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

                                   FORM 10-Q/A

                 AMENDMENT NO. 2 TO QUARTERLY REPORT PURSUANT TO
           SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1998
                         
                          Commission file number 1-4996
                                                 ------
                               ALLTEL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


     DELAWARE                                                  34-0868285 
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)

One Allied Drive, Little Rock, Arkansas                          72202
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code    (501) 905-8000
                                                  ------------------------------

--------------------------------------------------------------------------------
               (Former name, former address and former fiscal year, 
                         if changed since last report)

          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.
          YES X NO


     Number of common shares outstanding as of September 30, 1998:

                                                  274,428,563
                                                  -----------

The Exhibit Index is located at page 18 of this amendment.


<PAGE>


           The Registrant hereby amends the following items, financial
statements, exhibits or other portions of its quarterly report on Form 10-Q as
of September 30, 1998 as set forth in the pages attached hereto:

Item 1.  Financial Statements

           The following consolidated financial statements of ALLTEL Corporation
and subsidiaries, included in the interim report of ALLTEL Corporation to its
stockholders for periods ended September 30, 1998, a copy of which is attached
hereto, are incorporated herein by reference:


           Consolidated Statements of Income - for the three, nine and twelve
                      months ended September 30, 1998 and 1997.

           Consolidated Balance Sheets - September 30, 1998 and 1997 and
                      December 31, 1997.

           Consolidated Statements of Cash Flows - for the nine and twelve
                      months ended September 30, 1998 and 1997.

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

Item 6.  Exhibits and Reports on Form 8-K

        (a)     See the Exhibit Index located on page 18 of this amendment.

        (b)     Reports on Form 8-K:

                On September 2, 1998, ALLTEL filed under Form 8-K/A, Amendment
                No. 1 to its Current Report on Form 8-K dated June 30, 1998,
                reporting under Item 7, Financial Statements, Pro Forma
                Financial Information and Exhibits. The Form 8-K/A included the
                required historical financial statements of 360 required
                pursuant to Rule 3-05 of Regulation S-X and the pro forma
                financial information required pursuant to Article 11 of
                Regulation S-X.

                No other reports on Form 8-K have been filed during the quarter
                for which this report is filed.



                                       2

<PAGE>


                                   SIGNATURE



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.



                                     ALLTEL CORPORATION 
                                -----------------------------
                                        (Registrant)


                                   /s/ Dennis J. Ferra 
                                -----------------------------
                                    Dennis J. Ferra
                                    Senior Vice President and
                                      Chief Administrative Officer
                                    (Principal Financial Officer)
                                    March 2, 1999




                                         3


<PAGE>


                               ALLTEL CORPORATION

                                    FORM 10-Q

                          PART I - FINANCIAL STATEMENTS

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

GENERAL

    The following is a discussion and analysis of the historical results of
operations and financial condition of ALLTEL Corporation ("ALLTEL" or the
"Company"). This discussion should be read in conjunction with the unaudited
consolidated financial statements, including the notes thereto, for the interim
periods ended September 30, 1998 and 1997, and the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.

Forward-Looking Statements
--------------------------

    This Management's Discussion and Analysis of Financial Condition and Results
of Operations includes, and future filings by the Company on Form 10-K, Form
10-Q and Form 8-K and future oral and written statements by the Company and its
management may include, certain forward-looking statements, including (without
limitation) statements with respect to anticipated future operating and
financial performance, growth opportunities and growth rates, acquisition and
divestitive opportunities, Year 2000 compliance and other similar forecasts and
statements of expectation. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates" and "should", and variations of these
words and similar expressions, are intended to identify these forward-looking
statements. Forward-looking statements by the Company and its management are
based on estimates, projections, beliefs and assumptions of management and are
not guarantees of future performance. The Company disclaims any obligation to
update or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise.

    Actual future performance, outcomes and results may differ materially from
those expressed in forward-looking statements made by the Company and its
management as a result of a number of important factors. Representative examples
of these factors include (without limitation) rapid technological developments
and changes in the telecommunications and information services industries;
ongoing deregulation (and the resulting likelihood of significantly increased
price and product/service competition) in the telecommunications industry as a
result of the Telecommunications Act of 1996 and other similar federal and state
legislation and the federal and state rules and regulations enacted pursuant to
that legislation; regulatory limitations on the Company's ability to change its
pricing for communications services; the possible future unavailability of SFAS
71 to the Company's wireline subsidiaries; continuing consolidation in certain
industries, such as banking, served by the Company's information services
business; the risks associated with relatively large, multi-year contracts in
the Company's information services business; and higher than anticipated
expenditures associated with the Company's Year 2000 efforts. In addition to
these factors, actual future performance, outcomes and results may differ
materially because of other, more general, factors including (without
limitation) general industry and market conditions and growth rates, domestic
and international economic conditions, governmental and public policy changes
and the continued availability of financing in the amounts, at the terms and on
the conditions necessary to support the Company's future business.

                                          4
<PAGE>

COMPLETION OF MERGER

    On July 1, 1998, ALLTEL completed its merger with 360 Communications
Company ("360"). The merger was accounted for as a pooling of interests;
and accordingly, all prior period financial information has been restated to
include the 360 operations. The financial statements presented include
certain eliminations and reclassification adjustments to conform the accounting
and financial reporting policies of ALLTEL and 360. See note 2 to the
unaudited consolidated financial statements for additional information regarding
the merger transaction. As further discussed below, results for the third
quarter were affected by merger and integration expenses and other non-recurring
and unusual items.

OVERVIEW-CONSOLIDATED RESULTS OF OPERATIONS

    Revenues and sales increased $186.7 million or 16 percent, $457.7 million or
14 percent and $548.7 million or 12 percent for the three, nine and twelve month
periods ended September 30, 1998, respectively. Growth in revenues and sales in
the nine and twelve month periods of 1998 was impacted by the sale of the
Company's wire and cable subsidiary, HWC Distribution Corp. ("HWC"). The sale of
information services' healthcare operations also impacted revenues and sales
growth in the twelve month period of 1998. Adjusted to exclude the sold
operations, revenues and sales would have increased $500.6 million or 15 percent
and $658.1 million or 15 percent in the nine and twelve months ended
September 30, 1998.

