UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For the quarterly period ended March 31, 2003.

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

      For the transition period from ________________ to ________________

                         Commission file number: 0-26525

                              BREDA TELEPHONE CORP.
        (Exact name of small business issuer as specified in its charter)

               Iowa                                              42-0895882
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                  112 E. Main, P.O. Box 190, Breda, Iowa 51436
                    (Address of principal executive offices)

                                 (712) 673-2311
                          (Issuer's telephone number)

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 32,812 shares of common stock,
no par value, at March 31, 2003.

      Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              March 31,       December 31,
                                                                 2003              2002
                                                             (Unaudited)        (Audited)
                                                             -----------      ------------
<S>                                                          <C>               <C>
                                       ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                  $ 1,300,748       $ 1,032,734
  Temporary investments                                          245,479           459,059
  Accounts receivable                                            704,005           835,667
  Current portion of notes receivable                            132,000           116,000
  Interest receivable                                             50,483            68,053
  Inventories                                                     97,618            91,114
  Other                                                          125,291            85,025
                                                             -----------       -----------
                                                               2,655,624         2,687,652
                                                             -----------       -----------

OTHER NONCURRENT ASSETS
  Long-term investments                                        3,309,592         3,136,576
  Other investments:
    Investments in unconsolidated affiliates at equity         3,742,156         3,454,159
    Long-term investments at cost                                801,245           807,564
  Goodwill                                                       896,812           896,812
  Intangibles                                                      1,556             1,556
  Notes receivable, less current portion                         340,698           512,792
                                                             -----------       -----------
                                                               9,092,059         8,809,459
                                                             -----------       -----------

PROPERTY AND EQUIPMENT                                         5,339,500         5,190,176
                                                             -----------       -----------

       TOTAL ASSETS                                          $17,087,183       $16,687,287
                                                             ===========       ===========
</TABLE>

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

<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                           March 31,        December 31,
                                                                             2003               2002
                                                                          (Unaudited)        (Audited)
                                                                          -----------       ------------
<S>                                                                       <C>               <C>
                           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term debt                                       $   137,225       $   134,981
  Accounts payable                                                            237,881           262,544
  Dividends payable                                                            98,436                --
  Accrued taxes                                                               345,243           167,079
  Other                                                                       146,383           174,534
                                                                          -----------       -----------
                                                                              965,168           739,138
                                                                          -----------       -----------

LONG-TERM DEBT, less current portion                                        1,742,485         1,777,644
                                                                          -----------       -----------

DEFERRED CREDITS                                                              108,208           105,534
                                                                          -----------       -----------

STOCKHOLDERS' EQUITY
  Common stock - no par value, 5,000,000 shares authorized,
    32,812 and 33,000 shares issued and outstanding
    at $280 stated value, respectively                                      9,187,360         9,240,000
  Retained earnings                                                         5,083,962         4,824,971
                                                                          -----------       -----------
                                                                           14,271,322        14,064,971
                                                                          -----------       -----------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $17,087,183       $16,687,287
                                                                          ===========       ===========
</TABLE>

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


                                       2
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               For the Three Months Ended March 31, 2003 and 2002

                                                      2003              2002
                                                  -----------       -----------

OPERATING REVENUES                                $ 1,690,643       $ 1,439,031
                                                  -----------       -----------

OPERATING EXPENSES
  Cost of services                                    663,834           541,581
  Depreciation and amortization                       260,467           251,726
  Selling, general and administration                 493,027           511,645
                                                  -----------       -----------
                                                    1,417,328         1,304,952
                                                  -----------       -----------

OPERATING INCOME                                      273,315           134,079
                                                  -----------       -----------

OTHER INCOME (EXPENSES)
  Interest and dividend income                         56,678            64,996
  Interest expense                                    (35,144)          (37,556)
  Income from equity investments                      287,997           298,683
  Other, net                                           (3,252)            1,533
                                                  -----------       -----------
                                                      306,279           327,656
                                                  -----------       -----------

INCOME BEFORE INCOME TAXES                            579,594           461,735
                                                  -----------       -----------

INCOME TAXES                                          222,167           164,451
                                                  -----------       -----------

INCOME BEFORE CUMULATIVE EFFECT
  OF ACCOUNTING CHANGE                                357,427           297,284
                                                  -----------       -----------

CUMULATIVE EFFECT OF ACCOUNTING
  CHANGE, NET OF TAX                                       --           (70,768)
                                                  -----------       -----------

NET INCOME                                        $   357,427       $   226,516
                                                  ===========       ===========

NET EARNINGS PER COMMON SHARE BEFORE
  CUMULATIVE EFFECT OF ACCOUNTING CHANGE          $     10.88       $      8.53

CUMULATIVE EFFECT OF ACCOUNTING
  CHANGE, NET OF TAX                                       --             (2.03)
                                                  -----------       -----------

NET INCOME PER COMMON SHARE                       $     10.88       $      6.50
                                                  ===========       ===========

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


                                       3
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                Common Stock             Retained
                                           Shares        Amount          Earnings           Total
                                           ------     -----------      -----------      ------------
<S>                                        <C>        <C>              <C>              <C>
Balance at December 31, 2001 (Audited)     35,025     $ 9,036,450      $ 4,475,000      $ 13,511,450

    Comprehensive Income:
      Net income                                                         1,218,421         1,218,421

    Dividends paid                                                        (104,214)         (104,214)

    Common stock redeemed, net             (2,025)       (560,686)                          (560,686)

    Stated value stock adjustment                         764,236         (764,236)
                                           ------     -----------      -----------      ------------

Balance at December 31, 2002 (Audited)     33,000       9,240,000        4,824,971        14,064,971

    Comprehensive Income:
      Net income                                                           357,427           357,427

    Dividends declared                                                     (98,436)          (98,436)

    Common stock redeemed, net               (188)        (52,640)                           (52,640)
                                           ------     -----------      -----------      ------------

Balance at March 31, 2003 (Unaudited)      32,812     $ 9,187,360      $ 5,083,962      $ 14,271,322
                                           ======     ===========      ===========      ============
</TABLE>

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


                                       4
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Three Months Ended March 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                               2003             2002
                                                                           -----------      -----------
<S>                                                                        <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                               $   357,427      $   226,516
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                                            260,467          251,726
      Amortization of investment tax credits                                    (2,443)          (2,443)
      Deferred income taxes                                                      5,117          (39,773)
      Cumulative effect of accounting change                                        --          119,945
      Note receivable discount                                                  (3,905)          (4,456)
      Equity income in unconsolidated affiliates, net of distributions
       received of $17,368 in 2002                                            (287,997)        (281,315)
      Changes in operating assets and liabilities:
         (Increase) decrease in assets                                         102,462           91,848
         Increase (decrease) in liabilities                                    125,350          162,021
                                                                           -----------      -----------
      Net cash provided by operating activities                                556,478          524,069
                                                                           -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Capital expenditures                                                      (409,792)        (187,790)
    Purchase of investments                                                   (357,013)        (630,237)
    Proceeds from the sale of investments                                      397,577          203,873
    Sale of other investments                                                    6,319            7,333
    Proceeds from notes receivable                                             160,000               --
                                                                           -----------      -----------
      Net cash used in investing activities                                   (202,909)        (606,821)
                                                                           -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Common stock redeemed                                                      (52,640)         (62,952)
    Repayment of long-term debt                                                (32,915)         (30,814)
                                                                           -----------      -----------
      Net cash used in financing activities                                    (85,555)         (93,766)
                                                                           -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           268,014         (176,518)
                                                                           -----------      -----------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             1,032,734        1,797,415
                                                                           -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $ 1,300,748      $ 1,620,897
                                                                           ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION
    Cash paid during the period for:
      Interest                                                             $    35,144      $    37,556
      Income taxes                                                         $    10,500      $        --
</TABLE>

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


                                       5
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      In the opinion of management, the accompanying condensed consolidated
      financial statements contain all adjustments (consisting of only normal
      recurring items) necessary to present fairly the financial position as of
      March 31, 2003 and December 31, 2002 and the results of operations and
      changes in cash flows for the three months ended March 31, 2003 and 2002.

