |  

See accompanying Notes to Consolidated Financial Statements.



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NTELOS Inc. and Subsidiaries

(Predecessor Company)

Consolidated Statements of Cash Flows



|                                                                                                                                           |  |                                    |          |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------- | -------- | -
|(In thousands)                                                                                                                             |  | January 1, 2005through May 1, 2005 |         
|Cash flows from operating activities                                                                                                       |  |                                    |          |  
|Net loss                                                                                                                                   |  | $                                  | (1,717   | )
|Adjustments to reconcile net loss to net cash provided by operating activities:                                                            |  |                                    |          |  
|Gain on disposition of assets                                                                                                              |  |                                    | (8,742   | )
|Non-cash restructuring and reorganization items                                                                                            |  |                                    | 300      |  
|Depreciation                                                                                                                               |  |                                    | 22,183   |  
|Amortization                                                                                                                               |  |                                    | 1,616    |  
|Accretion of asset retirement obligations                                                                                                  |  |                                    | 252      |  
|Retirement benefits and other                                                                                                              |  |                                    | 9,793    |  
|Amortization of loan origination costs                                                                                                     |  |                                    | 180      |  
|Changes in assets and liabilities from operations, net of effect of acquisitions and dispositions:                                         |  |                                    |          |  
|Increase in accounts receivable, net                                                                                                       |  |                                    | (3,418   | )
|Increase in inventories and supplies                                                                                                       |  |                                    | (449     | )
|Increase in other current assets                                                                                                           |  |                                    | (1,052   | )
|Changes in income taxes                                                                                                                    |  |                                    | 196      |  
|Decrease in accounts payable                                                                                                               |  |                                    | (2,921   | )
|Increase in other current liabilities                                                                                                      |  |                                    | 8,107    |  
|Retirement benefit contributions and distributions                                                                                         |  |                                    | (7,980   | )
|                                                                                                                                           |  |                                    |          |  
|Net cash provided by operating activities before reorganization items                                                                      |  |                                    | 16,348   |  
|Operating cash flows from reorganization items  Professional fees paid for services rendered in connection with the
Chapter 11 proceeding |  |                                    | (24      | )
|                                                                                                                                           |  |                                    |          |  
|Net cash provided by operating activities                                                                                                  |  |                                    | 16,324   |  
|                                                                                                                                           |  |                                    |          |  
|Cash flows from investing activities                                                                                                       |  |                                    |          |  
|Purchases of property, plant and equipment                                                                                                 |  |                                    | (20,099  | )
|Proceeds from sale of property, plant and equipment, investments and radio spectrum licenses                                               |  |                                    | 28,620   |  
|Investment in restricted cash                                                                                                              |  |                                    | (24,955  | )
|                                                                                                                                           |  |                                    |          |  
|Net cash used in investing activities                                                                                                      |  |                                    | (16,434  | )
|                                                                                                                                           |  |                                    |          |  
|Cash flows from financing activities                                                                                                       |  |                                    |          |  
|Proceeds from issuance of long-term debt                                                                                                   |  |                                    | 625,000  |  
|Loan repayments associated with debt refinancing                                                                                           |  |                                    | (171,328 | )
|Payments on senior secured term loans                                                                                                      |  |                                    | (7,713   | )
|Payments under lines of credit (net) and other debt instruments                                                                            |  |                                    | (556     | )
|Payments on deferred liabilities  interest rate swap                                                                                      |  |                                    | (4,748   | )
|Tender offer repurchase of common stock, warrants and common stock options                                                                 |  |                                    | (439,997 | )
|Debt issuance costs                                                                                                                        |  |                                    | (12,766  | )
|                                                                                                                                           |  |                                    |          |  
|Net cash used in financing activities                                                                                                      |  |                                    | (12,108  | )
|                                                                                                                                           |  |                                    |          |  
|Decrease in cash and cash equivalents                                                                                                      |  |                                    | (12,218  | )
|Cash and cash equivalents:                                                                                                                 |  |                                    |          |  
|Beginning of period                                                                                                                        |  |                                    | 34,187   |  
|                                                                                                                                           |  |                                    |          |  
|End of period                                                                                                                              |  | $                                  | 21,969   |  
|                                                                                                                                           |  |                                    |          |  

See accompanying Notes to Consolidated Financial Statements.



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NTELOS Inc. and Subsidiaries

(Predecessor Company)

Consolidated Statements of Shareholders Equity (Deficit)



|                                                             |  |              |   |  |          |          |   |                  |   |        |                                   |  |   |        |   |  |   |          |  
|------------------------------------------------------------ |  | ------------ | - |  | -------- | -------- | - | ---------------- | - | ------ | --------------------------------- |  | - | ------ | - |  | - | -------- | -
|                                                             |  | Common
Stock |   |  | Warrants |          |   | RetainedEarnings |   |        | TotalShareholdersEquity(Deficit) | 
|(In thousands)                                               |  | Shares       |   |  | Amount   |          |   |                  |  
|Balance, December 31, 2004                                   |  | 13,759       |   |  | $        | 272,049  |   |                  | $ | 3,150  |                                   |  | $ | 42,982 |   |  | $ | 318,181  |  
|                                                             |  |              |   |  |          |          |   |                  |   |        |                                   |  |   |        |   |  |   |          |  
|Comprehensive Loss:                                          |  |              |   |  |          |          |   |                  |   |        |                                   |  |   |        |   |  |   |          |  
|Net loss                                                     |  |              |   |  |          |          |   |                  |   |        |                                   |  |   | (1,717 | ) |  |   | (1,717   | )
|Tender offer repurchase of stock, warrants and stock options |  | (10,364      | ) |  |          | (437,625 | ) |                  |   | (2,372 | )                                 |  |   |        |   |  |   | (439,997 | )
|Tax benefit related to stock option repurchase               |  |              |   |  |          | 7,829    |   |                  |   |        |                                   |  |   |        |   |  |   | 7,829    |  
|                                                             |  |              |   |  |          |          |   |                  |   |        |                                   |  |   |        |   |  |   |          |  
|Balance, May 1, 2005                                         |  | 3,395        |   |  | $        | (157,747 | ) |                  | $ | 778    |                                   |  | $ | 41,265 |   |  | $ | (115,704 | )
|                                                             |  |              |   |  |          |          |   |                  |   |        |                                   |  |   |        |   |  |   |          |  

See accompanying Notes to Consolidated Financial Statements.



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NTELOS Inc. and Subsidiaries

(Predecessor Company)

Notes to Consolidated Financial Statements

Note 1. Organization

NTELOS Inc. (hereafter referred to as NTELOS or the Company) is an integrated communications provider that provides a broad range of products and
services to businesses, telecommunication carriers and residential customers in Virginia, West Virginia and surrounding states. The Companys primary services are wireless digital personal communications services (PCS), local and
long distance telephone services, broadband network services, high-speed broadband Internet access (such as Digital Service Line (DSL) and wireless modem), and dial-up Internet access.

On January 18, 2005, the Company and certain of its shareholders entered into an agreement (the Transaction Agreement) pursuant to which the Company
would be recapitalized and sold at a price of $40.00 per share of common stock (Note 2). On February 24, 2005, the Company borrowed $625 million from a new $660 million senior secured credit facility and used these proceeds to refinance
substantially all of its existing indebtedness and repurchase, pursuant to a tender offer of $440 million or approximately 75%, its existing common stock, warrants and options. On May 2, 2005, pursuant to the Transaction Agreement, NTELOS
Holdings Corp. (Holdings Corp.), an entity formed by the third party buyers, acquired all of the Companys remaining common shares, warrants and options by means of a merger. The recapitalization and sale is described in Note 2.

