<PAGE>

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

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

                                   ----------

                                    FORM 10-K

                  For Annual and Transition Reports Pursuant to
                Section 13 or 15(d) of the Securities Act of 1934

(Mark One)

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For The Fiscal Year Ended September 30, 2002.

                                       OR


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

                         Commission File Number: 027455

                                   ----------

                                AirGate PCS, Inc.
             (Exact name of registrant as specified in its charter)


                Delaware                                    58-2422929
      (State other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                   Identification Number)

           Harris Tower, 233
     Peachtree St. NE, Suite 1700,
            Atlanta, Georgia                                   30303
(Address of principal executive offices)                    (Zip code)

                                 (404) 525-7272
               Registrant's telephone number, including area code

                                   ----------

        Securities registered pursuant to Section 12(b) of the Act: None.

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                                (Title of Class)

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes |_| No |X|

         The aggregate market value of the voting stock held by non-affiliates
of the registrant computed by reference to the closing sale price on the Nasdaq
Stock Market on March 29, 2002, the last business day of the registrant's most
recently completed second fiscal quarter, was approximately $322,982,898. (For
purposes of determination of the foregoing amount, only our directors and
executive officers have been deemed affiliates).

         As of December 27, 2002, there were 25,836,520 shares of common stock,
$0.01 par value per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Definitive Proxy Statement to be filed within 120 days
after September 30, 2002 for the Registrant's Annual Shareholder Meeting are
incorporated into Part III of this Report on Form 10-K.

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

<PAGE>

                                AIRGATE PCS, INC.

                           ANNUAL REPORT ON FORM 10-K
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           PAGE
   ITEM NO.                                                                                                 NO.
   --------                                                                                                 ---
<S>                                                                                                        <C>
   PART I ..............................................................................................     1

   ITEM 1.    Business .................................................................................     1

   ITEM 2.    Properties ...............................................................................    37

   ITEM 3.    Legal Proceedings ........................................................................    37

   ITEM 4.    Submission of Matters to a Vote of Security Holders ......................................    37

   PART II .............................................................................................    38

   ITEM 5.    Market For Registrant's Common Equity And Related Stockholder Matters ....................    38

   ITEM 6.    Selected Financial Data ..................................................................    39

   ITEM 7.    Management's Discussion And Analysis Of Financial Condition And Results Of Operations ....    40

   ITEM 7A.   Quantitative And Qualitative Disclosures About Market Risk ...............................    60

   ITEM 8.    Financial Statements .....................................................................    60

   ITEM 9.    Changes In And Disagreements With Accountants On Accounting And Financial Disclosure .....    60

   PART III ............................................................................................    61

   ITEM 14.   Controls and Procedures ..................................................................    61

   PART IV .............................................................................................    62

   ITEM 15.   Financial Statements, Schedules, And Reports On Form 8-K and Exhibits ....................    62

</TABLE>

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                                     PART I

ITEM 1. Business

Special Caution Regarding Forward-Looking Statements

This annual report on Form 10-K and other documents we file with the Securities
and Exchange Commission ("SEC") contain forward-looking statements that are
based on current expectations, estimates, forecasts and projections about us,
our future performance, our liquidity, the wireless industry, our beliefs and
our management's assumptions. In addition, other written or oral statements that
constitute forward-looking statements may be made by or on our behalf. Words
such as "anticipate," "believe," "estimate," "expect," "goal," "intend," "plan,"
"project," "seek," "target," variations of such words and similar expressions
are intended to identify such forward-looking statements. These statements are
not guarantees of future performance and involve certain risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking statements. Except as required under the federal securities laws
and the rules and regulations of the SEC, we do not have any intention or
obligation to update publicly any forward-looking statements after the
distribution of this annual report on Form 10-K, whether as a result of new
information, future events, changes in assumptions, or otherwise.

Important factors that could cause our actual results to differ materially from
the results contemplated by the forward-looking statements are contained in the
"Risk Factors" section in this Item 1, in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
report.

Certain Definitions

In this annual report on Form 10-K, we refer to AirGate PCS, Inc. and its
subsidiaries, other than iPCS, Inc. and its subsidiaries, as "AirGate." We refer
to iPCS, Inc. and its subsidiaries as "iPCS." Unless the context otherwise
requires, the use of "we," "our," "us" or "the Company," refers to the combined
company of AirGate and iPCS after giving effect to the merger. AirGate has three
other wholly-owned subsidiaries, AGW Leasing Company, Inc., AirGate Network
Services, LLC and AirGate Service Company, Inc. iPCS has two wholly-owned
subsidiaries, iPCS Wireless, Inc. and iPCS Equipment, Inc.

"Sprint PCS" refers to Sprint Communications Company, L.P., Sprint Spectrum L.P.
and WirelessCo, L.P. In this annual report on Form 10-K, we refer to Sprint
Corporation and its affiliates, including Sprint PCS, as "Sprint". Statements in
this report regarding Sprint are derived from information contained in our
agreements with Sprint, periodic reports and other documents filed by Sprint
with the Securities and Exchange Commission or press releases issued by Sprint.

                                BUSINESS OVERVIEW

Background

AirGate PCS, Inc. and its subsidiaries and predecessors were formed for the
purpose of becoming a leading regional provider of wireless Personal
Communication Services, or PCS. We are a network partner of Sprint PCS, a wholly
owned subsidiary of Sprint Corporation, a diversified telecommunications service
provider. On November 30, 2001, AirGate acquired iPCS, Inc., another Sprint
network partner, by merging a wholly-owned subsidiary with and into iPCS. As
required by the terms of our outstanding indebtedness, we conduct our business
operations through two separate corporate entities: (i) AirGate and its
wholly-owned unrestricted subsidiaries and (ii) iPCS and its wholly-owned
subsidiaries.

Sprint operates a 100% digital PCS wireless network in the United States and
holds the licenses to provide PCS nationwide using a single frequency band and a
single technology. Sprint, directly and indirectly through network partners such
as us, provides wireless services in more than 4,000 cities and communities
across the country. Sprint directly operates its PCS network in major
metropolitan markets throughout the United States. Sprint has also entered into
independent agreements with various network partners, such as us, under which
the network partners have agreed to construct and manage PCS networks in smaller
metropolitan areas and along major highways.

Through AirGate's management agreement with Sprint, AirGate has the right to
market and provide Sprint PCS products and services in a territory that covers
almost the entire state of South Carolina, parts of North Carolina, and the
eastern Georgia cities of Augusta and Savannah. AirGate's territory encompasses
21 markets and approximately 7.1 million residents. Through iPCS' management
agreement with Sprint, iPCS has the right to market and provide Sprint PCS
products and services in a territory that


                                       1

<PAGE>

covers mid-sized cities and rural areas in parts of Illinois, Michigan, Iowa and
eastern Nebraska. iPCS' territory encompasses 37 markets with approximately 7.4
million residents.

As of September 30, 2002, AirGate had 339,139 subscribers and total network
coverage of approximately 5.9 million residents, representing approximately 83%
of the residents in its territory. For the year ended September 30, 2002,
AirGate generated revenue of approximately $313.5 million.

As of September 30, 2002, iPCS had 215,694 subscribers and total network
coverage of approximately 5.6 million residents, representing approximately 76%
of the residents in its territory. For the year ended September 30, 2002, iPCS
generated revenue of approximately $144.1 million.

As of September 30, 2002, the combined Company had 554,833 subscribers and total
network coverage of approximately 11.5 million residents, representing
approximately 79% of the residents in our territories. For the year ended
September 30, 2002, the Company generated revenue of approximately $456.6
million.

Current Operating Environment and its Impact on the Company

Since the beginning of the year, the wireless communications industry, as well
as the Company, has experienced significant declines in per share equity prices.
We believe that this decline in wireless stocks results from a weaker outlook
for the wireless industry than previously expected. Reasons for a weaker
operating environment include:

         o        declining rates of subscriber growth in the United States as
                  overall rates of penetration in the wireless industry approach
                  and exceed 50%, which decline may have been exacerbated by a
                  widespread economic slowdown;

         o        concerns that these declines, coupled with intense competition
                  among wireless service providers in the United States, will
                  continue to lead to service offerings of increasingly large
                  bundles of minutes at lower prices;

         o        higher rates of churn resulting from intense competition and
                  programs for sub-prime credit quality subscribers; and

         o        the highly leveraged capital structures of many wireless
                  providers and a lack of viable financing alternatives.

Our business has been and continues to be affected by these market conditions.
In addition, as a result of our dependence on Sprint, AirGate and iPCS are also
confronted with additional factors that have had a negative impact on our
operations such as:

         o        We offered a program that attracted sub-prime credit quality
                  subscribers and contributed to high rates of churn. The
                  introduction of this program was required under our agreements
                  with Sprint until late February, 2002 (See "Marketing
                  Strategy--Pricing" for a description of the program and
                  "Sprint Relationship and Agreements");

         o        Over the past year, Sprint has taken a number of actions which
                  resulted in unanticipated charges or increases in charges to
                  the Company. Some of these charges resulted from errors by
                  Sprint, while others were charges to which we had little or no
                  advance notice. The effect of these actions was to reduce our
                  liquidity and interject a greater degree of uncertainty to our
                  business and financial planning (See "Sprint Relationship and
                  Agreements");

         o        Our dependence on Sprint to provide customer care provides us
                  limited tools to improve the quality of customer care, which
                  may contribute to higher churn;

         o        Because 60% of our costs of service and roaming is paid to
                  Sprint as service, affiliation, roaming, long-distance and
                  other fees and expenses under our agreements, our ability to
                  control costs through our own cost cutting measures is more
                  limited (See "Related Party Transactions--Transactions with
                  Sprint"); and

         o        a more limited control of our own working capital.

These factors and the lack of additional sources of capital led us to revise our
business plans to reflect this less-favorable operating environment.

Over the near term, we have been and are managing both AirGate and iPCS to:

         o        restructure the organizations and eliminate positions to
                  operate in the most cost efficient manner possible;

         o        significantly reduce capital expenditures;

         o        cut back on spending for advertising and promotions; and

         o        restrict availability of programs for sub-prime subscribers to
                  reduce churn and improve the credit quality of our new
                  subscribers and our subscriber base.

Despite these measures, liquidity is an issue for iPCS in the near term. We
retained Houlihan Lokey Howard & Zukin Capital to review iPCS' revised long
range business plan, the strategic alternatives available to iPCS and to assist
iPCS in developing and


                                       2

<PAGE>

implementing a plan to improve its capital structure. Because current conditions
in the capital markets make additional financing unlikely, iPCS has undertaken
efforts to restructure its relationship with its secured lenders, its public
noteholders and Sprint, and we have begun restructuring discussions with
informal committees of these creditors. While the lenders and noteholders have
expressed willingness to work with iPCS, Sprint has informed us it is unwilling
to restructure its agreements with iPCS. Because of its deteriorating financial
condition, it is probable that iPCS will soon be required to seek protection
under the federal bankruptcy laws in an effort to effect a court-administered
reorganization. Even if a cooperative restructuring is possible, it is likely
that a court-administered reorganization would be a part of that process.

As a result of the industry trends discussed above and the fact that wireless
industry acquisitions subsequent to the Company's acquisition of iPCS have been
valued substantially lower on a price per population and price per subscriber
basis, the Company believed that the fair value of iPCS and its assets had been
reduced. The Company engaged a nationally recognized valuation expert on two
occasions during 2002 to perform fair value assessments of iPCS and its assets.
The Company recorded a goodwill impairment of approximately $261.2 million
during the quarter ended March 31, 2002. In the quarter ended September 30,
2002, the Company took total impairment charges of $556.2 million associated
with the impairment of goodwill, tangible and intangible assets related to iPCS
(See Note 2 to the consolidated financial statements).

Because iPCS is an unrestricted subsidiary, AirGate is generally unable to
provide capital or other financial support to iPCS. Further, iPCS lenders,
noteholders and creditors do not have a lien on or encumbrance on assets of
AirGate. We believe AirGate operations will continue independent of the outcome
of the iPCS restructuring. However, it is likely that AirGate's ownership
interest in iPCS will have no value after the restructuring is complete. It is
also possible that AirGate will no longer provide management services to iPCS if
ownership of iPCS changes. If this were to occur, AirGate would need to reduce
operating costs in an amount sufficient to recover the general and
administrative costs currently shared by both companies (estimated to be $4.6
million in fiscal 2003).

As described under "Liquidity and Capital Resources," as of December 30, 2002,
iPCS was in default under certain covenants contained in its senior secured
credit facility (the "iPCS credit facility") and indenture governing its notes
(the "iPCS notes"). Because of these events of default, the senior lenders will
have the ability to accelerate iPCS' payment obligations under the iPCS credit
facility and the holders of iPCS notes will have the ability to accelerate iPCS'
payment obligations under iPCS' indenture, after giving notice and the
expiration of applicable cure periods. iPCS is working with its lenders and
noteholders on a forbearance agreement, however there is no assurance that these
negotiations will be successful. In any event, we anticipate that iPCS will
default on certain financial covenants as of March 31, 2003 and iPCS expects to
file for bankruptcy in the near term, and these events are also events of
default under the iPCS credit facility.

While AirGate has also experienced a deterioration in its liquidity, it appears
that it is in a better position to address the issues discussed above. It has a
larger subscriber base than iPCS and, as a stand alone operation, AirGate's
business is more mature. Based upon its current business plan, which continues
to be revised and evaluated in light of evolving circumstances, we believe that
AirGate will have sufficient funds from operations and amounts available under
its senior secured credit facility (the "AirGate credit facility") to satisfy
our working capital needs, capital expenditures and other liquidity requirements
through fiscal 2003.

Business Strategy

Our goal is to become one of the most profitable regional wireless providers
through a conservative growth strategy of adding higher credit quality
subscribers with higher revenues while reducing costs. We believe the following
elements are critical to enable us to achieve this goal:

         o        continue to take advantage of our strategic relationship with
                  Sprint,

         o        maximize free cash flow by lowering our capital spending and
                  operating costs,

         o        reduce churn and improve the credit quality of our new
                  subscribers,

         o        work with Sprint to increase the predictability of costs and
                  financial information, and

         o        in the longer term, take advantage of the Sprint brand
                  recognition to capitalize on new growth initiatives, including
                  data services and wireline-to-wireless migration
                  opportunities.

Continue to capitalize on our strategic relationship with Sprint. The underlying
premise of our business plan is to continue to capitalize on our strategic
relationship with Sprint. We believe this relationship provides us with a
significant competitive advantage over other regional wireless providers because
of Sprint's:

         o        strong brand name recognition,

         o        all-digital nationwide coverage,



                                       3

<PAGE>

         o        quality products and services,

         o        advanced technology, and

         o        established distribution channels.

Maximize free cash flow by lowering capital spending and operating costs. We
believe our success will depend in large part on our ability to lower our
capital spending and operating costs and be cost competitive. With the primary
build-out of our network complete, we are reducing capital spending. In
addition, we have already taken a number of steps to lower our sales, marketing
and network service costs, including the following:

         o        reductions in discretionary spending,

         o        tightening management of vendors,

         o        closely examining our spending in sales and marketing,
                  including:

                  o        a management restructuring in our retail channel and
                           closing our least productive retail stores,

                  o        a reduction in support to our indirect distribution
                           channels to reflect reduced productivity in certain
                           of these outlets, such as Radio Shack and Walmart,

                  o        a reduction in support to our business distribution
                           channel.

As of January 10, 2003, these measures have resulted in a reduction in work
force of 106 (72 at AirGate and 34 at iPCS).

We are continuing to re-examine our business processes to identify other cost
savings opportunities and gain efficiencies. We are also undertaking a review of
our corporate staff functions to determine their optimal structure, both with
and without a management role with respect to iPCS.

Reduce churn and improve the credit quality of our subscribers. The high costs
associated with subscriber churn makes reducing churn critical to our success.
Currently, rates of churn, or customer turnover, are highest among sub-prime
credit quality customers. As a result, we have eliminated the program features
which were most attractive to sub-prime credit quality customers (See "Marketing
Strategy--Pricing" for a discussion of these programs and features). During the
last half of 2002, churn also increased in our prime credit quality customer
segments. The Company has implemented a customer education program with the goal
of both reducing churn in all customer segments and our exposure to non-paying
customers. We are also dedicating resources to identify other avenues to reduce
subscriber churn.

Work with Sprint to increase the predictability and accuracy of cost and
financial information. As described in more detail under "Sprint Relationship
and Agreements," over the past year, Sprint has taken actions which resulted in
unanticipated charges. Some of these charges resulted from errors by Sprint,
while others were charges to which we had little or no advance notice. The
effect of these actions were to reduce our liquidity and interject a greater
degree of uncertainty to our business and financial planning. We are working
with Sprint to provide greater visibility and predictability and to improve
accuracy of billing and other financial information.

In the longer term, take advantage of the Sprint brand recognition to capitalize
on new growth initiatives, including data services and wireline-to-wireless
migration opportunities.

Data Services and PCS Vision. The development of compelling data applications
will be critical to the growth in usage of wireless data network services. In
the third quarter of 2002, Sprint launched PCS Vision, a third generation
technology. Vision-enabled PCS devices take and receive pictures, check personal
and corporate e-mail, play games with full-color graphics and polyphonic sounds
and browse the Internet wirelessly with speeds that equal or exceed a home
computer's dial-up connection. At the same time, Sprint began to roll out a
broad portfolio of Vision-enabled devices that incorporate voice and data
functionality, expanded memory, high-resolution and larger color screens that
allow greater mobility, convenience and productivity. While the uptake of these
services has been slower than expected, we believe PCS Vision will provide a
vehicle for growth for data and wireless internet services.

Targeted Marketing. In addition to Sprint's national marketing plans, we plan to
develop local plans in conjunction with Sprint to target groups who share common
characteristics or have common needs in our territory.

Wireline-to-Wireless Migration Opportunities. We believe wireless will continue
to grow as a substitution for wireline services. Wireless internet access,
wireless local loop and other wireless applications can spur this migration and
increase sales of wireless services.

Other Recent Developments

AirGate's senior secured credit facility required that AirGate deliver audited
financial statements accompanied by an unqualified opinion of its independent
auditors by December 30, 2002, along with certain related documents. Similarly,
AirGate's discount


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notes (the "AirGate notes") required that AirGate deliver an audit opinion of
its independent auditors, along with certain related documents, by December 30,
2002.

As described in this report under "Item 14. Controls and Procedures," we
discovered inconsistencies between certain accounts receivable reports provided
to us by Sprint. In early December, Sprint informed us that certain of these
reports could not be relied on for financial reporting purposes. While Sprint
and the Company worked diligently to resolve issues related to this discrepancy,
we were unable to complete our financial statements by December 30, 2002.

Because AirGate did not deliver the required information on December 30, 2002,
AirGate was in default under its credit facility and the indenture governing the
AirGate notes. Under the AirGate credit facility and indenture governing the
AirGate notes, the default did not constitute an event of default until the
giving of notice and expiration of the applicable cure period.

On December 31, 2002, Standard & Poor's ("S&P") downgraded AirGate's corporate
rating from CCC+ to CCC- and its rating of the AirGate notes from CCC- to CC. In
addition, S&P downgraded iPCS' corporate rating from CCC- to CC. AirGate has
also been placed on credit watch with negative implications pending the cure of
the default under its credit facility and its notes.

AirGate has cured any defaults under its credit facility and indenture by
delivery of the required information.

Risk Factors

We strongly encourage you to read the discussions under "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and elsewhere in this report for a
discussion of factors which could cause our results to differ materially from
our expectations.

Markets

We believe that connecting Sprint's existing PCS markets with our PCS markets is
an important part of Sprint's on-going strategy to provide seamless, nationwide
PCS service to its subscribers. We believe our combined territories, with 14.5
million residents, have attractive demographic characteristics. AirGate's
territory has many vacation destinations, covers substantial highway mileage and
includes a large student population, with at least 27 colleges and universities.
iPCS' territory includes markets that are adjacent to several major metropolitan
operational markets in the Midwestern United States, including Chicago, Detroit,
Des Moines, Indianapolis, Omaha and St. Louis, and also includes a large student
population, with over 90 colleges and universities. The following table sets
forth the location and estimated population in each of the markets that comprise
the Company's territories:

AirGate Basic Trading Areas (1)                            Population (2)
---------------------------                                ----------
Greenville-Spartanburg, SC ..............................    897,700
Savannah, GA ............................................    737,100
Charleston, SC ..........................................    686,800
Columbia, SC ............................................    657,000
Asheville-Hendersonville, NC ............................    588,700
Augusta, GA .............................................    579,400
Anderson, SC ............................................    346,600
Hickory-Lenoir-Morganton, NC ............................    331,100
Wilmington, NC ..........................................    327,600
Florence, SC ............................................    260,200
Greenville-Washington, NC ...............................    245,100
Goldsboro-Kinston, NC ...................................    232,000
Rocky Mount-Wilson, NC ..................................    217,200
Myrtle Beach, SC ........................................    186,400
New Bern, NC ............................................    174,700
Sumter, SC ..............................................    156,700
Jacksonville, NC ........................................    148,400
Orangeburg, SC ..........................................    119,600
The Outer Banks, NC (3) .................................     92,000
Roanoke Rapids, NC ......................................     76,800
Greenwood, SC ...........................................     74,400
                                                             -------


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      Total .............................................  7,135,500
                                                           =========

(1)      Each of the AirGate markets contains 10 MHz of spectrum.
(2)      Based on 2000 estimates compiled by Kagan's Wireless Telecom Atlas &
         Databook, 2001 Edition, as reported per individual basic trading area.
(3)      Territory covered by our Sprint PCS management agreements do not
         comprise a complete basic trading area.

iPCS Basic Trading Areas                                 MHz       Population(1)
------------------------                                           ----------
Grand Rapids, MI .....................................    30        1,060,600
Saginaw-Bay City, MI .................................    30          634,100
Peoria, IL ...........................................    10          464,600
Davenport, IA and Moline, IL .........................    30          430,500
Cedar Rapids, IA .....................................    30          285,700
Springfield, IL ......................................    10          267,200
Waterloo-Cedar Falls, IA .............................    30          259,600
Omaha (Partial), NE (2) ..............................    30          248,800
Decatur-Effingham, IL ................................    10          247,600
Traverse City, MI ....................................    30          241,000
Bloomington, IL ......................................    10          234,100
Muskegon, MI .........................................    30          223,100
Champaign-Urbana, IL .................................    10          221,100
Dubuque, IA ..........................................    30          177,800
Des Moines, IA (Partial) (2) .........................    30          170,900
LaSalle-Peru-Ottawa-Streator, IL .....................    20          152,300
Grand Island-Kearney, NE .............................    30          147,100
Clinton, IA and Sterling, IL .........................    30          146,600
Burlington, IA .......................................    30          136,400
Kankakee, IL .........................................    20          135,600
Mount Pleasant, MI ...................................    30          130,700
Fort Dodge, IA .......................................    30          126,400
Iowa City, IA ........................................    30          125,400
Ottumwa, IA ..........................................    30          123,400
Mount Vernon-Centralia, IL ...........................    30          121,900
Mason City, IA .......................................    30          115,500
Danville, IL .........................................    20          110,700
Norfolk, NE ..........................................    30          110,600
Lincoln, NE (Partial) (2) ............................    30           98,300
Galesburg, IL ........................................    10           73,500
Hastings, NE .........................................    30           71,700
Jacksonville, IL .....................................    10           70,500
Matoon, IL ...........................................    10           62,600
Lansing, MI (Partial) (2) ............................    30           61,900
Marshalltown, IA .....................................    30           56,600
Battle Creek, MI (Partial) (2) .......................    30           54,600
St.  Louis, MO (Partial) (2) .........................    30           46,700
                                                                    ---------
      Total ..........................................              7,445,700
                                                                    =========

(1)      Based on 2000 estimates compiled by Kagan's Wireless Telecom Atlas &
         Databook, 2001 Edition, as reported per individual basic trading area.
(2)      Territory covered by iPCS' Sprint management agreement does not
         comprise a complete basic trading area.

AirGate's Sprint agreements required it to cover a specified percentage of the
population at a range of coverage levels within each of the markets granted to
it by those agreements by specified dates. AirGate is fully compliant with these
build-out requirements. iPCS' Sprint agreements required it to launch certain
markets by specified dates. We believe iPCS has satisfied these build-out
requirements as of September 30, 2002. iPCS' agreement with Sprint requires iPCS
to construct an additional four to five cell sites by December 31, 2004.

Products and Services

We offer Sprint PCS products and services throughout our territories. These PCS
products and services are generally designed to mirror the services offered by
Sprint.


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100% Digital Wireless Network with Service Across the Country. Our primary
service is wireless mobility coverage. As Sprint network partners, our existing
PCS network is part of the largest 100% digital wireless PCS network in the
United States. Subscribers in our territory may use Sprint PCS services
throughout our contiguous markets and seamlessly throughout the Sprint PCS
network.

PCS Vision Service. In the third calendar quarter of 2002, Sprint launched PCS
Vision, a third generation technology. Vision-enabled PCS devices take and
receive pictures, check personal and corporate e-mail, play games with
full-color graphics and polyphonic sounds and browse the Internet wirelessly
with speeds that equal or exceed a home computer's dial-up connection. At the
same time, Sprint began to roll out a broad portfolio of Vision-enabled devices
that incorporate voice and data functionality, expanded memory, high-resolution
and larger color screens that allow greater mobility, convenience and
productivity. The Company supports and offers PCS Vision services and phones in
the majority of its territories.

Wireless Internet Access. Wireless Internet access is available through both the
new PCS Vision service and PCS Vision-enabled phones as well as the Sprint
Wireless Web and other data capable PCS phones. PCS subscribers with web
browser-enabled phones have the ability to receive information such as stock
prices, airline schedules, sports scores and weather updates directly on their
handsets. Subscribers with PCS Vision phones can browse full color, graphic
versions of popular web sites. Those subscribers with other browser-enabled
phones are able to browse specially designated text based sites.

CDMA and Dual Band/Dual Mode Handsets. We offer code division multiple access,
or CDMA, digital technology handsets. These handsets range from full-featured
models with special features such as Palm OS and built-in digital cameras to
models with voice only capability. The phones can weigh as little as 2.65 ounces
and can have standby times surpassing 300 hours. We offer dual band/dual mode
handsets that allow subscribers to make and receive calls on both PCS and
cellular frequency bands and both digital or analog technology.

Sprint and Non-Sprint Roaming. We provide roaming services to Sprint PCS
subscribers that use a portion of our PCS network, and to non-Sprint subscribers
when they use a portion of our PCS network pursuant to roaming agreements
between Sprint and other wireless service providers. Sprint and other wireless
service providers supply similar services to our subscribers when our
subscribers use a portion of their networks.

Marketing Strategy

Our marketing and sales strategy generally uses the national advertising and
marketing programs that have been developed by Sprint. We enhance the Sprint
marketing strategy with strategies and tactics we have tailored to our specific
markets.

Use Sprint's brand equity and marketing. We feature exclusively and prominently
the nationally recognized Sprint brand in our marketing effort. From our
subscribers' point of view, they use our network and the PCS national network
seamlessly as a unified nationwide network.

Pricing. Our use of the Sprint national pricing strategy offers our subscribers
simple, easy-to-understand service plans. Sprint's pricing plans are typically
structured with monthly recurring charges, large local calling areas, bundles of
minutes and service features such as voicemail, caller ID, call waiting, call
forwarding and three-way calling. We also feature Sprint Free and Clear plans,
which offer simple, affordable plans for consumer and business subscribers, and
include long distance calling from anywhere on the Sprint PCS nationwide
network.

A significant pricing plan for the Company is the Clear Pay program and its
predecessors, the Account Spending Limit ("ASL") and no-deposit ASL ("NDASL")
programs. Under these programs, subscribers who did not meet certain credit
criteria could qualify for our digital wireless services. Subscribers were
classified into prime and sub-prime credit quality, with those in the sub-prime
category further designated into credit classes. Under the ASL program,
sub-prime credit quality subscribers could select any plan offered subject to an
account spending limit. Prior to May 2001, all of these subscribers were
required to make a deposit ranging from $125 to $200 that could be credited
against future billings. In May 2001, the NDASL program eliminated the deposit
requirement on all credit classes. In November 2001, the NDASL program was
replaced with a substantially similar program known as Clear Pay. The primary
difference between the two programs was the re-introduction of a deposit
requirement in the lowest credit class and an increased emphasis on collection
processes. In late February 2002, the Clear Pay II Program replaced the Clear
Pay Program for new subscribers in select PCS network partner markets, including
the Company's territories. The Clear Pay II Program reinstates a $125 deposit
for all sub-prime quality subscribers. A further, recent enhancement to the
Clear Pay II Program requires a $250 deposit from those sub-prime subscribers in
the lowest credit class. Although iPCS removed these deposit requirements in its
territory for all sub-prime credit quality subscribers except for the lowest
credit class at certain times between June 2002 and November 2002, the Clear Pay
II Program and its deposit requirements are currently in effect in most of
AirGate's and iPCS' respective markets. As a result, sub-prime credit quality
subscribers accounted for 55% of our gross subscriber additions since the
introduction of the NDASL program in May, 2001 and as of September 30, 2002,
sub-prime credit quality subscribers accounted for 36% of AirGate subscribers
and 35% of iPCS subscribers, or 35% of the combined Company subscribers.


                                       7

<PAGE>

Local focus. Our local focus enables us to supplement Sprint's marketing
strategies with our own strategy and tactics tailored to each of our specific
markets. This focus can include local advertising, sponsorships and
distribution. We also enhance our local focus with specific service plans called
Area-wide Plans. These plans are designed for our territories to create a more
competitive product to those offered by other regional or local providers.

Advertising and promotions. Sprint uses national as well as regional television,
radio, print, outdoor and other advertising campaigns to promote its products.
We benefit from this national advertising in our territory at no additional cost
to us. Sprint also runs numerous promotional campaigns that provide subscribers
with benefits such as additional features at the same rate, free minutes of use
for limited time periods or special prices on handsets and other accessories.

Sponsorships. Sprint sponsors numerous national, regional and local events.
These sponsorships provide Sprint with brand name and product recognition in
high profile events, create a forum for sales and promotional events and enhance
our promotional efforts in our territory.

Sales and Distribution

Our agreements with Sprint require us to use Sprint's and our own sales and
distribution channels in our territories. Key elements of our sales and
distribution plan consist of the following:

Sprint stores. AirGate currently operates 38 and iPCS currently operates 27
retail Sprint stores within its territory. These stores are located in
metropolitan markets within our territories, providing us with a local presence
and visibility. These stores have been designed to facilitate retail sales, bill
collection and subscriber service.

Sprint store within a Radio Shack store. Sprint has an arrangement with
RadioShack to install a "store within a store." Currently, RadioShack has 102
stores in AirGate's territory and 92 stores in iPCS' territory that are
authorized to offer Sprint PCS products and services to potential subscribers.

Other national third-party retail stores. In addition to RadioShack, we benefit
from the sales and distribution agreements established by Sprint with other
national retailers, which currently include Best Buy, Circuit City, Staples,
Target, Office Max, Wal-Mart, Office Depot and Ritz Camera. These retailers and
others have approximately 243 retail stores in AirGate's territory and 218
retail stores in iPCS' territory.

Local third-party retail stores. We benefit from the sales and distribution
agreements that we enter into with local retailers in our territory. We have
entered into sales and distribution agreements related to approximately 47 local
stores in AirGate's territory and 139 local stores in iPCS' territory.

National accounts and direct selling. We participate in Sprint's national
accounts program. Sprint has a national accounts team which focuses on the
corporate headquarters of large companies. Our direct sales force targets the
employees of these companies in our territories and cultivates other local
business subscribers. In addition, once a Sprint national account manager
reaches an agreement with any company headquartered outside of our territory, we
service the offices and subscribers of that company located in our territory.

Sprint Distribution Channels. Sprint directly controls various distribution
channels that sell Sprint PCS products and services in our markets. These
channels with significant activity in our markets include: Sprint Inbound
Telemarketing, Sprint web-based electronic commerce, Sprint Local Telephone
Division Retail, and Sprint Local Telephone Division Telemarketing. In addition
to these channels, Sprint's retail and business sales activities often have some
incidental overflow into our markets.

For the twelve months ended September 30, 2002, the following table sets forth
the percentage of gross activations that certain of our distribution channels
generated for each of AirGate and iPCS:

                                                    iPCS           AirGate
                                                    ----           -------
          Retail Sprint Stores                        32%              33%
          RadioShack                                  14               23
          Other National Third-Party                  15               11
          Local Third-Party                           26                7
          National Accounts                            3               10
          Sprint                                      10               16
                                                    -----          ------
                                                    100%             100%



                                       8

<PAGE>

Suppliers and Equipment Vendors

We do not manufacture any of the handsets or network equipment we use in our
operations. We purchase our network equipment and handsets pursuant to various
Sprint vendor arrangements that provide us with volume discounts. These
discounts have significantly reduced the overall capital required to build our
network.

Under such arrangements, AirGate currently purchases its network equipment from
Lucent Technologies, Inc. ("Lucent") and iPCS currently purchases its network
equipment from Lucent and Nortel Networks, Inc. In addition, we currently
purchase our handsets directly from Sprint and our accessories from Sprint and
certain other third-party vendors. Our agreements with Sprint require us to pay
Sprint $4.00 for each 3G handset that we purchase either directly from Sprint or
from a Sprint authorized distributor. We agreed to pay this fee starting with
purchases on July 1, 2002 and ending on the earlier of December 31, 2004 or the
date on which the cumulative 3G handset fees received by Sprint from all Sprint
network partners equal $25,000,000. We further agreed to purchase 3G handsets
only from Sprint or a Sprint authorized distributor during this period.

Seasonality

Our business is subject to seasonality because the wireless industry is heavily
dependent on fourth calendar quarter results. Among other things, the industry
relies on higher subscriber additions and handset sales in the fourth calendar
quarter when compared to the other three calendar quarters. A number of factors
contribute to this trend, including: the increasing use of retail distribution,
which is heavily dependent upon the year-end holiday shopping season; the timing
of new product and service announcements and introductions; competitive pricing
pressures; and aggressive marketing and promotions. The increased level of
activity requires a greater use of our available financial resources during this
period. We expect, however, that fourth calendar quarter seasonality will have
less impact in the future.

Employees and Labor Relations

As of September 30, 2002, AirGate and iPCS employed approximately 650 and 325
full-time employees, respectively. Of these, the service company formed to
provide management services to AirGate and iPCS leases approximately 150
employees from AirGate and 40 employees from iPCS. None of our employees are
represented by a labor union. We believe that we have good relations with our
employees.

Competition

Competition in the wireless communications industry is intense. We operate in
highly competitive markets, particularly in the southeast. In our territories,
we compete with national and regional cellular, PCS and other wireless
providers. We believe that our primary competition is with Verizon Wireless,
Nextel, Cingular Wireless, AT&T Wireless and its affiliates, Alltel and US
Cellular. These wireless service providers offer services that are generally
comparable to our PCS service. Most of our competitors have financial resources
and subscriber bases greater than ours.

Many of our competitors have access to more licensed spectrum than the 10 MHz
licensed to Sprint in AirGate's territory and the 10 MHz or 20 MHz licensed to
Sprint in parts of iPCS' territory. In addition, certain of our competitors may
be able to offer coverage in areas not served by our PCS network, or, because of
their calling volumes or their affiliations with, or ownership of, wireless
providers, may be able to offer roaming rates that are lower than those we
offer. PCS providers compete with us in providing some or all of the services
available through the Sprint PCS network and may provide services that we do
not. Additionally, we expect that existing cellular providers, some of whom have
been operational for a number of years and have significantly greater financial
and technical resources and subscriber bases than us, will continue to upgrade
their systems to provide digital wireless communication services competitive
with Sprint.

Our ability to compete effectively with these other providers will depend on a
number of factors, including:

         o        the continued success of CDMA technology in providing
                  competitive call clarity and quality;

         o        our ability to provide quality network service in a limited
                  capital environment;

         o        the competitiveness of Sprint's pricing plans;

         o        our spending on marketing and promotions compared to our
                  competitors;

         o        liquidity and capital resources;

         o        our ability to upgrade our networks to accommodate new
                  technologies;

         o        the continued expansion and improvement of the Sprint PCS
                  nationwide network;

         o        the quality of Sprint customer care systems; and

         o        our selection of handset options.



                                       9

<PAGE>

Our ability to compete successfully will also depend, in part, on the ability of
Sprint and us to anticipate and respond to various competitive factors affecting
the industry, including:

         o        new services that may be introduced;

         o        changes in consumer preferences;

         o        demographic trends;

         o        economic conditions; and

         o        discount pricing strategies by competitors.

                               NETWORK OPERATIONS

General

The effective operation of our portions of the Sprint PCS network require:

         o        public switched and long distance interconnection;

         o        the implementation of roaming arrangements; and

         o        the development of network monitoring systems.

We utilize Sprint's Network Operations Control Center for around-the-clock
monitoring as well as our own switching centers' capabilities for our network
base stations and switches.

Sprint developed the initial plan for the build-out of our Sprint networks. We
have further enhanced this plan to provide better coverage for our territories.
Pursuant to our network operations strategy, we have provided PCS service to the
largest communities in our markets and have covered interstates and primary
roads connecting these communities to each other and to the adjacent major
markets owned and operated by Sprint.

As of September 30, 2002, AirGate's network consisted of four switches located
at two switch centers and approximately 802 operating cell sites, and iPCS'
network consisted of three switches located at three switch centers and
approximately 633 operating cell sites. A switching center serves several
purposes, including routing calls, managing call handoff, managing access to the
public telephone network and providing access to voice mail. 99% of AirGate's
and 86% of iPCS' operating cell sites are co-located. Co-location describes the
strategy of leasing available space on a tower or cell site owned by another
company rather than building and owning the tower or cell site directly.

Our networks connect to the public telephone network through local exchange
carriers, which facilitate the origination and termination of traffic between
our networks and both local exchange and long distance carriers. Through our
management agreements with Sprint, we have the benefit of Sprint-negotiated
interconnection agreements with local exchange carriers.

Under our management agreements with Sprint, we are required to use Sprint for
long distance services and Sprint provides us with preferred rates for these
services. Backhaul services are provided by other third-party vendors. These
services carry traffic from our cell sites and local points of interconnection
to our switching facilities.

                                   TECHNOLOGY

General

In 1993, the FCC allocated the 1900 MHz frequency block of the radio spectrum
for wireless PCS Systems. PCS networks operate at a higher frequency and employ
more advanced digital technology than traditional analog cellular telephone
service. The enhanced capacity of digital systems, along with enhancements in
digital protocols, allows digital-based wireless technologies, whether using PCS
or cellular frequencies, to offer new and enhanced services, including greater
call privacy and more robust data transmission, such as facsimile, electronic
mail and connecting notebook computers with computer/data networks.

Presently, wireless PCS systems operate under one of three principal air
interface protocols: CDMA, time division multiple access (TDMA) or global system
for mobile communications (GSM). Wireless PCS operators in the United States now
have dual-mode or tri-mode handsets available so that their customers can
operate on different networks that employ different protocols.


                                       10

<PAGE>

CDMA Technology

Sprint's network and Sprint's network partners' networks all use CDMA
technology. CDMA technology is fundamental to accomplishing our business
objective of providing high volume, high quality airtime at a low cost. We
believe that CDMA provides important system performance benefits. CDMA systems
offer more powerful error correction, less susceptibility to fading and reduced
interference than analog systems. Using enhanced voice coding techniques, CDMA
systems achieve voice quality that is comparable to that of the typical wireline
telephone. This CDMA vocoder technology also employs adaptive equalization,
which filters out annoying background noise more effectively than existing
wireline, analog cellular or other digital PCS phones. CDMA technology also
allows a greater number of calls within one allocated frequency and reuses the
entire frequency spectrum in each cell. In addition, CDMA technology combines a
coding scheme with a low power signal to enhance security and privacy. As a
subscriber travels from one cell site to another cell site, the call must be
"handed off" to the second cell site. CDMA systems transfer calls throughout the
network using a technique referred to as soft hand-off, which connects a mobile
subscriber's call with a new cell site while maintaining a connection with the
cell site currently in use.

CDMA offers a cost effective migration to the next generation of wireless
services. CDMA standards and products currently in place will allow existing
CDMA networks to be upgraded in a cost efficient manner to the next generation
of wireless technology. As of September 30, 2002, we have upgraded our network
to the next generation of technology known as "one times radio transmission
technology" or "1XRTT." This technology offers data speeds of up to 144 kilobits
per second, voice capacity improvements of over 50% and improved battery life in
the handset. Further standards are being developed for CDMA that will offer data
speeds in excess of 2,000 kilo bits per second and additional improvements in
voice capacity.

Research and Development

We currently do not conduct our own research and development. Instead we benefit
from Sprint's and our vendors' extensive research and development effort, which
provides us with access to new technological products and enhanced service
features without significant research and development expenditures of our own.

We have been provided prompt access to any developments produced by Sprint for
use in our network. We believe that new features and services will be developed
for the Sprint PCS network to take advantage of CDMA technology. We may be
required to incur additional expenses in modifying our network to provide these
additional features and services.

Intellectual Property

Other than our corporate names, we do not own any intellectual property that is
material to our business. "Sprint," the Sprint diamond design logo, "Sprint
PCS," "Sprint Personal Communication Services," "The Clear Alternative to
Cellular" and "Experience the Clear Alternative to Cellular Today" are service
marks registered with the United States Patent and Trademark Office and owned by
Sprint or its affiliates. Pursuant to our management agreements with Sprint, we
have the right to use, royalty-free, the Sprint and Sprint PCS brand names and
the Sprint diamond design logo and certain other service marks of Sprint in
connection with marketing, offering and providing licensed services to end-users
and resellers, solely within our territories.

