<PAGE>   1
===============================================================================



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       Or

[ ]      TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________
         TO ____________, 19__.


                        Commission File Number: 0-23102

                                   ---------

                                 POWERTEL, INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                                 <C>
                DELAWARE                                              58-1944750
       (State or other jurisdiction                                  (I.R.S. Employer
     of incorporation or organization)                              Identification No.)

1239 O.G. SKINNER DRIVE, WEST POINT, GEORGIA                              31833
 (Address of principal executive offices)                              (Zip Code)
</TABLE>


       Registrant's telephone number, including area code: (706) 645-2000


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

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.


<TABLE>
<CAPTION>
                            Class                                         Outstanding at November 10, 2000

                <S>                                                       <C>
                Common Stock, $0.01 par value                                          31,464,385
</TABLE>



===============================================================================


<PAGE>   2


                                POWERTEL, INC.

                              INDEX TO FORM 10-Q


<TABLE>
<CAPTION>
                                                                                                           PAGE

<S>            <C>               <C>                                                                       <C>
PART I                           FINANCIAL INFORMATION

               Item 1.           Financial Statements.............................................          3

                                 Condensed Consolidated Balance Sheets as of
                                   September 30, 2000 (Unaudited) and December 31, 1999...........          3

                                 Condensed Consolidated Statements of Operations for the
                                   Three Months and Nine Months ended September 30, 2000 and
                                   1999 (Unaudited)...............................................          4

                                 Condensed Consolidated Statements of Cash Flows for the
                                   Nine Months ended September 30, 2000 and 1999 (Unaudited)......          5

                                 Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)....................................................          6

               Item 2.           Management's Discussion and Analysis of Financial
                                   Condition and Results of Operations............................          8

               Item 3.           Quantitative and Qualitative Disclosure About Market
                                     Risks........................................................          17

PART II                          OTHER INFORMATION

               Item 1.           Legal Proceedings................................................          17

               Item 6.           Exhibits and Reports on Form 8-K.................................          17

SIGNATURES
</TABLE>


                                       2
<PAGE>   3


                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                 POWERTEL, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,        DECEMBER 31,
                                                                                   2000                 1999
                                                                               ------------         ------------
                                                                               (UNAUDITED)
                                                                                  (DOLLARS IN THOUSANDS)
                                  ASSETS

<S>                                                                             <C>                 <C>
CURRENT ASSETS:
   Cash and cash equivalents ..............................................    $   234,189         $   371,396
   Restricted cash for payment of interest ................................             --              16,223
   Accounts receivable, net of allowance for doubtful accounts ............         45,871              30,925
   Inventories ............................................................         21,691              21,250
   Prepaid expenses and other .............................................         19,504              14,584
                                                                               -----------         -----------
                                                                                   321,255             454,378
                                                                               -----------         -----------

PROPERTY AND EQUIPMENT, AT COST ...........................................        807,190             721,913
   Less: accumulated depreciation .........................................       (228,130)           (160,803)
                                                                               -----------         -----------
                                                                                   579,060             561,110
                                                                               -----------         -----------
OTHER ASSETS:
   Licenses, net ..........................................................        392,392             400,587
   Investment in unconsolidated affiliates ................................         34,458               7,163
   Deferred charges and other, net ........................................         14,714              16,557
                                                                               -----------         -----------
                                                                                   441,564             424,307
                                                                               -----------         -----------

       Total assets .......................................................    $ 1,341,879         $ 1,439,795
                                                                               ===========         ===========

                          LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
   Accounts payable -- trade ..............................................    $    21,493         $    26,261
   Current portion of Credit Facility .....................................         28,010              12,946
   Accrued other ..........................................................         17,420              20,612
   Accrued taxes other than income ........................................         13,310              12,601
   Advance billings and customer deposits .................................         11,898               9,908
   Accrued interest .......................................................         11,125               2,781
   Accrued construction costs .............................................          3,936              18,479
                                                                               -----------         -----------
                                                                                   107,192             103,588
                                                                               -----------         -----------

LONG-TERM OBLIGATIONS:
   12% Senior Discount Notes due February 2006 ............................        339,278             310,076
   12% Senior Discount Notes due May 2006 .................................        336,419             308,308
   11.125% Senior Notes due June 2007 .....................................        300,000             300,000
   Long-term portion of Credit Facility ...................................        227,356             252,107
   Deferred gain on sale-leaseback ........................................         76,707              83,331
   Other ..................................................................             --                  23
                                                                               -----------         -----------
                                                                                 1,279,760           1,253,845
                                                                               -----------         -----------

COMMITMENTS AND CONTINGENCIES

CUMULATIVE CONVERTIBLE, REDEEMABLE
   PREFERRED STOCK ........................................................        152,219             152,219
                                                                               -----------         -----------

STOCKHOLDERS' DEFICIT:
   Preferred stock ........................................................              3                   3
   Common stock ...........................................................            314                 299
   Paid-in capital ........................................................        521,739             494,936
   Accumulated deficit ....................................................       (717,952)           (563,190)
   Deferred compensation ..................................................           (816)             (1,410)
   Treasury stock, at cost ................................................           (580)               (495)
                                                                               -----------         -----------
                                                                                  (197,292)            (69,857)
                                                                               -----------         -----------

       Total liabilities and stockholders' deficit ........................    $ 1,341,879         $ 1,439,795
                                                                               ===========         ===========
</TABLE>


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


                                       3
<PAGE>   4


                                 POWERTEL, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                          SEPTEMBER 30,                     SEPTEMBER 30,
                                                  ---------------------------         ---------------------------
                                                     2000             1999              2000              1999
                                                  ---------         ---------         ---------         ---------
                                                         (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

<S>                                               <C>               <C>               <C>               <C>
REVENUES AND SALES:
   Postpaid revenues .....................        $  60,075         $  46,568         $ 170,263         $ 128,182
   Prepaid revenues ......................           43,027            14,509           116,994            34,739
   Roaming revenues ......................            4,059             1,651             9,288             6,916
   Other revenues ........................            6,151             3,673            16,072             8,084
                                                  ---------         ---------         ---------         ---------
     Total service revenues ..............          113,312            66,401           312,617           177,921
   Equipment sales .......................            4,975             5,955            17,941            20,377
                                                  ---------         ---------         ---------         ---------
         Total revenues and sales ........          118,287            72,356           330,558           198,298
                                                  ---------         ---------         ---------         ---------