      Certain information and footnote disclosures normally included in annual
      financial statements prepared in accordance with accounting principles
      generally accepted in the United States of America have been condensed or
      omitted. It is suggested that these financial statements be read in
      conjunction with the financial statements and notes thereto included in
      the Company's December 31, 2002 audited financial statements. The results
      of operations for the period ended March 31, 2003 are not necessarily
      indicative of the operating results of the entire year.

      Certain reclassifications have been made to the 2002 financial statements
      to conform with the 2003 presentations.

NOTE 2. OPERATING SEGMENTS

      The Company organizes its business into three reportable segments: local
      exchange carrier (LEC) services, broadcast services and internet service
      provider (ISP) services. The LEC services segment provides telephone, data
      services and other services to customers in local exchanges. The broadcast
      services segment provides cable television services to customers in Iowa
      and Nebraska. The ISP services segment provides internet access to
      customers within the local exchanges and the surrounding areas.

      The Company's reportable business segments are strategic business units
      that offer different products and services. Each reportable segment is
      managed separately primarily because of different products, services and
      regulatory environments. LEC segments have been aggregated because of
      their similar characteristics.

      The segment's accounting policies are the same as those described in the
      summary of significant accounting policies.

<TABLE>
<CAPTION>
                                            Local                            Internet
                                           Exchange                          Service
                                           Carrier         Broadcast         Provider       Other         Total
                                          ----------       ---------        ---------       -----      ----------
           Three months ended
              March 31, 2003
<S>                                       <C>              <C>              <C>              <C>       <C>
      Revenues
           External customers             $1,290,804       $ 238,658        $ 161,181        $--       $1,690,643
           Intersegment                           --              --               --         --               --
              Segment profit (loss)          443,039         (46,384)         (39,228)        --          357,427
</TABLE>


                                       6
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. OPERATING SEGMENTS, (Continued)

<TABLE>
<CAPTION>
                                             Local                            Internet
                                            Exchange                          Service
                                            Carrier         Broadcast         Provider         Other            Total
                                           ----------       ---------        ---------        -------        ----------
           Three months ended
              March 31, 2002
<S>                                        <C>              <C>              <C>              <C>            <C>
      Revenues
            External customers             $1,012,635       $ 244,382        $ 182,014        $    --        $1,439,031
            Intersegment                           --              --               --             --                --
            Segment profit (loss)             355,162        (108,929)         (17,166)        (2,551)          226,516
</TABLE>

      Reconciliation of Segment Information               Three months ended
                                                       March 31,      March 31,
                                                          2003          2002
                                                       ----------   -----------
      REVENUES:
            Total revenues for reportable segments     $1,690,643   $ 1,439,031
            Other revenues                                     --            --
            Elimination of intersegment revenues               --            --
                                                       ----------   -----------
                  Consolidated Revenues                $1,690,643   $ 1,439,031
                                                       ==========   ===========

      PROFIT:
            Total profit for reportable segments       $  357,427   $   229,067
            Other profit (loss)                                --        (2,551)
            Non-operating segment                              --            --
            Minority interest                                  --            --
                                                       ----------   -----------
                  Net Income                           $  357,427   $   226,516
                                                       ==========   ===========

NOTE 3. NET INCOME PER COMMON STOCK

      Net income per common share for March 31, 2003 and 2002 was computed by
      dividing the weighted average number of shares of common stock outstanding
      into the net income. The weighted average number of shares of common stock
      outstanding for the three months ended March 31, 2003 and 2002 are 32,848
      and 34,843, respectively.

NOTE 4. STOCK VALUE ADJUSTMENT

      In May 2002, the board of directors authorized a $22 increase in the
      stated value of each share of common stock from $258 to $280. There were
      34,738 shares outstanding at the time of the value adjustment, which
      reduced retained earnings by $764,236.


                                       7
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

      Breda organizes its business into three reportable segments. Those
      segments are local exchange carrier services, broadcast services, and
      Internet service provider services.

      The local exchange carrier services segment provides telephone, data
      services, and other services to customers in the local exchanges served by
      Breda. Breda also provides long distance services to its customers in the
      local exchanges and in the Carroll, Iowa market area through BTC, Inc. The
      broadcast services segment provides cable television services to customers
      in Iowa and Nebraska. The Internet service provider services segment
      provides Internet access to customers within the local exchanges and the
      surrounding areas.

      The subsidiaries of Breda and the segments in which they operate are as
      follows:

            Local Exchange Carrier
               Prairie Telephone Co., Inc.
               Westside Independent Telephone Company
               BTC, Inc., which is a competitive local exchange carrier
               presently providing long distance services.

            Broadcast Services
               Tele-Services, Ltd.

            Internet Service Provider
               BTC, Inc.

      BTC, Inc. is a subsidiary of Prairie Telephone.

      Breda and its direct and indirect subsidiaries all conduct business under
      the names "W.I.N." or "Western Iowa Networks".

      The following table reflects, on a consolidated basis for Breda and its
      subsidiaries, the approximate percentage of revenue derived from Breda's
      and its subsidiaries' various businesses and investments as of the close
      of, respectively, the first quarter of 2002 and the first quarter of 2003:


                                       8
<PAGE>

                                               January-    January-
                                               March       March
                                               2002        2003

            Local Exchange Carrier (1)          70.4%       76.4%

            Broadcast (2)                       17.0%       14.1%

            Internet Service Provider (3)       12.6%        9.5%
                                              ------      ------
                   Total                       100.0%      100.0%

      (1)   Includes (i) flat monthly fees charged to subscribers by Breda,
            Prairie Telephone and Westside Independent for basic local telephone
            services, (ii) universal services funding amounts and access charges
            payable by long distance carriers for intrastate and interstate
            exchange services provided to those long distance carriers, (iii)
            fees from long distance providers for billing and collection
            services for long distance calls made by subscribers, (iv) per
            minute rates and calling plans rates for long distance services, and
            (v) monthly cellular commissions, advertising fees, and
            miscellaneous revenues.

      (2)   Includes monthly fees charged for basic and premium cable services.

      (3)   Includes monthly fees charged for internet services.

      Three-months ended March 31, 2003 Compared to Three-months ended March 31,
      2002

      Net Income

      Consolidated net income for the three-month period ended March 31, 2003
      was $357,427, which was a $130,911, or 57.8%, increase when compared to
      the $226,516 of consolidated net income for the three-month period ended
      March 31, 2002.

