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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      FORM 10-K
 (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-51466
      CONSOLIDATED COMMUNICATIONS
    HOLDINGS, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or Other Jurisdiction
    of
    Incorporation or Organization)

02-0636095(I.R.S. Employer
    Identification No.)   121 South
    17th Street
    Mattoon, Illinois
    61938-3987 (Address
    of principal executive offices)
  Registrants telephone number, including area code:
 (217) 235-3311
 Securities registered pursuant to Section 12(b) of the
    Act:
  (Title of Each Class)

(Name of Each Exchange on Which Registered)Common Stock, $0.01 par value per share

NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K form 10-K. o
    Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    Company o   Rule 12b-2 o þ
    Part of Form 10-K

Document Incorporated by ReferencePart II, Item 5, Part III, Items 10, 11, 12, 13, and 14

Portion of the Registrants proxy statement to be filed in
    connection with the Annual Meeting of the Stockholders of the
    Registrant to be held on May 6, 2008.




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TABLE OF
    CONTENTS
   
 Acronyms Used in this Annual Report on
    Form 10-K


1Forward Looking Statements


3Market and Industry Data


3PART 1Item 1.


Business


4Item 1A.


Risk Factors


26Item 1B.


Unresolved Staff Comments


39Item 2.


Properties


39Item 3.


Legal Proceedings


40Item 4.


Submission of Matters to a Vote of Security
    Holders


40PART IIItem 5.


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


40Item 6.


Selected Financial Data


42Item 7.


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


45Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


63Item 8.


Financial Statements and Supplementary Data


65Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


102Item 9A.


Controls and Procedures


102Item 9B.


Other Information


102PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


102Item 11.


Executive Compensation


102Item 12.


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


102Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


102Item 14.


Principal Accountant Fees and Services


103PART IVItem 15.


Exhibits and Financial Statement Schedules


103Schedule II  Valuation
    Reserves


104SIGNATURES


117INDEX TO EXHIBITS


118EX-10.2: FORM OF COLLATERAL AGREEMENTEX-10.3: FORM OF GUARANTY AGREEMENTEX-10.12: FORM OF EMPLOYMENT SECURITY AGREEMENTEX-21: LIST OF SUBSIDIARIESEX-23.1: CONSENT OF INDEPENDENT REGISTERED ACCOUNTING FIRMEX-23.2: CONSENT OF INDEPENDENT REGISTERED ACCOUNTING FIRMEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONS




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Acronyms
    Used in this Annual Report on
    Form 10-K  APB

Accounting Principals BoardARPU

Average revenue per userCOSO

Committee of Sponsoring Organization of the Treadway CommissionCLEC

Competitive Local Exchange CarrierDDTL

Delayed draw term loan facilityDGCL

Delaware general corporation lawDSL

Digital subscriber lineDSLAMs

Digital subscriber line access multiplexersEBITDA

Earnings before interest, taxes, depreciation and amortizationETCs

Eligible telecommunications carriersETFL

East Texas Fiber Line, Inc.FASB

Financial Accounting Standards BoardFCC

Federal Communications CommissionFIN

Financial interpretation numberFTC

Federal Trade CommissionGAAP

Generally Accepted Accounting PrinciplesICC

Illinois Commerce CommissionICTC

Illinois Consolidated Telephone CompanyILEC

Independent local exchange carrierIP

Internet protocolIPO

Initial public offeringIPTV

Internet protocol digital televisionLIBOR

London interbank offer rateMD&A

Management discussion & analysisMOU

Minutes of UseMPLS

Multi-Protocol Label SwitchingNECA

National Exchange Carrier AssociationNOC

Network operations centerNOL

Net operating lossPAPUC

Pennsylvania Public Utility CommissionPAUSF

Pennsylvania Universal Service FundPUCT

Public Utility Commission of TexasPURA

Public utilities regulatory actRBOC

Regional bell operating companyRLEC

Rural local exchange carrierSAB

Staff accounting bulletinSFAS

Statement of financial accounting standardsSFAS 71

SFAS No. 71, Accounting for the Effects of
    Certain Types of RegulationSFAS 109

SFAS No. 109, Accounting for Income TaxesSFAS 123

SFAS No. 123, Accounting for Stock Based
    CompensationSFAS 123R

SFAS No. 123 revised, Share Based PaymentSFAS 131

SFAS No. 131, Disclosure about Segments of an
    Enterprise and Regulated InformationSFAS 133

SFAS No. 133, Accounting for Derivative
    Instruments and Hedging ActivitySFAS 141

SFAS No. 141, Business CombinationsSFAS 142

SFAS No. 142, Goodwill and Other Intangible
    AssetsSFAS 144

SFAS No. 144, Accounting for the Impairment or
    Disposal of Long-lived AssetsSFAS 155

SFAS No. 155, Accounting for Certain Hybrid
    InstrumentsSFAS 157

SFAS No. 157, Fair Value Measurements 1




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SFAS 158

SFAS No. 158, Employers Accounting for
    Defined Benefit Pension and Other Postretirement PlansSFAS 159

SFAS No. 159, The Fair Value Option for
    Financial Assets and Financial LiabilitiesSFAS 160

SFAS No. 160, Noncontrolling Interests in
    Consolidated Financial StatementsSKL

SKL Investment Group, LLCSPCOA

Service provider certificate of operating authorityTXUCV

TXU Communications Ventures CompanyUNE-P

Unbundled network element platformVOIP

Voice over Internet protocol  2




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FORWARD-LOOKING
    STATEMENTS     MARKET
    AND INDUSTRY DATA   3




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PART I  Item 1.
    Business    Website
    Access to Securities and Exchange Commission Reports
  www.consolidated.com Form 10-K, Form 10-Q, Form 8-K,
  Overview
        History
    of the Company
     4




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Our
    Strengths
  Stable
    Local Telephone Business
    Attractive
    Markets and Limited Competition
         5




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Technologically
    Advanced Network
      Broad
    Service Offerings and Bundling of Services
      Favorable
    Regulatory Environment
   6




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Experienced
    Management Team with Proven Track Record
    
    particular expertise in providing superior quality services to
    rural customers in a regulated environment;
    a proven track record of successful business integrations and
    acquisitions, including the integration of ICTC and several
    related businesses into McLeodUSA in 1997, the acquisition of
    ICTC in 2002 and the TXUCV acquisition and related integration
    in 2004 and 2005; and
    a proven track record of launching and growing of new services,
    such as DSL and IPTV, along with managing CLEC businesses and
    complementary services, such as operator, telemarketing and
    order fulfillment services and directory publishing.  Business
    Strategy
  Increase
    Revenues Per Customer
      Improve
    Operating Efficiency
    Maintain
    Capital Expenditure Discipline
   7




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Pursue
    Selective Acquisitions
    
    attractiveness of the markets;
    quality of the network;
    our ability to integrate the acquired company efficiently;
    potential operating synergies; and
    cash flow accretive from day one.  Source of
    Revenues
    Year Ended December 31,2007


2006% of Total





% of Total$ (millions)


Revenues


$ (millions)


RevenuesRevenuesTelephone OperationsLocal calling services

$
82.8



25.2
%

$
85.1



26.6
%Network access services


70.2



21.3



68.1



21.2Subsidies


46.0



14.0



47.6



14.8Long distance services


14.0



4.3



15.2



4.7Data and internet services


38.0



11.5



30.9



9.6Other services


35.8



10.9



33.5



10.5Total Telephone Operations


286.8



87.1



280.4



87.4Other Operations


42.4



12.9



40.4



12.6Total operating revenues

$
329.2



100.0
%

$
320.8



100.0
%   Telephone
    Operations
      
    223,787 local access lines in service, of which approximately
    65% served residential customers and 35% served business
    customers;
    148,376 total long distance lines, including 131,640 lines from
    within our service areas, which represented 58.8% penetration of
    our local access lines;
    66,624 DSL lines, which represented approximately 47.7%
    penetration of our primary residential access lines.
    Approximately 95% of our total local access lines are
    DSL-capable; and
    12,241 IPTV subscribers. 8




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Local calling services
  Network access services
    Subsidies
  Long distance services
  Data and Internet services dial-up
  Other Services
  
    GTE Mobilnet of South Texas, which serves the greater Houston
    metropolitan area. We own approximately 2.3% of this
    partnership. Because of our minor ownership interest and our
    inability to influence the operations of this partnership, we
    account for this investment using the cost basis. As a result,
    income is recognized only on cash distributions paid to us up to
    our proportionate earnings in the partnership. We recognized
    income on cash distributions of $4.2 million and
    $4.0 million from this partnership for the years ended
    December 31, 2007 and 2006, respectively. 9




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
    GTE Mobilnet of Texas RSA #17, which serves areas in and
    around Conroe, Texas. We own approximately 17.0% of the equity
    of this partnership. Because of our ownership interest in this
    partnership, we account for this investment under the equity
    method. As a result, we recognize income based on the proportion
    of the earnings generated by the partnership that would be
    allocated to us. Cash distributions are recorded as a reduction
    in our investment amount. For the year ended December 31,
    2007, we recognized income of $2.2 million and received
    cash distributions of $1.9 million from this partnership.
    In 2006, we recognized income of $2.8 million and received
    cash distributions of $1.0 million from this partnership.    Other
    Operations
      North
    Pittsburgh Operations
  ILEC
    CLEC
    Internet
    Service Provider
  e-commerce
  Investments
   10




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Customers
    and Markets
              Sales
    and Marketing
  Telephone
    Operations
    
    positioning ourselves as a single point of contact for our
    customers communications needs;
    providing our customers with a broad array of voice and data
    services and bundling services where possible; 11




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
    providing excellent customer service, including providing
    24-hour,
    7-day a week
    centralized customer support to coordinate installation of new
    services, repair and maintenance functions;
    developing and delivering new services; and
    leveraging our history and involvement with local communities
    and expanding Consolidated Communications and
    Consolidated brand recognition.          Other
    Operations
    Information
    Technology and Support Systems
     12




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Network
    Architecture and Technology
    after-hours
  dial-up
    route-miles route-miles
   13




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Employees
      Competition
  Local
    Telephone Market
    IP-enabled
 14




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Wireless
    Service
    Internet
    Service
    Long
    Distance Service
    Other
    Competition
   15




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Regulatory
    Environment
  The following summary does not describe all present and
    proposed federal, state and local legislation and regulations
    affecting the telecommunications industry. Some legislation and
    regulations are currently the subject of judicial proceedings,
    legislative hearings and administrative proposals that could
    change the manner in which this industry operates. Neither the
    outcome of any of these developments, nor their potential impact
    on us, can be predicted at this time. Regulation can change
    rapidly in the telecommunications industry, and these changes
    may have an adverse effect on us in the future. See Risk
    Factors  Regulatory Risks.
  Overview
      Federal
    Regulation
    Access
    Charges
   16




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17




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01-92,
    Removal
    of Entry Barriers
      
    allow other carriers to resell their services; 18




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
    where feasible, provide number portability;
    ensure dialing parity, whereby consumers can choose their local
    or long distance telephone company over which their calls will
    automatically route without having to dial additional digits;
    ensure that competitors customers receive
    nondiscriminatory access to telephone numbers, operator service,
    directory assistance and directory listing;
    afford competitors access to telephone poles, ducts, conduits
    and rights-of-way;
    and establish reciprocal compensation arrangements with other
    carriers for the transport and termination of telecommunications
    traffic.    
    negotiate interconnection agreements with other carriers in good
    faith;
    interconnect their facilities and equipment with any requesting
    telecommunications carrier, at any technically feasible point,
    at nondiscriminatory rates and on nondiscriminatory terms and
    conditions;
    provide other carriers nondiscriminatory access to unbundled
    network elements, commonly known as UNEs, such as local loops
    and transport facilities, at any technically feasible point, at
    nondiscriminatory rates and on nondiscriminatory terms and
    conditions;
    offer their retail services to other carriers for resale at
    discounted wholesale rates;
    provide reasonable notice of changes in the information
    necessary for transmission and routing of services over the
    incumbent telephone companys facilities or in the
    information necessary for interoperability;
    and provide, at rates, terms and conditions that are just,
    reasonable and nondiscriminatory, for the physical co-location
    of other carriers equipment necessary for interconnection
    or access to UNEs at the premises of the incumbent telephone
    company.  Unbundled
    Network Element Rules
     19




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UNE-P.
    Promotion
    of Universal Service
     20




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State
    Regulation of CCI Illinois
       21




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State
    Regulation of CCI Texas
           22




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Texas
    Universal Service
    State
    Regulation of North Pittsburgh
   23




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Price
    Regulation
    Pennsylvania
    Universal Service and Access Charges
      Local
    Government Authorizations
   24




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Broadband
    and Internet Regulatory Obligations
           25




