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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

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

For the quarterly period ended September 30, 2008

or



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

For the transition period from  to
.

Commission File Number: 000-51798





NTELOS Holdings Corp.

(Exact name of registrant as specified in its
charter)







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

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

(Address of principal executive offices) (Zip Code)

(540) 946-3500

(Registrants telephone number, including area
code)





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

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



|                           |  |                                               |  |                          |  |                             
|-------------------------- |  | --------------------------------------------- |  | ------------------------ |  | ----------------------------
|Large accelerated filer  x |  | Accelerated filer   ̈                          |  | Non-accelerated filer   ̈ |  | Smaller reporting company   ̈
|                           |  | (Do not check if a smaller reporting company) |  |                         

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

There were 42,179,519 shares of the registrants common stock outstanding as of the close of business on October 31, 2008.









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##### Table of Contents

NTELOS HOLDINGS CORP.

QUARTERLY REPORT ON FORM 10-Q

INDEX



|                              |  |                                                                                       |  |   
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | --
|Part I. Financial Information |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Financial Statements                                                                  |  | 1 
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 17
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 32
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 34
|                              | 
|Part II. Other Information    |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 35
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors                                                                          |  | 35
|                              |  |                                                                                      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 35
|                              |  |                                                                                      
|Item 5.                       |  | Other Information                                                                     |  | 35
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 35
|                              | 
|Signatures                    |  | 36                                                                                   
|                              | 
|Certifications                |  |                                                                                      



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##### Table of Contents

Part I  FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

Condensed Consolidated
Balance Sheets

NTELOS Holdings Corp.

(Unaudited)



|                                                                              |  |                    |         |                   |   |        
|----------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|(In thousands)                                                                |  | September 30, 2008 |         | December 31, 2007
|Assets                                                                        |  |                    |         |                   |   |        
|                                                                              |  |                   
|Current Assets                                                                |  |                    |         |                   |   |        
|Cash and cash equivalents                                                     |  | $                  | 67,442  |                   | $ | 53,467 
|Accounts receivable, net of allowance of $14,098 ($14,004 in 2007)            |  |                    | 48,712  |                   |   | 45,543 
|Inventories and supplies                                                      |  |                    | 9,197   |                   |   | 7,693  
|Other receivables                                                             |  |                    | 3,522   |                   |   | 4,184  
|Income tax receivable                                                         |  |                    |        |                   |   | 11,753 
|Prepaid expenses and other                                                    |  |                    | 8,713   |                   |   | 7,944  
|                                                                              |  |                    |         |                   |   |        
|                                                                              |  |                    | 137,586 |                   |   | 130,584
|                                                                              |  |                    |         |                   |   |        
|Securities and Investments                                                    |  |                    |         |                   |   |        
|Interest rate swap                                                            |  |                    | 4,243   |                   |   | 347    
|Securities and investments                                                    |  |                    | 703     |                   |   | 523    
|                                                                              |  |                    |         |                   |   |        
|                                                                              |  |                    | 4,946   |                   |   | 870    
|                                                                              |  |                    |         |                   |   |        
|Property, Plant and Equipment                                                 |  |                    |         |                   |   |        
|Land and buildings                                                            |  |                    | 41,731  |                   |   | 38,513 
|Network plant and equipment                                                   |  |                    | 517,733 |                   |   | 458,874
|Furniture, fixtures and other equipment                                       |  |                    | 58,471  |                   |   | 44,422 
|                                                                              |  |                    |         |                   |   |        
|Total in service                                                              |  |                    | 617,935 |                   |   | 541,809
|Under construction                                                            |  |                    | 45,115  |                   |   | 54,401 
|                                                                              |  |                    |         |                   |   |        
|                                                                              |  |                    | 663,050 |                   |   | 596,210
|Less accumulated depreciation                                                 |  |                    | 231,225 |                   |   | 193,306
|                                                                              |  |                    |         |                   |   |        
|                                                                              |  |                    | 431,825 |                   |   | 402,904
|                                                                              |  |                    |         |                   |   |        
|Other Assets                                                                  |  |                    |         |                   |   |        
|Goodwill                                                                      |  |                    | 118,448 |                   |   | 127,637
|Franchise rights                                                              |  |                    | 32,000  |                   |   | 32,000 
|Other intangibles, less accumulated amortization of $46,050 ($37,149 in 2007) |  |                    | 77,000  |                   |   | 85,901 
|Radio spectrum licenses in service                                            |  |                    | 114,129 |                   |   | 114,180
|Radio spectrum licenses not in service                                        |  |                    | 19,671  |                   |   | 19,641 
|Deferred charges and other assets                                             |  |                    | 3,834   |                   |   | 4,771  
|                                                                              |  |                    |         |                   |   |        
|                                                                              |  |                    | 365,082 |                   |   | 384,130
|                                                                              |  |                    |         |                   |   |        
|                                                                              |  | $                  | 939,439 |                   | $ | 918,488
|                                                                              |  |                    |         |                   |   |        

See accompanying Notes to Condensed Consolidated Financial Statements.



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Condensed Consolidated Balance Sheets

NTELOS Holdings Corp.

(Unaudited)



|                                                                                                                        |  |                    |         |                   |   |        
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|(In thousands, except par value per share amounts)                                                                      |  | September 30, 2008 |         | December 31, 2007
|Liabilities and Stockholders Equity                                                                                    |  |                    |         |                   |   |        
|                                                                                                                        |  |                   
|Current Liabilities                                                                                                     |  |                    |         |                   |   |        
|Current portion of long-term debt                                                                                       |  | $                  | 6,693   |                   | $ | 6,751  
|Accounts payable                                                                                                        |  |                    | 32,836  |                   |   | 31,525 
|Dividends payable                                                                                                       |  |                    | 8,857   |                   |   | 8,833  
|Advance billings and customer deposits                                                                                  |  |                    | 19,044  |                   |   | 17,809 
|Accrued payroll                                                                                                         |  |                    | 8,818   |                   |   | 12,929 
|Accrued interest                                                                                                        |  |                    |        |                   |   | 70     
|Income tax payable                                                                                                      |  |                    | 1,109   |                   |   |       
|Accrued operating taxes                                                                                                 |  |                    | 4,223   |                   |   | 3,067  
|Other accrued liabilities                                                                                               |  |                    | 4,073   |                   |   | 3,836  
|                                                                                                                        |  |                    |         |                   |   |        
|                                                                                                                        |  |                    | 85,653  |                   |   | 84,820 
|                                                                                                                        |  |                    |         |                   |   |        
|Long-term Liabilities                                                                                                   |  |                    |         |                   |   |        
|Long-term debt                                                                                                          |  |                    | 602,755 |                   |   | 607,455
|Retirement benefits                                                                                                     |  |                    | 27,107  |                   |   | 27,860 
|Deferred income taxes                                                                                                   |  |                    | 11,139  |                   |   | 4,042  
|Other long-term liabilities                                                                                             |  |                    | 20,637  |                   |   | 19,218 
|Income tax payable                                                                                                      |  |                    | 3,540   |                   |   | 3,325  
|                                                                                                                        |  |                    |         |                   |   |        
|                                                                                                                        |  |                    | 665,178 |                   |   | 661,900
|                                                                                                                        |  |                    |         |                   |   |        
|Minority Interests                                                                                                      |  |                    | 485     |                   |   | 428    
|                                                                                                                        |  |                    |         |                   |   |        
|Commitments and Contingencies                                                                                           |  |                    |         |                   |   |        
|                                                                                                                        |  |                   
|Stockholders Equity                                                                                                    |  |                    |         |                   |   |        
|Preferred Stock, par value $.01 per share, authorized 100 shares, none issued                                           |  |                    |        |                   |   |       
|Common stock, par value $.01 per share, authorized 55,000 shares; 42,178 shares issued and outstanding (42,063 in 2007) |  |                    | 422     |                   |   | 421    
|Additional paid in capital                                                                                              |  |                    | 165,749 |                   |   | 162,304
|Retained earnings                                                                                                       |  |                    | 20,350  |                   |   | 6,603  
|Accumulated other comprehensive income                                                                                  |  |                    | 1,602   |                   |   | 2,012  
|                                                                                                                        |  |                    |         |                   |   |        
|                                                                                                                        |  |                    | 188,123 |                   |   | 171,340
|                                                                                                                        |  |                    |         |                   |   |        
|                                                                                                                        |  | $                  | 939,439 |                   | $ | 918,488
|                                                                                                                        |  |                    |         |                   |   |        

See accompanying Notes to Condensed Consolidated Financial Statements.



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Condensed Consolidated Statements of Operations

NTELOS Holdings Corp.

(Unaudited)



|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|---------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | ----------------- |  | - | ----------------- | - |  | - | ------- | -
|                                                                       |  | Three Months Ended |         |   | Nine Months Ended |  
|(In thousands except per share amounts)                                |  | September 30,2008  |         |   | September 30,2007 |   |         | September 30,2008 |  |   | September 30,2007 |  
|Operating Revenues                                                     |  | $                  | 135,985 |   |                   | $ | 126,931 |                   |  | $ | 399,249           |   |  | $ | 372,476 |  
|                                                                       |  |                    |         |  
|Operating Expenses                                                     |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|Cost of sales and services (exclusive of items shown separately below) |  |                    | 44,264  |   |                   |   | 39,972  |                   |  |   | 127,081           |   |  |   | 119,240 |  
|Customer operations                                                    |  |                    | 27,066  |   |                   |   | 27,221  |                   |  |   | 80,015            |   |  |   | 79,081  |  
|Corporate operations                                                   |  |                    | 7,794   |   |                   |   | 8,503   |                   |  |   | 24,797            |   |  |   | 24,511  |  
|Depreciation and amortization                                          |  |                    | 24,789  |   |                   |   | 26,863  |                   |  |   | 78,615            |   |  |   | 67,541  |  
|Accretion of asset retirement obligations                              |  |                    | 249     |   |                   |   | 230     |                   |  |   | 745               |   |  |   | 622     |  
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|                                                                       |  |                    | 104,162 |   |                   |   | 102,789 |                   |  |   | 311,253           |   |  |   | 290,995 |  
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|Operating Income                                                       |  |                    | 31,823  |   |                   |   | 24,142  |                   |  |   | 87,996            |   |  |   | 81,481  |  
|                                                                       |  |                    |         |  
|Other Income (Expenses)                                                |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|Interest expense                                                       |  |                    | (7,756  | ) |                   |   | (11,020 | )                 |  |   | (24,611           | ) |  |   | (32,721 | )
|Gain (loss) on interest rate swap                                      |  |                    | (2,403  | ) |                   |   | (1,265  | )                 |  |   | 3,896             |   |  |   | (2,648  | )
|Other income                                                           |  |                    | 44      |   |                   |   | 839     |                   |  |   | 871               |   |  |   | 2,340   |  
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|                                                                       |  |                    | (10,115 | ) |                   |   | (11,446 | )                 |  |   | (19,844           | ) |  |   | (33,029 | )
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|                                                                       |  |                    | 21,708  |   |                   |   | 12,696  |                   |  |   | 68,152            |   |  |   | 48,452  |  
|Income Tax Expense                                                     |  |                    | 8,714   |   |                   |   | 5,180   |                   |  |   | 27,334            |   |  |   | 20,360  |  
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|                                                                       |  |                    | 12,994  |   |                   |   | 7,516   |                   |  |   | 40,818            |   |  |   | 28,092  |  
|Minority Interests in (Earnings) Losses of Subsidiaries                |  |                    | (26     | ) |                   |   | 35      |                   |  |   | (57               | ) |  |   | 39      |  
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|Net Income                                                             |  | $                  | 12,968  |   |                   | $ | 7,551   |                   |  | $ | 40,761            |   |  | $ | 28,131  |  
|                                                                       |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|Basic and Diluted Earnings per Common Share:                           |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |         |  
|Income per share  basic                                               |  | $                  | 0.31    |   |                   | $ | 0.18    |                   |  | $ | 0.97              |   |  | $ | 0.68    |  
|Income per share  diluted                                             |  | $                  | 0.31    |   |                   | $ | 0.18    |                   |  | $ | 0.96              |   |  | $ | 0.67    |  
|Weighted average shares outstanding  basic                            |  |                    | 42,137  |   |                   |   | 41,630  |                   |  |   | 41,923            |   |  |   | 41,428  |  
|Weighted average shares outstanding  diluted                          |  |                    | 42,313  |   |                   |   | 42,361  |                   |  |   | 42,280            |   |  |   | 42,117  |  
|Cash Dividends Declared per Share  Common Stock                       |  | $                  | 0.21    |   |                   | $ | 0.15    |                   |  | $ | 0.63              |   |  | $ | 0.30    |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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Condensed Consolidated Statements of Cash Flows

NTELOS Holdings Corp.

(Unaudited)



|                                                                                  |  |                   |         |   |                   |   |         |  
|--------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                  |  | Nine Months Ended |        
|(In thousands)                                                                    |  | September 30,2008 |         |   | September 30,2007 |  
|Cash flows from operating activities                                              |  |                   |         |   |                   |   |         |  
|Net income                                                                        |  | $                 | 40,761  |   |                   | $ | 28,131  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                   |         |   |                   |   |         |  
|Depreciation                                                                      |  |                   | 69,714  |   |                   |   | 56,889  |  
|Amortization                                                                      |  |                   | 8,901   |   |                   |   | 10,652  |  
|Accretion of asset retirement obligations                                         |  |                   | 745     |   |                   |   | 622     |  
|Deferred income taxes                                                             |  |                   | 16,903  |   |                   |   | 9,096   |  
|(Gain) loss on interest rate swap instrument                                      |  |                   | (3,896  | ) |                   |   | 2,648   |  
|Common stock and stock options non-cash compensation expense                      |  |                   | 2,307   |   |                   |   | 3,209   |  
|Amortization and write-off of loan origination costs and debt discount            |  |                   | 281     |   |                   |   | 248     |  
|Retirement benefits and other                                                     |  |                   | 4,603   |   |                   |   | 3,402   |  
|Excess tax benefits from share-based compensation                                 |  |                   | (427    | ) |                   |   | (323    | )
|Changes in assets and liabilities from operations:                                |  |                   |         |   |                   |   |         |  
|Increase in accounts receivable                                                   |  |                   | (3,169  | ) |                   |   | (6,962  | )
|(Increase) decrease in inventories and supplies                                   |  |                   | (1,504  | ) |                   |   | 584     |  
|Increase in other current assets                                                  |  |                   | (107    | ) |                   |   | (376    | )
|Changes in income taxes                                                           |  |                   | 13,591  |   |                   |   | 1,314   |  
|Increase (decrease) in accounts payable                                           |  |                   | 1,311   |   |                   |   | (140    | )
|(Decrease) increase in other current liabilities                                  |  |                   | (1,651  | ) |                   |   | 934     |  
|Retirement benefit contributions and distributions                                |  |                   | (5,957  | ) |                   |   | (6,691  | )
|                                                                                  |  |                   |         |   |                   |   |         |  
|Net cash provided by operating activities                                         |  |                   | 142,406 |   |                   |   | 103,237 |  
|                                                                                  |  |                   |         |   |                   |   |         |  
|Cash flows from investing activities                                              |  |                   |         |   |                   |   |         |  
|Purchases of property, plant and equipment                                        |  |                   | (98,156 | ) |                   |   | (55,299 | )
|Other                                                                             |  |                   | 51      |   |                   |   | 8       |  
|                                                                                  |  |                   |         |   |                   |   |         |  
|Net cash used in investing activities                                             |  |                   | (98,105 | ) |                   |   | (55,291 | )
|                                                                                  |  |                   |         |   |                   |   |         |  
|Cash flows from financing activities                                              |  |                   |         |   |                   |   |         |  
|Repayments on senior secured term loans                                           |  |                   | (4,716  | ) |                   |   | (10,893 | )
|Cash dividends paid on common stock                                               |  |                   | (26,526 | ) |                   |   | (6,303  | )
|Debt and equity issuance costs                                                    |  |                   |        |   |                   |   | (930    | )
|Excess tax benefits from share-based compensation                                 |  |                   | 427     |   |                   |   | 323     |  
|Proceeds from stock option exercises and employee stock purchase plan             |  |                   | 531     |   |                   |   | 265     |  
|Other                                                                             |  |                   | (42     | ) |                   |   | 24      |  
|                                                                                  |  |                   |         |   |                   |   |         |  
|Net cash used in financing activities                                             |  |                   | (30,326 | ) |                   |   | (17,514 | )
|                                                                                  |  |                   |         |   |                   |   |         |  
|Increase in cash and cash equivalents                                             |  |                   | 13,975  |   |                   |   | 30,432  |  
|Cash and cash equivalents:                                                        |  |                   |         |   |                   |   |         |  
|Beginning of period                                                               |  |                   | 53,467  |   |                   |   | 44,180  |  
|                                                                                  |  |                   |         |   |                   |   |         |  
|End of period                                                                     |  | $                 | 67,442  |   |                   | $ | 74,612  |  
|                                                                                  |  |                   |         |   |                   |   |         |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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Notes to Condensed Consolidated Financial Statements

NTELOS Holdings Corp.