Except in certain instances, Sprint has agreed not to grant to any other person
a right or license to provide or resell, or act as agent for any person
offering, licensed services under the licensed marks in our territories, except
as to Sprint's marketing to national accounts and the limited right of resellers
of Sprint to inform their subscribers of handset operation on the Sprint PCS
network. In all other instances, Sprint has reserved for itself and its network
partners the right to use the licensed marks in providing its services, subject
to its exclusivity obligations described above, whether within or without our
territories.

Our agreements with Sprint contain numerous restrictions with respect to the use
and modification of any of the licensed marks.

                       SPRINT RELATIONSHIP AND AGREEMENTS

The following includes a summary of the material terms and provisions of each of
AirGate's and iPCS' separate Sprint agreements and the consent and agreements
modifying the Sprint management agreements. The Sprint agreements and consent
and agreements have been filed by each of AirGate and iPCS, as applicable, as
exhibits to certain of their respective filings with the SEC. AirGate and iPCS
urge you to carefully review the Sprint agreements and the consent and
agreements.

Overview of Sprint Relationship and Agreements

Under their respective long-term agreements with Sprint, AirGate and iPCS market
PCS products and services under the Sprint brand names in their territories. The
agreements with Sprint require AirGate and iPCS to build-out their systems,
platforms, products and services to seamlessly interface with the Sprint PCS
wireless network. The Sprint agreements also give AirGate and iPCS access to
Sprint's equipment discounts, roaming revenue from Sprint PCS and its PCS
network partner subscribers traveling


                                       11

<PAGE>

into our territory, and various other back office services. AirGate's and iPCS'
relationship and agreements with Sprint provide strategic advantages, including
avoiding the need to fund up-front spectrum acquisition costs and the costs of
establishing billing and other subscriber services infrastructure. The Sprint
agreements have an initial term of 20 years with three 10-year renewals which
can lengthen the contracts to a total term of 50 years. AirGate's Sprint
agreements will automatically renew for the first 10-year renewal period unless
AirGate is in material default on its obligations under the agreements. The
Sprint agreements will automatically renew for two additional 10-year terms (and
three additional 10-year terms in the case of iPCS) unless either AirGate or
iPCS on the one hand, or Sprint on the other hand, provides the other with two
years prior written notice to terminate the agreements.

Each of AirGate and iPCS has four major agreements with Sprint:

         o        the management agreement;

         o        the services agreements; and

         o        two separate trademark and service mark license agreements.

In addition, Sprint has entered into a consent and agreement with each of
AirGate and iPCS that modifies the respective management agreements for the
benefit of the lenders under AirGate's senior secured credit facility, in the
case of AirGate, and for the benefit of the lenders under iPCS' senior secured
credit facility, in the case of iPCS.

Dependence on Sprint

Approximately 60% of cost of service and roaming in our consolidated financial
statements relate to charges from Sprint for its affiliation fee, roaming,
long-distance, services provided such as billing, collections and customer care,
pass-through and other fees and expenses (See "Related Party Transactions -
Transactions with Sprint"). In addition, because Sprint provides billing and
collection services for the Company, approximately 96% of our revenues are
remitted to us by Sprint. As a result, we are dependent on Sprint to perform its
obligations under its agreements with us, including payment of collected
revenues, and on financial information provided by Sprint.

In addition, over the past year, our dependence on Sprint has interjected a
greater degree of uncertainty to our business and financial planning. During
this time:

         o        we agreed to a new $4 logistics fee for each 3G enabled
                  handset to avoid a prolonged dispute over certain charges for
                  which Sprint sought reimbursement;

         o        Sprint PCS sought to recoup $4.9 million in long-distance
                  access revenues previously paid by Sprint PCS to the Company,
                  of which $3.9 million related to AirGate and $1.0 million
                  related to iPCS (See "Legal Proceedings" herein);

         o        Sprint sought to charge in excess of $15 per month per 3G
                  subscriber in 2002 (declining in 2003 and beyond) to reimburse
                  Sprint for its 3G related expenses;

         o        Sprint informed the Company on December 23, 2002 that it had
                  miscalculated software maintenance fees for 2002 and future
                  years, which would result in an annualized increase of $2.0
                  million if owed by the Company;

         o        Sprint notified the Company that it intends to reduce the
                  reciprocal roaming rate charged by Sprint and its network
                  partners for use of our respective networks from $0.10 per
                  minute of use to $0.058 per minute of use in 2003 (see "Sprint
                  Agreements - The Management Agreement - Service pricing,
                  roaming and fees" herein).

We have questioned whether certain of these charges and actions are appropriate
and authorized under our Sprint agreements. We plan to work with Sprint to
increase the predictability of fees, charges and revenues and to resolve open
issues. We expect that it will take time to resolve these issues, and the
ultimate outcome is uncertain. See "Risk Factors - Risks Particular to Our
Relationship with Sprint."

Some of these items arose because of errors made by Sprint in billing the
Company. As described herein under "Item 14. Controls and Procedures," we
discovered that certain information previously provided to us by Sprint
regarding our subscriber accounts receivable balances was not reliable for
financial reporting purposes. We plan to strengthen our internal systems for
verifying information provided by Sprint and to work cooperatively with Sprint
to improve the accuracy of information we receive from Sprint for our financial
reporting purposes.

The Management Agreements

Under AirGate's and iPCS' management agreements with Sprint, AirGate and iPCS
have each agreed to:

         o        construct and manage a network in its territory in compliance
                  with Sprint's PCS licenses and the terms of the management
                  agreement;



                                       12

<PAGE>

         o        distribute during the term of the management agreement Sprint
                  PCS products and services;

         o        use Sprint's and its own distribution channels in its
                  territory;

         o        conduct advertising and promotion activities in its territory;
                  and

         o        manage that portion of Sprint's subscriber base assigned to
                  its territory.

Exclusivity. AirGate and iPCS are designated as the only person or entity that
can manage or operate a PCS network for Sprint in their respective territories.
Sprint is prohibited from owning, operating, building or managing another
wireless mobility communications network in AirGate's or iPCS' territories while
their respective management agreements are in place and no event has occurred
that would permit the agreements to terminate. Under the iPCS agreement, a
wireless mobility communications network is defined as one operating in the 1900
MHz spectrum. The AirGate agreement does not limit the definition of a wireless
mobility communications network to a specific spectrum. Sprint is permitted
under the agreements to make national sales to companies in the covered
territories and, as required by the FCC, to permit resale of the Sprint PCS
products and services in the covered territory.

Network build-out. The management agreements each specify the terms of the
Sprint affiliation, including the required network build-out plan.

         a)       AirGate: AirGate agreed to cover a specified percentage of the
                  population at coverage levels ranging from 39% to 86% within
                  each of the 21 markets which make up its territory by
                  specified dates. AirGate has satisfied these network build-out
                  requirements. AirGate has agreed to operate its PCS network,
                  if technically feasible and commercially reasonable, to
                  provide for a seamless handoff of a call initiated in its
                  territory to a neighboring Sprint PCS network. If Sprint
                  decides to expand coverage within AirGate's territory, Sprint
                  must provide AirGate with written notice of the proposed
                  expansion. AirGate has 90 days to determine whether AirGate
                  will build out the proposed area. If AirGate does not exercise
                  this right, Sprint can build out the territory or permit
                  another third-party to do so. Any new area that Sprint or a
                  third-party builds out is removed from AirGate's territory.

         b)       iPCS: iPCS agreed to launch certain markets by specified
                  dates. iPCS has satisfied these network build-out
                  requirements. The management agreement also requires iPCS to
                  reimburse Sprint for 50% of the microwave clearing cost for
                  all of its territory except Champaign, Illinois, where iPCS is
                  required to reimburse Sprint 100% of the microwave clearing
                  costs. iPCS has agreed to operate its PCS network, if
                  technically feasible and commercially reasonable, to provide
                  for a seamless handoff of a call initiated in its territory to
                  a neighboring Sprint PCS network. Sprint can decide to expand
                  the coverage requirements of its territory by providing iPCS
                  with written notice as long as the expanded coverage
                  requirements are for proposed areas in which a tower would
                  cover at least 10,000 residents. iPCS has 90 days after
                  receiving notice from Sprint to determine whether it will
                  build-out the proposed area. If iPCS does not exercise this
                  right, Sprint can build out the territory or permit another
                  third-party to do so. Any new area that Sprint or a
                  third-party builds out is removed from iPCS' territory.

Products and services. The respective management agreements identify the
products and services that AirGate and iPCS can offer in their respective
territories. AirGate and iPCS may offer non-Sprint PCS products and services in
their respective territories under limited circumstances and with Sprint's
concurrence. Neither company may offer products and services that are
confusingly similar to Sprint PCS products and services. AirGate and iPCS may
cross-sell services such as Internet access, subscriber premises equipment and
prepaid phone cards with Sprint and other Sprint network partners. If AirGate or
iPCS decide to use third parties to provide these services, AirGate and iPCS
must give Sprint an opportunity to provide the services on the same terms and
conditions. AirGate and iPCS cannot offer wireless local loop services
specifically designed for the competitive local exchange market in areas where
Sprint owns the local exchange carrier without Sprint's consent, unless AirGate
or iPCS, as the case may be, name the Sprint-owned local exchange carrier as the
exclusive distributor.

AirGate and iPCS are required to participate in the Sprint sales programs for
national sales to subscribers, and to pay the expenses related to sales from
national accounts located in their respective territories.

Long distance service. AirGate and iPCS must use Sprint's long distance service
which AirGate and iPCS can buy at the best prices offered to comparably situated
Sprint customers, plus an additional administrative fee. Sprint has a right of
last offer to provide backhaul and transport services.

Service pricing, roaming and fees. AirGate and iPCS must each offer Sprint
subscriber pricing plans designated for regional or national offerings. AirGate
and iPCS are to be paid 92% of collected revenues received by Sprint for Sprint
PCS products and services from subscribers in their respective territories.
Collected revenues exclude, among other things, outbound roaming revenues and
related charges, roaming revenues from Sprint PCS and its PCS network partner
subscribers, sales of handsets and accessories, proceeds from sales not in the
ordinary course of business and amounts collected with respect to taxes. Except
in the case of taxes, AirGate and iPCS retains 100% of these revenues. Although
many Sprint subscribers purchase a bundled pricing plan that allows roaming
anywhere on Sprint's and its network partners' networks without incremental
roaming charges, AirGate


                                       13

<PAGE>

and iPCS earn roaming revenues from every minute that a Sprint subscriber from
outside the AirGate or iPCS territory is carried on their respective PCS
networks. AirGate and iPCS earn revenues from Sprint based on an established per
minute rate for Sprint's subscribers roaming in their territory. Similarly,
AirGate and iPCS pay for every minute subscribers from their respective
territories use the Sprint PCS nationwide network outside such territories. On
April 27, 2001, AirGate and Sprint announced an agreement in principle to reduce
the reciprocal roaming rate exchanged between Sprint and AirGate for PCS
subscribers who roam into the other party's, or another network partner's,
territory. The rate was reduced from $0.20 per minute of use to $0.15 per minute
of use beginning June 1, 2001, and to $0.12 per minute of use beginning October
1, 2001. iPCS and Sprint had an agreement which fixed the reciprocal roaming
rate exchanged between Sprint and iPCS for subscribers who roam into the other
party's, or another network partner's, territory at $0.20 per minute of use
through December 31, 2001. Under the agreement in principle, the roaming rate
for both AirGate and iPCS with respect to calendar year 2002 is $0.10 per
minute. The Company has been notified by Sprint that it intends to decrease the
reciprocal roaming rate to $0.058 per minute in 2003.

On August 2, 2002, we entered into an agreement with Sprint, pursuant to which
we agreed to pay Sprint an additional $4.00 logistics fee for each 3G handset
that we purchased either directly from Sprint or from a Sprint authorized
distributor. We agreed to pay this fee starting with purchases on July 1, 2002
and ending on the earlier of December 31, 2004 or the date on which the
cumulative 3G handset fees received by Sprint from all Sprint network partners
equal $25,000,000. We further agreed to purchase 3G handsets only from Sprint or
a Sprint authorized distributor during this period.

Advertising and promotions. Sprint is responsible for all national advertising
and promotion of the Sprint PCS products and services. AirGate and iPCS are
responsible for advertising and promotion in their respective territories,
including a portion of the cost of any promotion or advertising done by any
third-party retailers in its territory pursuant to cooperative advertising
agreements with Sprint based on per unit handset sales.

Program requirements. AirGate and iPCS are required to comply with Sprint's
program requirements for technical standards, subscriber service standards,
national and regional distribution and national accounts programs. Sprint can
adjust the program requirements from time to time under the conditions provided
in the management agreements. AirGate and iPCS each have the right to appeal
Sprint's adjustments to the program requirements, if the adjustment: (1) causes
AirGate or iPCS, as the case may be, to spend more than 5% of the sum of the
applicable company's equity and long term debt, or (2) causes AirGate's or iPCS'
operating expenses to increase by more than 10% on a net present value basis. If
Sprint denies the company's appeal, then such company has 10 days after the
denial to submit the matter to arbitration. If the company does not submit the
matter to arbitration within the 10-day period or comply with the program
adjustment, Sprint has the termination rights described below.

Non-competition. AirGate and iPCS may not offer Sprint PCS products and services
outside their respective territories without the prior written approval of
Sprint. Within their respective territories, AirGate and iPCS may offer, market
or promote telecommunications products and services only under the Sprint
brands, their own brands, brands of related parties of theirs or other products
and services approved under the management agreements, except that no brand of a
significant competitor of Sprint or its related parties may be used for those
products and services. To the extent AirGate and iPCS have or obtain licenses to
provide PCS services outside their respective territories, neither AirGate nor
iPCS may use the spectrum to offer Sprint PCS products and services without
prior written consent from Sprint.

Inability to use non-Sprint brand. AirGate and iPCS may not market, promote,
advertise, distribute, lease or sell any of the Sprint PCS products and services
on a non-branded, "private label" basis or under any brand, trademark or trade
name other than the Sprint brand, except for sales to resellers approved by
Sprint or required by law or as otherwise permitted under the trademark and
service mark license agreements.

Rights of first refusal. Sprint has certain rights of first refusal to buy
AirGate's and iPCS' assets upon a proposed sale of all or substantially all of
their respective assets.

Termination of management agreements. Each management agreement can be
terminated as a result of:

         o        termination of Sprint's PCS licenses in the related company's
                  territory;

         o        failure by a party to pay any amount due under the management
                  agreement or any other agreement between the parties or their
                  respective related parties;

         o        any other uncured breach under the related management
                  agreement;

         o        bankruptcy of a party to the related management agreement;

         o        subject to the limitations in the related management
                  agreement, such management agreement not complying with any
                  applicable law in any material respect; or

         o        the termination of either of the related trademark and service
                  mark license agreements.

The termination or non-renewal of the management agreements triggers certain of
AirGate's and iPCS' rights, as applicable, and those of Sprint.


                                       14

<PAGE>

If AirGate or iPCS has the right to terminate its management agreement because
of an event of termination caused by Sprint, generally the affected party may:

         o        require Sprint to purchase all of its operating assets used in
                  connection with its PCS networks for an amount equal to at
                  least 80% of its entire business value as described below (88%
                  in the case of AirGate, unless Sprint becomes the licensee for
                  20 MHz of spectrum in AirGate's territory);

         o        if Sprint is the licensee for 20 MHz or more of the spectrum
                  on the date AirGate terminates the management agreement (or in
                  the case of iPCS, the date the management agreement was
                  executed), require Sprint to sell to AirGate or iPCS, as
                  applicable, subject to governmental approval, up to 10 MHz of
                  licensed spectrum for an amount equal to the greater of (1)
                  the original cost to Sprint of the license plus any microwave
                  relocation costs paid by Sprint or (2) 9% of its entire
                  business value; or

         o        sue Sprint for damages or submit the matter to arbitration and
                  not terminate the related management agreement.

If Sprint has the right to terminate a management agreement because of an event
of termination caused by AirGate or iPCS, as the case may be, generally Sprint
may:

         o        require the defaulting party to sell its operating assets to
                  Sprint for an amount equal to 72% of its entire business
                  value;

         o        require the defaulting party to purchase, subject to
                  governmental approval, the licensed spectrum in its territory
                  for an amount equal to the greater of (1) the original cost to
                  Sprint of the license plus any microwave relocation costs paid
                  by Sprint or (2) 10% of its entire business value;

         o        take any action as Sprint deems necessary to cure the
                  defaulting party's breach of its management agreement,
                  including assuming responsibility for, and operating, the
                  related PCS network; or

         o        sue the defaulting party for damages or submit the matter to
                  arbitration and not terminate the related management
                  agreement.

Non-renewal. If Sprint gives either AirGate or iPCS timely notice that it does
not intend to renew such company's management agreement, AirGate or iPCS, as the
case may be, may:

         o        require Sprint to purchase all of its operating assets used in
                  connection with the PCS network for an amount equal to at
                  least 80% of its entire business value (88% in the case of
                  AirGate, unless Sprint becomes the licensee for 20 MHz of
                  spectrum in AirGate's territory); or

         o        if Sprint is the licensee for 20 MHz or more of the spectrum
                  on the date AirGate terminates the management agreement (or in
                  the case of iPCS, the date the management agreement is
                  executed), require Sprint to assign to it, subject to
                  governmental approval, up to 10 MHz of licensed spectrum for
                  an amount equal to the greater of (1) the original cost to
                  Sprint of the license plus any microwave relocation costs paid
                  by Sprint or (2) 10% of its entire business value.

If AirGate or iPCS gives Sprint timely notice of non-renewal of the related
management agreement, or such company and Sprint both give notice of
non-renewal, or the related management agreement can be terminated for failure
to comply with legal requirements or regulatory considerations, Sprint may:

         o        purchase all of the related company's operating assets for an
                  amount equal to 80% of its entire business value; or

         o        require the related company to purchase, subject to
                  governmental approval, the licensed spectrum for an amount
                  equal to the greater of (1) the original cost to Sprint of the
                  license plus any microwave relocation costs paid by Sprint or
                  (2) 10% of its entire business value.

Determination of Entire Business Value. If the entire business value is to be
determined, AirGate or iPCS, as the case may be, and Sprint will each select one
independent appraiser and the two appraisers will select a third appraiser. The
three appraisers will determine the entire business value on a going concern
basis using the following guidelines:

         o        the entire business value is based on the price a willing
                  buyer would pay a willing seller for the entire on-going
                  business;

         o        then-current customary means of valuing a wireless
                  telecommunications business will be used;

         o        the business is conducted under the Sprint brands and the
                  related Sprint agreements;

         o        that the related company owns the spectrum and frequencies
                  presently owned by Sprint and subject to the related Sprint
                  agreements; and

         o        the valuation will not include any value for businesses not
                  directly related to the Sprint PCS products and services, and
                  such businesses will not be included in the sale.


                                       15

<PAGE>

The rights and remedies of Sprint outlined in the respective management
agreements resulting from an event of termination of the management agreement
have been materially amended by the related consent and agreement as discussed
below. However, until such time that there is no outstanding debt under the
related consent and agreement, such amendments to the rights and remedies of
Sprint reflected in the related consent and agreement will not be in effect.

Insurance. AirGate and iPCS are each required to obtain and maintain with
financially reputable insurers, who are licensed to do business in all
jurisdictions where any work is performed under the related management agreement
and who are reasonably acceptable to Sprint, workers' compensation insurance,
commercial general liability insurance, business automobile insurance, umbrella
excess liability insurance and "all risk" property insurance.

Indemnification. AirGate and iPCS have each agreed to indemnify Sprint and its
directors, employees and agents and related parties of Sprint and their
directors, employees and agents against any and all claims against any of the
foregoing arising from such company's violation of any law, a breach by such
company of any representation, warranty or covenant contained in their
respective management agreement or any other agreement between AirGate, iPCS or
either of their related parties and Sprint, such company's ownership of the
operating assets or the actions or the failure to act of anyone employed or
hired by such company in the performance of any work under the related
management agreement, except AirGate and iPCS will not indemnify Sprint for any
claims arising solely from the negligence or willful misconduct of Sprint.
Sprint has agreed to indemnify AirGate and iPCS, as the case may be, and their
directors, employees and agents against all claims against any of the foregoing
arising from Sprint's violation of any law and from Sprint's breach of any
representation, warranty or covenant contained in the related management
agreement or any other agreement between Sprint and its related parties and
AirGate and iPCS or their related parties, except Sprint will not indemnify
AirGate or iPCS for any claims arising solely from AirGate's or iPCS' negligence
or willful misconduct.

The Services Agreements

The respective services agreements outline various back office services provided
by Sprint and available to each of AirGate and iPCS at rates established by
Sprint. Sprint can change any or all of the service rates one time in each
12-month period. Some of the available services include: billing, subscriber
care, activation, credit checks, handset logistics, home locator record, voice
mail, prepaid services, directory assistance, operator services, roaming fees,
roaming clearinghouse fees, interconnect fees and inter-service area fees.
Sprint may contract with third parties to provide expertise and services
identical or similar to those to be made available or provided to AirGate and
iPCS. AirGate and iPCS have agreed not to use the services received under their
respective services agreement in connection with any other business or outside
their respective territories. AirGate and iPCS may discontinue use of selected
services upon three months' prior written notice. Sprint may discontinue a
service upon nine months' prior written notice. The services agreements
automatically terminate upon termination of the applicable management agreement.
The services agreements may not be terminated for any reason other than the
termination of the applicable management agreement.

AirGate or iPCS on the one hand and Sprint on the other hand have each agreed to
indemnify each other as well as officers, directors, employees and certain other
related parties and their officers, directors and employees for violations of
law or the services agreement except for any liabilities resulting from the
indemnitee's negligence or willful misconduct. The services agreement also
provides that no party to the agreement will be liable to the other party for
special, indirect, incidental, exemplary, consequential or punitive damages, or
loss of profits arising from the relationship of the parties or the conduct of
business under, or breach of, the services agreement except as may otherwise be
required by the indemnification provisions.

The Trademark and Service Mark License Agreements

Both AirGate and iPCS have non-transferable, royalty-free licenses to use the
following trademarks and service marks of Sprint: "Sprint," together with the
related "Diamond" logo, "Sprint PCS" and "Sprint Personal Communications
Services." In addition, we have licenses to use the following trademarks and
service marks of Sprint: "The Clear Alternative to Cellular," "Experience the
Clear Alternative to Cellular Today," and such other marks as may be adopted in
the future. AirGate and iPCS believe that the Sprint brand names and symbols
enjoy a very high degree of awareness, providing AirGate and iPCS an immediate
benefit in the market place. AirGate's and iPCS' use of the licensed marks is
subject to their adherence to quality standards determined by Sprint and use of
the licensed marks in a manner which would not reflect adversely on the image of
quality symbolized by the licensed marks. AirGate and iPCS have agreed to
promptly notify Sprint of any infringement of any of the licensed marks within
their respective territories of which AirGate and iPCS become aware and to
provide assistance to Sprint in connection with Sprint's enforcement of its
respective rights. AirGate and iPCS have agreed with Sprint to indemnify each
other for losses incurred in connection with a material breach of the trademark
license agreements. In addition, AirGate and iPCS have agreed to indemnify
Sprint from any loss suffered by reason of its use of the licensed marks or
marketing, promotion, advertisement, distribution, lease or sale of any Sprint
PCS products and services other than losses arising solely out of its use of the
licensed marks in compliance with certain guidelines.


                                       16

<PAGE>

Sprint can terminate the trademark and service mark license agreements if
AirGate or iPCS, as the case may be, file for bankruptcy, materially breach the
agreement or its management agreement is terminated. AirGate and iPCS can
terminate their respective trademark and service mark license agreements upon
Sprint's abandonment of the licensed marks or if Sprint files for bankruptcy, or
the related management agreement is terminated.

Consents and Agreements in Connection with the Senior Credit Facilities

Sprint has entered into a consent and agreement with the administrative agent
under AirGate's credit facility, which AirGate has acknowledged, that modifies
Sprint's rights and remedies under AirGate's management agreement for the
benefit of the senior lenders and any refinancing of AirGate's credit facility.
Lehman Commercial Paper, Inc., a subsidiary of Lehman Brothers, Inc., is the
administrative agent under AirGate's credit facility.

Similarly, Sprint has entered into a consent and agreement with the
administrative agent under the iPCS credit facility, which has been acknowledged
by iPCS, and modifies Sprint's rights and remedies under iPCS' management
agreement, for the benefit of the existing and future holders of indebtedness
under iPCS' credit facility, and any refinancing thereof. Toronto Dominion
(Texas), Inc. is the administrative agent under iPCS' credit facility.

The consent and agreement of one party and the rights and obligations of the
parties thereunder, including its lenders, are independent of the consent and
agreement of the other party and the rights and obligations of the parties under
its consent and agreement.

Each consent generally provides, among other things, the following:

         o        Sprint's consent to the pledge of the respective company's
                  subsidiary stock and the grant of a security interest in all
                  of the respective company's assets including the Sprint
                  agreements of such party;

         o        that the respective company's Sprint agreements may not be
                  terminated by Sprint until the respective credit facility is
                  satisfied in full pursuant to the terms of the respective
                  consent, unless AirGate's or iPCS' assets, including stock or
                  equity interests, as the case may be, are sold to a purchaser
                  who does not continue to operate such business as a Sprint PCS
                  network, which sale is at the discretion of the applicable
                  administrative agent;

         o        a prohibition on competing Sprint PCS networks in AirGate's or
                  iPCS' territory;

         o        for Sprint to maintain 10 MHz of PCS spectrum in all of either
                  AirGate's or iPCS' markets;

         o        for redirection of payments from Sprint to the applicable
                  administrative agent under specified circumstances;

         o        for Sprint and the applicable administrative agent to provide
                  to each other notices of default;

         o        the ability to appoint an interim replacement, including
                  Sprint, to operate AirGate's or iPCS', as applicable, PCS
                  network under such party's Sprint agreements after an event of
                  default of the respective credit facility or an event of
                  termination under the respective Sprint agreements;

         o        the ability of the applicable administrative agent or Sprint
                  to assign the Sprint agreements and sell AirGate's or iPCS'
                  respective assets or the equity interests of iPCS' operating
                  subsidiaries, as the case may be, to a qualified purchaser
                  other than a major competitor of Sprint;

         o        the ability to purchase spectrum from Sprint and sell
                  AirGate's or iPCS' respective assets to any qualified
                  purchaser; and

         o        the ability of Sprint to purchase AirGate's or iPCS'
                  respective assets or debt.

Consent to security interest and pledge of stock. Sprint has consented to the
grant of a first priority security interest in and lien on all of the applicable
party's assets and property, including such party's Sprint agreements and the
capital stock and equity interests of the applicable party's subsidiaries and
future subsidiaries.

Agreement not to terminate Sprint agreements until the obligations under related
financings are repaid. Sprint has agreed not to exercise its rights or remedies
under the respective Sprint agreements, except its right to cure certain
defaults, including its right to terminate the applicable Sprint agreements and
withhold payments, other than rights of setoff, until the respective financing
is satisfied in full pursuant to the terms of the respective consent. Sprint has
also agreed that until such obligations are satisfied, a failure to pay any
amount by any related party of AirGate or iPCS, as applicable, under any
agreement with Sprint or with any of Sprint's related parties (other than
AirGate's or iPCS' respective Sprint agreements) would not constitute a default
under AirGate's or iPCS' respective management agreement.

No competition until obligations under the credit facilities are repaid. Sprint
has agreed that it will not permit any person other than AirGate or iPCS, as
applicable, or a successor manager to be a manager or operator for Sprint in
AirGate's or iPCS' applicable territories, until that company's credit facility
is satisfied in full pursuant to the terms of that company's consent. Consistent
with the management agreements, while the applicable credit facility is
outstanding, Sprint can sell PCS services


                                       17

<PAGE>

through its national accounts, permit resellers and build new geographical areas
within AirGate's or iPCS', as applicable, territory for which the respective
company has chosen not to exercise its rights of first refusal. Similarly,
Sprint has agreed that it will not own, operate, build or manage another
wireless mobility communications network in AirGate's or iPCS', as applicable,
territory unless it is permitted under the applicable management agreement or
such management agreement is terminated in accordance with the applicable
consent, and, in each case, the applicable credit facility is satisfied in full
pursuant to the terms of the applicable consent.

Maintain 10 MHz of spectrum. Sprint has agreed to own at least 10 MHz of PCS
spectrum in each of AirGate's and iPCS' territories until the first of the
following events occurs:

         o        the obligations under the applicable credit facility is
                  satisfied in full pursuant to the terms of AirGate's or iPCS'
                  respective consent;

         o        the sale of spectrum is completed under the applicable
                  consent, as discussed below;

         o        the sale of operating assets is completed under the applicable
                  consent, as discussed below; or

         o        the termination of AirGate's or iPCS', as applicable,
                  management agreement.

Restrictions on assignment and change of control do not apply to lenders and the
administrative agent. Sprint has agreed not to apply the restrictions on
assignment of the Sprint agreements and changes in control of AirGate's or iPCS'
ownership to the lenders under the credit facilities or the administrative
agents. The assignment and change of control provisions in the Sprint agreements
will apply if the assignment or change of control is to someone other than the
applicable administrative agent or a lender under the credit facilities, or is
not permitted under the consents.

Redirection of payments from Sprint PCS to the applicable administrative agent.
Sprint has agreed to make all payments due from Sprint to AirGate or iPCS under
the respective Sprint agreements directly to the applicable administrative agent
if such administrative agent provides Sprint with notice that an event of
default has occurred and is continuing under the applicable credit facility.
Payments to such administrative agent would cease upon the cure of the event of
default.

Notice of defaults. Sprint has agreed to provide to the applicable
administrative agent a copy of any written notice it sends to either AirGate or
iPCS regarding an event of termination or an event that if not cured, or if
notice is provided, would be an event of termination under the applicable Sprint
agreements. Sprint also has acknowledged that an event of termination under the
Sprint agreements constitutes an event of default under the credit facilities.
The administrative agents have agreed to provide Sprint a copy of any written
notice sent to either AirGate or iPCS, as applicable, regarding an event of
default or default under the respective credit facility instruments.

Right to cure. Sprint and the respective applicable administrative agents have
the right, but not the obligation, to cure a default under the respective Sprint
agreements. During the first six months as interim manager Sprint's right to
reimbursement of any expenses incurred in connection with the cure are
subordinated to the satisfaction in full, pursuant to the terms of the consents,
of the obligations under the applicable credit facility.

Modification of termination rights. The consents modify the rights and remedies
under the management agreements provided in an event of termination and grant
the providers of the credit facilities certain rights in the event of a default
under the instruments governing the applicable senior debt. The rights and
remedies of the administrative agent under each credit facility vary based on
whether AirGate or iPCS, as applicable, has:

         o        defaulted under its debt obligations but no event of
                  termination has occurred under its respective management
                  agreement; or

         o        breached its respective management agreement.

Each consent generally permits the appointment of a person to run AirGate's or
iPCS' business, as the case may be, under its Sprint agreements on an interim
basis and establishes a process for sale of such business. The person designated
to operate such business on an interim basis is permitted to collect a
reasonable management fee. If Sprint or a related party is the interim operator,
the amount of the fee is not to exceed the amount of direct expenses of its
employees to operate such business plus out-of-pocket expenses. Sprint shall
collect its fee by setoff against the amounts owed to the defaulting party under
its Sprint agreements. In the event of an acceleration of obligations under the
applicable credit facility and for up to two years thereafter, Sprint may retain
only one-half of the 8% of collected revenues that it would otherwise be
entitled to retain under the defaulting party's Sprint agreements. Sprint may
retain the full 8% after the first anniversary of the date of acceleration if
Sprint has not been appointed to run such business on an interim basis or
earlier if such business is sold to a third-party, or after the second
anniversary if Sprint is running such business. The defaulting party or the
applicable administrative agent, as the case may be, is entitled to receive the
remaining one-half of the collected revenues that Sprint would otherwise have
retained. The amount advanced to the defaulting party or the applicable
administrative agent is to be evidenced by an interest-bearing promissory note.
The promissory note will mature on the earlier of (1) the date on which a
successor manager is qualified and assumes the


                                       18

<PAGE>

defaulting party's rights and obligations, as the case may be, under its Sprint
agreements or (2) the date on which such company's operating assets or equity
are purchased by a third-party.

Default under the credit facility without a management agreement breach. If
AirGate defaults on its obligations under its credit facility and there is no
existing default under its management agreement with Sprint, Sprint has agreed
to permit the administrative agent to elect to take any of the following
actions:

         o        allow AirGate to continue to operate its business under its
                  Sprint agreements;

         o        appoint Sprint to operate such business on an interim basis;
                  or

         o        appoint a person other than Sprint to operate such business on
                  an interim basis.

If iPCS defaults on its obligations under its credit facility and there is no
existing default under its management agreement with Sprint, Sprint has agreed
to permit the administrative agent to elect to take any of the following
actions:

         o        allow iPCS to continue to operate its business under its
                  Sprint agreements;

         o        after an acceleration of the debt payment or in the event iPCS
                  is in bankruptcy, appoint Sprint to operate such business on
                  an interim basis; or

         o        after an acceleration of the debt payment or in the event iPCS
                  is in bankruptcy, appoint a person other than Sprint to
                  operate such business on an interim basis.

Appointment of Sprint or third-party designee by applicable administrative agent
to operate business. If an applicable administrative agent appoints Sprint to
operate AirGate's or iPCS', as applicable, business, Sprint must accept the
appointment within 14 days or designate to operate such business another person
who also is a network partner of Sprint or is acceptable to such administrative
agent. Sprint or its designated person must agree to operate the business for up
to six months. At the end of the six months, the period may be extended by such
administrative agent for an additional six months or an additional 12 months if
the aggregate population served by all of Sprint's network partners is less than
40 million. If the term is extended beyond the initial six-month period, each
administrative agent has agreed that Sprint or its designated person's right to
be reimbursed by the defaulting party for amounts previously expended and to be
incurred as interim manager to cure a default up to an aggregate amount that is
equal to 5% of the sum of the defaulting party's stockholders' equity value plus
the outstanding amount of the defaulting party's long term debt will no longer
be subordinated to the defaulting party's obligations under our senior credit
facility. Sprint or its designated person is not required to incur expenses
beyond this 5% limit. At the end of the initial six-month interim term, the
applicable administrative agent has the right to appoint a successor to the
defaulting party subject to the requirements described below.

Appointment of third-party by administrative agent to operate business. If an
administrative agent appoints a person other than Sprint to operate a defaulting
party's business on an interim basis, the third-party must:

         o        agree to serve for six months unless terminated by Sprint for
                  cause or such administrative agent in its discretion;

         o        meet the requirements for a successor to an affiliate and not
                  be challenged by Sprint for failing to meet these requirements
                  within 20 days after the administrative agent provides Sprint
                  with information on the third-party; and

         o        agree to comply with the terms of the applicable Sprint
                  agreements.

The third-party is required to operate the Sprint network in the defaulting
party's territory but is not required to assume its existing liabilities. If the
third-party materially breaches the defaulting party's Sprint agreements, this
breach will be treated as an event of default under the related management
agreement with Sprint.

Management agreement breach. If AirGate or iPCS breaches its Sprint agreements
and such breach causes a default under such company's respective credit
facility, Sprint has the right to designate who will operate the business of the
defaulting party on an interim basis. Sprint has the right to:

         o        allow the defaulting party to continue to operate such
                  business under its Sprint agreements if approved by its
                  administrative agent;

         o        operate such business on an interim basis; or

         o        appoint a person other than Sprint that is acceptable to the
                  applicable administrative agent, which acceptance cannot be
                  unreasonably withheld and must be given for another Sprint
                  network partner, to operate such business on an interim basis.

When a debt default is caused by a breach of AirGate's or iPCS' management
agreement with Sprint, the applicable administrative agent only has a right to
designate who will operate such business on an interim basis if Sprint elects
not to operate such business or designate a third-party to operate such business
on an interim basis.


                                       19

<PAGE>

Election of Sprint to serve as interim manager or designate a third-party to
operate business. If Sprint elects to operate such business on an interim basis
or designate a third-party to operate such business on an interim basis, Sprint
or the third-party may operate such business for up to six months at the
discretion of Sprint. At the end of the six months, the period may be extended
for an additional six months or an additional 12 months if the aggregate
population served by AirGate and iPCS and all other network partners of Sprint
is less than 40 million. If the term is extended beyond the initial six-month
period, each administrative agent has agreed that Sprint or its designee's right
to be reimbursed by the defaulting party for amounts previously expended and to
be incurred as interim manager to cure a default up to an aggregate amount that
is equal to 5% of the sum of the defaulting party's stockholder's equity value
plus the outstanding amount of such company's long term debt will no longer be
subordinated by the defaulting party's obligations under the senior credit
facility. Sprint or its third-party designee is not required to incur expenses
beyond this 5% limit. At the end of the initial six-month interim term, Sprint,
subject to the approval of the applicable administrative agent, has the right to
appoint a successor interim manager to operate such business.

Appointment of third-party by administrative agent to operate business. If
Sprint gives the applicable administrative agent notice of a breach of AirGate's
or iPCS' management agreement, the debt repayment is accelerated, and Sprint
does not agree to operate such business or is unable to find a designee, such
administrative agent may designate a third-party to operate such business. Such
administrative agent has this same right if Sprint or the third-party designated
by Sprint resigns and is not replaced within 30 days. The third-party selected
by such administrative agent must:

         o        agree to serve for six months unless terminated by Sprint for
                  cause or by such administrative agent;

         o        meet the requirements for a successor to a network partner and
                  not be challenged by Sprint for failing to meet the
                  requirements within 20 days after such administrative agent
                  provides Sprint with information on the third-party; and

         o        agree to comply with the terms of the applicable Sprint
                  agreements.

The third-party may continue to operate the business after the six month period
at the applicable administrative agent's discretion, so long as the third-party
continues to satisfy the requirements to be a successor to a network partner and
is in material compliance with the terms or the applicable Sprint agreements.
The third-party is required to operate the Sprint PCS network in the defaulting
party's territory, but is not required to assume such company's existing
liabilities.

Purchase and sale of operating assets. Each of the consents establishes a
process for the sale of either AirGate's or iPCS' operating assets, as the case
may be, in the event of a default and acceleration under the applicable credit
facility. AirGate's stockholders have approved the sale of its operating assets
pursuant to the terms of AirGate's consent.

Sprint's right to purchase on acceleration of amounts outstanding under the
respective credit facility. Subject to the requirements of applicable law,
Sprint has the right to purchase AirGate's or iPCS' operating assets, as
applicable, upon notice of an acceleration of the respective senior credit
facility under the following terms:

         o        in addition to the purchase price requirements of the
                  respective management agreement, the purchase price must
                  include the payment or assumption in full, pursuant to the
                  terms of the respective consent, of the respective credit
                  facility;

         o        Sprint must notify the applicable administrative agent of its
                  intention to exercise the purchase right within 60 days of
                  receipt of the notice of acceleration;

         o        such administrative agent is prohibited for a period of at
                  least 120 days after the acceleration or until Sprint rescinds
                  its intention to purchase from enforcing its security interest
                  if Sprint has given notice of its intention to exercise the
                  purchase right;

         o        if the defaulting party receives a written offer that is
                  acceptable to such company to purchase its operating assets
                  within a specified period after the acceleration, Sprint has
                  the right to purchase, subject to the administrative agent's
                  consent, such operating assets on terms and conditions at
                  least as favorable to such company as the offer such company
                  receives. Sprint must agree to purchase the operating assets
                  within 14 business days of its receipt of the offer, on
                  acceptable conditions, and in an amount of time acceptable to
                  such company; and

         o        upon completion of the sale to Sprint, such administrative
                  agent must release the security interests upon satisfaction in
                  full pursuant to the terms of the respective consent of the
                  obligations under the respective credit facility.

If the applicable administrative agent acquires the defaulting party's operating
assets, Sprint has the right for 60 days to notify such administrative agent
that it wants to purchase such operating assets for an amount not less than the
sum of the aggregate amount paid by the lenders under the related credit
facility for such operating assets plus an aggregate amount sufficient to
satisfy in full the obligations under such credit facility pursuant to the terms
of the respective company's consent. If Sprint purchases such operating assets
under these provisions, the administrative agent must release the security
interests securing such senior credit facility. In the event that a bankruptcy
petition is filed by or with respect to AirGate or iPCS, Sprint has the right to
purchase the defaulting party's operating assets from the applicable
administrative agent by repaying the obligations in full. Such


                                       20

<PAGE>

right may be exercised by giving the administrative agent notice of Sprint's
intent to exercise such purchase right no later than 60 days following the date
of filing of the bankruptcy petition.

If such administrative agent receives an offer to purchase the operating assets
of the defaulting party, Sprint has the right to purchase the operating assets
on terms and conditions at least as favorable as the terms and conditions in the
proposed offer within 14 days of Sprint's receipt of notice of the offer, and so
long as the conditions of Sprint's offer and the amount of time to complete the
purchase is acceptable to the administrative agent.

Sale of operating assets to third parties. If Sprint does not purchase the
operating assets, following an acceleration of the obligations under the related
senior credit facility, the applicable administrative agent may sell the
operating assets of the defaulting party. Subject to the requirements of
applicable law, such administrative agent has two options:

         o        to sell the assets to an entity that meets the requirements to
                  be a successor under the related Sprint agreements; or

         o        to sell the assets to any third-party, subject to specified
                  conditions.

