##### 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 1934For the fiscal year ended:
    December 31, 2005OR[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission File Number: 0-19179
  CT COMMUNICATIONS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  North Carolina

56-1837282(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer Identification
    Number)1000 Progress Place,
    Northeast
    Concord, North Carolina

28025(Address of principal executive
    offices)

(Zip Code)   (704) 722-2500
      Common Stock
 Rights to Purchase Common Stock
  o x
  o x
  x o
  Regulation S-K Form 10-K Form 10-K. x
  Rule 12b-2
  Large
    accelerated filer
    o     Accelerated
    filer  x
    Non-accelerated
    filer  o  Rule 12b-2 o x
      Document of the
    Company

Form 10-K
    Reference Location2006 Annual Meeting Proxy Statement

Part III




---



##### 



CT
    COMMUNICATIONS, INC.
    AND CONSOLIDATED SUBSIDIARIESForm 10-K
    for the Fiscal Year Ended December 31, 2005
    TABLE OF CONTENTS
  PART I Item 1.

Business


2 Item 1A.

Risk Factors


19 Item 1B.

Unresolved Staff
    Comments


24 Item 2.

Properties


25 Item 3.

Legal
    Proceedings


25 Item 4.

Submission of
    Matters to a Vote of Security Holders


25PART II Item 5.

Market for the
    Registrants Common Equity, Related Shareholder Matters and
    Issuer Purchases of Equity Securities


26 Item 6.

Selected Financial
    Data


27 Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


28 Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


47 Item 8.

Financial
    Statements and Supplementary Data


48 Item 9.

Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


48 Item 9A.

Controls and
    Procedures


48 Item 9B.

Other
    Information


51PART III Item 10.

Directors and
    Executive Officers of the Company


51 Item 11.

Executive
    Compensation


51 Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Shareholder Matters


51 Item 13.

Certain
    Relationships and Related Transactions


52 Item 14.

Principal
    Accountant Fees and Services


52PART IV Item 15.

Exhibits and
    Financial Statement Schedules


53 Signatures


54Ex-21.1Ex-23.1Ex-23.2Ex-23.3Ex-23.4Ex-31.1Ex-31.2Ex-32.1




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##### Table of Contents



PART I  Item 1.
    Business  Some of the statements contained in this
    Form 10-K
    discuss future expectations, contain projections of results of
    operations or financial condition or state other forward-looking
    information. These forward-looking statements are
    subject to certain risks, uncertainties and assumptions that
    could cause the actual results to differ materially from those
    reflected in the forward-looking statements. The forward-looking
    information is based on various factors and was derived using
    numerous assumptions. In some cases, these so-called
    forward-looking statements can be identified by the use of words
    such as may, will, should,
    expect, plan, anticipate,
    believe, estimate, predict,
    project, intend or potential
    or the negative of those words and other comparable words. Those
    statements however only reflect the Companys predictions.
    Actual events or results may differ substantially. Important
    factors that could cause actual events or results to be
    materially different from the forward-looking statements include
    those discussed under the heading Risk Factors and
    throughout this
    Form 10-K.
  Form 10-K
  General
    (704) 722-2500).
  small-to-medium-size
     2




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dial-up
      Operations
  ILEC
    Services
      dial-up
       3




---



##### Table of Contents



Regulation.
 4




---



##### Table of Contents



rights-of-way.
  rate-of-return
    computer-to-computer
       5




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##### Table of Contents



270-day
       6




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##### Table of Contents



rate-of-return
        Competition.
  
    growing customer demand for alternative products and services
    including wireless and Internet services,
    technological advances in transmitting voice, data and video
    services such as cable telephony and VoIP services,
    development of fiber optics and digital electronic technology,
    the advent of competitors in the yellow pages market,
    a decline in the level of access charges paid by interexchange
    carriers to local telephone companies to access their local
    networks, and
    legislation and regulations designed to promote competition.   7




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CLEC
    Services
    ,
  face-to-face
       8




---



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Regulation.
          Competition.
 9




---



##### Table of Contents



Greenfield
    Services
  ,
        Regulation.
     10




---



##### Table of Contents



Competition.
  Wireless
    Services
     11




---



##### Table of Contents



Regulation. Form 10-K.
  (E-911)
  Competition.
  Internet
    and Data Services
  dial-up dial-up
     12




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Internet Access Service. dial-up
  
    Dedicated Access.  The Company offers a broad
    line of high-speed dedicated access utilizing frame relay and
    dedicated circuits, which provide business customers with direct
    access to a range of Internet applications. The Company is also
    developing product sets such as Metro Ethernet to take advantage
    of its 10 Gbps Ethernet core network.
    DSL Access.  In late 1999, the Company began to
    offer high-speed Internet access service using DSL technology.
    DSL technology permits high speed digital transmission over the
    existing copper wiring of regular telephone lines. Broadband
    services utilizing DSL are available at download speeds from
    256 Kbps up to 10 Mbps. DSL services are designed for
    residential users and
    small-to-medium
    sized businesses to provide high quality Internet access at
    speeds faster than an integrated services digital network
    (ISDN) and at flat-rate prices that are lower than
    traditional dedicated access charges. The Companys DSL
    lines increased from 13,887 at December 31, 2004 to 19,507
    at December 31, 2005.
    Dial-up
    Access.  The Companys
    dial-up
    services provide access to the Internet through ordinary
    telephone lines at speeds up to 56 Kbps and through digital
    ISDN lines at download speeds up to 64 Kbps.
    Dial-up
    customers declined from 9,041 at December 31, 2004 to 6,522
    at December 31, 2005, as customers continue to demand
    higher speed broadband products.    DS-3
  Regulation.
 13




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Competition.
  
    access and content providers, such as AOL and Microsoft,
    local, regional and national Internet service providers, such as
    EarthLink,
    the Internet services of regional, national and international
    telecommunications companies, such as AT&T, BellSouth and
    Verizon,
    online services offered by direct broadcast satellite
    providers, and
    online services offered by incumbent cable providers, such as
    Time Warner.  Long
    Distance Services
        Investments
  Palmetto MobileNet.
    Wireless One.
 14




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##### Table of Contents



Form 8-K
  held-for-sale
  Other Investments.
      Legislative
    and Regulatory Developments
  Legislative.
  Federal Regulations.
 15




---



##### Table of Contents



and/or
    computer-to-computer and/or
  IP-enabled
 16




---



##### Table of Contents



Form 8-K held-for-sale
  State and Local Regulation. city-by-city county-by-county
  rate-of-return
 17




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##### Table of Contents



Employees
    Available
    Information
  www.ctc.net Form 10-K, Form 10-Q, Form 8-K,
  Executive
    Officers of the Registrant
    Michael R. Coltrane
  Matthew J. Dowd
 18




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James E. Hausman
  Michael R. Nash
  David H. Armistead
  Ronald A. Marino
  Item 1A.
    Risk
    Factors    Form 10-K,
  The
    Company expects to continue to face significant competition in
    the telecommunications industry.
    
    incumbent local exchange carriers,
    competitive local exchange carriers,
    interexchange carriers,
    Internet service providers,
    wireless telecommunications providers,
    cable television companies,
    VoIP providers,
    local and regional system integrators, and
    resellers of telecommunications services and enhanced services
    providers.   19




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The
    Companys success depends in part upon its ability to grow
    and develop its business.
    
    acquire necessary equipment, software, and facilities, and
    integrate them into the Companys systems,
    offer competitive services,
    evaluate markets,
    monitor operations,
    control costs,
    maintain effective quality controls,
    hire, train, and retain key personnel,
    obtain sufficient capital funding to support the Companys
    business plan,
    enhance operating and accounting systems, and
    obtain any required government authorizations.   20




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##### Table of Contents



The
    Company must adapt to rapid technological change.
      The
    Company is subject to a complex and uncertain regulatory
    environment.
      The
    Companys success depends upon its ability to attract and
    retain key personnel.
    The
    Companys acquisitions, joint ventures and strategic
    alliances may not be successful.
    
    difficulties assimilating acquired operations and personnel,
    disruptions of the Companys ongoing businesses,
    diversion of resources and management time, 21




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
    the possibility that uniform management and operating systems
    and procedures may not be maintained,
    increased regulatory burdens,
    new markets in which the Company may have limited or no
    experience and
    possible impairment of relationships with employees or customers.      The
    Company is dependent on interconnection agreements, permits and
    rights-of-way.
  rights-of-way. rights-of-way
  The
    Companys CLEC and Greenfield businesses must secure
    network elements from third parties.
    The
    Company is dependent on its operating support systems.
   22




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##### Table of Contents



The
    Companys long distance services are affected by its
    ability to establish effective termination agreements.
    The
    market price of the Companys Common Stock has been and may
    be volatile.
      
    entrance of new competitors,
    sales by the Companys current shareholders of large
    amounts of its Common Stock,
    new legislation or regulation,
    variations in its revenue, net income and cash flows,
    the difference between its actual results and the results
    expected by investors and analysts,
    announcements of unfavorable financial or operational
    performance for other telecommunications companies,
    announcements of new service offerings, marketing plans or price
    reductions by the Company or its competitors,
    technological innovations, and
    mergers, acquisitions or strategic alliances.    The
    Companys investments in marketable securities and
    unconsolidated companies may not be successful.
     23




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Anti-takeover
    provisions may limit the ability of shareholders to effect a
    change in control of the Company.
    Evolving
    corporate governance and public disclosure regulations may
    result in additional expenses and uncertainty.
    Equipment
    failure and disasters may adversely affect the Companys
    operations.
    The
    Company expects a continued decline in the voice long distance
    industry.
    The
    Company relies on a limited number of key suppliers and vendors
    to operate its business.
   Item 1B.  Unresolved
    Staff Comments   24




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Item 2.
    Properties              Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   25




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##### Table of Contents



PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Shareholder
    Matters and Issuer Purchases of Equity Securities  Market
    Information, Holders and Dividends
      Per ShareDividendHigh


Low


DeclaredYear ended December 31,
    2005First quarter

$
12.36


$
10.05


$
0.070Second quarter


13.44



10.23



0.100Third quarter


13.76



10.67



0.100Fourth quarter


13.02



10.40



0.100Year ended December 31,
    2004First quarter

$
14.25


$
10.73


$
0.065Second quarter


15.05



12.06



0.065Third quarter


15.09



12.87



0.065Fourth quarter


13.90



12.01



0.070       Issuer
    Purchases of Equity Securities
    Total Number of


Maximum Number ofShares Purchased as


Shares that May YetTotal Number


Average Price


Part of Publicly


Be Purchased UnderThree Months Ended

of Shares


Paid


Announced Plans or


the Plans orDecember 31, 2005

Purchased


Per Share


Programs


Programs(1)October 1-October 31, 2005














972,400November 1-November 30, 2005














972,400December 1-December 31, 2005














972,400Total














972,400     (1)
    
    On April 28, 2005, the Board of Directors approved the
    continuation of the Companys existing stock repurchase
    program. Under this program, the Company is authorized, subject
    to certain conditions, to repurchase up to 1,000,000 shares
    of its outstanding Common Stock during the twelve-month period
    from April 28, 2005 to April 28, 2006. Pursuant to
    this authorization, the Company repurchased 27,600 shares
    of Common Stock during the year ended December 31, 2005. 26




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended
    December 31,2005


2004


2003


2002


2001Income Statement
    Data:Operating revenue

$
171,665


$
163,680


$
160,961


$
147,975


$
135,424Operating expense


149,701



140,126



139,636



128,927



121,321Operating income


21,964



23,554



21,325



19,048



14,103Other income (expense)(1)


1,893



594



13,911



3,325



(3,666
)Income taxes


9,308



9,445



13,526



8,808



4,656Income from continuing operations


14,549



14,703



21,710



13,565



5,781Discontinued operations(2)










(424
)


(5,657
)


(5,880
)Net income (loss)