As further discussed in Note 3, effective May 2, 2005, the Company became a 100% owned subsidiary of Holdings Corp. Holdings Corp. is accounting for
the merger under the provisions of Statement of Financial Accounting Standards No 141, Business Combinations(SFAS No. 141). Holdings Corp.s cost of acquiring the Company has been used to establish the new accounting
basis for the Companys assets and liabilities effective May 2, 2005. The presentation of financial information of the Predecessor Company represents the Companys financial statements for the specified periods prior to and concluding
on May 1, 2005.

Note 2. Merger and Recapitalization Transactions

On January 18, 2005, the Company and certain of its shareholders entered into the Transaction Agreement pursuant to which the Company would be recapitalized and sold to Holdings Corp., an entity formed on
January 14, 2005 by Quadrangle Capital Partners LP and Citigroup Venture Capital Equity Partners, L.P., (the Buyers), at a price of $40.00 per share of common stock. The recapitalization and sale occurred through a series of
transactions as set forth below.

Under the first step in the transaction, on February 24, 2005 the Company borrowed $625 million from a new $660
million senior secured credit facility and used these proceeds to refinance substantially all of its existing indebtedness and repurchase approximately 10,364,000 shares of common stock, 358,000 shares of common stock warrants and 969,000 shares of
common stock options (approximately 75% of each) pursuant to a tender offer for $440 million. The purchase price was $40.00 per share for outstanding common stock, $16.27 per share for common stock issuable pursuant to the exercise of a warrant and
$20.23 per share for common stock issuable pursuant to the exercise of vested options. The $16.27 per share price for the warrants and the $20.23 per share option price were derived by taking the difference between their respective strike price and
the $40.00 per share price for the common stock shares. After the tender offer buyback, the Company had outstanding approximately 3,396,000 common shares, 117,000 warrants and 327,000 options.

On January 24, 2005, the Company provided notice to its common and warrant holders of their rights under the Companys Shareholders Agreement to participate in
the initial sale of securities between the Buyers and significant shareholders (as defined in the Tag-Along Sale). On February 24, 2005, immediately after completing the first step of the transaction noted above, Holdings Corp.
acquired approximately 821,000 common shares (24.9%) for $40.00 per share and 33,000 warrants (24.9%) for $16.27 per share from certain significant shareholders and other common and warrant holders that elected to participate pursuant to a
tag-along offer. As a result of the Tag-Along Sale, the Companys Shareholders Agreement was amended to provide the Buyers with certain governance rights, including the right to designate two directors to be elected to the Companys board
of directors.

On May 2, 2005, pursuant to the Transaction Agreement, Holdings Corp. acquired all of the Companys remaining common shares,
warrants and options by means of a merger. The merger consideration was $40.00 per share of outstanding common stock, $16.27 per share of common stock issuable pursuant to the exercise of a warrant and $20.23 per share of common stock issuable
pursuant to the exercise of options, respectively. Following completion of the merger, the Company became a 100% owned subsidiary of Holdings Corp.



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In addition, pursuant to the terms of the Transaction Agreement, on May 2, 2005, the Company disbursed $25.0 million
of restricted cash to purchase the remaining equity securities not owned by the Buyers. The Company has also recognized a payable to Holdings Corp. for $5.8 million representing the Companys obligation to forward to Holdings Corp. the proceeds
from the sale and collection on certain identified assets.

Effective with the completion of the merger, the Companys articles of incorporation were
amended and restated resulting in 1,000 authorized common shares and 100 common shares issued and outstanding, with a par value of $0.01 per share.

Note 3. Significant Accounting Policies

ACCOUNTING ESTIMATES:The preparation of consolidated statements of operations and cash
flows in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION:The consolidated statements of operations and cash flows include the
accounts of the Company, its wholly-owned subsidiaries and those limited liability corporations where the Company, as managing member, exercises control. All significant intercompany accounts and transactions have been eliminated.

REVENUE RECOGNITION:The Company recognizes revenue when services are rendered or when products are delivered, installed and functional, as applicable. Certain
services of the Company require payment in advance of service performance. In such cases, the Company records a service liability at the time of billing and subsequently recognizes revenue over the service period.

With respect to the Companys wireline and wireless businesses, the Company earns revenue by providing access to and usage of its networks. Local service and
airtime revenues are recognized as services are provided. Wholesale revenues are earned by providing switched access and other switched and dedicated services, including wireless roamer management, to other carriers. Revenues for equipment sales are
recognized at the point of sale. PCS handset equipment sold with service contracts are sold at prices below cost, based on the terms of service contract. The Company recognizes the entire cost of the handsets at the time of sale, rather than
deferring such costs over the service contract period.

Nonrefundable PCS activation fees and the portion of the activation costs directly related to
acquiring new customers (primarily activation costs and sales commissions) are deferred and recognized ratably over the estimated life of the customer relationship ranging from 12 to 24 months. Similarly, in the RLEC and competitive wireline
segments the Company charges nonrefundable activation fees for certain new service activations. Such activation fees are deferred and recognized ratably over 5 years. Direct activation costs exceed activation revenues in all cases. The Company
defers direct activation costs up to but not in excess of the related deferred revenue.

Effective July 1, 2003, the Company adopted Emerging Issues
Task Force No. 00-21 (EITF No. 00-21), Accounting for Revenue Arrangements with Multiple Element Deliverables. The EITF guidance addresses how to account for arrangements that may involve multiple revenue-generating activities,
i.e., the delivery or performance of multiple products, services, and/or rights to use assets. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed to be a bundled transaction and
the consideration will be measured and allocated to the separate units based on their relative fair values. The adoption of EITF No. 00-21 has required evaluation of each arrangement entered into by the Company for each type of sales transaction and
each sales channel. The adoption of EITF No.00-21 has resulted in substantially all of the activation fee revenue generated from Company-owned retail stores and associated direct costs being recognized at the time the related wireless handset is
sold and is classified as equipment revenue and cost of equipment, respectively. Upon adoption of EITF No. 00-21, previously deferred revenues and costs continued to be amortized over the remaining estimated life of a subscriber, not to exceed 24
months.



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Revenue and costs for activations at third party retail locations and related to the Companys segments other than
wireless continue to be deferred and amortized over the estimated lives as prescribed by Securities and Exchange Commissions Staff Accounting Bulletin 101 as amended by staff accounting Bulletin 104 (collectively referred to as SAB
No. 104). The adoption of EITF No. 00-21 had the effect of increasing equipment revenue and related customer operations expenses for the period January 1, 2005 through May 1, 2005 by $0.6 million. These revenues and costs
otherwise would have been deferred and amortized.

TRADE ACCOUNTS RECEIVABLE:The Company sells its services to residential and commercial end-users
and to other communication carriers primarily in Virginia and West Virginia. The Company has credit and collection policies to ensure collection of trade receivables and requires deposits on certain of its sales. The Company maintains an allowance
for doubtful accounts which management believes adequately covers all anticipated losses with respect to trade receivables. Actual credit losses could differ from such estimates. The Company includes bad debt expenses in customer operations expense
in the consolidated statement of operations. Bad debt expense for the period January 1, 2005 through May 1, 2005 was $2.3 million.

PROPERTY, PLANT AND EQUIPMENT AND OTHER LONG-LIVED ASSETS:Depreciation of property, plant and equipment is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over a 50-year
life and leasehold improvements, which are categorized with land and building, are depreciated over the shorter of the estimated useful lives or the remaining lease terms. Network plant and equipment are depreciated over various lives from 4 to 40
years, with an average life of approximately 13 years. Furniture, fixtures and other equipment are depreciated over various lives from 5 to 18 years.

Goodwill, franchise rights and radio spectrum licenses are considered indefinite lived intangible assets. Indefinite lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently
if an event indicates that the asset might be impaired. Trademarks are amortized over 15 years and customer intangibles are amortized over 5 to 25 years. Amortization for other intangibles for the period January 1, 2005 to May 1, 2005 was
$1.6 million.

ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS:In June 2001, the FASB issued Statement of Financial Accounting Standard No. 143,
Accounting for Asset Retirement Obligations(SFAS No. 143). SFAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset
retirement cost. The fair value of a liability for an asset retirement obligation is to be recognized in the period in which it is incurred if a reasonable estimate can be made. The associated retirement costs are capitalized and included as part of
the carrying value of the long-lived asset and amortized over the useful life of the asset.

The Company reported depreciation charges related to the
retirement obligation assets and accretion expenses related to the asset retirement obligations for the period January 1, 2005 through May 1, 2005 of $0.2 million and $0.3 million, respectively.

The Company enters into long-term leasing arrangements primarily for tower sites and retail store locations in its wireless segment. Additionally, in its wireline
operations, the Company enters into various facility co-location agreements and is subject to locality ordinances. In both cases, the Company constructs assets at these locations and, in accordance with the terms of many of these agreements, the
Company is obligated to restore the premises to their original condition at the conclusion of the agreements, generally at the demand of the other party to these agreements. The Company recognized the fair value of a liability for an asset
retirement obligation and capitalized that cost as part of the cost basis of the related asset, depreciating it over the useful life of the related asset.

DEFERRED FINANCING COSTS:Deferred financing costs are amortized using the straight-line method, which approximates the effective interest method, over a period equal to the term of the related debt instrument. Deferred financing
costs related to the First Lien Term Loan and the Second Lien Term Loan was being amortized over a period of 6 1/2 to 7 years. Amortization of deferred financing costs is included in interest expense and was $0.3 million for the period beginning on
the February 24, 2005 closing date of the new financing through May 1, 2005.

The Company had deferred financing costs associated with previous
financings. Amortization of these costs for the period January 1, 2005 to February 23, 2005 was $0.3 million.

ADVERTISING COSTS:The
Company expenses advertising costs and marketing production costs as incurred.



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PENSION BENEFITS:The Company sponsors a non-contributory defined benefit pension plan covering all employees who
meet eligibility requirements and were employed prior to October 1, 2003. The defined benefit pension plan was closed to employees employed on or after October 1, 2003. Pension benefits vest after five years of service and are based on
years of service and average final compensation subject to certain reductions if the employee retires before reaching age 65. The Companys funding policy has been to contribute to the plan based on applicable regulatory requirements.
Section 412 of the Internal Revenue Code and ERISA Section 302 establishes minimum funding requirements for defined benefit pension plans whereby the funded current liability percentage must be at least 90% of the current liability in
order to prevent noticing to members of an underfunded plan. Contributions are made to stay above this threshold and are intended to provide not only for benefits based on service to date, but also for those expected to be earned in the future.

NTELOS Inc. also sponsors a contributory defined contribution plan under Internal Revenue Code Section 401(k) for substantially all employees. The
Companys policy is to match 60% of each participants annual contribution for contributions up to 6% of each participants annual compensation. Company contributions to this plan vest after three years of service.

RETIREMENT BENEFITS OTHER THAN PENSIONS:NTELOS Inc. provides certain health care and life benefits for retired employees that meet eligibility requirements.
Employees hired after April 1993 are not eligible for these benefits. The Companys share of the estimated costs of benefits that will be paid after retirement is generally being accrued by charges to expense over the eligible employees
service periods to the dates they are fully eligible for benefits.

INCOME TAXES:Deferred income taxes are provided on an asset and liability
method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

STOCK-BASED COMPENSATION:The Company accounts for stock-based employee compensation plans under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations and follows the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensationand the revised disclosure requirements of SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure, an Amendment of SFAS No. 123.

In September 2003, the Company adopted a new stock option
plan for purposes of retaining key employees and enabling them to participate in the future success of the Company.

On February 24, 2005,
approximately 75% of the then outstanding stock options were purchased at a price of $20.23 per share issuable pursuant to the settlement of vested options as part of the tender offer transaction. On May 2, 2005, the remaining 25% of the stock
options vested pursuant to the change in control terms in the stock option agreements and were purchased at a price of $20.23 per share in connection with the closing of the Merger (Note 2).



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Had compensation cost been recorded based on the fair value of awards at the grant date, the pro forma impact on the
Companys (loss) income applicable to common shares would have been as follows:



|                                                                                                             |  |                                   |        |  
|------------------------------------------------------------------------------------------------------------ |  | --------------------------------- | ------ | -
|(In thousands, except per share data)                                                                        |  | January 1, 2005throughMay 1,
2005 |       
|Net loss, as reported                                                                                        |  | $                                 | (1,717 | )
|Deduct: Total stock-based employee compensation expense determined under fair value based method, net of tax |  |                                   | 740    |  
|                                                                                                             |  |                                   |        |  
|Net loss, pro forma                                                                                          |  | $                                 | (2,457 | )
|                                                                                                             |  |                                   |        |  
|Loss per common share:                                                                                       |  |                                   |        |  
|Basic (as reported)                                                                                          |  | $                                 | (0.21  | )
|Basic (pro forma)                                                                                            |  | $                                 | (0.31  | )
|Diluted (as reported)                                                                                        |  | $                                 | (0.21  | )
|Diluted (pro forma)                                                                                          |  | $                                 | (0.31  | )

The fair value of each grant is estimated at the grant date using the Black-Scholes option-pricing model with the
following assumptions: dividend rate of 0%; risk-free interest rate of 2.5% for all periods in 2004 through May 1, 2005 and expected life of 5 years for all periods in 2004 through 2005.

LOSS PER COMMON SHARE:The loss per share amounts are calculated in accordance with SFAS No. 128. Basic and diluted loss per share is presented for loss
applicable to common shares before cumulative effect for accounting change and for loss applicable to common shares. The numerator for both basic and diluted loss per share is net of the dividend requirements and reorganization items on preferred
stock. For basic loss per common share, the denominator is the weighted average number of common shares outstanding during the year. For diluted loss per common share, the denominator is calculated using the weighted average number of common and
dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental shares of common stock issuable upon the exercise of stock options and warrants (using the treasury stock method), and the
incremental shares of common stock issuable upon the conversion of the convertible notes (using the if-converted method). Common equivalent shares are excluded from the calculation since their effect is anti-dilutive and thus, the denominator for
the diluted per common share calculation is average basic shares outstanding, as using average diluted shares outstanding would result in an antidilutive effect.

FAIR VALUE OF FINANCIAL INSTRUMENTS:In June 1998, the FASB issued Statement of Financial Accounting Standard No. 133, as amended by SFAS No. 138, Accounting for Derivative Instruments and Hedging Activities
(SFAS No. 133 and 138). SFAS Nos. 133 and 138 require all derivatives to be measured at fair value and recognized as either assets or liabilities on the Companys balance sheet. Changes in the fair values of derivative
instruments are recognized in either earnings or comprehensive income, depending on the designated use and effectiveness of the instruments.

RECENT
ACCOUNTING PRONOUNCEMENTS:In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement
No. 143 (FIN 47). FIN 47 clarifies the term conditional asset retirement obligation as used in Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations, and also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement. FIN 47 is effective no later than the end of fiscal years ending after
December 15, 2005. The Company does not anticipate that the implementation of FIN 47 will have a material impact on its consolidated statements of operations or cash flows.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payments (SFAS No. 123R). SFAS No. 123R requires the recognition of the cost of employee
services received in exchange for an award of equity instruments in the financial statements and measurement based on the grant-date fair value of the award. It requires the cost to be recognized over the period during which an employee is required
to provide service in exchange for the award. Additionally, compensation expense will be recognized over the remaining employee service period for the outstanding portion of any awards for which compensation expense had not been previously
recognized or disclosed under SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). SFAS No. 123R replaces SFAS No. 123 and supersedes APB Opinion No. 25 and its related
interpretations.