Sale of assets to qualified successor. Subject to the requirements of applicable
law, the related administrative agent may sell the operating assets and assign
the agreements to entities that meet the following requirements to succeed the
defaulting party:

         o        the person has not materially breached a material agreement
                  with Sprint or its related parties that has resulted in the
                  exercise of a termination right or in the initiation of
                  judicial or arbitration proceedings during the past three
                  years;

         o        the person is not named by Sprint as a prohibited successor;

         o        the person has reasonably demonstrated its credit worthiness
                  and can demonstrate the ability to service the indebtedness
                  and meet the requirements of the related build-out plan; and

         o        the person agrees to be bound by the applicable Sprint
                  agreements.

Such administrative agent is required to provide Sprint with information
necessary to determine if a buyer meets the requirements to succeed the
defaulting party. Sprint has 20 days after its receipt of this information to
object to the qualifications of the buyer to succeed the defaulting party. If
Sprint does not object to the buyer's qualifications, subject to the
requirements of applicable law, the buyer can purchase the assets and assume our
rights and responsibilities under the related Sprint agreements. The consents
will remain in full force and effect for the benefit of the buyer and its
lenders. The buyer also has a period to cure any defaults under the applicable
Sprint agreements.

Sale of assets to non-successor. Subject to the requirements of applicable law,
the related administrative agent may sell a defaulting party's assets to a party
that does not meet the requirements to succeed the defaulting party. If such a
sale is made:

         o        Sprint may terminate the related Sprint agreements;

         o        the buyer may purchase from Sprint 5, 7.5 or 10 MHz of the PCS
                  spectrum licensed to Sprint in AirGate's or iPCS' territory
                  under specified terms, as the case may be;

         o        if the buyer controls, is controlled by or is under common
                  control with an entity that owns a license to provide wireless
                  service to at least 50% of the population in a basic trading
                  area where the buyer proposes to purchase the spectrum from
                  Sprint, the buyer may only buy 5MHz of spectrum;

         o        the price to purchase the spectrum is equal to the sum of the
                  original cost of the license to Sprint pro rated on a
                  population and a spectrum basis, plus the cost paid by Sprint
                  for microwave clearing in the spectrum ultimately acquired by
                  the buyer of the defaulting party's assets and the amount of
                  carrying costs attributable to the license and microwave
                  clearing costs from the date of the appropriate consent until
                  the closing of the sale, based on a rate of 12% per annum;

         o        the buyer will receive from Sprint the subscribers with the
                  MIN assigned to the market area covered by the purchased
                  spectrum except for subscribers of national accounts and
                  resellers;

         o        with limited exceptions, Sprint will not solicit for six
                  months the subscribers transferred to the buyer with the MIN
                  assigned to the market area;

         o        the buyer and Sprint will enter into a mutual roaming
                  agreement with prices equal to the lesser of the most favored
                  pricing provided by buyer to third parties roaming in the
                  geographic area and the national average paid by Sprint to
                  third parties; and

         o        Sprint will have the right to resell the buyer's wireless
                  services at most favored nations pricing.

Right to purchase debt obligations. Following an acceleration under the
applicable senior credit facility and until the 60-day anniversary of the filing
of a petition of bankruptcy, Sprint has the right to purchase AirGate's or iPCS'
obligations under such credit facility, as the case may be, at a purchase price
equal to the amount of the obligations under such credit facility. In the event
that Sprint purchases the obligations within 60 days following the earlier of
acceleration or the date of the filing of a


                                       21

<PAGE>

bankruptcy petition, the purchase price for the obligations will be reduced by
accrued interest and any fees and expenses that are unreasonable.

Modification and amendment of consent. If Sprint modifies or amends the form of
consent and agreement it enters into with a lender to another Sprint network
partner that serves an area with population exceeding 5.0 million, then Sprint
agrees to give the administrative agents written notice of the amendments and to
amend the consents in the same manner at the applicable administrative agent's
request; provided, however, that Sprint is not required to amend the consents
to:

         o        incorporate selected changes designated by such administrative
                  agent unless Sprint consents to making only the selected
                  changes; or

         o        incorporate changes made for the benefit of a lender because
                  of circumstances related to a particular Sprint network
                  partner other than AirGate or iPCS.

The following circumstances would not be considered related to a particular
Sprint network partner and, subject to the provisions described in the preceding
sentence, could result in amendment of the consents (if the 5.0 million
population threshold is met as described above):

         o        any form of recourse to Sprint or similar form of credit
                  enhancement;

         o        any change in Sprint's right to purchase our operating assets
                  or capital stock, as applicable, under the management
                  agreement or Sprint's right to purchase the obligations under
                  the credit facilities;

         o        any change to the right of AirGate or iPCS or the right of the
                  related administrative agent or the lenders under the related
                  credit facilities to sell the collateral or purchase spectrum
                  from Sprint;

         o        any change in the ownership status, terms of usage or the
                  amount of spectrum that may be purchased by AirGate or iPCS
                  from Sprint;

         o        any material change in the flow of certain revenues between
                  Sprint and AirGate or iPCS;

         o        any changes to the obligations required to be assumed by, or
                  qualifications for, or appointment of, anyone other than
                  AirGate or iPCS who can be appointed to operate such business
                  on an interim basis under such management agreement or
                  purchase such business and continue to operate under such
                  management agreement;

         o        any changes to the consent and agreements terms on
                  confidentiality, non-compete or eligible buyers of the
                  business;

         o        any clarifications of FCC compliance issues;

         o        any issuance of legal opinions; and

         o        any changes to the requirements described in this section.

Termination of consents. The consents will terminate upon the first to occur of:

         o        repayment in full of all obligations under the applicable
                  credit facility and termination of such credit facility; and

         o        termination of the applicable Sprint agreements.


             REGULATION OF THE WIRELESS TELECOMMUNICATIONS INDUSTRY

 Federal Regulation

Federal Communications Commission Regulation. The FCC regulates the licensing,
construction, operation, acquisition and interconnection arrangements of
wireless telecommunications systems in the United States. Specifically, we are
subject to radio license regulation under Title III of the Communications Act,
as amended, as well as common carrier regulation under Title II of the
Communications Act, as amended. In addition, our operations are subject to
regulation as commercial mobile radio services, commonly referred to as CMRS,
and to service-specific personal communications service regulations.

The FCC has promulgated, and is in the process of promulgating and revising, a
series of rules, regulations and policies that affect our operations. Penalties
for violating the FCC's rules and policies can range from monetary forfeitures
to license revocation or non-renewal of licenses. The FCC Title II regulations
applicable to our wireless operations include, among other things:

         o        requirements and standards, discussed further below, for the
                  interconnection of PCS networks with other wireless and
                  wireline carriers;

         o        requirements to provide service upon reasonable request and
                  prohibitions on unjust or unreasonable discrimination by
                  carriers between similarly situated subscribers and the
                  charging of unreasonable or unjust rates; and

         o        requirements to pay access charges, universal service funding
                  (as discussed below), and other regulatory and non-regulatory
                  fees and charges.


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<PAGE>

We do not hold any radio licenses, but rather operate using spectrum licensed to
Sprint under the Sprint management agreements. Nonetheless, we are subject to,
or impacted by, a number of additional regulations and requirements under Title
III of the Communications Act, as amended. These requirements include, among
other things:

         o        requirements in most cases to obtain prior consent before the
                  assignment and/or transfer of control of a PCS license, as
                  discussed below;

         o        limitations on the extent of non-U.S. ownership of radio
                  licenses and the qualifications of holders of radio licenses;
                  and

         o        requirements for compliance of antenna sites with the National
                  Environmental Policy Act of 1969, including restrictions on
                  emissions of radio frequency radiation, as well as
                  requirements on the marking and lighting of antenna
                  structures, and related notifications to the Federal Aviation
                  Administration, for certain antenna sites.

Furthermore, our operations are also subject to CMRS and service specific
regulation by the FCC. CMRS regulations include, among other things:

         o        limitations on having attributable interests (usually 20% or
                  greater) in broadband PCS, cellular and specialized mobile
                  radio service, or SMR, spectrum totaling more than 55 MHz in a
                  given market (while these limitations will expire on January
                  1, 2003, the FCC will consider competitive factors when
                  licensees seek to aggregate large amounts of spectrum in an
                  area);

         o        requirements for carriers to provide access to 9-1-1 services
                  from mobile handsets, including handsets of users who are not
                  subscribers of such carrier, and for the network to provide
                  enhanced location and other mobile identification information
                  to public safety answering points, as discussed below;

         o        requirements to comply with the Communications Assistance to
                  Law Enforcement Act, commonly known as CALEA, including the
                  dedication of capacity and provision of access points for law
                  enforcement agencies to facilitate wiretaps and intercepts
                  with valid authority; and

         o        rules requiring implementation by November 24, 2003 of local
                  number portability, including the ability to deliver calls
                  from the company's networks to ported numbers anywhere in the
                  country, and to contribute to the Local Number Portability
                  Fund.

The FCC has divided the 120 MHz of spectrum allocated to broadband PCS into six
frequency blocks, A through F. Through Sprint, we operate under blocks B, D and
E. PCS specific regulations that affect our operations include, among other
things:

         o        presumptions regarding the grant or denial of PCS license
                  renewals, as discussed below;

         o        rules governing the height, power and physical emissions
                  characteristics of PCS transmitters;

         o        rules, discussed further below, requiring service providers to
                  meet specific coverage benchmarks by the end of the fifth year
                  from being licensed and, in some cases, by the end of the
                  license term;

         o        rules to allow broadband PCS licensees to partition their
                  market areas and/or to disaggregate their assigned spectrum
                  and to transfer partial market areas or spectrum assignments
                  to eligible third parties; and

         o        rules requiring PCS providers to relocate, or otherwise
                  compensate, incumbent microwave users (or share in the
                  relocation costs, if the microwave user has already relocated)
                  in the band if the deployment of PCS would interfere with the
                  microwave user's system.

Interconnection

The FCC has the authority to order interconnection between CMRS providers (which
includes us) and any other common carrier. The FCC has ordered local exchange
carriers to provide reciprocal compensation to CMRS providers for the
termination of traffic. Under these new rules, we benefit from interconnection
agreements negotiated by Sprint for AirGate's network with BellSouth and Verizon
and for iPCS' network with Qwest, SBC and Ameritech, and for both networks with
several smaller independent local exchange carriers. Interconnection agreements
are negotiated on a statewide basis. If an agreement cannot be reached, parties
to interconnection negotiations can submit outstanding disputes to state
authorities for arbitration. Negotiated interconnection agreements are subject
to state approval.

Universal Service Requirements

The FCC and the states are required to establish a universal service program to
ensure that affordable, quality telecommunications services are available to all
residents of the United States of America. Sprint PCS is required to contribute
to the federal universal service program as well as existing state programs. The
FCC has determined that the contribution to the federal universal service
program is a variable percentage of interstate end-user telecommunications
revenues and was approximately 6.8% for the first quarter of 2002, rising to
approximately 7.3% for the second through fourth quarters of 2002. Although many
states are likely to


                                       23

<PAGE>

adopt a similar assessment methodology for intrastate revenues, the states are
free to calculate telecommunications service provider contributions in any
manner they choose as long as the process is not inconsistent with the FCC's
rules. At the present time it is not possible to predict the extent of our total
federal and state universal service assessments or our ability to recover costs
associated with the universal service fund.

Transfers, Assignments and Control of PCS Licenses

The FCC must give prior approval to the assignment of, or transfers involving,
substantial changes in ownership or control of a PCS license. Non-controlling
interests in an entity that holds a PCS license or operates PCS networks
generally may be bought or sold without prior FCC approval. In addition, the FCC
requires only post-consummation notification of certain pro forma assignments or
transfers of control.

An integral element of these rules is that the FCC also requires licensees to
maintain a certain degree of control over their licenses. The Sprint PCS
agreements reflect an alliance that the parties believe meets the FCC
requirements for licensee control of licensed spectrum. If the FCC were to
determine that the Sprint PCS agreements need to be modified to increase the
level of licensee control, we have agreed with Sprint PCS under the terms of our
Sprint PCS agreements to use our best efforts to modify the agreements as
necessary to cause the agreements to comply with applicable law and to preserve
to the extent possible the economic arrangements set forth in the agreements. If
the agreements cannot be modified, the agreements may be terminated pursuant to
their terms. In addition to revoking the licenses, the FCC could also impose
monetary penalties on us.

Enhanced 911

In June 1996, the FCC adopted rules requiring broadband PCS and other CMRS
providers to implement Phase I enhanced emergency 911 calling capabilities by
October 1, 2001 to requesting public safety answering points. In addition, the
FCC has required implementation of Phase II enhanced 911 capabilities by October
1, 2002, including the ability to provide automatic location identification (or
ALI) of subscribers by latitude and longitude with a specified accuracy. Sprint
PCS has obtained waivers of the relevant ALI enhanced 911 requirements based on
a modified deployment plan, which includes a number of interim benchmarks and
other conditions, and would provide for completing Phase II enhanced 911
deployment by 2005.

Communications Assistance for Law Enforcement Act

CALEA was enacted in 1994 to preserve electronic surveillance capabilities by
law enforcement officials in the face of rapidly changing telecommunications
technology. CALEA requires telecommunications carriers, including us, to modify
their equipment, facilities, and services to allow for authorized electronic
surveillance based on either industry or FCC standards. Following adoption of
interim standards and a lengthy rulemaking proceeding, including an appeal and
remand proceeding, as of June 30, 2002, all carriers were required to be in
compliance with the CALEA requirements. The Company is currently in compliance
with the CALEA requirements.

PCS License Renewal

PCS licensees can renew their licenses for additional 10 year terms. PCS renewal
applications are not subject to auctions. However, under the FCC's rules, third
parties may oppose renewal applications and/or file competing applications. If
one or more competing applications are filed, a renewal application will be
subject to a comparative renewal hearing. The FCC's rules afford PCS renewal
applicants involved in comparative renewal hearings with a "renewal expectancy."
The renewal expectancy is the most important comparative factor in a comparative
renewal hearing and is applicable if the PCS renewal applicant has:

         o        provided "substantial service" during its license term; and

         o        substantially complied with all applicable laws and FCC rules
                  and policies.

The FCC's rules define "substantial service" in this context as service that is
sound, favorable and substantially above the level of mediocre service that
might minimally warrant renewal.

Build-Out Conditions of PCS Licenses

All PCS licenses are granted for 10-year terms conditioned upon timely
compliance with the FCC's build-out requirements. Pursuant to the FCC's
build-out requirements, all 30 MHz broadband PCS licensees must construct
facilities that offer coverage to one-third of the population within 5 years and
to two-thirds of the population within 10 years, and all 10 MHz broadband PCS
licensees must construct facilities that offer coverage to at least one-quarter
of the population within 5 years or make a showing of "substantial service"
within that 5 year period. Rule violations could result in license cancellation
or revocation.


                                       24

<PAGE>

Other Federal Regulations

Wireless systems, which we use in the provision of services, must comply with
certain FCC and FAA regulations regarding the siting, marking, lighting and
construction of transmitter towers and antennas. The FCC also requires that
aggregate radio wave emissions from every site location meet certain standards.
Although we believe that our existing network meets these standards, a site
audit may reveal the need to reduce or modify emissions at one or more sites.
This would increase our costs and could have a material adverse affect on our
operations. In addition, these regulations will also affect site selection for
new network build-outs and may increase the costs of improving our network. The
increased costs and delays from these regulations may have a material adverse
affect on our operations. In addition, the FCC's decision to license a proposed
tower may be subject to environmental review pursuant to the National
Environmental Policy Act of 1969, or NEPA, which requires federal agencies to
evaluate the environmental impacts of their decisions under certain
circumstances. FCC regulations implementing NEPA place responsibility on each
applicant to investigate any potential environmental effects, including health
effects relating to radio frequency emissions, of a proposed operation and to
disclose any significant effects on the environment to the agency prior to
commencing construction. In the event that the FCC determines that a proposed
tower would have a significant environmental impact, the FCC would require
preparation of an environmental impact statement. This process could
significantly delay or prevent the registration or construction of a particular
tower or make tower construction more costly. In certain jurisdictions, local
laws or regulations may impose similar requirements.

Wireless Facilities Siting

States and localities are not permitted to regulate the placement of wireless
facilities so as to prohibit the provision of wireless services or to
discriminate among providers of such services. In addition, as long as a
wireless system complies with the FCC's rules, states and localities are
prohibited from using radio frequency health effects as a basis to regulate the
placement, construction or operation of wireless facilities. State and
localities are, however, permitted to engage in other forms of regulation,
including zoning regulation, that impacts the Company's ability to select and
modify sites. The FCC is considering numerous requests for preemption of local
actions affecting wireless facilities siting.

State Regulation of Wireless Service

Section 332 of the Communications Act preempts states from regulating the rates
and entry of CMRS providers. However, states may petition the FCC to regulate
such providers and the FCC may grant such petition if the state demonstrates
that:

         o        market conditions fail to protect subscribers from unjust and
                  unreasonable rates or rates that are unjustly or unreasonably
                  discriminatory; or

         o        when CMRS is a replacement for landline telephone service
                  within the state.

To date, the FCC has granted no such petition. To the extent we provide fixed
wireless service in the future, we may be subject to additional state
regulation.

                                  RISK FACTORS

OUR BUSINESS AND OUR PROSPECTS ARE SUBJECT TO MANY RISKS. THE FOLLOWING ITEMS
ARE REPRESENTATIVE OF THE RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT COULD AFFECT
OUR BUSINESS, OUR FUTURE PERFORMANCE, OUR LIQUIDITY AND THE OUTCOME OF THE
FORWARD-LOOKING STATEMENTS WE MAKE. IN ADDITION, OUR BUSINESS, OUR FUTURE
PERFORMANCE, OUR LIQUIDITY AND FORWARD-LOOKING STATEMENTS COULD BE AFFECTED BY
GENERAL INDUSTRY AND MARKET CONDITIONS AND GROWTH RATES, GENERAL ECONOMIC AND
POLITICAL CONDITIONS, INCLUDING THE GLOBAL ECONOMY AND OTHER FUTURE EVENTS,
INCLUDING THOSE DESCRIBED BELOW AND ELSEWHERE IN THIS ANNUAL REPORT ON FORM
10-K.

Risks Related to Our Business, Strategy and Operations
------------------------------------------------------

Our revenues may be less than we anticipate which could materially adversely
affect our liquidity, financial condition and results of operations

Revenue growth is primarily dependent on the size of our subscriber base,
average monthly revenues per user and roaming revenue. During the year ended
September 30, 2002, we experienced slower net subscriber growth rates than
planned, which we believe is due in large part to increased churn, declining
rates of wireless subscriber growth in general, the re-imposition of deposits
for most sub-prime credit subscribers during the last half of the year, the
current economic slowdown and increased competition. Other carriers also have
reported slower subscriber growth rates compared to prior periods. We have seen
a


                                       25

<PAGE>

continuation of competitive pressures in the wireless telecommunications market
causing some major carriers to offer plans with increasingly large bundles of
minutes of use at lower prices which may compete with the calling plans we
offer, including the Sprint calling plans we support. While our business plan
anticipates lower subscriber growth, it assumes average monthly revenues per
user will remain relatively stable. Increased price competition may lead to
lower average monthly revenues per user than we anticipate. In addition, the
lower reciprocal roaming rate that Sprint intends to institute in 2003 will
reduce our roaming revenue, which may not be offset by the reduction in our
roaming expense. If our revenues are less than we anticipate, it could
materially adversely affect our liquidity, financial condition and results of
operation.

Our costs may be higher than we anticipate which could materially adversely
affect our liquidity, financial condition and results of operations

Our business plan anticipates that we will be able to lower our operating and
capital costs, including costs per gross addition and cash cost per user.
Increased competition may lead to higher promotional costs, losses on sales of
handset and other costs to acquire subscribers. Further, as described below
under "Risks Related to Our Relationship With Sprint," a substantial portion of
costs of service and roaming are attributable to fees and charges we pay Sprint
for billing and collections, customer care and other back-office support. Our
ability to manage costs charged by Sprint is limited. If our costs are more than
we anticipate, the actual amount of funds to implement our strategy and business
plan may exceed our estimates, which could have a material adverse affect on our
liquidity, financial condition and results of operations.

The unsettled nature of the wireless market may limit the visibility of key
operating metrics

Our business plan and estimated future operating results are based on estimates
of key operating metrics, including subscriber growth, subscriber churn, average
monthly revenue per subscriber, losses on sales of handsets and other subscriber
acquisitions costs and other operating costs. The unsettled nature of the
wireless market, the current economic slowdown, increased competition in the
wireless telecommunications industry, new service offerings of increasingly
large bundles of minutes of use at lower prices by some major carriers, and
other issues facing the wireless telecommunications industry in general have
created a level of uncertainty that may adversely affect our ability to predict
these key operating metrics.

We may continue to experience a high rate of subscriber turnover, which would
adversely affect our financial performance

The wireless personal communications services industry in general, and Sprint
and its network partners in particular, have experienced a higher rate of
subscriber turnover, commonly known as churn, as compared to cellular industry
averages. This churn rate has been driven higher over the past year due to the
NDASL and Clear Pay programs and the removal of deposit requirements as
described elsewhere in this report. Our business plan assumes that churn will
decline significantly over the course of fiscal 2003. Due to significant
competition in our industry and general economic conditions, among other things,
this decline may not occur and our future rate of subscriber turnover may be
higher than our historical rate. Factors may contribute to higher churn include:

         o        inability or unwillingness of subscribers to pay which results
                  in involuntary deactivations, which accounted for 67% of our
                  deactivations in the year ended September 30, 2002;

         o        subscriber mix and credit class, particularly sub-prime credit
                  subscribers which have accounted for approximately 55% of our
                  gross subscriber additions since May 2001 and account for
                  approximately 35% of our subscriber base as of September 30,
                  2002;

         o        the attractiveness of our competitors' products, services and
                  pricing;

         o        network performance and coverage relative to our competitors;

         o        customer service;

         o        increased prices; and

         o        any future changes by us in the products and services we
                  offer, especially to the Clear Pay Program.

A high rate of subscriber turnover could adversely affect our competitive
position, liquidity, financial position, results of operations and our costs of,
or losses incurred in, obtaining new subscribers, especially because we
subsidize some of the costs of initial purchases of handsets by subscribers.

Our allowance for doubtful accounts may not be sufficient to cover uncollectible
accounts

On an ongoing basis, we estimate the amount of subscriber receivables that we
will not collect to reflect the expected loss on such accounts in the current
period. Our business plan assumes that bad debt as a percentage of service
revenues will decline significantly during fiscal 2003. Our allowance for
doubtful accounts may underestimate actual unpaid receivables for various
reasons, including:

         o        our churn rate may exceed our estimates;



                                       26

<PAGE>

         o        bad debt as a percentage of service revenues may not decline
                  as we assume in our business plan;

         o        adverse changes in the economy; or

         o        unanticipated changes in Sprint's PCS products and services.

If our allowance for doubtful accounts is insufficient to cover losses on our
receivables, it could materially adversely affect our liquidity, financial
condition and results of operations.

Roaming revenue could be less than anticipated, which could adversely affect our
liquidity, financial condition and results of operations

The Company has been notified by Sprint that it intends to reduce the reciprocal
rate from $0.10 per minute to $0.058 per minute in 2003. While the Company
believes this reduction is not in accordance with its agreements with Sprint, it
is reviewing its options, and its recourse against Sprint for this reduction may
be limited. Based upon 2002 historical roaming data, a reduction in the roaming
rate to $0.058 per minute would have reduced roaming revenue by approximately
$36 million ($23 million for AirGate and $13 million for iPCS) and would have
reduced roaming expense by approximately $26 million ($16 million for AirGate
and $10 million for iPCS). The ratio of roaming revenue to expense for the year
ended September 30, 2002 was 1.3 to one.

The amount of roaming revenue we receive also depends on the minutes of use of
our network by PCS subscribers of Sprint and Sprint PCS network partners. If
actual usage is less than we anticipate, our roaming revenue would be less and
our liquidity, financial condition and results of operations could be materially
adversely affected.

Our efforts to reduce costs may have adverse affects on our business

As a result of the current business environment, AirGate has revised its
business plan and is seeking to manage expenses to improve its liquidity
position. AirGate has significantly reduced projected capital expenditures,
advertising and promotion costs and other operating costs. Reduced capital
expenditures could, among other things, force us to delay improvements to our
networks, which could adversely affect the quality of service to our
subscribers. These actions could reduce our subscriber growth and increase
churn, which could materially adversely affect our financial condition and
results of operation.

The Company may incur significantly higher wireless handset subsidy costs than
we anticipate for existing subscribers who upgrade to a new handset

As the Company's subscriber base matures, and technological innovations occur,
more existing subscribers will begin to upgrade to new wireless handsets. The
Company subsidizes a portion of the price of wireless handsets and incurs sales
commissions, even for handset upgrades. Excluding sales commissions, the Company
has experienced approximately $4.8 million associated with wireless handset
upgrade costs for the year ended September 30, 2002. The Company does not have
any historical experience regarding the adoption rate for wireless handset
upgrades. If more subscribers upgrade to new wireless handsets than the Company
projects, its results of operations would be adversely affected.

The loss of the officers and skilled employees who we depend upon to operate our
business could materially adversely affect our results of operations

Our business is managed by a small number of executive officers. We believe that
our future success depends in part on our continued ability to attract and
retain highly qualified technical and management personnel. We may not be
successful in retaining our key personnel or in attracting and retaining other
highly qualified technical and management personnel. Our ability to attract and
retain such persons may be negatively impacted if our liquidity position does
not improve. In addition, we grant stock options as a method of attracting and
retaining employees, to motivate performance and to align the interests of
management with those of our stockholders. Due to the decline in the trading
price of our common stock, a substantial portion of the stock options held by
employees have an exercise price that is higher than the current trading price
of our common stock, and therefore these stock options may not be effective in
helping us to retain valuable employees. We currently have "key man" life
insurance for our Chief Executive Officer. The loss of our officers and skilled
employees could materially adversely affect our results of operation.

Parts of our territories have limited amounts of licensed spectrum, which may
adversely affect the quality of our service and our results of operations

Sprint has licenses covering 10 MHz of spectrum in AirGate's territory. While
Sprint has licenses covering 30 MHz of spectrum throughout most of iPCS'
territory, it has licenses covering only 10 MHz or 20 MHz in parts of Illinois.
As the number of subscribers in our territories increase, this limited amount of
licensed spectrum may not be able to accommodate increases in call volume, may
lead to increased dropped and blocked calls and may limit our ability to offer
enhanced services, all of which could result in increased subscriber turnover
and adversely affect our financial condition and results of operations.


                                       27

<PAGE>

There is a high concentration of ownership of the wireless towers we lease and
if we lose the right to install our equipment on certain wireless towers or are
unable to renew expiring leases, our financial condition and results of
operations could be adversely impacted

Many of our cell sites are co-located on leased tower facilities shared with one
or more wireless providers. A large portion of these leased tower sites are
owned by a few tower companies. Approximately 75% of the towers leased by
AirGate are owned by four tower companies (and their affiliates). Approximately
60% of the towers leased by iPCS are owned by four tower companies (and their
affiliates), with one company owning approximately 29% of the combined Company's
leased towers. If a master co-location agreement with one of these tower
companies were to terminate, or if one of these tower companies were unable to
support our use of its tower sites, we would have to find new sites or we may be
required to rebuild that portion of our network. In addition, because of this
concentration of ownership of our cell sites, our financial condition and
results of operations could be materially and adversely affected if we are
unable to renew expiring leases with such tower companies on favorable terms, or
in the event of a disruption in any of their business operations.

Risks Particular to AirGate's Indebtedness
------------------------------------------

AirGate has substantial debt that it may not be able to service; a failure to
service such debt may result in the lenders under such debt controlling
AirGate's assets

The substantial debt of AirGate has a number of important consequences for our
operations and our investors, including the following:

         o        AirGate will have to dedicate a substantial portion of any
                  cash flow from its operations to the payment of interest on,
                  and principal of, its debt, which will reduce funds available
                  for other purposes;

         o        AirGate may not be able to obtain additional financing if the
                  assumptions underlying the business plan are not correct and
                  existing sources of funds, together with cash flow, are
                  insufficient for capital requirements, working capital
                  requirements and other corporate purposes;

         o        some of AirGate's debt, including financing under AirGate's
                  credit facility, is at variable rates of interest, which could
                  result in higher interest expense in the event of increases in
                  market interest rates; and

         o        due to the liens on substantially all of AirGate's assets and
                  the pledges of stock of AirGate's existing and future
                  restricted subsidiaries that secure AirGate's credit facility
                  and notes, lenders or holders of such notes may exercise
                  remedies giving them the right to control AirGate's assets or
                  the assets of the subsidiaries of AirGate, other than iPCS, in
                  the event of a default.

The ability of AirGate to make payments on its debt will depend upon its future
operating performance which is subject to general economic and competitive
conditions and to financial, business and other factors, many of which AirGate
cannot control. If the cash flow from AirGate's operating activities is
insufficient, it may take actions, such as further delaying or reducing capital
expenditures, attempting to restructure or refinance its debt, selling assets or
operations or seeking additional equity capital. Any or all of these actions may
not be sufficient to allow AirGate to service its debt obligations. Further,
AirGate may be unable to take any of these actions on satisfactory terms, in a
timely manner or at all. The AirGate credit facility and indenture governing
AirGate's debt limit our ability to take several of these actions.

If AirGate does not meet all of the conditions required under its senior secured
credit facility, it may not be able to draw down all of the funds it anticipates
receiving from its senior lenders and AirGate may not be able to fund operating
losses and working capital needs

As of December 31, 2002, AirGate had borrowed $141.5 million under its credit
facility. The remaining $12 million available under AirGate's credit facility is
subject to AirGate meeting all of the conditions specified in its financing
documents. Additional borrowings are subject to specific conditions on each
funding date, including the following:

         o        that the representations and warranties in the loan documents
                  are true and correct;

         o        that certain financial covenant tests are satisfied, including
                  leverage, debt coverage and operating performance covenants,
                  minimum subscriber revenues, maximum capital expenditures, and
                  covenants relating to earnings before interest, taxes,
                  depreciation and amortization; and

         o        the absence of a default under the loan documents and
                  agreements with Sprint.

If AirGate does not meet these conditions at each funding date, its senior
lenders may not lend some or all of the remaining amounts under its credit
facility. If other sources of funds are not available, AirGate may not be in a
position to meet its operating and other cash needs.


                                       28

<PAGE>

The AirGate indenture and credit facility contain provisions and requirements
that could limit AirGate's ability to pursue borrowing opportunities

The restrictions contained in the indenture governing the AirGate notes, and the
restrictions contained in AirGate's credit facility, may limit AirGate's ability
to implement its business plans, finance future operations, respond to changing
business and economic conditions, secure additional financing, if needed, and
engage in opportunistic transactions. The AirGate credit facility and notes also
restricts the ability of AirGate and the ability of AirGate's subsidiaries,
other than iPCS, and its future subsidiaries to do the following:

         o        create liens;

         o        make certain payments, including payments of dividends and
                  distributions in respect of capital stock;

         o        consolidate, merge and sell assets;

         o        engage in certain transactions with affiliates; and

         o        fundamentally change its business.

If AirGate fails to pay the debt under its credit facility, Sprint has the
option of purchasing AirGate's loans, giving Sprint certain rights of a creditor
to foreclose on AirGate's assets

Sprint has contractual rights, triggered by an acceleration of the maturity of
the debt under AirGate's credit facility, pursuant to which Sprint may purchase
AirGate's obligations to its senior lenders and obtain the rights of a senior
lender. To the extent Sprint purchases these obligations, Sprint's interests as
a creditor could conflict with AirGate's interests. Sprint's rights as a senior
lender would enable it to exercise rights with respect to AirGate's assets and
continuing relationship with Sprint in a manner not otherwise permitted under
its Sprint agreements.

Risks Related to iPCS
---------------------

iPCS is in default on its senior credit facility and notes

It is an event of default under iPCS' credit facility and the indenture
governing its notes if, among other things, iPCS fails to file its periodic
reports with the Securities and Exchange Commission, deliver its financial
statements or provide the required opinion of its independent auditors on its
financial statements. At December 30, 2002, iPCS failed to meet these
requirements. Upon giving the appropriate notice and passage of cure periods,
the lenders will have the ability to accelerate iPCS' payment obligations under
the iPCS credit facility and the trustee for or the holders of its notes will
have the ability to accelerate iPCS' payment obligations to them under the
indenture governing such notes. iPCS does not anticipate being able to remedy
these defaults within the cure periods. iPCS would not have sufficient resources
to meet its payment obligations in the event of any such acceleration. In
addition, the senior lenders and noteholders could foreclose on the collateral
pledged to secure outstanding loans or institute an involuntary bankruptcy
proceeding against iPCS. While iPCS is negotiating forbearance agreements with
the lenders and certain noteholders, there can be no assurance that such
negotiations will be successful. Even if those negotiations are successful, we
do not expect that iPCS will be able to satisfy the financial covenants
contained in its credit facility at March 31, 2003 and it is probable that iPCS
will file for bankruptcy in the near term, and these events are also events of
default under the iPCS credit facility.

The restructuring of iPCS may cause the value of AirGate's ownership interest in
iPCS to be worthless

There is a substantial risk that AirGate will lose all of the value of its
investment in iPCS in connection with any restructuring of iPCS. Because the
amount of iPCS' obligations under its credit facility and its notes would be
greater than its existing cash and other assets if its payment obligations are
accelerated, there would likely be no assets available for distribution to
AirGate as iPCS' sole stockholder. While AirGate may request an equity
participation in a restructuring of iPCS, it is likely that AirGate will lose
all of the value of its investment in iPCS in connection with any restructuring.

AirGate cannot provide funding to iPCS

In order to assure continued compliance with the indenture governing AirGate's
notes, AirGate has designated iPCS as an "unrestricted subsidiary." As a result,
for purposes of their respective public debt indentures, AirGate and iPCS
operate as separate business entities. Due to restrictions in AirGate's
indenture, AirGate is generally unable to provide funding, or direct or indirect
credit or financial support to iPCS and may not maintain or preserve iPCS'
financial condition or cause iPCS to achieve a specified level of operating
results.


                                       29

<PAGE>

If iPCS fails to pay the debt under its senior secured credit facility, Sprint
has the option of purchasing iPCS' loans, giving Sprint certain rights of a
creditor to foreclose on iPCS' assets

Sprint has contractual rights, triggered by an acceleration of the maturity of
the debt under iPCS' senior secured credit facility, pursuant to which Sprint
may purchase iPCS' obligations to its senior lenders and obtain the rights of a
senior lender. To the extent Sprint purchases these obligations, Sprint's
interests as a creditor could conflict with the interests of iPCS. Sprint's
rights as a senior lender would enable it to exercise rights with respect to
iPCS' assets and its continuing relationship with iPCS in a manner not otherwise
permitted under its Sprint agreements.

The restructuring of iPCS may have adverse affects on AirGate

AirGate has agreements and relationships with third parties, including
suppliers, subscribers and vendors, that are integral to conducting its
day-to-day operations. A restructuring of iPCS in or out of a bankruptcy
proceeding could have a material adverse affect on the perception of AirGate and
the AirGate business and its prospects in the eyes of subscribers, employees,
suppliers, creditors and vendors. These persons may perceive that there is
increased risk in doing business with AirGate as a result of iPCS'
restructuring. Some of these persons may terminate their relationships with
AirGate which would make it more difficult for AirGate to conduct its business.

In the event of iPCS' bankruptcy or insolvency, AirGate may not be able to
reduce its general and administrative costs in an amount sufficient to subsidize
the portion of the combined Company's costs currently borne by iPCS

On a net basis, we estimate that iPCS will pay approximately $4.6 million of the
combined Company's general and administrative costs in fiscal 2003. If AirGate
no longer owns iPCS and the management services agreement is terminated, AirGate
will be required to lower its costs and expenses to meet its business plan.
AirGate may have little notice of any such termination. A failure to reduce
these expenses in a timely manner could adversely affect AirGate's liquidity,
financial condition and results of operations.

iPCS' net operating loss and credit carryforwards may be significantly reduced
in the event of a restructuring

If a restructuring of iPCS is implemented and there is a significant elimination
or reduction of iPCS' outstanding indebtedness, iPCS' net operating loss and
credit carryforwards and the tax bases of its assets may be significantly
reduced.

Risks Related to Our Relationship with Sprint
---------------------------------------------

The termination of AirGate's or iPCS' affiliation with Sprint would severely
restrict our ability to conduct our business

Neither AirGate nor iPCS own the licenses to operate their wireless network. The
ability of AirGate and iPCS to offer Sprint PCS products and services and
operate a PCS network is dependent on their Sprint agreements remaining in
effect and not being terminated. All of our subscribers have purchased Sprint
PCS products and services to date, and we do not anticipate any change in the
future. The management agreements between Sprint and each of AirGate and iPCS
are not perpetual. Sprint can choose not to renew iPCS' management agreement at
the expiration of the 20-year initial term or any ten-year renewal term.
AirGate's management agreement automatically renews at the expiration of the
20-year initial term for an additional 10-year period unless AirGate is in
material default. Sprint can choose not to renew AirGate's management agreement
at the expiration of the ten-year renewal term or any subsequent ten-year
renewal term. In any event, AirGate's and iPCS' management agreements terminate
in 50 years.

In addition, each of these agreements can be terminated for breach of any
material term, including, among others, marketing, build-out and network
operational requirements. Many of these requirements are extremely technical and
detailed in nature. In addition, many of these requirements can be changed by
Sprint with little notice. As a result, we may not always be in compliance with
all requirements of the Sprint agreements. For example, Sprint conducts periodic
audits of compliance with various aspects of its program guidelines and
identifies issues it believes needs to be addressed. There may be substantial
costs associated with remedying any non-compliance, and such costs may adversely
affect our liquidity, financial condition and results of operations.

AirGate and iPCS also are dependent on Sprint's ability to perform its
obligations under the Sprint agreements. The non-renewal or termination of any
of the Sprint agreements or the failure of Sprint to perform its obligations
under the Sprint agreements would severely restrict our ability to conduct
business.

Sprint may make business decisions that are not in our best interests, which may
adversely affect our relationships with subscribers in our territory, increase
our expenses and/or decrease our revenues

Sprint, under the Sprint agreements, has a substantial amount of control over
the conduct of our business. Accordingly, Sprint may make decisions that
adversely affect our business, such as the following:


                                       30

<PAGE>

         o        Sprint could price its national plans based on its own
                  objectives and could set price levels or other terms that may
                  not be economically sufficient for our business;

         o        Sprint could develop products and services, such as a one-rate
                  plan where subscribers are not required to pay roaming
                  charges, or establish credit policies, such as an NDASL
                  program, which could adversely affect our results of
                  operations;

         o        Sprint could raise the costs to perform back office services
                  or maintain the costs above those expected, reduce levels of
                  services or expenses or otherwise seek to increase expenses
                  and other amounts charged;

         o        Sprint can seek to further reduce the reciprocal roaming rate
                  charged when Sprint's or other Sprint network partners' PCS
                  subscribers use our network;

         o        Sprint could limit our ability to develop local and other
                  promotional plans to enable us to attract sufficient
                  subscribers;

         o        Sprint could, subject to limitations under our Sprint
                  agreements, alter its network and technical requirements or
                  request that we build out additional areas within our
                  territories, which could result in increased equipment and
                  build-out costs;

         o        Sprint could make decisions which could adversely affect the
                  Sprint brand names, products or services; and

         o        Sprint could decide not to renew the Sprint agreements or to
                  no longer perform its obligations, which would severely
                  restrict our ability to conduct business.

The occurrence of any of the foregoing could adversely affect our relationship
with subscribers in our territories, increase our expenses and/or decrease our
revenues and have a material adverse affect on our liquidity, financial
condition and results of operation.

Our dependence on Sprint for services may limit our ability to reduce costs,
which could materially adversely affect our financial condition and results of
operation

Approximately 60% of cost of service and roaming in our financial statements
relate to charges from Sprint. As a result, a substantial portion of our cost of
service and roaming is outside our control. There can be no assurance that
Sprint will lower its operating costs, or, if these costs are lowered, that
Sprint will pass along savings to its PCS network partners. If these costs are
more than we anticipate in our business plan, it could materially adversely
affect our liquidity, financial condition and results of operations and as noted
below, our ability to replace Sprint with lower cost providers may be limited.

Our dependence on Sprint may adversely affect our ability to predict our results
of operations

As described herein under "Sprint Relationship and Agreements - Dependence on
Sprint," over the past year our dependence on Sprint has interjected a greater
degree of uncertainty to our business and financial planning. Unanticipated
expenses and reductions in revenue have had and, if they occur in the future,
will have a negative impact on our liquidity and make it more difficult to
predict with reliability our future performance.

Inaccuracies in data provided by Sprint could understate our expenses or
overstate our revenues and result in out-of-period adjustments that may
materially adversely affect our financial results

Approximately 60% of cost of service and roaming in our financial statements
relate to charges from Sprint. In addition, because Sprint provides billing and
collection services for the Company, Sprint remits approximately 96% of our
revenues to us. As a result, we rely on Sprint to provide accurate, timely and
sufficient data and information to properly record our revenues, expenses and
accounts receivables which underlie a substantial portion of our periodic
financial statements and other financial disclosures.

The Company and Sprint have discovered billing and other errors or inaccuracies,
which, while not material to Sprint, could be material to the Company. If the
Company is required in the future to make additional adjustments or charges as a
result of errors or inaccuracies in data provided to us by Sprint, such
adjustments or charges may have a material adverse affect on our financial
results in the period that the adjustments or charges are made and our ability
to satisfy covenants contained in AirGate's credit facility.