OPERATING EXPENSES:
   Cost of services ......................           25,384            15,920            71,272            42,642
   Cost of equipment sales ...............           26,578            17,072            77,046            48,650
   Operations ............................           18,105            14,800            49,131            46,619
   Selling and marketing .................           32,714            22,933            86,098            65,414
   General and administrative ............           11,498            10,503            33,817            30,429
   Depreciation ..........................           23,662            19,372            67,327            58,102
   Amortization ..........................            2,552             2,550             7,654             7,661
                                                  ---------         ---------         ---------         ---------
         Total operating expenses ........          140,493           103,150           392,345           299,517
                                                  ---------         ---------         ---------         ---------

OPERATING LOSS ...........................          (22,206)          (30,794)          (61,787)         (101,219)
                                                  ---------         ---------         ---------         ---------

OTHER EXPENSE (INCOME):
   Interest expense, net .................           30,316            25,695            86,379            80,889
   Gain on sale of assets ................               --                --                --          (127,161)
   Miscellaneous income ..................             (293)              (67)             (716)             (209)
                                                  ---------         ---------         ---------         ---------
         Total other expense (income) ....           30,023            25,628            85,663           (46,481)
                                                  ---------         ---------         ---------         ---------

LOSS BEFORE INCOME TAXES .................          (52,229)          (56,422)         (147,450)          (54,738)
INCOME TAX PROVISION .....................               --                --                --                --
                                                  ---------         ---------         ---------         ---------

NET LOSS .................................          (52,229)          (56,422)         (147,450)          (54,738)
DIVIDENDS ON CUMULATIVE CONVERTIBLE,
   REDEEMABLE PREFERRED STOCK ............           (2,437)           (2,437)           (7,312)           (7,312)
                                                  ---------         ---------         ---------         ---------

NET LOSS ATTRIBUTABLE TO COMMON
   STOCKHOLDERS ..........................        $ (54,666)        $ (58,859)        $(154,762)        $ (62,050)
                                                  =========         =========         =========         =========

PER SHARE DATA:
   BASIC AND DILUTED LOSS PER COMMON
     SHARE................................        $   (1.74)        $   (2.10)        $   (5.07)        $   (2.24)
                                                  =========         =========         =========         =========

   WEIGHTED AVERAGE COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING .......           31,347            28,053            30,521            27,751
                                                  =========         =========         =========         =========
</TABLE>


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


                                       4
<PAGE>   5


                                 POWERTEL, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                           NINE MONTHS ENDED
                                                                                              SEPTEMBER 30,
                                                                                      ---------------------------
                                                                                         2000             1999
                                                                                      ---------         ---------
                                                                                        (DOLLARS IN THOUSANDS)
<S>                                                                                   <C>               <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
   Net loss ..................................................................        $(147,450)        $ (54,738)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Gain on sale of subsidiary, net .........................................               --           (79,312)
     Realized gain on sale-leaseback, net ....................................               --           (47,849)
     Depreciation and amortization ...........................................           74,981            65,763
     Bond accretion ..........................................................           57,313            50,923
     Other ...................................................................           (4,187)             (577)
     Changes in current assets and liabilities:
       Increase in accounts receivable .......................................          (14,946)          (13,874)
       (Increase) decrease in inventories ....................................             (441)            8,425
       Increase in other assets ..............................................           (4,920)             (102)
       Increase (decrease) in accounts payable and accrued expenses ..........            3,083            (2,578)
                                                                                      ---------         ---------
           Net cash used in operating activities .............................          (36,567)          (73,919)
                                                                                      ---------         ---------

CASH FLOWS (USED IN) PROVIDED FROM INVESTING ACTIVITIES:
   Capital expenditures ......................................................          (85,277)          (97,983)
   Investment in unconsolidated affiliates ...................................          (27,295)           (7,153)
   Liquidation of short-term investments .....................................           16,223            14,836
   (Decrease) increase in accrued construction costs .........................          (14,543)            6,043
   Proceeds from sale-leaseback ..............................................               --           261,501
   Proceeds from sale of subsidiary ..........................................               --            89,339
   Microwave relocation costs ................................................              541            (2,797)
                                                                                      ---------         ---------
           Net cash (used in) provided from investing activities .............         (110,351)          263,786
                                                                                      ---------         ---------

CASH FLOWS PROVIDED FROM FINANCING ACTIVITIES:
   Proceeds from exercise of stock options and warrants ......................           19,506             2,448
   (Repayments of) borrowings under Credit Facility ..........................           (9,670)            6,468
   Other .....................................................................             (125)              (36)
                                                                                      ---------         ---------
           Net cash provided from financing activities .......................            9,711             8,880
                                                                                      ---------         ---------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .........................         (137,207)          198,747

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............................          371,396           204,787
                                                                                      ---------         ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................................        $ 234,189         $ 403,534
                                                                                      =========         =========

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for interest ....................................................        $  35,389         $  33,185
                                                                                      =========         =========
</TABLE>


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


                                       5
<PAGE>   6


                                 POWERTEL, INC.
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1.       Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted pursuant to
         Article 10 of Regulation S-X of the Securities and Exchange
         Commission. The accompanying unaudited condensed consolidated
         financial statements reflect, in the opinion of management, all
         adjustments necessary to achieve a fair statement of financial
         position and results for the interim periods presented. All such
         adjustments are of a normal recurring nature. It is suggested that
         these condensed consolidated financial statements be read in
         conjunction with the financial statements and notes thereto included
         in the Annual Report of Powertel, Inc. on Form 10-K for the year ended
         December 31, 1999.