Note 1. Organization

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

Note 2. Significant Accounting Policies

In the Companys opinion, the accompanying unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2008 and for the three and nine months ended September 30, 2007
contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 2008, and the results of operations and cash flows for all periods presented on the respective
financial statements included herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying Condensed Consolidated Balance Sheet as of December 31,
2007 has been derived from the audited financial statements included in Part II, Item 8 of the Companys Annual Report on Form 10-K for the year ended December 31, 2007.

Accounting Estimates

The preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Financial
Statement Classification

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

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, NTELOS Inc.
and all of its wholly-owned subsidiaries and those limited liability corporations where NTELOS Inc., as managing member, exercises control. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid
debt instruments with an original maturity of three months or less to be cash equivalents. At September 30, 2008, total cash equivalents, consisting of amounts invested in a temporary business investment deposit account, were $68.2 million.
This account, as well as the Companys other primary cash accounts, some of which are in amounts in excess of the FDIC insurance limit, are with a commercial bank. This commercial bank has maintained a high rating by Standard &
Poors and Moodys.

Trade Accounts Receivable

The Company sells its services to residential and commercial end-users and to other communication carriers primarily in Virginia and West Virginia. The Company has credit and collection policies to enhance collection of trade receivables
and requires deposits on certain sales. The Company maintains an allowance for doubtful accounts based on historical results, current and expected trends and



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changes in credit policies. Management believes the allowance adequately covers all anticipated losses with respect to trade receivables. Actual credit
losses could differ from such estimates. The Company includes bad debt expense in customer operations expense in the Condensed Consolidated Statements of Operations. Bad debt expense for the three and nine months ended September 30, 2008 was
$2.1 million and $5.0 million, respectively, and bad debt expense for the three and nine months ended September 30, 2007 was $2.8 million and $5.7 million, respectively.

Property, Plant and Equipment and Other Long-Lived Assets

Long-lived assets include property, plant and equipment,
radio spectrum licenses, long-term deferred charges and intangible assets to be held and used. Long-lived assets, excluding intangible assets with indefinite useful lives, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount should be addressed pursuant to Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144). Impairment is
determined by comparing the carrying value of these long-lived assets to managements best estimate of future undiscounted cash flows expected to result from the use of the assets. If the carrying value exceeds the estimated undiscounted cash
flows, the impairment is measured as the excess of carrying value over the estimated fair value. The Company believes that no impairment indicators exist as of September 30, 2008 that would require us to perform impairment testing.

During the three and nine months ended September 30, 2008, the Company recorded approximately $3.6 million and $17.1 million, respectively, of accelerated
depreciation related to equipment scheduled to be replaced earlier than the original estimated lives in connection with the Companys planned Evolution-Data Optimized Revision A (EV-DO) network upgrade pursuant to the terms of the
Amended and Restated Resale Agreement with Sprint Spectrum L.P., an indirect wholly-owned subsidiary of Sprint Nextel Corporation (hereinafter collectively referred to as Sprint Nextel), and based on the Companys plan to upgrade
substantially all of its current service coverage areas outside its wholesale territory by 2009. The impact of this accelerated depreciation for the three months ended September 30, 2008 was a reduction of $3.6 million to operating income, a
reduction of $2.2 million to net income and a reduction of $0.05 to both basic and diluted earnings per share. For the nine months ended September 30, 2008, the impact of this accelerated depreciation was a reduction of $17.1 million to
operating income, a reduction of $10.5 million to net income and a reduction of $0.25 to both basic and diluted earnings per share. The total net book value of the related equipment subject to early retirement was approximately $80 million as of
August 1, 2007, the date the Company made the decision regarding the technology upgrade, and was approximately $32.7 million as of September 30, 2008.

Goodwill, franchise rights and radio spectrum licenses are considered indefinite-lived intangible assets.
Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset might be impaired. The Company assesses the recoverability of indefinite-lived
assets annually on October 1stand whenever adverse events or changes in circumstances indicate that impairment may have occurred. The Company
believes that there have been no significant adverse events or changes in circumstances during the first nine months of 2008 which would require testing as of September 30, 2008.

The following table presents the activity in goodwill:



|                                                             |  |   |         |  
|------------------------------------------------------------ |  | - | ------- | -
|(In thousands)                                               |  |   |        
|Goodwill, December 31, 2007                                  |  | $ | 127,637 |  
|Section 382 deferred tax pre-acquisition adjustment (Note 9) |  |   | (9,279  | )
|Other valuation adjustment                                   |  |   | 90      |  
|                                                             |  |   |         |  
|Goodwill, September 30, 2008                                 |  | $ | 118,448 |  
|                                                             |  |   |         |  

Intangibles with a finite life are classified as other intangibles on the Condensed Consolidated Balance Sheets.
At September 30, 2008 and December 31, 2007, other intangibles were comprised of the following:



|                       |  |                |  |             |         |                         |   |             |  |                         |         |  |   |       
|---------------------- |  | -------------- |  | ----------- | ------- | ----------------------- | - | ----------- |  | ----------------------- | ------- |  | - | ------
|                       |  |                |  | 2008        |         | 2007                   
|(Dollars in thousands) |  | Estimated Life |  | GrossAmount |         | AccumulatedAmortization |   | GrossAmount |  | AccumulatedAmortization
|Customer relationships |  | 3 to 15 yrs.   |  | $           | 113,400 |                         | $ | 43,848      |  | $                       | 113,400 |  | $ | 35,430
|Trademarks             |  | 14 to 15 yrs.  |  | $           | 9,650   |                         | $ | 2,202       |  | $                       | 9,650   |  | $ | 1,719 



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The Company amortizes its definite-lived intangible assets using the straight-line method. Amortization expense for the
three months ended September 30, 2008 and 2007 was $2.8 million and $3.6 million, respectively, and amortization expense for the nine months ended September 30, 2008 and 2007 was $8.9 million and $10.7 million, respectively.

Amortization expense for the remainder of 2008 and the next five years is as follows:



|                  |  |                       |        |            |   |       |  |   |       
|----------------- |  | --------------------- | ------ | ---------- | - | ----- |  | - | ------
|(In thousands)    |  | CustomerRelationships |        | Trademarks |   | Total
|Remainder of 2008 |  | $                     | 2,688  |            | $ | 161   |  | $ | 2,849 
|2009              |  |                       | 10,750 |            |   | 645   |  |   | 11,395
|2010              |  |                       | 10,750 |            |   | 645   |  |   | 11,395
|2011              |  |                       | 10,750 |            |   | 645   |  |   | 11,395
|2012              |  |                       | 10,093 |            |   | 645   |  |   | 10,738
|2013              |  | $                     | 9,764  |            | $ | 645   |  | $ | 10,409

Share-Based Compensation

The Company accounts for share-based employee compensation plans under SFAS No. 123 (revised 2004), Share-Based Payment, or SFAS No. 123R.

Total share-based compensation expense related to all of the Companys share-based awards for the three and nine months ended September 30, 2008 and 2007 was
allocated as follows:



|                                 |  |                    |     |                   |   |                   |  |                   |       |  |   |      
|-------------------------------- |  | ------------------ | --- | ----------------- | - | ----------------- |  | ----------------- | ----- |  | - | -----
|                                 |  | Three Months Ended |     | Nine Months Ended
|(In thousands)                   |  | September 30,2008  |     | September 30,2007 |   | September 30,2008 |  | September 30,2007
|Cost of sales and services       |  | $                  | 55  |                   | $ | 102               |  | $                 | 226   |  | $ | 298  
|Customer operations              |  |                    | 95  |                   |   | 155               |  |                   | 359   |  |   | 457  
|Corporate operations             |  |                    | 284 |                   |   | 837               |  |                   | 1,722 |  |   | 2,454
|                                 |  |                    |     |                   |   |                   |  |                   |       |  |   |      
|Share-based compensation expense |  | $                  | 434 |                   | $ | 1,094             |  | $                 | 2,307 |  | $ | 3,209
|                                 |  |                    |     |                   |   |                   |  |                   |       |  |   |      

Future share-based compensation expense related to instruments outstanding at September 30, 2008 for the
remainder of 2008 and the years 2009 through 2012 is estimated to be $0.4 million, $1.3 million, $1.2 million, $0.5 million and $0.1 million, respectively.

Derivatives and Hedging Activities

The Company adopted FASB Statement No. 157, Fair Value Measurement (SFAS No. 157). SFAS
No. 157 defines fair value, establishes a framework for the measurement of fair value, and enhances disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measures. The Company accounts for its interest
rate swap instrument outstanding on September 30, 2008 under the provisions of SFAS No. 133 which requires that this instrument be recorded at fair value on its Condensed Consolidated Balance Sheets. The fair value of the instrument was
based on a value quoted from the counterparty to the instrument. The Company corroborated this valuation using the net present value of future cash flows method based on a three-month LIBOR forward curve and considered credit worthiness of the
counterparty in assessing fair value. The Companys valuation techniques for this instrument are considered to be level two fair value measurements within the SFAS No. 157 fair value hierarchy. The fair value determined at
September 30, 2008 was an asset of $4.2 million.



7



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##### Table of Contents

Pension Benefits and Retirement Benefits Other Than Pensions

For the three and nine months ended September 30, 2008 and 2007, the components of the Companys net periodic benefit cost for its Defined Benefit Pension Plan
were as follows:



|                               |  |                    |      |   |                   |   |      |                   |  |   |                   |   |  |   |        |  
|------------------------------ |  | ------------------ | ---- | - | ----------------- | - | ---- | ----------------- |  | - | ----------------- | - |  | - | ------ | -
|                               |  | Three Months Ended |      |   | Nine Months Ended |  
|(In thousands)                 |  | September 30,2008  |      |   | September 30,2007 |   |      | September 30,2008 |  |   | September 30,2007 |  
|Service cost                   |  | $                  | 686  |   |                   | $ | 699  |                   |  | $ | 2,059             |   |  | $ | 2,097  |  
|Interest cost                  |  |                    | 786  |   |                   |   | 685  |                   |  |   | 2,358             |   |  |   | 2,054  |  
|Expected return on plan assets |  |                    | (956 | ) |                   |   | (749 | )                 |  |   | (2,870            | ) |  |   | (2,245 | )
|Early retirement cost          |  |                    |     |   |                   |   |     |                   |  |   | 859               |   |  |   |       |  
|                               |  |                    |      |   |                   |   |      |                   |  |   |                   |   |  |   |        |  
|Net periodic benefit cost      |  | $                  | 516  |   |                   | $ | 635  |                   |  | $ | 2,406             |   |  | $ | 1,906  |  
|                               |  |                    |      |   |                   |   |      |                   |  |   |                   |   |  |   |        |  

As noted in the table above, the Company recorded $0.9 million of pension expense in the nine months ended
September 30, 2008 related to a pension enhancement pursuant to a voluntary early retirement plan accepted by certain employees of the wireline segments. This charge represented the effect of this enhancement on the accumulated benefit
obligation for the related employees. Additionally, this arrangement resulted in a change to certain future pension assumptions specific to these employees, the effect of which was a $0.8 million charge ($0.5 million, net of tax) recorded as a
reduction to the unrecognized gain from defined benefit plans in accumulated other comprehensive income.

Pension plan assets were valued at $41.9 million
at December 31, 2007 and $36.8 million at September 30, 2008.

For the three and nine months ended September 30, 2008 and 2007, the
components of the Companys net periodic benefit cost for its Other Postretirement Benefit Plan were as follows:



|                          |  |                    |     |                   |   |                   |  |                   |     |  |   |    
|------------------------- |  | ------------------ | --- | ----------------- | - | ----------------- |  | ----------------- | --- |  | - | ---
|                          |  | Three Months Ended |     | Nine Months Ended
|(In thousands)            |  | September 30,2008  |     | September 30,2007 |   | September 30,2008 |  | September 30,2007
|Service cost              |  | $                  | 31  |                   | $ | 35                |  | $                 | 94  |  | $ | 105
|Interest cost             |  |                    | 170 |                   |   | 157               |  |                   | 509 |  |   | 471
|                          |  |                    |     |                   |   |                   |  |                   |     |  |   |    
|Net periodic benefit cost |  | $                  | 201 |                   | $ | 192               |  | $                 | 603 |  | $ | 576
|                          |  |                    |     |                   |   |                   |  |                   |     |  |   |    

The total expense recognized for the Companys nonqualified pension plan for the three months ended
September 30, 2008 and 2007 was $0.2 million and $0.1 million, respectively, and less than $0.1 million of this expense for each respective three-month period relates to the amortization of unrealized loss. For the nine months ended
September 30, 2008 and 2007, the total expense recognized for the Companys nonqualified pension plan was $0.6 million and $0.7 million, respectively, and $0.1 million of this expense for both respective periods relates to the amortization
of unrealized losses.

The Company applied the measurement date provisions required by SFAS No. 158 for its Defined Benefit Pension Plan, Other
Postretirement Benefit plan and nonqualified pension plan in the first quarter of 2008. The Company elected to continue to use the measurements determined for the prior fiscal year-end reporting based on a September 30, 2007 measurement date to
estimate the effects of the change and, accordingly, an adjustment was made to retained earnings for the portion of the net periodic benefit cost relating to the period between September 30, 2007 and December 31, 2007. The effects of this
change are reported in the Statement of Stockholders Equity included in Note 7.

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

The Company manages its business segments with separate products and services.

The Company has one customer, Sprint Nextel, which accounted for approximately 22% and 21% of the Companys total revenue for the three and nine months ended
September 30, 2008, respectively, and approximately 22% of the Companys total revenue for the three and nine months ended September 30, 2007, respectively. Revenue from this customer was derived from a wireless PCS wholesale contract
and rural local exchange carrier (RLEC) and Competitive Wireline segments network access.