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The Company is required to adopt SFAS No 123R no later than January 1, 2006. The Company does not believe that the
effects of adoption will have a material impact on the Companys consolidated statements of operations or cash flows.

Note 4. Disclosures
about Segments of an Enterprise and Related Information

The Company manages its business segments with separable management focus and infrastructures.

Wireless PCS:The Companys wireless PCS business carries digital phones and services, marketed in the retail and business-to-business
channels throughout much of Virginia and West Virginia. The Companys Wireless PCS segment operates in three primary markets: Virginia East, Virginia West and West Virginia. The Virginia East market currently serves a populated area of
3.4 million people primarily in the Richmond and Hampton Roads areas of Virginia through Richmond 20MHz, LLC, a wholly owned subsidiary. The region was added in July 2000 from the PrimeCo VA acquisition. The Virginia West market currently
serves a populated area of 2.2 million people in central and western Virginia primarily through the Virginia PCS Alliance, L.C. (VA Alliance), a 97% majority owned Limited Liability Company. The West Virginia market is served by
West Virginia PCS Alliance, L.C. (WV Alliance), a wholly owned limited liability company, and currently serves a populated area of 1.6 million people primarily in West Virginia, but extending to parts of eastern Kentucky,
southwestern Virginia and eastern Ohio. In addition to the markets indicated above, the Company has licenses, which are not active, that currently cover a populated area of approximately 1.4 million people.

In addition to the end-user customer business, the Company provides roaming services to other PCS providers and has a Strategic Network Alliance with Sprint Nextel,
which West Virginia PCS Alliance, L.C., Virginia PCS Alliance, L.C. and NTELOS Inc. entered into in June 2004. Prior to this, the Company had a wholesale network access agreement with Horizon Personal Communications, Inc., a Sprint affiliate (Note
13). Revenue from these wholesale service agreements was $19.9 million for the period from January 1, 2005 through May 1, 2005.

RLEC:The Company has RLEC businesses subject to the regulations of the State Corporation Commission of Virginia. NTELOS Inc. has owned one of these for over 100 years and the other was added in early 2001 through a merger with
R&B Communications, Inc. These businesses serve several areas in western Virginia, are fully integrated and are managed as one consolidated operation. Principal products offered by this segment are local service, which includes advanced calling
features, network access, long distance toll and directory advertising.

Competitive wireline:In addition to the RLEC services, the Company
directly or indirectly owns 1,900 route-miles of fiber optic network and provides transport services for long distance, Internet and private network services. Much of this network is located in regions that the Company sells products and services or
provides connections for and between markets the Company serves. The Companys network is connected and marketed through Valley Network Partnership (ValleyNet), a partnership of three nonaffiliated communications companies that have
interconnected their networks to form a nonswitched, fiber optic network. The ValleyNet network is connected to and marketed with other adjacent fiber networks creating a connected fiber optic network serving the ten-state mid-Atlantic region,
stretching from Pennsylvania to Florida north to south and west as far as Ashland, KY.

The Company also offers competitive local exchange carrier
(CLEC) services. Through its wholly-owned subsidiaries certified in Virginia, West Virginia and Tennessee, it currently provides CLEC service in 16 geographic markets. The Company has a facilities-based strategy, offering broadband
service applications such as Ethernet, PRI connections and competitive access utilizing its fiber network. Also within this segment, the Company provides Internet access services through a local presence in 54 markets in Virginia, West Virginia and
Tennessee. The Companys focus with internet has shifted to concentrate efforts on broadband service offerings. Metro Ethernet, dedicated high-speed access, integrated access, digital subscriber line (DSL) and portable broadband are
the primary broadband products. These operations are managed as one consolidated operation within a single segment due to the interdependence of network and other assets and functional support.

Other:Other communications services includes certain unallocated corporate related items, as well as results from the Companys paging and other
communication services, which are not considered separate reportable segments. Total unallocated corporate operating expenses were $0.9 million for the period January 1, 2005 through May 1, 2005. In addition, restructuring charges were
$15.4 million for the period January 1, 2005 through May 1, 2005.

The Company has one customer that accounted for greater than 10% of its
revenue during the 2005 period ended



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May 1, 2005. Revenue from this customer was primarily derived from a wireless PCS wholesale contract and RLEC and competitive wireline segments
network access. The percent of operating revenue from this customer for the Predecessor Company periods January 1, 2005 through May 1, 2005 was approximately 18%.

Summarized financial information for the Companys reportable segments is shown in the following table. On the Statement of Operations, the wireless communications revenue caption is exclusively comprised of the
wireless PCS segment and the wireline communications revenue captions is comprised of the RLEC and the Competitive wireline segments.



|                                                   |  |             |        |   |      |   |                     |  |   |        |   |  |       |        |   |  |   |         |  
|-------------------------------------------------- |  | ----------- | ------ | - | ---- | - | ------------------- |  | - | ------ | - |  | ----- | ------ | - |  | - | ------- | -
|(In thousands)                                     |  | WirelessPCS |        |   | RLEC |   | CompetitiveWireline |  |   | Other  |   |  | Total |       
|For the period January 1, 2005 through May 1, 2005 |  |             |        |   |      |   |                     |  |   |        |   |  |       |        |   | 
|Operating revenues                                 |  | $           | 89,826 |   |      | $ | 18,834              |  | $ | 17,357 |   |  | $     | 343    |   |  | $ | 126,360 |  
|Operating income (loss)                            |  |             | 12,205 |   |      |   | 10,611              |  |   | 2,595  |   |  |       | (7,762 | ) |  |   | 17,649  |  
|Depreciation and amortization                      |  |             | 16,768 |   |      |   | 3,618               |  |   | 3,308  |   |  |       | 105    |   |  |   | 23,799  |  
|Accretion of asset retirement obligations          |  |             | 231    |   |      |   | 4                   |  |   | 13     |   |  |       | 4      |   |  |   | 252     |  
|Gain on sale of assets                             |  |             | (51    | ) |      |   |                    |  |   | (21    | ) |  |       | (8,670 | ) |  |   | (8,742  | )
|Capital and operational restructuring charges      |  |             |       |   |      |   |                    |  |   |       |   |  |       | 15,403 |   |  |   | 15,403  |  

Note 5. Asset Dispositions

On November 18, 2004, the Company signed an agreement to sell certain inactive PCS licenses covering a population of approximately 2 million in Pennsylvania for $15.5 million. Each license covered 10 MHz of
spectrum. The book value of these licenses was $10.0 million. Final closing occurred in February 2005, with the Company recognizing net proceeds of $15.2 million and recognized a gain of $5.2 million.

On November 11, 2004, the Company signed an agreement to sell all of the MMDS spectrum licenses, spectrum leases and wireless cable equipment in the Richmond, VA
market for a minimum of $4.2 million and up to $5.0 million, conditioned on the satisfactory completion of certain deliverables. Additionally, the Company assigned all spectrum leases and tower leases for this market to the buyer. The book value of
the licenses is $1.5 million and the equipment assets have a book value of less than $0.1 million. During the period ending May 1, 2005, the Company closed on the sale of substantially all of these assets and recognized net proceeds of $4.8
million and recognized a gain of $3.5 million.

Note 6. Long-Term Debt

On February 24, 2005, the Company entered into $660 million of Senior Secured Credit Facilities (the Facilities) consisting of (i) a $400 million, 6.5 year, first-lien term loan facility (the
First Lien Term Loan), (ii) a $35 million, 5-year, revolving credit facility (the Revolving Credit Facility), and (iii) a $225 million, 7 year, second-lien term loan facility (the Second Lien Term Loan).