      The $130,911 increase in net income resulted from the following four
      factors:

            1)    Consolidated operating income, which is Operating Revenues
                  less Operating Expenses, generated from the local exchange
                  carrier segment, the broadcast services segment, and the
                  internet service provider segment, increased $139,236, or
                  103.8%, for the three-month period ended March 31, 2003, when
                  compared to the three-month period ended March 31, 2002.

            2)    Other income (expense), which includes items such as interest
                  and dividend income, income from equity investments, interest
                  expense, and gains (losses) on the sale of investments and
                  property, decreased


                                       9
<PAGE>

                  $21,377, or 6.5%, for the three-month period ended March 31,
                  2003, when compared to the three-month period ended March 31,
                  2002.

            3)    Income taxes increased $57,716, or 35.1%, for the three-month
                  period ended March 31, 2003, when compared to the three-month
                  period ended March 31, 2002.

            4)    The cumulative effect of an accounting change, net of tax, of
                  $70,768 during the three-month period ended March 31, 2002,
                  reflects an impairment of goodwill from the implementation of
                  Statement of Financial Accounting Standard 142 on January 1,
                  2002. There was no corresponding entry during the three-month
                  period ended March 31, 2003.

      Operating Revenues

      There was an increase in total operating revenues for the three-month
      period ended March 31, 2003, when compared to the three-month period ended
      March 31, 2002, of $251,612, or 17.5%. The segments making up total
      operating revenues and their contributions to the $251,612 increase
      between the two periods are as follows: local exchange carrier services -
      $278,169; broadcast services - ($5,724); and Internet services -
      ($20,833).

      Local Exchange Carrier Services - $278,169

      Local exchange carrier services revenue accounted for 76.4% of the
      operating revenue in the three-month period ended March 31, 2003. The
      components of and their contributions to the $278,169 increase in local
      exchange carrier services revenue for the three-months ended March 31,
      2003 when compared to the three-months ended March 31, 2002 are as
      follows: local network services - $470; network access services -
      ($7,332); long distance services - $1,867; billing and collection services
      - ($3,471); cellular services - $224,902; and miscellaneous - $61,733.

      Both local network services and network access services revenue were
      nearly identical for the three-month periods ended March 31, 2003 and
      March 31, 2002, with a 0.3% increase and 1.2% decrease, respectively, in
      the three month period ended March 31, 2003 when compared to the same
      three-month period in 2002. Breda has not experienced an adverse effect
      from the implementation in 2002 of different methodologies for the support
      payment funding regulated by the FCC. Breda has, however, had lower access
      revenue in both 2002 and 2003 because Qwest no longer pays access revenue
      for traffic originating with a wireless carrier that uses Qwest to deliver
      the traffic back to a number served by local exchange carriers, such as
      Breda, Prairie Telephone, and Westside Independent, who participate in the
      use of the switching and network facilities offered by Iowa Network
      Services. Access charges constitute a substantial part of Breda's, Prairie
      Telephone's and Westside Independent's revenues, and a material risk to
      them arises from the regulation of access charge rates by the FCC. Breda
      anticipates


                                       10
<PAGE>

      continuing pressure for the lowering of state and federal access charge
      rates, so future reductions in access charge rates are likely.

      Breda's long distance services revenue continues to grow because of the
      increase in its customer base for those services. Breda believes that long
      distance services should continue to be a growth area for Breda in 2003 as
      Breda continues to market this service as both a stand-alone service and
      as part of a package with other services, such as Internet. The
      three-month period ended March 31, 2003 reflected a 6.7% increase in long
      distance services revenues when compared to the three-month period ended
      March 31, 2002. The increase is a direct reflection of the 41.2% increase
      in Breda's long distance customer base.

      Breda expanded its cellular retail location in Carroll, Iowa by taking
      over the management of a U.S. Cellular kiosk located in the Walmart store
      in Carroll, Iowa, on August 1, 2002. The $224,902, or 133.1%, increase in
      cellular services revenue for the three-month period ended March 31, 2003,
      when compared to the three-month period ended March 31, 2002, reflects the
      increased sales generated through Breda's Carroll, Iowa location and the
      increased sales generated through the efforts of outside sales staff.

      Miscellaneous revenue increased $61,733, or 135.0%, for the three-month
      period ended March 31, 2003, when compared to the three-month period ended
      March 31, 2002. Two unusual items made up this increase for the
      three-month period ended March 31, 2003. The first item was the
      performance of fiber installation contractual work for an outside
      corporation, which generated $50,000 in miscellaneous revenue, before
      materials, equipment and labor costs. The second item was the receipt of
      approximately $15,657 in access charges, which had been previously written
      off as uncollectible because of Chapter ll bankruptcy filings by WorldCom
      on July 21, 2001.

      Broadcast Services ($5,724)

      Broadcast services revenue decreased $5,724, or 2.3%, for the three-month
      period ended March 31, 2003, when compared to the three-month period ended
      March 31, 2002. Breda's subsidiary, Tele-Services, Ltd., continues to face
      increasing competition from satellite providers that can now include local
      channels in their package offerings. Tele-Services experienced a 3.6%
      decrease in its customer base when comparing the three-month period ended
      March 31, 2003, to the three-month period ended March 31, 2002. Another
      factor faced by Tele-Services is the declining population base in the
      small rural communities served by Tele-Services, which adversely affects
      Tele-Services' current and prospective customer base.

      Internet Services ($20,833)

      Internet services revenue decreased $20,833, or 11.4%, for the three-month
      period ended March 31, 2003, when compared to the three-month period ended
      March 31, 2002. The decrease is directly attributable to the decrease in
      BTC, Inc.'s Internet service customer base, which decrease is the result
      of the intense competition by multiple suppliers in the Carroll, Iowa,
      market area. Breda began


                                       11
<PAGE>

      bundling Internet services with long distance services and lowered its
      pricing of the Internet services in 2001 in response to competitive
      pressures. Breda has continued those programs in 2002 and 2003. The
      programs have, however, resulted in reduced Internet service revenues in
      both 2002 and 2003 given the lower pricing by Breda for Internet services
      under those programs.

      Operating Expenses

      There was a increase in total operating expenses of $112,376, or 8.6%, for
      the three-month period ended March 31, 2003, when compared to the
      three-month period ended March 31, 2002. The components making up
      operating expenses are as follows: cost of services; depreciation and
      amortization; and selling, general and administration expenses.

      Cost of services increased $122,253, or 22.6%, for the three-month period
      ended March 31, 2003, when compared to the three-month period ended March
      31, 2002. Most of the increase was caused by increased programming costs
      of $6,000, increased Internet provision costs of $22,232, and increased
      cellular services costs of $118,793. There was also a refund of
      approximately $25,000 in co-location fees, which reduced cost of services
      expense. As noted previously, cellular revenue increased $224,902, or
      133.1%, for the three-month period ended March 31, 2003, when compared to
      the three-month period ended March 31, 2002. Cellular service costs
      increased 99.9%, however, as part of providing those increased services
      during the three-month period ended March 31, 2003.

      Depreciation and amortization expense increased $8,741, or 3.5%, for the
      three-month period ended March 31, 2003, when compared to the three-month
      period ended March 31, 2002. Most of the $8,741 increase in depreciation
      and amortization expense for the three-month period ended March 31, 2003
      is attributable to new equipment, buildings, and capital items being
      depreciated, and which were necessary because of the increases in the
      telephone, cable TV and Internet operations.