2.       Certain prior year amounts have been reclassified to conform to the
         current period presentation.

3.       Prior to the sale of our cellular operations in April 1999, we
         classified our operations into two business segments: PCS and
         cellular. We allocated certain corporate administrative expenses to
         the segments based upon the nature of the expense. Intersegment
         revenues were not material. The following table summarizes financial
         information by business segment (in millions) for the applicable
         periods:


<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                         ------------------------------------------
                                                         2000                     1999
                                                         -----        -----------------------------
                                                         TOTAL        PCS        CELLULAR     TOTAL
                                                         -----        ----       --------     -----
                                                                         (UNAUDITED)

                     <S>                                <C>          <C>         <C>         <C>
                     Revenues and sales............     $ 330.6      $ 191.3       $ 7.0     $ 198.3
                     Operating (loss) income.......       (61.8)      (104.8)        3.6      (101.2)
                     Net (loss) income ............      (147.5)      (137.6)       82.9       (54.7)
</TABLE>

4.       Pursuant to a stock purchase agreement dated May 30, 2000 with Eliska
         Wireless Ventures I, Inc. ("Eliska Ventures"), we agreed to purchase
         12,475 shares of the Series A Preferred Stock of Eliska Ventures for
         $125 million. In addition, Sonera Holding B.V., a wholly owned
         subsidiary of Sonera Corporation ("Sonera"), agreed to invest $75
         million, and Eliska Wireless Investors I, L.P. agreed to invest $50
         million, in Eliska Ventures. Assuming closing of these transactions,
         we will have a 49.9% equity interest and a 24.95% voting interest in
         Eliska Ventures, Sonera will have a 30.1% equity interest and a 15.05%
         voting interest, and Eliska Investors will have a 20% equity interest
         and 60% voting interest. In connection with the formation of Eliska
         Ventures, on May 30, 2000, we also entered into a stock purchase
         agreement with Sonera whereby Sonera agreed to purchase $125 million
         of our common stock subject to the closing of the formation of Eliska
         Ventures. The purchase price for the common stock is $71.80 per share.

         Eliska Ventures is being formed to acquire substantially all of the
         assets, business and operations of, and certain related liabilities
         of, DigiPH Holding Company, Inc. ("Holding"), DigiPH Communication,
         Inc. ("Communication"), and DiGiPH PCS, Inc. (with Holding and
         Communication, "DiGiPH PCS"), including the assignment of the FCC
         licenses held by DiGiPH PCS (the "Asset Acquisition"). The aggregate
         purchase price for the Asset Acquisition is $375 million, subject to
         adjustment upward or downward for certain performance and post-closing
         matters. In connection with the Asset Acquisition, we intend to enter
         into a technical services agreement with Eliska Ventures for
         management, technical and consulting services. Pursuant to this
         agreement, we will assist Eliska Ventures in marketing its services
         under the Powertel brand name, expanding distribution channels and
         increasing network coverage in the market areas covered by the FCC
         licenses to be acquired by Eliska Ventures. One of our subsidiaries
         has loaned Eliska Ventures $27.3 million to fund its pre-closing
         deposit in connection with the Asset Acquisition and certain other
         expenses pending closing. This loan becomes due and payable in full at
         the closing of the Asset Acquisition.

         The formation of Eliska Ventures, Sonera's investment in our common
         stock and the Asset Acquisition are subject to the satisfaction of a
         number of conditions prior to closing, including the receipt of
         regulatory


                                       6
<PAGE>   7


         approval from the FCC, and there can be no assurance that any of these
         transactions will be consummated on the terms currently negotiated or
         at all. In management's opinion, however, these transactions are
         anticipated to close during the first quarter of 2001.

5.       On August 26, 2000, we entered into a definitive merger agreement (the
         "DT/Powertel Merger Agreement") with Deutsche Telekom AG ("DT")
         providing for the merger of Powertel with a subsidiary of DT, with
         Powertel surviving (the "DT/Powertel Merger"). On August 26, 2000, we
         also entered into a definitive merger agreement (the
         "VoiceStream/Powertel Merger Agreement") with VoiceStream Wireless
         Corporation ("VoiceStream") providing for the merger of Powertel with
         a subsidiary of VoiceStream, with Powertel surviving (the
         "VoiceStream/Powertel Merger"). The DT/Powertel Merger Agreement and
         the VoiceStream/Powertel Merger Agreement are mutually exclusive. If
         VoiceStream closes its merger with DT (the "DT/VoiceStream Merger") as
         contemplated by the merger agreement dated July 23, 2000 between DT
         and VoiceStream (the "DT/VoiceStream Merger Agreement"), then we will
         merge with a subsidiary of DT in accordance with the terms of the
         DT/Powertel Merger Agreement, and the VoiceStream/Powertel Merger
         Agreement will terminate. However, if the DT/VoiceStream Merger
         Agreement is terminated, then the DT/Powertel Merger Agreement will
         terminate, and we will merge with a subsidiary of VoiceStream in
         accordance with the terms of the VoiceStream/Powertel Merger
         Agreement. Each of the DT/Powertel Merger Agreement and the
         VoiceStream/Powertel Merger Agreement is subject to regulatory
         approvals, Powertel stockholder approval and other customary closing
         conditions.


                                       7
<PAGE>   8


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

         We provide PCS services in the southeastern United States. Our PCS
licenses encompass a territory of approximately 246,000 contiguous square miles
with a population of approximately 24.4 million people. We hold licenses to
serve the Atlanta, Georgia MTA, the Jacksonville, Florida MTA, the Memphis,
Tennessee/Jackson, Mississippi MTA and the Birmingham, Alabama MTA and 13 BTAs
in Kentucky and Tennessee. We hold 30 MHz of spectrum licensed for PCS in the
MTA Markets, and we hold 20 MHz of spectrum licensed for PCS in all of the BTA
Markets except for the Knoxville, Tennessee BTA, where we hold a license for 10
MHz of spectrum. We have one of the largest contiguous licensed PCS footprints
in the southeastern United States.

         We introduced our PCS services in October 1996 in Jacksonville,
Florida and Montgomery, Alabama and, to date, have launched our PCS services in
a total of 34 markets in the Southeast. As of September 30, 2000, we had
approximately 393,000 postpaid PCS subscribers and 410,000 prepaid PCS
subscribers.

         We incurred a net loss of $52.2 million for the three months ended
September 30, 2000, primarily as a result of the significant costs required to
maintain our expanding PCS network, the hiring and managing of required
personnel to operate our business and market our services, the subsidization of
handsets to our subscribers and the depreciation of equipment and amortization
of the PCS licenses. We expect to incur an operating loss for the remainder of
2000 as we continue to expand our PCS network, increase our subscriber base and
subsidize the cost of handsets to our subscribers.

         Historically, average revenues per subscriber in the wireless industry
have gradually declined, which we believe is the result of an increasing number
of casual users as wireless service becomes more prevalent, as well as intense
competition within the wireless industry. We believe the potential negative
impact of these trends on our earnings will be mitigated by our continued focus
on offering bundled products and services designed to encourage our subscribers
to purchase higher-priced rate plans and continually introducing enhanced
features such as text messaging. We also believe the potential negative impact
of these trends will be mitigated in the future through the introduction of
additional value-added services primarily in the wireless data area.