14,549



14,703



21,286



7,908



(99
)Dividends on preferred stock


10



20



20



20



25Earnings (loss) for common stock

$
14,539


$
14,683


$
21,266


$
7,888


$
(124
)Basic weighted average common
    shares outstanding


18,785



18,867



18,747



18,710



18,816Diluted weighted average common
    shares outstanding


18,947



19,007



18,808



18,746



18,860Per share data:Basic earnings (loss) per share

$
0.77


$
0.78


$
1.13


$
0.42


$
(0.01
)Diluted earnings (loss) per share


0.77



0.77



1.13



0.42



(0.01
)Dividends per share


0.370



0.265



0.260



0.260



0.260Balance Sheet Data:Book value per share

$
10.35


$
9.97


$
9.45


$
8.53


$
8.67Total assets


321,420



329,864



322,685



337,868



308,474Long-term debt (excluding current
    maturities)


40,000



65,000



80,000



127,697



100,000Redeemable preferred stock
    (excluding current maturities)


















88Shareholders equity


195,880



188,228



177,394



159,341



162,210     (1)
    
    Other income in 2003 includes a $15.2 million gain related
    to the sale of the Companys investment in ITC Holding
    Company. Other expense in 2001 includes $13.4 million in
    impairment charges related to the write-down of Maxcom
    Telecomunicaciones, S.A. de C.V.(2)
    
    See Note 2  Discontinued Operations
    included in Item 8. 27




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion of the Companys financial
    condition and results of operations should be read in
    conjunction with the consolidated financial statements and
    related notes and the selected financial data included elsewhere
    in this report.
  Introduction
                 28




---



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Industry
    and Operating Trends
          dial-up dial-up
       29




---



##### Table of Contents



IP-enabled
  rate-of-return
       30




---



##### Table of Contents



Form 8-K
  held-for-sale
  Critical
    Accounting Policies and Estimates
    Revenue
    recognition
   31




---



##### Table of Contents



EITF 00-21, No. 00-21,
  Goodwill
    and intangible assets
  held-for-sale) held-for-sale
  Long-lived
    assets
     32




---



##### Table of Contents



Asset
    retirement obligations
    Investments
  other-than-temporary,
  Accounting
    for income taxes
     33




---



##### Table of Contents



Pension
    and post-retirement benefits
        Allowance
    for doubtful accounts
    Results
    of Operations
  and/or
   34




---



##### Table of Contents



Consolidated
    Operating Results (in
    thousands, except lines and subscribers)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$
171,665


$
163,680


$
160,961


$
7,985



4.9
%

$
2,719



1.7
%Operating expense


149,701



140,126



139,636



9,575



6.8
%


490



0.4
%Operating income


21,964



23,554



21,325



(1,590
)


(6.8
)%


2,229



10.5
%Other income


1,893



594



13,911



1,299



218.7
%


(13,317
)


(95.7
)%Income taxes


9,308



9,445



13,526



(137
)


(1.5
)%


(4,081
)


(30.2
)%Income from continuing operations


14,549



14,703



21,710



(154
)


(1.0
)%


(7,007
)


(32.3
)%Discontinued operations










(424
)










424



Net income

$
14,549


$
14,703


$
21,286


$
(154
)


(1.0
)%

$
(6,583
)


(30.9
)%Depreciation expense

$
31,883


$
30,770


$
28,866


$
1,113



3.6
%

$
1,904



6.6
%Capital expenditures


27,094



27,197



23,762



(103
)


(0.4
)%


3,435



14.5
%Total assets


321,420



329,864



322,685



(8,444
)


(2.6
)%


7,179



2.2
%Wired access lines


157,592



157,609



155,123



(17
)






2,486



1.6
%Wireless subscribers


46,138



43,213



38,458



2,925



6.8
%


4,755



12.4
%Internet and data customers


26,722



23,534



21,566



3,188



13.5
%


1,968



9.1
%   2005
    compared to 2004
       35




---



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2004
    compared to 2003
               36




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##### Table of Contents



ILEC (in
    thousands, except lines)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$
94,561


$
93,016


$
96,079


$
1,545



1.7
%

$
(3,063
)


(3.2
)%Operating expense


71,039



65,856



65,830



5,183



7.9
%


26



Operating income

$
23,522


$
27,160


$
30,249


$
(3,638
)


(13.4
)%

$
(3,089
)


(10.2
)%Depreciation expense

$
20,429


$
18,925


$
19,157


$
1,504



7.9
%

$
(232
)


(1.2
)%Capital expenditures


14,943



16,204



12,294



(1,261
)


(7.8
)%


3,910



31.8
%Total assets


163,947



175,824



172,475



(11,877
)


(6.8
)%


3,349



1.9
%Business access lines


28,263



28,710



29,137



(447
)


(1.6
)%


(427
)


(1.5
)%Residential access lines


81,854



84,206



86,401



(2,352
)


(2.8
)%


(2,195
)


(2.5
)%Total access lines


110,117



112,916



115,538



(2,799
)


(2.5
)%


(2,622
)


(2.3
)%   2005
    compared to 2004
  dial-up
       37




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##### Table of Contents



2004
    compared to 2003
  dial-up
       38




---



##### Table of Contents



CLEC (in
    thousands, except lines)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$
19,272


$
19,123


$
19,681


$
149



0.8
%

$
(558
)


(2.8
)%Operating expense


20,538



19,969



21,354



569



2.8
%


(1,385
)


(6.5
)%Operating loss

$
(1,266
)

$
(846
)

$
(1,673
)

$
(420
)


(49.6
)%

$
827



49.4
%Depreciation expense

$
2,546


$
2,309


$
2,550


$
237



10.3
%

$
(241
)


(9.5
)%Capital expenditures


1,499



784



1,004



715



91.2
%


(220
)


(21.9
)%Total assets


13,606



14,570



12,776



(964
)


(6.6
)%


1,794



14.0
%Access lines


32,546



31,718



29,490



828



2.6
%


2,228



7.6
%Long distance lines


24,937



23,723



20,916



1,214



5.1
%


2,807



13.4
%   2005
    compared to 2004
           39




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##### Table of Contents



2004
    compared to 2003
        Greenfield (in
    thousands, except lines and projects)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$
9,636


$
8,108


$
6,223


$
1,528



18.8
%

$
1,885



30.3
%Operating expense


12,417



12,004



10,919



413



3.4
%


1,085



9.9
%Operating loss

$
(2,781
)

$
(3,896
)

$
(4,696
)

$
1,115



28.6
%

$
800



17.0
%Depreciation expense

$
3,427


$
3,274


$
2,515


$
153



4.7
%

$
759



30.2
%Capital expenditures


6,214



5,315



4,680



899



16.9
%


635



13.6
%Total assets


29,549



26,762



24,717



2,787



10.4
%


2,045



8.3
%Access lines


14,929



12,975



10,095



1,954



15.1
%


2,880



28.5
%Long distance lines


8,603



6,877



4,806



1,726



25.1
%


2,071



43.1
%Total projects


118



105



93



13



12.4
%


12



12.9
%     ProjectedGreenfield Projects

Lines in


Marketable


TotalBy Year Signed

Service


Lines


ProjectsPrevious years


9,470



27,000



512002


3,951



13,000



242003


948



5,000



182004


514



4,000



122005


46



4,000



13Total


14,929



53,000



118  40




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##### Table of Contents



2005
    compared to 2004
                2004
    compared to 2003
  minutes-of-use
  minutes-of-use
 41




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##### Table of Contents



Wireless (in
    thousands, except subscribers)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$
36,426


$
32,548


$
28,517


$
3,878



11.9
%

$
4,031



14.1
%Operating expense


33,194



28,561



26,535



4,633



16.2
%


2,026



7.6
%Operating income

$
3,232


$
3,987


$
1,982


$
(755
)


(18.9
)%

$
2,005



101.2
%Depreciation expense

$
2,378


$
1,930


$
1,689


$
448



23.2
%

$
241



14.3
%Capital expenditures


2,210



2,229



1,107



(19
)


(0.9
)%


1,122



101.4
%Total assets


34,049



33,676



30,509



373



1.1
%


3,167



10.4
%Subscribers


46,138



43,213



38,458



2,925



6.8
%


4,755



12.4
%   2005
    compared to 2004
    home-on-home Home-on-home home-on-home
     42




---



##### Table of Contents



2004
    compared to 2003
          Internet
    and Data Services (in
    thousands, except lines and accounts)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$
11,770


$
10,885


$
10,461


$
885



8.1
%

$
424



4.1
%Operating expense


10,167



11,288



11,302



(1,121
)


(9.9
%)


(14
)


(0.1
%)Operating income

$
1,603


$
(403
)

$
(841
)

$
2,006



497.8
%

$
438



52.1
%Depreciation expense

$
1,761


$
2,954


$
1,551


$
(1,193
)


(40.4
%)

$
1,403



90.5
%Capital expenditures


1,229



1,380



2,434



(151
)


(10.9
%)


(1,054
)


(43.3
%)Total assets


13,533



13,806



15,961



(273
)


(2.0
%)


(2,155
)


(13.5
%)DSL lines


19,507



13,887



10,183



5,620



40.5
%


3,704



36.4
%Dial-up
    accounts


6,522



9,041



10,838



(2,519
)


(27.9
%)


(1,797
)


(16.6
%)High-speed accounts


693



606



545



87



14.4
%


61



11.2
%   2005
    compared to 2004
  dial-up dial-up dial-up
   43




---



##### Table of Contents



2004
    compared to 2003
  dial-up
      Other
    Business Units (in
    thousands)
  2005


2004


2003


2005-2004 Change


2004-2003 ChangeOperating revenue

$



$



$



$





%

$





%Operating expense


2,346



2,448



3,696



(102
)


(4.2
)%


(1,248
)


(33.8
)%Operating income

$
(2,346
)

$
(2,448
)

$
(3,696
)

$
(102
)


(4.2
)%

$
(1,248
)


(33.8
)%Depreciation expense

$
1,342


$
1,378


$
1,404


$
(36
)


(2.6
)%

$
(26
)


(1.9
)%Capital expenditures


999



1,285



2,243



(286
)


(22.3
)%


(958
)


(42.7
)%Total assets


51,118



49,224



53,213



1,894



3.8
%


(3,989
)


(7.5
)%   2005
    compared to 2004
    2004
    compared to 2003
   44




---



##### Table of Contents







Liquidity
    and Capital Resources




Net cash
    provided by operating activities








Net cash
    used in investing activities








Net cash
    used in financing activities












14-year




Anticipated
    sources and uses of funds






45



---



##### Table of Contents



and/or
























|                           |  |                      |        |  |           |   |        |           |  |   |           |  |  |         |        |  |  |   |        | 
|-------------------------- |  | -------------------- | ------ |  | --------- | - | ------ | --------- |  | - | --------- |  |  | ------- | ------ |  |  | - | ------ | 
|                           |  | Payments Due by Year |       
|                           |  |                      |        |  | Less Than |   |        |           |  |   |           |  |  | After   |       
|                           |  | Total                |        |  | One Year  |   |        | 1-3 Years |  |   | 4-5 Years |  |  | 5 Years |       
|                          
|Contractual obligations:   |  |                      |        |  |           |   |        |           |  |   |           |  |  |         |        |  |  |   |        | 
|Revolving credit facility  |  | $                    | 10,000 |  |           | $ | 10,000 |           |  | $ |          |  |  | $       |       |  |  | $ |       | 
|Term loan                  |  |                      | 45,000 |  |           |   | 5,000  |           |  |   | 10,000    |  |  |         | 10,000 |  |  |   | 20,000 | 
|Variable interest payments |  |                      | 139    |  |           |   | 139    |           |  |   |          |  |  |         |       |  |  |   |       | 
|Fixed interest payments    |  |                      | 15,235 |  |           |   | 3,157  |           |  |   | 5,216     |  |  |         | 3,751  |  |  |   | 3,111  | 
|Operating leases           |  |                      | 13,503 |  |           |   | 2,717  |           |  |   | 4,580     |  |  |         | 3,732  |  |  |   | 2,474  | 
|Capital leases             |  |                      | 577    |  |           |   | 485    |           |  |   | 92        |  |  |         |       |  |  |   |       | 
|Other service contracts    |  |                      | 2,148  |  |           |   | 969    |           |  |   | 1,007     |  |  |         | 172    |  |  |   |       | 
|                           |  |                      |        |  |           |   |        |           |  |   |           |  |  |         |        |  |  |   |        | 
|                           |  | $                    | 86,602 |  |           | $ | 22,467 |           |  | $ | 20,895    |  |  | $       | 17,655 |  |  | $ | 25,585 | 
|                           |  |                      |        |  |           |   |        |           |  |   |           |  |  |         |        |  |  |   |        | 