    Operating income decreased $262.6 million or 95 percent, $161.9 million or
22 percent and $115.0 million or 12 percent for the three, nine and twelve month
periods ended September 30, 1998, respectively. As further discussed below,
operating income for all periods of 1998 was affected by merger and integration
expenses and other non-recurring charges to reduce the carrying value of certain
assets. The sales of the HWC and healthcare operations also impacted operating
income growth in the nine and twelve month periods of 1998. Adjusted to exclude
the results from operations for the asset dispositions, merger and integration
expenses and asset write-downs, operating income would have increased $44.4
million or 16 percent, $129.6 million or 17 percent and $183.7 million or 19
percent for the three, nine and twelve months ended September 30, 1998,
respectively.

    In addition to reflecting the third quarter merger and integration expenses
and asset write-downs, reported net income and earnings per share amounts for
all periods of 1998 include gains realized from the sale of certain investments.
As a result of the impact of all non-recurring and unusual items, reported net
income decreased $178.9 million or 119 percent, $84.1 million or 18 percent and
$54.8 million or 10 percent for the three, nine and twelve month periods ended
September 30, 1998, respectively. Basic earnings per common share also decreased
118 percent, 18 percent and 9 percent for the three, nine and twelve month
periods ended September 30, 1998, respectively. Excluding the impact in each
period of the asset dispositions and non-recurring and unusual items, net income
would have increased $29.0 million or 23 percent, $81.3 million or 23 percent
and $114.5 million or 26 percent, while basic earnings per share would have
increased 24 percent, 25 percent and 28 percent in the three, nine and twelve
month periods ended September 30, 1998, respectively.


                                         5
<PAGE>

Net income and basic earnings per share adjusted for the asset dispositions and
the non-extraordinary, non-recurring and unusual items are summarized in the
following table:

<TABLE>
(Dollars in thousands, except per share amounts)
----------------------------------------------------------------------------------------------------------------------
                                           Three Months Ended           Nine Months Ended         Twelve Months Ended
                                              September 30,                September 30,              September 30,    
                                           -------------------         --------------------       --------------------   
                                               1998       1997            1998         1997           1998        1997
<S>                                        <C>        <C>              <C>         <C>            <C>         <C>
Net income (loss), as reported             $(27,975)  $150,943         $373,713    $457,793       $505,301    $560,094
Disposition of healthcare and
   wire and cable operations                      -          -                -        (838)             -      (4,726)
Non-recurring and unusual items:
   Merger and integration expenses          200,995          -          200,995           -        200,995           -
   Provision to reduce carrying
       value of certain assets               33,605          -           31,605      11,744         33,605      11,744
   Gain on disposal of assets               (49,233)   (22,569)        (179,770)   (121,485)      (179,770)   (121,485)
                                           --------   --------         --------    --------       --------    --------
Net income, as adjusted                    $157,392   $128,374         $428,543    $347,214       $560,131    $445,627
                                           ========   ========         ========    ========       ========    ========
----------------------------------------------------------------------------------------------------------------------

Basic earnings (loss) per share,
   as reported                                $(.10)      $.55            $1.36       $1.65          $1.84       $2.02
Disposition of healthcare and
   wire and cable operations                      -          -                -           -              -        (.02)
Non-recurring and unusual items:
   Merger and integration expenses              .73          -              .73           -            .73           -
   Provision to reduce carrying
       value of certain assets                  .12          -              .12         .04            .12         .04
   Gain on disposal of assets                  (.18)      (.09)            (.65)       (.44)          (.65)       (.44)
                                              -----       ----            -----       -----          -----       -----
Basic earnings per share, as adjusted         $ .57       $.46            $1.56       $1.25          $2.04       $1.60
                                              =====       ====            =====       =====          =====       ===== 
----------------------------------------------------------------------------------------------------------------------
</TABLE>

The net income and basic earnings per share impact of the asset dispositions and
the non-recurring and unusual items has been presented as supplemental
information only. The non-recurring items reflected in the above table are
discussed in reference to the caption in the consolidated statements of income
in which they are reported.

Merger and Integration Expenses 
-------------------------------

    During the third quarter of 1998, the Company recorded on a pretax basis
transaction costs and one-time charges totaling $252 million related to the 
closing of its merger with 360. The merger and integration expenses include
professional and financial advisors' fees of $31.5 million, employee-related 
expenses of $48.7 million and integration costs of $171.8 million. The 
integration costs include several adjustments resulting from the redirection of
a number of strategic initiatives based on the merger with 360 and ALLTEL's 
expanded wireless presence. These adjustments include a $60 million write-down
in the carrying value of certain in-process software development assets, $50 
million of costs associated with the early termination of certain service
obligations, branding and signage costs of $20.7 million, an $18 million 
write-down in the carrying value of certain assets resulting from a revised 
Personal Communications Services ("PCS") deployment plan, and other integration
costs of $23.1 million. As a result of its integration efforts, ALLTEL expects
to realize synergies through a reduction in operating expenses of $20 million 
in 1998, $80 million in 1999 and $100 million in 2000. Of the total synergies
expected to be realized each year, ALLTEL estimates 40 percent of the cost
savings will result from a reduction in duplicative salaries and employee 
benefits, 20 percent from a reduction in variable network expenses, 20 percent
from volume purchase discounts, 10 percent from a reduction in branding and
advertising costs and 10 percent from a reduction in information technology
expenses.
                                         6
<PAGE>

    At September 30, 1998, the Company's remaining unpaid liability related to 
its merger and integration efforts was $108.5 million, consisting of $50 million
of contract termination fees, $44.5 million of employee-related expenses and $14
million of other integration costs. Cash outlays for the employee-related 
expenses and other integration costs are expected to be substantially completed
by the end of the first quarter of 1999. The Company expects to finalize 
amounts payable with respect to certain contract termination fees by the end
of 1999. Funding for this liability will be internally financed from operating 
cash flows. The merger and integration expenses decreased net income $201.0 
million or $.73 per share in the three, nine and twelve month periods ended
September 30, 1998.

Provision to Reduce Carrying Value of Certain Assets
----------------------------------------------------

During the third quarter of 1998, the Company recorded a $55 million charge 
related to its contract with GTE Corporation ("GTE"). Due to its pending merger
with Bell Atlantic Corporation, GTE has re-evaluated its billing and customer 
care requirements and modified its billing conversion plans and will purchase 
certain software usage rights and processing services from ALLTEL for an interim
period. This charge decreased net income $33.6 million or $.12 per share in the
three, nine and twelve month periods ended September 30, 1998.