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Item 1A.
    Risk
    Factors  Form 10-K
  Risks
    Relating to Our Common Stock
  You may not receive dividends because our board of
    directors could, in its discretion, depart from or change our
    dividend policy at any time.
    We might not have cash in the future to pay dividends in
    the intended amounts or at all.
    
    the state of our business, the environment in which we operate
    and the various risks we face, including, but not limited to,
    competition, technological change, changes in our industry,
    regulatory and other risks summarized in this Annual Report on
    Form 10-K;
    changes in the factors, assumptions and other considerations
    made by our board of directors in reviewing and adopting the
    dividend policy, as described under Dividend Policy and
    Restrictions in Item 5 of this Annual Report on
    Form 10-K;
    our future results of operations, financial condition, liquidity
    needs and capital resources;
    our various expected cash needs, including interest and any
    future principal payments on our indebtedness, capital
    expenditures, taxes, pension and other post-retirement
    contributions and certain other costs; and
    potential sources of liquidity, including borrowing under our
    revolving credit facility or possible asset sales.    
    either reduce or eliminate dividends;
    fund dividends by incurring additional debt (to the extent we
    were permitted to do so under the agreements governing our then
    existing debt), which would increase our leverage, debt
    repayment obligations and interest expense and decrease our
    interest coverage, resulting in, among other things, reduced
    capacity to incur debt for other purposes, including to fund
    future dividend payments;
    amend the terms of our credit agreement or indenture, if our
    lenders agreed, to permit us to pay dividends or make other
    payments if we are otherwise not permitted to do so; 26




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
    fund dividends from future issuances of equity securities, which
    could be dilutive to our stockholders and negatively effect the
    price of our common stock;
    fund dividends from other sources, such as such as by asset
    sales or by working capital, which would leave us with less cash
    available for other purposes; and
    reduce other expected uses of cash, such as capital expenditures.    Because we are a holding company with no operations, we
    will not be able to pay dividends unless our subsidiaries
    transfer funds to us.
    You may not receive dividends because of restrictions in
    our debt agreements, Delaware, Illinois and Pennsylvania law and
    state regulatory requirements.
    
    Our credit agreement and our indenture restrict our ability to
    pay dividends. Based on the results of operations from
    October 1, 2005 through December 31, 2007, we would
    have been able to pay a dividend of $60.6 million based on
    the restricted payment covenants contained in our credit
    agreement and indenture. This is based on the ability of the
    borrowers under the credit facility (Consolidated
    Communications, Inc, Consolidated Communications Acquisition
    Texas, Inc. and North Pittsburgh Systems, Inc.) to pay to the
    Company $60.6 million in dividends and the ability of the
    Company to pay to its stockholders $101.1 million in
    dividends under the general formula under the restricted
    payments covenants of the indenture, commonly referred to as the
    build-up
    amount. After giving effect to the dividend of
    $11.4 million which was declared in November of 2007 and
    paid on February 1, 2008, we could pay a dividend of
    $49.2 million under the credit facility and
    $89.7 million under the indenture. The amount of dividends
    we will be able to pay under the
    build-up
    amount will be based, in part, on the amount of cash that may be
    distributed by the borrowers under the credit agreement to us.
    In addition, based on the indenture provision relating to public
    equity offerings, which includes our IPO that was completed
    July 27, 2005, we expect that we will be able to pay
    approximately $4.1 million annually in dividends, subject
    to specified conditions. This means that we could pay
    approximately $4.1 million in dividends under this
    provision in addition to whatever we may be able to pay under
    the build-up
    amount, although a dividend payment under this provision will
    reduce the amount we otherwise would have available to us under
    the build-up
    amount for restricted payments, including dividends.
    Under Delaware law, our board of directors may not authorize
    payment of a dividend unless it is either paid out of our
    surplus, as calculated in accordance with the Delaware General
    Corporation law, or the DGCL, or if we do not have a surplus, it
    is paid out of our net profits for the fiscal year in which the
    dividend is declared
    and/or the
    preceding fiscal year. The Illinois Business Corporation Act
    also imposes limitations on the ability of our subsidiaries that
    are Illinois corporations, including ICTC, to declare and pay
    dividends. The Pennsylvania Business Corporation law imposes
    similar limitation on our subsidiaries that are Pennsylvania
    corporations, including North Pittsburgh. 27




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
    State Commissions could require our rural telephone companies to
    make minimum amounts of capital expenditures and could limit the
    amount of cash available to transfer from our rural telephone
    companies to us. Our Illinois, Pennsylvania and Texas ILECs are
    ICTC, Consolidated Communications of Pennsylvania Company,
    Consolidated Communications of Fort Bend Company and
    Consolidated Communications of Texas Company. The ICC imposed
    various conditions on its approval of the reorganization
    consummated in connection with the completion of our IPO,
    including (1) prohibitions on the payment of dividends or
    other cash transfers from ICTC, our Illinois rural telephone
    company, to us if it fails to meet or exceed agreed benchmarks
    for a majority of seven service quality metrics for the prior
    reporting year and (2) the requirement that our Illinois
    rural telephone company have access to the higher of
    $5.0 million or its currently approved capital expenditure
    budget for each calendar year through a combination of available
    cash and amounts available under credit facilities. In addition,
    the Illinois Public Utilities Act prohibits the payment of
    dividends by ICTC, except out of earnings and earned surplus, if
    ICTCs capital is or would become impaired by payment of
    the dividend, or if payment of the dividend would impair
    ICTCs ability to render reasonable and adequate service at
    reasonable rates, unless the ICC otherwise finds that the public
    interest requires payment of the dividend, subject to any
    conditions imposed by the ICC. The PAPUC has placed debt and
    transaction cost recovery restrictions for a three year period
    that could have an impact to the payment of dividends.  We expect that our cash income tax liability will increase
    in 2008 as a result of the use of, and limitations on, our net
    operating loss carryforwards, which will reduce our after-tax
    cash available to pay dividends and may require us to reduce
    dividend payments in future periods.
    If we continue to pay dividends at the level currently
    anticipated under our dividend policy, our ability to pursue
    growth opportunities may be limited.
   28




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Our organizational documents could limit or delay another
    partys ability to acquire us and, therefore, could deprive
    our investors of the opportunity to obtain a takeover premium
    for their shares.
    
    dividing our board of directors into three classes, which
    results in only approximately one-third of our board of
    directors being elected each year;
    requiring the affirmative vote of holders of not less than 75%
    of the voting power of our outstanding common stock to approve
    any merger, consolidation or sale of all or substantially all of
    our assets;
    providing that directors may only be removed for cause and then
    only upon the affirmative vote of holders of not less than
    two-thirds of the voting power of our outstanding common stock;
    requiring the affirmative vote of holders of not less than
    two-thirds of the voting power of our outstanding common stock
    to amend, alter, change or repeal specified provisions of our
    amended and restated certificate of incorporation and bylaws
    (other than provisions regarding stockholder approval of any
    merger, consolidation or sale of all or substantially all of our
    assets, which shall require the affirmative vote of 75% of the
    voting power of our outstanding common stock);
    requiring stockholders to provide us with advance notice if they
    wish to nominate any persons for election to our board of
    directors or if they intend to propose any matters for
    consideration at an annual stockholders meeting; and
    authorizing the issuance of so-called blank check
    preferred stock without stockholder approval upon such terms as
    the board of directors may determine.    The concentration of the voting power of our common stock
    ownership could limit your ability to influence corporate
    matters.
    
    the election of directors;
    significant corporate transactions, such as a merger or other
    sale of our company or its assets, or to prevent any such
    transaction;
    acquisitions that increase our amount of indebtedness or sell
    revenue-generating assets;
    corporate and management policies;
    amendments to our organizational documents; and
    other matters submitted to our stockholders for approval. 29




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Risks
    Relating to Our Indebtedness and Our Capital Structure
  We have a substantial amount of debt outstanding and may
    incur additional indebtedness in the future, which could
    restrict our ability to pay dividends.
    
    requiring us to dedicate a substantial portion of our cash flow
    from operations to make interest payments on our debt, which
    payments we currently expect to be approximately $64.0 to
    $67.0 million in 2008, thereby reducing funds available for
    operations, future business opportunities and other purposes
    and/or
    dividends on our common stock;
    limiting our flexibility in planning for, or reacting to,
    changes in our business and the industry in which we operate;
    making it more difficult for us to satisfy our debt and other
    obligations;
    limiting our ability to borrow additional funds, or to sell
    assets to raise funds, if needed, for working capital, capital
    expenditures, acquisitions or other purposes;
    increasing our vulnerability to general adverse economic and
    industry conditions, including changes in interest
    rates; and
    placing us at a competitive disadvantage compared to our
    competitors that have less debt.      We will require a significant amount of cash to service
    and repay our debt and to pay dividends on our common stock, and
    our ability to generate cash depends on many factors beyond our
    control.
    
    our business will generate sufficient cash flow from operations
    to service and repay our debt, pay dividends on our common stock
    and to fund working capital and planned capital expenditures;
    future borrowings will be available under our credit facilities
    or any future credit facilities in an amount sufficient to
    enable us to repay our debt and pay dividends on our common
    stock; or
    we will be able to refinance any of our debt on commercially
    reasonable terms or at all. 30




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Our indenture and credit agreement contain covenants that
    limit the discretion of our management in operating our business
    and could prevent us from capitalizing on business opportunities
    and taking other corporate actions.
    
    incur additional debt and issue preferred stock;
    make restricted payments, including paying dividends on,
    redeeming, repurchasing or retiring our capital stock;
    make investments and prepay or redeem debt;
    enter into agreements restricting our subsidiaries ability
    to pay dividends, make loans or transfer assets to us;
    create liens;
    sell or otherwise dispose of assets, including capital stock of
    subsidiaries;
    engage in transactions with affiliates;
    engage in sale and leaseback transactions;
    make capital expenditures;
    engage in business other than telecommunications
    businesses; and
    consolidate or merge.    
    limit our ability to plan for or react to market conditions,
    meet capital needs or otherwise restrict our activities or
    business plans; and
    adversely affect our ability to finance our operations, enter
    into acquisitions or to engage in other business activities that
    would be in our interest.     31




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We face the risks of either not being able to refinance
    our existing debt if necessary or doing so at a higher interest
    expense.
  3 4
  Risks
    Relating to Our Business
  The telecommunications industry is generally subject to
    substantial regulatory changes, rapid development and
    introduction of new technologies and intense competition that
    could cause us to suffer price reductions, customer losses,
    reduced operating margins or loss of market share.
    
    substantial regulatory change due to the passage and
    implementation of the Telecommunications Act, which included
    changes designed to stimulate competition for both local and
    long distance telecommunications services;
    rapid development and introduction of new technologies and
    services;
    increased competition within established markets from current
    and new market entrants that may provide competing or
    alternative services;
    the blurring of traditional dividing lines between, and the
    bundling of, different services, such as local dial tone, long
    distance, wireless, cable, data and Internet services; and
    an increase in mergers and strategic alliances that allow one
    telecommunications provider to offer increased services or
    access to wider geographic markets.      The use of new technologies by other, existing companies
    may increase our costs and cause us to lose customers and
    revenues.
   32




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The integration of the Company and North Pittsburgh may
    present significant challenges.
    We will incur additional integration and restructuring
    costs in connection with the completed North Pittsburgh
    merger.
    Our possible pursuit of future acquisitions could be
    expensive, may not be successful and, even if it is successful,
    may be more costly than anticipated.
     33




---



##### Table of Contents



Poor economic conditions in our service areas in Illinois,
    Pennsylvania and Texas could cause us to lose local access lines
    and revenues.
    
    demographic trends;
    in Illinois, the strength of the agricultural markets and the
    light manufacturing and services industries, continued demand
    from universities and hospitals and the level of government
    spending;
    in Pennsylvania, the strength of small to medium sized
    businesses, health care and education spending; and
    in Texas, the strength of the manufacturing, health care, waste
    management and retail industries and continued demand from
    schools and hospitals.    A system failure could cause delays or interruptions of
    service could cause us to lose customers.
    
    physical damage to our central offices or local access lines;
    disruptions beyond our control;
    power surges or outages; and
    software defects.    Loss of a large customer could reduce our revenues. In
    addition, a significant portion of our revenues from the State
    of Illinois is based on contracts that are favorable to the
    government.
    
    includes provisions that allow the respective state agency to
    terminate the contract without cause and without penalty under
    some circumstances; 34




---



##### Table of Contents




    is subject to decisions of state agencies that are subject to
    political influence on renewal;
    gives the State of Illinois the right to renew the contract at
    its option but does not give us the same right; and
    could be cancelled if state funding becomes unavailable.    If we are unsuccessful in obtaining and maintaining
    necessary rights-of-way for our network, our operations may be
    interrupted and we would likely face increased costs.
    We are dependent on third party vendors for our
    information, billing and network systems as well as IPTV
    service. Any significant disruption in our relationship with
    these vendors could increase our costs and affect our operating
    efficiencies.
    The loss of key management personnel, or the inability to
    attract and retain highly qualified management and other
    personnel in the future, could have a material adverse effect on
    our business, financial condition and results of
    operations.
   35




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##### Table of Contents



Regulatory
    Risks
  The telecommunications industry in which we operate is
    subject to extensive federal, state and local regulation that
    could change in a manner adverse to us.
    Legislative or regulatory changes could reduce or
    eliminate the revenues our rural telephone companies receive
    from network access charges.
         36




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##### Table of Contents



Legislative or regulatory changes could reduce or
    eliminate the government subsidies we receive.
        The high costs of regulatory compliance could make it more
    difficult for us to enter new markets, make acquisitions or
    change our prices.
   37




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##### Table of Contents



Legislative and regulatory changes in the
    telecommunications industry could raise our costs by
    facilitating greater competition against us and reduce potential
    revenues.
        Because we are subject to extensive laws and regulations
    relating to the protection of the environment, natural resources
    and worker health and safety, we may face significant
    liabilities or compliance costs in the future.
    