         Minimizing subscriber attrition, or "churn," remains a challenge as
our subscriber base grows and competition intensifies. We generated an average
monthly churn rate of 5.4% for the three months ended September 30, 2000, as
compared to 3.3% for the same period of 1999. We believe our increased churn
rate is related to the continued growth of our prepaid subscriber base as a
percentage of our overall subscriber base, as well as increased competition in
our markets. We believe our emphasis on offering bundled products and services
and enhanced features, as well as superior customer service will enable us to
retain our most profitable subscribers in the future.

         We use the Global System for Mobile Communications ("GSM") technology.
We are a member of the GSM Alliance, a consortium of PCS carriers who offer
GSM-based PCS service throughout North America. All members of the GSM Alliance
have executed roaming agreements with each other, which allows GSM customers to
roam throughout many major metropolitan areas in the United States and Canada.
Additionally, we have signed a substantial number of international roaming
agreements and expect to sign numerous others with international GSM carriers
to facilitate international roaming, which we officially launched during August
1999.

RECENT DEVELOPMENTS

Merger with Deutsche Telekom AG or VoiceStream Wireless Corporation

         On August 26, 2000, we entered into the DT/Powertel Merger Agreement
with DT providing for the merger of Powertel with a subsidiary of DT, with
Powertel surviving. On August 26, 2000, we also entered into the
VoiceStream/Powertel Merger Agreement with VoiceStream providing for the merger
of Powertel with a subsidiary of VoiceStream, with Powertel surviving. The
DT/Powertel Merger Agreement and the VoiceStream/Powertel Merger Agreement are
mutually exclusive. If the DT/VoiceStream Merger closes as contemplated by the
DT/VoiceStream Merger Agreement, then we will merge with a subsidiary of DT in
accordance with the terms of the DT/Powertel Merger Agreement, and the
VoiceStream/Powertel Merger Agreement will terminate. However, if


                                       8
<PAGE>   9


the DT/VoiceStream Merger Agreement is terminated, then the DT/Powertel Merger
Agreement will terminate, and we will merge with a subsidiary of VoiceStream in
accordance with the terms of the VoiceStream/Powertel Merger Agreement. Each of
the DT/Powertel Merger Agreement and the VoiceStream/Powertel Merger Agreement
is subject to regulatory approvals, Powertel stockholder approval and other
customary closing conditions.

Formation of Eliska Ventures and Acquisition of DiGiPH PCS

         Pursuant to a stock purchase agreement dated May 30, 2000 with Eliska
Ventures, we agreed to purchase 12,475 shares of the Series A Preferred Stock
of Eliska Ventures for $125 million. In addition, Sonera and Eliska Investors
entered into stock purchase agreements with Eliska Ventures on May 30, 2000.
Under these agreements, Sonera agreed to invest $75 million in Eliska Ventures
in exchange for 7,525 shares of its Series B Preferred Stock and Eliska
Investors agreed to invest $50 million in Eliska Ventures in exchange for 5,000
shares of its common stock. Eliska Investors' investment will be made by
delivery of $1 million in cash and a $49 million promissory note secured by
4,900 of the shares purchased by Eliska Investors. Assuming the closing of
these transactions, we will have a 49.9% equity interest and a 24.95% voting
interest in Eliska Ventures, Sonera will have a 30.1% equity interest and a
15.05% voting interest, and Eliska Investors will have a 20% equity interest
and 60% voting interest.

         Eliska Ventures is being formed to acquire substantially all of the
assets, business and operations of, and certain related liabilities of, DiGiPH
PCS, including the assignment of the FCC licenses held by DiGiPH PCS. The
aggregate purchase price for the Asset Acquisition is $375 million, subject to
adjustment upward or downward for certain performance and post-closing matters.
In connection with the Asset Acquisition, we intend to enter into a technical
services agreement with Eliska Ventures for management, technical and
consulting services. Pursuant to this agreement, we will assist Eliska Ventures
in marketing its services under the Powertel brand name, expanding distribution
channels and increasing network coverage in the market areas covered by the FCC
licenses to be acquired by Eliska Ventures. One of our subsidiaries has loaned
Eliska Ventures $27.3 million to fund its pre-closing deposit in connection
with the Asset Acquisition and certain other expenses pending closing. This
loan becomes due and payable in full at the closing of the Asset Acquisition.

         On May 30, 2000, we entered into a stock purchase agreement with
Sonera whereby Sonera agreed to purchase $125 million of our common stock
subject to the closing of the formation of Eliska Ventures. The purchase price
for the common stock is $71.80 per share.

         In connection with the formation of Eliska Ventures, we entered into a
put agreement with each of Sonera and Eliska Investors. Pursuant to the put
agreement with Sonera, we agreed that, from October 1, 2001 until June 30,
2002, Sonera may sell all of its interest in Eliska Ventures to us in exchange
for 1,044,568 shares of our common stock. At any time, we have a right of first
offer on Sonera's stock in Eliska Ventures in the event Sonera desires to sell
such stock to a third party. Pursuant to the put agreement with Eliska
Investors, we agreed that, from October 1, 2001 until October 30, 2001, Eliska
Investors may sell its initial $1 million interest in Eliska Ventures to us in
exchange for 13,928 shares of our common stock or $1.5 million in cash. In such
an event, the remaining ownership interest of Eliska Investors in Eliska
Ventures would be cancelled, subject to the receipt of regulatory approvals. In
addition, if Eliska Investors has fully satisfied its obligations under the $49
million promissory note to Eliska Ventures, we agreed that, from July 2, 2003
until July 31, 2003, Eliska Investors may exchange all of its interest in
Eliska Ventures for shares of our common stock at fair market value. Any time,
we have a right of first refusal with respect to Eliska Investors' interest in
Eliska Ventures in the event that Eliska Investors desires to sell its stock to
a third party.

         The formation of Eliska Ventures, Sonera's investment in our common
stock and the Asset Acquisition are subject to the satisfaction of a number of
conditions prior to closing, including the receipt of regulatory approval from
the FCC, and there can be no assurance that any of these transactions will be
consummated on the terms currently negotiated or at all. In management's
opinion, however, these transactions are anticipated to close during the first
quarter of 2001.


                                       9
<PAGE>   10


RESULTS OF OPERATIONS

Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999

         The following table sets forth our service revenues and equipment
sales and related gross margins, as well as overall operating and other costs
and margins, for each of the three months ended September 30, 2000 and 1999.