      Selling, general and administration expenses decreased $18,618, or 3.6%,
      for the three-month period ended March 31, 2003, when compared to the same
      three month period in 2002. The decrease was the result of a reduction in
      labor related to telephone customer service work and more efforts focused
      on the heavier volume customer service areas of cellular, long distance,
      and Internet services.

      Operating Income

      The net result of the operating revenue and operating expenses was an
      increase of $139,236, or 103.8%, in operating income for the three-month
      period ended March 31, 2003, when compared to the same three-month period
      in 2002.


                                       12
<PAGE>

      Other Income (Expense)

      Other income (expense) decreased $21,377, or 6.5%, during the three-month
      period ended March 31, 2003, when compared to the same three-month period
      in 2002. The decrease was mainly attributable to two items. The first item
      is interest and dividend income, which decreased $8,318, or 12.8%, when
      comparing the three month period ended March 31, 2003 to the three month
      period ended March 31, 2002. The decrease in interest and dividend income
      was mainly due to lower interest income rates available on investments
      during the three-month period ended March 31, 2003, as compared to the
      rates available during the three-month period ended March 31, 2002. The
      second item is income from equity investments, which decreased $10,686, or
      3.6%, during the three-month period ended March 31, 2003, when compared to
      the same three-month period in 2002. The income from equity investments
      reported on Breda's financial statements is Breda's pro-rata share of the
      net income or net loss of each equity investment, based on Breda's
      percentage of ownership in each equity investment. The decrease in equity
      investments reported on Breda's income statement for the three-month
      period ended March 31, 2003 is a reflection of the net increases and
      decreases in the net operating income of these investments.

      Income Before Income Taxes

      Income before income taxes increased $117,859, or 25.5%, for the
      three-month period ended March 31, 2003, when compared to the three-month
      period ended March 31, 2002. The $117,859 increase was the result of the
      $139,236 increase in operating income and the $21,377 decrease in other
      income (expense).

      Net Income

      Income taxes increased $57,716, or 35.1%, for the three-month period ended
      March 31, 2003, when compared to the same three month period in 2002. The
      increase is a direct reflection of the increased income generated in the
      three-month period ended March 31, 2003. The effective tax rate in 2003
      was 38.3%, versus 35.6% in 2002. The effective tax rates differ from the
      U.S. statutory rate primarily due to state income taxes, and the
      proportion of investments with state tax exemptions.

      The cumulative effect of an accounting change, net of tax, of $70,768
      during the three-month period ended March 31, 2002, reflects an impairment
      of goodwill, for which there was no corresponding entry during the
      three-month period ended March 31, 2003. The Financial Accounting
      Standards Board issued Financial Accounting Statement No. 142 in August
      2001 relating to the treatment of goodwill, and those new accounting
      principles were incorporated into Breda's financial statement beginning
      January 1, 2002. Under those accounting principles, Breda is no longer
      able to expense over a fifteen-year period the portion of the Westside
      purchase price which had been allocated to goodwill. The goodwill is now
      reviewed for impairment, that is, written down and expensed


                                       13
<PAGE>

      against earnings, only in the periods in which the recorded value of
      goodwill is more than its fair value. Financial Accounting Statement No.
      142 requires that Breda recognize an impairment loss when the carrying
      amount of goodwill is greater than its implied fair value. These tests
      have been applied to the goodwill and intangible assets of Breda and its
      subsidiaries, and the net-of-tax, impairment expense at January 1, 2002,
      was Breda's estimate of the expense to offset earnings for the carrying
      amount of the Westside purchase goodwill attributable to broadcast
      services which was in excess of the fair value of that asset based on
      discounted cash flow valuation upon implementation of SFAS 142.

      Net income increased $130,911, or 57.8%, for the three-month period ended
      March 31, 2003, when compared to the same three month period in 2002.

      Liquidity and Capital Resources at Twelve-months ended December 31, 2002

      Cash Flows

      Cash flows from operations continue to be a steady source of funds for
      Breda. Cash provided from operations was $1,650,381 in 2002. Cash flows
      from operations in 2002 were primarily attributable to a positive net
      income of $1,218,421, plus the addition of non-cash expenses of $1,070,569
      from depreciation and amortization, which were then offset by $721,247 of
      non-cash, equity income in unconsolidated affiliates.

      Cash used in investing activities was $1,623,797 in 2002, and capital
      expenditures relating to ongoing business were $754,895 in 2002. A new
      corporate office building was constructed in 2002 at a cost, including
      furnishings and fixtures, of $480,000. Capital used in investing
      activities in 2002 included the additional $248,273 investment in Alpine
      Communications L.C., the $160,000 issuance of a note to the purchaser of
      the former corporate office building sold on contract on October 1, 2001,
      and the purchase of investments with excess cash during the normal course
      of operations.

      Cash used in financing activities was $791,265 in 2002. Breda used cash in
      2002 to repay $126,365 of borrowings from the Rural Telephone Finance
      Cooperative, to redeem common stock for $560,686, and to pay dividends of
      $104,214. Breda funds the redemption of its stock from cash flows from
      operations. Breda redeemed 2,025 shares during 2002, for an aggregate
      amount of $560,686.

      Working Capital

      Working capital was $1,948,514 as of December 31, 2002, compared to
      working capital of $2,664,323 as of December 31, 2001. The ratio of
      current assets to current liabilities was 3.6 to 1.0 as of December 31,
      2002, as compared to 5.3 to 1.0 as of December 31, 2001.

      Breda had a $601,941 decrease in current assets during the twelve-month
      period ended December 31, 2002, when compared to the twelve-months ended


                                       14
<PAGE>

      December 31, 2001. The decrease in current assets was mainly attributable
      to a $941,791 decrease in cash and temporary investments and a $299,289
      increase in accounts receivable, resulting in a corresponding increase in
      long-term investments. Customer accounts receivable as of December 31,
      2002 were comparable to customer accounts receivable as of December 31,
      2001. The $299,289 increase in accounts receivable was mainly attributable
      to National Exchange Carrier Association pooling receivables, unpaid
      access charges due from slow paying carriers, estimated post bankruptcy
      payments from Global Crossing and WorldCom, and unpaid access payments
      from Qwest for October, November and December 2002, while Qwest was making
      an in-house billing software conversion. The Qwest software conversion
      involved billing functions being reviewed and processed at new locations,
      so carrier invoices sent to the prior billing locations were not processed
      until the local telephone companies resubmitted their invoices to the new
      processing center. The Qwest receivables were paid during the three-month
      period ended March 31, 2003.

      During September 2001, Tele-Services entered into a contract with Toyne,
      Inc. to sell its corporate building for $200,000. Tele-Services received a
      cash deposit of $20,000 at the time of the contract, and another $20,000
      at the time of possession on October 1, 2002. $140,000 of the remaining
      $160,000 on this contract is shown in long-term note receivables and
      $20,000 is included in short-term note receivables. The remaining contract
      amount of $160,000 was, however, paid in full on February 14, 2003.

      Current liabilities increased $113,868 as of the end of the twelve-month
      period ended December 31, 2002, when compared to the end of the same
      period in 2001. Accounts payable and accruals increased $62,869. The
      increase was mainly the result of a 24-month over earnings National
      Exchange Carrier Association accrual of approximately $82,200, and a
      $35,000 co-location invoice from Qwest which was received at year-end for
      work performed prior to year-end.