    Under certain environmental laws, we could be held liable,
    jointly and severally and without regard to fault, for the costs
    of investigating and remediating any actual or threatened
    environmental contamination at currently and formerly owned or
    operated properties, and those of our predecessors, and for
    contamination associated with disposal by us or our predecessors
    of hazardous materials at third party disposal sites. Hazardous
    materials may have been released at certain current or formerly
    owned properties as a result of historic operations.
    The presence of contamination can adversely affect the value of
    our properties and our ability to sell any such affected
    property or to use it as collateral.
    We could be held responsible for third party property damage
    claims, personal injury claims or natural resource damage claims
    relating to any such contamination. 38




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##### Table of Contents




    The cost of complying with existing environmental requirements
    could be significant.
    Adoption of new environmental laws or regulations or changes in
    existing laws or regulations or their interpretations could
    result in significant compliance costs or as yet identified
    environmental liabilities.
    Future acquisitions of businesses or properties subject to
    environmental requirements or affected by environmental
    contamination could require us to incur substantial costs
    relating to such matters.
    In addition, environmental laws regulating wetlands, endangered
    species and other land use and natural resource issues may
    increase costs associated with future business or expansion
    opportunities, delay, alter or interfere with such plans, or
    otherwise adversely affect such plans.    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      ApproximateSquareLocation

Primary Use

Owned/Leased


Operating Segment


FeetGibsonia, PA (Gibsonia 
    Headquarters Complex)

Office and Switching


Owned



Telephone & Other



111,931Conroe, TX

Regional Office


Owned



Telephone & Other



51,900Mattoon, IL

Order Fullfillment


Leased



Other Operations



50,000Mattoon, IL

Corporate Headquarters


Leased



Telephone & Other



49,100Mattoon, IL

Operator Services and Operations


Owned



Telephone & Other



36,300Charleston, IL

Communications Center and Office


Leased



Telephone & Other



34,000Operations and DistributionMattoon, IL

Center


Leased



Telephone & Other



30,900Mattoon, IL

Sales and Administration Office


Leased



Telephone & Other



30,700Lufkin, TX

Regional Office


Owned



Telephone & Other



30,100Conroe, TX

Warehouse and Plant


Owned



Telephone & Other



28,500Lufkin, TX

Office


Owned



Telephone & Other



23,200Katy, TX

Warehouse and Office


Owned



Telephone & Other



19,716Butler, PA (Butler)

Office and Switching


Owned



Telephone & Other



18,564Taylorville, IL

Office and Communications Center


Owned



Telephone & Other



15,900Operations and DistributionTaylorville, IL

Center


Leased



Telephone & Other



14,700Lufkin, TX

Warehouse


Owned



Telephone & Other



14,200Sewickley, PA (Spectra 1 & 2)

Office


Leased



Telephone & Other



13,970Cranberry Twp, PA (Cranberry C.O.)

Office and Switching


Owned



Telephone & Other



13,110Lufkin, TX

Office and Data Center


Owned



Telephone & Other



11,900Conroe, TX

Office


Owned



Telephone & Other



10,650 39




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##### Table of Contents



ApproximateSquareLocation

Primary Use

Owned/Leased


Operating Segment


FeetMattoon, IL

Office


Owned



Telephone & Other



10,100     Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities
    DividendsQuarter Ended

Low


High


DeclaredMarch 31, 2006

$
12.41


$
16.33


$
0.39June 30, 2006

$
14.50


$
17.00


$
0.39September 30, 2006

$
14.68


$
19.55


$
0.39December 31, 2006

$
16.61


$
21.19


$
0.39March 31, 2007

$
18.71


$
23.00


$
0.39June 30, 2007

$
19.30


$
23.71


$
0.39September 30, 2007

$
15.72


$
23.11


$
0.39December 31, 2007

$
15.50


$
21.45


$
0.39   Dividend
    Policy and Restrictions
   40




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##### Table of Contents




    Nothing requires us to pay dividends.
    While our current dividend policy contemplates the distribution
    of a substantial portion of the cash generated by our business
    in excess of our expected cash needs, this policy could be
    changed or revoked by our board of directors at any time, for
    example, if it were to determine that we had insufficient cash
    to take advantage of other opportunities with attractive rates
    of return.
    Even if our dividend policy is not changed or revoked, the
    actual amount of dividends distributed under this policy, and
    the decision to make any distributions, is entirely at the
    discretion of our board of directors.
    The amount of dividends distributed will be subject to covenant
    restrictions in the agreements governing our debt, including our
    indenture and our credit agreement, and in agreements governing
    any future debt.
    We might not have sufficient cash in the future to pay dividends
    in the intended amounts or at all. Our ability to generate this
    cash will depend on numerous factors, including the state of our
    business, the environment in which we operate and the various
    risks we face, changes in the factors, assumptions and other
    considerations made by our board of directors in reviewing and
    adopting the dividend policy, our future results of operations,
    financial condition, liquidity needs and capital resources and
    our various expected cash needs.
    The amount of dividends distributed may be limited by state
    regulatory requirements.
    The amount of dividends distributed is subject to restrictions
    under Delaware, Illinois and Pennsylvania law.
    Our stockholders have no contractual or other legal right to
    receive dividends.      Issuer
    Purchases of Common Stock During the Quarter Ended
    December 31, 2007
    Total Number of


Maximum NumberShares Purchased


of Shares that MayTotal Number of


Average Price Paid


as Part of Publically


Yet be PurchasedPurchase period

Shares Purchased


per Share


Announced Plans


Under the PlansOctober 13, 2007


2,646


$
20.65



Not applicable



Not applicableNovember 10, 2007


2,286


$
16.89



Not applicable



Not applicableDecember 5, 2007


2,329


$
16.44



Not applicable



Not applicable  41




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##### Table of Contents



Item 6.
    Selected
    Financial Data    CCI HoldingsYear Ended December 31,2007


2006


2005


2004


2003($s In millions except per share amounts)Consolidated Statement of Operations Data:Telephone operations revenues

$
286.8


$
280.4


$
282.3


$
230.4


$
90.3Other operations revenues


42.4



40.4



39.1



39.2



42.0Total operating revenues


329.2



320.8



321.4



269.6



132.3Cost of services and products (exclusive of depreciation and
    amortization shown separately below)


107.3



98.1



101.1



80.6



46.3Selling, general and administrative


89.6



94.7



98.8



87.9



42.5Intangible assets impairment






11.3







11.6



Depreciation and amortization


65.7



67.4



67.4



54.5



22.5Income from operations


66.6



49.3



54.1



35.0



21.0Interest expense, net(1)


(56.8
)


(42.9
)


(53.4
)


(39.6
)


(11.9
)Other, net(2)


6.3



7.3



5.7



3.7



0.1Income (loss) before income taxes


16.1



13.7



6.4



(0.9
)


9.2Income tax expense


(4.7
)


(0.4
)


(10.9
)


(0.2
)


(3.7
)Net income (loss)


11.4



13.3



(4.5
)


(1.1
)


5.5Dividends on redeemable preferred shares










(10.2
)


(15.0
)


(8.5
)Net income (loss) applicable to common shares

$
11.4


$
13.3


$
(14.7
)

$
(16.1
)

$
(3.0
)Net income (loss) per common share:Basic

$
0.44


$
0.48


$
(0.83
)

$
(1.79
)

$
(0.33
)Diluted

$
0.44


$
0.47


$
(0.83
)

$
(1.79
)

$
(0.33
)Consolidated Cash Flow Data:Cash flows from operating activities

$
82.1


$
84.6


$
79.3


$
79.8


$
28.9Cash flows used in investing activities


(305.3
)


(26.7
)


(31.1
)


(554.1
)


(296.1
)Cash flows from (used in) financing activities


230.9



(62.7
)


(68.9
)


516.3



277.4Capital expenditures


33.5



33.4



31.1



30.0



11.3Dividends declared per common share

$
1.55


$
1.55


$
0.80


$



$
Consolidated Balance Sheet Data:Cash and cash equivalents

$
34.3


$
26.7


$
31.4


$
52.1


$
10.1Total current assets


99.6



74.2



79.0



98.9



39.6Net plant, property & equipment(3)


411.6



314.4



335.1



360.8



104.6Total assets


1,304.6



889.6



946.0



1,006.1



317.6Total long-term debt (including current portion)(4)(5)


892.6



594.0



555.0



629.4



180.4Redeemable preferred shares














205.5



101.5Stockholders equity/Members deficit/Parent company
    investment


155.4



115.0



199.2



(18.8
)


(3.5
) 42




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##### Table of Contents



CCI HoldingsYear Ended December 31,2007


2006


2005


2004


2003($s In millions except per share amounts)Other Financial Data:Consolidated EBITDA(6)

$
143.8


$
139.8


$
136.8


$
115.8


$
45.5Other Data (as of end of period)(7):Local access lines in serviceResidential


183,070



155,354



162,231



168,778



58,461Business


98,958



78,335



79,793



86,430



32,426Total local access lines


282,028



233,689



242,024



255,208



90,887CLEC access line equivalents


68,874















IPTV subscribers


12,241



6,954



2,146



101



DSL subscribers


81,337



52,732



39,192



27,445



7,951Total connections


444,480



293,375



283,362



282,754



98,838     (1)
    
    Interest expense includes amortization and write-off of deferred
    financing costs totaling $13.5 million, $3.3 million,
    $5.5 million, $6.4 million and $0.5 million for
    the years ended December 31, 2007, 2006, 2005, 2004 and
    2003, respectively.(2)
    
    We recognized $0.3 million and $2.8 million of net
    proceeds in other income due to the receipt of key-man life
    insurance proceeds relating to the passing of former TXUCV
    employees in 2007 and 2005, respectively.(3)
    
    Property, plant and equipment are recorded at cost. The cost of
    additions, replacements and major improvements is capitalized,
    while repairs and maintenance are charged to expenses. When
    property, plant and equipment are retired from our regulated
    subsidiaries, the original cost, net of salvage, is charged
    against accumulated depreciation, with no gain or loss
    recognized in accordance with composite group life remaining
    methodology used for regulated telephone plant assets.(4)
    
    In connection with the TXUCV acquisition on April 14, 2004,
    we issued $200.0 million in aggregate principal amount of
    senior notes and entered into credit facilities. In connection
    with the IPO, we retired $70.0 million of senior notes and
    amended and restated our credit facilities. In connection with
    the acquisition of North Pittsburgh on December 31, 2007,
    we issued $296.0 million new term debt, net of payoffs of
    existing debt.(5)
    
    In July 2006, we repurchased and retired approximately
    3.8 million shares of our common stock for approximately
    $56.7 million, or $15.00 per share. We financed this
    transaction using approximately $17.7 million of cash on
    hand and $39.0 million of additional term-loan borrowings.(6)
    
    We present Consolidated EBITDA because we believe it is a useful
    indicator of our historical debt capacity and our ability to
    service debt and pay dividends and because it provides a measure
    of consistency in our financial reporting. We also present
    Consolidated EBITDA because covenants in our credit facilities
    contain ratios based on Consolidated EBITDA.Consolidated EBITDA is defined in our current credit facility
    as: Consolidated Net Income, which is defined in our credit
    facility, (a) plus the following to the extent deducted in
    arriving at Consolidated Net Income (i) interest expense,
    amortization or write-off of debt discount and non-cash expense
    incurred in connection with equity compensation plans;
    (ii) provision for income taxes; (iii) depreciation
    and amortization; (iv) non-cash charges for asset
    impairment; all charges, expenses and other extraordinary,
    non-recurring and unusual integration costs or losses related to
    the acquisition of North Pittsburgh, including all severance
    payments in connection with the acquisition, so long as such
    costs or losses are incurred prior to December 31, 2009 and
    do not exceed $12 million in the aggregate; (vi) all
    non-recurring transaction fees, charges and other amounts
    related to the acquisition of North Pittsburgh (excluding all
    amounts otherwise included in accordance with GAAP in
    determining Consolidated EBITDA), so long as such fees, charges
    and other amounts do not exceed $18 million in the
    aggregate; (b) minus (in the case of gains) or plus (in the
    case of losses) gain or loss on sale of assets; (c) minus
    (in the case of gains) or plus (in the 43