8



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##### Table of Contents

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



|                                                       |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |   |  |   |        
|------------------------------------------------------ |  | ----------- | ------- | ---- | - | ------------------- |  | ----- | ------- |  | ------------ | ------ | - | ----- | - | ------ | - |  | - | -------
|(In thousands)                                         |  | WirelessPCS |         | RLEC |   | CompetitiveWireline |  | Other |         |  | Eliminations |        |   | Total
|For the three months ended September 30, 2008          |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |  
|Operating revenues                                     |  | $           | 104,805 |      | $ | 15,078              |  | $     | 15,979  |  | $            | 123    |   |       | $ |       |   |  | $ | 135,985
|Intersegment revenues(1)                               |  |             | 60      |      |   | 1,623               |  |       | 1,041   |  |              | 7      |   |       |   | (2,731 | ) |  |   |       
|Operating income (loss)                                |  |             | 23,902  |      |   | 7,454               |  |       | 3,006   |  |              | (2,539 | ) |       |   |       |   |  |   | 31,823 
|Depreciation and amortization                          |  |             | 17,387  |      |   | 3,607               |  |       | 3,037   |  |              | 758    |   |       |   |       |   |  |   | 24,789 
|Accretion of asset retirement obligations              |  |             | 231     |      |   | 4                   |  |       | 14      |  |              |       |   |       |   |       |   |  |   | 249    
|Non-cash compensation charges                          |  | $           |        |      | $ |                    |  | $     |        |  | $            | 434    |   |       | $ |       |   |  | $ | 434    
|                                                       |  |             |         |      |   |                    
|As of and for the nine months ended September 30, 2008 |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |   |  |   |        
|Operating revenues                                     |  | $           | 306,878 |      | $ | 44,435              |  | $     | 47,515  |  | $            | 421    |   |       | $ |       |   |  | $ | 399,249
|Intersegment revenues(1)                               |  |             | 166     |      |   | 4,736               |  |       | 3,105   |  |              | 27     |   |       |   | (8,034 | ) |  |   |       
|Operating income (loss)                                |  |             | 64,486  |      |   | 21,298              |  |       | 9,144   |  |              | (6,932 | ) |       |   |       |   |  |   | 87,996 
|Depreciation and amortization                          |  |             | 57,716  |      |   | 10,784              |  |       | 9,317   |  |              | 798    |   |       |   |       |   |  |   | 78,615 
|Accretion of asset retirement obligations              |  |             | 684     |      |   | 13                  |  |       | 43      |  |              | 5      |   |       |   |       |   |  |   | 745    
|Non-cash compensation charges                          |  |             |        |      |   |                    |  |       |        |  |              | 2,307  |   |       |   |       |   |  |   | 2,307  
|Voluntary early retirement plan charges                |  |             |        |      |   | 597                 |  |       | 384     |  |              |       |   |       |   |       |   |  |   | 981    
|                                                       |  |             |         |      |   |                    
|Goodwill                                               |  |             | 69,107  |      |   | 33,438              |  |       | 15,903  |  |              |       |   |       |   |       |   |  |   | 118,448
|                                                       |  |             |         |      |   |                    
|Total segment assets                                   |  | $           | 520,301 |      | $ | 193,235             |  | $     | 110,631 |  | $            | 1,106  |   |       | $ |       |   |  | $ | 825,273
|Corporate assets                                       |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |   |  |   | 114,166
|                                                       |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |   |  |   |        
|Total assets                                           |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |   |  | $ | 939,439
|                                                       |  |             |         |      |   |                     |  |       |         |  |              |        |   |       |   |        |   |  |   |        



|(1) | Intersegment revenues consist primarily of telecommunications services such as local exchange services, inter-city and
local transport of voice and data traffic, and leasing of various network elements. Intersegment revenues are primarily recorded at tariff and prevailing market rates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|                                              |  |             |         |      |   |                     |  |       |        |  |              |        |   |       |   |        |   |  |   |        
|--------------------------------------------- |  | ----------- | ------- | ---- | - | ------------------- |  | ----- | ------ |  | ------------ | ------ | - | ----- | - | ------ | - |  | - | -------
|(In thousands)                                |  | WirelessPCS |         | RLEC |   | CompetitiveWireline |  | Other |        |  | Eliminations |        |   | Total
|For the three months ended September 30, 2007 |  |             |         |      |   |                     |  |       |        |  |              |        |   |       |   |        |  
|Operating revenues                            |  | $           | 96,152  |      | $ | 15,264              |  | $     | 15,337 |  | $            | 178    |   |       | $ |       |   |  | $ | 126,931
|Intersegment revenues(1)                      |  |             | 51      |      |   | 1,482               |  |       | 878    |  |              | 13     |   |       |   | (2,424 | ) |  |   |       
|Operating income (loss)                       |  |             | 16,957  |      |   | 7,484               |  |       | 2,093  |  |              | (2,392 | ) |       |   |       |   |  |   | 24,142 
|Depreciation and amortization                 |  |             | 20,065  |      |   | 3,528               |  |       | 3,258  |  |              | 12     |   |       |   |       |   |  |   | 26,863 
|Accretion of asset retirement obligations     |  |             | 209     |      |   | 5                   |  |       | 14     |  |              | 2      |   |       |   |       |   |  |   | 230    
|Non-cash compensation charges                 |  | $           |        |      | $ |                    |  | $     |       |  | $            | 1,094  |   |       | $ |       |   |  | $ | 1,094  
|                                              |  |             |         |      |   |                    
|For the nine months ended September 30, 2007  |  |             |         |      |   |                     |  |       |        |  |              |        |   |       |   |        |   |  |   |        
|Operating revenues                            |  | $           | 281,237 |      | $ | 46,103              |  | $     | 44,589 |  | $            | 547    |   |       | $ |       |   |  | $ | 372,476
|Intersegment revenues(1)                      |  |             | 135     |      |   | 4,229               |  |       | 2,603  |  |              | 34     |   |       |   | (7,001 | ) |  |   |       
|Operating income (loss)                       |  |             | 60,003  |      |   | 22,860              |  |       | 5,805  |  |              | (7,187 | ) |       |   |       |   |  |   | 81,481 
|Depreciation and amortization                 |  |             | 47,522  |      |   | 10,550              |  |       | 9,409  |  |              | 60     |   |       |   |       |   |  |   | 67,541 
|Accretion of asset retirement obligations     |  |             | 562     |      |   | 13                  |  |       | 41     |  |              | 6      |   |       |   |       |   |  |   | 622    
|Non-cash compensation charges                 |  |             |        |      |   |                    |  |       |       |  |              | 3,209  |   |       |   |       |   |  |   | 3,209  
|Secondary offering costs                      |  | $           |        |      | $ |                    |  | $     |       |  | $            | 570    |   |       | $ |       |   |  | $ | 570    



|(1) | Intersegment revenues consist primarily of telecommunications services such as local exchange services, inter-city and
local transport of voice and data traffic, and leasing of various network elements. Intersegment revenues are primarily recorded at tariff and prevailing market rates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Other segment is comprised of the paging and communications services operations. Certain unallocated corporate related items that do not provide direct benefit to the operating segments are also
included in the Other segment. For the three and nine months ended September 30, 2008, total unallocated corporate operating expenses were $1.3 million and $3.7 million, respectively. Additionally, the Company recorded non-cash
compensation of $0.4 million and $2.3 million for the three and nine months ended September 30, 2008, respectively, which was not allocated.

For the
three and nine months ended September 30, 2007, total unallocated corporate operating expenses were $1.3 million and $3.4 million, respectively. The Company also recorded $1.1 million and $3.2 million of non-cash compensation during the
respective three-and-nine-month periods ended September 30, 2007 and $0.6 million of secondary offering costs during the nine months ended September 30, 2007, which were not allocated.

Depreciation expense related to corporate assets is allocated to the operating segments and was $1.6 million and $4.2 million for the three and nine months ended
September 30, 2008, respectively, and was $1.1 million and $3.1 million for the three and nine months ended September 30, 2007, respectively.



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Note 4. Long-Term Debt

As of September 30, 2008 and December 31, 2007, the Companys outstanding long-term debt consisted of the following:



|                                        |  |                   |         |                  |   |        
|--------------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|(In thousands)                          |  | September 30,2008 |         | December 31,2007
|First lien term loan                    |  | $                 | 608,057 |                  | $ | 612,773
|Capital lease obligations               |  |                   | 1,391   |                  |   | 1,433  
|                                        |  |                   |         |                  |   |        
|                                        |  |                   | 609,448 |                  |   | 614,206
|                                        |  |                  
|Less: current portion of long-term debt |  |                   | 6,693   |                  |   | 6,751  
|                                        |  |                   |         |                  |   |        
|Long-term debt                          |  | $                 | 602,755 |                  | $ | 607,455
|                                        |  |                   |         |                  |   |        

Long-term debt, excluding capital lease obligations

On June 1, 2006, NTELOS Inc. entered into a first lien Restated and Amended Credit Agreement (Amended Credit Agreement). In addition to the First Lien
Term Loan outstanding noted in the table above, the Amended Credit Agreement also includes a $35 million first lien revolving credit facility (the Revolving Credit Facility), none of which has ever been drawn upon. The First Lien Term
Loan and Revolving Credit Facility are secured by a first priority pledge of substantially all property and assets of NTELOS Inc. and all material subsidiaries, as guarantors, excluding the RLECs.

The First Lien Term Loan matures in August 2011, with quarterly payments of $1.6 million through September 30, 2010, and the remainder due in four equal quarterly
installments over the year prior to maturity. The First Lien Term Loan bears interest at rates 2.25% above the Eurodollar rate as long as the Companys leverage ratio is less than 4.00:1.00. The First Lien Term Loan also includes various
restrictions and conditions including covenants relating to leverage and interest coverage ratio requirements. At September 30, 2008, NTELOS Inc.s leverage ratio (as defined under the Amended Credit Agreement) was 2.73:1.00.

The First Lien Term Loan has a restricted payment basket which can be used to make certain restricted payments, as defined under the Credit Agreement, including the
ability to pay dividends, repurchase stock or advance funds to the Company. The amount of the restricted payment basket was $36.4 million as of September 30, 2008, which was subsequently reduced by an $8.9 million dividend paid on
October 10, 2008. The restricted payment basket is increased by $6.5 million per quarter plus an additional amount annually for calculated excess cash flow, based on the definition in the Credit Agreement, and is decreased by any actual
restricted payments.

The aggregate maturities of long-term debt outstanding at September 30, 2008 based on the contractual terms of the instruments
are $1.6 million for the remainder of 2008, $6.3 million for 2009, $153.6 million in 2010 and $446.6 million in 2011.

The Companys blended average
interest rate on its long-term debt as of September 30, 2008 was 4.91%.

Note 5. Supplementary Disclosures of Cash Flow Information

The following information is presented as supplementary disclosures for the Condensed Consolidated Statements of Cash Flows for the periods indicated below.



|                                      |  |                   |        |                   |   |       
|------------------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                                      |  | Nine Months Ended
|(In thousands)                        |  | September 30,2008 |        | September 30,2007
|Cash payments for:                    |  |                   |        |                   |   |       
|Interest (net of amounts capitalized) |  | $                 | 24,309 |                   | $ | 32,481
|Income taxes                          |  |                   | 7,415  |                   |   | 10,135
|Cash received from income tax refunds |  |                   | 10,358 |                   |   |      
|Supplemental financing disclosure:    |  |                   |        |                   |   |       
|Dividend declared not paid            |  | $                 | 8,857  |                   | $ | 6,307 

Interest payments in the above table are net of $0.4 million and $3.0 million related to net interest received on
the interest rate swap agreements for the nine months ended September 30, 2008 and 2007, respectively. The amount of interest capitalized in the nine months ending September 30, 2008 and 2007 was $0.6 million and $0.4 million,
respectively.



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##### Table of Contents

Note 6. Derivatives and Hedging Activities

In February 2008, NTELOS Inc. entered into an interest rate swap agreement, which commenced September 1, 2008 and extends through March 1, 2010, in order to manage its exposure to interest rate movements by
effectively converting a portion of its long-term debt from variable to fixed rates. The interest rate swap has a notional amount of $600 million with fixed interest rate payments at a per annum rate of 2.66% and variable rate payments based on the
three-month U.S. Dollar LIBOR. The weighted average LIBOR rate applicable to this agreement was 3.88% on September 30, 2008. The effect of this interest rate swap combined with the interest provisions of the First Lien Term Loan resulted
in a fixed interest rate of 4.91% on $600 million of the First Lien Term Loan for the period September 1, 2008 through March 1, 2010.

NTELOS
Inc. was also a party to an interest rate swap agreement that ended in February 2008 with a notional amount of $312.5 million. Fixed interest rate payments were at a per annum rate of 4.1066% and variable rate payments were based on three-month
U.S. Dollar LIBOR.

At September 30, 2008, NTELOS recorded the interest rate swap at fair value of a $4.2 million asset, $2.7 million of which
represents projected interest rate differences in the next twelve months. During 2008, the counterparty to the interest rate swap experienced liquidity problems and in June 2008 merged with another prominent financial institution. The Company was
notified that the swap was guaranteed and a formal legal novation occurred on November 6, 2008.

In considering credit worthiness of the new
counterparty, the Company reviewed reports from Moodys and Standard & Poors. The ratings published by these rating agencies remain positive and based on our review, the Company was not required to make an adjustment for credit
risk.

The Company did not designate either of these swap agreements as cash flow hedges for accounting purposes and, therefore, records the changes in
market value of the swap agreements as gain or loss on interest rate swap instrument for the applicable periods. The LIBOR rates remain volatile and, therefore, the fair value of this swap agreement is volatile and could change materially. As of
September 30, 2008, a one percent increase and a one percent decrease in the three-month U.S. Dollar Libor rate would result in a change in the fair value of the interest rate swap agreement of $8.1 million and $(8.4) million,
respectively. As of October 31, 2008, the fair value of this instrument was a liability of $1.1 million.

Note 7. Stockholders Equity

On August 5, 2008, the Companys board of directors declared a quarterly dividend on its common stock in the amount of $0.21 per share (totaling
$8.9 million), which was paid on October 10, 2008 to stockholders of record on September 19, 2008.