<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                         SEPTEMBER 30,
                                                                -------------------------------
                                                                   2000                 1999
                                                                ---------             ---------
                                                                     (DOLLARS IN THOUSANDS)
                                                                           (UNAUDITED)
        <S>                                                     <C>                   <C>
        SERVICE REVENUES & COST ANALYSIS:
        Service revenues:
           Postpaid revenues .......................            $  60,075             $  46,568
           Prepaid revenues ........................               43,027                14,509
           Roaming revenues ........................                4,059                 1,651
           Other revenues ..........................                6,151                 3,673
                                                                ---------             ---------
             Total service revenues ................              113,312                66,401
        Cost of services ...........................               25,384                15,920
                                                                ---------             ---------
           Gross margin ............................            $  87,928             $  50,481
                                                                =========             =========

        EQUIPMENT SALES & COST ANALYSIS:
        Equipment sales ............................            $   4,975             $   5,955
        Cost of equipment sales ....................               26,578                17,072
                                                                ---------             ---------
           Gross margin ............................            $ (21,603)            $ (11,117)
                                                                =========             =========

        OPERATING MARGIN ANALYSIS:
        Total revenues and sales ...................            $ 118,287             $  72,356
                                                                ---------             ---------
        Operating expenses:
           Cost of services and equipment sales ....               51,962                32,992
           Operations ..............................               18,105                14,800
           Selling and marketing ...................               32,714                22,933
           General and administrative ..............               11,498                10,503
           Depreciation ............................               23,662                19,372
           Amortization ............................                2,552                 2,550
                                                                ---------             ---------
             Total operating expenses ..............              140,493               103,150
                                                                ---------             ---------
        Operating loss .............................              (22,206)              (30,794)
        Interest expense, net ......................               30,316                25,695
        Miscellaneous income .......................                 (293)                  (67)
                                                                ---------             ---------
        Loss before income taxes ...................              (52,229)              (56,422)
        Income tax provision .......................                   --                    --
                                                                ---------             ---------
           Net loss ................................              (52,229)              (56,422)
        Dividends on Cumulative, Convertible
           Redeemable Preferred Stock ..............               (2,437)               (2,437)
                                                                ---------             ---------
        Net loss attributable to common
           stockholders.............................            $ (54,666)            $ (58,859)
                                                                =========             =========

        OTHER SUPPLEMENTAL DATA:
        Subscribers at end of period ...............              803,000               438,000
        Capital expenditures .......................            $  56,055             $  45,791
</TABLE>


                                      10
<PAGE>   11


         Postpaid service revenues increased $13.5 million, or 29.0%, for the
three months ended September 30, 2000 as compared to the same period of 1999,
which is primarily the result of our continued subscriber growth. Our postpaid
subscribers grew to approximately 393,000 at September 30, 2000, from
approximately 319,000 at September 30, 1999, of which approximately 10,000 net
postpaid subscribers were added during the three months ended September 30,
2000 as compared to approximately 27,000 for the same period of 1999. We
believe this decrease in the rate in postpaid subscriber growth is due in part
to the expanded distribution and increased availability of our prepaid service
launched in late 1998.

         The average monthly service revenue ("RPU") per postpaid subscriber
increased to $51.61 for the three months ended September 30, 2000 as compared
to $50.89 for the same period of 1999. We believe this increase in RPU reflects
the success of our rate plans that emphasize bundled airtime and toll minutes
for higher-priced plans, as well as an increase in the average minutes of use
per subscriber.

         Prepaid service revenues increased $28.5 million, or 196.6%, for the
three months ended September 30, 2000 as compared to the same period of 1999.
Our prepaid subscribers grew to approximately 410,000 at September 30, 2000,
from approximately 119,000 at September 30, 1999, of which approximately 67,000
net prepaid subscribers were added during the three months ended September 30,
2000, as compared to approximately 29,000 for the same period of 1999. A
significant portion of our prepaid subscriber growth for the three months ended
September 30, 2000 is attributable to our "Ready to Call" kit promotional
offering and our third quarter 2000 "50% more minutes" promotional offering.

         RPU per prepaid subscriber decreased to $38.65 for the three months
ended September 30, 2000 as compared to $46.40 for the same period of 1999. We
believe this decrease in RPU is attributable primarily to the introduction of
lower-denominated prepaid cards for airtime renewals.

         Roaming revenues (including roaming long distance) increased $2.4
million, or 145.9%, for the three months ended September 30, 2000 as compared
to the same period of 1999. This increase is due primarily to an increase in
the number of roamers and usage per roamer, which we believe is the result of
increased penetration levels by surrounding GSM carriers and our success in
obtaining roaming agreements with these carriers. We also launched
international roaming in August 1999 and currently have agreements with other
GSM carriers in more than 50 countries outside North America.

         Other service revenues, which include activation fees and
interconnection fees billed to local exchange carriers ("LECs") for connections
to our PCS network, increased $2.5 million, or 67.5%, for the three months
ended September 30, 2000 as compared to the same period of 1999. This increase
is due primarily to the increase in new subscribers and a continued increase in
interconnection fees as a result of increased utilization of our network by
LECs.

         Cost of services includes the cost of interconnection with LEC
facilities, direct cell site costs (property taxes and insurance, site lease
costs and electric utilities), roaming validation (provided by a third-party
clearinghouse), long distance toll costs and certain prepaid subscriber-related
fees. Cost of services increased $9.5 million, or 59.4%, for the three months
ended September 30, 2000 as compared to the same period of 1999. This increase
is due primarily to the costs of providing service to our prepaid subscriber
base, including sales commissions on prepaid card renewals, taxes and other
surcharges that we do not bill to our prepaid subscribers and
intelligent-network management fees. We also experienced a substantial increase
in our roaming costs due to the increase in postpaid subscribers on our
50-State Rate plans.

         We generated a negative equipment margin of 434.2% on $5.0 million of
sales during the three months ended September 30, 2000 as compared to a
negative margin of 187.0% on $6.0 million of sales for the same period of 1999.
Although we experienced a continued decrease in the average cost of handsets,
we sold our handsets at disproportionately low prices for competitive reasons.
We also subsidized the handset associated with our prepaid "Ready to Call" kit
more heavily than our other handset models and offered handset credits to all
postpaid subscribers who activated during the three months ended September 30,
2000. We expect to continue subsidizing the cost of handsets to subscribers for
the foreseeable future.