    During the second quarter of 1997, the Company recorded a pretax write-down
of $16.9 million to reflect the fair value less cost to sell its wire and cable
subsidiary, HWC. The net income impact of this write-down resulted in a decrease
in net income of $11.7 million or $.04 per share in the nine and twelve month
periods ended September 30, 1997.

Gain on Disposal of Assets and Other
------------------------------------

    During the third quarter of 1998, the Company recorded a pretax gain of
$80.9 million from the sale of a portion of its investment in MCI WorldCom, Inc.
("MCI WorldCom") common stock. This gain increased net income $49.2 million or
$.18 per share in the three month period ended September 30, 1998. In addition
to including this gain, the nine and twelve month periods of 1998 also include
pretax gains of $184.8 million resulting from additional sales of MCI WorldCom
common stock completed in the first and second quarters of 1998, and a pretax
gain of $30.5 million resulting from the sale of the Company's ownership
interest in a cellular partnership serving the Omaha, Nebraska market. The gains
from the transactions recorded during the first two quarters of 1998 resulted in
an increase in net income of $130.6 million or $.47 in earnings per share.

    During the third quarter of 1997, the Company recorded a pretax gain of
$34.4 million primarily related to the sale of its investment in a software
company. This gain increased net income $22.6 million or $.09 per share. In the
second quarter of 1997, the Company recorded a pretax gain of $156.0 million
from the sale of a portion of its investment in MCI WorldCom common stock. This
transaction resulted in an increase of $88.1 million in net income and $.31 in
earnings per share. During the first quarter of 1997, the Company recorded a
pretax gain of $16.2 million from the sale of information services' healthcare
operations. In addition, the Company recorded a pretax gain of $3.0 million from
the divestiture of its ownership interest in two unconsolidated cellular
partnerships. These first quarter transactions increased net income $10.8
million or $.04 per share.

See notes 3 and 4 to the unaudited consolidated financial statements for
additional information regarding the merger and integration expenses and other
non-recurring and unusual items recorded during 1998.

                                       7
<PAGE>

RESULTS OF OPERATIONS BY BUSINESS SEGMENT
<TABLE>
Communications-Wireless Operations 
---------------------------------------------------------------------------------------------------------------------
                                   Three Months Ended             Nine Months Ended             Twelve Months Ended
(Dollars in thousands)                 September 30,                September 30,                   September 30,    
---------------------------------------------------------------------------------------------------------------------
                                    1998         1997             1998            1997            1998           1997
                                    ----         ----             ----            ----            ----           ----
<S>                             <C>          <C>            <C>             <C>             <C>            <C>
Revenues and sales              $554,738     $473,057       $1,575,308      $1,359,339      $2,054,513     $1,774,053
Operating income                $177,246     $134,920       $  452,162      $  342,229      $  570,386     $  424,967
---------------------------------------------------------------------------------------------------------------------
</TABLE>

    Wireless revenues and sales increased $81.7 million or 17 percent, $216.0
million or 16 percent and $280.5 million or 16 percent for the three, nine and
twelve month periods ended September 30, 1998, respectively. Operating income
increased $42.3 million or 31 percent, $109.9 million or 32 percent and $145.4
million or 34 percent for the three, nine and twelve month periods ended
September 30, 1998, respectively. During the past twelve month period,
subscriber growth remained strong as the number of wireless customers grew to
3,862,871 from 3,366,757, an increase of 15 percent. During the first nine
months of 1998, the Company placed more than 1,029,000 gross units in service,
compared to nearly 985,000 gross units for the same period of 1997. Overall, the
Company's market penetration rate (number of customers as a percent of the total
population in ALLTEL's service areas) increased to 11.6 percent as of 
September 30, 1998. Customer churn (average monthly rate of customer 
disconnects) increased slightly and was 2.2 percent, 2.1 percent and 2.1 percent
for the three, nine and twelve months ended September 30, 1998, respectively, 
compared to 2.0 percent for each of the same three periods in 1997.

    Wireless revenues and sales increased in all periods primarily due to the
growth in the Company's customer base. Increases in local airtime, roaming and
long-distance revenues, reflecting higher volumes of network usage, also
contributed to the growth in revenues and sales in all periods. The increased
usage of the Company's network facilities boosted the average revenue per
customer per month for the third quarter of 1998 to $49 compared to $48 for the
third quarter of 1997. Average revenue per customer per month was $48 and $47
for the nine and twelve months ended September 30, 1998, respectively. On a
comparative basis, average revenue per customer per month was $48 for both the
nine and twelve month periods ended September 30, 1997. Growth in average
revenue per customer per month for all periods of 1998 was affected by the
industry-wide trends of decreased roaming revenue rates and continued
penetration into lower-usage market segments. The Company expects these trends
to continue. In addition, the growth rate of new customers is expected to
decline as the Company's wireless customer base grows. Accordingly, future
revenue growth will be dependent upon ALLTEL's success in maintaining customer
growth in existing markets, increasing customer usage of the Company's network
and providing customers with enhanced products and services.

    The growth in operating income for all periods of 1998 primarily reflects
the increases in revenues and sales noted above. Improved margins realized on
the sale of wireless equipment, a reduction in branding and other advertising
costs and a decline in losses sustained from fraud also contributed to the
growth in operating income in all periods. Partially offsetting these increases
in operating income in all periods were increases in sales commissions, customer
service-related expenses, and general administrative expenses consistent with
the overall growth in revenues and sales. In addition, depreciation and
amortization expense increased in all periods primarily due to growth in
wireless plant in service. The reduction in branding and other advertising costs
reflects savings realized as a result of the merger, as the Company ceased
promotion of the 360 brand name during the third quarter. The decline in
losses sustained from fraud reflects the Company's continuing efforts to control
unauthorized usage of its customers' wireless telephone numbers that results in
unbillable fraudulent roaming activity.

    Cost to acquire a new wireless customer was $254, $286 and $282 for the
three, nine and twelve month periods ended September 30, 1998, respectively,
compared to $281, $280 and $282 for the same periods of 1997. The significant
decrease in the cost to acquire a new customer in the three month period was

                                       8
<PAGE>

primarily due to the reduction in branding and advertising costs noted above, as
well as distributing costs over a larger number of customers acquired when
compared to the corresponding prior year period. The increase in the cost to
acquire a new customer in the nine month period primarily resulted from
increased commissions paid to national dealers, reflecting increased sales from
external distribution channels. Although the Company intends to continue to
utilize its large dealer network, the Company has expanded its internal sales
distribution channels to include its own retail stores and kiosks located in
shopping malls and other retail outlets. Incremental sales costs at a Company
retail store or kiosk are significantly lower than commissions paid to national
dealers. Accordingly, the Company intends to manage the costs of acquiring new
customers by continuing to expand and enhance its internal distribution
channels.