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##### Table of Contents

The computations of basic and diluted earnings per share for the three and nine months ended September 30, 2008 and
2007 are as follows:



|                                                                                        |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | ----------------- |  | - | ----------------- | - |  | - | ------ | -
|                                                                                        |  | Three Months Ended |        |   | Nine Months Ended |  
|(In thousands)                                                                          |  | September 30,2008  |        |   | September 30,2007 |   |        | September 30,2008 |  |   | September 30,2007 |  
|Numerator:                                                                              |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  
|Income applicable to common shares for earnings-per-share computation                   |  | $                  | 12,968 |   |                   | $ | 7,551  |                   |  | $ | 40,761            |   |  | $ | 28,131 |  
|                                                                                        |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  
|Denominator:                                                                            |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  
|Total shares outstanding                                                                |  |                    | 42,178 |   |                   |   | 42,045 |                   |  |   | 42,178            |   |  |   | 42,045 |  
|Less: weighted average unvested shares                                                  |  |                    | (29    | ) |                   |   | (394   | )                 |  |   | (197              | ) |  |   | (394   | )
|Less: effect of calculating weighted average shares                                     |  |                    | (12    | ) |                   |   | (21    | )                 |  |   | (58               | ) |  |   | (223   | )
|                                                                                        |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  
|Denominator for basic earnings per common shareweighted average shares outstanding     |  |                    | 42,137 |   |                   |   | 41,630 |                   |  |   | 41,923            |   |  |   | 41,428 |  
|Plus: weighted average unvested shares                                                  |  |                    | 29     |   |                   |   | 394    |                   |  |   | 197               |   |  |   | 394    |  
|Plus: common stock equivalents of stock options outstanding                             |  |                    | 147    |   |                   |   | 337    |                   |  |   | 160               |   |  |   | 295    |  
|                                                                                        |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  
|Denominator for diluted earnings per common share  weighted average shares outstanding |  |                    | 42,313 |   |                   |   | 42,361 |                   |  |   | 42,280            |   |  |   | 42,117 |  
|                                                                                        |  |                    |        |   |                   |   |        |                   |  |   |                   |   |  |   |        |  

Below is a summary of the activity and status of stockholders equity as of and for the nine months ended
September 30, 2008:



|                                                                                                                |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ----------- | --- | ------------------------ | - | ---------------- |  | - | ----------------------------------- | - |  | ------------------------ | ----- | - |  | - | ------- | -
|(In thousands)                                                                                                  |  | CommonShares |  | CommonStock |     | AdditionalPaid-inCapital |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome |   |  | TotalStockholdersEquity |      
|Balance, December 31, 2007                                                                                      |  | 42,063       |  | $           | 421 |                          | $ | 162,304          |  | $ | 6,603                               |   |  | $                        | 2,012 |   |  | $ | 171,340 |  
|                                                                                                                |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   |         |  
|Effects of changing the retirement plans measurement date pursuant to FASB Statement No. 158                   |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   |         |  
|Net periodic benefit cost for October 1, 2007  December 31, 2007, net of $0.3 million of deferred income taxes |  |              |  |             |     |                          |   |                  |  |   | (464                                | ) |  |                          | 14    |   |  |   | (450    | )
|Non-cash compensation                                                                                           |  |              |  |             |     |                          |   | 2,307            |  |   |                                     |   |  |                          |       |   |  |   | 2,307   |  
|Expiration of former Class A common stock repurchase rights (Note 8)                                            |  |              |  |             |     |                          |   | 181              |  |   |                                     |   |  |                          |       |   |  |   | 181     |  
|Excess tax deduction related to non-cash compensation recorded for non-qualified stock option exercises         |  |              |  |             |     |                          |   | 427              |  |   |                                     |   |  |                          |       |   |  |   | 427     |  
|Restricted shares issued, shares issued through the employee stock purchase plan and stock options exercised    |  | 115          |  |             | 1   |                          |   | 530              |  |   |                                     |   |  |                          |       |   |  |   | 531     |  
|Cash dividends declared ($0.63 per share)                                                                       |  |              |  |             |     |                          |   |                  |  |   | (26,550                             | ) |  |                          |       |   |  |   | (26,550 | )
|Comprehensive Income:                                                                                           |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   |         |  
|Net income                                                                                                      |  |              |  |             |     |                          |   |                  |  |   | 40,761                              |   |  |                          |       |   |  |   |         |  
|Unrecognized loss from defined benefit plans, net of $0.3 million of deferred income taxes (Note 2)             |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          | (424  | ) |  |   |         |  
|Total Comprehensive Income                                                                                      |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   | 40,337  |  
|                                                                                                                |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   |         |  
|Balance, September 30, 2008                                                                                     |  | 42,178       |  | $           | 422 |                          | $ | 165,749          |  | $ | 20,350                              |   |  | $                        | 1,602 |   |  | $ | 188,123 |  
|                                                                                                                |  |              |  |             |     |                          |   |                  |  |   |                                     |   |  |                          |       |   |  |   |         |  



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Note 8. Stock Plans

During the nine months ended September 30, 2008, the Company issued 323,840 stock options under the Equity Incentive Plan, of which 208,440 were issued to officers, and 43,000 stock options under the Non-Employee Director Equity Plan.
The options issued under the Equity Incentive Plan vest one-fourth annually beginning one year after the grant date and the options issued under the Non-Employee Director Equity Plan vest quarterly over the year following the grant date. No options
expired during the period. Additionally, during the nine months ended September 30, 2008, the Company issued 24,550 shares of restricted stock under the Equity Incentive Plan. These shares of restricted stock cliff vest on the third anniversary
of the grant date.

The fair value of each option and restricted stock award is estimated on the grant date using the Black-Scholes option-pricing model
with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected terminations. For more details on these Black-Scholes assumptions, see Note 9 contained in Part II, Item 8 of the Companys Annual Report
on Form 10-K for the year ended December 31, 2007.

The summary of the activity and status of the Companys stock options for the nine months
ended September 30, 2008 is as follows:



|                                             |  |        |   |  |                                       |       |                                          |            |                         |   |      
|-------------------------------------------- |  | ------ | - |  | ------------------------------------- | ----- | ---------------------------------------- | ---------- | ----------------------- | - | -----
|(In thousands, except per share amounts)     |  | Shares |   |  | WeightedAverageExercisePrice perShare |       | Weighted-AverageRemainingContractualTerm |            | AggregateIntrinsicValue
|Stock options outstanding at January 1, 2008 |  | 585    |   |  | $                                     | 13.80 |                                          |            |                         |   |      
|Granted during the period                    |  | 367    |   |  |                                       | 22.26 |                                          |            |                         |   |      
|Exercised during the period                  |  | (86    | ) |  |                                       | 5.01  |                                          |            |                         |   |      
|Forfeited during the period                  |  | (12    | ) |  |                                       | 15.71 |                                          |            |                         |   |      
|                                             |  |        |   |  |                                       |       |                                          |            |                         |   |      
|Outstanding at September 30, 2008            |  | 854    |   |  | $                                     | 18.29 |                                          | 8.63 years |                         | $ | 7,352
|                                             |  |        |   |  |                                       |       |                                          |            |                         |   |      
|Exercisable at September 30, 2008            |  | 164    |   |  | $                                     | 12.24 |                                          | 7.66 years |                         | $ | 2,397
|                                             |  |        |   |  |                                       |       |                                          |            |                         |   |      
|Expected to vest at September 30, 2008       |  | 795    |   |  | $                                     | 18.18 |                                          |            |                         | $ | 6,922
|                                             |  |        |   |  |                                       |       |                                          |            |                         |   |      

The weighted-average grant date fair value of stock options granted during the first nine months of 2008 and 2007
was $5.65 per share and $7.36 per share, respectively. The total intrinsic value of options exercised during the first nine months of 2008 and 2007 was $1.9 million and $2.0 million, respectively. The total fair value of options that vested during
the first nine months of 2008 and 2007 was $1.5 million and $1.0 million, respectively.

The summary of the activity and status of the Companys
restricted stock awards for the nine months ended September 30, 2008 is as follows:



|                                                   |  |        |  |                                             |      
|-------------------------------------------------- |  | ------ |  | ------------------------------------------- | -----
|(In thousands, except per share amounts)           |  | Shares |  | WeightedAverageGrantDate FairValue perShare
|Restricted stock outstanding at January 1, 2008    |  |       |  | $                                           |     
|Granted during the period                          |  | 25     |  |                                             | 21.47
|Vested during the period                           |  |       |  |                                             |     
|Forfeited during the period                        |  |       |  |                                             |     
|                                                   |  |        |  |                                             |      
|Restricted stock outstanding at September 30, 2008 |  | 25     |  | $                                           | 21.47
|                                                   |  |        |  |                                             |      

As of September 30, 2008, there was $0.4 million of total unrecognized compensation cost related to unvested
restricted stock awards, which is expected to be recognized over a weighted-average period of 2.65 years.



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##### Table of Contents

The summary of the activity and status of the former Class A common stock instruments subject to repurchase rights
for the nine months ended September 30, 2008 is as follows:



|                                                                   |  |        |   |  |                                     |      
|------------------------------------------------------------------ |  | ------ | - |  | ----------------------------------- | -----
|(In thousands, except per share amounts)                           |  | Shares |   |  | WeightedAverageGrant DateFair Value
|Common shares subject to repurchase rights at January 1, 2008      |  | 394    |   |  | $                                   | 12.00
|Number of shares whose repurchase rights expired during the period |  | (389   | ) |  |                                     | 12.00
|                                                                   |  |        |   |  |                                     |      
|Common shares subject to repurchase rights at September 30, 2008   |  | 5      |   |  | $                                   | 12.00
|                                                                   |  |        |   |  |                                     |      

The repurchase rights remaining at September 30, 2008 will expire in September 2009. For more information on
the former Class A common stock instruments, see Note 8 contained in Part II, Item 8 of the Companys Annual Report on Form 10-K for the year ended December 31, 2007.

Note 9. Income Taxes

Income tax expense for the nine months ended September 30, 2008 was $27.3 million,
representing the statutory tax rate applied to pre-tax income and the effects of non-deductible expenses. We expect our recurring non-deductible expenses to relate primarily to certain non-cash stock based compensation. The annual amounts of these
non-deductible, non-cash stock based compensation charges relating to equity-based awards outstanding as of September 30, 2008 are projected to be $1.8 million in 2008 and $0.8 million in 2009.

The Company has unused net operating losses (NOLs) totaling $177.6 million as of September 30, 2008. These NOLs, along with net unrealized losses
existing at the September 2003 bankruptcy emergence date, are subject to an annual utilization limitation of $1.6 million (prior to adjustment for realization of built-in gains that existed as of the 2005 merger, with a maximum limitation of $9.2
million). Based on this limitation and the adjustments required for certain built-in gains realized or to be realized during the five year period immediately following our May 2, 2005 merger, the Company expects to use NOLs of approximately
$152.7 million as follows: $9.2 million per year in 2009 through 2024, $5.1 million in 2025 and $0.8 million in 2026.

During June 2008, we resolved an
uncertainty related to the interaction of the adjustment for realized built-in gains and the general carryforward provisions for unused annual NOL limits. This uncertainty existed at the time of our merger and thus we did not record a deferred tax
asset of approximately $9.3 million for the benefit of approximately $23.2 million of pre-merger NOLs. This deferred tax benefit of approximately $9.3 million has been reflected as a reduction to goodwill and the increased available NOL amounts have
been included in the annual projections discussed above.

The Company adopted the provisions of FIN No. 48, Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement 109,on January 1, 2007. As a result of the implementation of FIN No. 48, the Company recognized approximately $2.2 million in previously unrecognized benefits and increased our liability for
other unrecognized benefits by $0.5 million resulting in a net increase to the January 1, 2007 retained earnings of $1.7 million. The Company accrued $0.2 million for the nine months ended September 30, 2008 and $0.2 million of interest on
this obligation during 2007.

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

Note 10. Commitments and Contingencies

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



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

In connection with the planned EV-DO network upgrade pursuant to the terms of the
Amended and Restated Resale Agreement with Sprint Spectrum L.P. and based on the Companys plan to upgrade substantially all of its current service coverage areas outside its wholesale territory, the Company has entered into a three-year
third-party vendor agreement to purchase network equipment. The Company expects to spend approximately $88.2 million under this agreement, of which approximately $72.9 million has been spent as of September 30, 2008. The Company expects to
spend the remainder of the $88.2 million as follows: $8.8 million in the remainder of 2008 and $6.5 million in 2009. Under the vendor agreement, the Company receives significant current purchase volume discounts which ultimately are conditional on
spending at or above the $88.2 million noted above.

The Company has other purchase commitments relating to capital expenditures totaling $3.5 million as
of September 30, 2008, which are expected to be satisfied during 2008.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Any statements contained in this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words
anticipates, believes, expects, intends, plans, estimates, targets, projects, should, may, will and similar words and
expressions are intended to identify forward-looking statements. These forward-looking statements are contained throughout this report, for example in Risk Factors and Managements Discussion and Analysis of Financial
Condition and Results of Operations. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks,
uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. All forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report. Because of these risks, uncertainties and assumptions, you should not place undue reliance on
these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future
events or otherwise. You should read the following discussion of our financial condition in conjunction with our consolidated financial statements and the related notes included elsewhere in this report. The following discussion contains
forward-looking statements that involve risks and uncertainties. For additional information regarding some of these risks and uncertainties that affect our business and the industry in which we operate, please see Risk Factors in Part I,
Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007.

Overview

We are a leading provider of wireless and wireline communications services under the NTELOS brand name to consumers and businesses primarily in Virginia and West
Virginia. Our wireless operations are composed of an NTELOS-branded retail business and a wholesale business that we operate under an exclusive contract with Sprint Spectrum L.P., an indirect wholly-owned subsidiary of Sprint Nextel Corporation
(hereinafter collectively referred to as Sprint Nextel). We believe our regional focus and contiguous service area provide us with a differentiated competitive position relative to our primary wireless competitors, all of whom are
national providers.

Our wireless revenues accounted for 77.1% and 76.9% of our total revenues for the three and nine months ended September 30, 2008,
respectively, and 95.6% and 95.8% of the total revenue growth over the comparative three-and-nine-month periods in 2007, respectively. As of September 30, 2008, our wireless retail business had approximately 427,000 NTELOS-branded subscribers,
representing an 8.0% penetration of our total covered population. We have made significant investments in our wireless network since 2005, adding 274 new wireless cell sites (including 88 cell sites added during 2008) and increasing our total cell
sites to 1,111 at September 30, 2008. These investments and other initiatives, including the increased take rate of national rate plans and enhanced data service offerings, contributed to a 7.7% increase in subscribers from the third quarter of
2007 to the third quarter of 2008 despite overall economic weakness which may have negatively affected customer growth. Given the economic outlook for a softer retail holiday season, our customer growth in the fourth quarter of 2008 could be
negatively impacted. We also amended our agreement with Sprint Spectrum L.P. during 2007 to act as a wholesale provider of network services through July 31, 2015. Under this arrangement, which we refer to as the Strategic Network Alliance, we
are the exclusive PCS service provider in our western Virginia and West Virginia service area for all Sprint Nextel CDMA wireless customers. Under the terms of the agreement, we are committed to upgrading our wireless network to EV-DO in the
territory covered by the agreement, and as of September 30, 2008, we have completed the upgrade to EV-DO in nine of thirteen markets in this territory, and by October 31, 2008 the upgrade was completed in the remaining markets in this
territory. We expect our aggregate incremental capital expenditures for 2007 through 2009 for the upgrade to EV-DO in all of our markets to be approximately $65 million, of which $25 million was spent in 2007 and $38 million is expected to be spent
in 2008 (approximately $28.3 million of which was spent by September 30, 2008). This level of expenditures in 2008 is expected to satisfy the 98% build-out completion target defined in the Strategic Network Alliance, resulting in an increase of
the monthly revenue minimum from $8 million to $9 million. For the three and nine months ended September 30, 2008, we realized wholesale and roaming revenues of $28.2 million and $77.8 million, respectively, primarily related to the Strategic
Network Alliance, representing increases of 15.9% and 8.7% over the same respective periods in 2007.



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Founded in 1897, our wireline incumbent local exchange carrier business is conducted through two subsidiaries that
qualify as RLECs under the Telecommunications Act. These two RLECs provide wireline communications services to residential and business customers in the western Virginia communities of Waynesboro, Covington, Clifton Forge and portions of Botetourt
and Augusta counties. As of September 30, 2008, we operated approximately 42,000 RLEC telephone access lines. We also own a 2,133 route-mile regional fiber optic network and participate in partnerships that directly connect our networks with
many of the largest markets in the mid-Atlantic region. We leverage our wireline network infrastructure to offer competitive voice and data communication services in Virginia and West Virginia outside our RLEC coverage area. Within our Competitive
Wireline segment, we market and sell local and long distance, voice and data services almost exclusively to business customers through our competitive local exchange carrier (CLEC), and Internet Service Provider (ISP),
operation. As of September 30, 2008, we served customers with approximately 49,900 CLEC access line connections. We also offer DSL services in over 97% of our RLEC service area and, as of September 30, 2008, we operated approximately
21,800 broadband access connections in our markets, representing an increase of 11.9% over September 30, 2007. In the three and nine months ended September 30, 2008, the wireline Competitive segment strategic products (local phone
services, IPTV-based video services, broadband voice and data services and high-capacity network access and transport services) experienced revenue growth of 12.0% and 14.0% over the three and nine months ended September 30, 2007, respectively.
Our wireline operating income margins were 33.7% and 31.3% for the three months ended September 30, 2008 and 2007, respectively, and were 33.1% and 31.6% for the nine months ended September 30, 2008 and 2007, respectively. In late 2007, we
introduced NTELOS video in selected neighborhoods within our two RLEC service areas, providing an alternative to cable and satellite TV. It is delivered via fiber to the home, along with Internet access and local and long distance telephone
services. At September 30, 2008, we passed approximately 4,000 homes with fiber and we had approximately 700 IPTV customers. Revenues from the video and high speed Internet products are included in the Competitive Wireline segment.