                                      11
<PAGE>   12


         Operations costs, which include the costs of managing and maintaining
our PCS system, customer service, credit and collections (including bad debt)
and inventory management increased $3.3 million, or 22.3%, for the three months
ended September 30, 2000 as compared to the same period of 1999. Our personnel
costs increased due to providing customer service through our centralized call
center to the growing subscriber base and our network maintenance costs
increased due to our expanding PCS network and certain equipment warranty
expirations.

         Selling and marketing costs increased $9.8 million, or 42.7%, for the
three months ended September 30, 2000 as compared to the same period of 1999.
Substantially all of this increase is attributable to an increase in
advertising to support our promotional campaigns and the continued expansion of
our sales distribution channels, including increases in personnel, commissions
and retail location costs.

         General and administrative costs increased $1.0 million, or 9.5%, for
the three months ended September 30, 2000 as compared to the same period of
1999. Substantially all of this increase is attributable to increased
personnel, facilities and computer systems costs at our corporate and regional
administrative offices and information technology center to support our rapidly
growing operations.

         Depreciation and amortization increased $4.3 million, or 19.6%, for
the three months ended September 30, 2000 as compared to the same period of
1999 and consists principally of the depreciation of the PCS network and the
amortization of PCS licenses. Substantially all of the increase is attributable
to depreciation associated with the 156 additional cell sites that we placed in
service since September 30, 1999, as well as depreciation of computer systems
and infrastructure costs required to manage the administrative functions of our
business.

         Net consolidated interest expense increased $4.6 million, or 18.0%,
for the three months ended September 30, 2000 as compared to the same period of
1999. This increase in net interest expense is the result primarily of an
increase in our bond accretion expense, as well as a decrease in interest
income due to a reduction in cash available for investment.

         The effective income tax rate for the three months ended September 30,
2000 and 1999 was 0%. We generated a net loss of $52.2 million for the three
months ended September 30, 2000 and expect to incur a net loss for the
remainder of 2000. We will not recognize the tax benefit of these losses until
management determines that it is more likely than not that such benefit is
realizable.


                                      12
<PAGE>   13


Nine Months Ended September 30, 2000 Compared to Nine Months Ended September
30, 1999

         The following table reflects the composition of our cellular and PCS
service revenue and equipment sales and related gross margins, as well as
overall operating and other costs and margins, for each of the nine months
ended September 30, 2000 and 1999. Our historical results of operations,
particularly in view of the sale of our cellular telephone assets in April
1999, will not be comparable with future periods.


<TABLE>
<CAPTION>
                                                                            NINE MONTHS ENDED SEPTEMBER 30,
                                                        -------------------------------------------------------------------------
                                                           2000                                     1999
                                                        ---------            ----------------------------------------------------
                                                                                                                        COMBINED
                                                                                                                        CELLULAR
                                                                                                                           AND
                                                          TOTAL              CELLULAR                PCS                   PCS
                                                        ---------            --------             ---------             ---------
                                                                                  (DOLLARS IN THOUSANDS)
                                                                                        (UNAUDITED)
<S>                                                     <C>                  <C>                  <C>                   <C>
SERVICE REVENUES & COST ANALYSIS:
Service revenues:
   Postpaid revenues .......................            $ 170,263             $ 3,922             $ 124,260             $ 128,182
   Prepaid revenues ........................              116,994                  --                34,739                34,739
   Roaming revenues ........................                9,288               2,597                 4,319                 6,916
   Other revenues ..........................               16,072                 173                 7,911                 8,084
                                                        ---------             -------             ---------             ---------
     Total service revenues ................              312,617               6,692               171,229               177,921
Cost of services ...........................               71,272                 564                42,078                42,642
                                                        ---------             -------             ---------             ---------
   Gross margin ............................            $ 241,345             $ 6,128             $ 129,151             $ 135,279
                                                        =========             =======             =========             =========

EQUIPMENT SALES & COST ANALYSIS:
Equipment sales ............................            $  17,941             $   316             $  20,061             $  20,377
Cost of equipment sales ....................               77,046                 598                48,052                48,650
                                                        ---------             -------             ---------             ---------
   Gross margin ............................            $ (59,105)            $  (282)            $ (27,991)            $ (28,273)
                                                        =========             =======             =========             =========

OPERATING MARGIN ANALYSIS:
Total revenues and sales ...................            $ 330,558             $ 7,008             $ 191,290             $ 198,298
                                                        ---------             -------             ---------             ---------
Operating expenses:
   Cost of services and equipment sales ....              148,318               1,162                90,130                91,292
   Operations ..............................               49,131                 576                46,043                46,619
   Selling and marketing ...................               86,098                 658                64,756                65,414
   General and administrative ..............               33,817                 537                29,892                30,429
   Depreciation ............................               67,327                 521                57,581                58,102
   Amortization ............................                7,654                  --                 7,661                 7,661
                                                        ---------             -------             ---------             ---------
     Total operating expenses ..............              392,345               3,454               296,063               299,517
                                                        ---------             -------             ---------             ---------
Operating (loss) income ....................              (61,787)            $ 3,554             $(104,773)             (101,219)
                                                                              =======             =========
Interest expense, net ......................               86,379                                                          80,889
Gain on sale of assets .....................                   --                                                        (127,161)
Miscellaneous income .......................                 (716)                                                           (209)
                                                        ---------                                                       ---------
Loss before income taxes ...................             (147,450)                                                        (54,738)
Income tax provision .......................                   --                                                              --
                                                        ---------                                                       ---------
   Net loss ................................             (147,450)                                                        (54,738)
Dividends on Cumulative, Convertible
   Redeemable Preferred Stock ..............               (7,312)                                                         (7,312)
                                                        ---------                                                       ---------
Net loss attributable to common
   stockholders.............................            $(154,762)                                                      $ (62,050)
                                                        =========                                                       =========

OTHER SUPPLEMENTAL DATA:
Subscribers at end of period ...............              803,000                  --               438,000               438,000
Capital expenditures .......................            $  85,277             $   326             $  97,657             $  97,983
</TABLE>


                                      13
<PAGE>   14


         The following discussion reflects the results of operations for our
PCS line of business only. We sold substantially all of the assets for our
cellular line of business in the second quarter of 1999.