The inability of Sprint to provide high quality back office services, or our
inability to use Sprints back office services and third-party vendors' back
office systems, could lead to subscriber dissatisfaction, increased churn or
otherwise increase our costs

We rely on Sprint's internal support systems, including subscriber care, billing
and back office support. Our operations could be disrupted if Sprint is unable
to provide and expand its internal support systems in a high quality manner, or
to efficiently outsource those services and systems through third-party vendors.
The rapid expansion of Sprint's PCS business, together with cost pressures, is
expected to continue to pose a significant challenge to its internal support
systems. Additionally, Sprint has made reductions in its customer service
support structure and may continue to do so in the future, which may have an
adverse


                                       31

<PAGE>

effect on our churn rate. Further, Sprint has relied on third-party vendors for
a significant number of important functions and components of its internal
support systems and may continue to rely on these vendors in the future. We
depend on Sprint's willingness to continue to offer these services and to
provide these services effectively and at competitive costs. These costs were
approximately $40.4 million for AirGate and $19.7 million for iPCS for the year
ended September 30, 2002. Our Sprint agreements provide that, upon nine months'
prior written notice, Sprint may elect to terminate any of these services. The
inability of Sprint to provide high quality back office services, or our
inability to use Sprint back office services and third-party vendors' back
office systems, could lead to subscriber dissatisfaction, increase churn or
otherwise increase our costs.

Further, our ability to replace Sprint in providing back office services may be
limited. While the services agreements allow the Company to use third-party
vendors to provide certain of these services instead of Sprint, the high startup
costs and necessary cooperation associated with interfacing with Sprint's system
may significantly limit our ability to use back office services provided by
anyone other than Sprint. This could limit our ability to lower our operating
costs.

Changes in Sprint PCS products and services may reduce subscriber additions,
increase subscriber turnover and decrease subscriber credit quality

The competitiveness of Sprint PCS products and services is a key factor in our
ability to attract and retain subscribers, and we believe was a factor in the
slowing subscriber growth in the last two quarters of fiscal 2002.

Certain Sprint pricing plans, promotions and programs may result in higher
levels of subscriber turnover and reduce the credit quality of our subscriber
base. For example, as described herein under "Marketing Strategy--Pricing", we
believe that the NDASL and Clear Pay Program resulted in increased churn and an
increase in sub-prime credit subscribers.

Sprint's roaming arrangements may not be competitive with other wireless service
providers, which may restrict our ability to attract and retain subscribers and
create other risks for us

We rely on Sprint's roaming arrangements with other wireless service providers
for coverage in some areas where Sprint service is not yet available. The risks
related to these arrangements include:

         o        the quality of the service provided by another provider during
                  a roaming call may not approximate the quality of the service
                  provided by the Sprint PCS network;

         o        the price of a roaming call off our network may not be
                  competitive with prices of other wireless companies for
                  roaming calls;

         o        subscribers must end a call in progress and initiate a new
                  call when leaving the Sprint PCS network and entering another
                  wireless network;

         o        Sprint customers may not be able to use Sprint's advanced
                  features, such as voicemail notification, while roaming; and

         o        Sprint or the carriers providing the service may not be able
                  to provide us with accurate billing information on a timely
                  basis.

If Sprint customers are not able to roam instantaneously or efficiently onto
other wireless networks, we may lose current Sprint subscribers and our Sprint
PCS services will be less attractive to new subscribers.

Certain provisions of the Sprint agreements may diminish the value of AirGate's
common stock and restrict the sale of our business

Under limited circumstances and without further stockholder approval, Sprint may
purchase the operating assets of AirGate or iPCS at a discount. In addition,
Sprint must approve any change of control of the ownership of AirGate or iPCS
and must consent to any assignment of their Sprint agreements. Sprint also has a
right of first refusal if AirGate or iPCS decide to sell its operating assets to
a third-party. Each of AirGate and iPCS also is subject to a number of
restrictions on the transfer of its business, including a prohibition on the
sale of AirGate or iPCS or their operating assets to competitors of Sprint.
These restrictions and other restrictions contained in the Sprint agreements
could adversely affect the value of AirGate's common stock, may limit our
ability to sell our business, may reduce the value a buyer would be willing to
pay for our business and may reduce the "entire business value," as described in
our Sprint agreements.

We may have difficulty in obtaining an adequate supply of certain handsets from
Sprint, which could adversely affect our results of operations

We depend on our relationship with Sprint to obtain handsets, and we have agreed
to purchase all of our 3G capable handsets from Sprint or a Sprint authorized
distributor through the earlier of December 31, 2004 or the date on which the
cumulative 3G handset fees received by Sprint from all Sprint network partners
equal $25,000,000. Sprint orders handsets from various manufacturers. We could
have difficulty obtaining specific types of handsets in a timely manner if:


                                       32

<PAGE>

         o        Sprint does not adequately project the need for handsets for
                  itself, its network partners and its other third-party
                  distribution channels, particularly in transition to new
                  technologies, such as "one time radio transmission
                  technology," or "1XRTT;"

         o        Sprint gives preference to other distribution channels;

         o        we do not adequately project our need for handsets;

         o        Sprint modifies its handset logistics and delivery plan in a
                  manner that restricts or delays our access to handsets; or

         o        there is an adverse development in the relationship between
                  Sprint and its suppliers or vendors.

The occurrence of any of the foregoing could disrupt our subscriber service
and/or result in a decrease in our subscribers, which could adversely affect our
results of operations.

If Sprint does not complete the construction of its nationwide PCS network, we
may not be able to attract and retain subscribers

Sprint currently intends to cover a significant portion of the population of the
United States, Puerto Rico and the U.S. Virgin Islands by creating a nationwide
PCS network through its own construction efforts and those of its network
partners. Sprint is still constructing its nationwide network and does not offer
PCS services, either on its own network or through its roaming agreements, in
every city in the United States. Sprint has entered into management agreements
similar to ours with companies in other markets under its nationwide PCS
build-out strategy. Our results of operations are dependent on Sprint's national
network and, to a lesser extent, on the networks of Sprint's other network
partners. Sprint's PCS network may not provide nationwide coverage to the same
extent as its competitors, which could adversely affect our ability to attract
and retain subscribers.

If other Sprint network partners have financial difficulties, the Sprint PCS
network could be disrupted

Sprint's national network is a combination of networks. The large metropolitan
areas are owned and operated by Sprint, and the areas in between them are owned
and operated by Sprint network partners, all of which are independent companies
like we are. We believe that most, if not all, of these companies have incurred
substantial debt to pay the large cost of building out their networks.

If other network partners experience financial difficulties, Sprint's PCS
network could be disrupted. If Sprint's agreements with those network partners
are like ours, Sprint would have the right to step in and operate the network in
the affected territory. In such event, there can be no assurance that Sprint
could transition in a timely and seamless manner.

Non-renewal or revocation by the Federal Communications Commission of Sprint's
PCS licenses would significantly harm our business

PCS licenses are subject to renewal and revocation by the Federal Communications
Commission referred to as the FCC. Sprint licenses in our territories will begin
to expire in 2007 but may be renewed for additional ten-year terms. There may be
opposition to renewal of Sprint's PCS licenses upon their expiration, and
Sprint's PCS licenses may not be renewed. The FCC has adopted specific standards
to apply to PCS license renewals. Any failure by Sprint or us to comply with
these standards could cause revocation or forfeiture of Sprint's PCS licenses
for our territories. If Sprint loses any of its licenses in our territory, we
would be severely restricted in our ability to conduct business.

If Sprint does not maintain control over its licensed spectrum, the Sprint
agreements may be terminated, which would result in our inability to provide
service

The FCC requires that licensees like Sprint maintain control of their licensed
spectrum and not delegate control to third-party operators or managers. Although
the Sprint agreements with AirGate and iPCS reflect an arrangement that the
parties believe meets the FCC requirements for licensee control of licensed
spectrum, we cannot assure you that the FCC will agree. If the FCC were to
determine that the Sprint agreements need to be modified to increase the level
of licensee control, AirGate and iPCS have agreed with Sprint to use their best
efforts to modify the Sprint agreements to comply with applicable law. If we
cannot agree with Sprint to modify the Sprint agreements, they may be
terminated. If the Sprint agreements are terminated, we would no longer be a
part of the Sprint PCS network and would be severely restricted in our ability
to conduct business.

Risks Particular to Our Industry
--------------------------------

Significant competition in the wireless communications services industry may
result in our competitors offering new or better products and services or lower
prices, which could prevent us from operating profitably

Competition in the wireless communications industry is intense. Competition has
caused, and we anticipate that competition will continue to cause, the market
prices for two-way wireless products and services to decline in the future. Our
ability to compete


                                       33

<PAGE>

will depend, in part, on our ability to anticipate and respond to various
competitive factors affecting the telecommunications industry. (See "Item 1.
Business - Competition" herein).

Our dependence on Sprint to develop competitive products and services and the
requirement that we obtain Sprint's consent to sell local pricing plans and
non-Sprint approved equipment may limit our ability to keep pace with
competitors on the introduction of new products, services and equipment. Many of
our competitors are larger than us, possess greater resources and more extensive
coverage areas, and may market other services, such as landline telephone
service, cable television and Internet access, with their wireless
communications services. Furthermore, there has been a recent trend in the
wireless communications industry towards consolidation of wireless service
providers through joint ventures, reorganizations and acquisitions. We expect
this consolidation to lead to larger competitors over time. We may be unable to
compete successfully with larger companies that have substantially greater
resources or that offer more services than we do. In addition, we may be at a
competitive disadvantage since we may be more highly leveraged than many of our
competitors.

Market saturation could limit or decrease our rate of new subscriber additions

Intense competition in the wireless communications industry could cause prices
for wireless products and services to continue to decline. If prices drop, then
our rate of net subscriber additions will take on greater significance in
improving our financial condition and results of operations. However, as our and
our competitor's penetration rates in our markets increase over time, our rate
of adding net subscribers could decrease. If this decrease were to happen, it
could materially adversely affect our liquidity, financial condition and results
of operations.

Alternative technologies and current uncertainties in the wireless market may
reduce demand for PCS

The wireless communications industry is experiencing significant technological
change, as evidenced by the increasing pace of digital upgrades in existing
analog wireless systems, evolving industry standards, ongoing improvements in
the capacity and quality of digital technology, shorter development cycles for
new products and enhancements and changes in end-user requirements and
preferences. Technological advances and industry changes could cause the
technology used on our network to become obsolete. Sprint may not be able to
respond to such changes and implement new technology on a timely basis, or at an
acceptable cost.

If Sprint is unable to keep pace with these technological changes or changes in
the wireless communications market based on the effects of consolidation from
the Telecommunications Act of 1996 or from the uncertainty of future government
regulation, the technology used on our network or our business strategy may
become obsolete.

We are a consumer business and a recession in the United States involving
significantly lowered spending could negatively affect our results of operations

Our subscriber base is primarily individual consumers and our accounts
receivable represent unsecured credit. We believe the economic downturn has had
an adverse affect on our operations. In the event that the economic downturn
that the United States and our territories have recently experienced becomes
more pronounced or lasts longer than currently expected and spending by
individual consumers drops significantly, our business may be further negatively
affected.

Regulation by government and taxing agencies may increase our costs of providing
service or require us to change our services, either of which could impair our
financial performance

Our operations and those of Sprint may be subject to varying degrees of
regulation by the FCC, the Federal Trade Commission, the Federal Aviation
Administration, the Environmental Protection Agency, the Occupational Safety and
Health Administration and state and local regulatory agencies and legislative
bodies. Adverse decisions or regulation of these regulatory bodies could
negatively impact our operations and our costs of doing business. For example,
changes in tax laws or the interpretation of existing tax laws by state and
local authorities could subject us to increased income, sales, gross receipts or
other tax costs or require us to alter the structure of our current relationship
with Sprint.

Use of hand-held phones may pose health risks, which could result in the reduced
use of wireless services or liability for personal injury claims

Media reports have suggested that certain radio frequency emissions from
wireless handsets may be linked to various health problems, including cancer,
and may interfere with various electronic medical devices, including hearing
aids and pacemakers. Concerns over radio frequency emissions may discourage use
of wireless handsets or expose us to potential litigation. Any resulting
decrease in demand for wireless services, or costs of litigation and damage
awards, could impair our ability to achieve and sustain profitability.


                                       34

<PAGE>

Regulation by government or potential litigation relating to the use of wireless
phones while driving could adversely affect our results of operations

Some studies have indicated that some aspects of using wireless phones while
driving may impair drivers' attention in certain circumstances, making accidents
more likely. These concerns could lead to litigation relating to accidents,
deaths or serious bodily injuries, or to new restrictions or regulations on
wireless phone use, any of which also could have material adverse effects on our
results of operations. A number of U.S. states and local governments are
considering or have recently enacted legislation that would restrict or prohibit
the use of a wireless handset while driving a vehicle or, alternatively, require
the use of a hands-free telephone. Legislation of this sort, if enacted, would
require wireless service providers to provide hands-free enhanced services, such
as voice activated dialing and hands-free speaker phones and headsets, so that
they can keep generating revenue from their subscribers, who make many of their
calls while on the road. If we are unable to provide hands-free services and
products to our subscribers in a timely and adequate fashion, the volume of
wireless phone usage would likely decrease, and our ability to generate revenues
would suffer.

Risks Related to Our Common Stock
---------------------------------

We may not achieve or sustain operating profitability or positive cash flows,
which may adversely affect AirGate's stock price

AirGate and iPCS have limited operating histories. Our ability to achieve and
sustain operating profitability will depend upon many factors, including our
ability to market Sprint PCS products and services, manage churn, sustain
monthly average revenues per user, and reduce capital expenditures and operating
expenses. We have experienced slowing net subscriber growth, increased churn and
increased costs to acquire new subscribers and as a result, have had to revise
our business plans. As discussed elsewhere in this report, we do not believe
that iPCS' existing capital resources will be sufficient to maintain its current
and planned operations. If AirGate does not achieve and maintain positive cash
flows from operations when projected, AirGate's stock price may be materially
adversely affected. In addition, in the event of a bankruptcy of iPCS, AirGate's
investment in iPCS is likely to be worthless, and such bankruptcy may materially
adversely affect AirGate's stock price.

Our stock price has suffered significant declines, remains volatile and you may
not be able to sell your shares at the price you paid for them

The market price of AirGate common stock has been and may continue to be subject
to wide fluctuations in response to factors such as the following, some of which
are beyond our control:

         o        quarterly variations in our operating results;

         o        concerns about liquidity, particularly with respect to iPCS;

         o        operating results that vary from the expectations of
                  securities analysts and investors;

         o        changes in expectations as to our future financial
                  performance, including financial estimates by securities
                  analysts and investors;

         o        changes in the market perception about the prospects and
                  results of operations and market valuations of other companies
                  in the telecommunications industry in general and the wireless
                  industry in particular, including Sprint and its PCS network
                  partners and our competitors;

         o        changes in the Company's relationship with Sprint;

         o        announcements by Sprint concerning developments or changes in
                  its business, financial condition or results of operations, or
                  in its expectations as to future financial performance;

         o        actual or potential defaults by us under any of our
                  agreements;

         o        actual or potential defaults in bank covenants by Sprint or
                  Sprint PCS network partners, which may result in a perception
                  that AirGate is unable to comply with its bank covenants;

         o        announcements by Sprint or our competitors of technological
                  innovations, new products and services or changes to existing
                  products and services;

         o        changes in law and regulation;

         o        announcements by third parties of significant claims or
                  proceedings against us;

         o        announcements by us or our competitors of significant
                  contracts, acquisitions, strategic partnerships, joint
                  ventures or capital commitments; and

         o        general economic and competitive conditions.


                                       35

<PAGE>

Our business and the value of your securities may be adversely affected if the
Company fails to maintain its listing on Nasdaq

Since its initial public offering in September 1999, the Company's common stock
has been listed on the Nasdaq National Market. We received notice from the
Nasdaq National Market indicating that as of October 28, 2002, the closing bid
price of our common stock had fallen below $1.00 for 30 consecutive trading days
and that we would have 90 calendar days, or until January 27, 2003, to regain
compliance with a minimum bid price of $1.00 if the bid price of our common
stock closes at $1.00 per share or more for a minimum of 10 consecutive trading
days during this time. As of January 10, 2003, we had not yet regained
compliance. Nasdaq further advised us that we may wish to consider transferring
the listing for our common stock to the Nasdaq SmallCap Market where it would be
afforded an extended grace period through April 28, 2003 to satisfy the minimum
bid price requirement to maintain its listing on the Nasdaq SmallCap Market and
may also be eligible for an additional 180 day grace period thereafter. If we
were to transfer the listing for our common stock to the SmallCap Market, we
would be eligible to transfer back to the Nasdaq National Market if, by October
27, 2003, the closing bid price was $1.00 per share for 30 consecutive trading
days and the Company had maintained compliance with all other National Market
listing requirements. We are evaluating our alternatives in case the bid price
requirement is not met during the 90-day period.

If our common stock loses its Nasdaq National Market status, shares of our
common stock would likely trade in the over-the-counter market in the so-called
"pink sheets" or the OTC Bulletin Board. Selling our common stock would be more
difficult because smaller quantities of shares would likely be bought and sold
and transactions could be delayed. In addition, security analysts' and news
media coverage of us may be further reduced. These factors could result in lower
prices and larger spreads in the bid and ask prices for shares of our common
stock. Such delisting from the Nasdaq National Market or further declines in our
stock price could also greatly impair our ability to raise additional necessary
capital through equity or debt financing and may significant increase the
dilution to stockholders caused by issuing equity in financing or other
transactions.

In addition, if our common stock is not listed on the Nasdaq National Market, we
may become subject to Rule 15g-9 under the Securities and Exchange Act of 1934
which imposes additional sales practice requirements on broker-dealers that sell
low-priced securities, referred to as "penny stocks," to persons other than
established subscribers and institutional accredited investors. A penny stock is
generally any equity security that has a market price or exercise price of less
than $5.00 per share, subject to certain exceptions, including listing on the
Nasdaq National Market or the Nasdaq SmallCap Market. For transactions covered
by these rules, broker-dealers must make a special suitability determination for
the purchase of such securities and must have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the SEC relating to the penny stock market. The broker-dealer is also subject to
additional sales practice requirements. Consequently, the penny stock rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of holders to sell these securities in the secondary market and the
price at which such holders can sell any such securities.

Future sales of shares of our common stock, including sales of shares following
the expiration of `lock-up" arrangements, may negatively affect our stock price

As a result of the acquisition of iPCS, the former iPCS security holders
received approximately 12.4 million shares of our common stock and options and
warrants to purchase approximately 1.1 million shares of our common stock. The
shares of common stock issued in connection with the acquisition represented
approximately 47.5% of our common stock, assuming the exercise of all
outstanding warrants and options.

In connection with the merger, holders of substantially all of the outstanding
shares of iPCS common and preferred stock entered into "lock-up" agreements with
the Company. The lock-up agreements imposed restrictions on the ability of such
stockholders to sell or otherwise dispose of the shares of our common stock that
they received in the merger. As of September 26, 2002, all of such shares were
released from the lock-up.

We entered into a registration rights agreement at the effective time of the
merger with some of the former iPCS stockholders. Under the terms of the
registration rights agreement, Blackstone Communications Partners I L.P. and
certain of its affiliates ("Blackstone") has a demand registration right, which
became exercisable after November 30, 2002. In addition, the former iPCS
stockholders, including Blackstone, have incidental registration rights pursuant
to which they can, in general, include their shares of our common stock in any
public registration we initiate, whether or not for sale for our own account.

Sales of substantial amounts of shares of our common stock, or even the
potential for such sales, could lower the market price of our common stock and
impair its ability to raise capital through the sale of equity securities.

We do not intend to pay dividends in the foreseeable future

We do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We intend to retain any future earnings to fund our growth,
debt service requirements and other corporate needs. Accordingly, you will not
receive a return on your investment in our common stock through the payment of
dividends in the foreseeable future and may not realize a return on



                                       36

<PAGE>

your investment even if you sell your shares. Any future payment of dividends to
our stockholders will depend on decisions that will be made by our board of
directors and will depend on then existing conditions, including our financial
condition, contractual restrictions, capital requirements and business
prospects.

ITEM 2.    Properties

As of September 30, 2002, our properties were as follows:

         Corporate offices. Our principal executive offices consist of leased
         office space located in Atlanta, Georgia. AirGate also leases office
         space in Charleston, Columbia and Greenville, South Carolina and
         Asheville, North Carolina. iPCS leases office space in Geneseo,
         Illinois, Grand Rapids, Michigan, Davenport, Iowa and Springfield,
         Illinois.

         Sprint PCS stores. AirGate and iPCS leased space for 41 and 19 retail
         Sprint stores, respectively, in their territory. As of December 27,
         2002, AirGate and iPCS leased space for 38 and 27 retail stores in
         their territory.

         Switching Centers. AirGate leases switching centers in Greenville,
         South Carolina and Columbia, South Carolina. iPCS leases switching
         centers in Grand Rapids, Michigan, Gridley, Illinois and Davenport,
         Iowa.

         Cell Sites. AirGate leases space on approximately 800 cell site towers
         and owns 2 towers. AirGate co-locates on approximately 99% of its cell
         sites. iPCS leases space on approximately 546 cell cite towers and owns
         87 towers. iPCS co-locates on approximately 86% of its cell sites.

We believe our facilities are in good operating condition and are currently
suitable and adequate for our business operations.

ITEM 3.    Legal Proceedings

On July 3, 2002 the Federal Communications Commission (the "FCC") issued an
order in Sprint PCS v. AT&T for declaratory judgment holding that PCS wireless
carriers could not unilaterally impose terminating long distance access charges
pursuant to FCC rules. This FCC order did not preclude a finding of a
contractual basis for these charges, nor did it rule whether or not Sprint PCS
had such a contract with carriers such as AT&T. AirGate and iPCS have previously
received $3.9 and $1.0 million, respectively, from Sprint PCS. This is comprised
of $4.3 and $1.1 million, respectively, of terminating long distance access
revenues, less $0.4 and $0.1 million, respectively, of associated affiliation
fees from Sprint PCS, and Sprint PCS has asserted its right to recover these
revenues net of the affiliation fees. As a result of this ruling, and our
assessment of this contingency under SFAS No. 5, "Accounting for Contingencies",
the Company recorded a charge to revenues during the quarter ended June 30, 2002
to fully reserve for these amounts. However, we will continue to assess the
ability of Sprint, Sprint PCS or other carriers to recover these charges and the
Company is continuing to review the availability of defenses it may have against
Sprint PCS' claim to recover these revenues.

In May, 2002, putative class action complaints were filed in the United States
District Court for the Northern District of Georgia against AirGate PCS, Inc.,
Thomas M. Dougherty, Barbara L. Blackford, Alan B. Catherall, Credit Suisse
First Boston, Lehman Brothers, UBS Warburg LLC, William Blair & Company, Thomas
Wiesel Partners LLC and TD Securities. The complaints do not specify an amount
or range of damages that the plaintiffs are seeking. The complaints seek class
certification and allege that the prospectus used in connection with the
secondary offering of Company stock by certain former iPCS shareholders on
December 18, 2001 contained materially false and misleading statements and
omitted material information necessary to make the statements in the prospectus
not false and misleading. The alleged omissions included (i) failure to disclose
that in order to complete an effective integration of iPCS, drastic changes
would have to be made to the Company's distribution channels, (ii) failure to
disclose that the sales force in the acquired iPCS markets would require
extensive restructuring and (iii) failure to disclose that the "churn" or
"turnover" rate for subscribers would increase as a result of an increase in the
amount of sub-prime credit quality subscribers the Company added from its merger
with iPCS. On July 15, 2002, certain plaintiffs and their counsel filed a motion
seeking appointment as lead plaintiffs and lead counsel. On November 26, 2002,
the Court entered an Order requiring the plaintiffs to provide additional
information in connection with their Motion for Appointment as Lead Plaintiff
and in December 2002, the plaintiffs submitted Declarations in Support of Motion
for Appointment of Lead Plaintiff. The Company believes the plaintiffs' claims
are without merit and intends to vigorously defend against these claims.
However, no assurance can be given as to the outcome of the litigation.

ITEM 4.    Submission Of Matters To A Vote Of Security Holders

None.



                                       37

<PAGE>

                                     PART II

ITEM 5.    Market For Registrant's Common Equity And Related Stockholder Matters

AirGate's common stock has been traded on the Nasdaq National Market under the
symbol "PCSA" since September 28, 1999. The following table sets forth, for the
periods indicated, the range of high and low sales prices for AirGate's common
stock as reported on the Nasdaq National Market.

                                                         Price Range of
                                                          Common Stock
                                                          ------------
                                                      High             Low
                                                      ----             ---
Fiscal Year Ended September 30, 2002:
     Fourth Quarter ..............................  $  1.88          $ 0.39
     Third Quarter ...............................  $ 17.53          $ 0.92
     Second Quarter ..............................  $ 47.97          $ 8.52
     First Quarter ...............................  $ 60.44          $42.20
Fiscal Year Ended September 30, 2001:
     Fourth Quarter ..............................  $ 60.05          $41.75
     Third Quarter ...............................  $ 53.50          $30.88
     Second Quarter ..............................  $ 49.88          $29.44
     First Quarter ...............................  $ 48.00          $21.69

On December 27, 2002, the last reported sales price of AirGate's common stock as
reported on the Nasdaq National Market was $0.84 per share. On December 27,
2002, there were 205 holders of record of AirGate's common stock.

AirGate has never declared or paid any cash dividends on its common stock or any
other of its securities. AirGate does not expect to pay cash dividends on its
capital stock in the foreseeable future. AirGate currently intends to retain its
future earnings, if any, to fund the development and growth of its business.
AirGate's future decisions concerning the payment of dividends on its common
stock will depend upon its results of operations, financial condition and
capital expenditure plans, as well as such other factors as the board of
directors, in its sole discretion, may consider relevant. In addition, AirGate's
existing indebtedness restricts, and AirGate anticipates its future indebtedness
may restrict, AirGate's ability to pay dividends.

Recent Sales of Unregistered Securities

On July 11, 2000, Weiss, Peck & Greer Venture Partners Affiliated Funds
exercised their warrants to acquire 214,413 shares of AirGate's common stock, at
a price of $12.75 per share. The exercise was a cashless exercise, with 40,956
of the 214,413 shares being surrendered to AirGate as payment of the exercise
price. The exemption claimed for this issuance is Section 4(2) of the Securities
Act of 1933.

On September 14, 2000, Lucent Technologies exercised its warrants to acquire
128,860 shares of AirGate's common stock at a price of $20.40 per share. The
exercise was a cashless exercise, with 48,457 of the 128,860 shares being
surrendered to AirGate as payment of the exercise price. The exemption claimed
for this issuance is Section 4(2) of the Securities Act of 1933.



                                       38

<PAGE>

ITEM 6.    Selected Financial Data

The selected financial data presented below under the captions "Statement of
Operations Data," "Other Data," and "Balance Sheet Data" for, and as of the end
of, the years ended September 30, 2002, 2001, and 2000, the nine months ended
September 30, 1999 and the year ended December 31, 1998 and are derived from the
consolidated financial statements of AirGate PCS, Inc. and subsidiaries, which
consolidated financial statements have been audited by KPMG LLP, independent
certified auditors. The consolidated financial statements as of September 30,
2002 and 2001, and for each of the years in the three-year period ended
September 30, 2002, and the report thereon are included herein.

<TABLE>
<CAPTION>
                                                                                                    For the
                                                                                                      Nine
                                                                                                      Months
                                                                                                      Ended    For the Year
                                                              For the Year Ended                    September      Ended
                                                                 September 30,                         30,     December 31,
                                                  -------------------------------------------     ------------ ------------
                                                      2002(1)        2001            2000           1999           1998
                                                      ----           ----            ----           ----           ----
Statement of Operations Data:                              (In thousands except per share subscriber data)
Revenues:
<S>                                               <C>            <C>             <C>             <C>             <C>
      Service revenue .........................   $    327,365   $    105,976    $      9,746    $       --      $       --
      Roaming revenue .........................        111,162         55,329          12,338            --              --
      Equipment revenue .......................         18,030         10,782           2,981            --              --
                                                  ------------   ------------    ------------    ------------    ------------
            Total revenues ....................        456,557        172,087          25,065            --              --
                                                  ------------   ------------    ------------    ------------    ------------

Operating expenses:
     Cost of services and roaming (exclusive of
       depreciation as shown separately below).       (311,135)      (116,732)        (27,770)           --              --
     Cost of equipment ........................        (43,592)       (20,218)         (5,685)           --              --
     Selling and marketing ....................       (116,521)       (71,617)        (28,357)           --              --
     General and administrative ...............        (25,339)       (15,742)        (14,078)         (5,294)         (2,597)
     Non-cash stock compensation ..............           (769)        (1,665)         (1,665)           (325)           --
     Depreciation .............................        (70,197)       (30,621)        (12,034)           (622)         (1,204)
     Amortization of intangible assets ........        (39,332)           (46)           --              --              --
     Loss on disposal of property and equipment         (1,074)          --              --              --              --
                                                  ------------   ------------    ------------    ------------    ------------
       Operating expenses before impairments...       (607,959)      (256,641)        (89,589)         (6,241)         (3,801)
     Impairment of goodwill (3) ...............       (460,920)          --              --              --              --
     Impairment of property and equipment (3) .        (44,450)          --              --              --              --
     Impairment of intangible assets (3) ......       (312,043)          --              --              --              --
                                                  ------------   ------------    ------------    ------------    ------------
       Total operating expenses ...............     (1,425,372)      (256,641)        (89,589)         (6,241)         (3,801)
                                                  ------------   ------------    ------------    ------------    ------------
     Operating loss ...........................       (968,815)       (84,554)        (64,524)         (6,241)         (3,801)
     Interest income ..........................            590          2,463           9,321
     Interest expense .........................        (57,153)       (28,899)        (26,120)         (9,358)         (1,392)
     Income tax benefit .......................         28,761           --              --              --              --
                                                  ------------   ------------    ------------    ------------    ------------
     Net loss .................................   $   (996,617)  $   (110,990)   $    (81,323)   $    (15,599)   $     (5,193)
                                                  ============   ============    ============    ============    ============
     Basic and diluted net loss per share of
       common stock ...........................   $     (41.96)  $      (8.48)   $      (6.60)   $      (4.57)   $      (1.54)
     Basic and diluted weighted-average
       outstanding common shares ..............     23,751,507     13,089,285      12,329,149       3,414,276       3,382,518
Other Data:
     Number of subscribers at end of period ...        554,833        235,025          56,689            --              --

Statement of Cash Flow Data:

     Cash used in operating activities ........   $    (45,242)  $    (40,850)   $    (41,609)   $     (2,473)   $       (989)
     Cash used in investing activities ........        (78,716)       (71,772)       (152,397)        (15,706)         (2,432)
     Cash provided by (used in) financing
       activities .............................        142,143         68,528          (6,510)        274,783           5,200
</TABLE>

<TABLE>
<CAPTION>
                                                                       As of                           As of
                                                                    September 30,                  December 31,
                                                  --------------------------------------------    ------------
                                                  2002(1)      2001          2000       1999         1998
                                                  ----         ----          ----       ----         ----
Balance Sheet Data (at period end):                               (In Thousands)
<S>                                            <C>          <C>          <C>         <C>         <C>
  Cash and cash equivalents                    $  32,475    $  14,290    $  58,384   $ 258,900   $   2,296
  Total current assets                           129,773       56,446       74,315     261,247       2,774
  Property and equipment, net                    399,155      209,326      183,581      44,206      12,545
  Total assets                                   574,294      281,010      268,948     317,320      15,450
  Total current liabilities (2)                  494,173       61,998       37,677      31,507      16,481
  Long-term debt and capital lease obligations   354,828      266,326      180,727     165,667       7,700
  Stockholders' equity (deficit)                (292,947)     (52,724)      49,873     127,846      (5,350)
</TABLE>

(1) On November 30, 2001, AirGate acquired iPCS, Inc. (together with its
subsidiaries "iPCS"). The accounts of iPCS are included as of September 30,
2002, and the results of operations subsequent to November 30, 2001.

(2) As a result of an event of default, the iPCS credit facility and iPCS notes
have been classified as a current liability.

(3) As a result of fair value assessments performed by a nationally recognized
valuation expert, the Company recorded total impairment charges of $817.4
million associated with the impairment of goodwill and tangible and intangible
assets related to iPCS.


                                       39

<PAGE>

ITEM 7.    Management's Discussion And Analysis Of Financial Condition And
           Results Of Operations

This Management's Discussion and Analysis of Results of Operations and Financial
Condition ("MD&A") contains forward looking statements that are based on current
expectations, estimates, forecasts and projections about us, our future
performance, our liquidity, the wireless industry, our beliefs and management's
assumptions. In addition, other written and oral statements that constitute
forward looking statements may be made by us or on our behalf. Such forward
looking statements include statements regarding expected financial results and
other planned events, including but not limited to, anticipated liquidity, churn
rates, ARPU, CPGA and CCPU (all as defined in the Key Operating Metrics),
roaming rates, EBITDA (as defined in the Key Operating Metrics), and capital
expenditures. Words such as "anticipate," "assume," "believe," "estimate,"
"expect," "intend," "plan," "seek", "project," "target," "goal," variations of
such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual future events or results may differ materially from
these statements. These risks and uncertainties include:

         o        the impact of an iPCS insolvency;

         o        the competitiveness and impact of Sprint's pricing plans and
                  PCS products and services;

         o        subscriber credit quality;

         o        the ability of Sprint to provide back office billing,
                  subscriber care and other services and the costs of such
                  services;

         o        inaccuracies in data provided by Sprint;

         o        new charges and fees, or increased charges and fees, charged
                  by Sprint;

         o        rates of penetration in the wireless industry;

         o        our significant level of indebtedness;

         o        adequacy of bad debt and other allowances;

         o        the potential to experience a continued high rate of
                  subscriber turnover;

         o        the potential need for additional sources of liquidity;

         o        anticipated future losses;

         o        subscriber purchasing patterns;

         o        potential fluctuations in quarterly results;

         o        an adequate supply of subscriber equipment;

         o        risks related to future growth and expansion; and

         o        the volatility of the market price of AirGate's common stock.

These and other applicable risks and uncertainties are summarized under the
captions "Future Trends That May Affect Operating Results, Liquidity and Capital
Resources" included in this "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors" included under
"Item 1. Business" of this annual report on Form 10-K and elsewhere in this
report.

For a further list of and description of such risks and uncertainties, see the
reports filed by us with the SEC. Except as required under federal securities
law and the rules and regulations of the SEC, we do have any intention or
obligation to update publicly any forward looking statements after distribution
of this report, whether as a result of new information, future events, changes
in assumptions or otherwise.

Overview

On July 22, 1998, AirGate entered into management and related agreements with
Sprint whereby it became the network partner of Sprint with the right to provide
100% digital PCS products and services under the Sprint brand names in AirGate's
original territory in the southeastern United States. In January 2000, AirGate
began commercial operations with the launch of four markets covering 2.2 million
residents in AirGate's territory. By September 30, 2000, AirGate had launched
commercial PCS service in all of the 21 basic trading areas, referred to as
markets, which comprise AirGate's original territory. On November 30, 2001,
AirGate acquired iPCS, a network partner of Sprint with 37 markets in the
midwestern states of Michigan, Illinois, Iowa and Nebraska. The acquisition of
iPCS increased the total resident population in the Company's markets from
approximately 7.1 million to approximately 14.5 million. Additionally, iPCS
served 149,119 subscribers as of November 30, 2001. At September 30, 2002,
AirGate and iPCS provided Sprint PCS services to 339,139 and 215,694
subscribers, respectively. At September 30, 2002, AirGate had total network
coverage of approximately 5.9 million residents and iPCS had total network
coverage of approximately 5.6 million residents, of the 7.1 and 7.4 million
residents in its respective territory.



                                       40

<PAGE>

Under AirGate's and iPCS' long-term agreements with Sprint, we manage our
networks on Sprint's licensed spectrum and have the right to use the Sprint
brand names royalty-free during the respective company's PCS affiliation with
Sprint. We also have access to Sprint's national marketing support and
distribution programs and are generally entitled to buy network equipment and
subscriber handsets at the same discounted rates offered by vendors to Sprint
based on its large volume purchases. In exchange for these and other benefits,
AirGate and iPCS each pay an affiliation fee of 8% of collected revenues to
Sprint. We are entitled to 100% of revenues collected from the sale of handsets
and accessories and on roaming revenues received when customers of Sprint and
Sprint's other network partners make a wireless call on our PCS network.

iPCS is a wholly-owned, unrestricted subsidiary of AirGate. As required by the
terms of AirGate's and iPCS' respective outstanding indebtedness, each of
AirGate and iPCS conducts its business as a separate corporate entity from the
other. AirGate's notes require subsidiaries of AirGate to be classified as
either "restricted subsidiaries" or "unrestricted subsidiaries". A restricted
subsidiary is defined generally as any subsidiary that is not an unrestricted
subsidiary. An unrestricted subsidiary includes any subsidiary which:

         o        has been designated an unrestricted subsidiary by the AirGate
                  board of directors,

         o        has no indebtedness which provides recourse to AirGate or any
                  of its restricted subsidiaries,

         o        is not party to any agreement with AirGate or any of its
                  restricted subsidiaries, unless the terms of the agreement are
                  no less favorable to AirGate or such restricted subsidiary
                  than those that might be obtained from persons unaffiliated
                  with AirGate,

         o        is a subsidiary with respect to which neither AirGate nor any
                  of its restricted subsidiaries has any obligation to subscribe
                  for additional equity interests, maintain or preserve such
                  subsidiary's financial condition or cause such subsidiary to
                  achieve certain operating results,

         o        has not guaranteed or otherwise provided credit support for
                  any indebtedness of AirGate or any of its restricted
                  subsidiaries, and

         o        has at least one director and one executive officer that are
                  not directors or executive officers of AirGate or any of its
                  restricted subsidiaries.

AirGate's notes impose certain affirmative and restrictive covenants on AirGate
and its restricted subsidiaries and also include as events of default certain
events, circumstances or conditions involving AirGate or its restricted
subsidiaries. Because iPCS is an unrestricted subsidiary, the covenants and
events of default under AirGate's notes do not generally apply to iPCS.

AirGate's credit facility also imposes certain restrictions on, and applies
certain events of default to events, circumstances or conditions involving,
AirGate and its subsidiaries. AirGate's senior credit facility, however,
expressly excludes iPCS from the definition of "subsidiary." Therefore, these
restrictions and events of default applicable to AirGate and its subsidiaries do
not generally apply to iPCS.

CRITICAL ACCOUNTING POLICIES

The Company relies on the use of estimates and makes assumptions that impact its
financial condition and results. These estimates and assumptions are based on
historical results and trends as well as the Company's forecasts as to how these
might change in the future. Several of the most critical accounting policies
that materially impact the Company's results of operations include:

Allowance for Doubtful Accounts

Estimates are used in determining the allowance for doubtful accounts and are
based on historical collection and write-off experience, current trends, credit
policies and accounts receivable by aging category. In determining these
estimates, the Company compares historical write-offs in relation to the
estimated period in which the subscriber was originally billed. The Company also
looks at the average length of time that elapses between the original billing
date and the date of write-off in determining the adequacy of the allowance for
doubtful accounts by aging category. From this information, the Company provides
specific amounts to the aging categories. The Company provides an allowance for
substantially all receivables over 90 days old. The provision for doubtful
accounts as a percentage of service revenues for the years ended September 30
was as follows:


                                       41

<PAGE>


    Provision for Doubtful Accounts
        as % of Service Revenue       AirGate     iPCS      Combined Company
        -----------------------       -------     ----      ----------------
                  2002                 9.4%       5.5%            8.2%
                  2001                 7.7%       N/A              N/A
                  2000                 5.8%       N/A              N/A

The allowance for doubtful accounts as of September 30, 2002 and September 30,
2001 was $11.3 million and $2.8 million, respectively. At September 30, 2002,
$6.8 million and $4.5 million was attributable to AirGate and iPCS,
respectively. If the allowance for doubtful accounts is not adequate, it could
have a material adverse affect on our liquidity, financial position and results
of operations.

The Company also reviews current trends in the credit quality of its subscriber
base and periodically changes its credit policies. As of September 30, 2002, 35%
of the combined Company's, 36% of AirGate's and 35% of iPCS' subscriber base
consisted of sub-prime credit quality subscribers. The NDASL and Clear Pay
programs and their associated lack of deposit requirements increased the number
of sub-prime credit subscribers. These programs are described herein at
"Business Overview-Marketing Strategy - Pricing." The Clear Pay II program and
its deposit requirements are currently in effect in most of AirGate's and iPCS'
markets, which reinstates a deposit requirement of $125 for most sub-prime
credit subscribers.

Reserve for First Payment Default Subscribers

The Company reserves a portion of its new subscribers and provides a reduction
in revenues from those subscribers that it anticipates will never pay a bill.
Using historical information of the percentage of subscribers whose service was
cancelled for non-payment without ever making a payment, the Company estimates
the number of new subscribers activated in the current period that will never
pay a bill. For these subscribers, the Company provides a reduction of revenue
and removes them from subscriber additions and churn. As a result, these
subscribers are not included in the churn statistics or subscriber count. At
September 30, 2002 and September 30, 2001, the Company had approximately 7,126
and 7,811 such subscribers, respectively.