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##### Table of Contents



case of losses) non-cash income or charges relating to foreign
    currency gains or losses; (d) plus (in the case of losses)
    and minus (in the case of income) non-cash minority interest
    income or loss; (e) plus (in the case of items deducted in
    arriving at Consolidated Net Income) and minus (in the case of
    items added in arriving at Consolidated Net Income) non-cash
    charges resulting from changes in accounting principles;
    (f) plus, extraordinary losses and minus extraordinary
    gains as defined by GAAP; (g) plus, in the case of any
    period ending on December 31, 2007 and any period ending
    during the seven immediately succeeding fiscal quarters of the
    Company, to the extent not otherwise included in Consolidated
    EBITDA, cost savings to be realized by the Company and its
    subsidiaries in connection with the acquisition of North
    Pittsburgh and which are attributable to the integration of the
    operations and businesses of the Illinois and Texas operations,
    on the one hand, and the Pennsylvania operations, on the other
    hand, which cost savings are deemed to be the amounts set forth
    on a schedule to the credit agreement for each such fiscal
    quarter; and (h) minus interest income. If our Consolidated
    EBITDA were to decline below certain levels, covenants in our
    credit facilities that are based on Consolidated EBITDA,
    including our total net leverage, and interest coverage ratios
    covenants, may be violated and could cause, among other things,
    a default or mandatory prepayment under our credit facilities,
    or result in our inability to pay dividends.We believe that net cash provided by operating activities is the
    most directly comparable financial measure to Consolidated
    EBITDA under generally accepted accounting principles.
    Consolidated EBITDA should not be considered in isolation or as
    a substitute for consolidated statement of operations and cash
    flows data prepared in accordance with GAAP. Consolidated EBITDA
    is not a complete measure of an entitys profitability
    because it does not include costs and expenses identified above;
    nor is Consolidated EBITDA a complete net cash flow measure
    because it does not include reductions for cash payments for an
    entitys obligation to service its debt, fund its working
    capital, make capital expenditures and make acquisitions or pay
    its income taxes and dividends.    CCI HoldingsYear Ended December 31,2007


2006


2005


2004


2003Historical EBITDA:Net cash provided by operating activities

$
82.1


$
84.6


$
79.3


$
79.8


$
28.9Adjustments:Compensation from restricted share plan


(4.0
)


(2.5
)


(8.6
)






Other adjustments, net(a)


(3.8
)


(8.1
)


(18.0
)


(22.0
)


(7.3
)Changes in operating assets and liabilities


2.8



6.7



10.2



(4.4
)


6.4Interest expense, net


56.8



42.9



53.4



39.6



11.8Income taxes


4.7



0.4



10.9



0.2



3.7Historical EBITDA(b)


138.6



124.0



127.2



93.2



43.5Adjustments to EBITDA(c):Intergration, restructuring and Sarbanes-Oxley(d)


1.2



3.7



7.4



7.0



Professional service fees(e)










2.9



4.1



2.0Other, net(f)


(6.6
)


(7.1
)


(3.0
)


(3.7
)


Investment distributions(g)


6.6



5.5



1.6



3.6



Pension curtailment gain(h)










(7.9
)






Intangible assets impairment(a)






11.2







11.6



Non-cash compensation(i)


4.0



2.5



8.6







Consolidated EBITDA

$
143.8


$
139.8


$
136.8


$
115.8


$
45.5  44




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##### Table of Contents



(a)
    
    Other adjustments, net includes $11.2 million and
    $11.6 million of asset impairment charges for years ended
    December 31, 2006 and December 31, 2004, respectively.
    Upon completion of our 2006 annual impairment review and as a
    result of a decline in estimated future cash flows in the
    telemarketing and operator services business, we determined that
    the value of the customer lists associated with these businesses
    was impaired. As a result of our 2004 impairment testing we
    determined that the goodwill of our operator services business
    and the tradenames of our telemarketing and mobile services
    business were impaired. Non-cash impairment charges are excluded
    in arriving at Consolidated EBITDA under our credit facility.(b)
    
    Historical EBITDA is defined as net earnings (loss) before
    interest expense, income taxes, depreciation and amortization on
    a historical basis.(c)
    
    These adjustments reflect those required or permitted by the
    lenders under the credit facility in place at the end of each of
    the years included in the periods presented.(d)
    
    In connection with the TXUCV acquisition, we have incurred
    certain expenses associated with integrating and restructuring
    the businesses. These expenses include severance, employee
    relocation expenses, Sabanes-Oxley
    start-up
    costs, costs to integrate our technology, administrative and
    customer service functions, billing systems and other
    integration costs.(e)
    
    Represents the aggregate professional service fees paid to
    certain large equity investors prior to our initial public
    offering. Upon closing of the initial public offering, these
    agreements terminated.(f)
    
    Other, net includes the equity earnings from our investments,
    dividend income and certain other miscellaneous non-operating
    items. Key man life insurance proceeds of $0.3 million and
    $2.8 million received in 2007 and 2005, respectively, are
    not deducted to arrive at Consolidated EBITDA.(g)
    
    For purposes of calculating Consolidated EBITDA, we include all
    cash dividends and other cash distributions received from our
    investments.(h)
    
    Represents a $7.9 million curtailment gain associated with
    the amendment of our Texas pension plan. The gain was recorded
    in general and administrative expenses. However, because the
    gain is non-cash, it is excluded from Consolidated EBITDA.(i)
    
    Represents compensation expenses in connection with our
    Restricted Share Plan, which because of the non-cash nature of
    the expenses, are being excluded from Consolidated EBITDA.(7)
    
    Other data for 2007 includes access lines, CLEC access line
    equivalents, and DSL subscribers for our North Pittsburgh
    operations which were acquired on December 31, 2007.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  We present below Managements Discussion and Analysis of
    Financial Condition and Results of Operations
    (MD&A) of Consolidated Communications Holdings,
    Inc. and its subsidiaries on a consolidated basis. The following
    discussion should be read in conjunction with our historical
    financial statements and related notes contained elsewhere in
    this Report.
  Overview
  dial-up dial-up
 45




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##### Table of Contents



Initial
    Public Offering
      
    repay in full outstanding borrowings under our term loan A and C
    facilities, together with accrued but unpaid interest through
    the date of repayment and associated fees and expenses;
    redeem $70.0 million of the aggregate principal amount of
    our senior notes and pay the associated redemption premium of
    $6.8 million, together with accrued but unpaid interest
    through the date of redemption; and
    partially fund integration and restructuring costs relating to
    the 2004 TXUCV acquisition.  Share
    Repurchase
      
    a reduction in our annual dividend obligation of
    $5.9 million;
    an increase in our after tax net cash interest of
    $2.9 million due to the increased borrowings incurred net
    of, an increase in the interest rate on our credit facility of
    25 basis points and a decrease of cash on hand.  Acquisition
    of North Pittsburgh and New Credit Facility
      
    a $50.0 million revolving credit facility that is currently
    undrawn;
    a $760.0 million term loan, the proceeds of which were
    drawn at closing of the acquisition; and
    a delayed draw term loan in the amount of $140.0 million
    which is available to the company until May 1, 2008, the
    proceeds of which can be used for the sole purpose of redeeming
    our $130.0 million of outstanding senior notes along with
    the payment of any accrued interest and fees. 46




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##### Table of Contents




    pay off the Companys previous credit facility of
    $464.0 million plus accrued interest;
    fund the cash portion of the acquisition; and
    pay fees and expenses related to the acquisition and new
    financing.  Redemption
    of Senior Notes
    Factors
    Affecting Results of Operations
  Revenues
  Telephone Operations and Other Operations.
  Local Access Lines and Bundled Services.
  dial-up
    
    aggressively promoting DSL service, including selling DSL as a
    stand-alone service;
    bundling value-adding services, such as DSL or IPTV, with a
    combination of local service, custom calling features, voicemail
    and Internet access;
    maintaining excellent customer service standards, particularly
    as we introduce new services to existing customers; and
    keeping a strong local presence in the communities we serve.   47




---



##### Table of Contents



December 31,2007


2006


2005Local access lines in service:Residential


146,659



155,354



162,231Business


77,128



78,335



79,793Total local access lines


223,787



233,689



242,024IPTV subscribers


12,241



6,954



2,146DSL subscribers


66,624



52,732



39,192Broadband connections


78,865



59,686



41,338Total connections


302,652



293,375



283,362Long distance lines


148,376



148,181



143,882Dial-up
    subscribers


6,734



11,942



15,971Service bundles


45,971



43,175



36,627     Expenses
   48




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##### Table of Contents



Cost of
    Services and Products
    
    operating expenses relating to plant costs, including those
    related to the network and general support costs, central office
    switching and transmission costs and cable and wire facilities;
    general plant costs, such as testing, provisioning, network,
    administration, power and engineering; and
    the cost of transport and termination of long distance and
    private lines outside our rural telephone companies
    service area.    Selling,
    General and Administrative Expenses
    
    selling and marketing expenses;
    expenses associated with customer care;
    billing and other operating support systems; and
    corporate expenses, including professional service fees, and
    non-cash stock compensation.       49




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##### Table of Contents



Depreciation
    and Amortization Expenses
    YearsBuildings


15-35Network and outside plant facilities


5-30Furniture, fixtures and equipment


3-17Capital Leases


11   Goodwill and
    Other Intangible Assets
    Year Ended December 31,2007


2006


2005% of Total





% of Total





% of Total$ (millions)


Revenues


$ (millions)


Revenues


$ (millions)


RevenuesRevenuesTelephone OperationsLocal calling services

$
82.8



25.2
%

$
85.1



26.6
%

$
88.2



27.4
%Network access services


70.2



21.3



68.1



21.2



64.4



20.0Subsidies


46.0



14.0



47.6



14.8



53.9



16.8Long distance services


14.0



4.3



15.2



4.7



16.3



5.1Data and internet services


38.0



11.5



30.9



9.6



25.8



8.0Other services


35.8



10.9



33.5



10.5



33.7



10.5Total Telephone Operations


286.8



87.1



280.4



87.4



282.3



87.8Other Operations


42.4



12.9



40.4



12.6



39.1



12.2Total operating revenues


329.2



100.0



320.8



100.0



321.4



100.0ExpensesOperating expensesTelephone Operations


153.4



46.6



152.4



47.5



161.8



50.3Other Operations


43.5



13.2



51.7



16.1



38.1



11.9Depreciation and amortization


65.7



20.0



67.4



21.0



67.4



21.0Total operating expenses


262.6



79.8



271.5



84.6



267.3



83.2Income from operations


66.6



20.2



49.3



15.4



54.1



16.8Interest expense, net


(56.8
)


(17.3
)


(42.9
)


(13.4
)


(53.4
)


(16.6
)Other income, net


6.3



1.9



7.3



2.3



5.7



1.8Income tax expense


(4.7
)


(1.4
)


(0.4
)


(0.1
)


(10.9
)


(3.4
)Net income (loss)

$
11.4



3.5
%

$
13.3



4.1
%

$
(4.5
)


(1.4
)%  50




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##### Table of Contents



Segments
  Disclosure about Segments of an
    Enterprise and Related Information
  Results
    of Operations
  For
    the Year Ended December 31, 2007 Compared to
    December 31, 2006
  Revenues
    Telephone
    Operations Revenues
  Local calling services
  Network access services point-to-point
  Subsidies
  Long distance services
  Data and Internet dial-up
  Other Services
  Other
    Operations Revenue
   51




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##### Table of Contents



Operating
    Expenses
    Telephone
    Operations Operating Expense
    Other
    Operations Operating Expenses
    Depreciation
    and Amortization
    Non-Operating
    Income (Expense)
  Interest
    Expense, Net
    Other
    Income (Expense)
    Income
    Taxes
     52




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##### Table of Contents



For
    the Year Ended December 31, 2006 Compared to
    December 31, 2005
  Revenues
    Telephone
    Operations Revenues
  Local calling services
  Network access services point-to-point
  Subsidies
  Long distance services
  Data and Internet dial-up
  Other Services
  Other
    Operations Revenue
   53




