##### 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, 2006OR[ ]

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 Location2007 Annual Meeting Proxy Statement

Part III




---



##### 



CT
    COMMUNICATIONS, INC.
    AND CONSOLIDATED SUBSIDIARIESForm 10-K
    for the Fiscal Year Ended December 31, 2006
    TABLE OF CONTENTS
  PART IItem 1.

Business


2Item 1A.

Risk
    Factors


15Item 1B.

Unresolved Staff
    Comments


21Item 2.

Properties


21Item 3.

Legal
    Proceedings


21Item 4.

Submission of
    Matters to a Vote of Security Holders


21PART IIItem 5.

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


22Item 6.

Selected Financial
    Data


24Item 7.

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


25Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


46Item 8.

Financial
    Statements and Supplementary Data


47Item 9.

Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


47Item 9A.

Controls and
    Procedures


47Item 9B.

Other
    Information


48PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


49Item 11.

Executive
    Compensation


49Item 12.

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


49Item 13.

Certain
    Relationships and Related Transactions, and Director
    Independence


50Item 14.

Principal
    Accountant Fees and Services


50PART IVItem 15.

Exhibits and
    Financial Statement Schedules


51Signatures


52Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 23.3Exhibit 31.1Exhibit 31.2Exhibit 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
    dial-up
   2




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##### Table of Contents



Operations
  ILEC
    Services
      dial-up
         3




---



##### Table of Contents



IP-based
          Regulation.
 4




---



##### Table of Contents



rights-of-way.
               5




---



##### 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, 6




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##### Table of Contents




    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.    CLEC
    Services
    ,
  face-to-face
      Regulation.
   7




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##### Table of Contents



Competition.
  Greenfield
    Services
  ,
       8




---



##### Table of Contents



Regulation.
      Competition.
  Wireless
    Services
     9




---



##### Table of Contents



Regulation. Form 10-K.
      Competition.
 10




---



##### Table of Contents



Internet
    and Data Services
  dial-up dial-up
    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.
    Fiber Access.  In 2006, the Company began
    deploying aerial fiber in select ILEC locations. The fiber
    facilities allow the ILEC to deliver enhanced bandwidth
    services, including voice, video and higher speed data service.
    The ILEC is currently offering data speeds of up to 15 Mbps
    to customers served off these fiber facilities.
    DSL Access.  In 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 19,507 at December 31, 2005 to 25,704
    at December 31, 2006.
    Dial-up
    Access.  The Companys
    dial-up
    services provide access to the Internet through ordinary
    telephone lines at speeds up to 56 Kbps.
    Dial-up
    customers declined from 6,522 at December 31, 2005 to 4,717
    at December 31, 2006, as customers continue to demand
    higher speed broadband products.      Regulation.
 11




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##### Table of Contents



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 and Verizon,
    online services offered by direct broadcast satellite providers,
    online services offered by incumbent cable providers, such as
    Time Warner and
    wireless data services.  Investments
  Palmetto MobileNet.
  Wireless One.
    Other Investments.
   12




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Legislative
    and Regulatory Developments
  Legislative.
  Federal Regulations.
         13




---



##### Table of Contents



IP-enabled
    State and Local Regulation. city-by-city county-by-county
  rate-of-return
  Employees
    Available
    Information
  www.ctc.net Form 10-K, Form 10-Q, Form 8-K,
  Executive
    Officers of the Registrant
   14




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##### Table of Contents



Michael R. Coltrane
  Matthew J. Dowd
  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, 15




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##### Table of Contents




    cable television companies,
    VoIP providers,
    local and regional system integrators, and
    resellers of telecommunications services and enhanced services
    providers.          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, 16




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##### Table of Contents




    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.      The
    Company must adapt to rapid technological change.
      The
    Company may be required to make certain future expenditures
    under contractual agreements with third parties.
    The
    Company is subject to a complex and uncertain regulatory
    environment.
     17




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##### Table of Contents



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,
    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
 18




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##### Table of Contents



The
    Companys CLEC and Greenfield businesses must secure
    network elements from third parties.
    The
    Company is dependent on its operating support systems.
    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, 19




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##### Table of Contents




    technological innovations, and
    mergers, acquisitions or strategic alliances.    The
    Companys investments in marketable securities and
    unconsolidated companies may not be successful.
      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.
   20




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##### Table of Contents



The
    Company relies on a limited number of key suppliers and vendors
    to operate its business.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties            Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   21




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##### Table of Contents



PART II  Item 5.
    Market
    for 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, 2006Fourth quarter

$
24.07


$
20.08


$
0.12Third quarter


26.56



21.22



0.10Second quarter


22.87



12.91



0.10First quarter


14.08



12.42



0.10Year ended December 31, 2005Fourth quarter

$
13.02


$
10.40


$
0.10Third quarter


13.76



10.67



0.10Second quarter


13.44



10.23



0.10First quarter


12.36



10.05



0.07      22




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##### Table of Contents



Performance
    Graph
      Comparison
    of the Return of the Companys Common Stock
  
  12/31/2001


12/31/2002


12/31/2003


12/31/2004


12/31/2005


12/31/2006CTCI


$
100



$
69



$
82



$
75



$
75



$
141RLEC Index


$
100



$
59



$
81



$
91



$
77



$
100Russell 2000


$
100



$
78



$
114



$
133



$
138



$
161     Issuer
    Purchases of Equity Securities
   23




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended December 31,2006


2005


2004


2003


2002Income Statement
    Data:Operating revenue

$
176,871


$
171,665


$
163,680


$
160,961


$
147,975Operating expense


152,610



149,701



140,126



139,636



128,927Operating income


24,261



21,964



23,554



21,325



19,048Other income(1)


92,038



1,893



594



13,911



3,325Income taxes


44,638



9,308



9,445



13,526



8,808Income from continuing operations


71,661



14,549



14,703



21,710



13,565Discontinued operations














(424
)


(5,657
)Net income


71,661



14,549



14,703



21,286



7,908Dividends on preferred stock


3



10



20



20



20Earnings for common stock

$
71,658


$
14,539


$
14,683


$
21,266


$
7,888Basic weighted average common
    shares outstanding


19,432



18,785



18,867



18,747



18,710Diluted weighted average common
    shares outstanding


19,818



18,947



19,007



18,808



18,746Per share data:Basic earnings per share

$
3.69


$
0.77


$
0.78


$
1.13


$
0.42Diluted earnings per share


3.62



0.77



0.77



1.13



0.42Dividends per share


0.42



0.37



0.265



0.26



0.26Balance Sheet Data:Book value per share

$
13.94


$
10.35


$
9.97


$
9.45


$
8.53Total assets


387,358



321,420



329,864



322,685



337,868Long-term debt (excluding current
    maturities)


35,000



40,000



65,000



80,000



127,697Shareholders equity


279,378



195,880



188,228



177,394



159,341     (1)
    
    Other income in 2006 includes equity in income of unconsolidated
    companies of $89.2 million resulting from Palmettos
    sale of its ownership interests in 10 RSAs to Alltel Corporation
    for approximately $455 million. Other income in 2003
    includes a $15.2 million gain related to the sale of the
    Companys investment in ITC Holding Company. 24




---



##### Table of Contents



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
          line-up,
   25




---



##### Table of Contents



IP-based
          Industry
    and Operating Trends
          dial-up
 26




---



##### Table of Contents



dial-up
                 27




---



##### Table of Contents



IP-enabled
    rate-of-return
     28




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    Revenue
    recognition
       29




---



##### Table of Contents



00-21, No. 00-21,
  Goodwill
    and intangible assets
  held-for-sale) held-for-sale
  Long-lived
    assets
        98-1,
 30




---



##### Table of Contents



Investments
  other-than-temporary,
  Accounting
    for income taxes
       31




---



##### Table of Contents



Pension
    and postretirement benefits
        Allowance
    for doubtful accounts
    Results
    of Operations
  and/or
   32




---



##### Table of Contents



Consolidated
    Operating Results (in
    thousands, except lines and customers)
  2006