      Common stock had a net increase of $203,550 during the twelve-month period
      ended December 31, 2002, when compared to the twelve months ended December
      31, 2001. The increase resulted primarily from two items. One item was the
      $22 per share increase in outstanding shares value on May 21, 2002, and
      the other was a decrease in the number of outstanding shares through the
      redemption of 2,025 share of common stock by Breda during the twelve-month
      period ended December 31, 2002. The increase in retained earnings during
      the twelve-month period ended December 31, 2002, when compared to the
      twelve months ended December 31, 2001, is the net effect of the stated
      value stock adjustment of $764,236, the dividends paid in 2002 of
      $104,214, and the year-to-date net income as of December 31, 2002.


                                       15
<PAGE>

      Liquidity and Capital Resources at Three-months ended March 31, 2003

      Cash Flows

      Cash provided from operations for the three-month periods ended March 31,
      2003, and March 31, 2002, was, respectively, $556,478 and $524,069. The
      cash flows from operations for the three-month period ended March 31, 2003
      were primarily attributable to a positive net income of $357,427, plus the
      addition of non-cash expenses such as depreciation, amortization, deferred
      income taxes, note receivable discount, and amortization of investment tax
      credits totaling $259,236, which were then offset by $287,997 of non-cash,
      equity income in unconsolidated affiliates. The positive changes in assets
      and liabilities of $227,812 were also added to net income. The cash flows
      from operations for the three-month period ended March 31, 2002 were
      primarily attributable to a positive net income of $226,516, plus the
      addition of non-cash expenses of $251,726 from depreciation and
      amortization, the addition of $119,945 from the cumulative effect of an
      accounting change, and the net effect of a decrease in operating assets
      and an increase in operating liabilities of $253,869, which were then
      offset by $281,315 of non-cash equity income in unconsolidated affiliates.

      Cash used in investing activities was $202,909 for the three-month period
      ended March 31, 2003, and $606,821 for the three-month period ended March
      31, 2002. Capital expenditures relating to ongoing business were $409,792
      for the three-month period ended March 31, 2003, and $187,790 for the
      three-month period ended March 31, 2002. A new corporate office building
      was constructed in 2002 at a cost, including furnishings and fixtures, of
      $480,000, but most of those expenditures had not yet occurred during the
      three-month period ended March 31, 2002. As noted previously, Breda
      received $160,000 in February 2003, as an early payoff of a building
      contract note receivable. Breda expects capital expenditures in 2003 to be
      at similar levels to those made in 2002. Capital used in investing
      activities in 2002 included the additional $248,273 investment in Alpine
      Communications L.C.

      Cash used in financing activities was $85,555 for the three-month period
      ended March 31, 2003, and $93,766 for the three-month period ended March
      31, 2002. During the three-month period ended March 31, 2003, cash was
      used to repay $32,915 of borrowings from the RTFC, and to redeem common
      stock for $52,640. During the three-month period ended March 31, 2002,
      cash was used to repay $30,814 of long-term debt, and to redeem common
      stock for $62,952. Breda funds the redemption of its stock from cash flows
      from operations.

      Working Capital

      Working capital was $1,690,456 as of March 31, 2003, compared to working
      capital of $1,948,514 as of December 31, 2002. The ratio of current assets
      to current liabilities was 2.8 to 1.0 as of March 31, 2003, and 3.6 to 1.0
      as of December 31, 2002.


                                       16
<PAGE>

      Breda had a $32,028 decrease in current assets during the three-month
      period ended March 31, 2003, when compared to the year ended December 31,
      2002. The decrease in current assets was mainly attributable to a $54,434
      increase in cash and temporary investments and a $131,662 decrease in
      accounts receivable. There was a corresponding $173,016 increase in
      long-term investments. Customer accounts receivable as of March 31, 2003
      were comparable to customer accounts receivable as of December 31, 2002.
      The $131,662 decrease in accounts receivable was mainly attributable to
      the partial receipt of NECA pooling receivables, the receipt of some of
      the unpaid access charges due from slow paying carriers, and receipt of
      access payments from Qwest for October, November and December of 2002.

      Noncurrent assets, which mainly consist of longer-term investments,
      increased $282,600 during the three-month period ended March 31, 2003,
      when compared to the year ended December 31, 2002. On May 2, 2001, Prairie
      Telephone entered into a contractual agreement to advance $500,000 to
      Desktop Media, L.L.C. This note is shown net of unamortized discounts of
      $27,302 and $31,208 at, respectively, March 31, 2003 and December 31,
      2002. $340,698 is included in long-term note receivables, and $132,000 is
      included in short-term note receivables as of March 31, 2003. Investments
      in unconsolidated affiliates at equity increased $287,997 for the
      three-month period ended March 31, 2003, when compared to the year ended
      December 31, 2002. This increase represents Breda's pro rata share of the
      net income or net loss of each equity investment, based on Breda's
      percentage of ownership in each equity investment during the three-month
      period ended March 31, 2003.

      During September 2001, Tele-Services entered into a five-year contract
      with Toyne, Inc. to sell its corporate building for $200,000.
      Tele-Services received a cash payment on October 1, 2002, and the
      remaining balance of $160,000 was shown in long-term and in short-term
      note receivables on Breda's balance sheet as of December 31, 2002. As
      noted previously, the remaining contract amount of $160,000 was paid in
      full on February 14, 2003.

      Current liabilities increased $226,030 for the three-month period ended
      March 31, 2003, when compared to the year ended December 31, 2002.
      Accounts payable decreased $24,663. A $3.00 per share dividend was
      declared by Breda's Board of Directors to shareholders of record on March
      10, 2003, and payable on April 1, 2003. This is recorded as a $98,436
      dividend payable for the three-month period ended March 31, 2003. Accrued
      taxes also increased $178,164 for the three-month period ended March 31,
      2003, when compared to the year ended December 31, 2002.

      Common stock had a net decrease of $52,640 during the three-month period
      ended March 31, 2003, when compared to the year ended December 31, 2002.
      The decrease resulted from the decrease in the number of outstanding
      shares through the redemption of 188 shares of common stock at a
      redemption price of $280 per share. The increase in retained earnings
      during the three-month period


                                       17
<PAGE>

      ended March 31, 2003, when compared to the year ended December 31, 2002,
      is the net effect of the $98,436 in dividends declared on March 10, 2003,
      and paid on April 1, 2003, and the year-to-date net income as of March 31,
      2003.

      Breda anticipates that Breda's operational, investing and financing
      activities during the remainder of 2003 will be similar to 2002, and will
      be funded internally through operations and temporary investments.

      Other Activities

      Breda received notification from the FBI on April 15, 2003, that the FBI
      would grant Breda, Prairie Telephone and Westside Independent an extension
      until June 30, 2004 for certain of their deployment schedules under the
      Communications Assistance For Law Enforcement Act. The FCC decides whether
      or not to grant any such extension, but Breda contemplates that the FCC
      will approve of the FBI's determination.