<TABLE>
Communications-Wireline Operations 
---------------------------------------------------------------------------------------------------------------------
                                          Three Months Ended         Nine Months Ended           Twelve Months Ended
(Dollars in thousands)                       September 30,             September 30,                September 30,    
---------------------------------------------------------------------------------------------------------------------
                                             1998        1997          1998         1997            1998         1997
                                             ----        ----          ----         ----            ----         ----
<S>                                      <C>         <C>           <C>          <C>           <C>          <C>
Local service                            $148,624    $135,721      $432,865     $396,109      $  572,610   $  524,925
Network access and long-distance          160,160     154,667       473,750      450,785         632,325      592,392
Miscellaneous                              22,775      22,083        69,735       65,881          92,608       89,127
                                         --------    --------      --------     --------      ----------   ----------
    Total revenues and sales             $331,559    $312,471      $976,350     $912,775      $1,297,543   $1,206,444
Operating income                         $115,483    $113,278      $347,841     $329,527      $  468,299   $  430,822
---------------------------------------------------------------------------------------------------------------------
</TABLE>

    Wireline revenues and sales increased $19.1 million or 6 percent, $63.6
million or 7 percent and $91.1 million or 8 percent for the three, nine and
twelve months ended September 30, 1998, respectively. Wireline operating income
increased $2.2 million or 2 percent, $18.3 million or 6 percent and $37.5
million or 9 percent for the three, nine and twelve month periods ended
September 30, 1998, respectively.

    Local service revenues increased $12.9 million or 10 percent, $36.8 million
or 9 percent and $47.7 million or 9 percent in the three, nine and twelve month
periods ended September 30, 1998, respectively. Customer access lines increased
more than 6 percent during the past twelve month period, including the sales of
residential and second access lines. Growth in custom calling and other enhanced
services revenues also contributed to the increases in local service revenues in
all periods of 1998.

    Network access and long-distance revenues increased $5.5 million or 4
percent, $23.0 million or 5 percent and $39.9 million or 7 percent for the
three, nine and twelve month periods ended September 30, 1998, respectively. The
increases in all periods primarily reflect higher volumes of access usage and
growth in customer access lines. These increases were partially offset by a
reduction in intrastate toll revenues.

    Miscellaneous revenues increased $0.7 million or 3 percent, $3.8 million or
6 percent and $3.5 million or 4 percent for the three, nine and twelve month
periods ended September 30, 1998, respectively. The increases in all periods
reflect increases in directory advertising and equipment rental revenues.

    As more fully discussed in note 8 to the unaudited interim consolidated
financial statements, the Georgia Public Service Commission ("Georgia PSC")
issued an order requiring that ALLTEL's wireline subsidiaries which operate
within its jurisdiction reduce their annual network access charges by $24
million, prospectively, effective July 1, 1996. The Company appealed the Georgia
PSC order. In November 1996, the Superior Court of Fulton County, Georgia, (the
"Superior Court") rendered its decision and reversed the Georgia PSC order,
finding, among other matters, that the Georgia PSC had exceeded its authority by
ordering the rate reductions. The Superior Court did not rule on a number of
other assertions made by the Company as grounds for reversal of the Georgia PSC
order. The Georgia PSC appealed the Superior Court's decision, and in July 1997,
the Georgia Court of Appeals (the "Appellate Court") reversed the Superior
Court's decision. The Company appealed the Appellate Court's decision to the
Georgia Supreme Court. On October 5, 1998, the Georgia Supreme Court, in a 4-3
decision, upheld the Appellate Court's ruling that the Georgia PSC had the

                                       9
<PAGE>

authority to order the rate reductions. The case will now return to the Superior
Court for a hearing on the merits and provide ALLTEL the opportunity to
challenge the Georgia PSC's order by asserting a number of additional federal
and state constitutional and other legal grounds. Since the Company believes
that it will prevail in this case, the Company has not implemented any revenue
reductions or established any reserves for refund related to this matter at this
time.

    Operating income for the three month period reflects the increases in
wireline operating revenues and sales, partially offset by increases in data
processing charges, network-related expenses, depreciation and amortization, and
general administrative expenses. Depreciation and amortization expense increased
in the three month period primarily due to growth in wireline plant in service.
The growth in wireline operating income for the nine and twelve month periods of
1998, primarily reflects the increases in revenues and sales noted above.
 
    ALLTEL's wireline subsidiaries follow the accounting for regulated
enterprises prescribed by Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" ("SFAS 71"). If
ALLTEL's wireline subsidiaries no longer qualified for the provisions of SFAS
71, the accounting impact to the Company would be an extraordinary non-cash
charge to operations of an amount that could be material. Criteria that would
give rise to the discontinuance of SFAS 71 include (1) increasing competition
that restricts the wireline subsidiaries' ability to establish prices to recover
specific costs and (2) significant change in the manner in which rates are set
by regulators from cost-based regulation to another form of regulation. The
Company periodically reviews these criteria to ensure the continuing application
of SFAS 71 is appropriate. As a result of the passage of the Telecommunications
Act of 1996 (the "96 Act")and state telecommunications reform legislation,
ALLTEL's wireline subsidiaries could begin to experience increased competition
in their local service areas. To date, competition has not had a significant
adverse effect on the operations of ALLTEL's wireline subsidiaries.

    In August 1996, the FCC issued regulations implementing the local
competition provisions of the 96 Act. These regulations established pricing
rules for state regulatory commissions to follow with respect to entry by
competing carriers into the local, intrastate markets of incumbent local
exchange carriers ("ILECs") and addressed interconnection, unbundled network
elements and resale rates. The FCC's authority to adopt such pricing rules,
including permitting new entrants to "pick and choose" among the terms and
conditions of approved interconnection agreements, was challenged in federal
court by various ILECs and state regulatory commissions. On July 18, 1997, the
U.S. Eighth Circuit Court of Appeals (the "Eighth Circuit Court") issued its
decision and vacated the FCC's pricing rules including the "pick and choose"
provisions, finding, among other matters, that the FCC had exceeded its
jurisdiction in establishing pricing rules for intrastate communications
services. In responding to petitions for rehearing of its earlier decision, the
Eighth Circuit Court ruled on October 14, 1997, that ILECs are not required by
the 96 Act to recombine network elements purchased by requesting carriers on an
unbundled basis. The FCC asked the U.S. Supreme Court ("Supreme Court") to
review two interconnection decisions of the Eighth Circuit Court, and the
Supreme Court agreed to review these decisions. Oral arguments were held before
the Supreme Court on October 13, 1998.