         Postpaid service revenues increased $46.0 million, or 37.0%, for the
nine months ended September 30, 2000 as compared to the same period of 1999,
which is primarily the result of our continued subscriber growth. Our postpaid
subscribers grew to approximately 393,000 at September 30, 2000, from
approximately 319,000 at September 30, 1999, of which approximately 52,000 net
postpaid subscribers were added during the nine months ended September 30, 2000
as compared to approximately 65,000 for the same period of 1999. We believe
this decrease in the rate in postpaid subscriber growth is due in part to the
expanded distribution and increased availability of our prepaid service
launched in late 1998. A significant portion of our postpaid subscriber growth
for the nine months ended September 30, 2000 is attributable to our 50-State
Rate plans and our "50% more minutes" promotional offerings, which we
introduced in the first quarter of 2000.

         RPU per postpaid subscriber increased to $50.99 for the nine months
ended September 30, 2000 as compared to $49.04 for the same period of 1999. We
believe this increase in RPU reflects the success of our rate plans that
emphasize bundled airtime and toll minutes for higher-priced plans, as well as
an increase in the average minutes of use per subscriber.

         Prepaid service revenues increased $82.3 million, or 236.8%, for the
nine months ended September 30, 2000 as compared to the same period of 1999.
Our prepaid subscribers grew to approximately 410,000 at September 30, 2000,
from approximately 119,000 at September 30, 1999, of which approximately
205,000 net prepaid subscribers were added during the nine months ended
September 30, 2000 as compared to approximately 78,000 for the same period of
1999. A significant portion of our prepaid subscriber growth for the nine
months ended September 30, 2000 is attributable to our "Ready to Call" kit
promotional offering.

         RPU per prepaid subscriber decreased to $41.27 for the nine months
ended September 30, 2000 as compared to $49.71 for the same period of 1999. We
believe this decrease in RPU is attributable primarily to the introduction of
lower-denominated prepaid cards for airtime renewals.

         Roaming revenues (including roaming long distance) increased $5.0
million, or 115.0%, for the nine months ended September 30, 2000 as compared to
the same period of 1999. This increase is due primarily to an increase in the
number of roamers and usage per roamer, which we believe is the result of
increased penetration levels by surrounding GSM carriers and our success in
obtaining roaming agreements with these carriers. We also launched
international roaming in August 1999 and currently have agreements with other
GSM carriers in more than 50 countries outside North America.

         Other service revenues, which include activation fees and
interconnection fees billed to LECs for connections to our network, increased
$8.2 million, or 103.2%, for the nine months ended September 30, 2000 as
compared to the same period of 1999. This increase is due primarily to the
increase in new subscribers and a continued increase in interconnection fees as
a result of increased utilization of our network by LECs.

         Cost of services includes the cost of interconnection with LEC
facilities, direct cell site costs (property taxes and insurance, site lease
costs and electric utilities), roaming validation (provided by a third-party
clearinghouse), long distance toll costs and certain prepaid subscriber-related
fees. Cost of services increased $29.2 million, or 69.4%, for the nine months
ended September 30, 2000 as compared to the same period of 1999. This increase
is due primarily to the costs of providing service to our prepaid subscriber
base, including sales commissions on prepaid card renewals, taxes and other
surcharges that we do not bill to our prepaid subscribers and
intelligent-network management fees. We also experienced a substantial increase
in our roaming costs due to the increase in postpaid subscribers on our
50-State Rate plans and an increase in interconnection due to increased usage
of our network.

         We generated a negative equipment margin of 329.4% on $17.9 million of
sales during the nine months ended September 30, 2000 as compared to a negative
margin of 140.0% on $20.1 million of sales for the same period of 1999.
Although we experienced a continued decrease in the average cost of handsets,
we sold our handsets at disproportionately low prices for competitive reasons.
We also subsidized the handset associated with our prepaid "Ready to Call" kit
more heavily than our other handset models and offered handset credits to all


                                      14
<PAGE>   15


postpaid subscribers who activated during the nine months ended September 30,
2000. We expect to continue subsidizing the cost of handsets to subscribers for
the foreseeable future.

         Operations costs, which include the costs of managing and maintaining
our PCS system, customer service, credit and collections (including bad debt)
and inventory management increased $3.1 million, or 6.7%, for the nine months
ended September 30, 2000 as compared to the same period of 1999. Our personnel
costs increased due to providing customer service through our centralized call
center to the growing subscriber base and our network maintenance costs
increased due to our expanding PCS network and certain equipment warranty
expirations. These increases were offset by a substantial reduction in bad debt
provisions resulting from the success of our prepaid service, as well as
improvements in credit and collections associated with our postpaid subscriber
base.

         Selling and marketing costs increased $21.3 million, or 33.0%, for the
nine months ended September 30, 2000 as compared to the same period of 1999.
Substantially all of this increase is attributable to an increase in
advertising to support our promotional campaigns and the continued expansion of
our sales distribution channels, including increases in personnel, commissions
and retail location costs.

         General and administrative costs increased $3.9 million, or 13.1%, for
the nine months ended September 30, 2000 as compared to the same period of
1999. Substantially all of this increase is attributable to increased
personnel, facilities and computer systems costs at our corporate and regional
administrative offices and information technology center to support our rapidly
growing operations.

         Depreciation and amortization increased $9.7 million, or 14.9%, for
the nine months ended September 30, 2000 as compared to the same period of 1999
and consists principally of the depreciation of the PCS network and the
amortization of PCS licenses. Substantially all of the increase is attributable
to depreciation associated with the 156 additional cell sites that we placed in
service since September 30, 1999, as well as depreciation of computer systems
and infrastructure costs required to manage the administrative functions of our
business.

         Net consolidated interest expense increased $5.5 million, or 6.8%, for
the nine months ended September 30, 2000 as compared to the same period of
1999. This increase in net interest expense is the result primarily of an
increase in our bond accretion expense, which was partially offset by an
increase in interest income earned on the additional cash available for
investment due to asset sales in 1999.

         The effective income tax rate for the nine months ended September 30,
2000 and 1999 was 0%. We generated a net loss of $147.5 million for the nine
months ended September 30, 2000 and expect to incur a net loss for the
remainder of 2000. We will not recognize the tax benefit of these losses until
management determines that it is more likely than not that such benefit is
realizable.

LIQUIDITY AND CAPITAL RESOURCES

         We had cash and cash equivalents of $234.2 million at September 30,
2000 as compared to $371.4 at December 31, 1999. For the nine months ended
September 30, 2000, we used net cash of $36.6 million for operating activities
as compared to $73.9 million for the same period of 1999. The cash impact of
the net loss from operations totaled $147.5 million but was partially offset by
$75.0 million of depreciation and amortization and $57.3 million of bond
accretion on the senior discount notes, as well as an increase in accounts
receivable of $14.9 million.