      The Federal Communications Commission's October 11, 2001 order on the
      Multi-Association Group plan regarding access charge rate reform and
      deregulation for non-price cap, incumbent local exchange carriers became
      effective for Breda, Prairie Telephone, and Westside Independent on July
      1, 2002. Breda continues to believe that the Federal Communications
      Commission's order on the plan will not have any materially adverse
      effects on Breda's or its subsidiaries' revenues in 2003.

      A primary source of Breda's consolidated revenue is generated from
      Tele-Services' cable business. Tele-Services' operating revenues arise
      primarily from monthly fees for basic and premium cable services provided
      to its cable subscribers. Tele-Services' main competition is from
      satellite dish providers. The FCC now allows satellite dish providers to
      provide local channels, which has had an adverse effect on Tele-Services,
      given that its ability to provide local channels was, in the past, one
      reason subscribers might choose Tele-Services' cable services over a
      satellite dish. Other rulings and decisions by the FCC are possible, and
      may provide satellite dish providers, or other providers as changes in the
      telecommunications and cable industry occur, with equal or greater
      advantages than Tele-Services can offer to its subscribers, which could
      obviously have an adverse effect on Tele-Services' business. Changes in
      the telecommunications and cable industry are continually occurring, and
      technological advances may provide Tele-Services subscribers with other
      options. For example, Iowa Network Services is offering cable services in
      Iowa over existing telephone lines, and it is estimated that up to 70
      independent telephone companies in mostly rural Iowa will be able to offer
      cable television programming over their telephone lines by 2005. This
      option, and others which might arise through other changes or advancements
      in technology, could have material adverse effects on Tele-Services in the
      future. Tele-Services is also faced with a declining population base in
      its service areas, which results in a lower potential customer base for
      Tele-Services, and with the need to upgrade its plant,


                                       18
<PAGE>

      equipment and cables in order to add more channel lineups so that it can
      stay competitive and continue to be able to obtain programming licenses.

      Tele-Services is working with an engineering firm to look at and work on
      consolidating its head-end equipment with the goal being that the
      equipment will then be able to serve two or more communities, instead of
      just one community, as is currently the case, resulting in lower
      maintenance costs for that equipment. Tele-Services is also, however,
      evaluating the option of upgrading some of its cable TV systems and
      installing additional equipment and electronics to be able to provide more
      channel line-up options to its subscribers and to also possibly offer
      Internet access services over a cable modem. The cost of upgrades in 2003,
      and of any continuing or further head-end equipment consolidation, is
      estimated to be less than $300,000.

      Breda has determined to expand its core business of providing telephone
      services into the Carroll, Iowa market area through BTC, Inc. BTC, Inc. is
      presently offering Internet access services in the Carroll, Iowa market
      area, but BTC, Inc. was incorporated in 1997 primarily to explore the
      possibility of becoming a competitive local exchange carrier in some Iowa
      communities which are not served by Breda, Prairie Telephone or Westside
      Independent. A provider must receive a Certificate of Public Convenience
      and Necessity from the Iowa Utilities Board ("IUB") before it can provide
      landline, local telephone service in Iowa. In addition to the certificate
      requirement, a provider cannot provide local service until it has received
      IUB approval for its tariffs and for maps and other documentation showing
      the provider's proposed service territory. Although the IUB's rules do not
      require interconnection agreements with other local service providers in
      the service territory, an interconnection agreement is usually necessary
      in order to provide the services the customers already have. BTC, Inc. has
      finalized an interconnection agreement with Qwest.

      On July 17, 1997, BTC, Inc. filed an application with the IUB for issuance
      of a Certificate of Public Convenience and Necessity. The IUB issued an
      Order Granting Application on August 26, 1997, to BTC, Inc. wherein it was
      noted that the IUB found that BTC, Inc. has demonstrated that it has the
      necessary technical, financial, and managerial ability to provide local
      exchange service and that its application did serve the public interest.
      In the order, the IUB stated that BTC, Inc. would be issued a certificate
      when BTC, Inc. obtained an approved tariff setting forth the prices,
      terms, and conditions of local exchange in Iowa. The IUB also approved the
      maps filed by BTC, Inc. on July 17, 1997.

      On January 23, 2003, BTC, Inc. filed an amendment to its approved
      application reflecting the fact that it will be doing business as "Western
      Iowa Networks". BTC, Inc. also filed a proposed local exchange tariff on
      January 23, 2003, and revisions to the tariff were filed on February 23,
      2003. On March 7, 2003, the IUB issued an order approving the amended
      application, approving the proposed tariff and its revisions, and issuing
      a certificate of public convenience and necessity. Breda anticipates that
      the implementation of this business plan will occur in June 2003.


                                       19
<PAGE>

      Breda, Prairie Telephone, Westside Independent and BTC, Inc. continue to
      face ever-increasing competition in providing dial-up and high-speed
      Internet access. For example, Breda has been experiencing price-point
      competition for Internet services from Iowa Telecom in three communities
      since the late fourth quarter 2000. Breda had been the sole provider of
      Internet services in those communities until that time. Iowa Telecom
      purchased the telephone exchanges for those communities in 1999 and began
      operating them on June 1, 2000. In late 2000, Iowa Telecom expanded the
      services offered in those communities to include Internet services and at
      a lower price than is offered by Breda. As a result, Breda has lost
      Internet customers in the three communities. BTC, Inc. is experiencing
      intense pricing and free services competition in providing Internet access
      in its Carroll, Iowa market. There are at least five competitors in this
      relatively small market area, and BTC, Inc. has experienced a 17.0%
      decline in its dial-up customer base in this market since March 31, 2002.

      Breda is pursuing additional marketing approaches to attempt to retain and
      increase its internet customer base, but Breda believes there will be
      continuing competitive pressures to lower dial-up rates and to provide
      higher speed Internet access.

      One step that Breda had taken to lower Breda's underlying Internet costs
      was through Prairie Telephone's acquisition in October of 2001 of a 10%
      ownership interest in Desktop Media, L.L.C. Desktop Media, L.L.C. provided
      internet service provider support services to Prairie Telephone from
      approximately November 1, 2001 through March 4, 2003, at which time Breda
      moved its end user help-desk technical support to eCi Technical Support
      Solutions. Prairie Telephone has, however, retained its 10% ownership
      interest in Desktop Media, L.L.C. Breda's desire to further lower its
      underlying Internet costs in order to compete at a lower price point for
      Internet services was a critical factor in the move to eCi. Two other
      factors were Breda's desire to offer its Internet customers 24-hour a day,
      7-day a week end user help-desk technical support, and to be able to brand
      these services under its own name for customer service continuity. Breda
      also reduced its pricing of Internet services and bundled Internet
      services with its long distance services in August, 2001 in order to
      attempt to compete at a lower price point for Internet services. Breda's
      reduction of its pricing has led to a decrease in Breda's overall revenue
      from Internet service fees. In order to attempt to provide a more
      competitively priced, high speed Internet service, BTC, Inc. completed the
      process of installing equipment in the Qwest central office in July of
      2002 that allows BTC, Inc. to use a product that Qwest offers called line
      sharing. Breda is also looking at other options to provide Internet
      service at lower costs through BTC, Inc.'s contemplated competitive local
      exchange carrier operations, which Breda anticipates will commence during
      the second quarter of 2003.