The Company borrowed $625 million under the First and Second Lien Term Loans and used the proceeds to retire the remaining obligations under its existing
$325 million Senior Credit Facility entered into on September 9, 2003 (the Senior Credit Facility), the existing interest rate swap agreements, 6.25% to 7.0% Notes payable secured by certain PCS radio spectrum licenses and 5.0% to
6.05% Notes payable secured by certain assets for an aggregate disbursement of approximately $183 million. The 5.0% to 6.05% notes payable carrying value had been reduced below the face value based on fair value interest rates of 7.1% to 8.9%. At
the date of retirement, the difference between face value and carrying value of the 5.0% to 6.05% notes payable of approximately $0.8 million was recorded as a component of interest expense.

In connection with the retirement described above, the Company recorded interest expense of approximately $0.3 million related to the write-off of deferred debt issuance
costs. Additionally, in connection with the retirement of the portion of the original Senior Credit Facility held by RTFC, the investment in RTFC subordinated capital certificates of $7.2 million was netted and accordingly reduced the principal due
at the time of the retirement.



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The First Lien Term Loan bears interest at rates 2.5% above the Eurodollar rate or 1.5% above the Federal Funds rate,
with a 25 basis point reduction in each of these rates when the Companys leverage ratio is equal to or less than 4.0:1.0, as defined in the agreement. The Second Lien Term Loan bears interest at rates 5.0% above the Eurodollar rate or 4.0%
above the Federal Funds rate. Interest on the First and Second Lien Term Loans is due and payable monthly.

In connection with the transactions described
above, NTELOS Inc. deferred debt issuance costs of approximately $12.8 million which were being amortized to interest expense over the life of the Facilities. Amortization of these costs from February 24 through May 1, 2005 was $0.4
million.

Note 7. Supplementary Disclosures of Cash Flow Information

The following information is presented as supplementary disclosures for the consolidated statements of cash flows for the period indicated below.



|                                      |  |                                   |      
|------------------------------------- |  | --------------------------------- | -----
|(In thousands)                        |  | January 1, 2005throughMay 1,
2005
|Cash payments for:                    |  |                                   |      
|Interest                              |  | $                                 | 7,829
|Income taxes, net of refunds received |  |                                   | 103  

Within the cash payments for interest amounts in the above table, $1.1 million relates to interest paid on the
interest rate swap agreements for the period January 1 through May 1, 2005.

Pursuant to the Transaction Agreement, the Company was required to
move proceeds from the sale of certain assets into a segregated account and disbursed these funds on the May 2, 2005 merger closing date as part of the consideration used to purchase the remaining security interest not owned by the Buyers. The
amount paid to the Buyers from this account was $25.0 million. In addition, the Company has recognized a payable to Holdings Corp. for $5.8 million representing the Companys obligation to remit to Holdings Corp. the proceeds from the sale and
collection on certain identified assets. Receipt of these funds is expected prior to December 31, 2005.

Note 8. Financial Instruments 
Interest Rate Swaps

Pursuant to the requirements of the new Senior Secured Credit Facility, on February 24, 2005 the Company entered into a new
interest rate swap agreement with a notional amount of $312.5 million in order to manage its exposure to interest rate movements by effectively converting a portion of its long-term debt from variable to fixed rates. This swap agreement has
maturities up to three years and involves the exchange of fixed rate payments for variable rate payments without the effect of leverage and without the exchange of the underlying face amount. Fixed interest rate payments are at a per annum rate of
4.1066%. Variable rate payments are based on three month US dollar LIBOR. The weighted average LIBOR rate applicable to this agreement was 3.21% on the May 2, 2005 merger transaction closing date. The notional amounts do not represent amounts
exchanged by the parties, and thus are not a measure of exposure to the Company. The amounts exchanged are based on the notional amounts and other terms of the swaps.

For the period February 24, 2005 through May 1, 2005 this swap agreement was not designated as a cash flow hedge for accounting purposes per the provisions of SFAS No. 133 and therefore the changes in
market value of the swap agreement were recorded as a charge or credit to interest expense. On May 1, 2005, the swap had a fair value of a $0.7 million liability.

Prior to February 24, 2005, the Company was a party to two interest rate swap agreements with aggregate notional amounts of $162.5 million, with maturities of up to 5 years, to manage its exposure to interest
rate movements by effectively converting a portion of its long-term debt from variable to fixed rates. These agreements involve the exchange of fixed rate payments for variable rate payments without the effect of leverage and without the exchange of
the underlying face amount. Fixed interest rate payments are at a per annum rate of 6.76%. Variable rate payments are based on one month US dollar LIBOR. The notional amounts do not represent amounts exchanged by the parties, and thus are not a
measure of exposure to the Company. The amounts exchanged are normally based on the notional amounts and other terms of the swaps. The Company retired these swap agreements for $4.1 million on February 24, 2005 commensurate with the retirement
of the related Senior Credit Facilities.



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The Company does not believe that any reasonably likely change in interest rates would have a material adverse effect on
the results of operations or cash flows of the Company. All interest rate swaps are reviewed with and, when necessary, are approved by the Companys board of directors.

Note 9. Income Taxes

The components of income tax expense are as follows for the period indicated below:



|                                              |  |                                   |      
|--------------------------------------------- |  | --------------------------------- | -----
|(In thousands)                                |  | January 1, 2005throughMay 1, 2005
|Current tax expense:                          |  |                                   |      
|Federal                                       |  | $                                 |     
|State                                         |  |                                   | 379  
|                                              |  |                                   |      
|                                              |  |                                   | 379  
|                                              |  |                                   |      
|Deferred tax expense:                         |  |                                   |      
|Federal                                       |  |                                   | 6,082
|State                                         |  |                                   | 1,264
|Valuation allowance for temporary differences |  |                                   | 425  
|                                              |  |                                   |      
|                                              |  |                                   | 7,771
|                                              |  |                                   |      
|                                              |  | $                                 | 8,150
|                                              |  |                                   |      

Total income tax expense was different than an amount computed by applying the graduated statutory federal income
tax rates to income before taxes. The reasons for the differences are as follows:



|                                                      |  |                                   |      
|----------------------------------------------------- |  | --------------------------------- | -----
|(In thousands)                                        |  | January 1, 2005throughMay 1, 2005
|Computed tax expense at statutory rate of 35%         |  | $                                 | 2,252
|Nondeductible reorganization items                    |  |                                   | 4,405
|State income taxes, net of federal income tax benefit |  |                                   | 1,068
|Valuation allowance for temporary differences         |  |                                   | 425  
|                                                      |  |                                   |      
|                                                      |  | $                                 | 8,150
|                                                      |  |                                   |      

Income tax expense for 2005 relates primarily to state minimum taxes.

Subsequent to emergence from bankruptcy in 2003 and through the effective date of our merger (Note 2), the Company has incurred additional NOLs of approximately
$84.9 million. These NOLs, in addition to amounts which are subject to the first limitation, are subject to an annual limitation of $1.6 million (prior to adjustment for realized built-in gains occurring after the merger). Due to the limited
carryforward life of NOLs and the amount of the annual limitation, it is unlikely that we will be able to realize in excess of $43 million of NOLs existing prior to our emergence from bankruptcy. However, the NOLs that accumulated since our
emergence are expected to be realized due to the anticipation of recognizing certain built-in gains in future periods.

Note 10. Securities and
Investments

The Company acquired RTFC subordinated capital certificates (SCC) of $7.5 million concurrent with the tranche C Senior Credit
Facility borrowings of $75 million. The debt instrument required the Company to purchase SCCs equal to 10% of the tranche C term loan of the Senior Credit Facility. The SCCs are nonmarketable securities, stated at historical cost and
included in restricted investments. As the RTFC loans are repaid, the SCCs are refunded through a cash payment to maintain a 10% SCC to outstanding loan balance ratio. In connection with the refinancing and RTFC loan payoff on
February 24, 2005, these SCCs were redeemed in full.