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement
exists, services have been rendered or products have been delivered, the price
to the buyer is fixed and determinable, and collectibility is reasonably
assured. The Company's revenue recognition polices are consistent with the
guidance in Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements" promulgated by the Securities and Exchange Commission.

The Company records equipment revenue from the sale of handsets and accessories
to subscribers in its retail stores and to local distributors in its territories
upon delivery. The Company does not record equipment revenue on handsets and
accessories purchased from national third-party retailers such as Radio Shack,
Best Buy and Circuit City, or directly from Sprint by subscribers in its
territories. The Company believes the equipment revenue and related cost of
equipment associated with the sale of wireless handsets and accessories is a
separate earnings process from the sale of wireless services to subscribers. For
industry competitive reasons, the Company sells wireless handsets at a loss.
Because such arrangements do not require a customer to subscribe to the
Company's wireless services and because the Company sells wireless handsets to
existing customers at a loss, the Company accounts for these transactions
separately from agreements to provide customers wireless service.

The Company's subscribers pay an activation fee to the Company when they
initiate service. The Company defers activation fee revenue over the average
life of its subscribers, which is estimated to be 30 months. The Company
recognizes service revenue from its subscribers as they use the service. The
Company provides a reduction of recorded revenue for billing adjustments, first
payment default customers, late payment fees, and early cancellation fees. The
Company also reduces recorded revenue for rebates and discounts given to
subscribers on wireless handset sales in accordance with Emerging Issues Task
Force ("EITF") Issue No. 01-9 "Accounting for Consideration Given by a Vendor to
a Subscriber (Including a Reseller of the Vendor's Products)." The Company
participates in the Sprint national and regional distribution programs in which
national retailers such as Radio Shack, Best Buy and Circuit City sell Sprint
PCS products and services. In order to facilitate the sale of Sprint PCS
products and services, national retailers purchase wireless handsets from Sprint
for resale and receive compensation from Sprint for Sprint PCS products and
services sold. For industry competitive reasons, Sprint subsidizes the price of
these handsets by selling the handsets at a price below cost. Under the
Company's Sprint agreements, when a national retailer sells a handset purchased
from Sprint to a subscriber in the Company's territories, the Company is
obligated to reimburse Sprint for the handset subsidy. The Company does not
receive any revenues from the sale of handsets and accessories by national
retailers. The Company classifies these handset subsidy charges as a selling and
marketing expense for a new subscriber handset sale and classifies these
subsidies as a cost of service and roaming for a handset upgrade to an existing
subscriber. Handset subsidy charges included in selling and marketing for the
years ended September 30, 2002, 2001, and 2000 were $19.1 million, $12.8
million, and $3.7 million, respectively. Excluding sales commissions, handset
subsidy upgrade charges in cost of service and



                                       42

<PAGE>

roaming for the year ended September 30, 2002 were $4.8 million. The Company did
not incur handset subsidy upgrade charges for the years ended September 30, 2001
and 2000.

Sprint retains 8% of collected service revenues from subscribers based in the
Company's markets and from non-Sprint subscribers who roam onto the Company's
network. The amount of affiliation fees retained by Sprint is recorded as cost
of service and roaming. Revenues derived from the sale of handsets and
accessories by the Company and from certain roaming services (outbound roaming
and roaming revenues from Sprint PCS and its PCS network partner subscribers)
are not subject to the 8% affiliation fee from Sprint.

The Company defers direct subscriber activation costs when incurred and
amortizes these costs using the straight-line method over 30 months, which is
the estimated average life of a subscriber. Direct subscriber activation costs
also include credit check fees and loyalty welcome call fees charged to the
Company by Sprint and costs incurred by the Company to operate a subscriber
activation center.

For the years ended September 30, 2002, 2001 and 2000 the Company recognized
approximately $6.3, $3.4 and $0.1 million, respectively, of activation fee
revenue. For the years ended September 30, 2002, 2001 and 2000 the Company
recognized approximately $3.7, $2.8 and $0.1 million, respectively, of direct
subscriber activation costs. As of September 30, 2002, the Company has deferred
approximately $15.0 million of subscriber activation fee revenue and $8.4
million of direct subscriber activation costs to future periods.

Impairment of Long-Lived Assets and Goodwill

The Company accounts for long-lived assets and goodwill in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" and SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 144 requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. SFAS No. 142 requires annual tests for
impairment of goodwill and intangible assets that have indefinite useful lives
and interim tests when an event has occurred that more likely than not has
reduced the fair value of such assets. The Company recorded a goodwill
impairment of $261.2 million and $199.7 million during the quarter ended March
31, 2002 and the quarter ended September 30, 2002, respectively, as a result of
these fair value assessments.

Purchase price accounting requires extensive use of accounting estimates and
judgments to allocate the purchase price to the fair market value of the assets
acquired and liabilities assumed. In recording the purchase of iPCS, the Company
engaged a nationally recognized valuation expert to assist in determining the
fair value of these assets and liabilities. Included in the asset valuation for
this purchase was the valuation of three intangible assets: the iPCS subscriber
base, non-compete agreements for certain former iPCS employees, and the right to
be the exclusive provider of Sprint PCS products and services in the 37 markets
in which iPCS operates. For the subscriber base, the non-compete agreements, and
the right to provide Sprint PCS products and services in the iPCS territory,
finite useful lives of 30 months, six months and 205 months, respectively, have
been assigned. The Company evaluates its intangible assets for potential
impairment indicators whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. During the quarter ended September
30, 2002, the Company recorded impairments of $312.0 million associated with
iPCS' right to provide service under the Sprint agreements and the acquired
subscriber base and an asset impairment of $44.5 million associated with
property and equipment of iPCS.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2002, the Financial Accounting Standards Boards ("FASB") issued SFAS
No. 148 "Accounting for Stock-Based Compensation--Transition and Disclosure--an
amendment of FASB Statement No. 123." SFAS No. 148 provides alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation from the intrinsic value-based
method of accounting prescribed by Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." As allowed by SFAS No. 123,
the Company has elected to continue to apply the intrinsic value-based method of
accounting, and has adopted the disclosure requirements of SFAS No. 123. The
Company currently does not anticipate adopting the provisions of SFAS No. 148.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 provides new guidance on the
recognition of costs associated with exit or disposal activities. The standard
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of


                                       43

<PAGE>

commitment to an exit or disposal plan. SFAS No. 146 supercedes previous
accounting guidance provided by EITF Issue No. 94-3 "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." EITF Issue No. 94-3
required recognition of costs at the date of commitment to an exit or disposal
plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. Early application is permitted. The adoption
of SFAS No. 146 by the Company on October 1, 2002 is not expected to have a
material impact on the Company's financial position, results of operations or
cash flows as the Company has not recorded any significant restructurings in
past periods, but the adoption may impact the timing of charges in future
periods.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
Among other things, this statement rescinds FASB Statement No. 4, "Reporting
Gains and Losses from Extinguishment of Debt" which required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effect. As a result, the
criteria in APB Opinion No. 30, "Reporting the Results of Operations --
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now be used to
classify those gains and losses. The adoption of SFAS No. 145 by the Company on
October 1, 2002 is not expected to have a material impact on the Company's
financial position, results of operations or cash flows.

In November 2001, the EITF of the FASB issued EITF 01-9 "Accounting for
Consideration Given by a Vendor to a Subscriber (Including a Reseller of the
Vendor's Products)." EITF 01-9 provides guidance on when a sales incentive or
other consideration given should be a reduction of revenue or an expense and the
timing of such recognition. The guidance provided in EITF 01-9 is effective for
financial statements for interim or annual periods beginning after December 15,
2001. The Company occasionally offers rebates to subscribers that purchase
wireless handsets in its retail stores. The Company's historical policy
regarding the recognition of these rebates in the consolidated statement of
operations is a reduction in the revenue recognized on the sale of the wireless
handset by an estimate of the amount of rebates expected to be redeemed. The
Company's policy is in accordance with the guidance set forth in EITF 01-9.
Therefore, the adoption of EITF 01-9 by the Company on January 1, 2002 did not
have a material impact on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 provides new guidance on the
recognition of impairment losses on long-lived assets with definite lives to be
held and used or to be disposed of and also issued the definition of what
constitutes a discontinued operation and how the results of a discontinued
operation are to be measured and presented. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. The Company elected early adoption of
SFAS No. 144 as of the beginning of its fiscal year on October 1, 2001. The
Company's adoption of SFAS No. 144 did not have a material impact on the
Company's financial position, results of operations or cash flows. However, as
discussed in note 2 to the financial statements, the application of the
provisions of SFAS No. 144 resulted in a $356.5 million impairment during the
quarter ended September 30, 2002.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 requires the fair value of a liability for an asset
retirement obligation to be recognized in the period that it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The
adoption of SFAS No. 143 by the Company on October 1, 2002 is not expected to
have a material impact on the Company's financial position, results of
operations or cash flows.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which provides for non-amortization of goodwill and intangible assets
that have indefinite useful lives, annual tests of impairments of those assets
and interim tests of impairment when an event occurs that more likely than not
has reduced the fair value of such assets. The statement also provides specific
guidance about how to determine and measure goodwill impairments, and requires
additional disclosure of information about goodwill and other intangible assets.
The provisions of this statement are required to be applied starting with fiscal
years beginning after December 15, 2001, and applied to all goodwill and other
intangible assets recognized in the financial statements at that date. Goodwill
and intangible assets acquired after June 30, 2001 will be subject to the
non-amortization provisions of the statement. Early application is permitted for
entities with fiscal years beginning after March 15, 2001, provided that the
first interim financial statements had not been issued previously. The Company
met the criteria for early application and adopted SFAS No. 142 on October 1,
2001. The Company's adoption of the provisions of SFAS No. 142 did not have a
material impact on the Company's financial position, results of operations or
cash flows. However, as discussed in note 2 to the financial statements, the
application of SFAS No. 142 resulted in an impairment charge of $460.9 million
during the fiscal year ended September 30, 2002.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations," which is
effective for all business combinations initiated after June 30, 2001. SFAS No.
141 requires companies to account for all business combinations using the
purchase method of accounting, recognize intangible assets if certain criteria
are met, as well as provide additional disclosures regarding business
combinations and allocation of purchase price. The Company adopted SFAS No. 141
as of July 1, 2001, prior to



                                       44

<PAGE>

AirGate recording any significant business acquisitions and such adoption did
not have a material impact on the Company's financial position, results of
operation or cash flows.

Key Operating Metrics

Terms such as subscriber net additions, average revenue per user, churn, cost
per gross addition and cash cost per user are important operating metrics used
in the wireless telecommunications industry. Terms such as EBITDA are financial
measures used by many companies. None of these terms, including EBITDA, are
measures of financial performance under accounting principles generally accepted
in the United States ("GAAP"). As an indicator of the Company's operating
performance or liquidity, EBITDA should not be considered an alternative to, or
more meaningful than, net income, cash flow or operating loss as determined in
accordance with GAAP. EBITDA and these other terms as used by the Company may
not be comparable to a similarly titled measure of another company.

The following terms used in this report have the following meanings:

"EBITDA" means earnings before other income, interest, taxes, non-cash stock
compensation expense, depreciation, amortization of intangibles, loss on
disposal of property and equipment and impairment losses. The definition has
changed over time as the Company has introduced new line items in its income
statement that are excluded from EBITDA.

"ARPU" summarizes the average monthly service revenue per user, excluding
roaming revenue. ARPU is computed by dividing service revenue for the period by
the average subscribers for the period, which is net of an adjustment for first
payment default subscribers.

"Churn" is the monthly rate of subscriber turnover that both voluntarily and
involuntarily discontinued service during the month, expressed as a percentage
of the total subscriber base. Churn is computed by dividing the number of
subscribers that discontinued service during the month, net of 30 day returns
and an adjustment for estimated first payment default subscribers, by the
average total subscriber base for the period.

"CPGA" summarizes the average cost to acquire new subscribers during the period.
CPGA is computed by adding the income statement components of selling and
marketing, cost of equipment and activation costs (which are included as a
component of cost of service) and reducing that amount by the equipment revenue
recorded. That net amount is then divided by the total new subscribers acquired
during the period, reduced by a provision for first payment default subscribers.

"CCPU" is a measure of the cash costs to operate the business on a per user
basis consisting of subscriber support, network operations, service delivery,
roaming expense, bad debt expense, wireless handset upgrade subsidies and other
general and administrative costs, divided by average subscribers for the period,
which is net of an adjustment for first payment default subscribers.

The table below sets forth below key metrics for the Company for the years ended
September 30, 2000, 2001 and 2002. For the year ended September 30, 2002, these
metrics are shown separately for each of AirGate, iPCS and the combined Company.

<TABLE>
<CAPTION>
                                                                  Fiscal Year Ended September 30,
                                     -------------------------------------------------------------------------------------------
                                       2000               2001                                     2002
                                       ----               ----         ---------------------------------------------------------
                                     (AirGate)          (AirGate)           AirGate              iPCS           Combined Company
                                     ---------          ---------           -------              ----           ----------------
<S>                                <C>                <C>                 <C>               <C>                 <C>
Subscriber Gross Additions               62,007            233,390             247,221            127,028              374,249
Subscriber Net Additions                 56,689            178,336             104,116             66,072              170,188*
Total Subscribers                        56,689            235,025             339,139            215,694              554,833
ARPU                                        $59                $62                 $61                $55                  $59
Churn                                     2.75%              2.76%               3.53%              2.98%                3.35%
CPGA                                       $501               $361                $386               $387                 $386
CCPU                                       $162                $76                 $59                $61                  $60
Capital Expenditures               $152,397,000        $71,270,000         $41,338,000        $55,722,000          $97,060,000
EBITDA                             $(50,825,000)      $(52,222,000)       $(14,860,000)      $(25,170,000)        $(40,030,000)
</TABLE>
-----
*Includes net additions from iPCS on a pro forma basis.



                                       45

<PAGE>

The reconciliation of EBITDA to our reported operating loss, as determined in
accordance with GAAP, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  Fiscal Year Ended September 30,
                                     -------------------------------------------------------------------------------------------
                                       2000               2001                                     2002
                                       ----               ----         ---------------------------------------------------------
                                     (AirGate)          (AirGate)           AirGate              iPCS           Combined Company
                                     ---------          ---------           -------              ----           ----------------
<S>                                    <C>                <C>                 <C>                <C>                  <C>
EBITDA                                 $(50,825)          $(52,222)           $(14,860)          $(25,170)            $(40,030)
  Non-cash stock compensation
  expense                                (1,665)            (1,665)               (769)                 -                 (769)
  Depreciation                          (12,034)           (30,621)            (40,678)           (29,519)             (70,197)
  Amortization of intangible
  assets                                      -                (46)            (35,803)            (3,529)             (39,332)
  Impairment of goodwill                      -                  -            (452,860)            (8,060)            (460,920)
  Impairment of property and
  equipment                                   -                  -                   -            (44,450)             (44,450)
  Impairment of intangible
  assets                                      -                  -            (312,043)                 -             (312,043)
  Loss on disposal of property
  and equipment                               -                  -              (1,074)                 -               (1,074)
                                        --------           --------           ---------          ---------            ---------
Operating Loss                         $(64,524)          $(84,554)          $(858,087)         $(110,728)           $(968,815)
                                        ========           ========           =========          =========            =========
</TABLE>

The tables below also show quarterly key operating metrics for each of the four
quarters in fiscal 2002 for each of AirGate, iPCS and the combined Company. This
information is provided to show the most recent trends in these key operating
metrics. The results for any quarter are not necessarily indicative of results
for any future period.

                                     AirGate
                                     -------
<TABLE>
<CAPTION>
                                                                     Quarter Ended
                                  ------------------------------------------------------------------------------
                                     12/31/01               3/31/02              6/30/02             9/30/02
                                     --------               -------              -------             --------
<S>                                <C>                   <C>                  <C>                  <C>
Subscriber Gross Additions               83,012                68,404               47,529               48,276
Subscriber Net Additions                 54,820                36,055               11,404                1,836
Total Subscribers                       289,844               325,899              337,303              339,139
ARPU                                        $60                   $63                  $57                  $63
Churn                                      3.19%                 3.18%                3.33%                4.30%
CPGA                                       $345                  $321                 $432                 $505
CCPU                                        $64                   $55                  $56                  $63
Bad Debt Expense                          11.88%                10.35%                9.02%                7.11%
Capital Expenditures                 $3,246,000           $17,793,000          $11,241,000           $9,058,000
EBIDTA                             $(14,637,000)           $1,102,000           $3,237,000          $(4,562,000)
Operating Loss                     $(28,350,000)        $(282,447,000)        $(16,955,000)       $(530,335,000)
</TABLE>

                                      iPCS
                                      ----
<TABLE>
<CAPTION>
                                                                     Quarter Ended
                                  -------------------------------------------------------------------------------
                                     12/31/01             3/31/02              6/30/02               9/30/02
                                     --------             -------              -------               --------
<S>                                <C>                  <C>                  <C>                   <C>
Subscriber Gross Additions               17,681               32,145               32,370                44,832
Subscriber Net Additions                 13,892               16,954               14,675                20,551
Total Subscribers                       163,514              180,468              195,143               215,694
ARPU                                        $55                  $56                  $54                   $55
Churn                                      2.13%                2.61%                2.92%                 3.60%
CPGA                                       $365                 $359                 $443                  $374
CCPU                                        $77                  $60                  $60                   $59
Bad Debt Expense                          12.98%                6.66%                7.77%                 0.65%
Capital Expenditures                 $3,880,000          $23,604,000          $17,641,000           $10,597,000
EBIDTA                              $(6,051,000)         $(7,887,000)         $(6,886,000)          $(4,346,000)
Operating Loss                      $(8,374,000)        $(16,409,000)        $(17,637,000)         $(68,308,000)
</TABLE>


                                       46

<PAGE>

                                Combined Company
                                ----------------
<TABLE>
<CAPTION>
                                                                     Quarter Ended
                                  -------------------------------------------------------------------------------
                                    12/31/01              3/31/02               6/30/02              9/30/02
                                    --------              -------               -------              -------
<S>                                     <C>                  <C>                    <C>                  <C>
Subscriber Gross Additions              100,693              100,549                79,899               93,108
Subscriber Net Additions*                68,712               53,009                26,079               22,387
Total Subscribers                       453,358              506,367               532,446              554,833
ARPU                                        $59                  $60                   $56                  $60
Churn                                      2.30%                2.97%                 3.19%                4.04%
CPGA                                       $349                 $333                  $437                 $442
CCPU                                        $66                  $57                   $57                  $61
Bad Debt Expense                          12.05%                9.12%                 8.59%                4.89%
Capital Expenditures                 $7,126,000          $41,397,000           $28,882,000          $19,655,000
EBITDA                             $(20,688,000)         $(6,785,000)          $(3,649,000)         $(8,908,000)
Operating Loss                     $(36,724,000)       $(298,856,000)         $(34,592,000)       $(598,643,000)
</TABLE>
-----
*Includes net additions from iPCS on a pro forma basis.

Results of Operations

The following discussion of the results of operations includes the results of
operations of iPCS subsequent to November 30, 2001.

For the year ended September 30, 2002 compared to the year ended September 30,
2001:

Subscriber Net Additions

As of September 30, 2002, the Company provided personal communication services
to 554,833 subscribers compared to 235,025 subscribers as of September 30, 2001,
an increase of 319,808 subscribers. The increased net subscribers include
149,622 subscribers acquired from iPCS on November 30, 2001. For the year ended
September 30, 2002, the Company added 104,115 net new AirGate subscribers and
66,072 net new iPCS subscribers. The increase in net subscribers is due
primarily to subscribers attracted from other wireless carriers and demand for
wireless services from new subscribers.

The Company does not include in its subscriber base an estimate of first payment
default subscribers. At September 30, 2002 and 2001, the estimated first payment
default subscribers were 7,126 and 7,811, respectively. Estimated first payment
default subscribers at September 30, 2002 for AirGate and iPCS were 3,717 and
3,409, respectively.

Subscriber Gross Additions

Subscriber gross additions for the years ended September 30, 2002 and 2001 were
374,249 and 233,390, respectively. For the year ended September 30, 2002,
subscriber gross additions from AirGate and iPCS were 247,221 and 127,028,
respectively. The increase in subscriber gross additions were attributable to
the acquisition of iPCS and the removal of deposit requirements in the NDASL and
certain Clear Pay programs, additional network build out and retail sales
distribution from AirGate.

Average Revenue Per User

For the years ended September 30, 2002 and 2001, ARPU was $59 and $62,
respectively. For the year ended September 30, 2002, iPCS had an ARPU of $55,
compared to $61 for AirGate. The decrease in ARPU for the Company is primarily
the result of the acquisition of iPCS, cessation of recognizing terminating
access revenue and declines in the average monthly recurring revenue per user.
Until March 2002, the Company recorded terminating long-distance access revenues
billed by Sprint PCS to long distance carriers. Sprint PCS has made a claim to
these historical revenues based upon its current litigation with AT&T and other
long distance carriers. While we continue to examine rights we may have against
Sprint PCS, the Company recorded a reserve to accrue for terminating access
charges previously paid by Sprint on behalf of long distance carriers and for
which Sprint PCS has made a claim.

Churn

Churn for the year ended September 30, 2002 was 3.4%, compared to 2.8% for the
year ended September 30, 2001. For the year ended September 30, 2002, churn
attributable to AirGate and iPCS was 3.5% and 3.0%, respectively. The increase
in churn is primarily a result of an increase in the number of sub-prime credit
quality subscribers whose service was involuntarily discontinued during the
period. Without the subscriber reserve, churn for the year ended September 30,
2002 and 2001 would be


                                       47

<PAGE>

4.0% and 2.8%, respectively. Churn without the subscriber reserve for the year
ended September 30, 2002 attributable to AirGate and iPCS would be 4.2% and
3.6%, respectively.

Cost Per Gross Addition

CPGA was $386 for the year ended September 30, 2002, compared to $361 for the
year ended September 30, 2001. For the year ended September 30, 2002, CPGA for
AirGate and iPCS was $386 and $387, respectively. The increase in CPGA is the
result of greater handset sales incentives, rebates and marketing costs.

Cash Cost Per User

CCPU was $60 for the year ended September 30, 2002, compared to $76 for the year
ended September 30, 2001. For the year ended September 30, 2002, CCPU for
AirGate and iPCS was $59 and $61, respectively. The decrease in CCPU is the
result of the fixed network and administrative support costs of CCPU being
spread over a greater number of average subscribers, including those acquired in
the merger with iPCS.

Revenues

We derive our revenue from the following sources:

         Service. We sell wireless personal communications services. The various
         types of service revenue associated with wireless communications
         services include monthly recurring access and feature charges and
         monthly non-recurring charges for local, wireless long distance and
         roaming airtime usage in excess of the subscribed usage plan.

         Equipment. We sell wireless personal communications handsets and
         accessories that are used by our subscribers in connection with our
         wireless services. Equipment revenue is derived from the sale of
         handsets and accessories from Company owned stores, net of sales
         incentives, rebates and an allowance for returns. The Company's handset
         return policy allows subscribers to return their handsets for a full
         refund within 14 days of purchase. When handsets are returned to the
         Company, the Company may be able to reissue the handsets to subscribers
         at little additional cost. However, when handsets are returned to
         Sprint for refurbishing, the Company receives a credit from Sprint,
         which is less than the amount originally paid for the handset.

         Roaming. The Company receives roaming revenue at a per-minute rate from
         Sprint and other Sprint PCS network partners when Sprint PCS
         subscribers from outside of the Company's territory use the Company's
         network, which accounted for 93% of the roaming revenue recorded for
         the year ended September 30, 2002. The Company pays the same reciprocal
         roaming rate when subscribers from our territories use the network of
         Sprint or its other PCS network partners. The Company also receives
         non-Sprint roaming revenue when subscribers of other wireless service
         providers who have roaming agreements with Sprint roam on the Company's
         network.

Service revenue and equipment revenue was $327.4 million and $18.0 million,
respectively, for the year ended September 30, 2002, compared to $106.0 million
and $10.8 million, respectively, for the year ended September 30, 2001, an
increase of $221.4 million and $7.2 million, respectively. For the year ended
September 30, 2002, service revenue attributable to AirGate and iPCS was $226.5
million and $100.9 million, respectively. These increased revenues reflect the
substantially higher average number of subscribers using the Company's network,
including subscribers acquired in the iPCS acquisition. For the year ended
September 30, 2002, the Company's service revenue was reduced because the
Company did not record revenues from terminating long-distance access charges.
In addition, the Company recorded a revenue adjustment for terminating
long-distance access revenue previously paid to the Company by Sprint PCS on
behalf of long distance carriers. Sprint PCS has made a claim to these
historical revenues that were previously paid by Sprint PCS to Company for the
period from January 2000 to March 2002. Terminating access revenue for which the
Company provided a revenue adjustment was approximately $2.0 million for the
period January 2000 to September 2001. Revenue adjustments for terminating
access revenue attributable to AirGate and iPCS for the year ended September 30,
2002 was $4.3 million and $1.1 million, respectively.

The Company recorded roaming revenue of $111.2 million during the year ended
September 30, 2002 (see roaming expense in Cost of Service and Roaming below),
compared to $55.3 million for the year ended September 30, 2001, an increase of
$55.9 million. The increase is attributable to the larger wireless subscriber
base for Sprint and other Sprint PCS network partners, the additional covered
territory acquired with iPCS, increased roaming revenue to iPCS from Verizon
Wireless and increased roaming revenue from other third-party carriers, PCS
partially offset by a lower average roaming rate. For the year ended September
30, 2002, roaming revenue from Sprint and its PCS network partners was $103.1
million, or 93% of the roaming revenue recorded. For the year ended September
30, 2002, roaming revenue from Sprint and its PCS network partners attributable
to AirGate and iPCS was $70.0 million and $33.1 million, respectively.



                                       48

<PAGE>

The reciprocal roaming rate among Sprint and its PCS network partners, including
the Company, has declined over time, from $0.20 per minute of use prior to June
1, 2001, to $0.10 per minute of use in 2002. See "Sprint Relationship and
Agreements -The Management Agreements--Service pricing, roaming and fees."
Sprint has notified the Company that it intends to reduce the reciprocal roaming
rate to $0.058 per minute of use in 2003. Based upon 2002 historical roaming
data, a reduction in the reciprocal roaming rate for $0.058 per minute would
have reduced roaming revenue by approximately $36 million ($23.0 million for
AirGate and $13.0 million for iPCS) per year, and reduced roaming expense by
approximately $26 million ($16.0 million for AirGate and $10.0 million for iPCS)
per year.

Cost of Service and Roaming

Cost of service and roaming principally consists of costs to support the
Company's subscriber base including:

         o        Roaming expense,

         o        network operating costs (including salaries, cell site lease
                  payments, fees related to the connection of the Company's
                  switches to the cell sites that they support, inter-connect
                  fees and other expenses related to network operations),

         o        back office services provided by Sprint such as customer care,
                  billing and activation,

         o        the 8% of collected service revenue representing the Sprint
                  affiliation fee,

         o        long distance expense relating to inbound roaming revenue and
                  the Company's own subscriber's long distance usage and roaming
                  expense when subscribers from the Company's territory place
                  calls on Sprint's network,

         o        bad debt related to estimated uncollectible accounts
                  receivable, and

         o        wireless handset subsidies on existing subscriber upgrades
                  through national third-party retailers.

The cost of service and roaming was $311.1 million for the year ended September
30, 2002, compared to $116.7 million for the year ended September 30, 2001, an
increase of $194.4 million. For the year ended September 30, 2002, cost of
service and roaming attributable to AirGate and iPCS was $203.2 million and
$107.9 million, respectively. The increase in the cost of service and roaming is
attributable to the increase in the number of subscribers due to the acquisition
of iPCS and additional subscriber growth.

Roaming expense included in the cost of service and roaming was $85.5 million
for the year ended September 30, 2002, compared to $35.4 million for the year
ended September 30, 2001, an increase of $50.6 million as a result of the
substantial increase in the Company's subscriber base, the acquired iPCS
subscriber base and an increase in the average roaming minutes per month for
each subscriber, partially offset by a lower average rate per minute. 92% and
88% of the cost of roaming was attributable to Sprint and its network partners
for the years ended September 30, 2002 and 2001, respectively. For the year
ended September 30, 2002, roaming expense attributable to AirGate and iPCS was
$57.3 million and $28.2 million, respectively. As discussed above, the
per-minute rate the Company pays Sprint when subscribers from the Company's
territory roam onto the Sprint network decreased beginning June 1, 2001 for
AirGate and January 1, 2002 for iPCS.

Bad debt included in the cost of service and roaming was $26.9 million for the
year ended September 30, 2002, compared to $10.9 million for the year ended
September 30, 2001, an increase of $16.0 million. This increase in bad debt
expense is attributable to the acquisition of iPCS and the increase in payment
defaults resulting from the increase in sub-prime credit quality customers.

For the year ended September 30, 2002, the network operating costs were $85.8
million, compared to $37.5 million at September 30, 2001, an increase of $48.3
million. This increase resulted from the acquisition of iPCS and its subscriber
base and network assets. The Company was supporting 554,833 subscribers at
September 30, 2002, compared to 235,025 subscribers at September 30, 2001. At
September 30, 2002, the Company's network, including the territory of iPCS,
consisted of 1,435 active cell sites and seven switches compared to 719 active
cell sites and four switches at September 30, 2001. There were approximately 144
employees performing network operations functions at September 30, 2002,
compared to 79 employees at September 30, 2001.

At September 30, 2002, the number of subscribers at AirGate and iPCS was 339,139
and 215,694, respectively. The number of active cell sites at September 30, 2002
for AirGate and iPCS was 802 and 633, respectively. The number of employees
performing network operations functions at September 30, 2002 for AirGate and
iPCS was 89 and 55, respectively.

Excluding sales commissions, the Company experienced approximately $4.8 million
associated with wireless handset upgrade costs for the year ended September 30,
2002. The Company did not experience wireless handset upgrade costs during the
year ended September 30, 2001.


                                       49

<PAGE>

Cost of Equipment

We purchase handsets and accessories to resell to our subscribers for use in
connection with our services. Because we subsidize the sale of handsets to
remain competitive in the marketplace, the cost of handsets is higher than the
resale price to the subscriber. Cost of equipment was $43.6 million for the year
ended September 30, 2002, and $20.2 million for year ended September 30, 2001,
an increase of $23.4 million. This increase is attributable to the increase in
the number of subscribers added during the period, including subscribers added
as a result of the iPCS acquisition, as cost of equipment includes the cost of
handsets and accessories sold to subscribers from the Company's stores. For the
year ended September 30, 2002, cost of equipment attributable to AirGate and
iPCS was $27.5 million and $16.1 million, respectively.

Selling and Marketing

Selling and marketing expenses include retail store costs such as salaries and
rent in addition to promotion, advertising and commission costs, and handset
subsidies on units sold by national third-party retailers for which the Company
does not record revenue. Under the management agreements with Sprint, when a
national retailer sells a handset purchased from Sprint to a subscriber from the
Company's territories, the Company is obligated to reimburse Sprint for the
handset subsidy that Sprint originally incurred. The national retailers sell
Sprint wireless services under the Sprint brands and marks. The Company incurred
selling and marketing expenses of $116.5 million during the year ended September
30, 2002, compared to $71.6 million in the year ended September 30, 2001, an
increase of $44.9 million. For the year ended September 30, 2002, selling and
marketing expense attributable to AirGate and iPCS was $79.0 million and $37.5
million, respectively. For the year ended September 30, 2002, national
third-party handset subsidy costs attributable to AirGate and iPCS was $11.7
million and $7.4 million, respectively. Handset subsidies on units sold by third
parties totaled approximately $19.1 million for the year ended September 30,
2002, compared to $12.8 million for the year ended September 30, 2001, an
increase of $6.3 million that is attributable to the acquisition of iPCS and
increased subscriber additions.

At September 30, 2002, there were approximately 710 employees performing sales
and marketing functions, compared to 388 employees as of September 30, 2001. The
majority of the increase in employees is a result of the acquisition of iPCS. At
September 30, 2002, employees performing sales and marketing functions for
AirGate and iPCS was approximately 480 and 230, respectively. Selling and
marketing expenses include retail store costs such as salaries and rent in
addition to promotion, advertising and commission costs, and handset subsidies
on units sold by national third-party retailers for which the Company does not
record revenue. Under the management agreements with Sprint, when a national
retailer sells a handset purchased from Sprint to a subscriber from the
Company's territories, the Company is obligated to reimburse Sprint for the
handset subsidy that Sprint originally incurred. The national retailers sell
Sprint wireless services under the Sprint brands and marks.

General and Administrative

For the year ended September 30, 2002, the Company incurred general and
administrative expenses of $25.3 million, compared to $15.7 million for the year
ended September 30, 2001, an increase of $9.6 million. This increase resulted
from the growth in the number of employees and service providers providing
general and administrative services and the acquisition of iPCS. Of the 973
employees at September 30, 2002, approximately 126 employees were performing
corporate support functions compared to 62 employees as of September 30, 2001.
For the year ended September 30, 2002, general and administrative expense
attributable to AirGate and iPCS was $17.6 million and $7.7 million,
respectively.

Non-Cash Stock Compensation

Non-cash stock compensation expense was $0.8 million for the year ended
September 30, 2002, and $1.7 million for the year ended September 30, 2001. The
Company applies the provisions of APB Opinion No. 25 and related interpretations
in accounting for its stock option plans. Unearned stock compensation is
recorded for the difference between the exercise price and the fair market value
of the Company's common stock and restricted stock at the date of grant and is
recognized as non-cash stock compensation expense in the period in which the
related services are rendered.

Depreciation

We capitalize network development costs incurred to ready our network for use
and costs to build-out our retail stores and office space. Depreciation of these
costs begins when the equipment is ready for its intended use and is amortized
over the estimated useful life of the asset. For the year ended September 30,
2002, depreciation increased to $70.2 million, compared to $30.7 million for the
year ended September 30, 2001, an increase of $39.5 million. The increase in
depreciation expense relates primarily to additional network assets placed in
service in 2002 and 2001 and approximately $29.5 million of depreciation from
the acquired iPCS property and equipment. During the fiscal fourth quarter of
2002, the Company placed into service the 1XRTT network hardware costs in
association with the commercial launch of 1XRTT. For the year ended September
30, 2002, depreciation attributable to AirGate and iPCS was $40.7 million and
$29.5 million, respectively.



                                       50

<PAGE>

The Company incurred capital expenditures of $97.1 million in the year ended
September 30, 2002, which included approximately $7.1 million of capitalized
interest, compared to capital expenditures of $71.3 million and capitalized
interest of $2.9 million in the year ended September 30, 2001. Capital
expenditures incurred by AirGate and iPCS were $41.4 million and $55.7 million,
respectively, for the year ended September 30, 2002.

Amortization of Intangible Assets

Amortization of intangible assets relates to the amounts recorded from the iPCS
acquisition for the acquired subscriber base, non-competition agreements, and
the right to provide service under iPCS' Sprint agreements. Amortization for the
year ended September 30, 2002, was approximately $39.3 million. Amortization of
intangible assets for the year ended September 30, 2002 was attributable to
AirGate as the Company did not elect pushdown accounting for the acquisition of
iPCS.

Loss on Disposal of Property and Equipment

For the year ended September 30, 2002, the Company recognized a loss of $1.1
million on disposal of property and equipment. This loss is the result of the
abandonment of eleven cell sites in AirGate's territory that were in process of
being constructed.

Goodwill Impairment

The wireless telecommunications industry experienced significant declines in
market capitalization throughout most of 2002. These significant declines in
market capitalization resulted from concerns surrounding anticipated weakness in
future subscriber growth, increased subscriber churn, anticipated future lower
ARPU and liquidity concerns. As a result of these industry trends, the Company
experienced significant declines in its market capitalization subsequent to its
acquisition of iPCS. Additionally, there have been adverse changes to the
strategic business plan for iPCS. These changes include lower new subscribers,
lower ARPU, higher churn, increased service and pass through costs from Sprint
and lower roaming margins from Sprint. Wireless industry acquisitions subsequent
to the Company's acquisition of iPCS have been valued substantially lower on a
price per population and price per subscriber basis. As a result of these
transactions and industry trends, the Company believed that the fair value of
iPCS and its assets had been reduced. Accordingly, the Company engaged a
nationally recognized valuation expert on two occasions during 2002 to perform
fair value assessments of iPCS. The Company recorded a goodwill impairment of
approximately $261.2 million and $199.7 million during the quarter ended March
31, 2002 and the quarter ended September 30, 2002, respectively, as a result of
these fair value assessments. The total goodwill impairment for the year ended
September 30, 2002 was $460.9 million.

Impairment of Fixed Assets

During the quarter ended September 30, 2002, the Company recorded an asset
impairment of $44.5 million associated with the fixed assets (principally
wireless networking infrastructure) of iPCS. This impairment was recorded under
the requirements of SFAS No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets." As discussed above, this impairment arose from significant
adverse changes to the business plan for iPCS as well as a generally weak
secondary market for telecommunications equipment. Accordingly, the Company
engaged a nationally recognized valuation expert to determine the fair value of
the assets which were valued at $185.4 million as of September 30, 2002.

Impairment of Intangible Assets

The Company recorded an intangible asset impairment of $305.4 million associated
with iPCS' right to provide services under the Sprint agreements. The right to
provide service under iPCS' Sprint agreements was recorded by the Company as a
result of the purchase price allocation for the acquisition of iPCS. The
original value and life assigned to this intangible was $323.3 million and 205
months, respectively. As discussed previously in the goodwill impairment
section, this impairment arose from significant adverse changes to the business
plan for iPCS. Accordingly, the Company adjusted the carrying value of the right
to provide services under the Sprint agreements to its fair value at September
30, 2002. The Company engaged a nationally recognized valuation expert to
determine the fair value of the right to provide services under the Sprint
agreements.

Interest Income

For the year ended September 30, 2002, interest income was $0.6 million,
compared to $2.5 million for the year ended September 30, 2001. The Company had
higher average cash and cash equivalent balances and higher average interest
rates on deposits for the year ended September 30, 2001, which resulted in
higher interest income for year ended September 30, 2001, when compared to the
year ended September 30, 2002. For the year ended September 30, 2002, interest
income attributable to AirGate and iPCS was $0.2 million and $0.4 million,
respectively.



                                       51

<PAGE>

Interest Expense

For the year ended September 30, 2002, interest expense was $57.2 million,
compared to $28.9 million for the year ended September 30, 2001, an increase of
$28.3 million. The increase is primarily attributable to increased debt related
to the iPCS notes, accreted interest on the AirGate notes and increased
borrowings under the AirGate and iPCS credit facilities, partially offset by
lower commitment fees on undrawn balances of the AirGate credit facility, and a
lower interest rate on variable rate borrowings under the AirGate credit
facility. The Company had borrowings of $709.8 million as of September 30, 2002,
including debt of iPCS, compared to $266.3 million at September 30, 2001. For
the year ended September 30, 2002, interest expense attributable to AirGate and
iPCS was $34.3 million and $22.9 million, respectively.

Income Tax Benefit

Income tax benefits of $28.8 million were recognized for the year ended
September 30, 2002. Income tax benefits will be recognized in the future only to
the extent management believes recoverability of deferred tax assets is more
likely than not.

Net Loss

For the year ended September 30, 2002, the net loss was $996.6 million, an
increase of $802.7 million from a net loss of $193.9 million for the year ended
September 30, 2001. The increase was attributable to the results of operations
of iPCS, which had a reported net loss of $133.2 million, the goodwill
impairment associated with AirGate's investment in iPCS of $460.9 million, the
fixed asset impairment associated with AirGate's investment in iPCS of $44.5
million, and the intangibles impairment associated with AirGate's investment in
iPCS of $312.0 million. For the year ended September 30, 2002, net loss
attributable to AirGate and iPCS was $863.4 million and $133.2 million,
respectively.

For the year ended September 30, 2001 compared to the year ended September 30,
2000:

Subscriber Gross Additions

Subscriber gross additions for the years ended September 30, 2001 and 2000 were
233,390 and 62,007, respectively. The increase in subscriber gross additions was
attributable to additional network build out and retail sales distribution from
AirGate and the removal of the deposit for subscribers selecting the NDASL plan.

Subscriber Net Additions

As of September 30, 2001, the Company provided personal communication services
to 235,025 subscribers compared to 56,689 subscribers as of September 30, 2000,
an increase of 178,336 net subscribers. At September 30, 2001 and 2000 the
estimated first payment default subscribers were 7,811 and 0, respectively. The
increase in net subscribers acquired during the year ended September 30, 2001
was attributable to having all of the Company's 21 markets fully launched during
fiscal 2001 and increased demand for wireless services in the United States.

Average Revenue Per User

For the year ended September 30, 2001, ARPU was $62. For the year ended
September 30, 2000, ARPU was $59. The increase in ARPU primarily resulted from
subscribers selecting rate plans with higher monthly recurring charges.

Churn

Churn for the year ended September 30, 2001 was 2.8%, the same as for the year
ended September 30, 2000. Without the subscriber reserve, churn for each of the
years ended September 30, 2001 and 2000 would have been 2.8%.

Cost Per Gross Addition

CPGA was $361 for the year ended September 30, 2001, compared to $501 for the
year ended September 30, 2000. The decrease in CPGA was the result of greater
gross subscriber additions covering the fixed cost components of CPGA such as
advertising, salaries and store rents.

Cash Cost Per User

CCPU was $76 for the year ended September 30, 2001 compared to $162 for the year
ended September 30, 2000. The decrease in CCPU was the result of the fixed
network and administrative support costs of CCPU being spread over a greater
number of average subscribers.