      Although Breda expects the overall potential customer base for Internet
      access to continue to increase, it is becoming more difficult to predict
      what increases, if any, Breda or its subsidiaries might experience in
      their Internet customer base


                                       20
<PAGE>

      given the increasingly competitive pressures in this area. It is also
      possible that Breda and its subsidiaries might continue to experience
      declines in their Internet customer base. Also, as noted above,
      competitive pressures regarding pricing may lead to little or no growth,
      or even declines, in Internet service revenues, even if Breda and its
      subsidiaries are successful in increasing their Internet customer base.

      BTC, Inc. was the successful bidder at an auction on December 23, 2002 for
      a commercial building located in Carroll, Iowa. The closing date for the
      purchase was January 20, 2003. The building has approximately 4,450 sq.
      ft., which is over two times the space of the present location in Carroll.
      The new building will allow BTC, Inc. and Breda to consolidate their
      present operations in the Carroll, Iowa market area, and afford Breda the
      opportunity to expand its service offerings from the Carroll location. It
      is anticipated that the transfer of the Carroll, Iowa operations from its
      present location to the new location will occur during third quarter 2003.

      Breda continues to anticipate that it may need to enter into a new agency
      agreement with U.S. Cellular some time in 2003. Breda continues to be
      hopeful, based on its past negotiations with U.S. Cellular, that any new
      agreement will, at worst, have a neutral impact on Breda's cellular
      commissions revenue.

      Breda, Prairie Telephone and Westside Independent continue to face
      competition in the sale and lease of telephone, cellular and related
      equipment because there are numerous competitors who sell and lease that
      equipment.

      The cellular ventures in which Breda, Prairie Telephone and Westside
      Independent have invested continue to face ever increasing and changing
      competition in providing cellular services and equipment from the various
      competitors offering cellular and personal communication services.

      Breda's primary ongoing capital investment activity will currently
      continue to be additions to property, plant and equipment. Breda's capital
      requirements to start up BTC, Inc.'s competitive local exchange carrier
      project in Carroll, Iowa is estimated to be less than $300,000 and will be
      funded internally. Breda will incur renovation costs for the building BTC,
      Inc. purchased in Carroll, Iowa, but those costs are not expected to be
      material. Capital expenditures for 2002 were $754,895, and are currently
      expected to be approximately $877,350 in 2003.

      Breda's current employment agreements with Robert Boeckman and Jane Morlok
      each terminated by their terms on April 1, 2003. Breda is, however,
      continuing the employment of both Mr. Boeckman and Ms. Morlok under their
      existing employment agreements while it is negotiating new employment
      agreements with them. Breda does not believe there will be any break in
      the employment of either Mr. Boeckman or Ms. Morlok.

      Breda believes that its present cash position along with its anticipated
      normal operating revenues will generate sufficient working capital for the
      Breda and its


                                       21
<PAGE>

      subsidiaries to meet their current operating needs and maintain historical
      fixed asset addition levels.

      Cautionary Statement on Forward Looking Statements

      This item and other items in this quarterly report are or contain forward
      looking statements that involve and are subject to various risks,
      uncertainties and assumptions. Forward looking statements include, but are
      not limited to, statements with respect to financial results and
      condition, anticipated future trends in revenues and net income,
      projections concerning operations and cash flow, business and growth and
      acquisition opportunities and strategies, management's plans and
      intentions for the future, competitive position, and other similar
      forecasts, projections and statements of expectation. Words such as
      "expects," "estimates," "plans," "will," "anticipates," "contemplates,"
      "forecasts," "predicts," "projects," "prospects," "possible," "hopeful,"
      "intends," "believes," "seeks," "should," "thinks," "objectives" and other
      similar expressions or variations thereof are intended to identify forward
      looking statements. Forward looking statements are made based on numerous
      and varied estimates, projections, views, beliefs and assumptions made or
      existing at the time of such statements and are not guarantees of future
      results or performance. Breda disclaims any obligation to update or revise
      any forward looking statements based on the occurrence of future events,
      the receipt of new information, or otherwise.

      Actual future performance, outcomes and results may differ materially from
      those expressed in forward looking statements as a result of numerous and
      varied factors, risks and uncertainties, some that are known and some that
      are not, and nearly all of which are beyond the control of Breda and its
      management. It is not possible to predict or identify all such factors,
      risks and uncertainties, but some of the factors, risks and uncertainties
      affecting forward looking statements include, but are not limited to, the
      following:

                  o     adverse changes by the Federal Communications Commission
                        or other regulatory authorities to the access charge
                        rates that can be charged by Breda and its subsidiaries
                        to long distance carriers or to the rules and other
                        requirements regarding access charge rates or access
                        charges, whether instituted by the applicable regulatory
                        authorities or at the request or by reason of court or
                        other actions taken by long distance carriers or other
                        interested persons;

                  o     technological advances in the telecommunications, cable
                        and related industries, which are always occurring and
                        at an ever increasing rate, and any one or more of which
                        may replace or otherwise adversely affect in a material
                        way the existing technologies utilized by Breda and its
                        subsidiaries;

                  o     changes in employee relations;


                                       22
<PAGE>

                  o     industry conditions and occurrences, including
                        bankruptcies and insolvencies of long distance carriers
                        (such as Global Crossing and Worldcom), and
                        consolidations in the telecommunications, cable and
                        related industries, which may result in competitors
                        which are larger and better financed and with greater
                        geographic reach, allowing them to compete more
                        effectively;

                  o     economic conditions at the national, regional and local
                        levels, which were highly uncertain at the time of the
                        preparation of this quarterly report;

                  o     political conditions at the international, national,
                        regional and local levels, including threats and/or acts
                        of terrorism or war;

                  o     the general emotions and psychology of the economy, the
                        markets and consumers, which can at times be totally
                        unrelated to actual economic or market conditions or
                        other more tangible factors;

                  o     litigation;

                  o     inaccurate assumptions or predictions by management;

                  o     the ability to enter into and maintain agreements which
                        are necessary to provide services, and on favorable
                        terms;

                  o     ever increasing costs and expenses which are necessary
                        to Breda's and its subsidiaries' businesses but which
                        are outside of Breda's control, such as health and other
                        insurance costs;

                  o     acts or omissions of existing and/or new competitors and
                        other third parties, including offering lower prices or
                        new or substitute products or services and their use of
                        new marketing strategies and approaches or new third
                        parties entering into Breda's or its subsidiaries'
                        marketing or service areas;

                  o     the risks associated with technological requirements,
                        technology substitution and changes and other
                        technological developments;

                  o     changes in or more governmental laws, rules, regulations
                        or policies;

                  o     reductions in or other changes to governmental programs
                        assisting or affecting the telecommunications, cable and
                        related industries, and in particular programs which aid
                        providers of those services to rural areas;

                  o     the availability and cost of financing, and on favorable
                        terms, and the consequences of increased leverage; and


                                       23
<PAGE>

                  o     effects of greater and changing competition, including
                        competition requiring new pricing or marketing
                        strategies or new product offerings and the risk that
                        Breda or its subsidiaries will not be able to respond on
                        a timely or profitable basis to competitive changes and
                        pressures, and the competitive effect of relationships
                        with other carriers causing new pricing for services
                        such as interexchange access charges and wireless access
                        charges.

      This section should also be read in conjunction with the financial
      statements and related notes included in Item 1 of Part I of this
      quarterly report.

Item 3. Controls and Procedures.