2005


2004


2006-2005 Change


2005-2004 ChangeOperating revenueCustomer recurring

$
112,834


$
109,015


$
107,297


$
3,819



3.5
%

$
1,718



1.6
%Universal service


5,537



4,708



3,521



829



17.6
%


1,187



33.7
%Access & interconnection


27,728



27,484



25,059



244



0.9
%


2,425



9.7
%Wireless roaming/settlement


12,416



11,984



9,622



432



3.6
%


2,362



24.5
%Other


18,356



18,474



18,181



(118
)


(0.6
)%


293



1.6
%Total operating
    revenue


176,871



171,665



163,680



5,206



3.0
%


7,985



4.9
%Operating expenseCost of service


59,850



60,875



54,490



(1,024
)


(1.7
)%


6,384



11.7
%Selling, general &
    administrative


60,813



56,943



54,866



3,869



6.8
%


2,078



3.8
%Depreciation


31,947



31,883



30,770



64



0.2
%


1,113



3.6
%Total operating
    expense


152,610



149,701



140,126



2,909



1.9
%


9,575



6.8
%Operating income


24,261



21,964



23,554



2,297



10.5
%


(1,590
)


(6.8
)%Other income


92,038



1,893



594



90,145







1,299Income before taxes


116,299



23,857



24,148



92,442







(291
)Income taxes


44,638



9,308



9,445



35,330







(137
)Net income

$
71,661


$
14,549


$
14,703


$
57,112






$
(154
)Capital expenditures

$
42,034


$
27,094


$
27,197


$
14,940



55.1
%

$
(103
)


(0.4
)%Total assets


387,358



321,420



329,864



65,938



20.5
%


(8,444
)


(2.6
)%Wired access lines


158,654



157,592



157,609



1,062



0.7
%


(17
)


(0.0
)%Wireless subscribers


49,157



46,138



43,213



3,019



6.5
%


2,925



6.8
%Internet and data customers


31,256



26,722



23,534



4,534



17.0
%


3,188



13.5
%   2006
    compared to 2005
     33




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##### Table of Contents



34




---



##### Table of Contents



lock-up
    2005
    compared to 2004
     35




---



##### Table of Contents



ILEC (in
    thousands, except lines)
  2006-2005


2005-20042006


2005


2004


Change


ChangeOperating revenue:Customer recurring

$
52,846


$
53,089


$
54,668


$
(243
)


(0.5
)%

$
(1,579
)


(2.9
)%Universal service


5,537



4,708



3,521



829



17.6
%


1,187



33.7
%Access & interconnection


21,153



21,098



19,648



55



0.3
%


1,450



7.4
%Other


15,715



15,666



15,179



49



0.3
%


487



3.2
%Total operating
    revenue


95,251



94,561



93,016



690



0.7
%


1,545



1.7
%Operating expense:Cost of service


20,053



21,398



19,258



(1,344
)


(6.3
)%


2,139



11.1
%Selling, general &
    administrative


31,553



29,212



27,673



2,340



8.0
%


1,540



5.6
%Depreciation


20,353



20,429



18,925



(76
)


(0.4
)%


1,504



7.9
%Total operating
    expense


71,959



71,039



65,856



920



1.3
%


5,183



7.9
%Operating income

$
23,292


$
23,522


$
27,160


$
(230
)


(1.0
)%

$
(3,638
)


(13.4
)%Operating margin


24.5
%


24.9
%


29.2
%Capital expenditures

$
25,299


$
14,943


$
16,204


$
10,356



69.3
%

$
(1,261
)


(7.8
)%Total assets


253,647



163,947



175,824



89,700



54.7
%


(11,877
)


(6.8
)%Business access lines


28,122



28,263



28,710



(141
)


(0.5
)%


(447
)


(1.6
)%Residential access lines


78,298



81,854



84,206



(3,556
)


(4.3
)%


(2,352
)


(2.8
)%Total access lines


106,420



110,117



112,916



(3,697
)


(3.4
)%


(2,799
)


(2.5
)%  36




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##### Table of Contents



2006
    compared to 2005
          2005
    compared to 2004
  dial-up
       37




---



##### Table of Contents



CLEC (in
    thousands, except lines)
  2006


2005


2004


2006-2005 Change


2005-2004 ChangeOperating revenue:Customer recurring

$
14,393


$
14,747


$
15,269


$
(354
)


(2.4
)%

$
(522
)


(3.4
)%Access & interconnection


4,422



4,237



3,665



185



4.4
%


572



15.6
%Other


276



288



189



(12
)


(4.2
)%


99



52.4
%Total operating
    revenue


19,091



19,272



19,123



(181
)


(0.9
)%


149



0.8
%Operating expense:Cost of service


10,203



10,972



11,204



(769
)


(7.0
)%


(232
)


(2.1
)%Selling, general &
    administrative


7,315



7,020



6,456



295



4.2
%


564



8.7
%Depreciation


2,709



2,546



2,309



163



6.4
%


237



10.3
%Total operating
    expense


20,227



20,538



19,969



(311
)


(1.5
)%


569



2.8
%Operating income

$
(1,136
)

$
(1,266
)

$
(846
)

$
130



(10.3
)%

$
(420
)


49.6
%Operating margin


(6.0
)%


(6.6
)%


(4.4
)%Capital expenditures

$
2,652


$
1,499


$
784


$
1,153



76.9
%

$
715



91.2
%Total assets


14,324



13,606



14,570



718



5.3
%


(964
)


(6.6
)%Access lines


35,615



32,546



31,718



3,069



9.4
%


828



2.6
%Long distance lines


24,213



24,937



23,723



(724
)


(2.9
)%


1,214



5.1
%   2006
    compared to 2005
      IP-packet
  2005
    compared to 2004
   38




---



##### Table of Contents



Greenfield (in
    thousands, except lines and projects)
  2006


2005


2004


2006-2005 Change


2005-2004 ChangeOperating revenue:Customer recurring

$
8,012


$
7,234


$
5,958


$
778



10.8
%

$
1,276



21.4
%Access & interconnection


2,153



2,149



1,746



4



0.2
%


403



23.1
%Other


268



253



404



15



5.9
%


(151
)


(37.4
)%Total operating
    revenue


10,433



9,636



8,108



797



8.3
%


1,528



18.8
%Operating expense:Cost of service


5,250



5,349



4,851



(99
)


(1.9
)%


498



10.3
%Selling, general &
    administrative


3,905



3,641



3,879



264



7.3
%


(238
)


(6.1
)%Depreciation


4,045



3,427



3,274



618



18.0
%


153



4.7
%Total operating
    expense


13,200



12,417



12,004



783



6.3
%


413



3.4
%Operating income

$
(2,767
)

$
(2,781
)

$
(3,896
)

$
14



(0.5
)%

$
1,115



(28.6
)%Operating margin


(26.5
)%


(28.9
)%


(48.1
)%Capital expenditures

$
6,039


$
6,214


$
5,315


$
(175
)


(2.8
)%

$
899



16.9
%Total assets


31,543



29,549



26,762



1,994



6.7
%


2,787



10.4
%Access lines


16,619



14,929



12,975



1,690



11.3
%


1,954



15.1
%Long distance lines


10,424



8,603



6,877



1,821



21.2
%


1,726



25.1
%Total projects


126



118



105



8



6.8
%


13



12.4
%   2006
    compared to 2005
     39




---



##### Table of Contents



2005
    compared to 2004
           40




---



##### Table of Contents



Wireless (in
    thousands, except subscribers)
  2006


2005


2004


2006-2005 Change


2005-2004 ChangeOperating revenue:Customer recurring

$
23,899


$
22,365


$
21,022


$
1,534



6.9
%

$
1,343



6.4
%Wireless roaming/settlement


12,416



11,984



9,622



432



3.6
%


2,362



24.5
%Other


1,940



2,077



1,904



(137
)


(6.6
)%


173



9.1
%Total operating
    revenue


38,255



36,426



32,548



1,829



5.0
%


3,878



11.9
%Operating expense:Cost of service


21,622



20,238



15,962



1,384



6.8
%


4,276



26.8
%Selling, general &
    administrative


11,206



10,578



10,669



628



5.9
%


(91
)


(0.9
)%Depreciation


2,596



2,378



1,930



218



9.2
%


448



23.2
%Total operating
    expense


35,424



33,194



28,561



2,230



6.7
%


4,633



16.2
%Operating income

$
2,831


$
3,232


$
3,987


$
(401
)