Other Overview Discussion

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

ARPU is a telecommunications industry metric that measures service
revenues per period divided by the weighted average number of subscribers in service during that period. ARPU as defined below may not be similar to ARPU measures of other companies, is not a measurement under GAAP and should be considered in
addition to, but not as a substitute for, the information contained in our Condensed Consolidated Statements of Operations. We closely monitor the effects of new rate plans and service offerings on ARPU in order to determine their effectiveness. We
believe ARPU provides management useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high-value customers. The table below provides a reconciliation of operating revenue
from our wireless segment (Note 3 in our Notes to Condensed Consolidated Financial Statements) to subscriber revenues used to calculate average monthly ARPU for the three and nine months ended September 30, 2008 and 2007.



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|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  
|------------------------------------------------------------ |  | ------------------ | ------- | - | ----------------- | - | ------- | ----------------- |  | - | ----------------- | - |  | - | -------- | -
|                                                             |  | Three Months Ended |         |   | Nine Months Ended |  
|(Dollars in thousands, other than average monthly ARPU data) |  | September 30,2008  |         |   | September 30,2007 |   |         | September 30,2008 |  |   | September 30,2007 |  
|Wireless communications revenues                             |  | $                  | 104,805 |   |                   | $ | 96,152  |                   |  | $ | 306,878           |   |  | $ | 281,237  |  
|Less: equipment revenues from sales to new customers         |  |                    | (1,665  | ) |                   |   | (2,892  | )                 |  |   | (9,196            | ) |  |   | (10,540  | )
|Less: equipment revenues from sales to existing customers    |  |                    | (4,131  | ) |                   |   | (1,863  | )                 |  |   | (8,710            | ) |  |   | (5,476   | )
|Less: wholesale revenues                                     |  |                    | (28,218 | ) |                   |   | (24,339 | )                 |  |   | (77,795           | ) |  |   | (71,590  | )
|(Less) plus: other revenues and adjustments                  |  |                    | (290    | ) |                   |   | (471    | )                 |  |   | (452              | ) |  |   | 466      |  
|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  
|Wireless gross subscriber revenues                           |  | $                  | 70,501  |   |                   | $ | 66,587  |                   |  | $ | 210,725           |   |  | $ | 194,097  |  
|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  
|Average number of subscribers                                |  |                    | 426,552 |   |                   |   | 393,779 |                   |  |   | 421,637           |   |  |   | 385,180  |  
|Total ARPU(1)                                                |  | $                  | 55.09   |   |                   | $ | 56.37   |                   |  | $ | 55.53             |   |  | $ | 55.99    |  
|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  
|Wireless gross subscriber revenues                           |  | $                  | 70,501  |   |                   | $ | 66,587  |                   |  | $ | 210,725           |   |  | $ | 194,097  |  
|Less: wireless voice and other features revenues(2)          |  |                    | (60,871 | ) |                   |   | (61,087 | )                 |  |   | (183,179          | ) |  |   | (179,808 | )
|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  
|Wireless data revenues(2)                                    |  | $                  | 9,630   |   |                   | $ | 5,500   |                   |  | $ | 27,546            |   |  | $ | 14,289   |  
|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  
|Average number of subscribers                                |  |                    | 426,552 |   |                   |   | 393,779 |                   |  |   | 421,637           |   |  |   | 385,180  |  
|Total data ARPU(2)                                           |  | $                  | 7.53    |   |                   | $ | 4.66    |                   |  | $ | 7.26              |   |  | $ | 4.12     |  
|                                                             |  |                    |         |   |                   |   |         |                   |  |   |                   |   |  |   |          |  



|(1) | We entered into a new agreement with more favorable terms to provide handset insurance to wireless subscribers, effective April 1, 2008. Due to the differences in the terms of
this new arrangement, revenues for handset insurance are no longer reported on a gross basis, but on a net basis instead. This has led to a reduction in total ARPU from the comparative three-and-nine-month periods in 2007. Historical periods will
not be restated. The following table presents pro forma total ARPU had this arrangement been in effect for all periods presented:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                         |  |                    |       |                   |                   |       |                   |  |   |                   |   |  |   |       |  
|------------------------ |  | ------------------ | ----- | ----------------- | ----------------- | ----- | ----------------- |  | - | ----------------- | - |  | - | ----- | -
|                         |  | Three Months Ended |       |                   | Nine Months Ended |      
|                         |  | September 30,2008  |       | September 30,2007 |                   |       | September 30,2008 |  |   | September 30,2007 |  
|Total ARPU  as reported |  | $                  | 55.09 |                   | $                 | 56.37 |                   |  | $ | 55.53             |   |  | $ | 55.99 |  
|Total ARPU  pro forma   |  |                    | 55.09 |                   |                   | 54.05 |                   |  |   | 54.78             |   |  |   | 53.67 |  
|                         |  |                    |       |                   |                   |       |                   |  |   |                   |   |  |   |       |  
|Reduction                |  | $                  |      |                   | $                 | (2.32 | )                 |  | $ | (0.75             | ) |  | $ | (2.32 | )
|                         |  |                    |       |                   |                   |       |                   |  |   |                   |   |  |   |       |  



|(2) | In September of 2007, we launched a new prepay billing platform which enhanced product offerings to customers and allowed the Company to separately identify certain data revenues
previously bundled into blended ARPU, and certain of the underlying plans were modified to offer data services. Accordingly, beginning in the fourth quarter of 2007, this revenue is included in data revenue. Additionally, beginning in the first
quarter of 2008, an allocation of certain postpay bundled package revenues representing the portion relating to data was reclassified into data revenue. These items contributed to accelerated growth in data ARPU over the comparative
three-and-nine-month periods in 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating Revenues

Our revenues are generated from the following categories:



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



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



| |  |  | Competitive segment revenues, including revenues from our key strategic products (local services, IPTV-based video services, broadband voice and data services, and
high-capacity network access and transport services), long distance and dial-up Internet services; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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##### Table of Contents

Operating Expenses

Our operating expenses are incurred from the following categories:



| |  |  | cost of sales and services, including digital PCS handset equipment costs which, in keeping with industry practice, we generally sell to our customers at a price
below our cost, and usage-based access charges, including long distance, roaming charges, and other direct costs incurred in accessing other telecommunication providers networks in order to provide telecommunication services to our end-use
customers, leased facility expenses for connection to other carriers, cell sites and switch locations and engineering and other expenses for service related property, plant and equipment;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | corporate operations expenses, including taxes other than income, executive, accounting, legal, purchasing, information technology, human resources and other
general and administrative expenses, including earned bonuses above target achievement levels, non-cash compensation expense related to stock and option instruments held by certain members of corporate management, expenses related to the voluntary
early retirement plan (VERP) and secondary offering costs;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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

Other Income (Expenses)

Our other income (expenses) are generated (incurred) from interest expense on debt instruments, including changes
in fair value of our interest rate swap instrument and other income, which includes interest income.

Income Taxes

Our income tax expense and effective tax rate increases or decreases based upon changes in a number of factors, including our pre-tax income or loss, state minimum tax
assessments, and non-deductible expenses.

Minority Interests in Losses (Earnings) of Subsidiaries

Our minority interest relates to a 53.7% RLEC segment investment in a partnership that owns certain signaling equipment and provides service to a number of small RLECs
and to VeriSign. We also have a 97% majority interest in the Virginia PCS Alliance L.C., or the VA Alliance, that provides PCS services to a 1.9 million populated area in central and western Virginia. The VA Alliance has incurred cumulative
operating losses since it initiated PCS services in 1997. Given that the total of minority member contributions and cumulative operating results are negative during all periods reported, we recognize a credit to minority interest only to the extent
of capital contributions from the 3% minority owners. No such contributions were made during the three and nine months ended September 30, 2008 or 2007.

Results of Operations

Three and nine months ended September 30, 2008 compared to three and nine months ended September 30,
2007

OVERVIEW

Operating revenues increased $9.1 million,
or 7.1%, from the three months ended September 30, 2007 to the three months ended September 30, 2008 and $26.8 million, or 7.2%, from the nine months ended September 30, 2007 to the nine months ended September 30, 2008. Wireless
PCS accounted for approximately 95.6% and 95.8% of the increase over the respective three-and-nine-month comparative periods, with growth occurring from subscriber revenues, equipment revenues and wholesale revenues. Wireline contributed the
remaining revenue increase over the three-and-nine-month comparative periods primarily from revenue increases in key strategic products in the Competitive segment, partially offset by declines in RLEC access revenues and other revenues from the
Competitive segment (dial-up Internet services, switched access and reciprocal compensation).



20



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Net income increased $5.4 million over the comparative three-month period. Reflected in this increase is an increase in
operating income of $7.7 million and a $3.3 million pre-tax improvement in interest expense. Primarily offsetting these improvements over the comparative three-month period was an increase in the pre-tax loss on the interest rate swap of $1.1
million and an increase in income tax expense of $3.5 million. For the nine months ended September 30, 2008, net income increased $12.6 million. Reflected in this increase is an increase in operating income of $6.5 million, an $8.1 million
improvement in interest expense and a $6.5 million increase in the change in the fair value of the interest rate swaps during the respective periods, which improved from a loss of $2.6 million for the nine months ended September 30, 2007 to a
gain of $3.9 million for the nine months ended September 30, 2008, and is discussed further below. Primarily offsetting these improvements was a $7.0 million increase in income tax expense.

OPERATING REVENUES

The following tables identify our external operating
revenues on a business segment basis for the three and nine months ended September 30, 2008 and 2007:



|                       |  |                    |         |                   |   |            |  |   |            |   |  |       |   
|---------------------- |  | ------------------ | ------- | ----------------- | - | ---------- |  | - | ---------- | - |  | ----- | --
|                       |  | Three Months Ended |         |                   |   |            |  |  
|Operating Revenues     |  | September 30,2008  |         | September 30,2007 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands) |  |                    |         |                   |   |            |  |   |            |  
|Wireless PCS           |  | $                  | 104,805 |                   | $ | 96,152     |  | $ | 8,653      |   |  | 9.0   | % 
|                       |  |                    |         |                   |   |            |  |   |            |   |  |       |   
|Wireline               |  |                    |         |                   |   |            |  |   |            |   |  |       |   
|RLEC                   |  |                    | 15,078  |                   |   | 15,264     |  |   | (186       | ) |  | (1.2  | )%
|Competitive wireline   |  |                    | 15,979  |                   |   | 15,337     |  |   | 642        |   |  | 4.2   | % 
|                       |  |                    |         |                   |   |            |  |   |            |   |  |       |   
|Total wireline         |  |                    | 31,057  |                   |   | 30,601     |  |   | 456        |   |  | 1.5   | % 
|                       |  |                    |         |                   |   |            |  |   |            |   |  |       |   
|Other                  |  |                    | 123     |                   |   | 178        |  |   | (55        | ) |  | (30.9 | )%
|                       |  |                    |         |                   |   |            |  |   |            |   |  |       |   
|Total                  |  | $                  | 135,985 |                   | $ | 126,931    |  | $ | 9,054      |   |  | 7.1   | % 
|                       |  |                    |         |                   |   |            |  |   |            |   |  |       |   



|                       |  |                   |         |                   |   |            |  |   |            |   |  |       |   
|---------------------- |  | ----------------- | ------- | ----------------- | - | ---------- |  | - | ---------- | - |  | ----- | --
|                       |  | Nine Months Ended |         |                   |   |            |  |  
|Operating Revenues     |  | September 30,2008 |         | September 30,2007 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands) |  |                   |         |                   |   |            |  |   |            |  
|Wireless PCS           |  | $                 | 306,878 |                   | $ | 281,237    |  | $ | 25,641     |   |  | 9.1   | % 
|                       |  |                   |         |                   |   |            |  |   |            |   |  |       |   
|Wireline               |  |                   |         |                   |   |            |  |   |            |   |  |       |   
|RLEC                   |  |                   | 44,435  |                   |   | 46,103     |  |   | (1,668     | ) |  | (3.6  | )%
|Competitive wireline   |  |                   | 47,515  |                   |   | 44,589     |  |   | 2,926      |   |  | 6.6   | % 
|                       |  |                   |         |                   |   |            |  |   |            |   |  |       |   
|Total wireline         |  |                   | 91,950  |                   |   | 90,692     |  |   | 1,258      |   |  | 1.4   | % 
|                       |  |                   |         |                   |   |            |  |   |            |   |  |       |   
|Other                  |  |                   | 421     |                   |   | 547        |  |   | (126       | ) |  | (23.0 | )%
|                       |  |                   |         |                   |   |            |  |   |            |   |  |       |   
|Total                  |  | $                 | 399,249 |                   | $ | 372,476    |  | $ | 26,773     |   |  | 7.2   | % 
|                       |  |                   |         |                   |   |            |  |   |            |   |  |       |   

WIRELESS COMMUNICATIONS REVENUESWireless communications revenues increased $8.7 million from the three
months ended September 30, 2007 to the three months ended September 30, 2008 due to an increase in our NTELOS-branded net subscriber revenue of $3.8 million, or 5.7%, an increase in equipment sales revenues of $1.0 million, or 21.9%, and a
$3.9 million, or 15.9%, increase in wholesale and roaming revenues. The $25.6 million increase from the nine months ended September 30, 2007 to the nine months ended September 30, 2008 was primarily due to an increase in our NTELOS-branded
net subscriber revenue of $17.4 million, or 9.1%, a $6.2 million, or 8.7%, increase in wholesale and roaming revenues, and a $1.9 million, or 11.8%, increase in equipment sales revenues related to increased sales of smart phones and other
feature-rich handsets, as well as an increase in sales not eligible for subsidized pricing.

In both the three-and-nine-month comparative periods,
subscriber revenues reflected net subscriber growth of 7.7%, or approximately 30,600 subscribers, from approximately 396,400 subscribers as of September 30, 2007 to approximately 427,000 subscribers as of September 30, 2008.

The favorable subscriber revenue results of $3.8 million for the three months ended September 30, 2008 primarily reflect increased postpay access revenue of $1.4
million, or 4.2%, due to product service improvements and increased data revenue of $2.0 million,



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##### Table of Contents

or 43.9%, due to continued growth in data services and data packages. Total data ARPU was $7.53 for the three months ended September 30, 2008, up from
$4.66 for the three months ended September 30, 2007 (see footnote 2 to the ARPU reconciliation table above). Partially offsetting these favorable results was a decrease in total ARPU of 2.3% from the three months ended September 30, 2007,
from $56.37 to $55.09. This decrease is attributable to a reduction in total ARPU related to a change in the reporting of handset insurance from a gross to a net basis effective April 1, 2008 (see footnote 1 to the ARPU reconciliation table
above), offset by the continued growth in data ARPU discussed above. Pro forma for the handset insurance reporting changes, wireless subscriber revenues and cost of sales for third quarter 2007 would have been lower by $2.7 million. Therefore, total
revenues pro forma of this reporting change increased $11.4 million, or 12.2% period over period, with subscriber revenues increasing $6.5 million, or 10.2% period over period.