      The principal executive officer and principal financial officer of Breda
      have evaluated the effectiveness of the design and operation of Breda's
      disclosure controls and procedures within 90 days of the filing of this
      quarterly report, and they have concluded that the disclosure controls and
      procedures have been effective for the purposes for which they are
      intended.

      There have not been any significant changes in Breda's internal controls
      or in other factors that could significantly affect Breda's internal
      controls subsequent to the date of the evaluation.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

      As of the date of this quarterly report, Breda was not aware of any
      pending legal proceeding to which Breda was a party or to which any of
      Breda's property was subject, other than for any routine litigation, if
      any, that was incidental to its business. As of the date of this quarterly
      report, Breda was not aware that any governmental authority was
      contemplating any proceeding against Breda or any of its property.

Item 2. Changes in Securities.

      No material modifications, limitations or qualifications of the type
      required to be reported under this Item were made to or placed upon the
      terms of Breda's shares of common stock during the period of January 1,
      2003 through March 31, 2003.

      Breda did not issue any shares of its common stock during the period of
      January 1, 2003 through March 31, 2003. As discussed in Item 5 below,
      Breda did redeem some shares of its common stock during the period of
      January 1, 2003 through March 31, 2003.


                                       24
<PAGE>

Item 3. Defaults Upon Senior Securities.

      There was no material default or any material arrearage or delinquency by
      Breda of the type required to be reported under this Item during the
      period of January 1, 2003 through March 31, 2003.

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

      No matters were submitted to a vote of the shareholders of Breda during
      the period of January 1, 2003 through March 31, 2003.

Item 5. Other Information.

      During the period of January 1, 2003 through March 31, 2003, Breda
      redeemed 188 shares of its common stock from 6 shareholders at $280.00 per
      share, for a total amount of $52,640. The $280.00 per share redemption
      price was the per share redemption price that was announced by the board
      of directors at, and which became effective at, the May 21, 2002 annual
      meeting of the shareholders of Breda.

      There were 2 transfers of shares of Breda's common stock during the period
      of January 1, 2003 through March 31, 2003 with respect to which Breda did
      not exercise its right of first refusal to purchase those shares. The
      transfers involved an aggregate of 40 shares of Breda's common stock.

      The board of directors declared a dividend of $3.00 per share on March 10,
      2003, payable to shareholders of record on March 10, 2003. The aggregate
      amount of the dividend was $96,436.

Item 6. Exhibits and Reports on Form 8-K.

      (a)   A list of the exhibits included as part of this quarterly report is
            set forth in the Exhibit Index which immediately precedes such
            exhibits and is incorporated herein by this reference.

      (b)   Breda did not file any reports on Form 8-K during the period of
            January 1, 2003 through March 31, 2003.


                                       25
<PAGE>

                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                      BREDA TELEPHONE CORP.


Date: May 14, 2003.                   By: /s/ Robert Boeckman
                                          --------------------------------------
                                          Robert Boeckman, Chief Operations
                                          Officer and Co-Chief Executive Officer


Date: May 14, 2003.                   By: /s/ Jane Morlok
                                          --------------------------------------
                                          Jane Morlok, Chief Financial Officer
                                          and Co-Chief Executive officer

                                 CERTIFICATIONS

      I, Robert Boeckman, certify that:

      1. I have reviewed this quarterly report on Form 10-QSB of Breda Telephone
Corp.;

      2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            (a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;


                                       26
<PAGE>

            (b) evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the filing
      date of this quarterly report (the "Evaluation Date"); and

            (c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            (a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have identified
      for the registrant's auditors any material weaknesses in internal
      controls; and

            (b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      controls; and

      6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

      Date: May 14, 2003.


                                       /s/ Robert Boeckman
                                       -----------------------------------------
                                       Robert Boeckman, Chief Operations Officer
                                       And Co-Chief Executive Officer

      I, Jane Morlok, certify that:

      1. I have reviewed this quarterly report on Form 10-QSB of Breda Telephone
Corp.;

      2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


                                       27
<PAGE>

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            (a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;

            (b) evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the filing
      date of this quarterly report (the "Evaluation Date"); and

            (c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            (a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have identified
      for the registrant's auditors any material weaknesses in internal
      controls; and

            (b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      controls; and

      6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

      Date: May 14, 2003.


                                       /s/ Jane Morlok
                                       -----------------------------------------
                                       Jane Morlok, Chief Financial Officer
                                       And Co-Chief Executive Officer


                                       28
<PAGE>

                                  EXHIBIT INDEX
                             Exhibits to Form 10-QSB
                        Three Months Ended March 31, 2003
                              BREDA TELEPHONE CORP.

Description of Exhibit                                                      Page
----------------------                                                      ----

2.    Plan of Acquisition, Reorganization,
      Arrangement, Liquidation or Succession

      (a)   Stock Purchase Agreement dated March
            29, 2000, by and among AirTouch Iowa,
            LLC, Central Iowa Cellular, Inc.,
            Prairie Telephone Company, Inc.,
            Panora Telecommunications, Inc.,
            Walnut Creek Communications, Inc.,
            Minburn Telephone Company, and
            Interstate Enterprises, Ltd. (Filed as
            Exhibit 2.1 to Breda's Form 8-K dated
            March 29,2000 and filed April 12,
            2000, and incorporated herein by this
            reference.)

      (b)   Des Moines Tower Proceeds Agreement
            dated as of March 29, 2000, by and
            among AirTouch Communications, Inc.,
            Panora Telecommunications, Inc.,
            Walnut Creek Communications, Inc.,
            Minburn Telephone Company, Interstate
            Enterprises, Ltd. and Prairie
            Telephone Company, Inc., along with
            Exhibits A and B thereto. (Filed as
            Exhibit 2.2 to Breda's Form 8-K dated
            March 29, 2000 and filed April 12,
            2000, and incorporated herein by this
            reference.)

3.    Articles of Incorporation and Bylaws

      (a)   Amended and Restated Articles of
            Incorporation of Breda Telephone Corp.
            (Filed as Exhibit 3.1 to Breda's
            Registration Statement on Form 10-SB,
            and incorporated herein by this
            reference.)

      (b)   Amended and Restated Bylaws of Breda
            Telephone Corp. (Filed as Exhibit 3.2
            to Amendment No. 1 to Breda's
            Registration Statement on Form 10-SB,
            and incorporated herein by this
            reference.)

<PAGE>

10.   Material Contracts

      (a)   Employment Agreement dated April 1,
            2002 between Breda and Robert
            Boeckman. (Filed as Exhibit 10(a) to
            Breda's Form 10-QSB for the quarterly
            period ended June 30, 2002 and filed
            August 14, 2002, and incorporated
            herein by this reference.)

      (b)   Employment Agreement dated April 1,
            2002 between Breda and Jane Morlok.
            (Filed as Exhibit 10(b) to Breda's
            Form 10-QSB for the quarterly period
            ended June 30, 2002 and filed August
            14, 2002, and incorporated herein by
            this reference.)

*99.  Certification of Financial Information

      (a)   Section 1350 Certification of Chief                             E-1
            Operations Officer and Co-Chief
            Executive Officer.

      (b)   Section 1350 Certification of Chief                             E-2
            Financial Officer and Co-Chief
            Executive Officer.

*     Included with this filing.