(12.4
)%

$
(755
)


(18.9
)%Operating margin


7.4
%


8.9
%


12.2
%Capital expenditures

$
1,789


$
2,210


$
2,229


$
(421
)


(19.0
)%

$
(19
)


(0.9
)%Total assets


33,948



34,049



33,676



(101
)


(0.3
)%


373



1.1
%Wireless subscribers


49,157



46,138



43,213



3,019



6.5
%


2,925



6.8
%   2006
    compared to 2005
        2005
    compared to 2004
   41




---



##### Table of Contents



home-on-home Home-on-home home-on-home
    Internet
    and Data Services (in
    thousands, except lines and accounts)
  2006-2005


2005-20042006


2005


2004


Change


ChangeOperating revenue:Customer recurring

$
13,684


$
11,580


$
10,380


$
2,104



18.2
%

$
1,200



11.6
%Other


157



190



505



(33
)


(17.4
)%


(315
)


(62.4
)%Total operating
    revenue


13,841



11,770



10,885



2,071



17.6
%


885



8.1
%Operating expense:Cost of service


2,722



2,918



3,172



(196
)


(6.7
)%


(254
)


(8.0
)%Selling, general &
    administrative


5,666



5,488



5,162



178



3.2
%


326



6.3
%Depreciation


1,290



1,761



2,954



(471
)


(26.7
)%


(1,193
)


(40.4
)%Total operating
    expense


9,678



10,167



11,288



(489
)


(4.8
)%


(1,121
)


(9.9
)%Operating income

$
4,163


$
1,603


$
(403
)

$
2,560



159.7
%

$
2,006



(497.8
)%Operating margin


30.1
%


13.6
%


(3.7
)%Capital expenditures

$
1,256


$
1,229


$
1,380


$
27



2.2
%

$
(151
)


(10.9
)%Total assets


13,393



13,533



13,806



(140
)


(1.0
)%


(273
)


(2.0
)%DSL lines


25,704



19,507



13,887



6,197



31.8
%


5,620



40.5
%Dial-up
    accounts


4,717



6,522



9,041



(1,805
)


(27.7
)%


(2,519
)


(27.9
)%High-speed accounts


835



693



606



142



20.5
%


87



14.4
%   2006
    compared to 2005
   42




---



##### Table of Contents



dial-up dial-up dial-up
      2005
    compared to 2004
  dial-up dial-up dial-up
      Other
    Business Units (in
    thousands)
  2006-2005


2005-20042006


2005


2004


Change


ChangeOperating expense:Cost of service

$



$



$
43


$




N/A


$
(43
)


(100.0
)%Selling, general &
    administrative


1,168



1,004



1,027



164



16.3
%


(23
)


(2.2
)%Depreciation


954



1,342



1,378



(388
)


(28.9
)%


(36
)


(2.6
)%Total operating
    expense


2,122



2,346



2,448



(224
)


(9.5
)%


(102
)


(4.2
)%Operating loss

$
(2,122
)

$
(2,346
)

$
(2,448
)

$
224



(9.5
)%

$
102



(4.2
)%Capital expenditures

$
4,999


$
999


$
1,285


$
4,000



400.4
%

$
(286
)


(22.3
)%Total assets


36,833



51,118



49,224



(14,285
)


(27.9
)%


1,894



3.8
%   2006
    compared to 2005
   43




---



##### Table of Contents



2005
    compared to 2004
    Liquidity
    and Capital Resources
  Net cash
    provided by operating activities
    Net cash
    used in investing activities
  available-for-sale
  Net cash
    used in financing activities
    Anticipated
    sources and uses of funds
     44




---



##### Table of Contents



Payments Due by YearLess Than








After 5Total


One Year


1-3 Years


4-5 Years


YearsContractual obligationsTerm loan

$
40,000


$
5,000


$
10,000


$
10,000


$
15,000Fixed interest payments


12,079



2,791



4,484



3,020



1,784Operating leases


11,793



2,332



4,411



3,053



1,997Capital leases


86



86











Other service contracts


1,959



1,044



915







Total

$
65,917


$
11,253


$
19,810


$
16,073


$
18,781     Accounting
    Considerations
    Cautionary
    Note Regarding Forward-Looking Statements
    
    the Companys ability to respond effectively to the issues
    surrounding the telecommunications industry caused by state and
    federal legislation and regulations, 45




---



##### Table of Contents




    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         46




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  F-42
  Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  (a)  Disclosure
    Controls and Procedures
  Rules 13a-15(e)
  (b)  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f).
  Internal Control  Integrated
    Framework .
    (c)  Changes
    in Internal Control Over Financial Reporting
    (d)  Report
    of Independent Registered Public Accounting Firm
    47




---



##### Table of Contents



Item 9B.
    Other
    Information   48




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance      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
    Equity
    Compensation Plan Information
    Number of Securities


Weighted-to be Issued Upon


Average Exercise


Number of SecuritiesExercise of


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


578,183
(1)

$
15.56



1,344,974
(2)Equity compensation plans not
    approved by security holders










     (1)
    
    Includes 151,042 options to purchase shares of Common Stock
    under the Omnibus Stock Compensation Plan and 427,141 options to
    purchase shares of Common Stock under the Amended and Restated
    2001 Stock Incentive Plan.(2)
    
    Includes 430,903 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
    913,591 shares authorized under the Amended and Restated
    2001 Stock Incentive Plan and 480 shares authorized under
    the Comprehensive Stock Option Plan. Available shares shown
    above for the Omnibus Stock Compensation Plan and the Amended
    and Restated 2001 Stock Incentive Plan include shares 49




---



##### Table of Contents



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, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   50




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules      
    Reports of Independent Registered Public Accounting Firms,
    Consolidated balance sheets as of December 31, 2006 and
    2005,
    Consolidated statements of income for the years ended
    December 31, 2006, 2005 and 2004,
    Consolidated statements of comprehensive income for the years
    ended December 31, 2006, 2005 and 2004,
    Consolidated statements of stockholders equity for the
    years ended December 31, 2006, 2005 and 2004,
    Consolidated statements of cash flows for the years ended
    December 31, 2006, 2005 and 2004 and
    Notes to consolidated financial statements.               51




---



##### 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    52




---



##### 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      53




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    FINANCIAL STATEMENTS INDEX
 December 31,
    2006, 2005 and 2004
   INDEX
  (1)  Consolidated
    Financial Statements
    

Independent
    registered public accounting firms reports

F-2 to F-3

Consolidated
    balance sheets as of December 31, 2006 and 2005

F-4

Consolidated
    statements of income for the years ended December 31, 2006,
    2005 and 2004

F-5

Consolidated
    statements of comprehensive income for the years ended
    December 31, 2006, 2005 and 2004

F-6

Consolidated
    statements of stockholders equity for the years ended
    December 31, 2006, 2005 and 2004

F-7 to F-8

Consolidated
    statements of cash flows for the years ended December 31,
    2006, 2005 and 2004

F-9

Notes to
    consolidated financial statements

F-10 to F-41   (2)  Consolidated
    Financial Statement Schedule
   

Schedule II 
    Valuation and Qualifying Accounts

F-42    F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Employers Accounting
    for Defined Benefit Pension and Postretirement Plans, Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements in Current Year Financial
    Statements
    ERNST &
    YOUNG LLP
    F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           KPMG
    LLP
    F-3




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 December 31, 2006 and 2005
  (in thousands, except share data)
  2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
14,063


$
23,011Short-term investments


86,741



Accounts receivable and unbilled
    revenue, net of allowance for doubtful accounts of $233 and $337
    at December 31, 2006 and 2005, respectively