Similarly, increases in access and data revenue, combined with increased revenue from our prepaid products contributed to the $17.4 million improvement in subscriber revenue over the nine-month comparative period.
Total data ARPU was $7.26 for the first nine months of 2008, up from $4.12 for the first nine months of 2007 (see footnote 2 to the ARPU reconciliation table above). Partially offsetting these favorable results was a decrease in total ARPU of 0.8%,
from $55.99 to $55.53 for the nine months ended September 30, 2007 and 2008, respectively. This decrease is primarily attributable to the change in reporting of handset insurance discussed above, offset by continued growth in data services and
a continued increased take-rate of our postpay national plans. Pro forma for the handset insurance reporting changes, wireless subscriber revenues and cost of sales would have been reduced by $2.8 million and $8.0 million for the nine months ended
September 30, 2008 and 2007, respectively. Therefore, total revenues pro forma of this reporting change increased $30.8 million, or 11.3% period over period, with subscriber revenues increasing $22.6 million, or 12.3% period over period.

The increase in wholesale and roaming revenues over the comparative three-and-nine-month periods was primarily driven by increased voice and data usage
under the Strategic Network Alliance. Wholesale and roaming revenues grew 15.9% over the comparative three months, from $24.3 million for the three months ended September 30, 2007 to $28.2 million for the three months ended September 30,
2008, and 8.7% over the comparative nine months, from $71.6 million for the nine months ended September 30, 2007 to $77.8 million for the nine months ended September 30, 2008. Our wholesale revenues are derived primarily from the voice
usage by Sprint Nextel customers who live in the Strategic Network Alliance service area (home minutes of use), those customers of Sprint Nextel who use our network for voice services while traveling through the Strategic Network
Alliance service area (travel minutes of use) and data usage by Sprint Nextel customers who live in or travel through the Strategic Network Alliance service area. In addition to volume increases experienced on existing cell sites, we
have added 77 cell sites within this wholesale service area since September 30, 2007, improving existing service and extending this coverage area. In addition to the revenue increase from the Strategic Network Alliance, our revenue from roaming
agreements with other carriers accounted for $0.8 million and $1.5 million of the three-and-nine-month increases in wholesale and roaming revenues noted above.

WIRELINE COMMUNICATIONS REVENUESWireline communications revenues increased $0.5 million and $1.3 million over the comparative three-and-nine-month periods, respectively.



| |  | RLEC Revenues.RLEC revenues, which include local service, network access, toll service, directory advertising and calling feature revenues from our RLEC
customers, decreased $0.2 million from the prior year comparative three-month period. This revenue decrease is primarily attributable to decreased local service revenues as a result of a 5.1% decrease in access lines, which is discussed in further
detail below. Access lines totaled approximately 42,000 as of September 30, 2008 and 44,200 as of September 30, 2007. RLEC revenues decreased $1.7 million from the comparative nine-month period due to a $0.7 million decrease in local
service revenues as a result of the access line loss described above and a $1.0 million, or 3.3%, decrease in access revenues. The decrease in access revenues is primarily attributable to a biennial reset of RLEC interstate access rates on
July 1, 2007 and reductions in National Exchange Carrier Association (NECA) settlement rates, partially offset by an increase in carrier access minutes of 4.4% from the nine months ended September 30, 2007 to the nine months ended
September 30, 2008. This increase in minutes is due primarily to growth in usage by wireless carriers. Also partially offsetting the decrease in access revenue from the nine-month comparative period were net favorable changes in access billing
disputes and settlements of $0.5 million.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The access line loss noted above is reflective primarily of residential
wireless substitution, second line losses and the introduction of competitive voice service offerings from Comcast, which commenced in May 2008 in one of our three RLEC markets. We expect that this competition will primarily be for residential
customers. Our access line loss in the first nine months of 2008 was 3.6% and we have estimated that our access line loss for the year will be between 4% and 6%.



22



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##### Table of Contents

| |  | Competitive Wireline Revenues.Competitive wireline revenue for the three months ended September 30, 2008 increased $0.6 million over the comparative
three-month period driven by revenues from our key strategic products (local services, IPTV-based video services, broadband voice and data services, and high-capacity network access and transport services) in the Competitive Wireline segment, which
grew $1.4 million, or 12.0%, over the comparative three months, offset by declines in other Competitive revenues (primarily dial-up Internet services, switched access and reciprocal compensation). Revenues from broadband, integrated access and Metro
Ethernet services increased $0.9 million, or 23.0%, from the three months ended September 30, 2007 to the three months ended September 30, 2008 due primarily to broadband products customer growth of 11.9%, particularly in the products with
higher bandwidth and ARPU. Revenues from the remaining key strategic products collectively increased $0.5 million, or 6.3%, over the comparative three months primarily from new circuit additions with carriers and increased customers. Dial-up revenue
for the three months ended September 30, 2008 declined $0.1 million and other Competitive revenues (primarily switched access and reciprocal compensation) declined $0.6 million collectively (to $1.0 million for the third quarter of 2008) from
the comparative three months due to volume reductions.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The revenue growth over the comparative nine-month period is also
attributable to growth in revenue from our key strategic products, which increased $4.8 million, or 14.0%, offset by a net decline of $2.0 million in other Competitive revenues. Revenue from broadband, integrated access and Metro Ethernet services
increased $2.5 million, or 21.7%, from the first nine months of 2007 to the first nine months of 2008 due to continued growth in demand for higher bandwidth. Revenues from the remaining key strategic products collectively increased $2.3 million, or
10.1%, over the comparative prior year period primarily from new circuit additions with carriers and increased customers. Dial-up revenue declined $0.7 million, or 22.8%, with a customer decline of 25.2% from the comparative period and other
Competitive revenues (primarily switched access and reciprocal compensation) declined $1.3 million due primarily to a decrease in rates.

On
September 28, 2007, the Virginia State Corporation Commission issued a final order in a rulemaking docket that capped CLECs intrastate switched access charges, including the access charges of our CLECs, at the higher of the CLECs
interstate switched access charges or the intrastate switched access charges of the ILEC (or the average of all ILECs) providing service in the geographic area served by the CLEC. The cap took effect at the end of a transition period that began on
December 1, 2007 and ended on March 31, 2008. As part of that transition, we reduced our CLEC access rates effective on December 1, 2007 and again on April 1, 2008. We expect these lower rates to reduce our CLEC access revenues
by a total of $1.2 million in 2008, inclusive of a $0.9 million reduction recognized in the first nine months of 2008.



23



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##### Table of Contents

OPERATING EXPENSES

The
following tables identify our operating expenses on a business segment basis, consistent with the tables presenting operating revenues above, for the three and nine months ended September 30, 2008 and 2007:



|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- | - | ---------- |  | - | ---------- | - |  | ------ | --
|                                                                                                                                                                                                         |  | Three Months Ended |         |                   |   |            |  |  
|Operating Expenses                                                                                                                                                                                       |  | September 30,2008  |         | September 30,2007 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands)                                                                                                                                                                                   |  |                    |         |                   |   |            |  |   |            |  
|Wireless PCS                                                                                                                                                                                             |  | $                  | 63,285  |                   | $ | 58,921     |  | $ | 4,364      |   |  | 7.4    | % 
|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|Wireline                                                                                                                                                                                                 |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|RLEC                                                                                                                                                                                                     |  |                    | 4,009   |                   |   | 4,247      |  |   | (238       | ) |  | (5.6   | )%
|Competitive wireline                                                                                                                                                                                     |  |                    | 9,920   |                   |   | 9,972      |  |   | (52        | ) |  | (0.5   | )%
|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|Total wireline                                                                                                                                                                                           |  |                    | 13,929  |                   |   | 14,219     |  |   | (290       | ) |  | (2.0   | )%
|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|Other                                                                                                                                                                                                    |  |                    | 1,470   |                   |   | 1,458      |  |   | 12         |   |  | 0.8    | % 
|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|Operating expenses, before depreciation and amortization, accretion of asset retirement obligations, secondary offering costs, non-cash
compensation charges and voluntary early retirement plan charges |  |                    | 78,684  |                   |   | 74,598     |  |   | 4,086      |   |  | 5.5    | % 
|Depreciation and amortization                                                                                                                                                                            |  |                    | 24,789  |                   |   | 26,863     |  |   | (2,074     | ) |  | (7.7   | )%
|Accretion of asset retirement obligations                                                                                                                                                                |  |                    | 249     |                   |   | 230        |  |   | 19         |   |  | 8.3    | % 
|Secondary offering costs                                                                                                                                                                                 |  |                    |        |                   |   | 4          |  |   | (4         | ) |  | (100.0 | )%
|Non-cash compensation charges                                                                                                                                                                            |  |                    | 434     |                   |   | 1,094      |  |   | (660       | ) |  | (60.3  | )%
|Voluntary early retirement plan charges                                                                                                                                                                  |  |                    | 6       |                   |   |           |  |   | 6          |   |  | N/M    |   
|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   
|Total operating expenses                                                                                                                                                                                 |  | $                  | 104,162 |                   | $ | 102,789    |  | $ | 1,373      |   |  | 1.3    | % 
|                                                                                                                                                                                                         |  |                    |         |                   |   |            |  |   |            |   |  |        |   



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##### Table of Contents

|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ----------------- | - | ---------- |  | - | ---------- | - |  | ------ | --
|                                                                                                                                                                                                         |  | Nine Months Ended |         |                   |   |            |  |  
|Operating Expenses                                                                                                                                                                                       |  | September 30,2008 |         | September 30,2007 |   | $ Variance |  |   | % Variance |  
|(dollars in thousands)                                                                                                                                                                                   |  |                   |         |                   |   |            |  |   |            |  
|Wireless PCS                                                                                                                                                                                             |  | $                 | 183,992 |                   | $ | 173,150    |  | $ | 10,842     |   |  | 6.3    | % 
|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|Wireline                                                                                                                                                                                                 |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|RLEC                                                                                                                                                                                                     |  |                   | 11,743  |                   |   | 12,680     |  |   | (937       | ) |  | (7.4   | )%
|Competitive wireline                                                                                                                                                                                     |  |                   | 28,627  |                   |   | 29,334     |  |   | (707       | ) |  | (2.4   | )%
|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|Total wireline                                                                                                                                                                                           |  |                   | 40,370  |                   |   | 42,014     |  |   | (1,644     | ) |  | (3.9   | )%
|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|Other                                                                                                                                                                                                    |  |                   | 4,243   |                   |   | 3,889      |  |   | 354        |   |  | 9.1    | % 
|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|Operating expenses, before depreciation and amortization, accretion of asset retirement obligations, secondary offering costs, non-cash
compensation charges and voluntary early retirement plan charges |  |                   | 228,605 |                   |   | 219,053    |  |   | 9,552      |   |  | 4.4    | % 
|Depreciation and amortization                                                                                                                                                                            |  |                   | 78,615  |                   |   | 67,541     |  |   | 11,074     |   |  | 16.4   | % 
|Accretion of asset retirement obligations                                                                                                                                                                |  |                   | 745     |                   |   | 622        |  |   | 123        |   |  | 19.8   | % 
|Secondary offering costs                                                                                                                                                                                 |  |                   |        |                   |   | 570        |  |   | (570       | ) |  | (100.0 | )%
|Non-cash compensation charges                                                                                                                                                                            |  |                   | 2,307   |                   |   | 3,209      |  |   | (902       | ) |  | (28.1  | )%
|Voluntary early retirement plan charges                                                                                                                                                                  |  |                   | 981     |                   |   |           |  |   | 981        |   |  | N/M    |   
|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   
|Total operating expenses                                                                                                                                                                                 |  | $                 | 311,253 |                   | $ | 290,995    |  | $ | 20,258     |   |  | 7.0    | % 
|                                                                                                                                                                                                         |  |                   |         |                   |   |            |  |   |            |   |  |        |   

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

The primary drivers of the three-and-nine-month increases in our operating expenses before depreciation and
amortization, accretion of asset retirement obligations, secondary offering costs, non-cash compensation and voluntary early retirement plan charges are described by segment as follows:



| |  |  | Wireless Communications  Of the increases in wireless communications operating expenses noted in the tables above, variable cost of sales and services
accounted for $1.5 million of the three-month increase and $3.1 million of nine-month increase. As described in the Cost of Sales and Services (COS) operating expense discussion below, the three-and-nine-month increases in COS are
primarily attributable to increased equipment, roaming and data COS, partially offset by a reduction in handset insurance cost of sales related to the April 1, 2008 reporting change discussed above. The sales of higher-cost smart phones for the
third quarter of 2008 were up almost 400% from the sales level in the third quarter of 2007. This increase in smart phone sales is attributable to these handsets increased functionality within our network due to the EV-DO network upgrade and
enhanced data capabilities, coupled with promotional pricing.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We expect continued growth in COS expenses as our customer
base grows, sales of national plans increase, sales of smart phones continue to represent a significantly higher percentage of total sales than in the prior year and usage of data features increases.

The remaining operating expense increases in wireless communications over the comparative periods were due to increased costs of maintaining our network,
combined with direct and indirect costs of sales and services expenses. Specifically, cell site and network access expenses increased $1.8 million over the three-month comparative period and $3.9 million over the nine-month comparative period
related to additional access connectivity to support high-speed data over the EV-DO network and to support our increased subscriber base, and a 9.9% increase in the number of cell sites in



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service from September 30, 2007 to September 30, 2008. Customer retention expense increased $0.5 million over the nine-month comparative period
primarily associated with increased promotions between the periods driving existing wireless customer handset upgrades and contract renewals. Customer retention expense decreased $0.6 million from the comparative three-month period primarily due to
recoveries from advance warranty replacements. The remaining increase in both the three-and-nine-month comparative periods is due primarily to increased bad debt expense, operating taxes and compensation expenses, partially offset by a decrease in
agent commissions as a result of a decrease in third-party agent sales.



| |  |  | Wireline Communications  The decreases in wireline operating expenses noted in the tables above are partially attributable to a $0.1 million and a $0.5
million decrease in bad debt expense from the comparative three-and-nine-month periods, respectively, primarily due to improved accounts receivable turnover and aging improvement. Also contributing to the decreases from the comparative periods was a
decrease in compensation expenses, most of which is attributable to savings realized in the third quarter of 2008 related to the voluntary early retirement plan described below, and decreases in allocated corporate expenses as a result of an
increased percentage of corporate expenses attributable to the significantly faster growing wireless segment. For the nine-month comparative periods, the decrease also includes a decrease of $0.6 million related to favorable access expense
settlements between the respective periods. These decreases were offset by increases in access expense over the three-and-nine-month comparative periods to support revenue growth in CLEC and backhaul demand from the wireless segment.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other  As noted in the tables above, operating expenses from the corporate and other communication service businesses were flat for the comparative
three months and increased $0.4 million over the comparative nine-month period. The nine-month increase is primarily attributable to unallocated accounting and other professional services performed in early 2008 associated with the year-end 2007
audit and professional expenses related to our first year of compliance with section 404 of the Sarbanes-Oxley Act.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

COST OF SALES AND
SERVICESCost of sales and services increased $4.3 million, or 10.7%, over the comparative three months and increased $7.8 million, or 6.6%, over the comparative nine months. Included in the results for the three and nine months ended
September 30, 2008 was a reduction from the prior year comparative period of $2.8 million and $5.3 million, respectively, in handset insurance cost of sales primarily related to a change in the reporting of handset insurance from a gross to a
net basis effective April 1, 2008 (see footnote 1 to the ARPU reconciliation table above). Roaming COS increased $1.3 million and $4.3 million over the comparative three-and-nine-month periods related primarily to an increased mix of national
plans and other plans which contain more roaming minutes, partially offset by in-network roaming savings related to continued cell site expansion. The percentage of subscribers with a national plan increased from 31.1% as of September 30, 2007
to 35.1% as of September 30, 2008. Data COS increased $0.3 million over the comparative three months and $0.9 million over the comparative nine months consistent with increased data usage. Equipment COS increased $2.0 million and $1.7 million
over the comparative three-and-nine-month periods, respectively, due primarily to increased sales of higher-cost, feature-rich handsets. Long distance toll and other COS collectively increased $0.6 million and $1.5 million over the
three-and-nine-month comparative periods, respectively.