    In May 1997, the FCC issued regulations relating to access charge reform and
universal service. The access charge reform regulations are applicable mainly to
price cap regulated local exchange companies. Since ALLTEL's wireline
subsidiaries are not price cap regulated companies, the access charge
regulations, with few exceptions, are not currently applicable to them. However,
the FCC instituted a rulemaking in June 1998 in which it proposed to amend the
access charge rules for rate-of-return LECs in a manner similar to that earlier
adopted for price cap LECs. The FCC's proposal involves the modification of the
transport rate structure, the reallocation of costs in the transport
interconnection charge, and amendments to reflect changes necessary to implement
universal service. The issue of additional pricing flexibility for
rate-of-return LECs is expected to be addressed in a subsequent phase of the
proceeding. Comments and reply comments on the FCC's proposal were filed August
17th and September 17th, respectively. Once the access charge rules for
rate-of-return LECs are finalized, ALLTEL will assess the impact, if any, the
new rules will have on its wireline operations. Based upon ALLTEL's review of

                                       10
<PAGE>

the FCC's regulations concerning the universal service subsidy, it is unlikely
that material changes in the universal service funding for ALLTEL's wireline
subsidiaries will occur prior to 2001. In 2001, the universal service subsidy is
scheduled to change from being based on actual costs to being based on a proxy
model. Since the FCC has not yet determined the content of any such proxy model,
the impact, if any, of this change in the universal service funding for ALLTEL's
wireline subsidiaries cannot be determined at this time. The impact of the FCC's
universal service order on ALLTEL's other telecommunications operations
continues to be evaluated. Appeals of certain aspects of the universal service
order are before the U.S. Fifth Circuit Court of Appeals.

    On October 5, 1998, the FCC began a proceeding to consider a represcription
of the authorized rate of return for the interstate access services of
approximately 1,300 ILECs, including ALLTEL's wireline subsidiaries. The
currently prescribed rate of return is 11.25 percent. The purpose of the FCC's
proceeding is to determine whether the prescribed rate of return corresponds to
current market conditions and whether the rate should be changed. A decision by
the FCC related to this matter is not expected until 1999.

    As resolution of the regulatory matters discussed above that are currently
under FCC and/or judicial review is uncertain and regulations to implement other
provisions of the 96 Act have yet to be issued, ALLTEL cannot predict at this
time the specific effects that the 96 Act and future competition will have on
its wireline operations.

<TABLE>
Communications-Emerging Businesses
-------------------------------------------------------------------------------------------------------------------
                                      Three Months Ended          Nine Months Ended            Twelve Months Ended
(Dollars in thousands)                   September 30,               September 30,                 September 30,   
-------------------------------------------------------------------------------------------------------------------
                                        1998         1997           1998         1997            1998          1997
                                        ----         ----           ----         ----            ----          ----
<S>                                 <C>           <C>           <C>          <C>             <C>           <C>
Revenues and sales                  $ 28,168      $13,544       $ 68,803     $ 33,410        $ 87,395      $ 39,193
Operating loss                      $(12,712)     $(6,478)      $(29,881)    $(17,981)       $(34,049)     $(22,587)
-------------------------------------------------------------------------------------------------------------------
</TABLE>


    Emerging businesses consist of the Company's long-distance, competitive
local exchange carrier ("CLEC"), Internet access, network management and PCS
operations. Long-distance and Internet access services are currently marketed to
residential and business customers in the majority of states in which ALLTEL
provides communications services. The Company began providing PCS service in
Jacksonville, Florida in March 1998, and ALLTEL expects to begin offering PCS
service in other markets in the near future. ALLTEL has begun to offer local
access and network management services in select markets outside its traditional
service areas to business customers.

    Emerging businesses' revenues and sales increased $14.6 million or 108
percent, $35.4 million or 106 percent and $48.2 million or 123 percent for the
three, nine and twelve month periods ended September 30, 1998. The growth in
revenues and sales in all periods primarily reflects growth in the long-distance
operations. Due to the start-up nature of these operations, operating losses
sustained by emerging businesses increased $6.2 million or 96 percent, $11.9
million or 66 percent and $11.5 million or 51 percent for the three, nine and
twelve month periods of 1998, respectively.

<TABLE>
Information Services
-------------------------------------------------------------------------------------------------------------------
                                      Three Months Ended          Nine Months Ended           Twelve Months Ended
(Dollars in thousands)                   September 30,               September 30,                September 30,        
-------------------------------------------------------------------------------------------------------------------
                                         1998        1997           1998         1997             1998         1997
                                         ----        ----           ----         ----             ----         ----
<S>                                  <C>         <C>            <C>          <C>            <C>            <C>
Revenues and sales                   $292,169    $244,256       $856,221     $710,003       $1,120,369     $964,663
Operating income                     $ 40,417    $ 34,944       $116,609     $104,202       $  157,335     $147,420
-------------------------------------------------------------------------------------------------------------------
</TABLE>

    Information services' revenues and sales increased $47.9 million or 20
percent, $146.2 million or 21 percent and $155.7 million or 16 percent for the
three, nine and twelve month periods ended September 30, 1998, respectively.

                                       11
<PAGE>

Growth in revenues and sales for the twelve month period was impacted by the
sale of the healthcare operations completed in January 1997. Excluding the sold
healthcare operations, revenues and sales would have increased $189.1 million or
20 percent in the twelve month period ended September 30, 1998. Revenues and
sales increased in all periods of 1998, primarily due to growth in the financial
services, international and telecommunications outsourcing operations,
reflecting volume growth in existing data processing contracts and the addition
of new outsourcing agreements. The increases in revenues and sales in both
periods were partially offset by lost operations from contract terminations due
primarily to the merger and consolidation activity in the domestic financial
services market. The domestic financial services industry continues to
experience consolidation due to mergers.