16,419



16,336Other accounts receivable


3,483



2,585Income taxes receivable


1,365



Materials and supplies


2,111



1,396Deferred income taxes


1,057



Wireless spectrum
    held-for-sale






15,646Other


3,759



3,239Total current assets


128,998



62,213Investment securities


5,381



5,845Other investments


1,909



1,690Investments in unconsolidated
    companies


3,670



15,618Property and equipment, net


209,908



200,179Goodwill


9,906



9,906Other intangibles, net


19,989



19,989Other assets


7,597



5,980Total assets

$
387,358


$
321,420LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
5,000


$
15,000Accounts payable


12,553



8,482Accrued payroll


8,636



8,129Customer deposits and advance
    billings


4,618



2,538Income taxes payable






2,107Accrued pension and postretirement
    benefit cost


2,391



481Deferred tax liability






432Other accrued liabilities


1,687



2,772Total current liabilities


34,885



39,941Long-term debt


35,000



40,000Deferred income taxes


23,060



25,078Postretirement and pension benefits


8,499



15,842Other


6,536



4,679Total liabilities


107,980



125,540Stockholders equity:Preferred stock 4.5% series,
    $100 par value; 614 shares outstanding at
    December 31, 2005






61Common stock, zero par value;
    20,035,823 and 18,930,624 shares outstanding at
    December 31, 2006 and December 31, 2005, respectively


59,132



42,946Unearned compensation






(307
)Accumulated other comprehensive
    income


4,276



282Retained earnings


215,970



152,898Total stockholders
    equity


279,378



195,880Total liabilities and
    stockholders equity

$
387,358


$
321,420     F-4




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
    Years ended December 31, 2006, 2005 and 2004 
    (in thousands, except per share data)
  2006


2005


2004Operating revenue:Telephone

$
124,775


$
123,469


$
120,248Wireless and internet


52,096



48,196



43,432Total operating
    revenue


176,871



171,665



163,680Operating expense:Telephone cost of service
    (excludes depreciation of $24,679, $23,507, and $21,172,
    respectively)


35,505



37,719



35,312Wireless and internet cost of
    service (excludes depreciation of $3,802, $4,021, and $4,736,
    respectively)


24,345



23,156



19,178Selling, general and
    administrative (excludes depreciation of $3,466, $4,355, and
    $4,862, respectively)


60,813



56,943



54,866Depreciation


31,947



31,883



30,770Total operating
    expense


152,610



149,701



140,126Operating income


24,261



21,964



23,554Other income:Equity in income of unconsolidated
    companies, net


90,102



4,275



5,771Interest, dividend income and gain
    on sale of investments


6,261



2,989



1,463Impairment of investments


(876
)


(546
)


(1,834
)Interest expense


(3,267
)


(4,546
)


(4,843
)Other (expense) income


(182
)


(279
)


37Total other income


92,038



1,893



594Income before income
    taxes


116,299



23,857



24,148Income taxes


44,638



9,308



9,445Net income


71,661



14,549



14,703Dividends on preferred stock


3



10



20Net income for common
    stock

$
71,658


$
14,539


$
14,683Earnings per common
    share:Basic

$
3.69


$
0.77


$
0.78Diluted


3.62



0.77



0.77Basic weighted average shares
    outstanding


19,432



18,785



18,867Diluted weighted average shares
    outstanding


19,818



18,947



19,007    F-5




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    Years ended December 31, 2006, 2005 and 2004
    (in thousands) 2006


2005


2004Net income

$
71,661


$
14,549


$
14,703Other comprehensive income (loss),
    net of tax:Unrealized holding gains (losses)
    on available-for sale securities, net of tax expense (benefit)
    of $324, ($15), and ($481) in 2006, 2005 and 2004, respectively


496



(23
)


(861
)Reclassification adjustment for
    (gains) losses on investments realized in net income, net of tax
    (expense) benefit of ($305), $59, and $326 in 2006, 2005 and
    2004, respectively


(468
)


90



584Comprehensive income

$
71,689


$
14,616


$
14,426    F-6




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
 Years ended December 31, 2006, 2005 and 2004
  (in thousands, except share data)
  Accum.5% Series


4.5% Series








Other





TotalPref


Pref


Common


Unearned


Comprehensive


Retained


StockholdersStock


Stock


Stock


Compensation


Income


Earnings


EquityBalance at December 31, 2003

$
336


$
61


$
41,098


$
(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 loss


















(277
)






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














(4
)










(4
)Balance at December 31, 2004

$
336


$
61


$
42,520


$
(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 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


















67







67Restricted stock compensation net
    of $821 earned in 2005














(39
)










(39
)Balance at December 31, 2005

$



$
61


$
42,946


$
(307
)

$
282


$
152,898


$
195,880    F-7




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY 
    (Continued)
    Years ended December 31, 2006, 2005 and 2004
    (in thousands, except share data)
  Accum.5% Series


4.5% Series








Other





TotalPref


Pref


Common


Unearned


Comprehensive


Retained


StockholdersStock


Stock


Stock


Compensation


Income


Earnings


EquityBalance at December 31, 2005

$



$
61


$
42,946


$
(307
)

$
282


$
152,898


$
195,880SAB 108 transition cumulative
    effect adjustment






















(350
)


(350
)Adj. balance at January 1, 2006

$



$
61


$
42,946


$
(307
)

$
282


$
152,548


$
195,530Net income






















71,661



71,661Issuance of 51,394 shares of
    common stock










719















719Issuance of 1,102,422 shares
    for exercise of stock options










13,603















13,603Forfeiture and cancellation of
    105,517 common shares










(2,001
)














(2,001
)Reversal of unamortized unearned
    compensation balance










(307
)


307











Tax benefits from exercised stock
    options










3,388















3,388Preferred stock subject to
    redemption






(61
)


















(61
)Dividends declared:4.5% preferred






















(3
)


(3
)Common stock






















(8,236
)


(8,236
)Other comprehensive income


















28







28SFAS 158 transition
    adjustment, net of taxes of $2,588


















3,966







3,966Restricted stock compensation net
    of $581 earned in 2006










784















784Balance at December 31, 2006

$



$



$
59,132


$



$
4,276


$
215,970


$
279,378    F-8




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2006, 2005 and 2004
    (in thousands)
  2006


2005


2004Cash flows from operating
    activities:Net income

$
71,661


$
14,549


$
14,703Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation


31,947



31,883



30,770Gain on sale of investment
    securities and investments in unconsolidated companies


(1,789
)


(1,587
)


(466
)Impairment of investments, fixed
    assets and wireless spectrum held for sale


1,066



707



1,834Stock compensation expense


581



988



812(Gain)/loss on sale of equipment


(151
)


268



Equity in income of unconsolidated
    companies, net


(90,102
)


(4,275
)


(5,771
)Provision for loss on accounts
    receivable


1,210



1,127



1,399Deferred income taxes and tax
    credits


(4,232
)


(2,899
)


5,331Long-term pension and
    postretirement benefits


1,120



1,084



(201
)Interest income on short-term
    investments


(508
)






Other


(65
)


(259
)


(422
)Changes in operating assets and
    liabilities:Accounts receivable


(1,182
)


(2,411
)


763Materials and supplies


(870
)


(232
)


694Other assets


(3,004
)


(2,176
)


(1,498
)Accounts payable


4,072



1,660



572Customer deposits and advance
    billings


(261
)


115



467Accrued liabilities


(90
)


811



1,040Income taxes


(3,472
)


(1,103
)


664Net cash provided by operating
    activities


5,931



38,250



50,691Cash flows from investing
    activities:Capital expenditures


(42,034
)


(27,094
)


(27,197
)Proceeds from sale of property,
    plant and equipment


273



2,003



Proceeds from sale of investment
    securities and unconsolidated companies


5,589



3,963



2,530Proceeds from sale of short-term
    investments


52,100







Proceeds from sale of wireless
    spectrum (net of costs to sell of $353)


15,647







Purchases of investment securities
    and unconsolidated companies


(179
)


(3,346
)


(2,889
)Purchases of short-term investments


(138,333
)






Payment for wireless spectrum


(300
)






(200
)Distribution from unconsolidated
    companies


98,063



4,628



3,744Net cash used in investing
    activities


(9,174
)


(19,846
)


(24,012
)Cash flows from financing
    activities:Repayment of long-term debt


(15,000
)


(15,000
)


(10,000
)Redemption of preferred stock


(50
)


(310
)


Tax benefits credited to additional
    paid-in-capital


3,388



64



Dividends paid


(8,239
)


(7,015
)


(5,010
)Repurchase of common stock






(2,009
)


Common stock issuances


14,291



1,001



200Net cash used in financing
    activities


(5,610
)


(23,269
)