Accounting
    Considerations








Cautionary
    Note Regarding Forward-Looking Statements






46



---



##### Table of Contents







| |   |                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Companys ability to respond effectively to the issues
    surrounding the telecommunications industry caused by state and
    federal legislation and regulations,                                               
|
| |  | the impact of economic conditions related to the financial
    performance of customers, business partners, competitors and
    peers within the telecommunications industry,                                         
|
| |  | the Companys ability to recover the substantial costs
    incurred over the past few years in connection with the
    expansion into new businesses,                                                                 
|
| |  | the Companys ability to attract and retain key personnel,                                                                                                                                                            
|
| |  | the Companys ability to retain its existing customer base
    against wireless competition and cable telephony in all areas of
    the business including local and long distance and Internet and
    data services,
|
| |  | the Companys ability to maintain its margins in a highly
    competitive industry,                                                                                                                                   
|
| |  | the performance of the Companys investments,                                                                                                                                                                         
|
| |  | the Companys ability to effectively manage rapid changes
    in technology and control capital expenditures related to those
    technologies, and                                                                   
|
| |  | the impact of economic and political events on the
    Companys business, operating regions and customers,
    including terrorist attacks.                                                                          







| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Item 1. Business and                                                                              
|
| |  | Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations.







In making forward-looking statements, the Company claims the
    protection of the safe harbor for forward-looking statements
    contained in the Private Securities Litigation Reform Act of
    1995. The Company undertakes no obligation to update or revise
    any forward-looking statements, whether as a result of new
    information, future events or otherwise. All forward-looking
    statements should be viewed with caution.




Item 7A.  Quantitative
    and Qualitative Disclosures About Market Risk








14-year






47



---



##### Table of Contents



Form 10-K.








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







|        |                                                                                             
|------- | --------------------------------------------------------------------------------------------
|Item 9. | Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure







|         |                            
|-------- | ---------------------------
|Item 9A. | Controls
    and Procedures



|    |                                       
|--- | --------------------------------------
|(a) | Disclosure
    Controls and Procedures











|    |                                                                     
|--- | --------------------------------------------------------------------
|(b) | Managements
    Report on Internal Control Over Financial Reporting



Rules 13a-15(f) 15d-15(f).




Internal Control  Integrated
    Framework


48



---



##### Table of Contents




    The Company identified a deficiency in the design of internal
    control over financial reporting due to the absence of controls
    to ensure the proper classification of balance sheet accounts.
    Specifically, management does not have sufficient policies and
    procedures in place to determine current and non-current
    classification of assets and liabilities. This deficiency
    resulted in a material error in the classification of the
    non-current portion of accrued pension cost and other retirement
    liabilities and also resulted in errors in the classification of
    accounts receivable, deferred interest and deferred maintenance
    for sales-type leases, and inventory obsolescence reserves. Such
    errors were corrected prior to the issuance of the
    Companys 2005 consolidated financial statements.
    The Company identified a deficiency in the design of internal
    control over financial reporting due to the absence of controls
    over accounting for equity-method investments. Specifically, the
    Company does not have policies and procedures that provide for
    the maintenance of adequate documentation of differences between
    the Companys carrying value of an equity-method investment
    and its underlying equity in the investee in order to provide
    for an adequate reconciliation process and management review of
    the reconciliation to ensure the accuracy of the reported
    equity-method investment balance. This deficiency resulted in an
    understatement of the Companys carrying value of
    investments in unconsolidated companies. This deficiency results
    in more than a remote likelihood that a material misstatement of
    the Companys annual or interim financial statements would
    not be prevented or detected on a timely basis.    (c)
    Changes
    in Internal Control Over Financial Reporting      
    The Company is in the process of implementing additional
    policies and procedures associated with the review and
    documentation of the classification of all balance sheet
    accounts to ensure proper classification as either current or
    non-current assets or liabilities.
    The Company is in the process of implementing additional
    policies and procedures associated with the review of support
    and reconciliations of the differences between the
    Companys carrying value of its investments in
    unconsolidated companies and its underlying equity in the
    investee accounted for under the equity method.  (d)
    Report of
    Independent Registered Public Accounting Firm     Managements Report on Internal Control Over Financial
    Reporting Internal Control  Integrated Framework .
 49




---



##### Table of Contents




    The Company identified a deficiency in the design of internal
    control over financial reporting due to the absence of controls
    to ensure the proper classification of balance sheet accounts.
    Specifically, management does not have sufficient policies and
    procedures in place to determine current and non-current
    classification of assets and liabilities. This deficiency
    resulted in a material error in the classification of the
    non-current portion of accrued pension cost and other retirement
    liabilities and also resulted in errors in the classification of
    accounts receivable, deferred interest and deferred maintenance
    for sales-type leases, and inventory obsolescence reserves.
    The Company identified a deficiency in the design of internal
    control over financial reporting due to the absence of controls
    over accounting for equity-method investments. Specifically, the
    Company does not have policies and procedures that provide for
    the maintenance of adequate documentation of differences between
    the Companys carrying value of an equity-method investment
    and its underlying equity in the investee in order to provide
    for an adequate reconciliation process and management review of
    the reconciliation to ensure the accuracy of the reported
    equity-method investment balance. This deficiency resulted in an
    understatement of the Companys carrying value of
    investments in unconsolidated companies. This deficiency results
    in more than a remote likelihood that a material misstatement of
    the Companys annual or interim financial statements would
    not be prevented or detected on a timely basis.   50




---



##### Table of Contents



Internal Control  Integrated
    Framework . Internal Control  Integrated Framework
      Item 9B.  Other
    Information   PART III Item 10.  Directors
    and Executive Officers of the Company     Item 11.  Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters  Security
    Ownership of Certain Beneficial Owners and Management
   51




---



##### Table of Contents



Equity
    Compensation Plan Information
    Number ofSecurities to be





Number ofIssued Upon


Weighted-Average


SecuritiesExercise of


Exercise Price of


Remaining availableOutstanding


Outstanding


for Future IssuanceOptions, Warrants


Options, Warrants


Under EquityPlan Category

and Rights


and Rights


Compensation PlansEquity compensation plans approved
    by security holders


1,704,729
(1)

$
13.49



1,236,126
(2)Equity compensation plans not
    approved by security holders










     (1)
    Includes 306,899 options to purchase shares of Common Stock
    under the Omnibus Stock Compensation Plan, 1,375,294 options to
    purchase shares of Common Stock under the Amended and Restated
    2001 Stock Incentive Plan and 22,536 options to purchase shares
    of Common Stock under the Comprehensive Stock Option plan.(2)
    Includes 415,750 shares originally authorized for issuance
    under the Omnibus Stock Compensation Plan that were transferred
    to the Amended and Restated 2001 Stock Incentive Plan in
    accordance with that plan. Also includes an additional
    811,942 shares authorized under the Amended and Restated
    2001 Stock Incentive Plan, 480 shares authorized under the
    Comprehensive Stock Option Plan and 7,954 shares authorized
    under the 1996 Director Compensation Plan. Available shares
    shown above for the Omnibus Stock Compensation Plan and the
    Amended and Restated 2001 Stock Incentive Plan include shares
    that have become available due to forfeitures or have been
    reacquired by the Company for any reason without delivery of the
    stock, as allowed under the terms of the plans.  Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services   52




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a)
    Documents filed as part of this report    
    Report of Independent Registered Public Accounting Firm,
    Consolidated balance sheets as of December 31, 2005 and
    2004,
    Consolidated statements of income for the years ended
    December 31, 2005, 2004 and 2003,
    Consolidated statements of cash flows for the years ended
    December 31, 2005, 2004 and 2003,
    Consolidated statements of stockholders equity for the
    years ended December 31, 2005, 2004 and 2003,
    Consolidated statements of comprehensive income for the years
    ended December 31, 2005, 2004 and 2003 and
    Notes to consolidated financial statements.               53




---



##### Table of Contents



SIGNATURES      By:
    /s/  MICHAEL R. COLTRANE         By:
    /s/  MICHAEL R. COLTRANE      By:
    /s/  O. CHARLIE CHEWNING, JR.    By:
    /s/  WILLIAM A. COLEY    By:
    /s/  BARRY W. EVELAND    By:
    /s/  LINDA M. FARTHING    By:
    /s/  RAYMOND C. GROTH   54




---



##### Table of Contents



By:
    /s/  JAMES L. MOORE, JR.     By:
    /s/  CYNTHIA L. MYNATT    By:
    /s/  TOM E. SMITH    By:
    /s/  JAMES E. HAUSMAN      By:
    /s/  RONALD A. MARINO     55




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    FINANCIAL STATEMENTS INDEX
 December 31,
    2005, 2004 and 2003
   INDEX
  (1)
    Consolidated
    Financial Statements    

Independent Registered Public
    Accounting Firms Report

F-2

Consolidated balance sheets as of
    December 31, 2005 and 2004

F-3

Consolidated statements of income
    for the years ended December 31, 2005, 2004 and 2003

F-4

Consolidated statements of
    comprehensive income for the years ended December 31, 2005,
    2004 and 2003

F-5

Consolidated statements of
    stockholders equity for the years ended December 31,
    2005, 2004 and 2003

F-6 and F-7

Consolidated statements of cash
    flows for the years ended December 31, 2005, 2004 and
    2003

F-8

Notes to consolidated financial
    statements

F-9 to F-39   (2)  Consolidated
    Financial Statement Schedule
 The following financial statement
    schedule is included:

Schedule II  Valuation
    and Qualifying Accounts

F-40    F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Stockholders

CT Communications, Inc.:



We have audited the consolidated financial statements of CT
    Communications, Inc. and subsidiaries as listed in the
    accompanying index. In connection with our audits of the
    consolidated financial statements, we also have audited the
    financial statement schedule as listed in the accompanying
    index. These consolidated financial statements and financial
    statement schedule are the responsibility of the Companys
    management. Our responsibility is to express an opinion on these
    consolidated financial statements and financial statement
    schedule 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 CT Communications, Inc. and subsidiaries as of
    December 31, 2005 and 2004, and the results of their
    operations and their cash flows for each of the years in the
    three-year period ended December 31, 2005, in conformity
    with U.S. generally accepted accounting principles. Also in
    our opinion, the related financial statement schedule, when
    considered in relation to the basic consolidated financial
    statements taken as a whole, presents fairly, in all material
    respects, the information set forth therein.



We also have audited, in accordance with the standards of the
    Public Company Accounting Oversight Board (United States), the
    effectiveness of CT Communications, Inc. and subsidiaries
    internal control over financial reporting as of
    December 31, 2005, based on criteria established in
    Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the
    Treadway Commission (COSO), and our report dated March 30,
    2006 expressed an unqualified opinion on managements
    assessment of, and an adverse opinion on the effective operation
    of, internal control over financial reporting.