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##### Table of Contents



Operating
    Expenses
    Telephone
    Operations Operating Expense
    Other
    Operations Operating Expenses
    Depreciation
    and Amortization
    Non-Operating
    Income (Expense)
  Interest
    Expense, Net
    Other
    Income (Expense)
   54




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##### Table of Contents



Income
    Taxes
        Critical
    Accounting Policies and Use of Estimates
    Subsidies
    Revenues
    Allowance
    for Uncollectible Accounts
   55




---



##### Table of Contents



Valuation
    of Intangible Assets
    
    a change in the use or perceived value of our tradenames;
    significant underperformance relative to expected historical or
    projected future operating results;
    significant regulatory changes that would impact future
    operating revenues;
    significant changes in our customer base;
    significant negative industry or economic trends; or
    significant changes in the overall strategy in which we operate
    our overall business.    Pension
    and Postretirement Benefits
         56




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##### Table of Contents



December 31,Percentage Point


2007 Obligation


2007 ExpenseAssumptions

Change


Higher


Lower


Higher


Lower(In millions)Pension Plan Expense:Discount rate


+ or − 0.5 pts


$
(10.0
)

$
10.9


$
(0.1
)

$
0.1Expected return on assets


+ or − 1.0 pts


$



$



$
(1.0
)

$
1.0Other Postretirement Expense:Discount rate


+ or − 0.5 pts


$
(1.9
)

$
2.1


$
(0.1
)

$
0.1   Liquidity
    and Capital Resources
  General
           57




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##### Table of Contents



Year Ended December 31,2007


2006


2005(In millions)Net Cash Provided by (Used for):Operating activities

$
82.1


$
84.6


$
79.3Investing activities


(305.3
)


(26.7
)


(31.1
)Financing activities


230.9



(62.7
)


(68.9
)   Operating
    Activities
        Investing
    Activities
        Financing
    Activities
   58




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##### Table of Contents



Debt
    Debt and
    Capital Leases as of December 31, 2007
  Balance


Maturity Date


Rate (1)(In millions)Capital lease

$
2.6



July 1, 2011



7.40
%Revolving credit facility






December 31, 2013



LIBOR + 2.50
%Term loan


760.0



December 31, 2014



LIBOR + 2.50
%Senior notes(2)


130.0



April 1, 2012



9.75
%     (1)
    
    As of December 31, 2007, the
    90-day LIBOR
    rate was 4.83%.(2)
    
    On February 26, 2008 we delivered notice of our intention
    to redeem all of the outstanding notes on April 1, 2008.  Credit
    Facilities
   59




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##### Table of Contents



Derivative
    Instruments
    Senior
    Notes
    Covenant
    Compliance
   60




---



##### Table of Contents



build-up
    Form 10-K 10-K.
  Dividends
      Surety
    Bonds
   61




---



##### Table of Contents



Table
    of Contractual Obligations and Commitments
    Payments Due by PeriodLess than


1 - 3


3 - 5


More thanTotal


1 Year


Years


Years


5 Years(In thousands)Long-term debt(a)

$
1,342,150


$
65,000


$
129,050


$
259,050


$
889,050Capital lease(b)


2,925



1,178



1,706



41



Operating leases


11,896



3,713



5,769



1,655



759Other agreements and commitments(c)


6,951



4,993



1,216



525



217Pension and other post-retirement obligations(d)


61,769



11,980



12,766



11,546



25,477Total contractual cash obligations and commitments

$
1,425,691


$
86,864


$
150,507


$
272,817


$
915,503     (a)
    
    This item consists of interest and principal payments under our
    credit facilities and our senior notes. The credit facilities
    consist of a $760.0 million term loan facility maturing on
    December 31, 2014 and a $50.0 million revolving credit
    facility, which was fully available but undrawn as
    December 31, 2007. The senior notes total
    $130.0 million and mature on March 31, 2012.(b)
    
    Represents payments of principal and interest on a capital lease
    entered into by North Pittsburgh for equipment used in its
    operations.(c)
    
    North Pittsburgh has two contracts to outsource a majority of
    its operational support systems. We have provided notice of our
    intent to cancel one of the contracts effective no later than
    May 15, 2008. Also, in the ordinary course of business, we
    enter into various contractual arrangements and purchase
    commitments for items such as network maintenance, Internet
    backbone services and advertising sponsorships.(d)
    
    Pension funding is an estimate of our minimum funding
    requirements to provide pension benefits for employees based on
    service through December 31, 2007. Obligations relating to
    other post retirement benefits are based on estimated future
    benefit payments. Our estimates are based on forecasts of future
    benefit payments which may change over time due to a number of
    factors, including life expectancy, medical costs and trends and
    on the actual rate of return on the plan assets, discount rates,
    discretionary pension contributions and regulatory rules.    Recent
    Accounting Pronouncements
  Noncontrolling Interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51.
  Business
    Combinations.
 62




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##### Table of Contents



The Fair Value
    Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115. instrument-by-instrument
  Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R).
  Fair Value Measurements. SFAS 157-2
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk     63




---



##### Table of Contents



64




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    ,
    Form 10-K.
 65




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON INTERNAL CONTROL OVER FINANCIAL REPORTING
                   Ernst &
    Young LLP
    66




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans  an Amendment of FASB
    Statements No. 87, 88, 106 and 132(R) Accounting for Uncertainty in Income Taxes, an
    Interpretation of FASB Statement No. 109,
    Ernst &
    Young LLP
    67




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##### Table of Contents



CONSOLIDATED
    COMMUNICATIONS HOLDINGS, INC.
  CONSOLIDATED
    BALANCE SHEETS
 (Amounts
    in thousands, except share amounts)
  December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
34,341


$
26,672Accounts receivable, net of allowance of $2,440 and $2,110,
    respectively


44,001



34,396Inventories


6,364



4,170Deferred income taxes


4,551



2,081Prepaid expenses and other current assets


10,358



6,898Total current assets


99,615



74,217Property, plant and equipment, net


411,647



314,381Intangibles and other assets:Investments


94,142



40,314Goodwill


526,439



316,034Customer lists, net


146,411



110,273Tradenames


14,291



14,291Deferred financing costs and other assets


12,046



20,069Total assets

$
1,304,591


$
889,579LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of capital lease obligation

$
1,010


$
Current portion of pension and post retirement benefit
    obligations


8,765



Accounts payable


17,386



11,004Advance billings and customer deposits


18,167



15,303Dividends payable


11,361



10,040Accrued expenses


28,254



29,399Total current liabilities


84,943



65,746Capital lease obligation less current portion


1,636



Long-term debt


890,000



594,000Deferred income taxes


97,289



55,893Pension and postretirement benefit obligations


56,729



54,187Other liabilities


14,306



1,100Total liabilities


1,144,903



770,926Minority interest


4,322



3,695Stockholders equityCommon stock, $0.01 par value, 100,000,000 shares
    authorized, 29,440,587 and 26,001,872 issued and outstanding in
    2007 and 2006, respectively


294



260Additional paid in capital


278,175



199,858Accumulated deficit


(117,452
)


(87,362
)Accumulated other comprehensive income (loss)


(5,651
)


2,202Total stockholders equity


155,366



114,958Total liabilities and stockholders equity

$
1,304,591


$
889,579    68




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##### Table of Contents



CONSOLIDATED
    COMMUNICATIONS HOLDINGS, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (Dollars
    in thousands, except per share amounts)
  Year Ended December 31,2007


2006


2005Revenues

$
329,248


$
320,767


$
321,429Operating expenses:Cost of services and products (exclusive of depreciation and
    amortization shown separately below)


107,290



98,093



101,159Selling, general and administrative expenses


89,662



94,693



98,791Intangible assets impairment






11,240



Depreciation and amortization


65,659



67,430



67,379Income from operations


66,637



49,311



54,100Other income (expense):Interest income


893



974



1,066Interest expense


(57,673
)


(43,873
)


(54,509
)Investment income


7,034



7,691



3,215Minority interest


(627
)


(721
)


(683
)Other, net


(167
)


290



3,284Income before income taxes


16,097



13,672



6,473Income tax expense


4,674



405



10,935Net income (loss)


11,423



13,267



(4,462
)Dividends on redeemable preferred shares










(10,263
)Net income (loss) applicable to common stockholders

$
11,423


$
13,267


$
(14,725
)Net income (loss) per common share Basic

$
0.44


$
0.48


$
(0.83
)Diluted

$
0.44


$
0.47


$
(0.83
)Cash dividends per common share

$
1.55


$
1.55


$
0.41    69




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##### Table of Contents



CONSOLIDATED
    COMMUNICATIONS HOLDINGS, INC.
    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
    EQUITY
    Year Ended December 31, 2007, 2006 and 2005
    (Dollars in thousands, except share amounts)
  AccumulatedOtherCommon Stock


Additional


Accumulated


Comprehensive





ComprehensiveShares


Amount


Paid in Capital


Deficit


Income (Loss)


Total


Income (Loss)Balance, January 1, 2005


10,000,000


$



$
58


$
(19,111
)

$
258


$
(18,795
)Net loss














(4,462
)






(4,462
)

$
(4,462
)Dividends on redeemable preferred shares














(10,263
)






(10,263
)


Dividends on common stock














(23,697
)






(23,697
)


Reorganization and conversion of redeemable preferred shares to
    common stock in connection with initial public offering


13,692,510



237



177,997











178,234



Issuance of common stock


6,000,000



60



67,529











67,589Shares issued under employee plan


87,500























Non-cash stock compensation










8,590











8,590Purchase and retirement of common stock


(5,000
)






(12
)










(12
)


Minimum pension liability, net of ($130) of tax


















(144
)


(144
)


(144
)Change in fair value of cash flow hedges, net of $1,582 of tax


















2,188



2,188



2,188Balance, December 31, 2005


29,775,010



297



254,162



(57,533
)


2,302



199,228


$
(2,418
)Net income














13,267







13,267


$
13,267Dividends on common stock














(43,096
)






(43,096
)


Shares issued under employee plan, net of forfeitures


13,841























Non-cash stock compensation










2,482











2,482Purchase and retirement of common stock


(3,786,979
)


(37
)


(56,786
)










(56,823
)


Reversal of minimum pension liability upon adoption of
    SFAS 158, net of $303 of tax


















427



427



Recognition of funded status upon adoption of SFAS 158, net
    of ($194) of tax


















(324
)


(324
)


Unrealized gain on marketable securities, net of $34 of tax


















49



49



49Change in fair value of cash flow hedges, net of ($492) of tax


















(252
)


(252
)


(252
)Balance, December 31, 2006


26,001,872



260



199,858



(87,362
)


2,202



114,958


$
13,064Net income














11,423







11,423


$
11,423Dividends on common stock














(41,513
)






(41,513
)


Issuance of common stock


3,319,142



34



74,376











74,410



Shares issued under employee plan, net of forfeitures


126,834























Non-cash stock compensation










4,034











4,034Purchase and retirement of common stock


(7,261
)






(131
)










(131
)


Permanent portion of tax on restricted stock vesting










38











38



Recognition of funded status of pension and other post
    retirement benefit plans, net of $1,606 of tax


















2,785



2,785



2,785Change in fair value of cash flow hedges, net of ($6,139) of tax


















(10,638
)


(10,638
)


(10,638
)Balance, December 31, 2007


29,440,587


$
294


$
278,175


$
(117,452
)

$
(5,651
)

$
155,366


$
3,570    70




---



##### Table of Contents



CONSOLIDATED
    COMMUNICATIONS HOLDINGS, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Dollars
    in thousands)
  Year Ended December 31,2007


2006


2005OPERATING ACTIVITIESNet income (loss)

$
11,423


$
13,267


$
(4,462
)Adjustments to reconcile net income (loss) to cash provided by
    operating activities:Depreciation and amortization


65,659



67,430



67,379Provision for uncollectible accounts


4,734



5,059



4,480Deferred income tax


(4,271
)


(9,305
)


10,232Intangible assets impairment






11,240



Pension curtailment gain










(7,880
)Partnership income


(2,205
)


(2,892
)


(1,809
)Non-cash stock compensation


4,034



2,482



8,590Minority interest in net income of subsidiary


627



721



683Penalty on early termination of debt










6,825Amortization and write off of deferred financing costs


13,451



3,260



5,482Changes in operating assets and liabilities, net of acquisition:Accounts receivable


(4,563
)


(3,952
)


(6,166
)Inventories


(228
)


(750
)


109Other assets


7,416



(2,080
)


156Accounts payable


1,258



(739
)


567Accrued expenses and other liabilities


(15,266
)


852



(4,886
)Net cash provided by operating activities


82,069



84,593



79,300INVESTING ACTIVITIESProceeds from sale of investments


10,625



5,921



Proceeds from sale of assets






815



Securities purchased


(10,625
)