(14,810
)Net cash used in discontinued
    operations  operating activities


(95
)


(482
)


(468
)Net (decrease)/increase in cash and
    cash equivalents


(8,948
)


(5,347
)


11,401Cash and cash equivalents at
    beginning of year


23,011



28,358



16,957Cash and cash equivalents at end
    of year

$
14,063


$
23,011


$
28,358Supplemental cash flow information:Cash paid for income taxes

$
48,735


$
13,037


$
3,443Cash paid for interest


3,767



4,664



5,177Supplemental disclosure of non-cash
    financing activities:Common and nonvested shares issued
    under annual bonus and incentive plan

$
714


$
782


$
760SAB 108 transition cumulative
    effect adjustment


350







SFAS 158 transition
    adjustment, net of taxes of $2,588


3,966







    F-9




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##### 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
        Buildings


30 to 40 yearsEquipment


3 to 7 yearsCentral office equipment


7 to 10 yearsPoles and cables


17 to 25 yearsConduit


50 years  F-10




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        98-1,
  (d) Asset
    Retirement Obligations
    (e) Cash
    Equivalents
    (f) Investment
    Securities and Short-Term Investments
  available-for-sale.
     F-11




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (g) Investments
    in Unconsolidated Companies and Other Investments
      (h) Materials
    and Supplies
    (i) Income
    Taxes
        (j) Revenue
    Recognition
     F-12




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            00-21, No. 00-21,
  (k) Goodwill
    and Intangibles
     F-13




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Form 8-K
    (l) Advertising
    (m) Use
    of Estimates
    (n) Impairment
    of Long-Lived Assets
    (o) Stock
    Option Plans
     F-14




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##### Table of Contents



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


2004Assumptions used in Black Scholes
    pricing model:Expected dividend yield


2.50
%


1.92
%Risk-free interest rate


4.20
%


3.30
%Weighted average expected life


5 years



5 yearsExpected volatility


57
%


52
%Fair value per share of options
    granted

$
4.73


$
5.65Net income as reported

$
14,549


$
14,703Stock based compensation costs,
    net of income tax, included in net income as reported


602



812Additional 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



1,086Pro-forma net income


10,743



13,617Earnings per share as
    reported  basic


0.77



0.78Earnings per share as
    reported  diluted


0.77



0.77Pro-forma earnings per
    share  basic


0.57



0.72Pro-forma earnings per
    share  diluted


0.57



0.72  F-15




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (p) Earnings
    Per Share
      FAS 123R-3
  (q) Derivative
    Instruments
        (r) Recent
    Accounting Pronouncements
  Staff
    Accounting Bulletin No. 108
      F-16




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Period in which the Misstatement OriginatedCumulative








AdjustmentPrior to


Year Ended


Recorded as ofJanuary 1,


December 31,


January 1,Increase/(decrease)

2004


2004


2005


2006Accounts receivable

$
131


$
(15
)

$
(6
)

$
110Deferred revenue


2,230



11



100



2,341Deferred income taxes


1,712



168



1



1,881Impact on net income


(387
)


142



(105
)Retained earnings














(350
)   Emerging
    Issues Task Force Issue
    No. 06-4
 No. 06-4 06-4), 06-4 06-4, 06-4
 F-17




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  06-4
  EITF
    Issue
    No. 06-4
 No. 06-5 06-5), Bulletin No. 85-4. 06-5 06-5
  SFAS No. 157
   SFAS No. 158
   FASB
    Interpretation No. 48
  F-18




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   EITF
    Issue
    No. 06-3
 No. 06-3 06-3), 06-3 06-3 06-3
  (2) Stock
    Compensation Plans
  in-the-money out-of-the-money
  lock-up
      
    Comprehensive Stock Option Plan  Under the
    Comprehensive Option Plan, 180,000 shares of common stock
    have been reserved for issuance. At December 31, 2006,
    480 shares of common stock were ungranted.
    Restricted Stock Award Program  The aggregate
    amount of common stock that may be awarded to participants under
    the Program is 180,000 shares. At December 31, 2006,
    455 shares of common stock were authorized but ungranted
    under the Program.
    Director Compensation Plan  This plan was
    approved to provide each member of the Board of Directors the
    right to receive Directors compensation in shares of
    common stock or cash, at the Directors discretion. An
    aggregate of 90,000 shares have been reserved for issuance
    under the Director Plan. All compensation for a Director who
    elects to receive shares of stock in lieu of cash will be
    converted to shares of stock based upon F-19




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  the fair market value of the common stock on the issue date. All
    subsequent compensation to the Director is converted to shares
    of common stock based upon the fair market value of the common
    stock on the date such compensation is paid or made available to
    the Director. During 2006 and 2005, the Company issued
    7,954 shares and 13,554 shares with an average fair
    market value of approximately $13 and $11, respectively. These
    shares related to Directors who elected to receive their
    compensation in shares for meetings attended during the previous
    year. Directors compensation expense is accrued during the
    year as meetings are attended. At December 31, 2006, no
    shares were available for issuance under the Director Plan.  
    Omnibus Stock Compensation Plan  Under this
    plan, 800,000 shares of common stock were reserved for
    issuance. The Stock Plan provides for awards of stock, stock
    options and stock appreciation rights. There are no stock
    appreciation rights outstanding. The Company issued 49,932 stock
    awards under the Stock Plan. Shares of common stock authorized
    for issuance under the Stock Plan but ungranted as of
    December 31, 2001 were transferred to the 2001 Stock
    Incentive Plan as authorized by the approval of the 2001 Stock
    Incentive Plan. The total shares authorized but ungranted are
    discussed below under the Amended and Restated 2001 Stock
    Incentive Plan.
    Amended and Restated 2001 Stock Incentive Plan(the
    Stock Incentive Plan)  This plan was
    approved and allows for stock options, stock appreciation
    rights, restricted stock, stock units, dividend equivalent
    rights and performance and annual incentive awards. Under the
    Stock Incentive Plan, 2.6 million shares, plus any shares
    remaining available for grant under the Companys Omnibus
    Stock Compensation Plan, have been reserved for issuance. Of the
    2.6 million shares reserved for issuance, 1.2 million
    shares were reserved for non-option grants. At December 31,
    2006, the number of shares of common stock authorized for
    issuance but ungranted was approximately 1,344,000 shares.
    The number of shares authorized but ungranted includes any
    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 Stock Incentive
    Plan and the Omnibus Stock Compensation Plan. There have been no
    stock appreciation rights or dividend equivalent rights granted
    by the Company. The Company issued 28,098 stock units under the
    plan during the year ended December 31, 2006 with an
    average fair market value of approximately $13. The Company has
    issued a total of 80,781 stock units under the Stock Incentive
    Plan, all of which were outstanding as of December 31,
    2006. These stock units are accounted for as liability awards
    and any changes to the fair value are recognized in compensation
    expense. During the year ended December 31, 2006, the
    Company recognized compensation expense of approximately
    $0.8 million related to these stock units.     F-20




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##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    FAS 123R-3
    Weighted-Weighted-


Average


AggregateAverage


Remaining


IntrinsicNumber


Exercise


Contractual


Valueof Options


Price


Term


(in thousands)Options outstanding and
    exercisable at December 31, 2005


1,706,179


$
13Options exercised


(1,102,422
)


12Options forfeited


(25,574
)


16Options outstanding and
    exercisable at December 31, 2006


578,183


$
16



6.35


$
4,257     Weighted-AverageNumber


Grant-Dateof Shares


ValueNonvested shares at
    December 31, 2005


156,160


$
11Shares granted


56,902



13Shares vested


(113,683
)


11Shares forfeited


(26
)


11Nonvested shares at
    December 31, 2006


99,353


$
12    F-21




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (3) Investments
    in Unconsolidated Companies
    OwnershipPercentage2006


2006


2005Equity Method:Palmetto MobileNet, L.P.