/s/  KPMG LLP



Charlotte, North Carolina

March 30, 2006

F-2




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 December 31, 2005 and 2004
  (in thousands, except share data)
  2005


2004ASSETSCurrent assets:Cash and cash equivalents

$
23,011


$
28,358Accounts receivable and unbilled
    revenue, net of allowance for doubtful accounts of $337 at 2005
    and $313 at 2004


16,336



15,052Other accounts receivable


2,585



1,147Materials and supplies


1,396



1,070Deferred income taxes






510Wireless spectrum
    held-for-sale


15,646



Other


3,239



3,712Total current assets


62,213



49,849Investment securities


5,845



5,190Other investments


1,690



1,500Investments in unconsolidated
    companies


15,618



16,002Property and equipment, net


200,179



206,877Goodwill


9,906



9,906Other intangibles, net


19,989



35,401Other assets


5,980



5,139Total assets

$
321,420


$
329,864LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Current portion of long-term debt

$
15,000


$
5,000Accounts payable


8,482



6,822Accrued payroll


8,129



7,231Customer deposits and advance
    billings


2,538



2,423Income taxes payable


2,107



3,210Accrued pension and postretirement
    benefit cost


481



496Deferred tax liability


432



Other accrued liabilities


2,650



3,254Liabilities of discontinued
    operations


122



604Total current liabilities


39,941



29,040Long-term debt


40,000



65,000Deferred credits and other
    liabilities:Deferred income taxes


25,078



28,739Investment tax credits






115Post-retirement and pension


15,842



14,758Other


4,679



3,984Total deferred credits and other
    liabilities


45,599



47,596Total liabilities


125,540



141,636Stockholders equity:Preferred stock not subject to
    mandatory redemption:5% series, $100 par value;
    3,356 shares outstanding at 2004






3364.5% series, $100 par value;
    614 shares outstanding at 2005 and 2004


61



61Common stock, 18,930,624 at 2005
    and 18,883,825 at 2004 shares outstanding


42,648



42,222Other capital


298



298Unearned compensation


(307
)


(268
)Accumulated other comprehensive
    income


282



215Retained earnings


152,898



145,364Total stockholders
    equity


195,880



188,228Total liabilities and
    stockholders equity

$
321,420


$
329,864    F-3




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 Years ended December 31, 2005, 2004 and 2003
  (in thousands, except per share data)
  2005


2004


2003Operating revenue:Telephone

$
123,469


$
120,248


$
121,983Wireless and internet


48,196



43,432



38,978Total operating
    revenue


171,665



163,680



160,961Operating expense:Telephone cost of service
    (excludes depreciation of $23,507, $21,172 and $21,518,
    respectively)


37,719



35,312



35,614Wireless and internet cost of
    service (excludes depreciation of $4,021, $4,736 and $2,967,
    respectively)


23,156



19,178



18,668Selling, general and
    administrative (excludes depreciation of $4,355, $4,862 and
    $4,381, respectively)


56,943



54,866



56,488Depreciation


31,883



30,770



28,866Total operating
    expense


149,701



140,126



139,636Operating income


21,964



23,554



21,325Other income (expense):Equity in income of unconsolidated
    companies, net


4,275



5,771



5,829Interest, dividend income and gain
    on sale of investments


2,989



1,463



16,269Impairment of investments


(546
)


(1,834
)


(1,744
)Interest expense


(4,546
)


(4,843
)


(5,850
)Other (expense) income


(279
)


37



(593
)Total other income


1,893



594



13,911Income from continuing
    operations before income taxes


23,857



24,148



35,236Income taxes


9,308



9,445



13,526Income from continuing
    operations


14,549



14,703



21,710Discontinued operations:Loss from operations of
    discontinued business, net of income tax benefits of $276 in 2003










(424
)Net income


14,549



14,703



21,286Dividends on preferred stock


10



20



20Earnings for common
    stock

$
14,539


$
14,683


$
21,266Basic earnings (loss) per
    share:Continuing operations

$
0.77


$
0.78


$
1.16Discontinued operations










(0.02
)Net income


0.77



0.78



1.13Diluted earnings (loss) per
    share:Continuing operations

$
0.77


$
0.77


$
1.15Discontinued operations










(0.02
)Net income


0.77



0.77



1.13Basic weighted average shares
    outstanding


18,785



18,867



18,747Diluted weighted average shares
    outstanding


18,947



19,007



18,808    F-4




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE
    INCOME
 Years ended December 31, 2005, 2004 and 2003
  (in thousands)
  2005


2004


2003Net income

$
14,549


$
14,703


$
21,286Other comprehensive income:Unrealized holding (losses) gains
    on
    available-for-sale
    securities, net of tax (benefit) expense of $(15), $(481), and
    $376 in 2005, 2004 and 2003, respectively


(23
)


(861
)


673Reclassification adjustment for
    losses (gains) on investments realized in net income, net of tax
    benefit (expense) of $59, $326 and ($23) in 2005, 2004 and 2003,
    respectively


90



584



(41
)Comprehensive income

$
14,616


$
14,426


$
21,918    F-5




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
 Years ended December 31, 2005, 2004 and 2003
  (in thousands, except share data)
  Accum.5% Series


4.5% Series











Other





TotalPref.


Pref.


Common


Other


Unearned


Comprehensive


Retained


StockholdersStock


Stock


Stock


Capital


Compensation


Income (Loss)


Earnings


EquityBalances at December 31, 2002

$
336


$
61


$
39,962


$
298


$
(470
)

$
(140
)

$
119,295


$
159,342Net income


























21,286



21,286Issuance of 97,282 shares of
    common stock










1,047



















1,047Issuance of 28,248 shares for
    exercise of stock options










252



















252Repurchase of 43,083 shares of
    common, including cancellations










(461
)


















(461
)Dividends declared:5% preferred


























(17
)


(17
)4.5% preferred


























(3
)


(3
)Common stock


























(4,890
)


(4,890
)Other comprehensive income






















632







632Restricted stock compensation, net
    of $774 earned in 2003


















206











206Balances at December 31, 2003

$
336


$
61


$
40,800


$
298


$
(264
)

$
492


$
135,671


$
177,394Net income


























14,703



14,703Issuance of 141,302 shares of
    common stock










1,752



















1,752Issuance of 2,974 shares for
    exercise of stock options










25



















25Repurchase of 29,638 shares of
    common, including cancellations










(355
)


















(355
)Dividends declared:5% preferred


























(17
)


(17
)4.5% preferred


























(3
)


(3
)Common stock


























(4,990
)


(4,990
)Other comprehensive income (loss)






















(277
)






(277
)Restricted stock compensation, net
    of $812 earned in 2004


















(4
)










(4
)Balances at December 31, 2004

$
336


$
61


$
42,222


$
298


$
(268
)

$
215


$
145,364


$
188,228    F-6




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY  (Continued)
    Years ended December 31, 2005, 2004 and 2003
    (in thousands, except share data)
  5% Series


4.5% Series











Accum. Other





TotalPref.


Pref.


Common


Other


Unearned


Comprehensive


Retained


StockholdersStock


Stock


Stock


Capital


Compensation


Income (Loss)


Earnings


EquityBalances at December 31, 2004

$
336


$
61


$
42,222


$
298


$
(268
)

$
215


$
145,364


$
188,228Net income


























14,549



14,549Issuance of 166,193 shares of
    common stock










1,904



















1,904Issuance of 76,725 shares for
    exercise of stock options










739



















739Repurchase of 196,119 shares
    of common, including cancellations










(2,448
)


















(2,448
)Tax benefits from stock options
    exercised










64



















64Stock compensation
    expense  acceleration of stock option vesting










167



















167Redemption of 3,356 shares of
    5% Series preferred stock


(336
)


























(336
)Dividends declared:5% preferred


























(7
)


(7
)4.5% preferred


























(3
)


(3
)Common stock


























(7,005
)


(7,005
)Other comprehensive income (loss)






















67







67Restricted stock compensation, net
    of $821 earned in 2005


















(39
)










(39
)Balances at December 31, 2005

$



$
61


$
42,648


$
298


$
(307
)

$
282


$
152,898


$
195,880    F-7




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years ended December 31, 2005, 2004 and 2003
  (in thousands)
  2005


2004


2003Cash flows from operating
    activities:Net income

$
14,549


$
14,703


$
21,286Adjustments to reconcile net income
    to net cash provided by operating activities:Loss from discontinued operations










424Depreciation


31,883



30,770



28,866Accretion expense on asset
    retirement obligation


84







Gain on sale of investment
    securities


(398
)


(466
)


(64
)Impairment of investments


546



1,834



1,744Impairment of wireless spectrum
    held for sale


161







Stock compensation expense


988



812



774Loss on sale of equipment


268







Gain on sale of investments in
    unconsolidated companies


(1,189
)






(15,063
)Equity in income of unconsolidated
    companies, net


(4,275
)


(5,771
)


(5,829
)Undistributed patronage dividends


(259
)


(422
)


(380
)Provision for loss on accounts
    receivable


1,127



1,399



1,439Deferred income taxes and tax
    credits


(2,899
)


5,331



10,363Long-term pension and
    post-retirement benefits


1,084



(201
)


146Changes in operating assets and
    liabilities:Accounts receivable


(2,411
)


763



(1,572
)Materials and supplies


(232
)


694



(304
)Other assets


(2,176
)


(1,498
)


740Accounts payable


1,660



572



(2,410
)Customer deposits and advance
    billings


115



467



54Accrued liabilities


727



1,040



3,282Income taxes


(1,103
)


664



6,151Net cash provided by operating
    activities


38,250



50,691



49,647Cash flows from investing
    activities:Capital expenditures


(27,094
)


(27,197
)


(23,762
)Proceeds from sale of property,
    plant and equipment


2,003







Proceeds from sale of investment in
    unconsolidated companies


1,245







17,052Proceeds from sale of investment
    securities


2,718



2,530



458Purchases of investments in
    unconsolidated companies


(50
)


(1,391
)


(3,849
)Purchases of investment securities


(3,296
)


(1,498
)


(396
)Purchase of wireless spectrum






(200
)


Distribution from unconsolidated
    companies


4,628



3,744



5,679Net cash used in investing
    activities


(19,846
)


(24,012
)


(4,818
)Cash flows from financing
    activities:Repayment of long-term debt


(15,000
)


(10,000
)


(30,000
)Redemption of preferred stock


(310
)






Dividends paid


(7,015
)


(5,010
)


(4,909
)Repurchases of common stock


(1,945
)






Common stock issuances


1,001



200



428Net cash used in financing
    activities


(23,269
)


(14,810
)


(34,481
)Net cash used in discontinued
    operations  operating activities (revised, see
    Note 2)


(482
)


(468
)


(1,043
)Net (decrease) increase in cash and
    cash equivalents


(5,347
)


11,401



9,305Cash and cash equivalents at
    beginning of year


28,358



16,957



7,652Cash and cash equivalents at end
    of year

$
23,011


$
28,358


$
16,957Supplemental cash flow information:Cash paid for income taxes

$
13,037


$
3,443


$
2,271Cash paid for interest


4,664



5,177



8,137Supplemental disclosure of non-cash
    investing and financing activities:Cancellation of note payable and
    reduction in other intangibles in connection with disposition of
    wireless spectrum

$



$



$
(17,697
)Common and restricted shares issued
    under annual bonus and incentive plan

$
782


$
760


$
297    F-8




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (1)
    Summary
    of Significant Accounting Policies  (a) Principles
    of Consolidation and Organization
      (b) Reclassifications
    (c) Property
    and Equipment
     F-9




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Buildings


30 to 40 yearsEquipment


3 to 7 yearsCentral office equipment


7 to 10 yearsPoles, wires, cables and conduit


17 to 50 years   (d) Asset
    Retirement Obligations
    (e) Investment
    Securities
  available-for-sale.
    (f) Other
    Investments
    (g) Investments
    in Unconsolidated Companies
    (h) Materials
    and Supplies
    (i) Income
    Taxes
   F-10




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (j) Revenue
    Recognition
            EITF 00-21, No. 00-21,
 F-11




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (k) Goodwill
    and Intangibles
        Form 8-K held-for-sale,
    (l) Cash
    Equivalents
   F-12




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (m) Use
    of Estimates
    (n) Impairment
    of Long-Lived Assets
    (o) Stock
    Option Plans
        in-the-money
  lock-up
 F-13