Acquisition, net of cash acquired


(271,780
)






Capital expenditures


(33,495
)


(33,388
)


(31,094
)Net cash used in investing activities


(305,275
)


(26,652
)


(31,094
)FINANCING ACTIVITIESProceeds from issuance of stock


12







67,589Proceeds from long-term obligations


760,000



39,000



5,688Payments made on long-term obligations


(464,000
)






(86,934
)Repayment of North Pittsburgh long-term obligation


(15,426
)






Costs paid to issue common stock


(400
)






Payment of deferred financing costs


(8,988
)


(262
)


(5,552
)Purchase of treasury shares


(131
)


(56,823
)


(12
)Distribution to preferred shareholders










(37,500
)Dividends on common stock


(40,192
)


(44,593
)


(12,160
)Net cash provided by (used in) financing activities


230,875



(62,678
)


(68,881
)Net increase (decrease) in cash and cash equivalents


7,669



(4,737
)


(20,675
)Cash and cash equivalents at beginning of the year


26,672



31,409



52,084Cash and cash equivalents at end of the year

$
34,341


$
26,672


$
31,409Supplemental cash flow informationInterest paid

$
44,343


$
44,509


$
53,065Income taxes paid

$
13,976


$
8,237


$
613    71




---



##### Table of Contents



CONSOLIDATED
    COMMUNICATIONS HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars
    in thousands, except share and per share amounts)
  1.
    Description
    of Business  dial-up
  2.
    Initial
    Public Offering      3.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
    Use of
    Estimates
    Regulatory
    Accounting
  Accounting for the Effects of Certain Types of
    Regulation
 72




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Cash
    Equivalents
    Investments
      Accounts
    Receivable and Allowance for Doubtful Accounts
    Inventories
    Goodwill
    and Other Intangible Assets
  Goodwill and Other Intangible
    Assets
 73




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Accounting for the
    Impairment or Disposal of Long-lived Assets
    (SFAS 144)
  Property,
    Plant, and Equipment
          YearsBuildings


15-35Network and outside plant facilities


5-30Furniture, fixtures, and equipment


3-17Capital lease assets


11   Revenue
    Recognition
     74




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
        Advertising
    Costs
    Income
    Taxes
    Accounting for Income
    Taxes Accounting for Uncertainty in Income Taxes
   75




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Stock
    Based Compensation
  Share Based
    Payment Accounting for Stock-Based
    Compensation Accounting for Stock Issued to
    Employees
  Financial
    Instruments and Derivatives
    Accounting for Derivative Instruments and Hedging
    Activity
  Recent
    Accounting Pronouncements
  Noncontrolling Interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51.
 76




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  Business
    Combinations.
  The Fair Value
    Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115. instrument-by-instrument
  Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R).
  Fair Value
    Measurements. SFAS 157-2
    No. FIN 48-1, Definition of Settlement in FASB Interpretation
    No. 48,
 77




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    No. 06-11, Accounting for Income Tax Benefits of Dividends on
    Share-Based Payment Awards. No. 06-11 No. 06-11 No. 06-11
  4.
    Acquisition      Current assets

$
17,729Property, plant and equipment


117,134Customer list


49,000Goodwill


214,389Investments and other assets


53,360Liabilities assumed


(105,034
)Net purchase price

$
346,578      78




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    December 312007


2006Total revenues

$
424,917


$
424,232Income from operations

$
59,752


$
67,696Proforma net income

$
5,592


$
26,888Income per share  basic

$
0.19


$
0.87Income per share  diluted

$
0.19


$
0.85   5.
    Prepaids
    and other current assets    December 31,2007


2006Deferred charges

$
1,334


$
992Prepaid expenses


7,864



4,702Other current assets


1,160



1,204$
10,358


$
6,898   6.
    Property,
    plant and equipment    December 31,2007


2006Property, plant and equipment:Land and buildings

$
75,921


$
49,346Network and outside plant facilities


915,811



670,791Furniture, fixtures and equipment


88,766



74,082Assets under capital leases


6,032



Work in process


10,226



4,1241,096,756



798,343Less: accumulated depreciation


(685,109
)


(483,962
)Net property, plant and equipment

$
411,647


$
314,381    79




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  7.
    Investments    December 31,2007


2006Cash surender value of life insurance policies

$
2,566


$
1,376Cost method investments:GTE Mobilnet of South Texas Limited Partnership


21,450



21,450Pittsburgh SMSA Limited Partnership


22,950



CoBank, ACB stock


2,388



2,251Other


18



18Equity method investments:GTE Mobilnet of Texas RSA #17 Limited Partnership (17.02% owned)


15,359



15,080Pennsylvania RSA 6(I) Limited Partnership (16.6725% owned)


7,102



Pennsylvania RSA 6(II) Limited Partnership (23.67% owned)


21,949



Boulevard Communications, LLP


167



Fort Bend Fibernet Limited Partnership (39.06% owned)


193



139$
94,142


$
40,314    80




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    2007


2006For the year ended December 31:Total revenues

$
180,412


$
49,298Income from operations


41,682



15,161Income before income taxes


42,680



15,633Net income


42,680



15,633As of December 31:Current assets


31,049



14,409Non-current assets


64,173



34,399Current liabilities


8,869



1,844Non-current liabilities


468



246Partnership equity


85,885



46,097     8.
    Minority
    Interest    9.
    Goodwill
    and Other Intangible Assets   81




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Telephone


OtherOperations


Operations


TotalBalance at December 31, 2005

$
305,289


$
8,954


$
314,243Adjustment for change in estimate of tax basis of acquired assets


1,791







1,791Reclassification


1,770



(1,770
)


Balance at December 31, 2006


308,850



7,184



316,034Utilization and release of NOL valuation allowance


(3,984
)






(3,984
)Purchase of North Pittsburgh


214,389







214,389Balance at December 31, 2007

$
519,255


$
7,184


$
526,439           December 31,2007


2006Gross carrying amount

$
205,648


$
156,648Less: accumulated amortization


(59,237
)


(46,375
)Net carrying amount

$
146,411


$
110,273    82




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    10.
    Affiliated
    Transactions          Year Ended December 31,2007


2006


2005Fees charged from First Mid-Illnois for:Banking fees

$
10


$
10


$
6401K plan adminstration


81



100



69Interest income earned by the Company on deposits at First
    Mid-Illinois


174



206



443Fees charged by the Company to First Mid-Illinois for
    telecommunication services


465



542



514      83




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  11.
    Income
    Taxes    Year Ended December 31,2007


2006


2005Current:Federal

$
7,790


$
10,152


$
240State


1,155



1,632



1,0428,945



11,784



1,282Deferred:Federal


(1,523
)


(4,568
)


4,972State


(2,748
)


(6,811
)


4,681(4,271
)


(11,379
)


9,653Income tax expense

$
4,674


$
405


$
10,935     Year Ended December 31,2007


2006


2005Statutory federal income tax rate (benefit)


35.0
%


35.0
%


35.0
%State income taxes, net of federal benefit


2.5



2.1



5.7Stock compensation


4.7



6.4



46.4Litigation settlement










16.6Life insurance proceeds










(15.0
)Other permanent differences


1.9



3.3



4.6Change in valuation allowance










4.9Change in tax law


(10.7
)


(45.8
)


Change in deferred tax rate


(5.4
)


2.0



71.3Other


1.0







(0.6
)29.0
%


3.0
%


168.9
%    84




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Year Ended December 31,2007


2006Current deferred tax assets:Reserve for uncollectible accounts

$
877


$
739Accrued vacation pay deducted when paid


1,258



1,013Accrued expenses and deferred revenue


2,415



3294,550



2,081Noncurrent deferred tax assets:Net operating loss carryforwards


5,968



6,322Pension and postretirement obligations


25,161



19,972Stock compensation


158



Derivative instruments


4,657



State tax credit carryforward


2,441



Alternative minimum tax credit carryforward






768Valuation allowance


(2,871
)


(5,349
)35,514



21,713Noncurrent deferred tax liabilities:Goodwill and other intangibles


(50,483
)


(29,353
)Derivative instruments






(1,488
)Partnership investment


(22,096
)


(5,470
)Property, plant and equipment


(60,223
)


(41,295
)(132,802
)


(77,606
)Net non-current deferred tax liabilities


(97,288
)


(55,893
)Net deferred income tax liabilities

$
(92,738
)

$
(53,812
)    85




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
               86




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
      Liability ForUnrecognizedTax BenefitsBalance at January 1, 2007

$
5,623Additions for tax positions of acquisition


407Reductions for tax positions of prior years


Additions for tax positions of prior years


Reduction for lapse of 2003 federal statute of limitations


Reduction for lapse of 2002 state statute of limitations


Balance at December 31,2007

$
6,030   12.
    Accrued
    Expenses    December 31,2007


2006Salaries and employee benefits

$
10,350


$
10,255Taxes payable


5,180



10,399Accrued interest


3,614



4,228Other accrued expenses


9,110



4,517$
28,254


$
29,399   13.
    Pension
    Costs and Other Postretirement Benefits   87




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
     88




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Pension Benefits


Other BenefitsDecember 31,


December 31,2007


2006


2005


2007


2006


2005The change in benefit obligationProjected benefit obligation, beginning of year

$
126,910


$
124,334


$
117,640


$
26,994


$
27,831


$
35,747Acquired with the acquisition of North Pittsburgh


61,651











13,165







Service cost


1,802



2,024



2,699



809



842



910Interest cost


7,378



7,012



7,003



1,527



1,346



1,638Plan participant contributions














246



109



196Plan amendments














916







(2,851
)Plan curtailments










(4,728
)










(7,881
)Benefits paid


(7,743
)


(6,666
)


(6,722
)


(1,792
)


(1,150
)


(1,882
)Administrative expenses paid






















(141
)Actuarial (gain)/loss


(2,147
)


206



8,442



(970
)


(1,984
)


2,095Projected benefit obligation, end of year

$
187,851


$
126,910


$
124,334


$
40,895


$
26,994


$
27,831Accumulated benefit obligation

$
180,003


$
125,377


$
115,630The change in plan assetsFair value of plan assets, beginning of year

$
103,790


$
100,446


$
94,292


$



$



$
Acquired with the acquisition of North Pittsburgh


54,912



















Actual return on plan assets


10,870



9,685



7,757











Employer contributions


4,809



402



5,372



1,546



1,041



1,827Plan participant contributions














246



109



196Administrative expenses paid






(77
)


(253
)










(141
)Benefits paid


(7,743
)


(6,666
)


(6,722
)


(1,792
)


(1,150
)


(1,882
)Fair value of plan assets, end of year

$
166,638


$
103,790


$
100,446


$



$



$
Funded statusProjected benefit obligation

$
(187,851
)

$
(126,910
)

$
(124,334
)

$
(40,895
)

$
(26,994
)

$
(27,831
)Fair value of plan assets


166,638



103,790



100,446











Employer contributions after measurement date and before end of
    year














339



136



158Funded status


(21,213
)


(23,120
)


(23,888
)


(40,556
)


(26,858
)


(27,673
)Unrecognized prior service (credit)


(151
)


(164
)






(131
)


(1,758
)


(2,469
)Unrecognized net actuarial (gain) loss


(3,640
)


1,376



3,368



49



1,064



2,988Net amount recognized

$
(25,004
)

$
(21,908
)

$
(20,520
)

$
(40,638
)

$
(27,552
)

$
(27,154
)   89




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  Pension Benefits


Other BenefitsDecember 31,


December 31,2007


2006


2005


2007


2006


2005Amounts recognized in the balance sheet included inCurrent liabilities

$
(5,924
)

$



$



$
(2,841
)

$



$
Noncurrent liabilities


(15,289
)


(23,120
)


(21,250
)


(37,715
)


(26,858
)


(27,154
)$
(21,213
)

$
(23,120
)

$
(21,250
)

$
(40,556
)

$
(26,858
)

$
(27,154
)Amounts in accumulated other comprehensive income (loss):Unrecognized prior service (credit)


(151
)


(164
)






(131
)


(1,758
)


Unrecognized net actuarial (gain) loss


(3,640
)


1,376



730



49



1,064



$
(3,791
)

$
1,212


$
730


$
(82
)

$
(694
)

$
       December 31,2007


2006Plan assets by categoryEquity securities


38.3
%


56.3
%Debt securities


24.3
%


35.9
%Other


37.4
%


7.8
%100.0
%


100.0
%      90




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Pension


OtherBenefits


Benefits2008

$
17,116


$
2,8412009


11,297



3,0902010


11,576



3,1702011


11,745



3,2952012


12,058



3,3982013 through 2017


44,693



17,228       Pension Benefits


Other Benefits2007


2006


2005


2007


2006


2005Service cost

$
1,802


$
2,024


$
2,699


$
809


$
842


$
910Interest cost


7,378



7,012



7,003



1,527



1,346



1,638Expected return on plan assets


(8,034
)