0.0
%

$



$
10,654Other


Various



35



35Cost Method:Magnolia Holding Company, LLC


4.6
%


1,111



1,587PRE Holdings, Inc


0.0
%






2,100InComm


0.2
%


1,304



Other


Various



1,220



1,242Total





$
3,670


$
15,618     available-for-sale
       F-22




---



##### Table of Contents



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


2005


2004Current assets

$
1,555


$
1,425


$
3,125Property and other non-current
    assets


9,195



104,627



104,730Current liabilities


11



476



398Long-term debt






12,550



13,582Other liabilities


1,251







Partners capital


9,499



93,025



93,876Equity in earnings of RSA
    partnership interests


3,499



20,861



26,563Operating income


3,462



20,024



26,009Net income


357,420



19,519



25,793   (4) Investment
    Securities
    Investment Securities

Book


Gross Unrealized


Gross UnrealizedAvailable-for-Sale

Value


Holding Gains


Holding Losses


Fair ValueAt December 31, 2006

$
4,869


$
558


$
(46
)

$
5,381At December 31, 2005

$
5,379


$
537


$
(71
)

$
5,845     Less than 12 months


12 months or more


TotalDescription of

Fair


Unrealized


Fair


Unrealized


Fair


UnrealizedSecurities

Value


Losses


Value


Losses


Value


LossesCommon Stock

$



$



$
93


$
(46
)

$
93


$
(46
)Total temporarily impaired
    securities

$



$



$
93


$
(46
)

$
93


$
(46
)   other-than-temporarily
     F-23




---



##### Table of Contents



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


2005Land, buildings and general
    equipment

$
92,971


$
91,496Central office equipment


203,118



190,220Poles, wires, cables and conduit


174,875



163,868Construction in progress


20,043



4,545491,007



450,129Accumulated depreciation


(281,099
)


(249,950
)Property and equipment, net

$
209,908


$
200,179         (6) Asset
    Retirement Obligations
  and/or and/or
   F-24




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Balance at December 31, 2005

$
265Liabilities incurred


24Liabilities settled


(5
)Accretion expense


19Balance at December 31, 2006

$
303         (7) Fair
    Value of Financial Instruments
    Cash and Cash Equivalents, Short-Term Investments, Accounts
    Receivable, Notes Receivable, Other Assets, and Accounts
    Payable
  Investment Securities
  Other Investments
  Debt Instruments
   F-25




---



##### Table of Contents



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


2005Line of credit with interest at
    LIBOR plus a spread (5.56% at December 31, 2005)

$



$
10,000Term loan with interest at 7.32%


40,000



45,00040,000



55,000Less: Current portion of long-term
    debt


5,000



15,000Long-term debt

$
35,000


$
40,000         2007

$
5,0002008


5,0002009


5,0002010


5,0002011


5,000Thereafter


15,000Total debt

$
40,000  F-26




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (9) Leases
  (a) Lease
    Obligations
      Capital


OperatingLeases


LeasesYear ending December 31:2007

$
86


$
2,3322008






2,3322009






2,0792010






1,8042011






1,249Thereafter






1,997Total minimum lease payments


86


$
11,793Less amount representing interest
    at 4.05%


(1
)Present value of net minimum
    capital lease payments


85Less current installments of
    obligations under capital leases


(85
)Obligations under capital leases,
    excluding current installments

$
     (b) Sales-Type
    Leases
   F-27




---



##### Table of Contents



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


2005Gross lease receivable

$
3,394


$
3,342Deferred finance charges


(665
)


(835
)Net lease receivable

$
2,729


$
2,507Current portion included in
    accounts receivable

$
909


$
778Non-current portion included in
    other non-current assets


1,820



1,729Net lease receivable

$
2,729


$
2,507     2007

$
1,2322008


9772009


6702010


4052011


110Total lease receivable

$
3,394   (10) Common
    Stock
            2006


2005


2004Basic weighted-average shares
    outstanding


19,432



18,785



18,867Effect of dilutive stock options
    and nonvested stock


386



162



140Total diluted weighted-average
    shares outstanding


19,818



18,947



19,007   (11) Preferred
    Stock
   F-28




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (12) Employee
    Stock Purchase Plan
    (13) Employee
    Benefit Plans
      At December 31, 2006PostretirementPension Liability


LiabilityPrior to


Prior to


Effect ofAdopting


Adopting


AdoptingSFAS No. 158


SFAS No. 158


SFAS No. 158


As ReportedAccrued pension liability

$
7,465


$



$
(4,796
)

$
2,669Accrued postretirement liability






9,978



(1,757
)


8,221Long-term deferred income taxes










2,588



2,588Other comprehensive income










3,966



3,966    F-29




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (a) Pension
    Plan and Savings Plan
      2006


2005Change in Benefit
    Obligation:Benefit obligation at beginning of
    plan year

$
(52,791
)

$
(46,456
)Service cost


(2,447
)


(2,241
)Interest cost


(2,896
)


(2,824
)Actuarial gain/(loss)


3,441



(3,537
)Actual distributions


2,428



2,267Benefit obligation at end of year

$
(52,265
)

$
(52,791
)Change in Plan
    Assets:Plan assets at fair value at
    beginning of year

$
45,972


$
45,531Actual return on plan assets


6,052



2,708Actual distributions


(2,428
)


(2,267
)Plan assets at fair value at end
    of year

$
49,596


$
45,972Funded status of the plan

$
(2,669
)

$
(6,819
)     2006Current liability

$
2,111Noncurrent liability


558Underfunded status at end of
    year

$
2,669  F-30




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005(Accrued) Prepaid Pension
    CostsFunded Status

$
(6,819
)Unrecognized net actuarial loss


1,048Unrecognized prior service cost


55Net amount recognized

$
(5,716
)         2007

$
2,1112008


2,1982009


2,3052010


2,3322011


2,3792012 thru 2016


15,806     Percentage of Total Assets2006


2005Summary of Plan
    Assets:Cash and cash equivalents


1.2
%


1.9
%Equity funds investments


72.4
%


74.1
%Fixed income investments


26.0
%


24.0
%Accrued income


0.4
%


0.0
%     2006


2005


2004Service cost, benefits earned
    during the period

$
2,447


$
2,241


$
1,995Interest cost on projected benefit
    obligation


2,896



2,824



2,577Expected return on plan assets


(3,597
)


(3,561
)


(3,371
)Net amortization and deferral


2



2



2Net periodic pension expense

$
1,748


$
1,506


$
1,203   2006

2005

2004Key assumptions
    used:Weighted-average discount rate

6.00%

5.75%

6.00%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%

8.00%    F-31




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   30-year
    (b) Employee
    Savings Plan
    (c) Postretirement
    Benefits
        2006


2005Change in Benefit
    Obligation:Benefit obligation at beginning of
    plan year

$
(8,453
)

$
(8,558
)Service cost


(51
)


(58
)Interest cost


(494
)


(475
)Amendments






523Actuarial loss


(321
)


(381
)Benefit payments, net of
    participant contributions(1)


621



496Benefit obligation at end of
    year

$
(8,698
)

$
(8,453
)     (1)
    
    The Company funded $0.5 million for 2007 in December 2006. F-32




---



##### Table of Contents



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

$
280Noncurrent liability


7,941Underfunded status at end of
    year

$
8,221     2005(Accrued) Prepaid
    Postretirement CostsFunded Status

$
(8,453
)Unrecognized net actuarial gain


(2,012
)Unrecognized prior service cost


(142
)Net amount recognized

$
(10,607
)     2007

$
2802008


7332009


7142010


6932011


6772012 thru 2016


3,231     2006


2005


2004Service cost

$
51


$
58


$
68Interest cost


494



475



499Amortization of transition
    obligation over 15 years










352Amortization of gain


(46
)


(117
)


(154
)Amortization of prior service cost


(29
)


(365
)


(335
)Net periodic postretirement
    benefit cost

$
470


$
51


$
430   F-33




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Key assumptions used:Measurement date

December 31, 2006

December 31, 2005Discount rate

6.00%

5.75%Rate of increase in compensation
    levels

4.00%

4.00%Assumed medical trend:Current trend rate

6.00%

9.00%Ultimate trend rate

6.00%

6.00%Years to ultimate trend rate



1   106-2, 106-2,
    (14) Income
    Taxes
    2006


2005


2004Income from operations

$
44,638


$
9,308


$
9,445Stockholders equity, for
    unrealized holding gains and losses on debt and equity
    securities recognized for financial reporting purposes and
    benefit from exercise of stock options and adoption of
    SFAS 158