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         2005


2004


2003Assumptions used in Black Scholes
    pricing model:Expected dividend yield


2.50
%


1.92
%


3.1
%Risk-free interest rate


4.2
%


3.3
%


3.5
%Weighted average expected life


5 years



5 years



6 yearsExpected volatility


57
%


52
%


52
%Fair value per share of options
    granted

$
4.73


$
5.65


$
4.74Net income as reported

$
14,549


$
14,703


$
21,286Stock based compensation costs,
    net of income tax, included in net income as reported


602



812



774Additional stock based
    compensation costs, net of income tax, that would have been
    included in net income if the fair value method had been applied


3,806



1,086



807Pro-forma net income


10,743



13,617



20,479Earnings per share as
    reported  basic


0.77



0.78



1.13Earnings per share as
    reported  diluted


0.77



0.77



1.13Pro-forma earnings per
    share  basic


0.57



0.72



1.09Pro-forma earnings per
    share  diluted


0.57



0.72



1.09   (p) Earnings
    Per Share
     F-14




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (q) Derivative
    Instruments
      variable-to-fixed
  (r)
    Recent
    Accounting Pronouncements  No. 03-1, Other-Than-Temporary other-than-temporary available-for-sale held-to-maturity No. 03-1 No. 03-1-1 paragraphs 10-20 No. 03-1.
       F-15




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   and/or and/or
    (2)
    Discontinued
    Operations    No. 94-3,
  December 31,


December 31,2005


2004Liabilities of discontinued
    operations:Other liabilities, primarily lease
    obligations

$
122


$
604Total liabilities of discontinued
    operations

$
122


$
604     Balance at December 31, 2003

$
1,072Lease payments


(468
)Balance at December 31, 2004


604Lease payments


(482
)Balance at December 31, 2005

$
122    F-16




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (3)
    Property
    and Equipment    2005


2004Land, buildings and general
    equipment

$
91,496


$
91,705Central office equipment


190,220



177,455Poles, wires, cables and conduit


163,868



155,049Construction in progress


4,545



5,364450,129



429,573Accumulated depreciation


(249,950
)


(222,696
)Property and equipment, net

$
200,179


$
206,877       (4)
    Asset
    Retirement Obligations  and/or and/or
       F-17




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (5)
    Investment
    Securities    Gross


GrossUnrealized


UnrealizedEquity Securities

Amortized


Holding


Holding


FairAvailable-for-Sale

Cost


Gains


Losses


ValueAt December 31, 2005

$
5,379


$
537


$
(71
)

$
5,845At December 31, 2004

$
4,855


$
384


$
(49
)

$
5,190   available-for-sale
    Less Than
    12 Months


12 Months or More


TotalDescription of

Fair


Unrealized


Fair


Unrealized


Fair


UnrealizedSecurities

Value


Losses


Value


Losses


Value


LossesCommon stock

$
17


$
38


$
105


$
33


$
122


$
71Total temporarily impaired
    securities

$
17


$
38


$
105


$
33


$
122


$
71   other-than-temporarily
     F-18




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (6)
    Investments
    in Unconsolidated Companies    OwnershipPercentage2005


2005


2004Equity Method:Palmetto MobileNet, L.P.


22.4
%

$
10,654


$
10,933Other


Various



35



40Cost Method:Magnolia Holding Company


4.6
%


1,587



1,680PRE Holdings, Inc. (formerly ITC
    Financial Services, LLC)


1.7
%


2,100



2,100Other


Various



1,242



1,249Total





$
15,618


$
16,002       available-for-sale
     F-19




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2005


2004


2003Current assets

$
1,425


$
3,125


$
6,201Property and other non-current
    assets


104,627



104,730



94,811Current liabilities


476



398



2,767Long-term debt


12,550



13,582



13,436Partners capital


93,025



93,876



84,810Equity in earnings of RSA
    partnership interests


20,861



26,563



28,258Operating income


20,024



26,009



27,788Net income


19,519



25,793



27,895   (7)
    Fair
    Value of Financial Instruments    Cash and Cash Equivalents, Accounts Receivable,
    Notes Receivable, Other Assets, and Accounts
    Payable
  Investment Securities
  Other Investments
  Debt Instruments
  Derivative Financial Instruments
     F-20




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (8)
    Debt
    Instruments    2005


2004Line of credit with interest at
    LIBOR plus 1.25% (5.56% at December 31, 2005 and 3.50% at
    December 31, 2004)

$
10,000


$
20,000Term loan with interest at 7.32%


45,000



50,00055,000



70,000Less: Current portion of long-term
    debt


15,000



5,000Long-term debt

$
40,000


$
65,000         2006

$
15,0002007


5,0002008


5,0002009


5,0002010


5,000Thereafter


20,000Total debt

$
55,000   (9)
    Leases  (a) Lease
    Obligations
   F-21




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Capital


OperatingLeases


LeasesYear ending December 31:2006

$
485


$
2,7172007


92



2,2872008






2,2932009






2,0142010






1,718After 5 years






2,474Total minimum lease payments


577


$
13,503Less amount representing interest
    (at rates from 4% to 6%)


(17
)Present value of net minimum
    capital lease payments


560Less current installments of
    obligations under capital leases


(452
)Obligations under capital leases,
    excluding current installments

$
108     (b) Sales-Type
    Leases
      2005


2004Gross lease receivable

$
3,342


$
3,034Deferred finance charges


(835
)


(769
)Net lease receivable

$
2,507


$
2,265Current portion included in
    accounts receivable

$
778


$
714Non-current portion included in
    other non-current assets


1,729



1,551Net lease receivable

$
2,507


$
2,265  F-22




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2006

$
1,1872007


9502008


6842009


3862010


135Total lease receivable

$
3,342     (10)
    Derivative
    Financial Instruments  variable-to-fixed
      (11)
    Common
    Stock           F-23




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2005


2004


2003Basic weighted average shares
    outstanding


18,785



18,867



18,747Effect of dilutive stock options
    and non- vested restricted stock


162



140



61Total weighted average diluted
    shares outstanding


18,947



19,007



18,808   (12)
    Preferred
    Stock        (13)
    Stock
    Compensation Plans  in-the-money out-of-the-money
  lock-up
   F-24




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Comprehensive
    Stock Option Plan
     Number


Weighted Averageof Options


Exercise PriceOptions outstanding and
    exercisable at December 31, 2002


84,784


$
9Options granted






Options exercised


(28,248
)


9Options forfeited






Options outstanding and
    exercisable at December 31, 2003


56,536



9Options granted






Options exercised






Options forfeited






Options outstanding and
    exercisable at December 31, 2004


56,536



9Options granted






Options exercised


(34,000
)


9Options forfeited






Options outstanding and
    exercisable at December 31, 2005


22,536


$
9     Restricted
    Stock Award Program
   Director
    Compensation Plan
  F-25




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Omnibus
    Stock Compensation Plan
     Number


Weighted Averageof Options


Exercise PriceOptions outstanding at
    December 31, 2002


406,233


$
24Options granted






Options exercised






Options forfeited


(55,407
)


22Options outstanding at
    December 31, 2003


350,826



23Options granted






Options exercised






Options forfeited


(24,440
)


23Options outstanding at
    December 31, 2004


326,386



23Options granted






Options exercised






Options forfeited


(19,487
)


24Options outstanding at
    December 31, 2005


306,899


$
22    F-26




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Number OutstandingWeighted-Average


and Exercisable atRange of Exercise

Remaining


December 31,


Weighted-AveragePrices

Contractual Life


2005


Exercise Price$10.53 - $13.39


3.35



10,322


$
11.49$15.82 - $20.00


4.26



163,019



17.75$21.00 - $29.13


4.15



133,558



29.06$10.53 - $29.13


4.18



306,899



22.46   Amended
    and Restated 2001 Stock Incentive Plan
      F-27




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Number


Weighted Averageof Options


Exercise PriceOptions outstanding at
    December 31, 2002


247,881


$
15Options granted


210,134



9Options exercised






Options forfeited


(23,507
)


12Options outstanding at
    December 31, 2003


434,508



12Options granted


563,068



12Options exercised


(2,974
)


9Options forfeited


(49,104
)


12Options outstanding at
    December 31, 2004


945,498



12Options granted


522,946



11Options exercised


(42,725
)


10Options forfeited


(50,425
)


12Options outstanding at
    December 31, 2005


1,375,294


$
12       Weighted-Average


Number OutstandingRemaining


and Exercisable at


Weighted-AverageRange of Exercise
    Prices

Contractual Life


December 31, 2005


Exercise Price$8.50 - $12.44


8.46



1,159,904


$
10.91$14.02 - $15.55


6.29



215,390



15.03$8.50 - $15.55


8.12



1,375,294



11.56   (14)
    Employee
    Stock Purchase Plan    (15)
    Employee
    Benefit Plans  (a) Pension
    Plan and Savings Plan
   F-28




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2005


2004Change in Benefit
    Obligation:Benefit obligation at beginning of
    plan year

$
(46,456
)

$
(43,008
)Service cost


(2,241
)


(1,995
)Interest cost


(2,824
)


(2,577
)Actuarial loss


(3,537
)


(961
)Actual distributions


2,267



2,085Benefit obligation at end of year

$
(52,791
)

$
(46,456
)Change in Plan
    Assets:Plan assets at fair value at
    beginning of year

$
45,531


$
43,205Actual return on plan assets


2,708



4,411Actual employer contributions






Actual distributions


(2,267
)


(2,085
)Plan assets at fair value at end
    of year

$
45,972


$
45,531(Accrued)/Prepaid Pension
    Cost:Funded status

$
(6,819
)

$
(925
)Unrecognized net actuarial loss
    (gain)


1,048



(3,342
)Unrecognized prior service


55



57Net amount recognized

$
(5,716
)

$
(4,210
)   Percentage of Total
    Assets2005


2004Summary of Plan
    Assets:Company stock






3.5
%Cash and cash equivalents


1.9
%


Equity funds


74.1
%


74.7
%Fixed income funds


24.0
%


21.8
%      F-29




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2006

$
2,0832007


2,1632008


2,2582009


2,3972010


2,4382011 thru 2015


15,144     2005


2004


2003Service cost, benefits earned
    during the period

$
2,241


$
1,995


$
1,852Interest cost on projected benefit
    obligation


2,824



2,577



2,503Expected return on plan assets


(3,561
)


(3,371
)


(2,653
)Net amortization and deferral


2



2



2Net periodic pension expense

$
1,506


$
1,203


$
1,704   2005

2004

2003Key assumptions used:Weighted average discount rate

5.75%

6.00%

6.25%Average rate of compensation
    increase

3.5% to 6.5%

3.5% to 6.5%

3.5% to 6.5%Expected long-term rates of return

8.00%

8.00%

7.50%     30-year
    (b) Employee
    Savings Plan
    (c) Post-retirement
    Benefits
   F-30




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      FSP 106-2, FSP 106-2,
    2005


2004Change in Benefit
    Obligation:Benefit obligation at beginning of
    plan year

$
(8,558
)

$
(8,378
)Service cost


(58
)


(68
)Interest cost


(475
)


(499
)Amendments


523



519Actuarial loss


(381
)


(640
)Benefit payments, net of
    participant contributions


496



508Benefit obligation at end of year

$
(8,453
)

$
(8,558
)(Accrued)/Prepaid
    Post-retirement Cost:Funded status

$
(8,453
)

$
(8,558
)Unrecognized net actuarial gain


(2,012
)


(2,503
)Unrecognized prior service cost


(142
)


(335
)Unrecognized transition obligation






352Net amount recognized

$
(10,607
)