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Note 11. Pension Plans and Other Postretirement Benefits

The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans (OPEBs) for its employees. The following
tables provide the components of net periodic benefit cost for the plans:



|                                         |  |                                   |      |  
|---------------------------------------- |  | --------------------------------- | ---- | -
|Defined Benefit Pension Plan             | 
|(In thousands)                           |  | January 1, 2005throughMay 1, 2005 |     
|Components of net periodic benefit cost: |  |                                   |      |  
|Service cost                             |  | $                                 | 760  |  
|Interest cost                            |  |                                   | 739  |  
|Expected return on plan assets           |  |                                   | (711 | )
|Recognized net actuarial gain            |  |                                   | 10   |  
|                                         |  |                                   |      |  
|Net periodic benefit cost                |  | $                                 | 798  |  
|                                         |  |                                   |      |  
|                                        
|Other Postretirement Benefit Plan        | 
|(In thousands)                           |  | January 1, 2005throughMay 1, 2005 |     
|Components of net periodic benefit cost: |  |                                   |      |  
|Service cost                             |  | $                                 | 44   |  
|Interest cost                            |  |                                   | 190  |  
|Recognized net actuarial gain            |  |                                   | (14  | )
|                                         |  |                                   |      |  
|Net periodic benefit cost                |  | $                                 | 220  |  
|                                         |  |                                   |      |  

Prior service costs are amortized on a straight-line basis over the average remaining service period of active
participants. Gains and losses in excess of 10% of the greater of the benefit obligation and the market-related value of assets are amortized over the average remaining service period of active participants.

The Company has multiple nonpension postretirement benefit plans. The health care plan is contributory, with participants contributions adjusted annually. The life
insurance plans are also contributory. Eligibility for the life insurance plan is restricted to active pension participants age 50-64 as of January 5, 1994. Neither plan is eligible to employees hired after April 1993. The accounting for the
plans anticipates that the Company will maintain a consistent level of cost sharing for the benefits with the retirees.

The following table provides the
assumptions used in the measurements of the Companys net cost for the Consolidated Statement of Operations:



|                                  |  |                                   |  
|--------------------------------- |  | --------------------------------- | -
|Defined Benefit Pension Plan      | 
|                                  |  | January 1, 2005throughMay 1, 2005 |  
|Discount rate                     |  | 6.00                              | %
|Expected return on plan assets    |  | 9.00                              | %
|Rate of compensation increase     |  | 3.50                              | %
|                                 
|Other Postretirement Benefit Plan | 
|                                  |  | January 1, 2005throughMay 1, 2005 |  
|Discount rate                     |  | 6.00                              | %



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The Company reviews the assumptions noted in the above table on an annual basis. These assumptions are reviewed annually
to reflect anticipated future changes in the underlying economic factors used to determine these assumptions. For measurement purposes, a 9.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2005. The
rate was assumed to decrease gradually each year to a rate of 5.0% for 2011 and remain at that level thereafter.

Assumed health care cost trend rates have
a significant effect on the amounts reported for the health care plans. The effect to the net periodic postretirement health care benefit cost of a 1% change on the medical trend rate per future year, while holding all other assumptions constant,
would be $0.8 million for a 1% increase and $0.6 million for a 1% decrease.

In December 2003 the Medicare Prescription Drug, Improvement and Modernization
Act of 2003 was signed into law. Effective in 2006 there will be a new Medicare Part D benefit, which will make available prescription drug coverage to those over 65. Employers that provide prescription drug benefits that are at least actuarially
equivalent to Medicare Part D are entitled to an annual subsidy from Medicare, which is equal to 28% of prescription drug costs between $250 and $5,000, for each Medicare-eligible retiree who does not join Part D. The Company and its actuaries have
determined that the NTELOS Prescription Drug Plan is at least actuarially equivalent to Medicare Part D.

In accordance with FASB Staff Position
No. 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, issued on May 19, 2004, the Company elected to reflect the effect of this law as of
December 31, 2004. Accordingly, the Company realized a $1.2 million gain related to the Medicare Act subsidy. This gain was being accounted for as an unrecognized actuarial gain amortized over ten years beginning in 2005. In connection with the
purchase accounting as of May 2, 2005, the post retirement plan obligation was adjusted to fair value and the actuarial gain was therefore eliminated.

The Companys weighted average expected long-term rate of return on pension assets was 9.0% for the period January 1, 2005 through May 1, 2005. In developing this assumption, the Company evaluated input from its third party
pension plan asset managers, including their review of asset class return expectations and long-term inflation assumptions. The Company also considered its historical 10-year average return, which was in line with the expected long-term rate of
return assumption.

The Company contributed $1.2 million to the pension plan during the period January 1, 2005 through May 1, 2005.

Other benefit plans

The accumulated benefit obligation of the
Companys nonqualified pension plan was approximately $6.5 million at December 31, 2004, $4.2 million of which was paid out on February 24, 2005, concurrent with the recapitalization (Note 2). On May 2, 2005, an additional $0.8
million was paid out commensurate with the merger and related change of control provisions of the plan. The Companys plans for postretirement benefits other than pensions have no plan assets and are closed to new participants.

The Company also sponsors a defined contribution 401(k) plan. The Companys matching contributions to this plan were $0.3 million for the period January 1,
2005 through May 1, 2005.

Note 12. Stock Plans

On February 24, 2005, in connection with the first step of the merger and recapitalization transactions (Note 2), the Company repurchased approximately 969,000 shares (approximately 75%) of the common stock options outstanding for
$20.23 per share for common stock issuable pursuant to the exercise of vested options. On May 2, 2005, pursuant to the Transaction Agreement, the Buyers acquired all of the Companys remaining options for $20.23 per share of common stock
issuable pursuant to the exercise of options.



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A summary of the activity and status of the Plans for the period ended May 1, 2005 is as follows:



|                                                                            |  |                                    |   |  |                               |      
|--------------------------------------------------------------------------- |  | ---------------------------------- | - |  | ----------------------------- | -----
|                                                                            |  | January 1, 2005through May 1, 2005
|(In thousands except per option amounts)                                    |  | Shares                             |   |  | Weighted-AverageExercisePrice
|Outstanding at beginning of period                                          |  | 1,296,245                          |   |  | $                             | 19.77
|Granted                                                                     |  |                                   |   |  |                               |     
|Exercised                                                                   |  | (1,296,245                         | ) |  |                               | 19.77
|Forfeited                                                                   |  |                                   |   |  |                               |     
|Outstanding at end of period                                                |  |                                   |   |  |                               |     
|Exercisable at end of period                                                |  |                                   |   |  | $                             |     
|Weighted average fair value per option of options granted during the period |  | N/A                               

Note 13. Commitments and Contingencies

Operating Leases

The Company has several operating leases for administrative office space, retail space, tower
space, channel rights and equipment, certain of which have renewal options. The leases for retail and tower space have initial lease periods of one to thirty years. These leases are associated with the operation of wireless digital PCS services
primarily in Virginia and West Virginia. The leases for channel rights related to the Companys MMDS spectrum, formerly used by the wireless cable operations and currently used to deliver a portable broadband Internet service in certain
markets, have initial terms of three to ten years. The equipment leases have an initial term of three years. Rental expense for all operating leases was $6.2 million for the period January 1, 2005 through May 1, 2005.

Other Commitments and Contingencies

The Company entered into
advisory agreements with CVC Management LLC and Quadrangle Advisors LLC (the Advisors) whereby the Advisors will provide advisory and other services to the Company for a period of ten years for a combined annual advisory fee of $2.0
million. Under certain conditions set forth in these agreements, the Company could terminate these agreements prior to their expiration. However, should that occur, the Company would be required to pay a termination fee equal to the present value of
future scheduled payments.