                                       52

<PAGE>

Revenues

Service revenue, roaming revenue and equipment revenue were $106.0 million,
$55.3 million and $10.8 million, respectively, for the year ended September 30,
2001, compared to $9.7 million, $12.3 million and $3.0 million, respectively,
for the year ended September 30, 2000, an increase of $96.3 million, $43.0
million and $7.8 million, respectively. These increased revenues reflected all
of the Company's markets being commercially operational in fiscal year 2001. In
fiscal year 2000, our markets were being launched in phases and were not
operational on a full fiscal year basis.

Cost of Service and Roaming

The cost of service and roaming was $116.7 million for the year ended September
30, 2001, compared to $27.8 million for the year ended September 30, 2000, an
increase of $88.9 million. Roaming expense included in the cost of service and
roaming was $35.4 million for the year ended September 30, 2001, compared to
$2.5 million for the year ended September 30, 2000, an increase of $32.9 million
resulting from the substantial increase in the Company's subscriber base.

The Company was supporting 235,025 subscribers at September 30, 2001, compared
to 56,689 subscribers at September 30, 2000. At September 30, 2001, the
Company's network consisted of 719 active cell sites and four switches compared
to 567 active cell sites and three switches at September 30, 2000. There were
approximately 79 employees performing network operations functions at September
30, 2001, compared to 59 employees at September 30, 2000.

The Sprint affiliation fee totaled $7.6 million in the year ended September 30,
2001, compared to $0.8 million for the year ended September 30, 2000, a $6.8
million increase related to the growth in service revenues. Fees paid to Sprint
for customer support and retention totaled $15.5 million for the year ended
September 30, 2001, compared to $1.5 million at September 30, 2000. Long
distance fees paid to Sprint totaled $6.5 million for the year ended September
30, 2001, compared to $1.1 million at September 30, 2000. The increases for
customer support and retention and long distance fees resulted from the increase
in the Company's subscriber base.

Cost of Equipment

Cost of equipment was $20.2 million for the year ended September 30, 2001, and
$5.7 million for the year ended September 30, 2000, an increase of $14.5
million. This increase was attributable to the increase in the number of
subscribers.

Selling and Marketing

The Company incurred selling and marketing expenses of $71.6 million during the
year ended September 30, 2001 compared to $28.4 million in the year ended
September 30, 2000, an increase of $43.2 million. At September 30, 2001, there
were approximately 388 employees performing sales and marketing functions,
compared to 246 employees as of September 30, 2000. A net 178,336 subscribers
were added in the year ended September 30, 2001 compared to 56,689 net
subscribers added in the year ended September 30, 2000. Handsets subsidies on
units sold by third parties totaled $12.8 million for the year ended September
30, 2001, compared to $3.7 million for the year ended September 30, 2000, an
increase of $9.1 million.

General and Administrative

For the year ended September 30, 2001, the Company incurred expenses of $15.7
million, compared to $14.1 million for the year ended September 30, 2000, an
increase of $1.6 million. Increased compensation and benefit amounts related to
the growth in employees were partially offset by lower amounts earned under the
retention bonus agreement with our chief executive officer. Of the 529 employees
at September 30, 2001, approximately 62 employees were performing corporate
support functions compared to 36 employees as of September 30, 2000.

Non-Cash Stock Compensation

Non-cash stock compensation expense was $1.7 million for each of the years ended
September 30, 2001 and 2000.

Depreciation

For the year ended September 30, 2001, depreciation and amortization expense
increased to $30.6 million, compared to $12.0 million for the year ended
September 30, 2000, an increase of $18.6 million. The increase in depreciation
and amortization expense related primarily to the completion of our network
build-out during fiscal year 2000 to support the Company's commercial launch.
The Company incurred capital expenditures of $56.1 million in the year ended
September 30, 2001, which included approximately $2.9 million of capitalized
interest compared to capital expenditures of $151.4 million and capitalized
interest of $5.9 million in the year ended September 30, 2000.


                                       53

<PAGE>

Interest Income

For the year ended September 30, 2001, interest income was $2.5 million compared
to $9.3 million for the year ended September 30, 2000, a decrease of $6.8
million. The Company had higher cash and cash equivalent balances for the year
ended September 30, 2000, resulting from the higher amount of proceeds that
remained from our September 1999 equity and debt offerings. As capital
expenditures were required to complete the build-out of the Company's PCS
network, and as working capital and operating losses were funded, decreasing
cash balances and a lower short-term interest rate environment resulted in lower
levels of interest income.

Interest Expense

For the year ended September 30, 2001, interest expense was $28.9 million,
compared to $26.1 million for the year ended September 30, 2000, an increase of
$2.8 million. The increase was primarily attributable to increased debt related
to accreted interest on the AirGate notes and increased borrowings under the
AirGate credit facility, partially offset by lower commitment fees on undrawn
balances of the AirGate credit facility, a lower interest rate on variable rate
borrowings under the AirGate credit facility and lower capitalized interest. The
Company had borrowings of $266.3 million as of September 30, 2001, compared to
$180.7 million as of September 30, 2000.

Net Loss

For the year ended September 30, 2001, net loss was $111.0 million, an increase
of $29.7 million over a net loss of $81.3 million for the year ended September
30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2002, the Company had $32.5 million in cash and cash
equivalents, compared to $14.3 million in cash and cash equivalents at September
30, 2001. The Company's working capital deficit was $364.4 million at September
30, 2002, compared to a working capital deficit of $5.6 million at September 30,
2001. The majority of the Company's working capital deficit as of September 30,
2002 was attributable to the classification of the iPCS credit facility and
notes totaling $352.9 million as current. As of December 31, 2002, iPCS was in
default of certain covenants associated with the iPCS credit facility and notes.
Because of iPCS' inability to cure such default, all amounts under the iPCS
credit facility and notes have been classified as a current liability. As of
September 30, 2002, cash and cash equivalents attributable to AirGate and iPCS
was $4.9 million and $27.6 million, respectively. Working capital at September
30, 2002 attributable to AirGate and iPCS was $(58.0) million and ($306.4)
million, respectively.

Net Cash Used in Operating Activities

The $45.2 million of cash used in operating activities in the year ended
September 30, 2002 was the result of the Company's $996.6 million net loss
offset by $978.8 million of goodwill impairment, fixed asset impairment,
impairment of intangible assets, depreciation, amortization of note discounts,
financing costs, amortization of intangibles, deferred tax benefit, provision
for doubtful accounts and non-cash stock compensation, that was partially offset
by negative net cash working capital changes of $27.4 million. The negative net
working capital changes were primarily a result of timing of payments
principally to Sprint, the increase in interest payable related to the increase
in the balance of the AirGate and iPCS credit facilities, and the increase in
the current maturities of long-term debt at September 30, 2002, compared to
September 30, 2001, resulting from the acquisition of iPCS and growth in the
Company's subscriber base. The $40.9 million of cash used in operating
activities in the year ended September 30, 2001 was the result of the Company's
$111.0 million net loss being partially offset by a net $4.6 million in cash
provided by changes in net working capital and $65.5 million of depreciation,
amortization of note discounts, provision for doubtful accounts, amortization of
financing costs and non-cash stock option compensation. The $41.6 million of
cash used in operating activities in the year ended September 30, 2000 was the
result of the Company's $81.3 million net loss being partially offset by $38.5
million of depreciation, amortization of note discounts, provision for doubtful
accounts, amortization of financing costs, non-cash stock compensation and
positive working capital changes of $1.2 million. For the year ended September
30, 2002, cash used in operating activities attributable to AirGate and iPCS was
$24.5 million and $20.9 million, respectively.

Net Cash Used in Investing Activities

The $78.7 million of cash used in investing activities during the year ended
September 30, 2002 represents $97.1 million for purchases of property and
equipment and $6.0 million of cash acquisition costs related to the acquisition
of iPCS, partially offset by $24.4 million of cash acquired from iPCS. Purchases
of property and equipment during the year ended September 30, 2002 related to
investments to upgrade the Company's network to 1XRTT, expansion of switch
capacity and expansion of service coverage in the Company's territories. For the
year ended September 30, 2001, cash outlays of $71.8 million represented cash
payments of $71.3 million made for purchases of equipment and $0.5 million to
purchase certain assets of one of the Company's agents. For the year ended
September 30, 2000, cash outlays of $152.4 million represented cash payments
made for purchases of


                                       54

<PAGE>

property and equipment. For the year ended September 30, 2002, cash used in
investing activities attributable to AirGate and iPCS was $23.0 million and
$55.7 million, respectively.

Net Cash Provided by Financing Activities

The $142.1 million in cash provided by financing activities during the year
ended September 30, 2002, consisted of $61.2 million in borrowings under the
AirGate credit facility and $80.0 million under the iPCS credit facility, $0.7
million of proceeds received from the exercise of options and warrants and $0.6
million received from stock issued under the employee stock purchase plan,
offset by $0.3 million for payments associated with the amendment to the iPCS
credit facility. The $68.5 million of cash provided by financing activities in
the year ended September 30, 2001 consisted of $61.8 million borrowed under the
AirGate credit facility and $6.7 million of proceeds received from exercise of
options and warrants. The $6.5 million of cash used in financing activities in
the year ended September 30, 2000 consisted of the repayment of a $7.7 million
unsecured promissory note partially offset by $1.2 million received from the
exercise of options to purchase common stock by employees and the exercise of
common stock purchase warrants. For the year ended September 30, 2002, cash
provided by financing activities attributable to AirGate and iPCS was $62.5
million and $79.8 million, respectively.

Liquidity

Due to the factors described under "Business Overview - Current Operating
Environment and its Impact on the Company," management has made changes to the
assumptions underlying the long-range business plans for AirGate and iPCS. These
changes included lower new subscribers, lower ARPU, higher subscriber churn,
increased service and pass through costs from Sprint in the near-term and lower
roaming margins from Sprint. Despite cost cutting and other measures, liquidity
is an issue for iPCS in the near-term and we do not believe it has sufficient
cash flow from operations to pay its operating costs, capital expenditures and
debt service as it becomes due over the next year and beyond. We retained
Houlihan Lokey Howard & Zukin Capital to review iPCS' revised long range
business plan, the strategic alternatives available to iPCS and to assist iPCS
in developing and implementing a plan to improve its capital structure. Because
current conditions in the capital markets make additional financing unlikely,
iPCS has undertaken efforts to restructure its relationship with its secured
lenders, its public noteholders and Sprint, and we have begun restructuring
discussions with informal committees of these creditors. While the lenders and
noteholders have expressed willingness to work with iPCS, Sprint has informed us
it is unwilling to restructure its agreements with iPCS. Because of its
deteriorating financial condition, it is likely that iPCS will soon be required
to seek protection under the federal bankruptcy laws in an effort to effect a
court-administered reorganization. Even if a cooperative restructuring is
possible, it is likely that a court-administered reorganization would be a part
of that process.

As of December 30, 2002, iPCS was in default under certain covenants contained
in its credit facility and the indenture governing its notes. Because of these
events of default, the senior lenders will have the ability to accelerate iPCS'
payment obligations under the iPCS credit facility and the holders of the iPCS
notes will have the ability to accelerate iPCS' payment obligations under iPCS'
indenture, after giving notice and the expiration of applicable cure periods.
iPCS does not anticipate being able to cure these defaults. iPCS is working with
its lenders and noteholders on a forbearance agreement, however there is no
assurance that these negotiations will be successful. In any event, we
anticipate that iPCS will default on certain financial covenants as of March 31,
2003 and it is probable that iPCS will file for bankruptcy in the near term, and
these events are also events of default under the iPCS credit facility.

Because iPCS is an unrestricted subsidiary, AirGate is generally unable to
provide capital or other financial support to iPCS. Further, iPCS lenders,
noteholders and creditors do not have a lien on or encumbrance on assets of
AirGate. We believe AirGate operations will continue independent of the outcome
of the iPCS restructuring.

While AirGate has also experienced a deterioration in its liquidity, it appears
that it is in a better position to address the issues discussed above. It has a
larger subscriber base than iPCS and, as a stand-alone operation, AirGate's
business is more mature. Based upon its current business plan, which continues
to be revised and evaluated in light of evolving circumstances, we expect that
AirGate will have sufficient funds from operations and amounts available under
its credit facility to satisfy our working capital requirements, capital
expenditures and other liquidity requirements through fiscal 2003.

Capital Resources

At September 30, 2002, the Company had $32.5 million of cash and cash
equivalents, consisting of $4.9 million for AirGate and $27.6 million for iPCS.
Total availability under the AirGate credit facility was $17.0 million and total
availability under the iPCS credit facility was $10.0 million.

As of December 31, 2002, $12.0 million remained available for borrowing under
the AirGate credit facility. The Company's obligations under the AirGate credit
facility are secured by all of AirGate's assets, but not assets of iPCS and its
subsidiaries.


                                       55

<PAGE>

As of December 31, 2002, there was no remaining availability under the iPCS
credit facility, which was amended during November 2002 to reduce availability
by $10.0 million to $130.0 million. As described above under "Liquidity," iPCS
is currently in default of certain covenants under its credit facility. Upon
giving the appropriate notice and passage of cure periods, the lenders will have
the ability to accelerate iPCS' payment obligations under the iPCS credit
facility and the holders of its notes will have the ability to accelerate iPCS'
payment obligations to them under the indenture governing such notes. iPCS would
not have sufficient resources to meet its payment obligations in the event of
any such acceleration. iPCS' obligations under the iPCS credit facility are
secured by all of iPCS' operating assets, but not other assets of AirGate and
its restricted subsidiaries.

Future Trends That May Affect Operating Results, Liquidity and Capital Resources

Our business plan and estimated future operating results are based on estimates
of key operating metrics, including subscriber growth, subscriber churn, capital
expenditures, ARPU, losses on sales of handsets and other subscriber
acquisitions costs, and other operating costs. The unsettled nature of the
wireless market, the current economic slowdown, increased competition in the
wireless telecommunications industry, new service offerings of increasingly
large bundles of minutes of use at lower prices by some major carriers, and
other issues facing the wireless telecommunications industry in general have
created a level of uncertainty that may adversely affect our ability to predict
future subscriber growth as well as other key operating metrics.

Certain other factors that may affect our operating results, liquidity and
capital resources include the following:

AirGate has limited funding options and the ability to draw remaining funds
under the AirGate credit facility may be terminated.

AirGate had only $12 million remaining available under the AirGate credit
facility as of December 31, 2002. AirGate currently has no additional sources of
working capital other than EBITDA. AirGate's ability to borrow funds under the
AirGate credit facility may be terminated due to its failure to maintain or
comply with the restrictive financial and operating covenants contained in the
agreements governing the AirGate credit facility. The AirGate credit facility
contains covenants specifying the maintenance of certain financial ratios,
reaching defined subscriber growth and network covered population goals, minimum
service revenues, maximum capital expenditures, and beginning January 1, 2003,
maintaining a ratio of total debt to annualized EBITDA, which ratio is 6.90 for
2003. The Company believes that it is currently in compliance in all material
respects with all financial and operational covenants relating to the AirGate
credit facility. If the Company is unable to operate the AirGate business within
the covenants specified in the AirGate credit facility, the Company's ability to
obtain future amendments to the covenants in AirGate's credit facility is not
assured and the ability to make borrowings required to operate the AirGate
business could be restricted or terminated. Such a restriction or termination
would have a material adverse affect on AirGate's liquidity and capital
resources.

If our actual revenues are less than we expect or operating or capital costs are
more than we expect, our financial condition and liquidity may be materially
adversely affected. In such event, there is substantial risk that the Company
could not access the credit or capital markets for additional capital.

Variable interest rates may increase substantially.

At September 30, 2002, the Company had borrowed $266.5 million under the AirGate
and iPCS credit facilities. The rate of interest on those credit facilities is
based on a margin above either the alternate bank rate (the prime lending rate
in the United States) or the London Interbank Offer Rate (LIBOR). For the year
ended September 30, 2002, the weighted average interest rate under variable rate
borrowings were 5.6% under the AirGate credit facility and 5.7% under the iPCS
credit facility. The combined Company's weighted average borrowing rate on
variable rate borrowings at September 30, 2002, was 5.63%. If interest rates
increase, the Company may not have the ability to service the interest
requirements on its credit facilities. Further, if AirGate or iPCS were to
default under their respective credit facility, such Company's rate of interest
would increase by an additional 2%.

The Company operates with negative working capital because of amounts owed to
Sprint.

Each month the Company pays Sprint expenses described in greater detail under
"Results of Operations" and "Related Party Transactions--Transactions with
Sprint." A reduction in the amounts the Company owes Sprint may result in a
greater use of cash for working capital purposes than the business plans
currently project.

Other factors.

Other factors which could adversely affect our liquidity and capital resources
are described in this report at Risk Factors, including the following:

         o        our revenues may be less than we anticipate,

         o        our costs may be higher than we anticipate,



                                       56

<PAGE>

         o        we may continue to experience a high rate of subscriber
                  turnover,

         o        our efforts to reduce costs may not succeed or may have
                  adverse affects on our business,

         o        our provision for doubtful accounts may not be sufficient to
                  cover uncollectible accounts,

         o        if AirGate does not meet all of the conditions required under
                  its credit facility, it may not be able to draw down all of
                  the funds it anticipates receiving from its senior lenders,

         o        the restructuring of iPCS,

         o        in the event of iPCS' bankruptcy or insolvency, AirGate may
                  not be able to reduce its general and administrative costs in
                  an amount sufficient to subsidize the portion of the combined
                  Company's costs currently borne by iPCS, and

         o        risks related to our relationship with Sprint.

Contractual Obligations

The Company is obligated to make future payments under various contracts it has
entered into, including amounts pursuant to the AirGate and iPCS credit
facilities, the AirGate notes, the iPCS notes, capital leases and non-cancelable
operating lease agreements for office space, cell sites, vehicles and office
equipment. Future minimum contractual cash obligations for the next five years
and in the aggregate at September 30, 2002, are as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                                                            Payments Due By Period
                                                            ----------------------
                                                           Years Ended September 30,
                                                           -------------------------

     Contractual Obligation       Total        2003         2004         2005         2006         2007      Thereafter
     ----------------------    ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                             <C>          <C>          <C>          <C>          <C>          <C>          <C>
AirGate credit facility (1)    $  136,500   $    2,024   $   15,863   $   21,150   $   26,920   $   35,400   $   35,143
AirGate notes                     300,000           --           --           --           --           --      300,000
AirGate operating leases (2)       75,284       19,096       18,313       13,711        8,768        5,766        9,630
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
      AirGate subtotal         $  511,784   $   21,120   $   34,176   $   34,861   $   35,688   $   41,166   $  344,773
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
iPCS credit facility (1)(3)    $  130,000   $       --   $    9,750   $   17,875   $   29,250   $   32,500   $   40,625
iPCS notes (3)                    300,000           --           --           --           --           --      300,000
iPCS operating leases (2)          71,029       13,214       12,593       11,663        8,694        6,094       18,771
iPCS capital leases                 1,285            4           74           77           81           84          965
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
      iPCS subtotal            $  502,314   $   13,218   $   22,417   $   29,615   $   38,025   $   38,678   $  360,361
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
      Total                    $1,014,098   $   34,338   $   56,593   $   64,476   $   73,713   $   79,844   $  705,134
                               ==========   ==========   ==========   ==========   ==========   ==========   ==========
      Total after
        reclassification(3)    $1,014,098   $  464,338   $   46,843   $   46,601   $   44,463   $   47,344   $  364,509
                               ==========   ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>

(1)      Total repayments are based upon borrowings outstanding as of September
         30, 2002, not projected borrowings under the respective credit
         facility.
(2)      Does not include payments due under renewals to the original lease
         term.
(3)      Amounts in this table do not reflect the current classification of the
         iPCS credit facility and iPCS notes as a result of the event of default
         discussed below. Total after reclassification reflects amounts due
         under the iPCS credit facility and notes in 2003 as a result of the
         event of default.

The AirGate $153.5 million credit facility provides for a $13.5 million senior
secured term loan, which matures on June 6, 2007, which is the first installment
of the loan, or tranche I. The second installment, or tranche II, under the
AirGate credit agreement is for a $140.0 million senior secured term loan, which
matures on September 30, 2008. The AirGate credit facility requires quarterly
payments of principal beginning December 31, 2002, for tranche I, and March 31,
2004, for tranche II, initially in the amount of 3.75% of the loan balance then
outstanding and increasing thereafter. The commitment fee on unused borrowings
is 1.50%, payable quarterly. The AirGate notes will require cash payments of
interest beginning on April 1, 2005.

The iPCS credit facility provides for a $80.0 million senior secured term loan
which matures on December 31, 2008, which is the first installment of the loan,
or tranche A. The second installment, or tranche B, under the iPCS credit
facility is for a $50.0 million senior secured term loan, which also matures on
December 31, 2008. The iPCS credit facility requires quarterly payments of
principal beginning March 31, 2004, for tranche A and tranche B, initially in
the amount of 2.5% of the loan balance then outstanding and increasing
thereafter. The commitment fee on unused borrowings ranges from 1.00% to 1.50%,
payable quarterly. The iPCS notes will require cash payments of interest
beginning on January 15, 2006.

As of December 31, 2002, two major credit rating agencies rate AirGate's and
iPCS' unsecured debt. The ratings were as follows:


                                       57

<PAGE>

           Type of facility                          Moody's       S&P
           ----------------                          -------       ---
           AirGate notes                               CAA2         CC
           iPCS notes                                   CA          CC

On December 31, 2002, S&P downgraded AirGate's corporate rating from CCC+ to
CCC- and its rating of the AirGate notes from CCC- to CC. In addition, S&P
downgraded iPCS' corporate rating from CCC- to CC. AirGate has also been placed
on credit watch with negative implications pending the cure of a default under
its senior credit facility and its notes.

There are provisions in each of the agreements governing the credit facilities,
the AirGate notes and the iPCS notes providing for an acceleration of repayment
upon an event of default, as defined in the respective agreements. As discussed
previously, because of iPCS' default under its credit facility, iPCS' senior
lenders and noteholders have the ability to accelerate its payment obligations,
after giving notice and the expiration of applicable cure periods. iPCS is
working with its lenders and noteholders on a forbearance agreement, however
there is no assurance that these negotiations will be successful.

The Company has no off-balance sheet arrangements and has not entered into any
transactions involving unconsolidated, limited purpose entities or commodity
contracts.

Seasonality

The Company's business is subject to seasonality because the wireless industry
historically has been heavily dependent on fourth calendar quarter results.
Among other things, the industry relies on significantly higher subscriber
additions and handset sales in the fourth calendar quarter as compared to the
other three calendar quarters. A number of factors contribute to this trend,
including: the increasing use of retail distribution, which is heavily dependent
upon the year-end holiday shopping season; the timing of new product and service
announcements and introductions; competitive pricing pressures; and aggressive
marketing and promotions. The increased level of activity requires a greater use
of available financial resources during this period. We expect, however, that
fourth quarter seasonality will have less impact in the future.

RELATED PARTY TRANSACTIONS AND TRANSACTIONS BETWEEN AIRGATE AND IPCS

Transactions with Sprint

Under the Sprint agreements, Sprint provides the Company significant support
services such as customer service, billing, collections, long distance, national
network operations support, inventory logistics support, use of the Sprint and
Sprint PCS brand names, national advertising, national distribution and product
development. Additionally, the Company derives substantial roaming revenue and
incurs substantial roaming expenses when Sprint's and Sprint's network partners'
PCS wireless subscribers incur minutes of use in the Company's territories and
when the Company's subscribers incur minutes of use in Sprint's and Sprint's
network partners' PCS territories. These transactions are recorded in the
roaming revenue, cost of service and roaming, cost of equipment and selling and
marketing expense captions in the statement of operations. Cost of service and
roaming transactions relate to the affiliation fee, long distance charges,
roaming expenses, and the costs of services such as billing, collections and
customer service. Cost of equipment transactions relate to inventory purchased
by the Company from Sprint under the Sprint agreements. Selling and marketing
transactions relate to subsidized costs on handsets and commissions paid by the
Company under Sprint's national distribution program. Amounts relating to the
Sprint agreements for the years ended September 30, 2002, 2001 and 2000, are as
follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                 For Years Ended September 30,
                                                                ------------------------------
                                                                  2002       2001       2000
                                                                --------   --------   --------
<S>                                                             <C>        <C>        <C>
Amounts included in the Consolidated Statement of Operations:

     AirGate roaming revenue ................................   $ 70,002   $ 53,863   $ 11,798
     AirGate cost of service and roaming:
          Roaming ...........................................   $ 52,746   $ 40,472   $  3,171
          Customer service ..................................     40,454     15,526      1,542
          Affiliation fee ...................................     15,815      7,603        757
          Long distance .....................................     13,846      6,556      1,119
          Other .............................................      2,115      1,252        145
                                                                --------   --------   --------
     AirGate cost of service and roaming: ...................   $124,976   $ 71,409   $  6,734
     AirGate purchased inventory ............................   $ 23,662   $ 19,405   $  7,571
     AirGate selling and marketing ..........................   $ 21,728   $ 20,827   $  5,716
     iPCS roaming revenue ...................................   $ 33,137         --         --
     iPCS cost of service and roaming
          Roaming ...........................................   $ 25,723         --         --
          Customer service ..................................     19,367         --         --

</TABLE>


                                       58

<PAGE>

<TABLE>
<CAPTION>
<S>                                                             <C>        <C>        <C>
          Affiliation fee ...................................      8,011         --         --
          Long distance .....................................      7,686         --         --
          Other .............................................        781         --         --
                                                                --------   --------   --------
     iPCS cost of service and roaming .......................   $ 61,568         --         --
     iPCS purchased inventory ...............................   $ 17,097         --         --
     iPCS selling and marketing .............................   $  9,970         --         --

<CAPTION>
                                                                            As of
                                                                        September 30,
                                                           -------------------------------------
                                                                  2002                 2001
                                                                  ----                 ----
<S>                                                           <C>                  <C>
           Receivable from Sprint                             $  44,953            $  10,200
           Payable to Sprint                                    (88,360)             (32,564)
</TABLE>

Transactions between AirGate and iPCS

The Company formed AirGate Service Company, Inc. ("ServiceCo") to provide
management services to both AirGate and iPCS. ServiceCo is a wholly-owned
restricted subsidiary of AirGate. Personnel who provide general management
services to AirGate and iPCS have been leased to ServiceCo, which include 188
employees at September 30, 2002. Generally, the management personnel include the
corporate staff in the Company's principal corporate offices in Atlanta and the
accounting staff in Geneseo, Illinois. ServiceCo expenses are allocated between
AirGate and iPCS based on the percentage of subscribers they contribute to the
total number of Company subscribers (the "ServiceCo Allocation"), which is
currently 60% AirGate and 40% iPCS. Expenses that are related to one company are
allocated to that company. Expenses that are related to ServiceCo or both
companies are allocated in accordance with the ServiceCo Allocation. For the
year ended September 30, 2002, iPCS paid ServiceCo a net total of $1.7 million
for ServiceCo expenses. We anticipate that the net ServiceCo allocation to iPCS
in fiscal year 2003 will be approximately $4.6 million.

AirGate has completed transactions at arms-length in the normal course of
business with its unrestricted subsidiary iPCS. These transactions are comprised
of roaming revenue and expenses, inventory sales and purchases and sales of
network operating equipment as further described below.

In the normal course of business under AirGate's and iPCS' Sprint agreements,
AirGate's subscribers incur minutes of use in iPCS' territory causing AirGate to
incur roaming expense (roaming revenue to iPCS). In addition, iPCS' subscribers
incur minutes of use in AirGate's territory for which AirGate receives roaming
revenue (roaming expense to iPCS). AirGate received $0.4 million of roaming
revenue and incurred $0.4 million of roaming expense to iPCS during the year
ended September 30, 2002. The reciprocal roaming rate charged and other terms
are established under AirGate's and iPCS' agreements with Sprint.

In order to optimize the most efficient use of certain models of wireless
handset inventory in relation to regional demand, in fiscal 2002 AirGate sold
approximately $0.1 million of wireless handset inventory to iPCS. Additionally
AirGate purchased approximately $0.2 million of wireless handset inventory from
iPCS. These transactions were completed at fair value. At September 30, 2002,
neither AirGate nor iPCS were carrying any wireless handset inventory purchased
from each other.

AirGate sold approximately $0.2 million of network operating equipment to iPCS
in fiscal 2002 at fair value. Additionally, iPCS sold to AirGate approximately
$0.7 million of network operating equipment at fair value.

The terms and conditions of each of the transactions described above are
comparable to those that could have been obtained in transactions with
unaffiliated entities.

Transactions Involving Board Members

AirGate purchases telecommunication services for its network from New South
Communications. James Akerhielm, a member of AirGate's board of directors during
the year ended September 30, 2002, is the president and chief executive officer
and a member of the board of directors of New South Communications, Inc. Mr.
Akerhielm was elected to the board of directors of the Company during May 2002.
For the year ended September 30, 2002, AirGate purchased $0.7 million of
telecommunication services from New South Communications, less than 1% of
AirGate's revenues. The terms and conditions of such transactions are comparable
to those that could have been obtained in transactions with unaffiliated
entities.

Pursuant to his employment agreement, iPCS purchases consulting services from
Tim Yager who served on AirGate's board of directors during the year ended
September 30, 2002. For the year ended September 30, 2002, iPCS purchased $0.3
million of consulting services from Tim Yager.

Messrs. Akerhielm and Yager have both recently resigned from AirGate's board of
directors.



                                       59

<PAGE>

Inflation

Our management believes that inflation has not had, and will not have, a
material adverse effect on our results of operation.

ITEM 7A. Quantitative And Qualitative Disclosure About Market Risk

In the normal course of business, the Company's operations are exposed to
interest rate risk on its credit facilities and any future financing
requirements. The Company's fixed rate debt consists primarily of the accreted
carrying value of the 1999 AirGate notes ($220.2 million at September 30, 2002)
and the 2000 iPCS notes ($223.1 million at September 30, 2002). Our variable
rate debt consists of borrowings made under the AirGate credit facility ($136.5
million at September 30, 2002) and the iPCS credit facility ($130.0 million at
September 30, 2002). For the year ended September 30, 2002, the weighted average
interest rate under the AirGate credit facility was 5.6% and under the iPCS
credit facility was 5.7%. Our primary interest rate risk exposures relate to (i)
the interest rate on long-term borrowings; (ii) our ability to refinance the
AirGate and iPCS notes at maturity at market rates; and (iii) the impact of
interest rate movements on our ability to meet interest expense requirements and
financial covenants under our debt instruments.

The Company manages the interest rate risk on its outstanding long-term debt
through the use of fixed and variable rate debt and the use of an interest rate
cap with regard to a portion of the iPCS debt. While the Company cannot predict
its ability to refinance existing debt or the impact interest rate movements
will have on existing debt, the Company continues to evaluate its interest rate
risk on an ongoing basis.

The following table presents the estimated future balances of outstanding
long-term debt projected at the end of each period and future required annual
principal payments for each period then ended associated with the AirGate and
iPCS notes and credit facilities based on projected levels of long-term
indebtedness:

<TABLE>
<CAPTION>
                                                Years Ending September 30,
                            -----------------------------------------------------------------------
                                2003        2004        2005        2006        2007    Thereafter
                                ----        ----        ----        ----        ----    ----------
                                                    (Dollars in thousands)
<S>                          <C>         <C>         <C>         <C>         <C>
AirGate notes                $228,813    $260,630    $297,191    $297,289    $297,587          --
Fixed interest rate              13.5%       13.5%       13.5%       13.5%       13.5%       13.5%
Principal payments                 --          --          --          --          --    $300,000

AirGate credit facility      $151,475    $133,700    $110,000    $ 79,893    $ 40,000          --
Variable interest rate (1)       5.75%       5.75%       5.75%       5.75%       5.75%       5.75%
Principal payments           $  2,025    $ 17,775    $ 23,700    $ 30,107    $ 39,893    $ 40,000

iPCS credit facility (2)     $130,000    $120,250    $102,375    $ 73,125    $ 40,625          --
Variable interest rate (1)       5.75%       5.75%       5.75%       5.75%       5.75%       5.75%
Principal payments                 --    $  9,750    $ 17,875    $ 29,250    $ 32,500    $ 40,625

iPCS notes (2)               $252,093    $285,118    $296,967    $297,165    $300,000          --
Fixed interest rate              14.0%       14.0%       14.0%       14.0%       14.0%       14.0%
Principal payments                 --          --          --          --          --    $300,000

</TABLE>

(1)      The interest rate on the credit facilities equals the London Interbank
         Offered Rate ("LIBOR") +3.75%. LIBOR is assumed to equal 2.0% for all
         periods presented, which is the current LIBOR rate. A 1% increase
         (decrease) in the variable interest rate would result in a $2.7 million
         increase (decrease) in the related interest expense on an annual basis.
(2)      Amounts in this table do not reflect the current classification of the
         iPCS credit facility and iPCS notes as a result of the event of default
         discussed elsewhere in this report.

ITEM 8. Financial Statements

Our financial statements are listed under Item 15(a) of this annual report and
are filed as part of this report on the pages indicated.

ITEM 9. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure

None.



                                       60

<PAGE>

                                    PART III

ITEM 14. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer are responsible for
establishing and maintaining "disclosure controls and procedures" (as defined in
the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) for the
Company. Our Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of our disclosure controls and procedures as of a
date within 90 days before the filing date of this annual report, have concluded
that our disclosure controls and procedures are adequate and effective in timely
alerting them to material information relating to the Company required to be
included in its periodic Securities and Exchange Commission filings.

Under our agreements with Sprint, Sprint provides us with billing, collections,
customer care and other back office services. As a result, Sprint remits
approximately 96% of our revenues to us. In addition, approximately 60% of cost
of service and roaming in our consolidated financial statements relate to
charges from Sprint for its affiliation fee, charges for services provided under
our agreements with Sprint such as billing, collections and customer care,
roaming expense, long-distance, and pass-through and other fees and expenses.
The Company, as a result, necessarily relies on Sprint to provide accurate,
timely and sufficient data and information to properly record our revenues,
expenses and accounts receivable which underlie a substantial portion of our
periodic financial statements and other financial disclosures. The relationship
with Sprint is established by our agreements and our flexibility to use a
service provider other than Sprint is limited.

Because of our reliance on Sprint for financial information, the Company must
depend on Sprint to design adequate internal controls with respect to the
processes established to provide this data and information to the Company and
Sprint's other network partners. To address this issue, Sprint engages its
independent auditors to perform a periodic evaluation of these controls and to
provide a "Report on Controls Placed in Operation and Tests of Operating
Effectiveness for Affiliates" under guidance provided in Statement of Auditing
Standards No. 70. This report is provided annually to the Company and covers the
Company's entire fiscal year.

Information provided by Sprint includes reports regarding our subscriber
accounts receivable. During the last quarter of fiscal 2002, Company personnel
began inquiring about differences between various accounts receivable reports
provided by Sprint. We continued to make inquiries and have discussions with
Sprint regarding these differences until, in early December, Sprint informed us
that certain accounts receivable reports provided to the Company could not be
relied upon for financial reporting purposes. Since that time, Sprint and the
Company have worked cooperatively to confirm the correct accounts receivable
balances and to reconcile inconsistencies with reports previously relied on by
the Company.

In connection with this review of accounts receivable, the Company has
reclassified approximately $10.0 million of subscriber accounts receivable for
the fiscal year ended September 30, 2002 to a receivable from Sprint. We believe
at least $10.0 million is payable from Sprint, but Sprint has acknowledged only
$5.8 million is owed to Airgate. We are in discussions with Sprint regarding the
differences and have provided for these discussions in our consolidated
financial statements.

Changes in Internal Controls

As indicated above, it is inherent in our relationship with Sprint that we rely
on Sprint to provide accurate, timely and sufficient data and information to
properly record the revenues, expenses and accounts receivable which underlie a
substantial portion of our periodic financial statements and other financial
disclosures. We and our independent auditors believe that the accounts
receivable issue resulted from a reportable condition in internal controls. We
will focus additional resources on reviewing and analyzing information provided
by Sprint and we are working with Sprint to identify other information and
reports that would assist us in this review and analysis, particularly as it
relates to accounts receivable and the application of cash. We continue to
assess and explore, both internally and with Sprint, what other measures might
be adopted to avoid this or similar reporting problems in the future.


                                       61

<PAGE>

                                     PART IV

ITEM 15. Financial Statements, Schedules, Reports On Form 8-K And Exhibits

   (a) Financial Statements

         1. The following financial statements are filed with this report on the
            pages indicated:
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         Independent Auditors' Report ........................................................................  F-1

         Consolidated Balance Sheets as of September 30, 2002 and September 30, 2001 .........................  F-2

         Consolidated Statements of Operations for the years ended September 30, 2002, 2001 and 2000 .........  F-3

         Consolidated Statements of Stockholders' Equity (Deficit) for the years ended September 30, 2002,
           2001 and 2000 .....................................................................................  F-4

         Consolidated Statements of Cash Flows for the years ended September 30, 2002, 2001 and 2000 .........  F-5

         Notes to the Consolidated Financial Statements ......................................................  F-6

   (b) Financial Statement Schedule

         Financial Statement Schedule

             Report of Independent Auditors' on Financial Statement Schedule .................................  F-32
             Schedule II--Valuation and Qualifying Accounts ..................................................  F-33
</TABLE>

         1. Exhibits

            See Item 15(c) below

    (c) Reports on Form 8-K

The following Current Reports on 8-K were filed by AirGate during the quarter
ended September 30, 2002:

On July 9, 2002, AirGate furnished a Current Report on Form 8-K with the
Securities and Exchange Commission under Item 9 - Regulation FD Disclosure
relating to its press release announcing its net subscriber additions for the
third fiscal quarter and that iPCS had attained its minimum subscriber covenant
under the iPCS senior secured credit facility.

On August 8, 2002, AirGate furnished a Current Report on Form 8-K with the
Securities and Exchange Commission under Item 9 - Regulation FD Disclosure
relating to its press release announcing its financial and operating results for
the third fiscal quarter and nine months ended June 30, 2002.


                                       62

<PAGE>

    (d) Exhibits

AirGate Exhibits

      Exhibit
       Number     Number description
       ------     ------------------

         3.1      Restated Certificate of Incorporation of AirGate PCS, Inc.
                  dated December 17, 2002.

         3.2      Amended and Restated Bylaws of AirGate PCS, Inc. dated
                  December 17, 2002.

         4.1      Specimen of common stock certificate of AirGate PCS, Inc.
                  (Incorporated by reference to Exhibit 4.1 to the Registration
                  Statement on Form S-1/A filed by AirGate with the Commission
                  on June 15, 1999 (SEC File Nos. 333-79189-02 and
                  333-79189-01))

         4.2      Form of warrant issued in units offering (included in Exhibit
                  10.20)

         4.3      Form of Lucent Warrants (Incorporated by reference to Exhibit
                  4.4 to the Registration Statement on Form S-1/A filed by
                  AirGate with the Commission on September 17, 1999 (SEC File
                  Nos. 333-79189-02 and 333-79189-01))

         4.4      Form of Indenture for senior subordinated discount notes
                  (including form of pledge agreement) (Incorporated by
                  reference to Exhibit 4.5 to the Registration Statement on Form
                  S-1/A filed by AirGate with the Commission on September 23,
                  1999 (SEC File Nos. 333-79189-02 and 333-79189-01))

         4.5      Form of unit (included in Exhibit 10.20)

         10.1     Sprint PCS Management Agreement and Addenda I-III thereto
                  between SprintCom, Inc. and AirGate Wireless, L.L.C.
                  (Incorporated by reference to Exhibit 10.1 to the Registration
                  Statement on Form S-1/A filed by AirGate with the Commission
                  on June 15, 1999 (SEC File Nos. 333-79189-02 and
                  333-79189-01))

         10.2     Assignment of Sprint PCS Management Agreement, Sprint Spectrum
                  Services Agreement and Trademark and Service Mark Agreement
                  from AirGate Wireless, L.L.C. to AirGate Wireless, Inc. dated
                  November 20, 1998 (Incorporated by reference to Exhibit 10.14
                  to the Registration Statement on Form S-1/A filed by AirGate
                  with the Commission on August 9, 1999 (SEC File Nos.
                  333-79189-02 and 333-79189-01))

         10.3     Addendum IV to Sprint PCS Management Agreement dated August
                  26, 1999 by and among SprintCom, Inc., Sprint Communications
                  Company, L.P., Sprint Spectrum L.P. and AirGate PCS, Inc.
                  (Incorporated by reference to Exhibit 10.1.2 to the annual
                  report on Form 10-K filed by AirGate with the Commission on
                  December 18, 2000 for the year ended September 30, 2000 (SEC
                  File No. 000-27455))

         10.4     Addendum V to Sprint PCS Management Agreement dated May 12,
                  2000 by and among SprintCom, Inc., Sprint Communications
                  Company, L.P. and AirGate PCS, Inc. (Incorporated by reference
                  to Exhibit 10.1.3 to the annual report on Form 10-K filed by
                  AirGate with the Commission on December 18, 2000 for the year
                  ended September 30, 2000 (SEC File No. 000-27455))

         10.5     Addendum VI to Sprint PCS Management Agreement dated December
                  8, 2000 by and among SprintCom, Inc., Sprint Communications
                  Company, L.P., Sprint Spectrum L.P. and AirGate PCS, Inc.
                  (Incorporated by reference to Exhibit 10.1.4 to the quarterly
                  report on Form 10-Q filed by AirGate with the Commission on
                  February 14, 2001 for the quarter ended December 31, 2000 (SEC
                  File No. 000-27455))

         10.6     Schedule of Definitions to Sprint PCS Management Agreement by
                  and among SprintCom, Inc. and AirGate Wireless, L.L.C.
                  (Incorporated by reference to Exhibit 10.33 to the quarterly
                  report on Form 10-Q filed by AirGate with the Commission on
                  May 15, 2002 for the quarter ended March 31, 2002 (SEC File
                  No. 000-27455))


                                       63

<PAGE>

      Exhibit
       Number     Number description
       ------     ------------------

         10.7     Sprint PCS Services Agreement between Sprint Spectrum L.P. and
                  AirGate Wireless, L.L.C. (Incorporated by reference to Exhibit
                  10.2 to the Registration Statement on Form S-1/A filed by
                  AirGate with the Commission on June 15, 1999 (SEC File Nos.
                  333-79189-02 and 333-79189-01))

         10.8     Sprint Spectrum Trademark and Service Mark License Agreement
                  (Incorporated by reference to Exhibit 10.3 to the Registration
                  Statement on Form S-1/A filed by AirGate with the Commission
                  on June 15, 1999 (SEC File Nos. 333-79189-02 and
                  333-79189-01))

         10.9     Sprint Trademark and Service Mark License Agreement
                  (Incorporated by reference to Exhibit 10.4 to the Registration
                  Statement on Form S-1/A filed by AirGate with the Commission
                  on June 15, 1999 (SEC File Nos. 333-79189-02 and
                  333-79189-01))

         10.10    Sales Agency Agreement made as of May 1, 2001 between Sprint
                  Communications Company L.P. and AirGate PCS, Inc.