$
(11,044
)     2006

$
7382007


7062008


6792009


6722010


6572011 thru 2015


3,076  F-31




---



##### Table of Contents





CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)










|                                                        |  |      |      |   |      |   |      |      |  |   |      |  
|------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                        |  | 2005 |      |   | 2004 |   |      | 2003 | 
|                                                       
|Service cost                                            |  | $    | 58   |   |      | $ | 68   |      |  | $ | 51   |  
|Interest cost                                           |  |      | 475  |   |      |   | 499  |      |  |   | 512  |  
|Amortization of transition
    obligation over 15 years |  |      |     |   |      |   | 352  |      |  |   | 612  |  
|Amortization of gain                                    |  |      | (117 | ) |      |   | (154 | )    |  |   | (223 | )
|Amortization of prior service cost                      |  |      | (365 | ) |      |   | (335 | )    |  |   | (336 | )
|                                                        |  |      |      |   |      |   |      |      |  |   |      |  
|Net periodic post-retirement
    benefit cost           |  | $    | 51   |   |      | $ | 430  |      |  | $ | 616  |  
|                                                        |  |      |      |   |      |   |      |      |  |   |      |  





|                                            |  |                   |  |                  
|------------------------------------------- |  | ----------------- |  | -----------------
|Key assmptions used:                        |  |                   |  |                  
|Measurement date                            |  | December 31, 2005 |  | December 31, 2004
|Discount rate                               |  | 5.75%             |  | 6.00%            
|Rate of increase in compensation
    levels |  | 4.00%             |  | 4.00%            
|Assumed medical trend:                      |  |                   |  |                  
|Current trend rate                          |  | 9.00%             |  | 12.00%           
|Ultimate trend rate                         |  | 6.00%             |  | 6.00%            
|Years to ultimate trend rate                |  | 1                 |  | 2                

















|                                                    |  |      |        |  |      |   |        | 
|--------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                                    |  | 2005 |        |  | 2004 |  
|                                                   
|Current pension and
    post-retirement liability   |  | $    | 481    |  |      | $ | 496    | 
|Long-term pension and
    post-retirement liability |  |      | 15,842 |  |      |   | 14,758 | 
|                                                    |  |      |        |  |      |   |        | 
|Total pension and post-retirement
    liability     |  | $    | 16,323 |  |      | $ | 15,254 | 
|                                                    |  |      |        |  |      |   |        | 
|                                                    |  |      |        |  |      |   |        | 
|Long-term pension liability                         |  | $    | 5,716  |  |      | $ | 4,210  | 
|                                                    |  |      |        |  |      |   |        | 
|Current post-retirement liability                   |  |      | 481    |  |      |   | 496    | 
|Long-term post-retirement liability                 |  |      | 10,126 |  |      |   | 10,548 | 
|                                                    |  |      |        |  |      |   |        | 
|Total post-retirement liability                     |  |      | 10,607 |  |      |   | 11,044 | 
|                                                    |  |      |        |  |      |   |        | 
|Total pension and post-retirement
    liability     |  | $    | 16,323 |  |      | $ | 15,254 | 
|                                                    |  |      |        |  |      |   |        | 



F-32



---



##### Table of Contents





CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)






|     |                 
|---- | ----------------
|(16) | Income
    Taxes







|                                                                                                                                                                                               |  |      |       |   |      |   |       |      |  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                                                                                                                                               |  | 2005 |       |   | 2004 |   |       | 2003 | 
|                                                                                                                                                                                              
|Income from continuing operations                                                                                                                                                              |  | $    | 9,308 |   |      | $ | 9,445 |      |  | $ | 13,526 |  
|Discontinued operations                                                                                                                                                                        |  |      |      |   |      |   |      |      |  |   | (276   | )
|Stockholders equity, for
    unrealized holding gains and losses on debt and equity
    securities recognized for financial reporting purposes and
    benefit from exercise of stock options |  |      | (20   | ) |      |   | (155  | )    |  |   | 353    |  









|                                                       |  |      |        |   |      |   |       |      |  |   |        | 
|------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ------ | 
|                                                       |  | 2005 |        |   | 2004 |   |       | 2003 | 
|                                                      
|Current:                                               |  |      |        |   |      |   |       |      |  |   |        | 
|Federal                                                |  | $    | 10,147 |   |      | $ | 1,701 |      |  | $ | 2,162  | 
|State                                                  |  |      | 1,924  |   |      |   | 1,872 |      |  |   | 1,111  | 
|Foreign                                                |  |      |       |   |      |   |      |      |  |   | 8      | 
|                                                       |  |      |        |   |      |   |       |      |  |   |        | 
|                                                       |  |      | 12,071 |   |      |   | 3,573 |      |  |   | 3,281  | 
|                                                       |  |      |        |   |      |   |       |      |  |   |        | 
|Deferred:                                              |  |      |        |   |      |   |       |      |  |   |        | 
|Federal, net of investment tax
    credit amortization |  |      | (2,533 | ) |      |   | 6,463 |      |  |   | 9,416  | 
|State                                                  |  |      | (230   | ) |      |   | (591  | )    |  |   | 829    | 
|Foreign                                                |  |      |       |   |      |   |      |      |  |   |       | 
|                                                       |  |      |        |   |      |   |       |      |  |   |        | 
|                                                       |  |      | (2,763 | ) |      |   | 5,872 |      |  |   | 10,245 | 
|                                                       |  |      |        |   |      |   |       |      |  |   |        | 
|Total                                                  |  | $    | 9,308  |   |      | $ | 9,445 |      |  | $ | 13,526 | 
|                                                       |  |      |        |   |      |   |       |      |  |   |        | 









|                                                      |  |      |       |   |      |   |        |      |  |   |        |  
|----------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                      |  | 2005 |       |   | 2004 |   |        | 2003 | 
|                                                     
|Amount computed at statutory rate                     |  | $    | 8,350 |   |      | $ | 8,452  |      |  | $ | 12,333 |  
|State income taxes, net of federal
    income tax     |  |      | 1,438 |   |      |   | 721    |      |  |   | 876    |  
|Increase (decrease) in valuation
    allowance        |  |      | (337  | ) |      |   | (248   | )    |  |   | 386    |  
|Amortization of federal investment
    tax credit     |  |      | (115  | ) |      |   | (115   | )    |  |   | (115   | )
|Worthless stock deduction                             |  |      |      |   |      |   | (2,100 | )    |  |   |       |  
|State audit settlement, net of
    federal income tax |  |      |      |   |      |   | 2,605  |      |  |   |       |  
|Other, net                                            |  |      | (28   | ) |      |   | 130    |      |  |   | 46     |  
|                                                      |  |      |       |   |      |   |        |      |  |   |        |  
|Income tax expense from continuing
    operations     |  | $    | 9,308 |   |      | $ | 9,445  |      |  | $ | 13,526 |  
|                                                      |  |      |       |   |      |   |        |      |  |   |        |  



F-33



---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2005


2004Deferred tax assetsCurrent:Accrued expenses

$
655


$
1,132Total gross current deferred tax
    assets


655



1,132Non-current:Accrued post-retirement and
    pension benefits


6,250



6,040Accrued incentive


1,015



1,269Amortization of
    start-up
    costs


1,956



1,783State net operating loss
    carryforwards


3,768



4,038Other accrued expenses and
    allowances


2,913



2,725Total gross non-current deferred
    tax assets


15,902



15,855Total gross deferred tax assets


16,557



16,987Total valuation allowance


(2,694
)


(3,031
)Total net deferred tax assets


13,863



13,956Deferred tax liabilitiesCurrent:Prepaid expenses


981



592Total gross current deferred tax
    liabilities


981



592Non-current:Property and equipment, primarily
    related to depreciation differences


33,945



41,079Other


4,447



514Total gross non-current deferred
    tax liabilities


38,392



41,593Total gross deferred tax
    liabilities


39,373



42,185Net deferred tax liabilities

$
25,510


$
28,229        F-34




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          (17)
    Segment
    Information    ILEC
    Wireless
    CLEC
    Greenfield
    Internet
    and Data Services (IDS)
  dial-up
 F-35




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Palmetto
    Other
      2005


2004


2003(in thousands)Operating revenueILEC

$
94,561


$
93,016


$
96,079Wireless


36,426



32,548



28,517CLEC


19,272



19,123



19,681Greenfield


9,636



8,108



6,223IDS


11,770



10,885



10,461Palmetto


20,861



26,563



28,258Other










Total

$
192,526


$
190,243


$
189,219Operating income (loss)ILEC

$
23,522


$
27,160


$
30,249Wireless


3,232



3,987



1,982CLEC


(1,266
)


(846
)


(1,673
)Greenfield


(2,781
)


(3,896
)


(4,696
)IDS


1,603



(403
)


(841
)Palmetto


20,024



26,009



27,788Other


(2,346
)


(2,448
)


(3,696
)Total

$
41,988


$
49,563


$
49,113 F-36




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2005


2004


2003(in thousands)DepreciationILEC

$
20,429


$
18,925


$
19,157Wireless


2,378



1,930



1,689CLEC


2,546



2,309



2,550Greenfield


3,427



3,274



2,515IDS


1,761



2,954



1,551Palmetto


180



178



151Other


1,342



1,378



1,404Total

$
32,063


$
30,948


$
29,017AssetsILEC

$
163,947


$
175,824


$
172,475Wireless


34,049



33,676



30,509CLEC


13,606



14,570



12,776Greenfield


29,549



26,762



24,717IDS


13,533



13,806



15,961Palmetto


106,052



107,855



101,012Other


51,118



49,224



53,213Total

$
411,854


$
421,717


$
410,663Capital expendituresILEC

$
14,943


$
16,204


$
12,294Wireless


2,210



2,229



1,107CLEC


1,499



784



1,004Greenfield


6,214



5,315



4,680IDS


1,229



1,380



2,434Palmetto


5



1,251



688Other


999



1,285



2,243Total

$
27,099


$
28,448


$
24,450     2005


2004


2003Segment operating profit

$
41,988


$
49,563


$
49,113Palmetto MobileNet, L.P.


(20,024
)


(26,009
)


(27,788
)Total other income (expense)


1,893



594



13,911Income from continuing operations
    before income taxes

$
23,857


$
24,148


$
35,236  F-37




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2005


2004


2003Segment revenues

$
192,526


$
190,243


$
189,219Palmetto MobileNet, L.P.


(20,861
)


(26,563
)


(28,258
)Total revenues

$
171,665


$
163,680


$
160,961     2005


2004


2003Segment depreciation

$
32,063


$
30,948


$
29,017Palmetto MobileNet, L.P.


(180
)


(178
)


(151
)Total depreciation

$
31,883


$
30,770


$
28,866     2005


2004


2003Segment equity in income of
    unconsolidated companies

$
(5
)

$
(2
)

$
(13
)Equity in income of Palmetto
    MobileNet, L.P.


4,280



5,773



5,842Total equity in income of
    unconsolidated companies

$
4,275


$
5,771


$
5,829     2005


2004


2003Segment investment in
    unconsolidated companies

$
4,964


$
5,069


$
4,132Investment in Palmetto MobileNet,
    L.P.


10,654



10,933



8,902Total investment in unconsolidated
    companies

$
15,618


$
16,002


$
13,034     2005


2004


2003Segment assets

$
411,854


$
421,717


$
410,663Investment in unconsolidated
    companies


15,618



16,002



13,034Palmetto MobileNet, L.P.