The Company is periodically involved in disputes and legal proceedings arising from normal business activities. In addition,
although the Company has consummated its Plan of Reorganization and emerged from its Chapter 11 proceedings, one dispute with respect to the amount of allowed claim owed by the Company to one of its creditors remains outstanding. While the outcome
of this and other such matters are currently not determinable, management does not expect that the ultimate costs to resolve such matters will have a material adverse effect on the Companys consolidated results of operations or cash flows and
adequate provision for any probable losses has been made in our consolidated financial statements.

Note 14. Capital and Operational Restructuring
Charges

During the period January 1, 2005 through May 1, 2005, the Company recorded $15.4 million of capital restructuring charges. These
charges relating to legal, financial and consulting costs, accelerated payout of certain retirement obligations, and retention related costs, all of which are directly attributable to the refinancing and merger transactions. In addition to this, the
Company incurred $12.8 million of debt issuance costs associated with the new first and second lien term loans which were capitalized and were being amortized over the life of the loans but which were subsequently eliminated through purchase
accounting.



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Note 15. Earnings Per Share

The computations of basic and diluted earnings per share from continuing operations for the period presented were as follows:



|                                                                                              |  |                                   |        |  
|--------------------------------------------------------------------------------------------- |  | --------------------------------- | ------ | -
|(In thousands)                                                                                |  | January 1, 2005throughMay 1,
2005 |       
|Numerator:                                                                                    |  |                                   |        |  
|Numerator for basic loss per share  Net Loss                                                 |  | $                                 | (1,717 | )
|                                                                                              |  |                                   |        |  
|Denominator:                                                                                  |  |                                   |        |  
|Denominator for basic and diluted loss per common share  weighted average shares outstanding |  |                                   | 8,020  |  
|                                                                                              |  |                                   |        |  

Note 16. Quarterly Financial Information (Unaudited)

Quarterly financial information for the periods January 1, 2005 through May 1, 2005 is presented below:



|                                          |  |              |        |   |                             |   |        |  
|----------------------------------------- |  | ------------ | ------ | - | --------------------------- | - | ------ | -
|(In thousands)                            |  | FirstQuarter |        |   | April 1, 2005 toMay 1, 2005 |  
|2005                                      |  |              |        |   |                             |   |        |  
|Operating revenues                        |  | $            | 93,053 |   |                             | $ | 33,307 |  
|Operating income                          |  |              | 17,155 |   |                             |   | 494    |  
|Net income (loss)                         |  |              | 4,917  |   |                             |   | (6,634 | )
|Depreciation and amortization             |  |              | 17,504 |   |                             |   | 6,295  |  
|Accretion of asset retirement obligations |  |              | 189    |   |                             |   | 63     |  
|Gain on sale of assets1                   |  |              | (5,246 | ) |                             |   | (3,496 | )
|Capital restructuring charges             |  |              | 5,199  |   |                             |   | 10,204 |  



|1 | The Company received $15.5 million in proceeds and recognized a $5.2 million in gain associated with the sale of certain
PCS spectrum licenses in the first quarter 2005. Additionally, the Company received $4.8 million in proceeds and recognized a $3.5 million gain on the sale of certain MMDS radio spectrum licenses in the second quarter 2005.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures.
|-------- | ------------------------

Conclusion Regarding the Effectiveness
of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the Exchange Act), as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods
specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions
regarding required disclosures. Managements report on internal control over financial reporting is included below.

The effectiveness of our internal
control over financial reporting as of December 31, 2007 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, indicated below.

Managements Annual Report on Internal Control over Financial Reporting

Our management is responsible for
establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Our internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with managements
and our directors authorizations; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the our assets that could have a material effect on the financial
statements.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer,
we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria for effective internal control over financial reporting described
in Internal Control-Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment, management concluded that, as of December 31, 2007, the Companys
internal control over financial reporting was effective to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles in the Unites States. The conclusion of our principal executive officer and principal financial officer is based on the recognition that there are inherent limitations in all systems of internal control. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during the
three months ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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Attestation Report of the Registered Public Accounting Firm

The Board of Directors and Stockholders

NTELOS Holdings Corp.:

We have audited NTELOS Holdings Corp.s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal
Control  Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NTELOS Holdings Corp.s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, NTELOS Holdings Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007,
based on criteria established in Internal Control  Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of NTELOS Holdings Corp. as of December 31, 2007 and 2006,
and the related consolidated statements of operations, cash flows, and stockholders equity for the years ended December 31, 2007 and 2006 and the period January 14, 2005 (inception) through December 31, 2005, and our report
dated February 28, 2008 expressed an unqualified opinion on those consolidated financial statements.



|                  
|------------------
|/s/ KPMG LLP      
|                  
|Richmond, Virginia
|February 28, 2008 



|Item 9B. | Other Information.
|-------- | ------------------

None.



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PART III



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

The
information required by this item is incorporated herein by reference from the registrants definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 2, 2008 to be filed with the Commission pursuant to Regulation
14A.

The Company has adopted a Code of Business Conduct and Ethics pursuant to section 406 of the Sarbanes-Oxley Act. A copy of our Code of Business
Conduct and Ethics is publicly available on our Company website at http://ir.ntelos.com/documentdisplay.cfm?DocumentID=1120. The information contained on our website is not incorporated by reference into this Report on Form 10-K.



|Item 11. | Executive Compensation.
|-------- | -----------------------

The information required by this item is
incorporated herein by reference from the registrants definitive Proxy Statement for the Annual Meeting of Stockholders.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of
December 31, 2007 concerning the shares of Common Stock which are authorized for issuance under our equity compensation plans.



|                                                       |  |                                                                                |  |                                                                  |       |                                                                                                                                         |          
|------------------------------------------------------ |  | ------------------------------------------------------------------------------ |  | ---------------------------------------------------------------- | ----- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan Category                                          |  | Number ofSecurities to beIssued onExercise ofOutstandingOptions andWarrants(a) |  | WeightedAverageExercisePrice ofOutstandingOptions andWarrants(b) |       | Number of SecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation
Plans(Excluding SecuritiesReflected in Column(a))(c)
|Equity Compensation Plans Approved by Stockholders     |  |                                                                                |  |                                                                  |       |                                                                                                                                         |          
|Equity Incentive Plan                                  |  | 541,824                                                                        |  | $                                                                | 13.63 |                                                                                                                                         | 1,745,552
|Non-Employee Director Equity Plan                      |  | 43,000                                                                         |  | $                                                                | 15.89 |                                                                                                                                         | 357,000  
|Employee Stock Purchase Plan                           |  |                                                                               |  | $                                                                |      |                                                                                                                                         | 191,213  
|Equity Compensation Plans Not Approved by Stockholders |  |                                                                               |  | $                                                                |      |                                                                                                                                         |         
|Total                                                  |  | 584,824                                                                        |  | $                                                                | 13.80 |                                                                                                                                         | 2,293,765

All other information required by this item is incorporated herein by reference from the registrants
definitive Proxy Statement for the Annual Meeting of Stockholders.



|Item 13. | Certain Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

The information required by this item is incorporated herein by reference from the registrants definitive Proxy Statement for the Annual Meeting of Stockholders.



|Item 14. | Principal Accountant Fees and Services.
|-------- | ---------------------------------------

The information required
by this item is incorporated herein by reference from the registrants definitive Proxy Statement for the Annual Meeting of Stockholders.



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PART IV



|Item 15. | Exhibits, Financial Statement Schedules.
|-------- | ----------------------------------------

(a) The following
documents are filed as a part of this Annual Report on Form 10-K:

(1) Consolidated Financial Statements

The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed in Item 8 hereof.

(3) Exhibits

The exhibits listed below and on the accompanying Index
to Exhibits immediately following the signature page hereto are filed as part of, or incorporated by reference into, this Report on Form 10-K.