         10.11    Consent and Agreement (Incorporated by reference to Exhibit
                  10.13 to the Registration Statement on Form S-1/A filed by
                  AirGate with the Commission on September 17, 1999 (SEC File
                  Nos. 333-79189-02 and 333-79189-01))

         10.12    Master Site Agreement dated August 6, 1998 between AirGate and
                  BellSouth Carolinas PCS, L.P. and BellSouth Personal
                  Communications, Inc. (Incorporated by reference to Exhibit
                  10.5 to the Registration Statement on Form S-1/A filed by
                  AirGate with the Commission on June 15, 1999 (SEC File Nos.
                  333-79189-02 and 333-79189-01))

         10.13    Notice to AirGate of an assignment of sublease dated September
                  20, 1999 between BellSouth Cellular Corp. and Crown Castle
                  South Inc., given pursuant to Section 16(b) of the Master Site
                  Agreement. (Incorporated by reference to Exhibit 10.5.1 to the
                  annual report on Form 10-K filed by AirGate with the
                  Commission on December 18, 2000 for the year ended September
                  30, 2000 (SEC File No. 000-27455))

         10.14    Master Tower Space Reservation and License Agreement dated
                  February 19, 1999 between AGW Leasing Company, Inc. and
                  American Tower, L.P. (Incorporated by reference to Exhibit
                  10.5.2 to the annual report on Form 10-K filed by AirGate with
                  the Commission on December 18, 2000 for the year ended
                  September 30, 2000 (SEC File No. 000-27455))

         10.15    Master Antenna Site Lease No. J50 dated July 20, 1999 between
                  Pinnacle Towers Inc. and AGW Leasing Company (Incorporated by
                  reference to Exhibit 10.5.3 to the annual report on Form 10-K
                  filed by AirGate with the Commission on December 18, 2000 for
                  the year ended September 30, 2000 (SEC File No. 000-27455))

         10.16    Commercial Real Estate Lease dated August 7, 1998 between
                  AirGate and Perry Company of Columbia, Inc. to lease a
                  warehouse facility (Incorporated by reference to Exhibit 10.7
                  to the Registration Statement on Form S-1/A filed by AirGate
                  with the Commission on July 12, 1999 (SEC File Nos.
                  333-79189-02 and 333-79189-01))

         10.17    Lease Agreement dated August 25, 1999 between Robert W. Bruce,
                  Camperdown Company, Inc. and AGW Leasing Company, Inc. to
                  lease office/warehouse space in Greenville, South Carolina
                  (Incorporated by reference to Exhibit 10.7.1 to the annual
                  report on Form 10-K filed by AirGate with the Commission on
                  December 18, 2000 for the year ended September 30, 2000 (SEC
                  File No. 000-27455))


                                       64

<PAGE>

      Exhibit
       Number     Number description
       ------     ------------------

         10.18    Form of Indemnification Agreement (Incorporated by reference
                  to Exhibit 10.8 to the Registration Statement on Form S-1/A
                  filed by AirGate with the Commission on June 15, 1999 (SEC
                  File Nos. 333-79189-02 and 333-79189-01))

         10.19    Credit Agreement with Lucent (including form of pledge
                  agreement and form of intercreditor agreement) (Incorporated
                  by reference to Exhibit 10.12 to the Registration Statement on
                  Form S-1/A filed by AirGate with the Commission on September
                  17, 1999 (SEC File Nos. 333-79189-02 and 333-79189-01))

         10.20    Form of Warrant for units offering (including form of warrant
                  in units offering and form of unit) (Incorporated by reference
                  to Exhibit 10.15 to the Registration Statement on Form S-1/A
                  filed by AirGate with the Commission on September 23, 1999
                  (SEC File Nos. 333-79189-02 and 333-79189-01))

         10.21    Employment Agreement dated April 9, 1999 by and between
                  AirGate PCS, Inc. and Thomas M. Dougherty (Incorporated by
                  reference to Exhibit 10.9 to the Registration Statement on
                  Form S-1/A filed by AirGate with the Commission on June 15,
                  1999 (SEC File Nos. 333-79189-02 and 333-79189-01))

         10.22    First Amendment to Employment Agreement dated December 20,
                  1999 between AirGate PCS, Inc. and Thomas M. Dougherty
                  (Incorporated by reference to Exhibit 10.16 to the quarterly
                  report on Form 10-Q filed by AirGate with the Commission on
                  May 15, 2000 for the quarter ended March 31, 2000 (SEC File
                  No.000-27455))

         10.23    Retention Bonus Agreement dated May 4, 2000 between AirGate
                  PCS, Inc. and Thomas M. Dougherty (Incorporated by reference
                  to Exhibit 10.17 to the quarterly report on Form 10-Q filed by
                  AirGate with the Commission on May 15, 2000 for the quarter
                  ended March 31, 2000 (SEC File No. 000-27455))

         10.24    Employment Agreement dated as of September 27, 1999 by and
                  between AirGate PCS, Inc. and David C. Roberts (Incorporated
                  by reference to Exhibit 10.22 to the annual report on Form
                  10-K filed by AirGate with the Commission on November 30, 2001
                  for the year ended September 30, 2001 (SEC File No.
                  000-27445))

         10.25    Employment Agreement dated as of August 30, 2000 by and
                  between AirGate PCS, Inc. and Barbara L. Blackford
                  (Incorporated by reference to Exhibit 10.23 to the annual
                  report on Form 10-K filed by AirGate with the Commission on
                  November 30, 2001 for the year ended September 30,r 2001 (SEC
                  File No. 000-27445))

         10.26    Separation Agreement and Release dated October 31, 2002, by
                  and between AirGate PCS, Inc. and Alan Catherall

         10.27    Offer Letter, effective October 24, 2002, by and between
                  AirGate PCS, Inc. and William H. Seippel

         10.28    AirGate PCS, Inc. 1999 Stock Option Plan (Incorporated by
                  reference to Exhibit 99.1 to the Registration Statement on
                  Form S-8 filed by AirGate with the Commission on April 10,
                  2000 (SEC File No. 333-34416))

         10.29    Form of AirGate PCS, Inc. Option Agreement (Incorporated by
                  reference to Exhibit 10.25 to the annual report on Form 10-K
                  filed by AirGate with the Commission on November 30, 2001 for
                  the year ended September 30, 2001 (SEC File No. 000-27455))

         10.30    AirGate PCS, Inc. 2001 Non-Executive Stock Option Plan
                  (Incorporated by reference to Exhibit 10.11.2 to the quarterly
                  report on Form 10-Q filed by AirGate with the Commission on
                  February 14, 2001 for the quarter ended December 31, 2000 (SEC
                  File No. 000-27455))


                                       65

<PAGE>

      Exhibit
       Number     Number description
       ------     ------------------

         10.31    AirGate PCS, Inc. 2001 Employee Stock Purchase Plan
                  (Incorporated by reference to Exhibit 10.11.3 to the quarterly
                  report on Form 10-Q filed by AirGate with the Commission on
                  February 14, 2001 for the quarter ended December 31, 2000 (SEC
                  File No. 000-27455))

         10.32    AirGate PCS, Inc. 2001 Non-Employee Director Compensation Plan
                  (Incorporated by reference to Exhibit 10.30 to the annual
                  report on Form 10-K filed by AirGate with the Commission on
                  November 30, 2001 for the year ended September 30, 2001 (SEC
                  File No. 000-27455))

         10.33    2002 AirGate PCS, Inc. Long-Term Incentive Plan (Incorporated
                  by reference to Exhibit 99.1 to the Registration Statement on
                  Form S-8 filed by AirGate with the Commission on March 29,
                  2002 (SEC File No. 333-85250)

         10.34    Agreement and Plan of Merger, dated as of August 28, 2001, by
                  and between AirGate PCS, Inc. and iPCS, Inc. (Incorporated by
                  reference to Exhibit 10.1 to the current report on Form 8-K
                  filed by AirGate with the Commission on August 31, 2001 (SEC
                  File No. 000-27455))

         10.35    Form of Registration Rights Agreement by and among AirGate
                  PCS, Inc., Blackstone/iPCS, L.L.C., Blackstone iPCS Capital
                  Partners L.P., Blackstone Communications Partners I L.P.
                  TCW/Crescent Mezzanine Partners II, L.P., TCW/Crescent
                  Mezzanine Trust II, TCW Leveraged Income Trust, L.P., TCW
                  Leveraged Income Trust II, L.P., TCW Leveraged Income Trust
                  IV, TCW Shared Opportunity Fund II, Shared Opportunity Fund
                  IIB, L.L.C., TCW Shared Opportunity Fund III, L.P., Geneseo
                  Communications, Inc., Cambridge Telcom, Inc., Cass
                  Communications, Inc., Technology Group, LLC, Montrose Mutual
                  PCS, Inc., Gridley Enterprises, Inc., Timothy M. Yager and
                  Kelly M. Yager (Incorporated by reference to Exhibit 10.2 to
                  the current report on Form 8-K filed by AirGate with the
                  Commission on August 31, 2001 (SEC File No. 000-27455)

         10.36    Services Agreement dated as of January 1, 2002 by and among
                  AirGate PCS, Inc., AirGate Service Company, Inc., iPCS, Inc.
                  and iPCS Wireless, Inc. (Incorporated by reference to Exhibit
                  10.34 to the quarterly report on Form 10-Q filed by AirGate
                  with the Commission on May 15, 2002 for the quarter ended
                  March 31, 2002 (SEC File No. 000-27455)).

         10.37    Technology License Agreement dated as of January 1, 2002 by
                  and among AirGate PCS, Inc., AGW Leasing Company, Inc.,
                  AirGate Service Company, Inc., AirGate Network Services, Inc.,
                  iPCS, Inc., iPCS Wireless, Inc. and iPCS Equipment, Inc.
                  (Incorporated by reference to Exhibit 10.35 to the quarterly
                  report on Form 10-Q filed by AirGate with the Commission on
                  May 15, 2002 for the quarter ended March 31, 2002 (SEC File
                  No. 000-27455)).

         21       Subsidiaries of AirGate PCS, Inc.

         23       Consent of KPMG LLP

         24       Power of Attorney

         99.1     Certification of Thomas M. Dougherty pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ss. 1350.

         99.2     Certification of William H. Seippel pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002, 18 U.S.C. ss. 1350.


                                       66

<PAGE>

iPCS Material Contracts

     Exhibit
      Number      Number description
      ------      ------------------

         2.1      Asset Purchase Agreement, dated as of January 10, 2001, by and
                  among Sprint Spectrum L.P. and its subsidiaries Sprint
                  Spectrum Equipment Company, L.P. and Sprint Spectrum Realty
                  Company, L.P., and iPCS Wireless, Inc. (Incorporated by
                  reference to Exhibit 2.1 to the current report on Form 8-K
                  filed by iPCS with the Commission on March 15, 2001)

         4.1      14% Senior Discount Notes due 2010 Indenture dated as of July
                  14,2000 by and among iPCS, Inc., as issuer, iPCS Equipment,
                  Inc. and iPCS Wireless, Inc., as guarantors, and CTC Illinois
                  Trust Company, as trustee (Incorporated by reference to
                  Exhibit 4.2 to the registration statement on Form S-4 filed by
                  iPCS with the Commission on October 10, 2000 (SEC File No.
                  333-47688))

         10.1*    Sprint PCS Management Agreement, as amended, dated as of
                  January 22, 1999 by and among Sprint Spectrum L.P., SprintCom,
                  Inc., WirelessCo, L.P. and Illinois PCS, LLC, as amended by
                  Addendum I, Addendum II, Amended and Restated Addendum III,
                  Addendum IV, and Addendum V thereto (Incorporated by reference
                  to exhibits to the registration statement on Form S-4/A filed
                  by iPCS with the Commission on January 8, 2001 (SEC File No.
                  333-47688))

         10.2*    Addendum VI to Sprint PCS Management Agreement dated February
                  28, 2001 by and among SprintCom, Inc., Sprint Communications
                  Company, L.P., Sprint Spectrum, L.P., WirelessCo, L.P. and
                  iPCS Wireless, Inc. (incorporated by reference to Exhibit
                  10.40 to the annual report on Form 10-K405 filed by iPCS with
                  the Commission on March 29, 2001)

         10.3     Addendum VII to Sprint PCS Management Agreement dated August
                  26, 2002 by and among SprintCom, Inc., Sprint Communications
                  Company, L.P., Sprint Spectrum L.P., WirelessCo, L.P. and iPCS
                  Wireless, Inc.

         10.4     Schedule of Definitions to Sprint PCS Management Agreement by
                  and among Sprint Spectrum, L.P., SprintCom, Inc., WirelessCo,
                  L.P. and Illinois PCS, LLC.

         10.5     Sprint PCS Services Agreement dated as of January 22, 1999 by
                  and between Sprint Spectrum L.P. and Illinois PCS, LLC
                  (Incorporated by reference to Exhibit 10.2 to the registration
                  statement on Form S-4/A filed by iPCS with the Commission on
                  January 8, 2001 (SEC File No. 333-47688))

         10.6     Sprint Trademark and Service Mark License Agreement dated as
                  of January 22, 1999 by and between Sprint Communications
                  Company, LP and Illinois PCS, LLC (Incorporated by reference
                  to Exhibit 10.3 to the registration statement on Form S-4/A
                  filed by iPCS with the Commission on January 8, 2001 (SEC File
                  No. 333-47688))

         10.7     Sprint Spectrum Trademark and Service Mark License Agreement
                  dated as of January 22, 1999 by and between Sprint Spectrum
                  L.P. and Illinois PCS, LLC (Incorporated by reference to
                  Exhibit 10.4 to the registration statement on Form S-4/A filed
                  by iPCS with the Commission on December 1, 2000 (SEC File No.
                  333-47688))

         10.8     Amended and Restated Consent and Agreement dated as of July
                  12, 2000 by and between Sprint Spectrum L.P., SprintCom, Inc.,
                  Sprint Communications Company, LP, WirelessCo, L.P., and
                  Toronto Dominion (Texas), Inc. and the lenders party thereto
                  (Incorporated by reference to Exhibit 10.5 to the registration
                  statement on Form S-4/A filed by iPCS with the Commission on
                  December 1, 2000 (SEC File No. 333-47688))

         10.9     Amended and Restated Credit Agreement dated as of July 12,
                  2000 by and among iPCS Wireless, Inc., as borrower, iPCS, Inc.
                  and iPCS Equipment, Inc. as guarantors, the lenders named
                  therein, Toronto Dominion (Texas), Inc., as administrative
                  agent, and GE Capital Corporation, as syndication agent, for a
                  $140.0 million credit facility (Incorporated by reference to
                  Exhibit 10.6 to the registration statement on Form S-4 filed
                  by iPCS with the Commission on October 10, 2000 (SEC File No.
                  333-47688))


                                       67

<PAGE>

     Exhibit
      Number      Number description
      ------      ------------------

         10.10    First Amendment to Amended and Restated Credit Agreement and
                  Consent dated as of February 23, 2001, by and among iPCS
                  Wireless, Inc., as borrower, iPCS, Inc. and iPCS Equipment,
                  Inc. as guarantors, and lenders named therein and Toronto
                  Dominion (Texas), Inc., as administrative agent (Incorporated
                  by reference to Exhibit 10.37 to the annual report on Form
                  10-K405 filed by iPCS with the Commission on March 29, 2001)

         10.11    Second Amendment to Amended and Restated Credit Agreement and
                  Consent dated as of September 28, 2001, by and among iPCS
                  Wireless, Inc., as borrower, iPCS, Inc. and iPCS Equipment,
                  Inc. as guarantors, and lenders named therein and Toronto
                  Dominion (Texas), Inc., as administrative agent (Incorporated
                  by reference to Exhibit 10.40 to the quarterly report on Form
                  10-Q filed by iPCS with the Commission on November 14, 2001)

         10.12    Third Amendment to Amended and Restated Credit Agreement dated
                  December 19, 2001, by and among iPCS Wireless, Inc., as
                  borrower, iPCS, Inc. and iPCS Equipment, Inc. as guarantors,
                  and lenders named therein and Toronto Dominion (Texas), Inc.,
                  as administrative agent

         10.13    Fourth Amendment to Amended and Restated Credit Agreement and
                  Consent dated February 14, 2002, by and among iPCS Wireless,
                  Inc., as borrower, iPCS, Inc. and iPCS Equipment, Inc. as
                  guarantors, and lenders named therein and Toronto Dominion
                  (Texas), Inc., as administrative agent (Incorporated by
                  reference to Exhibit 10.1 to the current report on Form 8-K
                  filed by iPCS with the Commission on February 22, 2002)

         10.14    Fifth Amendment to Amended and Restated Credit Agreement and
                  Waiver dated November 1, 2002, by and among iPCS Wireless,
                  Inc., as borrower, iPCS, Inc. and iPCS Equipment, Inc. as
                  guarantors, and lenders named therein and Toronto Dominion
                  (Texas), Inc., as administrative agent

         10.15    Purchase Agreement dated as of July 12, 2000 for $300,000,000
                  of 300,000 units consisting of 14% Senior Discount Notes Due
                  2010 and warrants to purchase 2,982,699 shares of Common Stock
                  (Incorporated by reference to Exhibit 10.18 to the
                  registration statement on Form S-4 by iPCS with the Commission
                  on October 10, 2000 (SEC File No. 333-47688))

         10.16    A/B Exchange Registration Rights Agreement dated as of July
                  12, 2000 by and among iPCS Equipment, Inc., iPCS Wireless,
                  Inc. and Donaldson Lufkin & Jenrette Securities Corporation
                  and TD Securities (USA) Inc. (Incorporated by reference to
                  Exhibit 10.24 to the registration statement on Form S-4 filed
                  by iPCS with the Commission on October 10, 2000 (SEC File No.
                  333-47688))

         10.17    Form of Global Notes (Incorporated by reference to Exhibit
                  10.25 to the registration statement on Form S-4 filed by iPCS
                  with the Commission on October 10, 2000 (SEC File No.
                  333-47688))

         10.18    Amended and Restated Employment Agreement effective as of
                  January 1, 2001 by and between iPCS Wireless, Inc., Timothy M.
                  Yager and iPCS, Inc. (Incorporated by reference to Exhibit
                  10.8 to the quarterly report on Form 10-Q filed by iPCS with
                  the Commission on May 15, 2001)

         10.19    Amended and Restated Employment Agreement effective as of July
                  1, 2000 by and between Illinois PCS, LLC, Patricia M. Greteman
                  and iPCS, Inc. (Incorporated by reference to Exhibit 10.19 to
                  the registration statement on Form S-4 filed by iPCS with the
                  Commission on October 10, 2000 (SEC File No. 333-47688))

         10.20    Lease dated as of June 1, 1999 by and between Gridley
                  Enterprises, Inc. and Illinois PCS, LLC (Incorporated by
                  reference to Exhibit 10.12 to the registration statement on
                  Form S-1 filed by iPCS with the Commission on July 19, 2000
                  (SEC File No. 333-32064))

         10.21    Lease dated August 17, 2000 between Investment Lease
                  Corporation and iPCS Wireless, Inc., as amended by the Lease
                  Amendment dated October 4, 2000 and the Lease Amendment dated
                  June 4, 2002.


                                       68

<PAGE>

     Exhibit
      Number      Number description
      ------      ------------------

         10.22    Lease dated May 5, 2000 between Barden Associates I, L.L.C.
                  and Illinois PCS LLC, as amended by the Addendum dated August
                  30, 2000 and the Lease Addendum dated April 8, 2001.

         10.23    Master Lease Agreement, dated as of August 31, 2000, by and
                  between iPCS Wireless, Inc. and Trinity Wireless Towers, Inc.
                  (Incorporated by reference to Exhibit 10.43 to the annual
                  report on Form 10-K405 filed by iPCS with the Commission on
                  March 29, 2001)

         10.24    Agreement Regarding Construction, Sale and Leaseback of Towers
                  dated as of May 28, 1999 between Illinois PCS, LLC and
                  American Tower Corporation (Incorporated by reference to
                  Exhibit 10.11 to the registration statement on Form S-4 filed
                  by iPCS with the Commission on October 10, 2000 (SEC File No.
                  333-47688))

         10.25    First Amendment to Agreement Regarding Construction, Sale and
                  Leaseback of Towers dated as of November 2000 by and between
                  America Tower Corporation and iPCS Wireless, Inc.
                  (Incorporated by reference to Exhibit 10.44 to the annual
                  report on Form 10-K405 filed by iPCS with the Commission on
                  March 29, 2001)

         10.26*   CDMA 1900 SprintCom Additional Affiliate Supply Agreement
                  dated as of May 24, 1999 between Illinois PCS, LLC and Nortel
                  Networks, Inc. (Incorporated by reference to Exhibit 10.20 to
                  the registration statement on Form S-4/A filed by iPCS with
                  the Commission on January 8, 2001 (SEC File No. 333-47688))

         10.27*   Amendment No. 1 to 1900 CDMA Additional Affiliate Supply
                  Agreement dated as of July 11, 2000 between Illinois PCS, LLC
                  and Nortel Networks, Inc. (Incorporated by reference to
                  Exhibit 10.21 to the registration statement on Form S-4/A
                  filed by iPCS with the Commission on January 8, 2001 (SEC File
                  No. 333-47688))

         10.28*   Amendment No. 2 to 1900 CDMA Additional Affiliate Supply
                  Agreement by and among iPCS Wireless, Inc. and iPCS Equipment,
                  Inc. and Nortel Networks Inc. (Incorporated by reference to
                  Exhibit 10.38 to the annual report on Form 10-K405 filed by
                  iPCS with the Commission on March 29, 2001)

         10.29    Asset Purchase Agreement dated as of July 12, 2000 by and
                  among Sprint Spectrum L.P., Sprint Spectrum Equipment Company,
                  LP, Sprint Spectrum Realty Company, LP and iPCS Wireless, Inc.
                  (Incorporated by reference to Exhibit 10.30 to the
                  registration statement on Form S-4 filed by iPCS with the
                  Commission on October 10, 2000 (SEC File No. 333-47688))

         10.30    Interim Network Operating Agreement dated as of July 12, 2000
                  by and between Sprint Spectrum L.P. and iPCS Wireless, Inc.
                  (Incorporated by reference to Exhibit 10.32 to the
                  registration statement on Form S-4 filed by iPCS with the
                  Commission on October 10, 2000 (SEC File No. 333-47688))

         10.31    Additional Affiliate Agreement dated as of July 12, 2000 by
                  and between iPCS Wireless, Inc. and Lucent Technologies Inc.
                  (Incorporated by reference to Exhibit 10.36 to the
                  registration statement on Form S-4/A filed by iPCS with the
                  Commission on December 1, 2000 (SEC File No. 333-47688))

         10.32    Amended and Restated Interim Network Operating Agreement,
                  dated as of March 1, 2001 by and between Sprint Spectrum LP
                  and iPCS Wireless, Inc. (Incorporated by reference to Exhibit
                  10.39 to the annual report on Form 10-K405 filed by iPCS with
                  the Commission on March 29, 2001)

----------
   * Confidential treatment has been requested on portions of these documents



                                       69

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on January 15,
2003.

                                          AIRGATE PCS, INC.



                                          By:  /S/ WILLIAM H. Sieppel
                                              ----------------------------------
                                                      William H. Sieppel
                                                    Chief Financial Officer
                                                   (Principal Financial and
                                                      Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
                       Name                                             Title                                     Date
                       ----                                             -----                                     ----
<S>                                                   <C>                                             <C>
             /S/  THOMAS M. DOUGHERTY                 Chief Executive Officer and Director            January 15, 2003
---------------------------------------------------      (Principal Executive Officer)
               Thomas M. Dougherty

            /S/    WILLIAM H. SIEPPEL                 Chief Financial Officer (Principal              January 15, 2003
---------------------------------------------------      Financial and Accounting Officer)
                William H. Sieppel

                      /S/ *                           Chairman of the Board of Directors              January 15, 2003
---------------------------------------------------
                 Barry Schiffman

                      /S/ *                           Director                                        January 15, 2003
---------------------------------------------------
                Robert A. Ferchat

                                                      Vice President, General Counsel and             January 15, 2003
By:          /S/   BARBARA L. BLACKFORD                Corporate Secretary
---------------------------------------------------
                    Barbara L. Blackford
                      Attorney-in-fact
</TABLE>

*  Barbara L. Blackford, by signing her name hereto, does sign this document on
   behalf of the above noted individuals pursuant to powers of attorney duly
   executed by such individuals, which have been filed as an exhibit to this
   Report.


                                       70

<PAGE>

                                 CERTIFICATIONS

I, Thomas M. Dougherty, certify that:

1. I have reviewed this annual report on Form 10-K of AirGate PCS, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  January 15, 2003

                           /s/ Thomas M. Dougherty
                           -------------------------
                           Thomas M. Dougherty
                           Chief Executive Officer


                                       71

<PAGE>

I, William H. Sieppel, certify that:

1. I have reviewed this annual report on Form 10-K of AirGate PCS, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and


6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  January 15, 2003

                           s/ William H. Sieppel
                           ------------------------
                           William H. Sieppel
                           Chief Financial Officer


                                       72

<PAGE>

Independent Auditors' Report

The Board of Directors
AirGate PCS, Inc.:

    We have audited the accompanying consolidated balance sheets of AirGate PCS,
Inc. and subsidiaries as of September 30, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for each of the years in the three-year period ended September 30, 2002.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of AirGate PCS,
Inc. and subsidiaries as of September 30, 2002 and 2001, and the results of
their operations and their cash flows for each of the years in the three-year
period ended September 30, 2002, in conformity with accounting principles
generally accepted in the United States of America.

     As discussed in notes 1 and 6 to the consolidated financial statements, the
Company's wholly-owned, unrestricted subsidiary, iPCS, Inc., is in default under
provisions of its credit agreements, and substantially all of its debt is
classified as a current liability. iPCS, Inc. has been unable to restructure its
debt and secure additional financing necessary to fund its operations and,
accordingly, iPCS, Inc. intends to file for reorganization and protection from
its creditors under Chapter 11 of the United States Bankruptcy Code in early
2003 either as a part of a consensual restructuring or in an effort to effect a
court administered reorganization. iPCS, Inc. represents approximately 32% of
total consolidated revenues for the year ended September 30, 2002 and 50% of the
total consolidated assets at September 30, 2002. AirGate PCS, Inc. and its
restricted subsidiaries are generally precluded by its credit agreements from
providing financial support to iPCS, Inc. Although the ultimate impact of the
planned iPCS, Inc. bankruptcy filing is not presently determinable, management
believes that the bankruptcy proceedings will not have a significant adverse
effect on the liquidity of AirGate PCS, Inc. and its restricted subsidiaries
through fiscal 2003.


/S/ KPMG LLP


Atlanta, Georgia
January 10, 2003


                                      F-1

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
           (Dollars in thousands, except share and per share amounts)


<TABLE>
<CAPTION>
                                                                                                     September 30,  September 30,
                                                                                                         2002            2001
                                                                                                     ------------   -------------
<S>                                                                                                      <C>             <C>
Assets:
Current assets:
     Cash and cash equivalents ....................................................................  $     32,475   $      14,290
     Accounts receivable, net of allowance for doubtful accounts of $11,256 and $2,759,
         respectively .............................................................................        38,127          23,798
     Receivable from Sprint (note 4) ..............................................................        44,953          10,200
     Inventories ..................................................................................         6,733           4,639
     Prepaid expenses .............................................................................         7,159           3,428
     Other current assets .........................................................................           326              91
                                                                                                     ------------   -------------
         Total current assets .....................................................................       129,773          56,446
Property and equipment, net of accumulated depreciation and amortization of $112,913 and
    $43,621, respectively (note 5) ................................................................       399,155         209,326
Financing costs ...................................................................................         8,118           9,088
Direct subscriber activation costs ................................................................         8,409           3,693
Intangible assets, net of accumulated amortization of $39,378 and $46, respectively (note 10) .....        28,327             113
Other assets ......................................................................................           512           2,344
                                                                                                     ------------   -------------
                                                                                                     $    574,294   $     281,010
                                                                                                     ============   =============

Liabilities and Stockholders' Equity (Deficit):
Current liabilities:
     Accounts payable .............................................................................  $     18,152   $      10,210
     Accrued expenses .............................................................................        20,950          13,840
     Payable to Sprint (note 4) ...................................................................        88,360          32,564
     Deferred revenue .............................................................................        11,775           5,384
     Current maturities of long-term debt and capital lease obligations (note 6) ..................       354,936              --
                                                                                                     ------------   -------------
         Total current liabilities ................................................................       494,173          61,998
Deferred subscriber activation fee revenue ........................................................        14,973           5,101
Other long-term liabilities .......................................................................         3,267             309
Long-term debt and capital lease obligations, excluding current maturities (note 6) ...............       354,828         266,326
                                                                                                     ------------   -------------
         Total liabilities ........................................................................       867,241         333,734
                                                                                                     ------------   -------------
           Commitments and contingencies (notes 1, 6, and 12) .....................................            --              --

Stockholders' equity (deficit) (notes 6 and 8):
     Preferred stock, par value, $.01 per share;
         5,000,000 shares authorized; no shares issued and outstanding ............................            --              --
     Common stock, par value, $.01 per share; 150,000,000 shares authorized; 25,806,520 and
         13,364,980 shares issued and outstanding at September 30, 2002 and 2001, respectively ....           258             134
     Additional paid-in-capital ...................................................................       924,008         168,255
     Accumulated deficit ..........................................................................    (1,216,184)       (219,567)
     Unearned stock compensation ..................................................................        (1,029)         (1,546)
                                                                                                     ------------   -------------
         Total stockholders' equity (deficit) .....................................................      (292,947)        (52,724)
                                                                                                     ------------   -------------
                                                                                                       $  574,294      $  281,010
                                                                                                     ============   =============
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                      F-2

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
           (Dollars in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                             Years Ended September 30,
                                                                                --------------------------------------------------
                                                                                      2002             2001              2000
                                                                                ---------------  ---------------   ---------------
<S>                                                                             <C>              <C>               <C>
Revenues (note 4):
      Service revenue ........................................................  $      327,365   $      105,976    $        9,746
      Roaming revenue ........................................................         111,162           55,329            12,338
      Equipment revenue ......................................................          18,030           10,782             2,981
                                                                                ---------------  ---------------   ---------------
                    Total revenues ...........................................         456,557          172,087            25,065
                                                                                ---------------  ---------------   ---------------
Operating expenses (note 4):
       Cost of service and roaming (exclusive of depreciation and
          amortization, as shown separately below) ...........................        (311,135)        (116,732)          (27,770)
       Cost of equipment .....................................................         (43,592)         (20,218)           (5,685)
       Selling and marketing .................................................        (116,521)         (71,617)          (28,357)
       General and administrative ............................................         (25,339)         (15,742)          (14,078)
       Non-cash stock compensation (In 2002, $512 related to general and
          administrative, $168 related to cost of service and roaming, and $89
          related to selling and marketing. In 2001, $1,399 related to general
          and administrative, $177 related to cost of service and roaming, and
          $89 related to selling and marketing. In 2000, $1,260 related to
          general and administrative, $223 related to cost of service and
          roaming, and $182 related to selling and marketing.) ...............            (769)          (1,665)           (1,665)
       Depreciation and amortization of property and equipment (note 5) ......         (70,197)         (30,621)          (12,034)
       Amortization of intangible assets (note 10) ...........................         (39,332)             (46)              ---
       Loss on disposal of property and equipment ............................          (1,074)             ---               ---
       Impairment of goodwill (note 2) .......................................        (460,920)             ---               ---
       Impairment of property and equipment (note 2) .........................         (44,450)             ---               ---
       Impairment of intangible assets (note 2) ..............................        (312,043)             ---               ---
                                                                                ---------------  ---------------   ---------------
                    Total operating expenses .................................      (1,425,372)        (256,641)          (89,589)
                                                                                ---------------  ---------------   ---------------
                    Operating loss ...........................................        (968,815)         (84,554)          (64,524)
Interest income ..............................................................             590            2,463             9,321
Interest expense .............................................................         (57,153)         (28,899)          (26,120)
                                                                                ---------------  ---------------   ---------------
                    Loss before income tax benefit ...........................      (1,025,378)        (110,990)          (81,323)
                    Income tax benefit .......................................          28,761              ---               ---
                                                                                ---------------  ---------------   ---------------
                    Net loss .................................................  $     (996,617)  $     (110,990)   $      (81,323)
                                                                                ===============  ===============   ===============
Basic and diluted net loss per share of common stock .........................  $       (41.96)  $        (8.48)   $        (6.60)
                                                                                ===============  ===============   ===============
Basic and diluted weighted-average outstanding common shares .................      23,751,507       13,089,285        12,329,149
                                                                                ===============  ===============   ===============
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                      F-3

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  (Dollars in thousands, except share amounts)

                 Years ended September 30, 2002, 2001, and 2000

<TABLE>
<CAPTION>
                                                                                                                           Total
                                                             Common Stock     Additional                  Unearned     stockholders
                                                          ------------------   paid-in    Accumulated      stock          equity
                                                            Shares    Amount   capital      deficit     compensation     (deficit)
                                                          ---------- -------  ----------  ------------  ------------   ------------
<S>                                                       <C>         <C>      <C>        <C>            <C>            <C>
Balance at September 30, 1999 ........................... 11,957,201  $ 120    $157,880   $  (27,254)    $  (2,900      $  127,846
  Conversion of notes payable to stockholders to
    common stock including beneficial conversion feature
    (note 8) ............................................     12,533    --          213          --            --              213
  Exercise of common stock purchase warrants (note 8) ...    762,444      8          (3)         --            --                5
  Unearned compensation related to grant of compensatory
    stock options (note 8) ..............................        --     --        2,231          --         (2,231)            --
  Issuance of stock purchase warrants in connection with
    senior credit facility (note 8) .....................        --     --          282          --            --              282
  Exercise of stock options (note 8) ....................     84,605    --         1,185         --            --            1,185
  Forfeiture of compensatory stock options (note 8) .....        --     --          (213)        --            213             --
  Stock option compensation (note 8) ....................        --                 --           --          1,665           1,665
  Net loss ..............................................        --                 --       (81,323)          --          (81,323)
                                                          ----------  -----    --------   ----------     ---------      ----------
Balance at September 30, 2000 ........................... 12,816,783    128     161,575     (108,577)       (3,253)         49,873
                                                          ----------  -----    --------   ----------     ---------      ----------
  Exercise of common stock purchase warrants (note 8) ...     80,641      1        --            --            --                1
  Exercise of stock options (note 8) ....................    467,556      5       6,722          --            --            6,727
  Forfeiture of compensatory stock options (note 8) .....        --     --          (81)         --             81             --
  Stock compensation expense (note 8) ...................        --     --           39          --          1,626)          1,665
  Net loss ..............................................        --     --          --      (110,990)          --         (110,990)
                                                          ----------  -----    --------   ----------     ---------      ----------
Balance at September 30, 2001 ........................... 13,364,980    134     168,255     (219,567)       (1,546)        (52,724)
                                                          ----------  -----    --------   ----------     ---------      ----------
  Issuance of common stock in merger with iPCS, Inc.
    (note 11) ........................................... 12,362,571    124     706,521          --            --          706,645
  Stock options and warrants assumed in merger with
    iPCS, Inc. (notes 8 and 11) .........................        --     --       47,727          --            --           47,727
  Exercise of stock options (note 8) ....................     33,558    --          685          --            --              685
  Issuance of restricted common stock (note 8) ..........     12,067    --          252          --           (252)            --
  Exercise of common stock purchase warrants (note 8) ...     15,001    --          --           --            --              --
  Issuance of common stock to employee stock purchase
     plan (note 8) ......................................     18,343    --          568          --            --              568
  Stock compensation expense (note 8) ...................        --     --          --           --            769              769
  Net loss ..............................................        --     --          --      (996,617)          --         (996,617)
                                                          ----------  -----    --------   ----------     ---------      ----------
Balance at September 30, 2002 ........................... 25,806,520  $ 258    $924,008  $(1,216,184)    $  (1,029)     $ (292,947)
                                                          ==========  =====    ========  ===========     =========      ==========
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                      F-4

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                             Years Ended September 30
                                                                                    --------------------------------------
                                                                                        2002          2001         2000
                                                                                    -----------    ----------   ----------
<S>                                                                                 <C>            <C>          <C>
Cash flows from operating activities:
     Net loss ....................................................................  $  (996,617)   $ (110,990)  $  (81,323)
     Adjustments to reconcile net loss to net cash used in operating activities:
      Impairment of goodwill .....................................................      460,920            --           --
      Impairment of property and equipment .......................................       44,450            --           --
      Impairment of intangible assets ............................................      312,043            --           --
      Loss on disposal of property and equipment .................................        1,074            --           --
      Depreciation and amortization of property and equipment ....................       70,197        30,621       12,034
      Amortization of intangible assets ..........................................       39,332            46           --
      Amortization of financing costs into interest expense ......................        1,211         1,210        1,192
      Provision for doubtful accounts ............................................       26,933         8,125          563
      Interest expense associated with accretion of discounts ....................       50,670        23,799       23,043
      Non-cash stock compensation ................................................          769         1,665        1,665
      Deferred income tax benefit ................................................      (28,761)           --           --
        Changes in assets and liabilities:
          Accounts receivable ....................................................      (29,669)      (26,995)      (5,491)
          Receivable from Sprint .................................................      (36,008)       (6,432)      (3,768)
          Inventories ............................................................        2,985        (1,737)      (2,902)
          Prepaid expenses, other current and non-current assets .................       (2,708)       (4,470)      (2,473)
          Accounts payable, accrued expenses and other long term liabilities .....      (15,777)        8,741        8,060
          Payable to Sprint ......................................................       45,397        27,272        5,292
          Deferred revenue .......................................................        8,317         8,295        2,499
                                                                                    -----------    ----------   ----------
                     Net cash used in operating activities .......................      (45,242)      (40,850)     (41,609)
                                                                                    -----------    ----------   ----------
Cash flows from investing activities:
     Purchases of property and equipment .........................................      (97,060)      (71,270)    (152,397)
     Cash acquired from iPCS, Inc. ...............................................       24,402            --           --
     Acquisition of iPCS, Inc. ...................................................       (6,058)           --           --
     Purchase of business assets .................................................           --          (502)          --
                                                                                    -----------    ----------   ----------
                     Net cash used in investing activities .......................      (78,716)      (71,772)    (152,397)
                                                                                    -----------    ----------   ----------
Cash flows from financing activities:
     Proceeds from borrowings under senior credit facilities .....................      141,200        61,800           --
     Payments made under capital lease obligations ...............................           (4)           --           --
     Proceeds from stock issued to employee stock purchase plan ..................          568            --           --
     Payments of note payable to Sprint PCS ......................................           --            --       (7,700)
     Payments for iPCS credit facility amendment .................................         (306)           --           --
     Proceeds from exercise of common stock purchase warrants ....................           --             1            5
     Proceeds from exercise of employee stock options ............................          685         6,727        1,185
                                                                                    -----------    ----------   ----------
                     Net cash provided by (used in) financing activities .........      142,143        68,528       (6,510)
                                                                                    -----------    ----------   ----------
                     Net increase (decrease) in cash and cash equivalents ........       18,185       (44,094)    (200,516)
Cash and cash equivalents at beginning of period .................................       14,290        58,384      258,900
                                                                                    -----------    ----------   ----------
Cash and cash equivalents at end of period .......................................  $    32,475    $   14,290   $   58,384
                                                                                    ===========    ==========   ==========
Supplemental disclosure of cash flow information - cash paid for interest ........  $    10,176    $    3,846   $    2,609
                                                                                    ===========    ==========   ==========
Supplemental disclosure of non-cash investing and financing activities:
     Capitalized interest ........................................................  $     7,118    $    2,917   $    5,938
     Grant of common stock purchase warrants related to senior credit facility ...           --            --          282
     Convertible notes payable to stockholders and accrued interest converted to
        equity ...................................................................           --            --          102
     Beneficial conversion feature of convertible notes payable to stockholders ..           --            --          111
     Grant of restricted common stock and compensatory stock options .............          252            --        2,231
     Forfeiture of compensatory stock options ....................................           --           (81)        (213)
     Modification of stock options ...............................................           --            39           --
     Purchases of property and equipment under capital leases ....................          191            --           --
     iPCS acquisition (note 11):
       Fair value of stock issued ................................................  $   706,645    $       --   $       --
       Fair value of common stock options and warrants assumed ...................       47,727            --           --
       Liabilities assumed .......................................................      394,165            --           --
       Fair value of tangible assets acquired ....................................      313,843            --           --
</TABLE>


        See accompanying notes to the consolidated financial statements.