(106,052
)


(107,855
)


(101,012
)Total assets

$
321,420


$
329,864


$
322,685  F-38




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (18)
    Summary
    of Quarterly Income Statement Information (Unaudited)    2005 Quarters EndedMarch 31


June 30


Sept. 30


Dec. 31Operating revenue

$
41,397


$
41,033


$
44,943


$
44,292Operating income


5,100



3,548



7,078



6,238Net income


2,989



2,953



4,736



3,871Basic earnings per common share

$
0.16


$
0.16


$
0.25


$
0.21Diluted earnings per common share

$
0.16


$
0.15


$
0.25


$
0.20   2004 Quarters EndedMarch 31


June 30


Sept. 30


Dec. 31Operating revenue

$
40,564


$
40,749


$
40,848


$
41,519Operating income


6,931



6,180



4,530



5,913Net income


4,239



4,165



2,244



4,055Basic earnings per common share

$
0.22


$
0.22


$
0.12


$
0.21Diluted earnings per common share

$
0.22


$
0.22


$
0.12


$
0.21   (19)
    Subsequent
    Event   F-39




---



##### Table of Contents



SCHEDULE II
  CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
    VALUATION AND QUALIFYING ACCOUNTS
    Years Ended December 31, 2005, 2004 and 2003 (in
    thousands)
  Column A

Column B


Column C


Column D


Column EDeductionsBalance,


Additions


FromBeginning


Charged


Reserves


Balance,Description

of Year


to Income


(See Note)


End of YearValuation and qualifying accounts
    deducted from assets to which they apply:Allowance for uncollectible
    accounts:Year ended December 31, 2005

$
313


$
1,127


$
1,103


$
337Year ended December 31, 2004


567



1,399



1,653



313Year ended December 31, 2003


1,174



1,439



2,046



567      F-40




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P.
    AND SUBSIDIARY
  REPORT ON
    CONSOLIDATED
    FINANCIAL STATEMENTS
  FOR THE
    YEARS ENDED
    DECEMBER 31, 2005, 2004 AND 2003
 F-41




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  CONTENTS
  PageREPORTS OF INDEPENDENT
    CERTIFIED PUBLIC ACCOUNTANTSElliott Davis, LLC


F-43Bauknight Pietras & Stormer,
    P.A.


F-44FINANCIAL STATEMENTSConsolidated balance sheets


F-45Consolidated statements of income
    and partners equity


F-46Consolidated statements of cash
    flows


F-47NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS


F-48  F-42




---



##### Table of Contents



REPORT OF
    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS  To the
    Partners of
 Palmetto MobileNet, L.P. and Subsidiary
   Palmetto MobileNet, L.P and Subsidiary
             F-43




---



##### Table of Contents



Report of
    Independent Auditors
               F-44




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
  December 31,2005


2004ASSETSCURRENT ASSETSCash and cash equivalents

$
15,112


$
3,123,392Accounts receivable


5,042



1,298Dividends receivable


1,404,740



Total current assets


1,424,894



3,124,690LAND, BUILDING AND
    IMPROVEMENTS, NET


7,511,025



7,685,573INTERESTS IN RSA
    PARTNERSHIPS


91,546,585



91,466,638GOODWILL


5,334,236



5,334,236OTHER ASSETS


234,820



243,746$
106,051,560


$
107,854,883LIABILITIES AND PARTNERS
    EQUITYCURRENT LIABILITIESAccounts
    payable  PMN, Inc.

$
178,368


$
129,334Accounts payable and accrued
    expenses


297,380



268,335Total current liabilities


475,748



397,669LONG-TERM DEBT


12,550,318



13,581,512COMMITMENTS AND CONTINGENCIES
    (Note 7)PARTNERS EQUITY


93,025,494



93,875,702Total liabilities and
    partners equity

$
106,051,560


$
107,854,883    See notes to
    consolidated financial statements which are an integral part of
    these statements.
 F-45




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF INCOME AND
    PARTNERS EQUITY
  Years ended December
    31,2005


2004


2003Equity in earnings of RSA
    partnership interests

$
20,860,756


$
26,562,695


$
28,258,064Management fee


(836,504
)


(553,256
)


(470,005
)Income from operations


20,024,252



26,009,439



27,788,059Revenue from real estate rentals


1,257,558



1,157,877



1,055,976Cost of rental revenues


(570,952
)


(596,905
)


(619,787
)Income from real estate rentals


686,606



560,972



436,189Other income (expense)Interest expense


(516,432
)


(442,243
)


(234,064
)Investment income


65



5,432



62,885Other


(675,928
)


(340,332
)


(158,019
)(1,192,295
)


(777,143
)


(329,198
)Net income


19,518,563



25,793,268



27,895,050Partners equity, beginning
    of year


93,875,702



84,809,861



94,643,217Repurchase of partners
    interest










(11,669,034
)Distributions to partners


(20,368,771
)


(16,727,427
)


(26,059,372
)Partners equity, end of year

$
93,025,494


$
93,875,702


$
84,809,861    See notes to
    consolidated financial statements which are an integral part of
    these statements.
 F-46




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years ended December
    31,2005


2004


2003OPERATING ACTIVITIESNet income

$
19,518,563


$
25,793,268


$
27,895,050Adjustments to reconcile net
    income to net cash used for operating activitiesEquity in earnings of RSA
    partnership interests


(20,860,756
)


(26,562,695
)


(28,258,064
)Depreciation


179,548



177,529



150,622Amortization of loan costs


8,926



75,962



5,790Changes in operating assets and
    liabilitiesAccounts receivable


(3,744
)


(1,298
)


69Deposits






30,350



(30,350
)Accounts payable and accrued
    expenses


78,079



74,007



54,195Net cash used for operating
    activities


(1,079,384
)


(412,877
)


(182,688
)INVESTING ACTIVITIESProceeds from RSA partnership
    distributions


19,376,069



19,730,039



24,333,188RSA capital contributions






(2,000,000
)


Proceeds from other assets










233,739Purchase of land, building and
    improvements


(5,000
)


(1,250,796
)


(687,561
)Net cash provided by investing
    activities


19,371,069



16,479,243



23,879,366FINANCING ACTIVITIESProceeds from long-term debt


22,056,796



13,581,512



17,100,000Repayments of long-term debt


(23,087,990
)


(15,878,571
)


(1,221,429
)Payments for loan costs






(89,260
)


(81,008
)Purchase of partners interest










(17,003,270
)Partnership distributions


(20,368,771
)


(16,727,427
)


(26,059,372
)Net cash used for financing
    activities


(21,399,965
)


(19,113,746
)


(27,265,079
)Net decrease in cash and cash
    equivalents


(3,108,280
)


(3,047,380
)


(3,568,401
)CASH AND CASH EQUIVALENTS
    BEGINNING OF YEAR


3,123,392



6,170,772



9,739,173CASH AND CASH EQUIVALENTS, END
    OF YEAR

$
15,112


$
3,123,392


$
6,170,772SUPPLEMENTAL CASH FLOW
    INFORMATIONCash paid for interest

$
394,920


$
503,431


$
159,384    See notes to
    consolidated financial statements which are an integral part of
    these statements.
 F-47




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##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1  Description
    of Business and Summary of Significant Accounting
    Policies
        Consolidation
    Estimates
    Cash and
    cash equivalents
      Interests
    in RSA Partnerships
    Land,
    building and improvements
    Loan
    costs
    Goodwill
  Goodwill and Other
    Intangible Assets.
 F-48




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##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Income
    taxes
    Reclassifications
    Note 2  Acquisitions
  15-year
        Note 3  Interests
    in RSA Partnerships
    
    South Carolina RSA No. 2 Cellular General Partnership (50%
    owned)          F-49




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##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2005


2004Current assets

$
23,482,288


$
24,454,723Net property and equipment


128,289,812



128,578,925Other assets


1,064,532



1,413,984Total assets

$
152,836,632


$
154,447,632Current liabilities

$
17,925,452


$
18,531,162Non-current liabilities


23,137,805



24,226,652Partners equity


111,773,375



111,689,818Total liabilities and
    partners equity

$
152,836,632


$
154,447,632     2005


2004


2003Net sales

$
259,319,205


$
257,703,100


$
229,526,063Operating expenses:System and operations


118,745,424



114,536,813



93,206,164Cost of products sold


24,745,536



23,543,975



19,337,760Depreciation and amortization


22,041,009



19,445,141



16,401,642Selling and marketing


27,973,691



26,176,695



21,361,829General and administrative


25,118,863



23,229,878



22,693,155Total operating expenses


218,624,523



206,932,502



173,000,550Other income


651,377



2,257,172



438,330Interest income


299,114



97,617



91,523Net income

$
41,645,173


$
53,125,387


$
57,055,366     F-50




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##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2005


2004


2003Cash flows from operating
    activities:Net income

$
41,645,173


$
53,125,387


$
57,055,366Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


22,041,009



19,445,141



16,401,642Provision for doubtful accounts


9,904,875



7,676,612



7,179,962Amortization of deferred rental
    revenue and related costs


(2,176,988
)


(2,176,992
)


(2,194,948
)Loss on disposal of assets


760,831



101,582



23,371Changes in operating assets and
    liabilities


(13,376,408
)


(8,797,160
)


(1,577,349
)Net cash provided by operating
    activities


58,798,492



69,374,570



76,888,044Cash flows from investing
    activities:Capital expenditures


(22,506,200
)


(29,626,965
)


(30,376,298
)Proceeds from sale/lease of
    equipment










2,493Net cash used for investing
    activities


(22,506,200
)


(29,626,965
)


(30,373,805
)Cash flows from financing
    activities:Distributions to partners


(41,561,616
)


(39,460,077
)


(48,666,368
)Capital contribution from partners






4,000,000



Change in affiliate payable, net


5,271,110



(4,286,294
)


2,152,419Net cash used for financing
    activities


(36,290,506
)


(39,746,371
)


(46,513,949
)Net change in cash


1,786



1,234



290Cash, beginning of year


18,984



17,750



17,460Cash, end of year

$
20,770


$
18,984


$
17,750     Note 4  Land,
    Building and Improvements, Net
    2005


2004Land

$
2,077,338


$
2,077,338Land improvements


50,000



50,000Building


4,997,020



4,997,020Building improvements


1,229,256



1,229,256Construction in progress


5,000



8,358,614



8,353,614Less, accumulated depreciation


(847,589
)


(668,041
)$
7,511,025


$
7,685,573  F-51




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##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         RelatedParty


Others


Total2006

$
932,758


$
214,996


$
1,147,7542007


969,058



203,830



1,172,8882008


972,358



203,830



1,176,1882009


972,358



203,830



1,176,1882010


972,358







972,358Thereafter


934,596







934,596$
5,753,486


$
826,486


$
6,579,972   Note 5  Long-Term
    Debt
    2005


2004Line of credit agreement with a
    bank for $20,000,000, requiring quarterly interest payments at
    the 90-day
    LIBOR rate (4.53% at December 31, 2005) plus 2%. The
    amount of available credit on this line is reduced by $500,000
    each quarter until the agreement matures on December 21,
    2014. This line of credit is secured by a mortgage on the real
    property owned by HamptonNet, LLC

$
12,550,318


$
13,581,51212,550,318



13,581,512Less current portion






$
12,550,318


$
13,581,512       Note 6  Related
    Party Transactions
   F-52




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##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7  Commitments
    and Contingencies
        Note 8  Subsequent
    Event
     F-53




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##### Table of Contents



Report of
    Independent Auditors
           F-54




---



##### Table of Contents



Report of
    Independent Auditors
            F-55




---



##### Table of Contents



Report of
    Independent Auditors
            F-56




---



##### Table of Contents



Report of
    Independent Auditors
            F-57




---



##### Table of Contents



Report of
    Independent Auditors
            F-58




---



##### Table of Contents



Report of
    Independent Auditors
           F-59




---



##### Table of Contents



Report of
    Independent Auditors
          F-60




---



##### Table of Contents



Report of
    Independent Auditors
          F-61




---



##### Table of Contents



Report of
    Independent Auditors
          F-62




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##### Table of Contents



Report of
    Independent Auditors
          F-63




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##### Table of Contents



INDEX TO
    EXHIBITS
  Exhibit No.