(783
)


(20
)


(155
)     2006


2005


2004Current:Federal

$
41,229


$
10,147


$
1,701State


7,648



1,924



1,87248,877



12,071



3,573Deferred:Federal, net of investment tax
    credit amortization


(4,174
)


(2,533
)


6,463State


(65
)


(230
)


(591
)(4,239
)


(2,763
)


5,872Total

$
44,638


$
9,308


$
9,445  F-34




---



##### Table of Contents



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


2005


2004Amount computed at statutory rate

$
40,705


$
8,350


$
8,452State income taxes, net of federal
    income tax


4,746



1,438



721Increase (decrease) in valuation
    allowance


182



(337
)


(248
)Amortization of federal investment
    tax credit






(115
)


(115
)Worthless stock deduction










(2,100
)State audit settlement, net of
    federal income tax










2,605Tax exempt interest


(937
)






Other, net


(58
)


(28
)


130Income tax expense from operations

$
44,638


$
9,308


$
9,445  F-35




---



##### Table of Contents



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


2005Deferred tax assetsCurrent:Accrued expenses

$
1,327


$
655Accrued post-retirement and
    pension benefits


834



Total gross current deferred tax
    assets


2,161



655Non-current:Accrued post-retirement and
    pension benefits


3,356



6,250Accrued incentive


1,812



1,015Amortization of
    start-up
    costs


261



1,956State net operating loss
    carryforwards


3,806



3,768Other accrued expenses and
    allowances


3,078



2,913Total gross non-current deferred
    tax assets


12,313



15,902Total gross deferred tax assets


14,474



16,557Total valuation allowance


(1,920
)


(2,694
)Total net deferred tax assets


12,554



13,863Deferred tax liabilitiesCurrent:Prepaid expenses


957



981Total gross current deferred tax
    liabilities


957



981Non-current:Property and equipment, primarily
    related to depreciation differences


30,237



33,945Other


3,363



4,447Total gross non-current deferred
    tax liabilities


33,600



38,392Total gross deferred tax
    liabilities


34,557



39,373Net deferred tax liabilities

$
22,003


$
25,510      F-36




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010-2021.
        (15) Segment
    Information
  dial-up
  ILEC
    Wireless
   F-37




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   CLEC
    Greenfield
    Internet
    and Data Services (IDS)
  dial-up
  Palmetto
    Other
      2006


2005


2004(In thousands)Operating revenueILEC

$
95,251


$
94,561


$
93,016Wireless


38,255



36,426



32,548CLEC


19,091



19,272



19,123Greenfield


10,433



9,636



8,108IDS


13,841



11,770



10,885Palmetto


3,499



20,861



26,563Total

$
180,370


$
192,526


$
190,243Operating income (loss)ILEC

$
23,292


$
23,522


$
27,160Wireless


2,831



3,232



3,987CLEC


(1,136
)


(1,266
)


(846
)Greenfield


(2,767
)


(2,781
)


(3,896
)IDS


4,163



1,603



(403
)Palmetto


3,462



20,024



26,009Other


(2,122
)


(2,346
)


(2,448
)Total

$
27,723


$
41,988


$
49,563 F-38




---



##### Table of Contents



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


2005


2004(In thousands)DepreciationILEC

$
20,353


$
20,429


$
18,925Wireless


2,596



2,378



1,930CLEC


2,709



2,546



2,309Greenfield


4,045



3,427



3,274IDS


1,290



1,761



2,954Palmetto


180



180



178Other


954



1,342



1,378Total

$
32,127


$
32,063


$
30,948AssetsILEC

$
253,647


$
163,947


$
175,824Wireless


33,948



34,049



33,676CLEC


14,324



13,606



14,570Greenfield


31,543



29,549



26,762IDS


13,393



13,533



13,806Palmetto


10,750



106,052



107,855Other


36,833



51,118



49,224Total

$
394,438


$
411,854


$
421,717Capital expendituresILEC

$
25,299


$
14,943


$
16,204Wireless


1,789



2,210



2,229CLEC


2,652



1,499



784Greenfield


6,039



6,214



5,315IDS


1,256



1,229



1,380Palmetto






5



1,251Other


4,999



999



1,285Total

$
42,034


$
27,099


$
28,448     2006


2005


2004Segment operating profit

$
27,723


$
41,988


$
49,563Palmetto MobileNet, L.P.


(3,462
)


(20,024
)


(26,009
)Total other income


92,038



1,893



594Income before income taxes

$
116,299


$
23,857


$
24,148  F-39




---



##### Table of Contents



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


2005


2004Segment revenues

$
180,370


$
192,526


$
190,243Palmetto MobileNet, L.P.


(3,499
)


(20,861
)


(26,563
)Total revenues

$
176,871


$
171,665


$
163,680     2006


2005


2004Segment depreciation

$
32,127


$
32,063


$
30,948Palmetto MobileNet, L.P.


(180
)


(180
)


(178
)Total depreciation

$
31,947


$
31,883


$
30,770     2006


2005


2004Segment equity in income of
    unconsolidated companies

$



$
(5
)

$
(2
)Equity in income of Palmetto
    MobileNet, L.P.


90,102



4,280



5,773Total equity in income of
    unconsolidated companies

$
90,102


$
4,275


$
5,771     2006


2005


2004Segment investment in
    unconsolidated companies

$
3,670


$
4,964


$
5,069Investment in Palmetto MobileNet,
    L.P.






10,654



10,933Total investment in unconsolidated
    companies

$
3,670


$
15,618


$
16,002     2006


2005


2004Segment assets

$
394,438


$
411,854


$
421,717Investment in unconsolidated
    companies


3,670



15,618



16,002Palmetto MobileNet, L.P.


(10,750
)


(106,052
)


(107,855
)Total assets

$
387,358


$
321,420


$
329,864   (16) Summary
    of Quarterly Income Statement Information (Unaudited)
    2006 Quarters EndedMarch 31


June 30


Sept. 30


Dec. 31Operating revenue

$
43,139


$
43,957


$
45,006


$
44,769Operating income


5,119



4,764



6,646



7,732Net income


57,489



3,893



5,120



5,159Basic earnings per common share

$
3.04


$
0.20


$
0.26


$
0.26Diluted earnings per common share

$
3.00


$
0.20


$
0.26


$
0.26  F-40




---



##### Table of Contents



CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  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  F-41




---



##### Table of Contents



SCHEDULE II  CT
    COMMUNICATIONS, INC. AND SUBSIDIARIES
    VALUATION AND QUALIFYING ACCOUNTS
    Years Ended December 31, 2006, 2005 and 2004 (in
    thousands)
  Column A

Column B


Column C


Column D


Column EDeductionsBalance,


Additions


FromBeginning


Charged to


Reserves


Balance,Description

of Year


Income


(See Note)


End of YearValuation and qualifying accounts
    deducted from assets to which they apply:Allowance for uncollectible
    accounts:Year ended December 31, 2006

$
337


$
1,210


$
1,314


$
233Year ended December 31, 2005


313



1,127



1,103



337Year ended December 31, 2004


567



1,399



1,653



313      F-42




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P.
    AND SUBSIDIARY
  REPORT ON
    CONSOLIDATED
    FINANCIAL STATEMENTS
  FOR THE
    YEARS ENDED
    DECEMBER 31, 2006 AND 2005
 F-43




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  CONTENTS
  PageREPORT OF
    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


F-45FINANCIAL STATEMENTSConsolidated
    balance sheets


F-46Consolidated
    statements of income and partners equity


F-47Consolidated
    statements of cash flows


F-48NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS


F-49-52  F-44




---



##### Table of Contents



REPORT OF
    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS            
    F-45




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
  December 31,2006


2005ASSETSCURRENT ASSETSCash and cash equivalents

$
1,524,624


$
15,112Accounts receivable


30,305



5,042Distributions receivable






1,404,740Total current assets


1,554,929



1,424,894LAND, BUILDING AND
    IMPROVEMENTS, NET


7,326,473



7,511,025INTERESTS IN RSA
    PARTNERSHIPS






91,546,585GOODWILL


955,670



5,334,236FUNDS HELD IN ESCROW


912,828



OTHER ASSETS






234,820$
10,749,900


$
106,051,560LIABILITIES AND PARTNERS
    EQUITYCURRENT LIABILITIESAccounts payable  PMN,
    Inc.