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                    
|2.1(1)      |  | Transaction Agreement dated as of January 18, 2005 by and among NTELOS Inc., Project Holdings Corp., Project Merger Sub Corp. and certain shareholders of Project Holdings Corp. signatories
thereto (as amended by Amendment No. 1 dated as of January 24, 2005).                             
|            | 
|2.3(1)      |  | Plan of Conversion of Project Holdings LLC (predecessor of NTELOS Holdings Corp.) dated April 27, 2005.                                                                                                                                                                                        
|            | 
|2.5(3)      |  | Agreement and Plan of Merger by and between Holdings and NTELOS Merger Corp.                                                                                                                                                                                                                   
|            | 
|3.1(3)      |  | Amended and Restated Certificate of Incorporation of Holdings.                                                                                                                                                                                                                                 
|            | 
|3.2(3)      |  | Amended and Restated By-laws of Holdings.                                                                                                                                                                                                                                                      
|            | 
|4.3(3)      |  | Amended and Restated Shareholders Agreement by and among Holdings and the shareholders listed on the signature pages thereto.                                                                                                                                                                  
|            | 
|10.1(4)     |  | Amended and Restated Credit Agreement, dated as of June 1, 2006.                                                                                                                                                                                                                               
|            | 
|10.2(3)     |  | Employment Agreement, dated as of May 2, 2005, between NTELOS Inc. and James S. Quarforth (including amendment thereto).                                                                                                                                                                       
|            | 
|10.3(3)     |  | Employment Agreement, dated as of May 2, 2005, between NTELOS Inc. and Michael B. Moneymaker (including amendment thereto).                                                                                                                                                                    
|            | 
|10.4(3)     |  | Employment Agreement, dated as of May 2, 2005, between NTELOS Inc. and Carl A. Rosberg (including amendment thereto).                                                                                                                                                                          
|            | 
|10.5(3)     |  | Employment Agreement, dated as of May 2, 2005, between NTELOS Inc. and David R. Maccarelli (including amendment thereto).                                                                                                                                                                      
|            | 
|10.6(3)     |  | Employment Agreement, dated as of May 2, 2005, between NTELOS Inc. and Mary McDermott (including amendment thereto).                                                                                                                                                                           
|            | 
|10.7(3)     |  | Holdings Amended and Restated Equity Incentive Plan.                                                                                                                                                                                                                                           
|            | 
|10.8(3)     |  | Holdings Employee Stock Purchase Plan, as amended.                                                                                                                                                                                                                                             
|            | 
|10.9(7)     |  | Resale Agreement, dated as of July 31, 2007, and effective as of July 1, 2007, by and among the West Virginia PCS Alliance, L.C., Virginia PCS Alliance, L.C., NTELOS Inc. and Sprint Spectrum
L.P. and Sprint Spectrum on behalf of and as an agent for SprintCom, Inc., a Kansas corporation.
|            | 
|10.10(3)    |  | Holdings Non-Employee Director Equity Plan.                                                                                                                                                                                                                                                    
|            | 
|10.11(5)    |  | Holdings 2005 Executive Supplemental Retirement Plan, as amended and restated December 21, 2006.                                                                                                                                                                                               
|            | 
|10.12(3)    |  | Form of Award Agreement under Holdings Amended and Restated Equity Incentive Plan.                                                                                                                                                                                                             
|            | 
|10.13(2)    |  | Form of Award Agreement under Holdings Non-Employee Director Equity Plan.                                                                                                                                                                                                                      
|            | 
|10.14(6)    |  | Amendment No. 1 to the Amended and Restated Credit Agreement, dated as of March 9, 2007.                                                                                                                                                                                                       
|            | 
|10.15(8)    |  | General Agreement for Purchase of Personal Communications Services Systems, dated and effective as of August 3, 2007 between NTELOS Inc. and Lucent Technologies Inc.                                                                                                                          
|            | 
|21.1*       |  | Subsidiaries of Holdings.                                                                                                                                                                                                                                                                      
|            | 
|23.1*       |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                           
|            | 
|31.1*       |  | Certificate of James S. Quarforth, Chief Executive Officer and President pursuant to Rule 13a-14(a).                                                                                                                                                                                           
|            | 
|31.2*       |  | Certificate of Michael B. Moneymaker, Executive Vice President and Chief Financial Officer, Treasurer and Secretary pursuant to Rule 13a-14(a).                                                                                                                                                
|            | 
|32.1*       |  | Certificate of James S. Quarforth, Chief Executive Officer and President pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                            
|            | 
|32.2*       |  | Certificate of Michael B. Moneymaker, Executive Vice President and Chief Financial Officer, Treasurer and Secretary pursuant to 18 U.S.C., Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.                                                                 



|* | Filed herewith.
|- | ---------------

|(1) | Filed as an exhibit to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (File No. 333-128849), filed November 15, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Filed as an exhibit to Amendment No. 3 to the Registrants Registration Statement on Form S-1 (File No. 333-128849), filed January 26, 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Filed as an exhibit to Annual Report on Form 10-K for the year ended December 31, 2005
|--- | --------------------------------------------------------------------------------------

|(4) | Filed as an exhibit to Current Report on Form 8-K filed June 1, 2006.
|--- | ---------------------------------------------------------------------

|(5) | Filed as an exhibit to Current Report on Form 8-K filed December 21, 2006.
|--- | --------------------------------------------------------------------------

|(6) | Filed as an exhibit to Current Report on Form 8-K filed March 12, 2007.
|--- | -----------------------------------------------------------------------

|(7) | Filed as an exhibit to Current Report on Form 8-K filed August 2, 2007.
|--- | -----------------------------------------------------------------------

|(8) | Filed as an exhibit to Current Report on Form 8-K filed August 3, 2007.
|--- | -----------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report on Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.





NTELOS HOLDINGS CORP.By:

/s/ James S. QuarforthName:

James S. QuarforthTitle:

President, Chief Executive Officer and Chairman of the Board of Directors


Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Annual
Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:



|                          |  |                                                                      |  |                  
|------------------------- |  | -------------------------------------------------------------------- |  | -----------------
|Signature                 |  | Title                                                                |  | Date             
|                          |  |                                                                     
|/s/ James S. Quarforth    |  | President, Chief Executive Officer and Chairman of                   |  | February 28, 2008
|James S. Quarforth        |  | the Board of Directors(principal executive officer)                  |  |                  
|                          |  |                                                                     
|/s/ Michael B. Moneymaker |  | Executive Vice President, Chief Financial Officer,                   |  | February 28, 2008
|Michael B. Moneymaker     |  | Treasurer and Secretary (principal financial and
accounting officer) |  |                  
|                          |  |                                                                     
|/s/ Timothy Biltz         |  | Director                                                             |  | February 28, 2008
|Timothy Biltz             |  |                                                                      |  |                  
|                          |  |                                                                     
|/s/ Daniel Heneghan       |  | Director                                                             |  | February 28, 2008
|Daniel Heneghan           |  |                                                                      |  |                  
|                          |  |                                                                     
|/s/ Eric Hertz            |  | Director                                                             |  | February 28, 2008
|Eric Hertz                |  |                                                                      |  |                  
|                          |  |                                                                     
|/s/ Michael Huber         |  | Director                                                             |  | February 28, 2008
|Michael Huber             |  |                                                                      |  |                  
|                          |  |                                                                     
|/s/ Julia North           |  | Director                                                             |  | February 28, 2008
|Julia North               |  |                                                                      |  |                  
|                          |  |                                                                     
|/s/ Henry Ormond          |  | Director                                                             |  | February 28, 2008
|Henry Ormond              |  |                                                                      |  |                  
|                          |  |                                                                     
|/s/ Jerry Vaughn          |  | Director                                                             |  | February 28, 2008
|Jerry Vaughn              |  |                                                                      |  |                  



121