    Operating income increased $5.5 million or 16 percent, $12.4 million or 12
percent and $9.9 million or 7 percent for the three, nine and twelve month
periods ended September 30, 1998, respectively. Excluding the impact of the sold
healthcare operations, operating income would have increased $15.2 million or 11
percent for the twelve months ended September 30, 1998. The increases in
operating income for all periods of 1998 reflect the growth in revenues and 
sales noted above, additional fees collected from the early termination of
contracts and improved profit margins realized from the international financial
services business. The increases in operating income in all periods attributable
to revenue growth, termination fees and increased profitability of the 
international operations were partially offset by lower margins realized by the
telecommunications operations. The decrease in telecommunications operating 
margins reflects increases in depreciation and amortization expense and
increases in software maintenance and other operating costs. Depreciation and 
amortization expense increased in both periods primarily due to the acquisition
of additional data processing equipment and due to an increase in amortization 
of internally developed software.

<TABLE>
Other Operations 
--------------------------------------------------------------------------------------------------------------------
                                      Three Months Ended          Nine Months Ended            Twelve Months Ended
(Dollars in thousands)                   September 30,              September 30,                  September 30,    
--------------------------------------------------------------------------------------------------------------------
                                         1998        1997           1998         1997             1998          1997
                                         ----        ----           ----         ----             ----          ----
<S>                                  <C>         <C>            <C>          <C>              <C>           <C>
Revenues and sales                   $178,593    $109,517       $425,155     $371,747         $532,330      $502,463
Operating income                     $  6,975    $  5,249       $ 19,242     $ 18,187         $ 22,994      $ 25,596
--------------------------------------------------------------------------------------------------------------------
</TABLE>

    Other operations consist of the Company's product distribution and directory
publishing operations. Revenues and sales increased $69.1 million or 63 percent,
$53.4 million or 14 percent and $29.9 million or 6 percent for the three, nine
and twelve month periods ended September 30, 1998, respectively. Operating
income increased $1.7 million or 33 percent, increased $1.1 million or 6 percent
and decreased $2.6 million or 10 percent for the three, nine and twelve month
periods ended September 30, 1998, respectively. Revenues and sales and operating
income for the nine and twelve month periods of 1997 include the operating
results of HWC, which was sold in May 1997, as previously discussed. Excluding
the impact of the HWC operations in each period, revenues and sales would have
increased $96.3 million or 29 percent and $105.9 million or 25 percent, while
operating income would have increased $2.5 million or 15 percent and $0.7
million or 3 percent for the nine and twelve month periods ended September 30,
1998, respectively.

    Revenues and sales increased in all periods of 1998 primarily due to growth
in sales of telecommunications and data products to both affiliated and
non-affiliated customers, including increased retail sales of these products at
the Company's counter showrooms. Sales to affiliates increased $60.5 million,
$76.1 million and $80.8 million in the three, nine and twelve month periods
ended September 30, 1998. The increases in affiliate sales in all periods was
primarily due to additional purchases made by the Company's wireless
subsidiaries, reflecting the merger with 360 and the expansion of ALLTEL
Supply's product lines to include wireless equipment. The increases in other
operations' revenues and sales in the nine and twelve month periods of 1998
attributable to ALLTEL Supply's operations were partially offset by decreases in
directory publishing revenues, primarily reflecting the loss of one large
directory publishing contract.

    Operating income increased in the three and nine month periods of 1998
primarily due to the increases in revenues and sales noted above. Growth in
other operations' operating income for all periods of 1998 was impacted by lower
gross profit margins realized by ALLTEL Supply, reflecting a reduction in

                                       12
<PAGE>

margins earned on affiliated sales and increased competition from other
distributors and from direct sales by manufacturers. Excluding the impact of the
HWC operations, operating income would have increased in the twelve month period
of 1998 primarily due to the increase in ALLTEL Supply's sales, partially offset
by increased selling and marketing expenses and the impact of the lower gross
profit margins discussed above. The increase in selling and marketing expenses
reflects additional costs incurred by the Company to open several new counter
showroom facilities during the last six months of 1997.

<TABLE>
Corporate Expenses
-----------------------------------------------------------------------------------------------------------------------
                                          Three Months Ended          Nine Months Ended            Twelve Months Ended
(Dollars in thousands)                       September 30,               September 30,                September 30,        
-----------------------------------------------------------------------------------------------------------------------
                                             1998        1997          1998         1997             1998          1997
                                             ----        ----          ----         ----             ----          ----
<S>                                      <C>           <C>         <C>           <C>             <C>            <C>
Corporate operating expenses             $  6,765      $5,686      $ 12,731      $11,106         $ 19,041       $15,378
Merger and integration expenses
  and provision to reduce carrying
  value of certain assets                 307,000           -       307,000       16,874          307,000        16,874
                                         --------      ------      --------      -------         --------       -------
    Total corporate expenses             $313,765      $5,686      $319,731      $27,980         $326,041       $32,252
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
    As indicated in the above table, corporate expenses for all periods of 1998
include the $307 million of merger and integration expenses and one-time charges
related to changes in GTE's customer care and billing contract, as previously
discussed. Corporate expenses for the nine and twelve month periods ended
September 30, 1997 include the write-down of $16.9 million to reflect the fair
value less cost to sell the HWC operations recorded in the second quarter of
1997. Excluding the impact of the merger and integration expenses and asset
write-downs in each period, corporate expenses would have increased $1.1 million
or 19 percent, $1.7 million or 15 percent and $3.7 million or 24 percent for the
three, nine and twelve month periods ended September 30, 1998. Net of the merger
and integration expenses and asset write-downs, the increases in corporate
expenses in all periods of 1998 reflect increases in corporate advertising and
employee benefit costs.

OTHER FINANCIAL STATEMENT ITEMS

Other Income, Net
-----------------

    Other income, net increased $12.3 million or 247 percent, $21.1 million or
303 percent and $27.3 million or 300 percent for the three, nine and twelve
month periods ended September 30, 1998, respectively. The increases in all
periods primarily reflect growth in equity income recognized by the Company on
its investments in wireless partnerships, partially offset by an increase in the
minority interest in earnings of the Company's wireless operations by others.
Increases in capitalized interest costs also contributed to the growth in other
income, net for the nine and twelve month periods of 1998. Capitalized interest
costs increased in the nine and twelve month periods of 1998 primarily due to
the acquisition of the PCS licenses, as interest related to the license cost is
capitalized for those markets not yet operational.