Description3
.1

Articles of Incorporation of CT
    Communications, as amended. (Incorporated by reference to
    Exhibit 3.1 of CT Communications Registration
    Statement on
    Form 8-A
    filed on January 28, 1999.)3
.2

Bylaws of CT Communications, as
    amended. (Incorporated by reference to Exhibit 3.2 to
    CT Communications Annual Report on
    Form 10-K
    filed with the Securities and Exchange Commission on
    March 29, 1999.)4
.1

Amended and Restated Rights
    Agreement, dated as of January 28, 1999 and effective as of
    August 27, 1998, between CT Communications and First
    Union National Bank, including the Rights Certificate attached
    as an exhibit thereto. (Incorporated by reference to
    Exhibit 4.2 of CT Communications Registration
    Statement on
    Form 8-A,
    filed with the Securities and Exchange Commission on
    January 28, 1999).4
.2

Specimen of Common Stock
    Certificate. (Incorporated by reference to Exhibit 4.1 of
    CT Communications Registration Statement on
    Form 8-A,
    filed with the Securities and Exchange Commission on
    January 28, 1999.)10
.1

BellSouth Carolinas PCS Limited
    Partnership Agreement dated December 8, 1994. (Incorporated
    by reference to Exhibit 10(h) of CT Communications
    Amendment No. 1 to Annual Report on
    Form 10-K/A,
    filed with the Securities and Exchange Commission on
    July 14, 1995.)10
.2

Limited Liability Company
    Agreement of WONC dated October 10, 1995 by and among
    CT Wireless, Wireless One, Inc. and O. Gene Gabbard.
    (Incorporated by reference to Exhibit 10.4 to CT
    Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 31, 1997.)10
.3

1989 Executive Stock Option Plan
    dated April 26, 1989. (Incorporated by reference to
    Exhibit 10(d) to CT Communications Annual Report
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 29, 1994.)10
.4

Comprehensive Stock Option Plan
    dated April 27, 1995. (Incorporated by reference to
    Exhibit 99.1 to CT Communications Registration
    Statement on
    Form S-8
    (No.
    33-59645),
    filed with the Securities and Exchange Commission on
    May 26, 1995.)10
.5

Employee Stock Purchase Plan dated
    April 27, 1995. (Incorporated by reference to
    Exhibit 99.1 to CT Communications Registration
    Statement on
    Form S-8
    (No.
    33-59643),
    filed with the Securities and Exchange Commission on
    May 26, 1995.)10
.6

Restricted Stock Award Program
    dated April 27, 1995. (Incorporated by reference to
    Exhibit 99.1 to CT Communications Registration
    Statement on
    Form S-8
    (No.
    33-59641),
    filed with the Securities and Exchange Commission on
    May 26, 1995.)10
.7

Omnibus Stock Compensation Plan
    dated April 24, 1997. (Incorporated by reference to
    Exhibit 10.10 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    April 9, 1998.)10
.8

1997 Employee Stock Purchase Plan
    dated April 24, 1997. (Incorporated by reference to
    Exhibit 10.11 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    April 9, 1998.)10
.9

Change in Control Agreement, dated
    October 1, 1997, between CT Communications and Michael R.
    Coltrane. (Incorporated by reference to Exhibit 10.12 to CT
    Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    April 9, 1998.)10
.10

Change in Control Agreement, dated
    as of June 22, 1998, between CT Communications and Richard
    L. Garner, Jr. (Incorporated by reference to
    Exhibit 10.14 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 29, 1999.)10
.11

Change in Control Agreement, dated
    as of December 12, 1998, between CT Communications and
    Michael R. Nash. (Incorporated by reference to
    Exhibit 10.14 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 29, 1999.)10
.12

Change in Control Agreement, dated
    as of December 31, 1998, between CT Communications and
    Charlotte S. Walsh. (Incorporated by reference to
    Exhibit 10.14 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 29, 1999.)10
.13

Form of Supplemental Executive
    Retirement Plan, dated June 27, 1997. (Incorporated by
    reference to Exhibit 10.17 to CT Communications
    Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    April 9, 1998.)




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##### Table of Contents



Exhibit No.

Description10
.14

Contribution Agreement by and
    among Palmetto MobileNet, L.P., PMN, Inc., CT Communications and
    Ellerbe Telephone Co., dated as of January 1, 1998.
    (Incorporated by reference to Exhibit 10.18 to CT
    Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    April 9, 1998.)10
.15

Amendment to the CT
    Communications, Inc. Omnibus Stock Compensation Plan, originally
    effective as of April 24, 1997, dated as of
    February 22, 2001. (Incorporated by reference to
    Exhibit 10.26 on CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 30, 2001.)10
.16

Amendment to the CT
    Communications, Inc. 1995 Comprehensive Stock Option Plan dated
    as of February 22, 2001. (Incorporated by reference to
    Exhibit 10.27 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 30, 2001.)10
.17

CT Communications, Inc.
    1996 Director Compensation Plan. (Incorporated by reference
    to Exhibit 99.1 to CT Communications Registration
    Statement on
    Form S-8
    (No.
    333-15537),
    filed with the Securities and Exchange Commission on
    November 5, 1996.)10
.18

Credit Agreement, dated as of
    May 4, 2001, by and among CT Communications, the Subsidiary
    Borrowers referred to therein, the Lenders referred to therein
    and CoBank ACB, as administrative agent. (Incorporated by
    reference to Exhibit 10.1 of CT Communications Quarterly
    Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    August 14, 2001.)10
.19

CT Communications, Inc. 2001
    Employee Stock Purchase Plan, dated April 26, 2001.
    (Incorporated by reference to Exhibit 10.2 to CT
    Communications Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    May 15, 2001.)10
.20

Limited Liability Company Interest
    Purchase Agreement, dated September 14, 2001, among
    Wireless One of North Carolina, L.L.C., CT Wireless Cable, Inc.,
    Wireless One, Inc., and WorldCom Broadband Solutions, Inc.
    (Incorporated by reference to Exhibit 99.1 to
    CT Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    September 28, 2001.)10
.21

Executive Nonqualified Excess
    Plan, as amended, dated December 1, 2001. (Incorporated by
    reference to Exhibit 10.1 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    May 14, 2003.)10
.22

Employment Agreement, dated as of
    April 15, 2002, between CT Communications and James E.
    Hausman. (Incorporated by reference to Exhibit 10.1 to CT
    Communications Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    August 14, 2002.)10
.23

Employment Agreement, dated as of
    May 15, 2002, between CT Communications and Matthew J.
    Dowd. (Incorporated by reference to Exhibit 10.2 to CT
    Communications Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    August 14, 2002.)10
.24

Change in Control Agreement, dated
    as of May 20, 2002, between CT Communications and James E.
    Hausman. (Incorporated by reference to Exhibit 10.3 to CT
    Communications Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    August 14, 2002.)10
.25

Change in Control Agreement, dated
    as of March 10, 2003, between CT Communications and Matthew
    J. Dowd. (Incorporated by reference to Exhibit 10.28 to CT
    Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 28, 2003.)10
.26

Change in Control Agreement, dated
    as of March 7, 2003, between CT Communications and Ronald
    A. Marino. (Incorporated by reference to Exhibit 10.29 to
    CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 28, 2003.)10
.27

CT Communications, Inc. Amended
    and Restated 2001 Stock Incentive Plan. (Incorporated by
    reference to Exhibit 10 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on May 5,
    2004.)10
.28

CT Communications, Inc. Amended
    and Restated 2001 Stock Incentive Plan:  Form of Non-Qualified
    Stock Option Agreement. (Incorporated by reference to
    Exhibit 10.1 to CT Communications Quarterly
    Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 5, 2004.)10
.29

CT Communications, Inc. Amended
    and Restated 2001 Stock Incentive Plan:  Form of Incentive Stock
    Option Agreement. (Incorporated by reference to
    Exhibit 10.2 to CT Communications Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 5, 2004.)




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##### Table of Contents



Exhibit No.

Description10
.30

CT Communications, Inc. Amended
    and Restated 2001 Stock Incentive Plan:  Form of Restricted
    Stock Agreement. (Incorporated by reference to Exhibit 10.3
    to CT Communications Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 5, 2004.)10
.31

CT Communications, Inc. Amended
    and Restated 2001 Stock Incentive Plan:  Form of Director
    Non-Qualified Stock Option Agreement. (Incorporated by reference
    to Exhibit 10.4 to CT Communications Quarterly
    Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 5, 2004.)10
.32

Description of Annual Incentive
    and Long-Term Incentive Bonus Awards. (Incorporated by reference
    to Exhibit 10.1 to CT Communications Current Report
    on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    January 20, 2005.)10
.33

Description of 2004 Compensation
    of Directors. (Incorporated by reference to Exhibit 10.2 to
    CT Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    January 20, 2005.)10
.34

Description of Annual Incentive
    and Long-Term Incentive Bonus Awards. (Incorporated by reference
    to Exhibit 10.1 to CT Communications Current Report
    on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    February 14, 2005.)10
.35

Description of 2005 Compensation
    of Directors. (Incorporated by reference to Exhibit 10.2 to
    CT Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    February 14, 2005.)10
.36

Description of Director Stock Unit
    Program. (Incorporated by reference to Exhibit 10 to
    CT Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    March 2, 2005.)10
.37

Resolution Agreement, dated
    January 31, 2005, between CT Communications, Inc. and North
    Carolina Department of Revenue (Incorporated by reference to
    Exhibit 10 to CT Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    March 23, 2005.)10
.38

Amended and Restated Agreement of
    Limited Partnership of Palmetto MobileNet, L.P., dated as of
    September 1, 1998. (Incorporated by reference to
    Exhibit 10.41 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 31, 2005.)10
.39

First Amendment to the Agreement
    of Limited Partnership of Palmetto MobileNet, L.P., dated as of
    January 1, 1999. (Incorporated by reference to
    Exhibit 10.42 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 31, 2005.)10
.40

Second Amendment to the Agreement
    of Limited Partnership of Palmetto MobileNet, L.P., dated as of
    October 8, 2003. (Incorporated by reference to
    Exhibit 10.43 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 31, 2005.)10
.41

Amendment to CT Communications,
    Inc. 1996 Director Compensation Plan, dated as of
    August 1, 2004. (Incorporated by reference to
    Exhibit 10.44 to CT Communications Annual Report on
    Form 10-K,
    filed with the Securities and Exchange Commission on
    March 31, 2005.)10
.42

CT Communications, Inc. Amended
    and Restated 2001 Stock Incentive Plan: Form of Director
    Deferred Stock Unit Award Agreement. (Incorporated by reference
    to Exhibit 10.1 to CT Communications Quarterly
    Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on May 6,
    2005.)10
.43

Form of Lock-Up Agreement.
    (Incorporated by reference to Exhibit 99.1 to CT
    Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    August 12, 2005.)10
.44

Amendment to Change in Control
    Agreement, dated as of August 16, 2005, between
    CT Communications and David H. Armistead. (Incorporated by
    reference to Exhibit 10.1 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 3, 2005.)10
.45

Amendment to Change in Control
    Agreement, dated as of August 17, 2005, between
    CT Communications and Michael R. Coltrane. (Incorporated by
    reference to Exhibit 10.2 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 3, 2005.)10
.46

Amendment to Change in Control
    Agreement, dated as of August 19, 2005, between
    CT Communications and Matthew J. Dowd. (Incorporated by
    reference to Exhibit 10.3 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 3, 2005.)




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##### Table of Contents



Exhibit No.

Description10
.47

Amendment to Change in Control
    Agreement, dated as of September 8, 2005, between
    CT Communications and James E. Hausman. (Incorporated by
    reference to Exhibit 10.4 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 3, 2005.)10
.48

Amendment to Change in Control
    Agreement, dated as of August 17, 2005, between
    CT Communications and Ronald A. Marino. (Incorporated by
    reference to Exhibit 10.5 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 3, 2005.)10
.49

Amendment to Change in Control
    Agreement, dated as of August 17, 2005, between
    CT Communications and Michael R. Nash. (Incorporated by
    reference to Exhibit 10.6 to CT Communications
    Quarterly Report on
    Form 10-Q,
    filed with the Securities and Exchange Commission on
    November 3, 2005.)10
.50

Description of Annual Incentive
    and Long-Term Incentive Bonus Awards. (Incorporated by reference
    to Exhibit 10.1 to CT Communications Current Report
    on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    February 24, 2006.)10
.51

Description of 2006 Compensation
    of Directors. (Incorporated by reference to Exhibit 10.2 to
    CT Communications Current Report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    February 24, 2006.)21
.1

Subsidiaries of CT Communications.23
.1

Consent of KPMG LLP.23
.2

Consent of Bauknight
    Pietras & Stormer, P.A.23
.3

Consent of PricewaterhouseCoopers,
    LLP.23
.4

Consent of Elliott Davis, LLC