         Cash used in investing activities was $110.4 million for the nine
months ended September 30, 2000 as compared to cash provided from investing
activities of $263.8 million for the same period of 1999. Investing activities
for the nine months ended September 30, 2000 consisted primarily of capital
expenditures of $85.3 million and investments in an unconsolidated affiliate of
$27.3 million. The investment in the unconsolidated affiliate represents a loan
of $27.3 million to Eliska Ventures to fund its pre-closing deposit in
connection with the Asset Acquisition and certain other expenses pending
closing. See "Recent Developments" above for further information on the
transactions with Eliska Ventures and the Asset Acquisition. We also liquidated
$16.2 million of short-term investments to satisfy our commitment to make the
last of the first six scheduled interest payments on the 11.125% Senior Notes
due June 2007 from restricted cash. At September 30, 2000, we had no restricted
cash on our balance sheet.


                                      15
<PAGE>   16


         Cash provided from financing activities was $9.7 million for the nine
months ended September 30, 2000 as compared to $8.9 million for the same period
of 1999. Financing activities for the nine months ended September 30, 2000
consisted primarily of proceeds from the exercise of stock options and warrants
of $19.5 million, which was partially offset by repayments of our credit
facility of $9.7 million.

         We maintain a $265 million credit facility, which funded our purchase
of PCS network equipment and services for our initial buildout. We have
borrowed the maximum amount available under the credit facility. We are
repaying the aggregate amount of the advances made in each calendar year
(1996-1999) under the credit facility in twenty equal quarterly installments,
with the last installment in an amount necessary to repay in full the remaining
outstanding balance. We paid the first such installment in March 2000.

         Total capital expenditures, including capital expenditures for
information technology and support of the PCS business, were $85.3 million for
the nine months ended September 30, 2000, as compared to $98.0 million for the
same period of 1999. We currently estimate that capital expenditures will total
approximately $30 million for the remainder of 2000. These expenditures are
primarily to enhance and expand our network in existing markets in order to
increase capacity and to satisfy subscriber needs and competitive requirements.
We will continue to upgrade our network capacity and service quality,
particularly as they relate to our prepaid service intelligent-network
platform, to support our anticipated subscriber growth.

         Although we have completed the initial buildout of our PCS system, we
continue to require significant amounts of capital to fund the operation and
expansion of our business. We achieved positive earnings before interest,
taxes, depreciation and amortization ("EBITDA") during each of the first three
quarters of 2000 and had positive EBITDA of $13.2 million for the nine months
ended September 30, 2000. We discuss EBITDA because it is a measure commonly
used in the industry. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered an
alternative to cash flow as a measure of liquidity. We expect to continue to
improve EBITDA for the remainder of 2000. We believe our cash on hand and cash
flow from operations will be sufficient to fund our operations for the
remainder of 2000.

RECENT ACCOUNTING PRONOUNCEMENTS

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin Number 101, "Revenue Recognition in Financial Statements,"
which provides additional guidance on the recognition of revenue in financial
statements for transactions not specifically addressed within the scope of
existing accounting pronouncements. We are currently evaluating the substance
of this bulletin to determine its impact on our financial statements, but do
not expect it to have a material impact on our financial statements.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements appear in a number of places in this
Report and include all statements that are not historical facts and which
relate to our intent, belief or current expectations, or that of our directors
or officers. In this Report, we may have made forward-looking statements with
respect to, among other things: (i) our future subscriber and revenue growth;
(ii) the proposed transactions with DT and VoiceStream and the acquisition of
the DiGiPH PCS assets; (iii) our financing plans, including our ability to
obtain financing in the future; (iv) trends affecting our financial condition
or results of operations; (v) our growth, prospects and operating strategies;
and (vi) our anticipated capital needs and capital expenditures. We caution
investors that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in forward-looking statements as a
result of: (i) factors affecting the availability, terms and cost of capital,
risks associated with the selection of our PCS digital protocol, competitive
factors and pricing pressures, general economic conditions, the failure of the
market demand for our products and services to be commensurate with our
management's expectations or past experience, issues associated with the
management of our growth, including the expansion of our network capacity, the
impact of present or future laws and regulations on our business, changes in
operating expenses or the failure of operating and buildout expenses to be
consistent with our


                                      16
<PAGE>   17


management's expectations and the difficulty of accurately predicting the
outcome and effect of certain matters, such as matters involving pending
transactions, litigations and investigations; (ii) various factors discussed
herein; and (iii) those factors discussed in detail in our previous filings
with the Securities and Exchange Commission, including the "Risk Factors"
section of our Registration Statement on Form S-3 (Registration number
333-84981), as declared effective by the Securities and Exchange Commission on
September 24, 1999.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

         We believe our exposure to market rate fluctuations on our investments
is nominal due to the short-term nature of those investments. We have market
risk to the extent of our borrowings under our credit facility because of the
variable interest rate on the credit facility. However, our management does not
foresee any material prolonged changes in interest rates in the near future. At
present, we have no plans to enter into any hedging arrangements with respect
to our borrowings.


                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         Reference is made to our Form 10-K for the year ended December 31,
1999 (as filed with the Securities and Exchange Commission on March 29, 2000)
for a discussion of certain legal proceedings.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (A)      EXHIBITS


<TABLE>
<CAPTION>
         Exhibit
         Number       Description
         ------       -----------

         <S>          <C>
            27        Financial Data Schedule (for SEC use only).
</TABLE>

         (B)      REPORTS ON FORM 8-K.

         On August 31, 2000, we filed a Current Report on Form 8-K dated August
26, 2000 which reported events under Item 5 (Other Events) in connection with
(i) our Agreement and Plan of Merger with Deutsche Telekom AG and (ii) our
Agreement and Plan of Reorganization with VoiceStream Wireless Corporation. We
were not required to file financial statements in connection with the merger
agreements.


                                      17
<PAGE>   18


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.



                           POWERTEL, INC.



November 13, 2000          /s/ Allen E. Smith
                           ----------------------------------------------------
                           Allen E. Smith
                           President and Chief Executive Officer



November 13, 2000          /s/ Fred G. Astor, Jr.
                           ----------------------------------------------------
                           Fred G. Astor, Jr.
                           Executive Vice President and Chief Financial Officer
                           (Chief Accounting Officer)


                                      18