Interest Expense
----------------

    Interest expense increased $0.2 million or less than 1 percent, increased
$5.0 million or 3 percent and increased $12.7 million or 5 percent for the
three, nine and twelve month periods ended September 30, 1998, respectively. The
increases in interest expense in the nine and twelve month periods reflect
increases in both the average amount of borrowings outstanding and weighted
average borrowing rates applicable to the Company's revolving credit agreement.
In addition, the issuance of $100 million of 6.65 percent notes in January 1998,
also contributed to the increase in interest expense in the nine and twelve
month periods ended September 30, 1998.

                                       13
<PAGE>

Income Taxes
------------

    Income tax expense decreased $25.1 million or 25 percent, increased $24.7
million or 8 percent and increased $40.8 million or 11 percent for the three,
nine and twelve month periods ended September 30, 1998, respectively. The
changes in income tax expense in all periods primarily reflect the tax-related
impact of the merger and integration expenses and the other non-recurring and
unusual items previously discussed. Excluding the impact on tax expense of these
items in each period, income tax expense would have increased $27.5 million or
32 percent, $63.7 million or 28 percent and $79.8 million or 27 percent in the
three, nine and twelve month periods ended September 30, 1998, respectively,
consistent with the overall growth in the Company's earnings from continuing
operations before non-recurring and unusual items.

Average Common Shares Outstanding
---------------------------------

    The average number of common shares outstanding decreased 1 percent in each
of the three, nine and twelve month periods ended September 30, 1998. The
decreases in all periods were primarily due to the Company's repurchase of its
common stock on the open market in 1997, partially offset by additional shares
issued in connection with the acquisition of a wireline property in the State of
Georgia and by additional shares issued under the Company's stock option plans.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

    ALLTEL's total capital structure was $6.6 billion at September 30, 1998,
reflecting 45 percent common and preferred equity and 55 percent debt. This
compares to a capital structure of $6.5 billion at December 31, 1997, reflecting
42 percent common and preferred equity and 58 percent debt. The Company has
adequate internal and external resources available to finance its ongoing
operating requirements, including capital expenditures, business development and
the payment of dividends.

    Cash provided from operations continues to be ALLTEL's primary source of
liquidity. Cash provided from operations was $835.6 million and $1,238.6 million
for the nine and twelve month periods ended September 30, 1998, respectively,
compared to $778.3 million and $1,136.7 million for the same periods in 1997.
The increases in the nine and twelve month periods reflect growth in the
earnings of the Company, changes in working capital requirements and the timing
of additional income tax payments associated with gains realized from the sale
of a portion of ALLTEL's investment in MCI WorldCom common stock.

    Capital expenditures for the nine and twelve month periods of 1998 were
$559.5 million and $863.0 million, respectively, compared to $523.4 million and
$764.3 million for the same periods in 1997. During the past two-year period,
the Company funded the majority of its capital expenditures through internally
generated funds. Capital expenditures were incurred to continue to modernize and
upgrade ALLTEL's telecommunications network and to expand into existing
information services markets. In addition, capital expenditures were incurred to
construct additional network facilities to provide PCS and to offer other
communications services, including long-distance, Internet and local competitive
access services. Capital expenditures are forecast at approximately $850 million
for 1998, which are expected to be funded primarily from internally generated
funds.

    Cash flows from investing activities for the nine and twelve month periods
of 1998 include cash outlays for the acquisition of property of $55.1 million
and $64.1 million, respectively. Cash outlays for the nine months ended
September 30, 1998, include $34.6 million related to the acquisition of two
wireless properties in Georgia and $20.5 million related to the acquisition of
additional ownership interests in wireless properties in North Carolina and
Texas. In addition to these acquisitions, cash outlays for the twelve months
ended September 30, 1998 include the purchase of a wireline property in Georgia.
Cash flows from investing activities for the nine and twelve month periods of
1997 include a cash outlay of $146.5 million related to the acquisition of PCS
licensing rights. The Company acquired PCS licensing rights for 73 markets
                                        14
<PAGE>

in 12 states. Cash flows from investing activities for the nine month period of
1997 also include cash outlays of $103.8 million for the acquisition of two 
wireless properties in Alabama and the purchase of additional ownership
interests in 16 wireless properties. In addition to these acquisitions, cash 
flows from investing activities for the twelve month period of 1997 also include
a cash outlay of $243.0 million related to the acquisition of Independent 
Cellular Network, Inc. ("ICN"). ICN owned and operated cellular systems serving
more than 140,000 customers in Ohio, Kentucky, Pennsylvania and West Virginia.

    Cash flows from investing activities for both the nine and twelve month
periods ended September 30, 1998 include proceeds of $290.9 million primarily
from the sale of a portion of the Company's investment in MCI WorldCom common
stock. Cash flows from investing activities for the nine and twelve month
periods ended September 30, 1997 also include proceeds of $185.9 million from
the sale of MCI WorldCom common stock. In addition, cash flows from investing
activities for both the nine and twelve month periods of 1997 include proceeds
of $202.3 million from the sale of property, principally consisting of three
non-strategic operations. In September 1997, ALLTEL received cash proceeds of
$48.7 million from the sale of an investment in a software company. In May 1997,
the Company completed the sale of HWC for approximately $45.0 million in cash;
and in January 1997, ALLTEL received cash proceeds of $104.9 million in
connection with the sale of its healthcare operations. The proceeds from these
asset sales were used primarily to reduce borrowings under the Company's
revolving credit agreement.

    Included in cash flows from financing activities are dividend payments and
the repurchase by the Company of its common stock. Common and preferred dividend
payments for the nine and twelve month periods ended September 30, 1998 were
$161.0 million and $212.3 million, respectively, compared to $154.9 million and
$204.4 million for the same periods in 1997. The increases in dividend payments
in both periods reflect the October 1997 action of the Board of Directors to
increase the quarterly common stock dividend. On October 22, 1998, the Board of
Directors approved a 5.2 percent increase in the quarterly common stock dividend
rate from $.29 to $.305 per share. This action raised the annualized dividend to
$1.22 per share and marked the 38th consecutive year in which ALLTEL has
increased its common stock dividend. Under a share repurchase program initiated
in 1996 and expanded in 1997, the Company repurchased approximately 2.7 million
of its common shares at a total cost of $95.2 million during the twelve month
period ended September 30, 1998. ALLTEL did not repurchase any of its common
stock during the first nine months of 1998. During the twelve month period ended
September 30, 1997, the Company repurchased approximately 6.4 million of its
common shares at a total cost of $195.2 million. Of this total, $116.8 million
was spent during the first nine months of 1997.