(7,790
)


(7,383
)










Curtailment gain






















(7,880
)Other, net


22



544



48



(667
)


(772
)


(471
)Net periodic benefit cost (income)

$
1,168


$
1,790


$
2,367


$
1,669


$
1,416


$
(5,803
)  91




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Pension Benefits


Other Benefits2007


2006


2005


2007


2006


2005Discount rate


6.3
%


6.0
%


5.9
%


6.3
%


6.0
%


5.9
%Compensation rate increase


3.5
%


3.3
%


3.3
%










Return on plan assets


8.0
%


8.0
%


8.0
%










Initial heathcare cost trend rate














10.0
%


10.0
%


10.5
%Ultimate heathcare cost rate














5.0
%


5.0
%


5.0
%Year ultimate trend rate reached














2012 to 2013



2011 to 2012



2011 to 2012       Pension


OtherBenefits


BenefitsDiscount rate


6.4
%


6.1
%Compensation rate increase


4.3
%


4.3
%Return on plan assets


8.0
%


Initial heathcare cost trend rate






10.0
%Ultimate heathcare cost rate






5.0
%Year ultimate trend rate reached






2013     1% Increase

1% DecreaseEffect on 2007 service and interest costs

$
291


$
(233
)Effect on accumulated postretirement benefit obligations as of
    December 31, 2007

$
3,509


$
(3,070
)  92




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Prior to


Effect ofAdopting


AdoptingSFAS 158


SFAS 158


As ReportedLiabilities for pension and postretirement benefit obligations

$
53,669


$
518


$
54,187Deferred income tax liabilities


56,087



(194
)


55,893Total liabilities


770,602



324



770,926Accumulated other comprehensive income


2,526



(324
)


2,202Total stockholders equity


115,282



(324
)


114,958   14.
    Employee
    401k Benefit Plans and Deferred Compensation
    Agreements  401k
    Benefit Plans
    Deferred
    Compensation Agreements
     93




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##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  15.
    Long-Term
    Debt    December 31,2007


2006Senior Secured Credit Facility:Revolving loan

$



$
Term loan


760,000



464,000Obligations under capital lease


2,646



Senior notes


130,000



130,000892,646



594,000Less: current portion


(1,010
)


$
891,636


$
594,000     2008

$
1,0102009


1,0872010


5092011


402012


130,000Thereafter


760,000$
892,646   Senior
    Secured Credit Facility
       94




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
    Capital
    Lease
    Senior
    Notes
  3 4
      Derivative
    Instruments
     95




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  16.
    Restricted
    Share Plan      2007


2006


2005Restricted shares outstanding, beginning of period


248,745



422,065



750,000Shares granted


136,584



18,000



87,500Shares vested


(246,277
)


(187,000
)


(408,662
)IPO conversion adjustment










(1,773
)Shares forfeited or retired


(9,750
)


(4,320
)


(5,000
)Restricted shares outstanding, end of period


129,302



248,745



422,065    96




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  17.
    Accumulated
    Other Comprehensive Income (Loss)    December 31,2007


2006Fair value of cash flow hedges

$
(12,769
)

$
4,008Pension liability adjustments, including the impact of adopting
    SFAS 158 in 2006


3,873



(518
)(8,896
)


3,490Deferred taxes


3,245



(1,288
)Accumulated other comprehensive income (loss)

$
(5,651
)

$
2,202   18.
    Environmental
    Remediation Liabilities    19.
    Commitments
    and Contingencies  Legal
    proceedings
    Operating
    leases
    Other
    Commitments
   97




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  Other
    Contingencies
      20.
    Share
    Repurchase   98




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  21.
    Net
    Income (Loss) per Common Share    December 31,2007


2006


2005Net income (loss) applicable to common stockholders

$
11,423


$
13,267


$
(14,725
)Basic weighted average number of common shares outstanding


25,764,380



27,739,697



17,821,609Effect of dilutive securities


358,104



430,804



Diluted weighted average number of common shares outstanding


26,122,484



28,170,501



17,821,609Basic earnings (loss) per share

$
0.44


$
0.48


$
(0.83
)Diluted earnings (loss) per share

$
0.44


$
0.47


$
(0.83
)     22.
    Business
    Segments  dial-up
    99




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  Telephone


OtherOperations


Operations


TotalYear ended December 31, 2007:Operating revenues

$
286,774


$
42,474


$
329,248Cost of services and products


78,139



29,151



107,290208,635



13,323



221,958Operating expenses


75,260



14,402



89,662Depreciation and amortization


63,213



2,446



65,659Operating income (loss)

$
70,162


$
(3,525
)

$
66,637Capital expenditures

$
32,245


$
1,250


$
33,495Year ended December 31, 2006:Operating revenues

$
280,334


$
40,433


$
320,767Cost of services and products


68,938



29,155



98,093211,396



11,278



222,674Operating expenses


83,393



11,300



94,693Intangible assets impairment






11,240



11,240Depreciation and amortization


62,064



5,366



67,430Operating income (loss)

$
65,939


$
(16,628
)

$
49,311Capital expenditures

$
32,698


$
690


$
33,388Year ended December 31, 2005:Operating revenues

$
282,285


$
39,144


$
321,429Cost of services and products


72,769



28,390



101,159209,516



10,754



220,270Operating expenses


89,043



9,748



98,791Depreciation and amortization


62,254



5,125



67,379Operating income (loss)

$
58,219


$
(4,119
)

$
54,100Capital expenditures

$
30,464


$
630


$
31,094As of December 31, 2007:Goodwill

$
519,255


$
7,184


$
526,439Total assets

$
1,281,011


$
23,580


$
1,304,591  100




---



##### Table of Contents



CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except share and per share amounts)
  23.
    Quarterly
    Financial Information (unaudited)  March 31


June 30


September 30


December 312007Revenues

$
82,980


$
80,944


$
80,320


$
85,004Operating expenses:Cost of services and products


25,629



25,788



27,698



28,175Selling, general and administrative expenses


22,299



22,296



21,800



23,267Depreciation and amortization


16,629



16,606



16,350



16,074Total operating expenses


64,557



64,690



65,848



67,516Income from operations


18,423



16,254



14,472



17,488Other expenses, net


10,117



9,704



10,119



20,600Pretax income (loss)


8,306



6,550



4,353



(3,112
)Income tax expense (benefit)


3,687



1,057



2,012



(2,082
)Net income (loss)

$
4,619


$
5,493


$
2,341


$
(1,030
)Net income (loss) per common share basic and diluted

$
0.18


$
0.21


$
0.09


$
(0.04
)2006Revenues

$
79,426


$
79,340


$
80,323


$
81,678Operating expenses:Cost of services and products


24,673



23,951



24,140



25,329Selling, general and administrative expenses


22,512



24,671



23,764



23,746Intangible assets impairment














11,240Depreciation and amortization


17,071



16,844



16,961



16,554Total operating expenses


64,256



65,466



64,865



76,869Income from operations


15,170



13,874



15,458



4,809Other expenses, net


8,694



8,738



9,530



8,677Pretax income (loss)


6,476



5,136



5,928



(3,868
)Income tax expense (benefit)


2,928



(3,089
)


3,913



(3,347
)Net income (loss)

$
3,548


$
8,225


$
2,015


$
(521
)Net income (loss) per common share Basic

$
0.12


$
0.28


$
0.08


$
(0.02
)Diluted

$
0.12


$
0.28


$
0.07


$
(0.02
)   Notes:
     101




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.  Controls
    and Procedures
  Rule 13a-15(e)
  Form 10-K.
 Item 9B.  Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence   102




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##### Table of Contents



Item 14.
    Principal
    Accounting Fees and Services   Part IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Exhibits
    Financial
    Statement Schedules
      Rule 3-09 Regulation S-X
 103




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##### Table of Contents



CONSOLIDATED
    COMMUNICATIONS HOLDINGS, INC.
  SCHEDULE II  VALUATION
    RESERVES
 (Dollars
    in thousands)
  December 31,2007


2006


2005Allowance for Doubtful Accounts:Balance at beginning of year

$
2,110


$
2,825


$
2,613North Pittsburgh acquisition


471







Provision charged to expense


4,734



5,059



4,480Write-offs, less recoveries


(4,875
)


(5,774
)


(4,268
)Balance at end of year

$
2,440


$
2,110


$
2,825Inventory reserves:Balance at beginning of year

$
429


$
630


$
549TXU Acquisiton










264North Pittsburgh acquisition


171







Provision charged to expense


125







70Write-offs


(325
)


(201
)


(253
)Balance at end of year

$
400


$
429


$
630Income tax valuation allowance:Balance at beginning of year

$
5,349


$
16,040


$
17,136North Pittsburgh acquisition


1,530







Adjustment to goodwill










(1,413
)Reduction of related deferred tax asset


(3,984
)


(5,021
)


Provision (benefit) charged to expense


(24
)


(283
)


317Release of valuation allowance






(5,387
)


Balance at end of year

$
2,871


$
5,349


$
16,040  104




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             105




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  BALANCE
    SHEETS
    December 31, 2007 and 2006
    (Dollars in thousands)
  2007


2006ASSETSCURRENT ASSETS:Accounts receivable, net of allowance of $373 and $329

$
3,006


$
2,602Unbilled revenue


952



1,047Due from General Partner


7,403



10,747Prepaid expenses and other current assets


8



13Total current assets


11,369



14,409PROPERTY, PLANT AND EQUIPMENT  Net


40,062



34,399TOTAL ASSETS

$
51,431


$
48,808LIABILITIES AND PARTNERS CAPITALCURRENT LIABILITIES:Accounts payable and accrued liabilities

$
1,579


$
1,844Advance billings and customer deposits


773



621Total current liabilities


2,352



2,465LONG TERM LIABILITIES


270



246Total liabilities


2,622



2,711COMMITMENTS AND CONTINGENCIES (see Notes 6 and 7)PARTNERS CAPITAL


48,809



46,097TOTAL LIABILITIES AND PARTNERS CAPITAL

$
51,431


$
48,808    106




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  STATEMENTS
    OF OPERATIONS
    Years Ended December 31, 2007, 2006 and 2005
    (Dollars in thousands)
  2007


2006


2005OPERATING REVENUES (see Note 5 for Transactions with
    Affiliates and Related Parties):Service revenues

$
48,096


$
45,295


$
38,399Equipment and other revenues


4,341



4,003



3,633Total operating revenues


52,437



49,298



42,032OPERATING COSTS AND EXPENSES (see Note 5 for Transactions
    with Affiliates and Related Parties):Cost of service (excluding depreciation and amortization related
    to network assets included below)


15,028



13,536



12,316Cost of equipment


5,085



3,709



3,336Selling, general and administrative


14,142



12,401



11,417Depreciation and amortization


5,020



4,491



4,004Total operating costs and expenses


39,275



34,137



31,073OPERATING INCOME


13,162



15,161



10,959OTHER INCOME:Interest income, net


550



472



301Total other income


550



472



301NET INCOME

$
13,712


$
15,633


$
11,260Allocation of Net Income:Limited partners

$
10,970


$
12,504


$
9,007General Partner

$
2,742


$
3,129


$
2,253    107




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  STATEMENTS
    OF CHANGES IN PARTNERS CAPITAL
    Years Ended December 31, 2007, 2006 and 2005
    (Dollars in thousands)
  GeneralPartner


Limited PartnersSan


Eastex





Consolidated


ALLTEL


SanAntonio


Telecom


Telecom


Communications


Communications


Antonio


TotalMTA,


Investments,


Supply,


Transport


Investments,


MTA,


PartnersL.P.


L.P.


Inc.


Company


Inc.


L.P.