$



$
178,368Accounts payable and accrued
    expenses


11,162



297,380Total current liabilities


11,162



475,748LONG-TERM DEBT






12,550,318DUE TO PMN, INC


896,032



DUE TO FORMER
    PARTNERS


344,045



1,251,239



13,026,066PARTNERS EQUITY


9,498,661



93,025,494Total liabilities and
    partners equity

$
10,749,900


$
106,051,560    F-46




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF INCOME AND
    PARTNERS EQUITY
 For the years ended December 31, 2006 and 2005
  December 31,2006


2005Equity in earnings of RSA
    partnership interests

$
3,499,413


$
20,860,756Management fee


(37,500
)


(836,504
)Income from operations


3,461,913



20,024,252Revenue from real estate rentals


1,238,894



1,257,558Cost of rental revenues


(646,779
)


(570,952
)Income from real estate rentals


592,115



686,606Other income (expense)Interest expense


(148,614
)


(516,432
)Investment income


284,291



65Gain on sale of interests in RSA
    partnerships


358,714,775



Goodwill impairment loss


(5,334,236
)


Other


(150,685
)


(675,928
)353,365,531



(1,192,295
)Net income


357,419,559



19,518,563Partners equity, beginning
    of year


93,025,494



93,875,702Repurchase of partners
    interests


(5,594,816
)


Distributions to partners


(435,351,576
)


(20,368,771
)Partners equity, end of year

$
9,498,661


$
93,025,494    F-47




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended December 31, 2006 and 2005
  December 31,2006


2005OPERATING ACTIVITIESNet income

$
357,419,559


$
19,518,563Adjustments to reconcile net
    income to net cash provided by (used for) operating activitiesGain on sale of interests in RSA
    partnerships


(358,714,775
)


Equity in earnings of interests in
    RSA partnerships


(3,499,413
)


(20,860,756
)Depreciation


179,552



179,548Interest accrued on certificate of
    deposits


(10,466
)


Amortization of loan costs


79,590



8,926Impairment of goodwill


5,334,236



Changes in operating assets and
    liabilitiesAccounts receivable


(25,263
)


(3,744
)Accounts payable and accrued
    expenses


431,446



78,079Net cash provided by (used for)
    operating activities


1,194,466



(1,079,384
)INVESTING ACTIVITIESProceeds from RSA partnership
    distributions


3,366,189



19,376,069Proceeds from sale of interests in
    RSA partnerships, net of selling costs


451,799,323



Investment in long-term
    certificate of deposit


(896,032
)


(Purchase) disposal of land,
    building and improvements


5,000



(5,000
)Net cash provided by investing
    activities


454,274,480



19,371,069FINANCING ACTIVITIESProceeds from long-term debt






22,056,796Repayments of long-term debt


(12,550,318
)


(23,087,990
)Repurchase of partners
    interests


(6,154,716
)


Partnership distributions


(435,254,400
)


(20,368,771
)Net cash used for financing
    activities


(453,959,434
)


(21,399,965
)Net increase (decrease) in cash
    and cash equivalents


1,509,512



(3,108,280
)CASH AND CASH EQUIVALENTS,
    BEGINNING OF YEAR


15,112



3,123,392CASH AND CASH EQUIVALENTS, END
    OF YEAR

$
1,524,624


$
15,112SUPPLEMENTAL CASH FLOW
    INFORMATIONCash paid for interest

$
283,619


$
394,920Distribution of capital
    certificates

$
(155,230
)

$
    F-48




---



##### 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
    Funds
    held in escrow
    Loan
    costs
   F-49




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Goodwill
  Goodwill and Other
    Intangible Assets.
  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-50




---



##### Table of Contents



PALMETTO
    MOBILENET, L.P. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  
    South Carolina RSA No. 3 Cellular General Partnership (50%
    owned)
    South Carolina RSA No. 4 Cellular General Partnership (50%
    owned)
    South Carolina RSA No. 5 Cellular General Partnership (50%
    owned)
    South Carolina RSA No. 6 Cellular General Partnership (50%
    owned)
    South Carolina RSA No. 7 Cellular General Partnership (50%
    owned)
    South Carolina RSA No. 8 Cellular General Partnership (50%
    owned)
    South Carolina RSA No. 9 Cellular General Partnership (50%
    owned)
    North Carolina RSA 5 Cellular Partnership (50% owned)
    North Carolina RSA 15 Cellular Partnership (50% owned)    2006


2005Current assets

$



$
23,482,288Noncurrent assets






129,354,344Current liabilities






17,925,452Noncurrent liabilities






23,137,805Partners equity






111,773,375   For the TwoMonths Ended


For the YearFebruary 28,


December 31,2006


2005Net sales

$
35,707,485


$
259,319,205Net income


6,998,820



41,645,174       Note 4 
    Land, Building and Improvements, Net
    2006


2005Land

$
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






5,0008,353,614



8,358,614Less, accumulated depreciation


(1,027,141
)


(847,589
)$
7,326,473


$
7,511,025      F-51




---



##### Table of Contents



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


Others


Total2007

$
932,737


$
203,830


$
1,136,5672008


935,618



203,830



1,139,4482009


935,618



203,830



1,139,4482010


826,675



127,395



954,0702011


674,154







674,154Thereafter


71,779







71,779$
4,376,581


$
738,885


$
5,115,466   Note 5 
    Long-Term Debt
    2006


2005Line of credit agreement with a
    bank for $20,000,000; requiring quarterly interest payments at
    the 90-day
    LIBOR rate (5.36% at December 31, 2006) plus 2%. This
    line of credit is secured by a mortgage on the real property
    owned by HamptonNet, LLC. On November 20, 2006, this line
    of credit was modified and the maximum available credit was
    reduced to $5,000,000, the financial covenants were adjusted and
    the line of credit maturity date was changed to
    November 29, 2007

$



$
12,550,318       Note 6 
    Related Party Transactions
    Note 7 
    Escrow Account
   F-52




---



##### 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.
    (Incorporated by reference to Exhibit 3.2 to
    CT Communications Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 22, 2006.)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 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.)




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##### Table of Contents



Exhibit No.

Description10
.11

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.)10
.12

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
.13

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
.14

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
.15

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
.16

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
.17

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
.18

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
.19

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
.20

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
.21

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
.22

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
.23

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
.24

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.)




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##### Table of Contents



Exhibit No.

Description10
.25

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
.26

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.)10
.27

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
.28

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
.29

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
.30

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
.31

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
.32

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
.33

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
.34

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
.35

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
.36

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
.37

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
.38

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
.39

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.)




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##### Table of Contents



Exhibit No.

Description10
.40

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.)10
.41

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
.42

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
.43

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
.44

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
.45

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.)10
.46

Master Loan Agreement between
    CT Communications, Inc. and COBANK, ACB, dated
    April 18, 2006. (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 10, 2006.)10
.47

Changes in Registrants
    Certifying Accountant. Letter from KPMG LLP, dated
    August 17, 2006. (Incorporated by Reference to
    Exhibit 16.1 to CT Communications Current Report
    on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    August 17, 2006.)10
.48

Amendment No. 1 to the
    CT Communications, Inc. Amended and Restated 2001 Stock
    Incentive Plan. (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, 2006.)10
.49

Form of Amendment No. 1 to
    the CT Communications, Inc. Amended and Restated 2001 Stock
    Incentive Plan 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 3, 2006.)21
.1

Subsidiaries of
    CT Communications. (filed herewith)23
.1

Consent of Ernst & Young
    LLP. (filed herewith)23
.2

Consent of KPMG LLP. (filed
    herewith)23
.3

Consent of Elliott Davis, LLC.
    (filed herewith)31
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 13a-14(a)
    under the Securities and Exchange Act of 1934. (furnished
    herewith)31
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)
    under the Securities and Exchange Act of 1934. (furnished
    herewith)32
.1

Certification of Chief Executive
    Officer and Chief Financial Officer pursuant to
    Rule 13a-14(b)
    under the Securities and Exchange Act of 1934 and 18 U.S.C.
    1350. (furnished herewith)