    The Company has a $1 billion line of credit under a revolving credit
agreement. Borrowings outstanding under this agreement at September 30, 1998
were $633.6 million, compared to $847.9 million that were outstanding at
December 31, 1997. Borrowings outstanding under this agreement at September 30,
1997 were $750.3 million. The weighted average interest rate on borrowings
outstanding under this agreement at September 30, 1998, was 5.6 percent. As
previously discussed, proceeds from the sales of MCI WorldCom common stock and
the HWC and healthcare operations were used primarily to reduce the amount of
borrowings outstanding under the revolving credit agreement. The net reduction
in revolving credit borrowings for the nine and twelve months ended 
September 30, 1998, represents a portion of the long-term debt retired in those
periods. Scheduled long-term debt retirements, net of the revolving credit 
agreement activity, amounted to $29.0 million and $46.7 million for the nine and
twelve month periods ended September 30, 1998, respectively. As previously 
indicated, in January 1998, the Company issued $100 million of 6.65 percent 
notes due 2008. This debt issuance represents substantially all of the long-term
debt issued in the nine and twelve month periods ended September 30, 1998. Long-
term debt issued in the nine month period of 1997 primarily consists of the 
issuance of $200 million of 7.6 percent notes due 2009. Proceeds from both the 
$100 million and $200 million debt issues were used to reduce borrowings 
outstanding under the revolving credit agreement. Long-term debt issued in the 
twelve month period of 1997 also includes the issuance of subordinated 
promissory notes and other debt issued in connection with the ICN acquisition.
                                       15
<PAGE>

Year 2000 Compliance
--------------------

    The Year 2000 issue affects the Company's internal computer systems and
infrastructure, as well as certain software, systems and services that the
Company provides to its customers. The Company began its Year 2000 compliance
efforts several years ago and plans to achieve Year 2000 compliance by June 30,
1999. The Company's Year 2000 plan consists of eight phases: (i) Awareness; (ii)
Inventory; (iii) Third-Party Strategies; (iv) Risk Assessment; (v) Planning;
(vi) Remediation; (vii) Testing; and (viii) Implementation.

    For the Company's internal computer systems and software, systems and
services that the Company provides to its customers and for which the Company is
responsible, the Awareness and Inventory phases have been completed. The Company
has commenced work on and plans to complete the Third-Party Strategies phase by
November 30, 1998, the Planning phase by December 15, 1998, the Risk Assessment
phase by January 15, 1999, and the Remediation, Testing and Implementation
phases by June 30, 1999.

    For the Company's infrastructure, including facilities and embedded
technologies, the Company has completed the Awareness phase and has commenced
work on and plans to complete the Third-Party Strategies, Planning and Risk
Assessment phases by November 30, 1998, and the Remediation, Testing and
Implementation phases by June 30, 1999.

    As part of its Year 2000 plan, the Company has implemented a third party
management process and is continuing to contact its vendors, suppliers and other
third parties upon which the Company depends regarding their plans for making
their products, services and systems Year 2000 compliant. The Company's ability
to meet its target completion dates is dependent upon the timely provision of
upgrades or other solutions from its vendors and suppliers. Some third party
upgrades or other solutions may not be available until early 1999, which may
delay the Company's completion of its Remediation, Testing, and Implementation
phases. The Company is also dependant upon other third parties who provide
essential services (such as utilities, interexchange carriers, etc.) to make
their critical systems Year 2000 compliant in a timely manner. Generally, the
Company does not have the ability to test those systems for Year 2000 compliance
and, instead, must rely on the third parties' representations.

    Contingency planning to maintain and restore service in the event of a
natural disaster, power failure, or software related interruption has long been
part of the Company's standard business practices. The Company is working to
leverage this experience in the development and implementation of its Year 2000
contingency plans, which assess the potential for business disruption in various
scenarios, including a possible, but unlikely, "worst case" scenario involving
the interruption of telecommunications and data processing services and/or
interruption of customer billing, operating and other information systems, and
provide for key-operation back-up and alternative solutions for recovery. The
Company expects to complete contingency planning for its critical systems by
December 31, 1998.

    The Company estimates the total cost of its Year 2000 efforts to be
approximately $80 million. As of September 30, 1998, the Company has incurred
approximately $40 million of that amount. Of the total Year 2000 cost to be
incurred, approximately one-half of the cost will be capitalized and
subsequently amortized over a 3 to 5 year period, including costs relating to
the remediation of the Company's software products. Some Year 2000 costs are not
incremental, but rather represent the redeployment of existing resources. The
estimated costs associated with making customers' systems Year 2000 compliant,
in those situations where the Company is obligated to do so, has been treated as
a contract cost and is not included in the Company's estimated Year 2000 costs.
The Company continues to evaluate the estimated costs associated with its Year
2000 efforts based on actual experience. While the efforts involve additional
costs, the Company believes, based on available information, that these costs
will not have a material adverse effect on its results of operations.
                                       16
<PAGE>

    The above information is based on the Company's current best estimates using
numerous assumptions of future events. Given the complexity of the Year 2000
issues and possible unidentified risks, actual results may vary from those
anticipated and discussed above.

Other Financial Information
---------------------------

    During the first nine months of 1998, there were no material changes in the
market risks discussed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.

Recently Issued Accounting Pronouncements
-----------------------------------------

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and for Hedging Activities", ("SFAS 133"). This Statement
establishes accounting and reporting standards requiring that every derivative
instrument be recorded on the balance sheet as either an asset or liability
measured at fair value. SFAS 133 requires that changes in a derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS 133
is effective for fiscal years beginning after June 15, 1999, and cannot be
applied retroactively. ALLTEL has not yet quantified the impacts of adopting
SFAS 133 on its financial statements; however, SFAS 133 could increase the
volatility of reported earnings and other comprehensive income once adopted.

                                         17

<PAGE>


                               ALLTEL CORPORATION

                                    FORM 10-Q

                                INDEX OF EXHIBITS


Form 10-Q                                                             Sequential
Exhibit No.                        Description                         Page No.
-----------                        -----------                        ----------

  (19)                 Interim Report to Stockholders and               19 - 29
                       Notes to Unaudited Consolidated Financial
                       Statements for the periods ended 
                       September 30, 1998 and 1997

  (27)                 Financial Data Schedule                             30
                       for the nine months ended September 30, 1998


                                         18