Also contributing to the changes in cost of sales and services for the three-and-nine-month
comparative periods were approximately $2.8 million and $4.8 million, respectively, of increased network related expenses, including cell site costs for wireless, transport and access expense and increases in other support expenses, such as
contracted labor and repairs and maintenance expenses. In connection with our 2008 planned network expansion and enhancements, we are planning an additional 5% to 6% increase in the number of cell sites for the remainder of 2008. Accordingly, when
these and future cell sites are placed in service, we expect these costs to increase. Additionally, the EV-DO upgrade will result in our adding additional access expenses for every cell site. Revenue generation related to this upgrade will lag these
increased expenses. For the three and nine months ended September 30, 2008, additional operating expenses associated with the EV-DO upgrade and additional cell sites totaled approximately $1.1 million and $1.8 million, respectively.

CUSTOMER OPERATIONS EXPENSESCustomer operations expenses decreased $0.2 million, or 0.6%, from the comparative three months and increased $0.9 million, or 1.2%,
over the comparative nine months. Retention costs decreased $0.6 million from the comparative three-month period and increased $0.5 million over the comparative nine-month period, as described above, and compensation expense increased $0.6 million
and $1.5 million over the three-and-nine-month comparative periods, respectively,



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associated with inflationary growth in wages and an increase in personnel to support subscriber growth. The remaining increases over the three-and-nine-month
comparative periods primarily relate to contracted services, rent expense and postage and freight. Offsetting these increases were decreases in bad debt expense of $0.7 million from the prior year three-and-nine-month comparative periods,
respectively, due to improvement in accounts receivable aging from the prior year. Also, for the nine-month comparative period, these increases were offset by a net decrease of $1.4 million in selling expenses due to the decrease in sales through
the higher-cost third-party agent channel noted above and due to a higher percentage of prepay sales in 2008 which generate lower selling costs.

CORPORATE
OPERATIONS EXPENSES Corporate operations expenses decreased $0.7 million, or 8.3%, from the comparative three months due primarily to a $0.6 million decrease in non-cash compensation expense as a result of the final vesting of the majority of
our former Class A shares in the second quarter of 2008 (Note 8). Also decreasing from the comparative three-month period were compensation expenses, which decreased $0.7 million primarily due to a decrease in performance-based compensation
expense. Offsetting these decreases was an increase of $0.8 million in operating taxes due primarily to a $0.8 million reversal of an operating tax reserve recorded in the third quarter of 2007 based on a favorable ruling from tax authorities.

For the nine-month comparative periods, corporate operations expenses increased $0.3 million, or 1.2%. The results for the nine months ended
September 30, 2008 contain $1.0 million of charges related to a voluntary early retirement plan offered to a select number of wireline employees. These charges primarily represent an enhanced pension benefit offered to the 22 employees who
accepted the early retirement offer. Also increasing over the nine-month comparative period were license fees and royalties and operating taxes. Offsetting these increases was a decrease of $0.6 million relating to legal, accounting and other
expenses associated with the secondary stock offering completed in the first quarter of 2007. The remaining decrease is primarily due to a $1.3 million decrease in compensation expense due to a decrease in performance-based compensation expense and
an increase in capitalized labor as a result of internally developed software, and a $0.7 million decrease in non-cash compensation expense, as described above.

DEPRECIATION AND AMORTIZATION EXPENSESDepreciation and amortization expenses decreased $2.1 million, or 7.7%, from the comparative three-month period ended September 30, 2007. This decrease is primarily attributable to a $2.7
million decrease in accelerated depreciation related to 3G-1xRTT and other equipment scheduled to be replaced earlier than originally anticipated related to the EV-DO upgrade, which began in the third quarter of 2007 and is discussed below. Also
contributing to the decrease was a $0.7 million decrease in amortization expense from the comparative three-month period related to the change in the remaining useful life of the intangible asset associated with the Strategic Network Alliance with
Sprint Nextel due to the extension of the contract period-end to July 2015. These three-month comparative decreases were offset by a $0.6 million increase in accelerated depreciation related to other equipment scheduled to be replaced earlier than
anticipated and a $0.7 million increase in depreciation expense over the comparative three months related to an increase in the average depreciable base.

Depreciation and amortization expenses increased $11.1 million, or 16.4%, over the comparative nine months. This increase is primarily attributable to an increase in accelerated depreciation of $10.8 million related to 3G-1xRTT and other
equipment scheduled to be replaced earlier than originally anticipated related to the EV-DO upgrade discussed below. The remaining $0.3 million increase is comprised of the other factors noted in the discussion above.

As discussed above in the wireless communications revenue section, we are upgrading a majority of our coverage areas with EV-DO. During 2007 and the first
nine months of 2008, we have recorded $33.0 million in accelerated depreciation on the 3G-1xRTT assets as they have been disposed of or are planned for disposal prior to their previously planned useful lives. We expect to record approximately $2.1
million and $5.0 million of additional accelerated depreciation during the remainder of 2008 and 2009, respectively.

ACCRETION OF ASSET RETIREMENT
OBLIGATIONSAccretion of asset retirement obligations is recorded in order to accrete the estimated asset retirement obligation over the life of the related asset up to its future expected settlement cost. This charge was flat from the three
months ended September 30, 2007 to the three months ended September 30, 2008 and increased approximately $0.1 million over the nine-month comparative period, from $0.6 million for the nine months ended September 30, 2007 to $0.7
million for the nine months ended September 30, 2008.



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OTHER INCOME (EXPENSES)

Interest expense on debt instruments decreased $3.3 million, or 29.6%, from the comparative three months and $8.1 million, or 24.8%, from the comparative nine months due primarily to lower LIBOR rates on the First Lien Term Loan and a lower
debt balance due to $12.5 million of debt repayment during 2007 and $4.7 million of scheduled debt repayments in the first nine months of 2008.

In
February 2008, NTELOS Inc. entered into a new interest rate swap agreement to replace the previous interest rate swap that ended in the same month. These swap agreements were not designated as interest rate hedge instruments for accounting purposes
and, therefore, the changes in the fair value of the swap agreements were recorded as gain (loss) on interest rate swap. The $3.9 million gain on interest rate swap recorded in the first nine months of 2008 includes a $0.3 million charge related to
the previous swap agreement, which was a $0.3 million asset at December 31, 2007. The previous swap agreement ended during February 2008, and the recording of a $4.2 million asset representing the fair value of the new swap agreement which is
included in the securities and investments section of the Condensed Consolidated Balance Sheets.

Other income primarily relates to interest income from
cash and cash equivalents and totaled less than $0.1 million and $0.9 million for the three and nine months ended September 30, 2008, respectively, $0.8 million and $1.5 million lower than the comparative three-and-nine-month periods,
respectively, due to significantly lower short-term investment interest rates partially offset by a higher average cash and cash equivalent balance in the current year versus the prior year comparative periods.

INCOME TAXES

Income tax expense for the three months ended
September 30, 2008 was $8.7 million, representing the statutory tax rate applied to pre-tax income and the effects of non-deductible, non-cash stock based compensation. Income taxes for the three months ended September 30, 2007 were $5.2
million, driven by non-deductible, non-cash stock based compensation and non-deductible secondary offering transaction costs.

Income tax expense for the
nine months ended September 30, 2008 was $27.3 million, representing the statutory tax rate applied to pre-tax income and the effects of non-deductible, non-cash stock based compensation. We expect our recurring non-deductible expenses to
relate primarily to certain non-cash stock based compensation. The annual amounts of these non-deductible charges for equity-based awards outstanding as of September 30, 2008 are projected to be approximately $1.8 million for 2008. Income tax
expense for the nine months ended September 30, 2007 was $20.4 million, driven by non-deductible, non-cash stock based compensation, and non-deductible cost related to the secondary offering.

Our unused net operating losses (NOLs), at September 30, 2008 are approximately $177.6 million. These NOLs, along with net unrealized losses existing at
the September 2003 bankruptcy emergence date, are subject to an annual utilization limitation of $1.6 million (prior to adjustment for realization of built-in gains that existed as of the 2005 merger, with a maximum limitation of $9.2 million).
Based on this limitation and the adjustments required for certain built-in gains realized during the five year period immediately following our May 2, 2005 merger, we expect to use NOLs of approximately $152.7 million as follows: $9.2 million
per year in 2009 through 2024, $5.1 million in 2025 and $0.8 million in 2026.

Liquidity and Capital Resources

For the nine months ended September 30, 2008 and 2007, we funded our working capital requirements, capital expenditures and cash dividends from net cash provided
from operating activities and long-term debt, as applicable. We believe our cash from operations will continue to grow in the future as we continue to execute on our business strategy and increase our subscriber base, particularly in our wireless
segment. In addition, the predictability of our cash flow is enhanced by our long-term Strategic Network Alliance with Sprint Nextel which was amended on July 31, 2007 and extended to July 31, 2015 (see overview section above).

As of September 30, 2008, we had $665.2 million in aggregate long-term liabilities, consisting of $602.8 million in outstanding long-term debt ($609.4 million
including the current portion) and $62.4 million in other long-term liabilities. Our Amended Credit Agreement also includes a revolving credit facility of $35 million (the Revolving Credit Facility), which is available for our working
capital requirements and other general corporate purposes through its expiration in February 2010. While we have received no indication that this would be the case at this time, continued volatility in the financial markets could restrict our
ability to draw on the Revolving Credit Facility if any of the lenders, some of whom are large financial institutions, are unable to perform their obligations under this facility.



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Our blended interest rate on our long-term debt as of September 30, 2008 is 4.91%. Our new, eighteen-month swap
agreement commenced on September 1, 2008 and fixed the interest rate at 4.91% for $600 million of the First Lien Term Loan.

In addition to the
long-term debt from the Amended Credit Agreement, we also enter into capital leases on vehicles used in our operations with lease terms of four to five years. At September 30, 2008, the net present value of these future minimum lease payments
was $1.4 million. The aggregate maturities of our long-term debt based on the contractual terms of the instruments are $1.7 million for the remainder of 2008, $6.7 million in 2009, $154.0 million in 2010 (with a scheduled maturity payment of $148.9
million due on December 31, 2010), $446.9 million in 2011 and $0.2 million thereafter.

As discussed in the overview to this section, we entered into
a new contract with Sprint Nextel which included a requirement for a technological upgrade of the network from 3G-1xRTT to EV-DO technology by 2009 in the Sprint overlap territory. Additionally, we are also upgrading a majority of our other coverage
areas with EV-DO. The expected incremental capital expenditures related to the upgrade to EV-DO (expenditures in excess of the previously anticipated capital expenditures without considering this technology upgrade) are $65 million, approximately
$53.0 million of which has been spent in 2007 and the first nine months of 2008. We expect to spend an additional $9.7 million of incremental capital expenditures in 2008 related to the upgrade of EV-DO, for a total of $38 million in 2008. This
level of expenditures in 2008 is expected to satisfy the 98% build-out completion target defined in the Strategic Network Alliance during the fourth quarter 2008, after which the monthly revenue minimum will increase from $8 million to $9 million.

The Company has a restricted payment basket, initially set at $30.0 million, which can be used to make certain restricted payments, as defined
under the Credit Agreement, including the ability to pay dividends, repurchase stock or advance funds to the Company. This restricted payment basket is increased by $6.5 million per quarter plus an additional amount annually for calculated excess
cash flow, based on the definition in the Credit Agreement, and is decreased by any actual restricted payments. The amount of the restricted payment basket was $36.4 million as of September 30, 2008, which was subsequently reduced by an $8.9
million dividend paid on October 10, 2008.

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

Under the Amended Credit Agreement, NTELOS Inc. is also bound by certain financial covenants, specifically a maximum ratio of
total debt outstanding to EBITDA (as defined under the Amended Credit Agreement) and a minimum interest coverage ratio. Noncompliance with any one or more of the debt covenants may have an adverse effect on our financial condition or liquidity in
the event such noncompliance cannot be cured or should we be unable to obtain a waiver from the lenders of the NTELOS Inc. senior secured credit facilities. As of September 30, 2008, we are in compliance with all of our debt covenants, and our
ratios at September 30, 2008 would be in compliance with any future period financial covenant ratio requirement under the Amended Credit Agreement.

Our ratios under the foregoing restrictive covenants as of September 30, 2008 are as follows:



|                                 |  |        |  |                                           
|-------------------------------- |  | ------ |  | ------------------------------------------
|                                 |  | Actual |  | Covenant Requirement at September 30, 2008
|Total debt outstanding to EBITDA |  | 2.73   |  | Not more than 5.50                        
|Minimum interest coverage ratio  |  | 6.39   |  | Not less than 2.25                        

During the nine months ended September 30, 2008, net cash provided by operating activities was $142.4
million. Net income during this period was $40.8 million. We recognized $99.1 million of depreciation, amortization, deferred taxes and other non-cash charges (net). Total net changes in operating assets and liabilities provided $2.5 million. The
principal changes in operating assets and liabilities from December 31, 2007 to September 30, 2008 were as follows: accounts receivable increased by $3.2 million due to increased revenues of 7.2%, offset by improved accounts receivable
aging; inventories and supplies increased $1.5 million driven by increased inventory on-hand in preparation for seasonally higher sales in the fourth quarter; other current assets increased $0.1 million; changes in income taxes totaled $13.6 million
primarily as a result of a $10.3 million cash refund received in April 2008;



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accounts payable increased $1.3 million due to the timing of payments at the end of the respective quarters; and, other current liabilities decreased $1.7
million which relate to a reduction in accrued annual incentive compensation partially offset by increases in other current liabilities due to the timing of payments. Retirement benefit payments for the first nine months of 2008 were $6.0 million
which includes a $5.4 million pension plan funding payment.

During 2008, the pension plan assets have declined in value. Pension plan assets were valued
at $41.9 million at December 31, 2007, $36.8 million at September 30, 2008 and $30.0 million at October 31, 2008. The Company made a cash contribution to the pension plan of $5.4 million in March 2008. Payments to participants in 2008
have not changed materially from 2007 payment levels. Absent a significant recovery in the value of the plan assets by year-end, the net periodic benefit cost for 2009 is expected to increase from the annualized cost of $2.9 million for 2008, and
the 2009 funding requirements will be impacted.

During the nine months ended September 30, 2007, net cash provided by operating activities was
approximately $103.2 million. Net income during this period was $28.1 million. We recognized $86.4 million of depreciation, amortization, deferred taxes and other non-cash charges (net). Total net changes in operating assets and liabilities used
$11.3 million. The principal changes in operating assets and liabilities from December 31, 2006 to September 30, 2007 were as follows: accounts receivable increased by $7.0 million, or 18.1%, due to increased revenues and increased
accounts receivable aging; inventories and supplies decreased $0.6 million with seasonally lower sales; other current assets increased $0.4 million largely related to increases in prepaid maintenance contracts; accounts payable decreased by $0.1
million; and other current liabilities increased $0.9 million due primarily to increased advance billings and accrued property taxes. Retirement benefit payments for the first nine months of 2007 were approximately $6.7 million which includes a $6.0
million pension plan funding.

Our cash flows used in investing activities for the nine months ended September 30, 2008 were $98.1 million primarily
used for the purchase of property and equipment comprised of (i) approximately $61.7 million related to our wireless business, including approximately $28.3 million of incremental capital expenditures related to our network upgrade to EV-DO,
approximately $11.9 million of continued network coverage expansion and enhancements within our coverage area, approximately $13.5 million of expenditures for additional capacity to support our projected growth in our NTELOS-branded subscribers and
increased usage by existing subscribers and growth in voice and data usage under the Strategic Network Alliance, and approximately $8.0 million for improvements to our existing networks and other business needs, (ii) approximately $29.1 million
for a strategic fiber build in WV, for the actual and projected growth of our Competitive wireline voice and data offerings, for fiber deployment in the RLEC territory related to an infrastructure upgrade to offer, among other services, enhanced
broadband services and IPTV-based video services, and routine capital outlays and facility upgrades supporting our RLEC operations, (iii) approximately $7.3 million related to information technology and corporate expenditures to enhance and
maintain the back office support systems.