CapitalBALANCE  January 1, 2005

$
5,439


$
4,631


$
4,631


$
4,631


$
4,631


$
3,241


$
27,204Distributions


(400
)


(341
)


(341
)


(341
)


(341
)


(236
)


(2,000
)Net income


2,253



1,917



1,917



1,917



1,917



1,339



11,260BALANCE  December 31, 2005


7,292



6,207



6,207



6,207



6,207



4,344



36,464Distributions


(1,201
)


(1,021
)


(1,021
)


(1,021
)


(1,021
)


(715
)


(6,000
)Net income


3,129



2,660



2,660



2,660



2,660



1,864



15,633BALANCE  December 31, 2006


9,220



7,846



7,846



7,846



7,846



5,493



46,097Distributions


(2,200
)


(1,872
)


(1,872
)


(1,872
)


(1,872
)


(1,312
)


(11,000
)Net income


2,742



2,334



2,334



2,334



2,334



1,634



13,712BALANCE  December 31, 2007

$
9,762


$
8,308


$
8,308


$
8,308


$
8,308


$
5,815


$
48,809    108




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  STATEMENTS
    OF CASH FLOWS
    Years Ended December 31, 2007, 2006 and 2005
    (Dollars in thousands)
  2007


2006


2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
13,712


$
15,633


$
11,260Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


5,020



4,491



4,004Provision for losses on accounts receivable


887



717



931Changes in certain assets and liabilities:Accounts receivable


(1,291
)


(937
)


(1,252
)Unbilled revenue


95



(138
)


(197
)Prepaid expenses and other current assets


5



1



(3
)Accounts payable and accrued liabilities


(149
)


76



283Advance billings and customer deposits


152



4



77Long term liabilities


24



109



137Net cash provided by operating activities


18,455



19,956



15,240CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures, including purchases from affiliates, net


(10,799
)


(10,044
)


(10,064
)Change in due from General Partner, net


3,344



(3,912
)


(3,176
)Net cash used in investing activities


(7,455
)


(13,956
)


(13,240
)CASH FLOWS FROM FINANCING ACTIVITIES:Distributions to partners


(11,000
)


(6,000
)


(2,000
)Net cash used in financing activities


(11,000
)


(6,000
)


(2,000
)CHANGE IN CASH










CASH  Beginning of year










CASH  End of year

$



$



$
NONCASH TRANSACTIONS FROM INVESTING AND FINANCING ACTIVITIES:Accruals for capital expenditures

$
242


$
214


$
879    109




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
    NOTES TO FINANCIAL STATEMENTS 
    Years Ended December 31, 2007, 2006 and 2005
    (Dollars in Thousands)
  1.
    Organization
    and Management  GTE Mobilnet of Texas #17 Limited
    Partnership
    General Partner:San Antonio MTA, L.P.*


20.0000
%Limited Partners:Eastex Telecom Investments, L.P.


17.0213
%Telecom Supply, Inc.


17.0213
%Consolidated Communications Transport Company


17.0213
%ALLTEL Communications Investments, Inc.


17.0213
%San Antonio MTA, L.P.*


11.9148
%     *
    
    San Antonio MTA, L.P. (General Partner) is a
    wholly-owned subsidiary of Cellco Partnership
    (Cellco) doing business as Verizon Wireless.  2.
    Significant
    Accounting Policies  Use of Estimates
  Revenue Recognition No. 00-21, Accounting for Revenue Arrangements with Multiple
    Deliverables Revenue Recognition in Financial Statements Revenue Recognition No. 00-21.
 110




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Operating Costs and Expenses minutes-of-use,
  Income Taxes
  Inventory
  Allowance for Doubtful Accounts
  Property, Plant and Equipment
    construction-in-progress
  FCC Licenses
  Valuation of Assets
 111




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Goodwill and Other Intangible Assets
    No. 02-7, Unit of Accounting for Testing Impairment of Indefinite-Lived
    Intangible Assets No. D-108, Use of the Residual Method to Value Acquired Assets other
    than Goodwill
  Concentrations
      Financial Instruments
  Due from General Partner
 112




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Distributions
  Recently Issued Accounting
    Pronouncements Fair Value Measurement No. FAS 157-b,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  No. 06-3, How Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement No. 06-3 No. 06-3 No. 06-3
  3.
    Property,
    Plant and Equipment    Useful lives

2007


2006Buildings and improvements

10-40 years

$
16,290


$
13,921Cellular plant equipment

3-15 years


51,268



44,850Furniture, fixtures and equipment

2-5 years


75



106Leasehold improvements

5 years


3,118



2,41170,751



61,288Less accumulated depreciation and amortization




30,689



26,889Property, plant and equipment, net



$
40,062


$
34,399  113




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Construction-in-progress
  4.
    Accounts
    Payable and Accrued Liabilities    2007


2006Accounts payable

$
749


$
964Non-income based taxes and regulatory fees


618



640Accrued commissions


212



240Accounts payable and accrued liabilities

$
1,579


$
1,844   5.
    Transactions
    with Affiliates and Related Parties    2007


2006


2005Service revenues(a)

$
13,035


$
15,819


$
12,758Equipment and other revenues(b)


(259
)


(278
)


(53
)Cost of service(c)


11,909



10,838



9,558Cost of equipment(d)


1,037



531



368Selling, general and administrative(e)


8,330



6,712



5,648     (a)
    
    Service revenues include roaming revenues relating to customers
    of other affiliated markets, long distance, paging, data and
    allocated contra-revenues including revenue concessions.(b)
    
    Equipment and other revenues include sales of handsets and
    accessories and allocated contra-revenues including equipment
    concessions and coupon rebates.(c)
    
    Cost of service includes roaming costs relating to customers
    roaming in other affiliated markets, paging, switch usage and
    allocated cost of telecom, long distance and handset
    applications.(d)
    
    Cost of equipment includes handsets, accessories, and allocated
    warehousing and freight.(e)
    
    Selling, general and administrative expenses include commissions
    and billing, and allocated office telecom, customer care,
    billing, salaries, sales and marketing, advertising, and
    commissions.  and/or
     114




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    6.
    Commitments      Years

Amount2008

$
1,8002009


1,7692010


9052011


6142012


4802013 and thereafter


1,597Total minimum payments

$
7,165     7.
    Contingencies  and/or and/or
   115




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##### Table of Contents



GTE
    MOBILNET OF TEXAS #17 LIMITED PARTNERSHIP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    8.
    Reconciliation
    of Allowance for Doubtful Accounts  Balance at


Additions


Write-offs


Balance atBeginning


Charged to


Net of


End ofof the Year


Operations


Recoveries


the YearAccounts Receivable Allowances:2007

$
329


$
887


$
(843
)

$
3732006


385



717



(773
)


3292005


268



931



(814
)


385   * * * * *
    *
 116




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##### Table of Contents



SIGNATURES    Consolidated
    Communications Holdings, Inc.
    (Registrant)
  By:
    /s/  Robert
    J. Currey          Signature

Title/s/  Robert
    J. CurreyRobert
    J. Currey

President , Chief Executive Officer and Director
    (Principal Executive Officer)/s/  Steven
    L. ChildersSteven
    L. Childers

Senior Vice President and
    Chief Financial Officer
    (Principal Financial and Accounting Officer)/s/  Richard
    A. LumpkinRichard
    A. Lumpkin

Chairman of the Board of Directors/s/  Jack
    W. BlumensteinJack
    W. Blumenstein

Director/s/  Roger
    H. MooreRoger
    H. Moore

Director/s/  Maribeth
    S. RaheMaribeth
    S. Rahe

Director  117




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##### Table of Contents



INDEX TO
    EXHIBITS  ExhibitNumber

Description2
.1

Agreement and Plan of Merger, dated as of July 1, 2007, by
    and among Consolidated Communications Holdings, Inc., North
    Pittsburgh Systems, Inc. and Fort Pitt Acquisition Sub Inc.
    (incorporated by reference to Exhibit 2.1 to Current Report
    on
    Form 8-K
    dated July 12, 2007).3
.1

Form of Amended and Restated Certificate of Incorporation
    (incorporated by reference to Exhibit 3.1 to Amendment
    No. 7 to
    Form S-1
    dated July 19, 2005).3
.2

Form of Amended and Restated Bylaws, as amended (incorporated by
    reference to Exhibit 3.2 to Current Report on
    Form 8-K
    dated September 11, 2007).4
.1

Specimen Common Stock Certificate (incorporated by reference to
    Exhibit 3.1 to Amendment No. 7 to
    Form S-1
    dated July 19, 2005).4
.2

Indenture, dated April 14, 2004, by and among Consolidated
    Communications Illinois Holdings, Inc., Consolidated
    Communications Texas Holdings, Inc., Homebase Acquisition, LLC
    and Wells Fargo Bank, N.A., as Trustee, with respect to the
    93/4% Senior
    Notes due 2012 (incorporated by reference to Exhibit 4.1 to
    Form S-4
    dated October 26, 2004).10
.1

Credit Agreement, dated December 31, 2007, among
    Consolidated Communications Holdings, Inc., as Parent Guarantor,
    Consolidated Communications, Inc., Consolidated Communications
    Acquisition Texas, Inc. and Fort Pitt Acquisition Sub Inc.,
    as Co-Borrowers, the lenders referred to therein, Wachovia Bank,
    National Association, as administrative agent, issuing bank and
    swingline lender, CoBank, ACB, as syndication agent, General
    Electric Capital Corporation, as co-documentation agent, The
    Royal Bank of Scotland PLC, as co-documentation agent, and
    Wachovia Capital Markets, LLC, as sole lead arranger and sole
    bookrunner (incorporated by reference to Exhibit 10.1 to
    Current Report on
    Form 8-K
    dated December 31, 2007).10
.2

Form of Collateral Agreement, dated December 31, 2007, by
    and among Consolidated Communications Holdings, Inc.,
    Consolidated Communications, Inc., Consolidated Communications
    Acquisition Texas, Inc., Fort Pitt Acquisition Sub Inc.,
    certain subsidiaries of Consolidated Communications Holdings,
    Inc. identified on the signature pages thereto, in favor of
    Wachovia Bank, National Association, as Administrative Agent
    (filed herewith).10
.3

Form of Guaranty Agreement, dated December 31, 2007, made
    by Consolidated Communications Holdings, Inc. and certain
    subsidiaries of Consolidated Communications Holdings, Inc.
    identified on the signature pages thereto, in favor of Wachovia
    Bank, National Association, as Administrative Agent (filed
    herewith).10
.4

Lease Agreement, dated December 31, 2002, between LATEL,
    LLC and Consolidated Market Response, Inc. (incorporated by
    reference to Exhibit 10.11 to
    Form S-4
    dated October 26, 2004).10
.5

Lease Agreement, dated December 31, 2002, between LATEL,
    LLC and Illinois Consolidated Telephone Company (incorporated by
    reference to Exhibit 10.12 to
    Form S-4
    dated October 26, 2004).10
.6

Master Lease Agreement, dated February 25, 2002, between
    General Electric Capital Corporation and TXU Communications
    Ventures Company (incorporated by reference to
    Exhibit 10.13 to
    Form S-4
    dated October 26, 2004).10
.7

Amendment No. 1 to Master Lease Agreement, dated
    February 25, 2002, between General Electric Capital
    Corporation and TXU Communications Ventures Company, dated
    March 18, 2002 (incorporated by reference to
    Exhibit 10.14 to
    Form S-4
    dated October 26, 2004).10
.8

Amended and Restated Consolidated Communications Holdings, Inc.
    Restricted Share Plan (incorporated by reference to
    Exhibit 3.1 to Amendment No. 7 to
    Form S-1
    dated July 19, 2005).10
.9

Form of 2005 Long-term Incentive Plan (incorporated by reference
    to Exhibit 3.1 to Amendment No. 7 to
    Form S-1
    dated July 19, 2005).10
.10

Stock Repurchase Agreement, dated July 13, 2006, by and
    among Consolidated Communications Holdings, Inc., Providence
    Equity Partners IV L.P. and Providence Equity Operating
    Partners IV L.P. (incorporated by reference to
    Exhibit 10.1 to
    Form 8-K
    dated July 17, 2006).10
.11

Form of Employment Security Agreement with certain of the
    Companys executive officers (incorporated by reference to
    Exhibit 10.1 to
    Form 8-K
    dated February 20, 2007). 118




---



##### Table of Contents



ExhibitNumber

Description10
.12

Form of Employment Security Agreement with the Companys
    and its subsidiaries vice president and director level employees
    (filed herewith).10
.13

Executive Long-Term Incentive Program, as revised March 12,
    2007 (incorporated by reference to Exhibit 10.1 to
    Form 8-K
    dated March 12, 2007).10
.14

Form of 2005 Long-Term Incentive Plan Performance Stock Grant
    Certificate (incorporated by reference to Exhibit 10.2 to
    Form 8-K
    dated March 12, 2007).10
.15

Form of 2005 Long-Term Incentive Plan Restricted Stock Grant
    Certificate (incorporated by reference to Exhibit 10.3 to
    Form 8-K
    dated March 12, 2007).10
.16

Form of 2005 Long-Term Incentive Plan Restricted Stock Grant
    Certificate for Directors (incorporated by reference to
    Exhibit 10.4 to
    Form 8-K
    dated March 12, 2007).10
.17

Description of the Consolidated Communications Holdings, Inc.
    Bonus Plan (incorporated by reference to Exhibit 10.5 to
    Form 8-K
    dated March 12, 2007).21


List of Subsidiaries of Consolidated Communications Holdings,
    Inc.23
.1

Consent of Independent Registered Public Accounting Firm.23
.2

Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.  119