Our cash flows used in investing activities for the nine months ended September 30, 2007 were approximately
$55.3 million used for the purchase of property and equipment comprised of (i) approximately $31.5 million related to supporting our increasing subscriber base and wholesale growth, continuing our incremental network expansion, installing
network software upgrades and initial equipment purchases associated with EV-DO (approximately $2.0 million), (ii) approximately $18.3 million for routine capital outlays and facility upgrades supporting our RLEC operations, for the actual and
projected growth of our Competitive wireline voice and data offerings, and for fiber deployment in the RLEC territory related to an infrastructure upgrade to offer, among other services, an enhanced broadband service offering which commenced in the
fourth quarter of 2006 and the third quarter 2007 launch of a new IPTV-based video service offering, and (iii) approximately $5.5 million related to information technology and corporate expenditures to enhance and maintain the back office
support systems.

We currently expect capital expenditures for 2008 to be in the range of $133 million to $135 million. We expect that our capital
expenditures associated with our wireless business in 2008 will be in the range of $88 million to $89 million, of which approximately $38 million represents incremental capital expenditures related to our network upgrade to EV-DO, $16 million
represents continued network coverage expansion and enhancements within our coverage area, approximately $20 million represents expenditures for additional capacity and upgrades to support our projected growth in our NTELOS-branded subscribers and
increased usage by existing subscribers and growth in voice and data usage under the Strategic Network Alliance, and the remaining $14 million to $15 million is targeted for improvements to our existing networks and other business needs. We expect
that our capital expenditures



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associated with our wireline business in 2008 will be in the range of $35 million to $36 million, of which approximately $6 million is targeted to support
strategic fiber builds and purchases, and the remaining $29 million to $30 million is anticipated to provide normal network facility upgrades for our RLEC operations, to support the projected growth of our Competitive wireline voice and data
offerings, and fiber deployment in the RLEC territory related to an infrastructure upgrade to offer, among other services, an enhanced broadband service and IPTV-based video services. In addition, we expect to invest a total of approximately $10
million in 2008 for enhancements and upgrades to our information technology and corporate expenditures to enhance and maintain the back office support systems to support the continued growth and introduction of new service offerings and
applications.

Net cash used in financing activities for the nine months ended September 30, 2008 aggregated $30.3 million, which primarily represents
the following:



| |  | $4.7 million in payments on our senior secured term loan;
|- |  | ---------------------------------------------------------



| |  | $26.5 million used to pay common stock cash dividends ($0.63 per share in the aggregate) on January 10, 2008, April 11, 2008 and July 11, 2008;
and,
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | approximately $1.0 million proceeds and tax benefits primarily related to the exercise of stock options.
|- |  | --------------------------------------------------------------------------------------------------------

Net cash used in financing activities for the nine months ended September 30, 2007 aggregated $17.5 million, which primarily represents the following:



| |  | $10.9 million in payments on our senior secured term loan;
|- |  | ----------------------------------------------------------



| |  | $6.3 million payment of a $0.15 per share common stock cash dividend on July 12, 2007;
|- |  | --------------------------------------------------------------------------------------



| |  | $1.0 million in debt issuance costs; and,
|- |  | -----------------------------------------



| |  | $0.6 million proceeds and tax benefits primarily related to the exercise of stock options.
|- |  | ------------------------------------------------------------------------------------------

As of September 30, 2008 and December 31, 2007, we had approximately $67.4 million and $53.5 million, respectively, in cash and cash equivalents and working
capital (current assets minus current liabilities) of approximately $51.9 million and $45.8 million, respectively. Of the cash and cash equivalents on hand on September 30, 2008, $64.2 million was held by NTELOS Inc. and its subsidiaries which
are subject to usage restrictions pursuant to the Amended Credit Agreement.

During March 2008, we applied for an accelerated federal income tax refund,
net of a portion of current year estimated tax, of $10.3 million pertaining to tax overpayments existing as of December 31, 2007. The refund was subsequently received on April 14, 2008.

We paid a dividend of $0.21 per share on January 10, 2008, which was declared during the fourth quarter of 2007 and totaled $8.8 million. On February 28, 2008,
the board of directors declared a dividend which was paid on April 11, 2008 to common stock shareholders of record on March 20, 2008 at a rate of $0.21 per share, totaling $8.8 million. On May 2, 2008, the board of directors declared
a dividend in the amount of $0.21 per share which was paid on July 11, 2008 to stockholders of record on June 20, 2008 and totaled $8.9 million. On August 5, 2008, the board of directors declared a dividend in the amount of $0.21 per
share which was paid on October 10, 2008 to stockholders of record on September 19, 2008 and totaled $8.9 million. On November 4, 2008, the board of directors declared a dividend in the amount of $0.26 per share to be paid on
January 12, 2009 to stockholders of record on December 19, 2008. We intend to continue to pay regular quarterly dividends on our common stock. However, any decision to declare future dividends will be made at the discretion of the board of
directors and will depend on, among other things, our results of operations, cash requirements, investment opportunities, financial condition, contractual restrictions, changes in economic conditions and outlook, capital market conditions and
outlook and other factors that the board of directors may deem relevant. We are a holding company that does not operate any business of our own. As a result, we are dependent on cash dividends and distributions and other transfers from our
subsidiaries to make dividend payments or to make other distributions to our stockholders, including by means of a stock repurchase. Amounts that can be made available to us to pay cash dividends or repurchase stock are restricted by the NTELOS Inc.
Amended Credit Agreement (as discussed earlier in this section).

We believe that our current cash balances and our cash flow from operations will be
sufficient to satisfy our foreseeable working capital and capital expenditures for at least the next 24 months. This takes into account higher capital expenditure levels during this



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period than we had in 2007 as we continue to make capital expenditures in connection with the EV-DO network upgrade over the next nine months, add additional
cell sites, and entertain other initiatives as we continue to grow our business and evaluate additional growth opportunities. If our growth opportunities result in unforeseeable capital expenditures during this period, we may draw against our
existing revolving credit facility or seek additional financing. However, as noted above, we have a cash balance of $67.4 million at September 30, 2008 and we believe our cash flow from operations will continue to grow.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

We are
exposed to market risks primarily related to interest rates. As of September 30, 2008, $608.1 million was outstanding under the First Lien Term Loan. As of September 30, 2008, NTELOS Inc. achieved a leverage ratio of 2.73:1.00 and an
interest coverage ratio of 6.39:1.00, both of which are favorable to any future covenant requirement. This facility bears interest at 2.25% above the Eurodollar rate or 1.25% above the Federal Funds rate. We had other fixed rate, long-term debt
totaling $1.4 million as of September 30, 2008.

In February 2008, NTELOS Inc. signed an eighteen-month, $600.0 million interest rate swap agreement
which commenced on September 1, 2008. Also during February 2008, the previous $312.5 million swap agreement ended. These swap agreements help minimize our exposure to interest rate movements by effectively converting a portion of our long-term
debt from variable rate debt to fixed rate debt. Under the $600.0 million interest rate swap agreement, our fixed rate payments are calculated at a per annum rate of 2.66%. Our swap counterpartys variable rate payments are based on three-month
U.S. Dollar LIBOR, which was 3.88% as of September 30, 2008. Interest rate differentials paid or received under our past and current swap agreements are recognized for GAAP purposes as adjustments to our interest expense. The effect of
this interest rate swap combined with the interest provisions of the First Lien Term Loan resulted in a fixed interest rate of 4.91% on $600 million of the First Lien Term Loan for the period September 1, 2008 through March 1, 2010.

We entered a six-month LIBOR contract beginning March 2008 on $609.6 million of our First Lien Term Loan which resulted in a 5.3% fixed rate over this
period. Because the initial six-month period has expired, we are exposed to interest rate risk on the borrowings in excess of $600.0 million. We are also exposed to loss if the counterparty to the interest rate swap agreement defaults.

During 2008, the counterparty to the interest rate swap experienced liquidity problems and in June 2008 merged with another prominent financial institution. The
Company was notified that the swap was guaranteed and a formal legal novation occurred on November 5, 2008. The acquiring financial institution has a strong credit rating and, accordingly, we did not adjust the value of the swap asset for
credit risk exposure.

At September 30, 2008, the interest rate swap was recorded at fair value of a $4.2 million asset. This value was obtained from
the counterparty to the interest rate swap agreement and verified by the Company using a net present value calculation based on three-month U.S. Dollar LIBOR projections from an independent third party. The independent third party is a
prominent financial institution and the values obtained were not materially different. Because of changes in the projected LIBOR rates over the life of the swap agreement, the fair value of the swap agreement was a liability of $1.1 million on
October 31, 2008, a $5.4 million decline in fair value from September 30, 2008.

At September 30, 2008, our financial assets included cash
and cash equivalents of $67.4 million. Other securities and investments totaled $0.7 million at September 30, 2008. We invest cash not used in daily operations in a money market account held by a prominent financial institution that is
available on demand. Nightly, additional cash is also invested in an overnight sweep account with the same financial institution. Both of these accounts are subject to the FDIC insurance limit of $250,000.

Critical Accounting Policies

The fundamental objective of financial
reporting is to provide useful information that allows a reader to comprehend our business activities. To aid in that understanding, management has identified our critical accounting policies for discussion in our Annual Report on Form 10-K for the
year ended December 31, 2007, as filed with the SEC on February 28, 2008. These policies have the potential to have a more significant impact on our financial statements, either because of the significance of the financial statement item
to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events which are continuous in nature. The following policies are related to new policies adopted during
the first nine months of 2008 or existing policies that were changed during the first nine months of 2008.



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In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement. SFAS No. 157 defines fair
value, establishes a framework for the measurement of fair value, and enhances disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measures. SFAS No. 157 is effective for fair value measures already
required or permitted by other standards for fiscal years beginning after November 15, 2007. The Company adopted SFAS No. 157 beginning on January 1, 2008. However, the effective date of SFAS No. 157 as it relates to fair value
measurement requirements for nonfinancial assets and liabilities that are not re-measured at fair value on a recurring basis has been deferred to fiscal years beginning after December 15, 2008. SFAS No. 157 is required to be applied
prospectively, except for certain financial instruments. The effect of adoption was immaterial to the Company and resulted in expanded disclosures regarding our interest rate swap.

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

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

In March 2008, the FASB issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 requires companies with derivative instruments to disclose information about how and why a company uses derivative instruments, how derivative
instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect a companys financial position, financial performance and cash flows. The Statement expands the
current disclosure framework in SFAS No. 133. SFAS No. 161 is effective prospectively for periods beginning on or after November 15, 2008. The Company is currently evaluating the impact of this SFAS No. 161 on its results of
operations, cash flows and financial position.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets.
Under the FSP, companies estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that
market participants would use about renewal or extension as adjusted for Statement 142s entity-specific factors. The guidance is restricted to estimating the useful life of recognized intangible assets; it contains no guidance on how to
measure or amortize them or account for the costs of renewals. The FSP also adds disclosures to those already required by SFAS No. 142. This FSP is effective for fiscal years beginning on or after December 15, 2008, and interim periods
within those fiscal years. The Company expects to apply the provisions of this FSP prospectively to intangible assets acquired after the effective date of this FSP and will apply the increased disclosure requirements for all intangible assets
recognized as of, and subsequent to, the effective date of this FSP.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities. This FSP will require unvested share-based payments that entitle employees to receive nonrefundable dividends to also be considered participating securities. This FSP is
effective for fiscal years beginning after December 15, 2008 and interim periods within those years, and early adoption is prohibited. The Company is currently evaluating the impact of this FSP on its calculation of earnings per share.



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|Item 4. | Controls and Procedures.
|------- | ------------------------

Conclusion Regarding the Effectiveness
of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our
principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no
changes in our internal control over financial reporting that occurred during the three and nine months ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.



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##### Table of Contents

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

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



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

In addition to the other information set forth in
this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors (pages 19 to 32) in our Annual Report on Form 10-K for the year ended December 31, 2007 and Part II, Item 1A. Risk Factors in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, which could materially affect our business, financial condition or future results. The risks described in this Annual Report on Form 10-K and Quarterly Report on Form 10-Q are
not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The following supplements the risk factors entitled Regulatory developments at the FCC and the Virginia SCC could reduce revenues that our rural
telephone company and CLEC subsidiaries receive from network access charges and Regulatory developments at the FCC could reduce revenues that our rural telephone company subsidiaries and our wireless subsidiaries receive from the Federal
Universal Service Fund in our Annual Report on Form 10-K for the year ended December 31, 2007:

The FCC is tentatively scheduled to
consider a proposed rulemaking which, if adopted, could materially impact the amount of intercarrier compensation and USF support we receive.

On
November 5, 2008, the Federal Communications Commission adopted a Further Notice of Proposed Rulemaking (November 5th Further Notice) requesting comment on three alternative proposals for reform of the Universal Service Fund
(USF) and the intercarrier compensation rules, including both federal and state access charges. Several members of the FCC have indicated their intention to act on the November 5th Further Notice by adopting a comprehensive reform
of intercarrier compensation and USF at the FCCs December 2008 meeting currently scheduled to take place on December 18, 2008. It is uncertain whether the FCC will ultimately adopt such a reform plan at the December 2008 meeting and, if a
plan is adopted, what matters will be addressed in that plan. Intercarrier compensation reform could result in significant decreases in the access charge revenues received by our rural telephone companies. While we expect that the FCC would allow
these changes to occur over some transition period and would permit our rural telephone companies to offset the impact of reduced revenues with increased subscriber line charges and USF payments, it is unknown whether all or only a portion of the
access revenues would be so recovered. In a USF reform plan, there can be no assurance that our rural telephone companies would continue to receive the current level of Universal Service Fund revenues. Loss of USF and access revenues could have a
significant adverse financial effect on our rural telephone companies depending on the amount of the reduction.

We do not believe that there have been any
other material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.



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

No matter was
submitted to a vote of security holders during the third quarter of 2008.



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                   
|31.1*       |  | Certificate of James S. Quarforth, Chief Executive Officer and President pursuant to Rule 13a-14(a).                                                                                                                          
|31.2*       |  | Certificate of Michael B. Moneymaker, Executive Vice President and Chief Financial Officer, Treasurer and Secretary pursuant to Rule 13a-14(a).                                                                               
|32.1*       |  | Certificate of James S. Quarforth, Chief Executive Officer and President pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                           
|            | 
|32.2*       |  | Certificate of Michael B. Moneymaker, Executive Vice President and Chief Financial Officer, Treasurer and Secretary pursuant to 18 U.S.C., Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.



|* | Filed herein.
|- | -------------



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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.



|                        |  |                       |  |                                                                              
|----------------------- |  | --------------------- |  | -----------------------------------------------------------------------------
|                        |  | NTELOS HOLDINGS CORP.
|                        |  |                      
|Dated: November 6, 2008 |  | By:                   |  | /s/ James S. Quarforth                                                       
|                        |  |                       |  | James S. Quarforth                                                           
|                        |  |                       |  | Chief Executive Officer, President and Chairman of the Board                 
|                        |  |                      
|Dated: November 6, 2008 |  | By:                   |  | /s/ Michael B. Moneymaker                                                    
|                        |  |                       |  | Michael B. Moneymaker                                                        
|                        |  |                       |  | Executive Vice President and Chief Financial Officer, Treasurer and Secretary



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