                                      F-5

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(1)  Business, Basis of Presentation and Liquidity

(a)  Business and Basis of Presentation

AirGate PCS, Inc. and its restricted and unrestricted subsidiaries (the
"Company") were created for the purpose of providing wireless Personal
Communication Services ("PCS"). AirGate PCS, Inc. and its restricted
subsidiaries ("AirGate") collectively are a network partner of Sprint with the
exclusive right to market and provide Sprint PCS products and services in a
defined network territory. AirGate is licensed to use the Sprint brand names in
its original 21 markets located in the southeastern United States.

On November 30, 2001, AirGate acquired iPCS, Inc. (together with its
subsidiaries, "iPCS"), a network partner of Sprint with 37 markets in the
midwestern United States. The accompanying consolidated financial statements
include the accounts of AirGate PCS, Inc. and its wholly-owned restricted
subsidiaries, AGW Leasing Company, Inc., AirGate Service Company, Inc., and
AirGate Network Services, LLC for all periods presented. The accounts of iPCS
are included as of September 30, 2002, and for the period from November 30, 2001
through September 30, 2002. These consolidated financial statements and related
footnotes have been prepared in accordance with accounting principles generally
accepted in the United States of America. All significant intercompany accounts
and transactions have been eliminated in consolidation.

The PCS market is characterized by significant risks as a result of rapid
changes in technology, intense competition and the costs associated with the
build-out of a PCS network. The Company's operations are dependent upon Sprint's
ability to perform its obligations under the agreements between the Company and
Sprint (see note 4) under which the Company has agreed to construct and manage
its Sprint PCS networks (the "Sprint Agreements"). Additionally, the Company's
ability to attract and maintain a subscriber base of sufficient size and credit
quality is critical to achieving sufficient positive cash flow to meet its
financial covenants under its credit agreements. Changes in technology,
increased competition, economic conditions or inability to achieve sufficient
positive cash flow to meet its financial covenants under its credit agreements,
among other factors, could have an adverse effect on the Company's financial
position, results of operations, and liquidity.

(b)  Liquidity

The Company has generated significant net losses since inception. For the year
ended September 30, 2002, the Company's net loss amounted to $996.6 million,
including goodwill and asset impairment charges of $817.4 million. As of
September 30, 2002, the Company had a working capital deficit of $366.4 million.
As of December 31, 2002, AirGate has available credit amounting to approximately
$12.0 million under its senior credit facility.

As described in Note 6, iPCS is not in compliance with certain provisions of its
debt agreements and has no remaining credit availability under its senior credit
facility. As a result of these covenant defaults, substantially all of iPCS'
debt is classified as a current liability.

iPCS also has incurred significant net losses during the year ended September
30, 2002, which are included in the accompanying consolidated financial
statements (see note 16 for condensed consolidating financial information of the
Company's restricted and unrestricted subsidiaries, which does not reflect
push-down accounting with respect to the iPCS financial information). Because
current conditions in the capital markets make additional financing unlikely,
iPCS has undertaken efforts to restructure its relationship with its secured
lenders, its public noteholders and Sprint, and we have begun restructuring
discussions with informal committees of these creditors. While the lenders and
noteholders have expressed willingness to work with iPCS, Sprint has informed us
it is unwilling to restructure its agreements with iPCS. iPCS, Inc. has been
unable to restructure its debt and secure additional financing necessary to fund
its operations and, accordingly iPCS, Inc. intends to file for reorganization
and protection from its creditors under Chapter 11 of the United States
Bankruptcy Code in early 2003 either as part of a consensual restructuring or in
an effort to effect a court administered reorganization.

Because iPCS is an unrestricted subsidiary, AirGate is generally unable to
provide capital or other financial support to iPCS. Further, iPCS lenders,
noteholders and creditors do not have a lien on or encumbrance on assets of
AirGate. We believe AirGate operations will continue independent of the outcome
of the iPCS restructuring. However, it is likely that AirGate's ownership
interest in iPCS will have no value after the restructuring is complete.

The carrying value of iPCS' long-lived assets in these consolidated financial
statements (principally property and equipment, goodwill and intangible assets)
has been written down to reflect impairment charges as required by SFAS No. 144
and SFAS No. 142. See note 2 for a discussion of these impairment charges.

While the ultimate and long-term affect on AirGate of iPCS' proposed bankruptcy
proceedings cannot be determined, management believes that AirGate and its
restricted subsidiaries will continue to operate and that iPCS' bankruptcy
proceedings, and related outcomes, will not have a material adverse effect on
the liquidity of AirGate.

In addition to its capital needs to fund operating losses, the Company has
invested large amounts to build-out its networks and for other capital assets.
For the three years ended September 30, 2002, the Company invested $320.7
million to purchase property and equipment. While much of the Company's networks
are now complete, and capital expenditures are expected to decrease
significantly in the future, such expenditures will continue to be necessary.

                                      F-6

<PAGE>


                       AIRGATE PCS, INC. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FNANCIAL STATEMENTS--(Continued)

AirGate has initiated a number of action steps to lower its operating costs and
capital needs. The following are some of the more significant steps:

   o        a plan to improve the credit quality of new subscribers  and its
            subscriber base by restricting availability of programs for
            sub-prime subscribers;
   o        a plan to reduce subscriber churn;
   o        the elimination of certain personnel positions;
   o        a significant reduction in capital expenditures; and
   o        a reduction in spending for advertising and promotions.


In addition to these steps, AirGate is initiating or investigating a number of
other actions that could further reduce operating expenses and capital needs.
These include additional reductions in staff; the outsourcing of certain
functions now performed by AirGate; further deferrals or reductions in capital
spending and seeking ways to lower fees and charges from services now provided
by Sprint. AirGate management believes that existing cash, fiscal 2003 results
of operations and cash flows, and credit available under its senior credit
facility will provide sufficient resources to fund its activities through fiscal
2003.

The following reflects condensed balance sheet information and statement of
operations information of AirGate and its unrestricted subsidiary, iPCS, Inc. as
of and for the year ended September 30, 2002 representing consolidated
information excluding the historical equity basis loss of iPCS ($133,192) and
the related effects of purchase accounting ($764,903) including the income tax
benefit ($28,761).

              Condensed Balance Sheet Information:

              Cash and cash equivalents                        $   4,887
              Other current assets                                62,819
                                                               ---------
                       Total current assets                       67,706

              Property and equipment, net                        213,777
              Investment in iPCS                                 (97,816)
              Other noncurrent assets                              4,956
                                                               ---------
                                                               $ 188,623
                                                               =========

              Current liabilities                              $ 125,723
              Long-term debt                                     354,264
              Other long-term liabilities                          1,583
                                                               ---------
                    Total liabilities                            481,570

              Stockholders' deficit                             (292,947)
                                                               ---------
                                                               $ 188,623
                                                               =========
              Condensed Statement of Operations
              Information:

              Revenues                                         $ 313,544

              Costs of revenues                                 (231,763)
              Selling and marketing expenses                     (79,010)
              General and administrative expenses                (17,631)
              Depreciation and amortization                      (76,481)
              Other expense, net                                 (35,942)
                                                               ---------
                    Total expenses                              (440,827)
                                                               ---------

              Loss before equity in loss of iPCS and
                  effects of purchase accounting,
                  including the related income tax benefit      (127,283)
              Equity in loss of iPCS                            (133,192)
              Effects of purchase accounting                    (764,903)
              Income tax benefit                                  28,761
                                                               ---------
              Net loss                                         $(996,617)
                                                               =========

                                      F-7

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
         <S>                                                               <C>

       Depreciation and amortization ..............................        76,481
       Impairment of goodwill and property and equipment ..........       764,903
       Interest expense, net ......................................        33,821
       Other ......................................................         2,121
                                                                      -----------
             Total expenses .......................................     1,205,730
                                                                      -----------

       Net loss ...................................................   $ (892,186)
                                                                      ==========
</TABLE>



(2) Goodwill and Asset Impairments

On November 30 2001, the Company completed the acquisition of iPCS. Significant
amounts of goodwill and other intangible assets were recorded as part of this
acquisition (note 11). The original purchase price allocation of this
acquisition was made in the quarter ended December 31, 2001. In the quarter
ended March 31, 2002, the original purchase price allocation was adjusted, which
resulted in a reclassification of amounts between goodwill, deferred income tax
liabilities, the amount assigned to the right to provide service under the
Sprint Agreements and other assets and liabilities. The Company recorded a
goodwill impairment charge of $261.2 million during the quarter ended March 31,
2002, and $199.7 million during the quarter ended September 30, 2002. During the
quarter ended September 30, 2002, the Company recorded an impairment of property
and equipment totaling $44.5 million and intangible assets totaling $312.0
million. The purchase of iPCS and the accounting that resulted from this
acquisition are described below and in notes 10 and 11.

The wireless telecommunications industry has experienced significant declines in
market capitalization throughout most of 2002. These significant declines in
market capitalization resulted from concerns surrounding anticipated weakness in
future subscriber growth, increased subscriber churn, anticipated future lower
average revenue per unit (ARPU) and liquidity concerns. As a result of these
industry trends, the Company experienced significant declines in its market
capitalization subsequent to its acquisition of iPCS. Additionally, there have
been significant adverse changes to the business plan for iPCS. These changes
include lower new subscribers, lower ARPU, increased service and pass through
costs from Sprint and lower roaming margins from Sprint. Wireless industry
acquisitions subsequent to the Company's acquisition of iPCS have been valued
substantially lower on a price per population and price per subscriber basis. As
a result of these transactions and industry trends, the Company believed that
the fair value of iPCS and its assets had been reduced. Accordingly, the Company
engaged a nationally recognized valuation expert on two occasions during 2002 to
perform fair value assessments of iPCS and its assets. The Company recorded
goodwill impairments of approximately $261.2 million and $199.7 million during
the quarter ended March 31, 2002 and the quarter ended September 30, 2002,
respectively, as a result of these fair value assessments.

During the quarter ended September 30, 2002, the Company recorded an intangible
asset impairment of $312.0 million associated with iPCS' right to provide
service under the Sprint Agreements and the acquired subscriber base. The right
to provide service under iPCS' Sprint Agreements and the acquired subscriber
base were recorded by the Company as a result of the purchase price allocation
for the acquisition of iPCS . The values and lives assigned to these intangibles
were $323.3 million and 205 months and $52.4 million and 30 months,
respectively. As discussed above, these impairments arose from significant
adverse changes to the business plan for iPCS. As a result, the Company adjusted
the carrying value of the right to provide service under the Sprint Agreements
and the acquired subscriber base to their fair values at September 30, 2002. The
Company engaged a nationally recognized valuation expert to assist the Company
in determining the fair value of the right to provide services under the Sprint
Agreements.

During the quarter ended September 30, 2002, the Company recorded an asset
impairment of $44.5 million associated with property and equipment (principally
network assets) of iPCS. As discussed above, this impairment arose from
significant adverse changes to the business plan for iPCS as well as a generally
weak secondary market for telecommunications equipment. The Company engaged a
nationally recognized valuation expert to assist the Company in determining the
fair value of iPCS' property and equipment.

(3)     Summary of Significant Accounting Policies

(a)  Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement
exists, services have been rendered or products have been delivered, the price
to the buyer is fixed and determinable, and collectibility is reasonably
assured. The Company's


                                      F-8

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

revenue recognition polices are consistent with the guidance in Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements"
promulgated by the Securities and Exchange Commission.

The Company records equipment revenue from the sale of handsets and accessories
to subscribers in its retail stores and to local distributors in its territories
upon delivery. The Company does not record equipment revenue on handsets and
accessories purchased from national third-party retailers such as Radio Shack,
Best Buy and Circuit City, or directly from Sprint by subscribers in our
territories. The Company believes the equipment revenue and related cost of
equipment associated with the sale of wireless handsets and accessories is a
separate earnings process from the sale of wireless services to subscribers. For
industry competitive reasons, the Company sells wireless handsets at a loss.
Because such arrangements do not require a customer to subscribe to the
Company's wireless services and because the Company sells wireless handsets to
existing customers at a loss, the Company accounts for these transactions
separately from agreements to provide customers wireless service.

The Company's subscribers pay an activation fee to the Company when they
initiate service. The Company defers activation fee revenue over the average
life of its subscribers, which is estimated to be 30 months. The Company
recognizes service revenue from its subscribers as they use the service. The
Company provides a reduction of recorded revenue for billing adjustments, first
payment default customers, late payment fees, and early cancellation fees. The
Company also reduces recorded revenue for rebates and discounts given to
subscribers on wireless handset sales in accordance with Emerging Issues Task
Force ("EITF") Issue No. 01-9 "Accounting for Consideration Given by a Vendor to
a Subscriber (Including a Reseller of the Vendor's Products)." The Company
participates in the Sprint national and regional distribution programs in which
national retailers such as Radio Shack, Best Buy and Circuit City sell Sprint
PCS products and services. In order to facilitate the sale of Sprint PCS
products and services, national retailers purchase wireless handsets from Sprint
for resale and receive compensation from Sprint for Sprint PCS products and
services sold. For industry competitive reasons, Sprint subsidizes the price of
these handsets by selling the handsets at a price below cost. Under the
Company's Sprint Agreements, when a national retailer sells a handset purchased
from Sprint to a subscriber in the Company's territories, the Company is
obligated to reimburse Sprint for the handset subsidy. The Company does not
receive any revenues from the sale of handsets and accessories by national
retailers. The Company classifies these handset subsidy charges as a selling and
marketing expense for a new subscriber handset sale and classifies these
subsidies as a cost of service and roaming for a handset upgrade to an existing
subscriber. Handset subsidy charges included in selling and marketing for the
years ended September 30, 2002, 2001, and 2000 were $19.1 million, $12.8
million, and $3.7 million, respectively. Excluding sales commissions, handset
subsidy upgrade charges in cost of service and roaming for the year ended
September 30, 2002 were $4.8 million. The Company did not incur handset subsidy
upgrade charges for the years ended September 30, 2001 and 2000.

Sprint retains 8% of collected service revenues from subscribers based in the
Company's markets and from non-Sprint subscribers who roam onto the Company's
network. The amount of affiliation fees retained by Sprint is recorded as cost
of service and roaming. Revenues derived from the sale of handsets and
accessories by the Company and from certain roaming services (outbound roaming
and roaming revenues from Sprint PCS and its PCS network partner subscribers)
are not subject to the 8% affiliation fee from Sprint.

The Company defers direct subscriber activation costs when incurred and
amortizes these costs using the straight-line method over 30 months, which is
the estimated average life of a subscriber. Direct subscriber activation costs
also include credit check fees and loyalty welcome call fees charged to the
Company by Sprint and costs incurred by the Company to operate a subscriber
activation center.

For the years ended September 30, 2002, 2001 and 2000 the Company recognized
approximately $6.3, $3.4 and $0.1 million, respectively, of activation fee
revenue. For the years ended September 30, 2002, 2001 and 2000 the Company
recognized approximately $3.7, $2.8 and $0.1 million, respectively, of direct
subscriber activation costs. As of September 30, 2002, the Company has deferred
approximately $15.0 million of subscriber activation fee revenue and $8.4
million of direct subscriber activation costs to future periods.

(b)  Allowance for Doubtful Accounts

Estimates are used in determining the allowance for doubtful accounts and are
based on historical collection and write-off experience, current trends, credit
policies and accounts receivable by aging category. In determining these
estimates, the Company compares historical write-offs in relation to the
estimated period in which the subscriber was originally billed. The Company also
looks at the average length of time that elapses between the original billing
date and the date of write-off in determining the adequacy of the allowance for
doubtful accounts by aging category. From this information, the Company provides
specific amounts to the aging categories. The Company provides an allowance for
substantially all receivables over 90 days old.

                                      F-9


<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The allowance for doubtful accounts as of September 30, 2002 and September 30,
2001 was $11.3 million and $2.8 million, respectively. At September 30, 2002,
$6.8 million and $4.5 million was attributable to AirGate and iPCS,
respectively.

The Company also reviews current trends in the credit quality of its subscriber
base and periodically changes its credit policies. As of September 30, 2002, 35%
of the combined Company's, 36% of AirGate's and 35% of iPCS' subscriber base
consisted of sub-prime credit quality subscribers. From May 2001 to February
2002, Sprint required AirGate and iPCS to remove the deposit requirement for
most sub-prime credit quality subscribers under certain Sprint PCS programs. On
February 24, 2002, Sprint allowed the Company to re-institute the deposit
requirement across all new sub-prime credit quality subscribers. The Company
removed the deposit requirement in iPCS' territory from all but the lowest
sub-prime credit quality subscribers at certain times during the period between
June 2002 and November 2002. During November 2002, the Company re-instituted the
deposit requirement in iPCS' territory across all new sub-prime credit quality
subscribers. The deposit requirement is currently in effect for most of
AirGate's and iPCS' markets.

(c)  Reserve for First Payment Default Subscribers

The Company reserves a portion of its new subscribers and provides a reduction
in revenues from those subscribers that it anticipates will never pay a bill.
Using historical information of the percentage of subscribers whose service was
cancelled for non-payment without ever making a payment, the Company estimates
the number of subscribers activated in the current period that will never pay a
bill. For these subscribers, the Company provides a reduction of revenue and
removes them from subscriber additions and churn. At September 30, 2002 and
September 30, 2001, the Company had approximately 7,126 and 7,811 such
subscribers, respectively.

(d)  Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and money market
accounts with original maturities of three months or less.

(e)  Inventories

Inventories consist of wireless handsets and related accessories held for
resale. Inventories are carried at the lower of cost or market determined using
replacement costs.

(f)  Property and Equipment

Property and equipment are stated at original cost, less accumulated
depreciation and amortization. Depreciation and amortization are provided using
the straight-line method over the estimated useful lives of the assets.
Estimated useful lives used by the Company are as follows:

                                                            Estimated
                                                           Useful Life
                                                           -----------

     Network assets .....................................     7 years
     Computer equipment .................................     3 years
     Furniture, fixtures, and office equipment ..........     5 years
     Towers (included within network assets) ............    15 years

Assets held under capital lease obligations are amortized over their estimated
useful life or the lease term, whichever is shorter. Amortization of assets held
under capital lease obligations is included in depreciation and amortization of
property and equipment.

Construction in progress includes expenditures for the purchase of network
assets. The Company capitalizes interest on its construction in progress
activities. Interest capitalized for the years ended September 30, 2002, 2001
and 2000 totaled $7.1 million, $2.9 million and $5.9 million, respectively.

When network assets are placed in service, the Company transfers the related
assets from construction in progress to network assets and depreciates those
assets over their estimated useful life.

(g)  Financing Costs

Costs incurred in connection with both the AirGate and iPCS credit facilities
and AirGate notes were deferred and are amortized into interest expense over the
term of the respective financing using the straight-line method.

                                      F-10

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


(h)  Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred
income tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred income tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred income tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. A valuation allowance is provided for deferred income tax assets based
upon the Company's assessment of whether it is more likely than not that the
deferred income tax assets will be realized.

(i)  Basic and Diluted Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the
weighted-average number of common shares outstanding during the period. All
potentially dilutive securities have been excluded from the computation of
dilutive net loss per share for all periods presented because their effect would
have been antidilutive. The effect of potentially dilutive common stock
equivalents computed using the treasury stock method excluded from the dilutive
net loss per share computations because they were antidilutive are as follows:

                                            Years ended September 30,
                                            -------------------------
                                          2002          2001           2000
                                          ----          ----           ----
     Common stock options ............  222,671       510,620         777,758
     Stock purchase warrants .........   50,345        65,346         145,987
                                        -------       -------         -------
              Total ..................  273,016       575,966         923,745
                                        =======       =======         =======

(j)  Impairment of Long-Lived Assets and Goodwill

The Company accounts for long-lived assets and goodwill in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" and SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 144 requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. SFAS No. 142 requires annual tests for
impairment of goodwill and intangible assets that have indefinite useful lives
and interim tests when an event has occurred that more likely than not has
reduced the fair value of such assets.

Purchase price accounting requires extensive use of accounting estimates and
judgments to allocate the purchase price to the fair market value of the assets
acquired and liabilities assumed. In recording the purchase of iPCS, the Company
engaged a nationally recognized valuation expert to assist in determining the
fair value of these assets and liabilities. Included in the asset valuation for
this purchase was the valuation of three intangible assets: the iPCS subscriber
base, non-compete agreements for certain former iPCS employees, and the right to
be the exclusive provider of Sprint PCS products and services in the 37 markets
in which iPCS operates. For the subscriber base, the non-compete agreements, and
the right to provide Sprint PCS products and services in the iPCS territory,
finite useful lives of 30 months, six months and 205 months, respectively, have
been assigned. The Company evaluates its intangible assets for potential
impairment indicators whenever events or changes in circumstances indicate that
the carrying value may not be recoverable.

(k)  New Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 148 "Accounting for Stock-Based Compensation--Transition and Disclosure--an
amendment of FASB Statement No. 123." SFAS No. 148 provides alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation from the intrinsic value-based
method of accounting prescribed by Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." As allowed by SFAS No. 123,
the Company has elected to continue to apply the intrinsic value-based method of
accounting, and has adopted the disclosure requirements of SFAS No. 123. The
Company currently does not anticipate adopting the provisions of SFAS No. 148.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 provides new guidance on the
recognition of costs associated with exit or disposal activities. The standard
requires


                                      F-11

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of commitment to an exit or disposal
plan. SFAS No. 146 supercedes previous accounting guidance provided by the EITF
Issue No. 94-3 "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." EITF Issue No. 94-3 required recognition of costs at the date
of commitment to an exit or disposal plan. SFAS No. 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
Early application is permitted. The adoption of SFAS No. 146 by the Company on
October 1, 2002 is not expected to have a material impact on the Company's
financial position, results of operations, or cash flows as the Company has not
recorded any significant restructurings in past periods, but the adoption may
impact the timing of charges in future periods.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
Among other things, this statement rescinds FASB Statement No. 4, "Reporting
Gains and Losses from Extinguishment of Debt" which required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effect. As a result, the
criteria in APB Opinion No. 30, "Reporting the Results of Operations --
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now be used to
classify those gains and losses. The adoption of SFAS No. 145 by the Company on
October 1, 2002 is not expected to have a material impact on the Company's
financial position, results of operations, or cash flows.

In November 2001, the EITF of the FASB issued EITF 01-9 "Accounting for
Consideration Given by a Vendor to a Subscriber (Including a Reseller of the
Vendor's Products)." EITF 01-9 provides guidance on when a sales incentive or
other consideration given should be a reduction of revenue or an expense and the
timing of such recognition. The guidance provided in EITF 01-9 is effective for
financial statements for interim or annual periods beginning after December 15,
2001. The Company occasionally offers rebates to subscribers that purchase
wireless handsets in its retail stores. The Company's historical policy
regarding the recognition of these rebates in the consolidated statement of
operations is a reduction in the revenue recognized on the sale of the wireless
handset by an estimate of the amount of rebates expected to be redeemed. The
Company's policy is in accordance with the guidance set forth in EITF 01-9.
Therefore, the adoption of EITF 01-9 by the Company on January 1, 2002 did not
have a material impact on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 provides new guidance on the
recognition of impairment losses on long-lived assets with definite lives to be
held and used or to be disposed of and also issued the definition of what
constitutes a discontinued operation and how the results of a discontinued
operation are to be measured and presented. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. The Company elected early adoption of
SFAS No. 144 as of the beginning of its fiscal year on October 1, 2001. The
Company's adoption of SFAS No. 144 did not have a material impact on the
Company's financial position, results of operations, or cash flows. However, as
discussed in note 2, the application of the provisions of SFAS No. 144 resulted
in a $356.5 million impairment during the quarter ended September 30, 2002.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 requires the fair value of a liability for an asset
retirement obligation to be recognized in the period that it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The
adoption of SFAS No. 143 on October 1, 2002 is not expected to have a material
impact on the Company's financial position, results of operations or cash flows.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which provides for non-amortization of goodwill and intangible assets
that have indefinite useful lives, annual tests of impairments of those assets
and interim tests of impairment when an event occurs that more likely than not
has reduced the fair value of such assets. The statement also provides specific
guidance about how to determine and measure goodwill impairments, and requires
additional disclosure of information about goodwill and other intangible assets.
The provisions of this statement are required to be applied starting with fiscal
years beginning after December 15, 2001, and applied to all goodwill and other
intangible assets recognized in the financial statements at that date. Goodwill
and intangible assets acquired after June 30, 2001 will be subject to the
non-amortization provisions of the statement. Early application is permitted for
entities with fiscal years beginning after March 15, 2001, provided that the
first interim financial statements had not been issued previously. The Company
met the criteria for early application and adopted SFAS No. 142 on October 1,
2001. The Company's adoption of the provisions of SFAS No. 142 did not have a
material impact on the Company's financial position, results of operations or
cash flows. However, as discussed in note 2, the application of the provisions
of SFAS No. 142 resulted in an impairment charge of $460.9 million during the
fiscal year ended September 30, 2002.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations," which is
effective for all business combinations initiated after June 30, 2001. SFAS No.
141 requires companies to account for all business combinations using the
purchase method of accounting, recognize intangible assets if certain criteria
are met, as well as provide additional disclosures regarding

                                      F-12

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


business combinations and allocation of purchase price. The Company adopted SFAS
No. 141 as of July 1, 2001, prior to AirGate recording any significant business
acquisitions and such adoption did not have a material impact on the Company's
financial position, results of operations or cash flows.

(l)  Use of Estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent liabilities at the dates of the consolidated balance sheets and
revenues and expenses during the reporting periods to prepare these consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America. Actual results could differ from those
estimates.

(m)  Concentration of Risk

The Company's cell sites are located on towers which are leased from a limited
number of tower companies, with one company owning approximately 20% of the
Company's leased towers. Additionally, the Company derives substantial revenues
and expenses from Sprint and Sprint PCS (see note 4).

The Company maintains cash and cash equivalents in accounts with financial
institutions in excess of the amount insured by the Federal Deposit Insurance
Corporation. Management does not believe there is significant credit risk
associated with deposits in excess of federally insured amounts. Further, the
Company maintains accounts with nationally recognized investment managers. Such
deposits are not insured by the Federal Deposit Insurance Corporation.
Management does not believe there is significant credit risk associated with
these uninsured deposits.

A significant amount of the Company's financial transactions result from the
Company's relationship with Sprint. Additionally, Sprint holds approximately
four to eleven days of the Company's subscriber lockbox receipts prior to
remitting those receipts to the Company weekly. Refer to note 4 for information
on the Company's transactions with Sprint.

Concentrations of credit risk with respect to accounts receivables are limited
due to a large subscriber base. Initial credit evaluations of subscribers'
financial condition are performed and security deposits are generally obtained
for subscribers with a high credit risk profile. The Company maintains an
allowance for doubtful accounts for potential credit losses.

(n)  Comprehensive Income (Loss)

No statements of comprehensive income (loss) have been included in the
accompanying consolidated financial statements since the Company does not have
any elements of other comprehensive income (loss) to report.

(o)  Advertising Expenses

The Company expenses advertising costs when the advertisement occurs. Total
advertising expenses amounted to approximately $30.9 million in 2002, $13.0
million in 2001 and $7.5 million in 2000 and are included in selling and
marketing expenses in the accompanying consolidated statements of operations.

(p)  Segments

AirGate and its unrestricted subsidiary, iPCS, provide wireless PCS services as
network partners of Sprint. Both AirGate and iPCS offer similar products and
services through similar retail channels to a broad range of wireless customers
in their respective markets. Consequently, these entities have been aggregated
into a single operating segment in accordance with the provisions of SFAS No.
131 - "Disclosures about Segments of an Enterprise and Related Information."

(q)  Stock Compensation

The Company applies the intrinsic value-based method of accounting prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations including FASB Interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation, an interpretation of APB Opinion No.
25" issued in March 2000, to account for its fixed stock option grants. Under
this method, compensation expense is recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. SFAS
No. 123, "Accounting for Stock-Based Compensation," established accounting and
disclosure requirements using a fair value-based method of accounting for
stock-based employee compensation plans. As allowed by SFAS No. 123, the Company
has elected to continue to apply the intrinsic value-based method of accounting
described above, and has adopted the disclosure requirements of SFAS No. 123.

                                      F-13

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



(r)  Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the
current year presentation.

(4)    Sprint Agreements

Under the Sprint Agreements, Sprint provides the Company significant support
services such as billing, collections, long distance, customer care, network
operations support, inventory logistics support, use of the Sprint and Sprint
PCS brand names, national advertising, national distribution and product
development. Additionally, the Company derives substantial roaming revenue and
expenses when Sprint's and Sprint's network partners' PCS wireless subscribers
incur minutes of use in the Company's territories and when the Company's
subscribers incur minutes of use in Sprint and other Sprint network partners'
PCS territories. These transactions are recorded in roaming revenue, cost of
service and roaming, cost of equipment and selling and marketing expense
captions in the accompanying consolidated statements of operations. Cost of
service and roaming transactions include the 8% affiliation fee, long distance
charges, roaming expense and the costs of services such as billing, collections,
and customer service and other pass-through expenses. Cost of equipment
transactions relate to inventory purchased by the Company from Sprint under the
Sprint Agreements. Selling and marketing transactions relate to subsidized costs
on handsets and commissions paid by the Company under Sprint's national
distribution program. Amounts recorded relating to the Sprint Agreements for the
years ended September 30, 2002, 2001 and 2000, are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
                <S>                                                                   <C>           <C>          <C>

                                                                                       Years Ended September 30,

                                                                                ----------------------------------------
                                                                                    2002          2001         2000
                                                                                    ----          ----         ----

Amounts included in the Consolidated Statement of Operations:

     AirGate roaming revenue .................................................. $   70,002     $  53,863    $   11,798
                                                                                ==========     =========    ==========
     AirGate cost of service and roaming:
          Roaming ............................................................. $   52,746     $  40,472    $    3,171
          Customer service ....................................................     40,454        15,526         1,542
          Affiliation fees ....................................................     15,815         7,603           757
          Long distance .......................................................     13,846         6,556         1,119
          Other ...............................................................      2,115         1,252           145
                                                                                -----------   ----------    -----------
     Total cost of service and roaming ........................................  $ 124,976     $  71,409    $    6,734
                                                                                 =========     =========    ==========
     AirGate purchased inventory .............................................. $   23,662     $  19,405    $    7,571
                                                                                ==========     =========    ==========
     AirGate selling and marketing ............................................ $   21,728     $  20,827    $    5,716
                                                                                ==========     =========    ==========
     iPCS roaming revenue ..................................................... $   33,137     $       -    $        -
                                                                                ==========     =========    ==========
     iPCS cost of service and roaming:
          Roaming ............................................................. $   25,723     $       -    $        -
          Customer service ....................................................     19,367             -             -
          Affiliation fees ....................................................      8,011             -             -
          Long distance .......................................................      7,686             -             -
          Other ...............................................................        781             -             -
                                                                                ----------     ---------    ----------
     Total cost of service and roaming ........................................ $   61,568     $       -    $        -
                                                                                ==========     =========    ==========
     iPCS purchased inventory ................................................. $   17,097     $       -    $        -
                                                                                ==========     =========    ==========
     iPCS selling and marketing ............................................... $    9,970     $       -    $        -
                                                                                ==========     =========    ==========
</TABLE>

Amounts included in the Consolidated Balance Sheet:

<TABLE>
<CAPTION>
                       <S>                                                      <C>
                                                                                As of
                                                                             September 30,
                                                                 -----------------------------------
                                                                      2002                  2001
                                                                      ----                  ----
           Receivable from Sprint                                  $ 44,953              $ 10,200
           Payable to Sprint                                        (88,360)              (32,564)
</TABLE>

The Sprint Agreements require the Company to maintain certain minimum network
performance standards and to meet other performance requirements. The Company
was in compliance in all material respects with these requirements at September
30, 2002.

                                      F-14


<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The Company has reclassified approximately $10.0 million of subscriber accounts
receivable for the fiscal year ended September 30, 2002 to a receivable from
Sprint. The Company believes at least $10.0 million is payable from Sprint, but
Sprint has acknowledged only $5.8 million is owed to AirGate. The Company is in
discussions with Sprint regarding the differences and has provided for these
discussions in our consolidated financial statements.

(5)    Property and Equipment

      Property and equipment consists of the following at September 30 (dollars
in thousands):
<TABLE>
<CAPTION>
                <S>                                                                         <C>                 <C>

                                                                                           2002                2001
                                                                                           ----                ----
      Network assets .................................................................   $ 461,806         $ 217,788
      Computer equipment .............................................................      10,723             3,684
      Furniture, fixtures, and office equipment ......................................      14,985            11,592
      Vehicles .......................................................................         891                --
      Construction in progress .......................................................      23,663            19,883
                                                                                        ------------       -----------
            Total property and equipment .............................................     512,068           252,947
      Less accumulated depreciation and amortization .................................    (112,913)          (43,621)
                                                                                        ------------       -----------
            Total property and equipment, net ........................................   $ 399,155         $ 209,326
                                                                                        ============       ===========
</TABLE>


      Depreciation and amortization of property and equipment for the years
      ended September 30, 2002, 2001, and 2000 was $70,197, $30,621, and
      $12,034, respectively.

      Costs and accumulated amortization associated with assets held under
      capital lease obligations as of September 30, 2002 are as follows:

                          Cost                                           $ 571
                          Accumulated amortization                         (28)
                                                                  -------------
                                                                         $ 543
                                                                  =============
(6)    Long Term Debt and Capital Lease Obligations

      Long-term debt includes the assumption of the iPCS long term debt on
      November 30, 2001 and consists of the following at September 30 (dollars
      in thousands):
<TABLE>
<CAPTION>
                        <S>                                                                      <C>              <C>

                                                                                                 2002            2001
                                                                                                 ----            ----

      AirGate credit facility, net of unaccreted original issue discounts of $376 and
         $574, respectively ................................................................   $ 136,124       $  74,726
      AirGate notes, $300,000 due at maturity:
            Accreted carrying value ........................................................     228,813         201,124
            Unaccreted original issue discount .............................................      (8,649)         (9,524)
                                                                                              ------------    ------------
                 Net AirGate notes .........................................................     220,164         191,600
      iPCS credit facility .................................................................     130,000              --
      iPCS notes, $300,000 due at maturity, at accreted carrying value, net of
         unamortized premium of $38,060 ....................................................     222,908              --
      iPCS capital lease obligations .......................................................         568              --
                                                                                              ------------    ------------
            Total long-term debt and capital lease obligations .............................     709,764         266,326
            Current maturities of long-term debt and capital lease obligations .............     354,936              --
                                                                                              ------------    ------------
            Long-term debt and capital lease obligations, excluding current maturities .....   $ 354,828       $ 266,326
                                                                                              ============    ============
</TABLE>


As of September 30, 2002, future scheduled principal payments under indebtedness
and future minimum capital lease payments for the next five years and thereafter
are as follows (in thousands):
<TABLE>
<CAPTION>
        <S>                                     <C>             <C>             <C>             <C>             <C>           <C>

Years Ending September 30,                    AirGate
                                               credit          AirGate        iPCS credit       iPCS          Capital
                                              facility          notes          facility         notes         leases      Total
                                              --------          -----          --------         -----         ------      -----
2003 .....................................  $      2,024       $     -        $        -       $        -    $      4   $     2,028
2004 .....................................        15,863             -             9,750                -          74        25,687
2005 .....................................        21,150             -            17,875                -          77        39,102
2006 .....................................        26,920             -            29,250                -          81        56,251
2007 .....................................        35,400             -            32,500                -          84        67,984
Thereafter ...............................        35,143       300,000            40,625          300,000         965       676,733
                                             -----------   -------------   -------------     ------------   -----------  -----------
</TABLE>


                                      F-15

<PAGE>

                       AIRGTAE PCS, INC. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>


<S>                                          <C>           <C>           <C>             <C>              <C>        <C>
  Total future principal payments on
      long-term debt and future minimum
      lease payments on capital leases ....    $136,500      $ 300,000   $   130,000        $ 300,000   $    1,285    $ 867,785
  Less amount representing interest and
      unaccreted discounts ................        (376)       (79,836)            -          (77,092)        (717)    (158,021)
                                            ------------  ------------   -----------    -------------   ----------- -----------
Total future principal payments on
  long-term debt, net of unaccreted
  discounts, and present value of future
  lease payments on capital leases .......      136,124        220,164       130,000          222,908          568      709,764
Less current maturities* .................       (2,024)             -      (130,000)        (222,908)          (4)    (354,936)
                                            -----------   ------------   -----------    -------------   ----------  -----------
Long-term debt and capital lease
  obligations, excluding current
  maturities .............................   $  134,100      $ 220,164   $         -        $       -   $      564  $   354,828
                                             ==========      =========   ===========    =============   =========== ===========
</TABLE>


*Amounts in this table do not reflect the current classifiation of the iPCS
credit facility and iPCS notes as discussed below, except in the classification
of current maturities.

AirGate Credit Facility

On August 16, 1999, AirGate entered into a $153.5 million senior credit
facility. The AirGate credit facility provides for (i) a $13.5 million senior
secured term loan (the "Tranche I Term Loan") which matures on June 6, 2007, and
(ii) a $140.0 million senior secured term loan (the "Tranche II Term Loan")
which matures on September 30, 2008. Mandatory quarterly payments of principal
are required beginning December 31, 2002 for the Tranche I Term Loan and March
31, 2004 for the Tranche II Term Loan initially in the amount of 3.75% of the
loan balance then outstanding and increasing thereafter. A commitment fee of
1.50% on unused borrowings under the AirGate credit facility is payable
quarterly and included in interest expense. For the years ended September 30,
2002, 2001 and 2000, commitment fees totaled $0.6 million, $1.5 million and $6.0
million, respectively. $17.0 million remained available for borrowing under the
AirGate credit facility as of September 30, 2002 and $12.0 million as of
December 31, 2002. The AirGate credit facility is secured by all the assets of
AirGate, other than assets of its unrestricted subsidiary, iPCS. In connection
with this financing, AirGate issued to Lucent Technologies, in its capacity as
administrative agent and arranger, warrants to purchase 139,035 shares of common
stock that were exercisable upon issuance. Additionally, AirGate incurred
origination fees and expenses of $5.0 million, which have been recorded as
financing costs and are amortized to interest expense using the straight-line
method, over the life of the agreement. The interest rate for the AirGate credit
facility is determined on a margin above either the prime lending rate in the
United States or the London Interbank Offer Rate. At September 30, 2002 and
2001, the weighted average interest rate on outstanding borrowings was 5.6% and
7.3%, respectively.

The AirGate credit facility contains ongoing financial covenants, including
reaching defined subscriber growth and covered population targets, maximum
annual spending on capital expenditures, attaining minimum subscriber revenues,
and maintaining certain leverage and other ratios such as debt to total
capitalization, debt to EBITDA and EBITDA to fixed charges. The AirGate credit
facility restricts the ability of AirGate and its subsidiaries, other than iPCS
to: create liens; incur indebtedness; make certain payments, including payments
of dividends and distributions in respect of capital stock; consolidate, merge
and sell assets; engage in certain transactions with affiliates; and
fundamentally change its business. As of September 30, 2002, AirGate was in
compliance with all operational and financial covenants governing the AirGate
credit facility. As discussed in Note 15, however, AirGate was in default as of
December 30, 2002, which is cured with the filing of these consolidated
financial statements.

AirGate Notes

On September 30, 1999, the Company received proceeds of $156.1 million from the
issuance of 300,000 units, each unit consisting of $1,000 principal amount at
maturity of 13.5% senior subordinated discount notes due 2009 (the "AirGate
notes") and one warrant to purchase 2.148 shares of common stock at a price of
$0.01 per share (see Note 8). The accreted value outstanding as of September 30,
2002 of the AirGate notes was $220.2 million. The Company incurred expenses,
underwriting discounts and commissions of $6.6 million related to the notes,
which have been recorded as financing costs and are amortized to interest
expense using the straight-line method, over the life of the agreement. The
notes contain certain covenants relating to limitations on AirGate's ability to,
among other acts, sell assets, incur additional indebtedness, and make certain
payments. The AirGate notes restrict the ability of AirGate and its
subsidiaries, other than iPCS to: create liens; incur indebtedness; make certain
payments, including payments of dividends and distributions in respect of
capital stock; consolidate, merge and sell assets; engage in certain
transactions with affiliates; and fundamentally change its business. As of
September 30, 2002, AirGate was in compliance with all covenants governing the
AirGate notes. As discussed in Note 15, however, AirGate was in default as of
December 30, 2002, which is cured with the filing of these consolidated
financial statements.

                                      F-16


<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

iPCS Credit Facility

The iPCS credit facility provides for a $80.0 million senior secured term loan
which matures on December 31, 2008, which is the first installment of the loan,
or tranche A. The second installment, or tranche B, under the iPCS credit
facility is for a $50.0 million senior secured term loan, which also matures on
December 31, 2008. The iPCS credit facility requires quarterly payments of
principal beginning March 31, 2004 for tranche A and tranche B, initially in the
amount of 2.5% of the loan balance then outstanding and increasing thereafter.
The commitment fee on unused borrowing ranges from 1.00% to 1.50%, payable
quarterly and is included in interest expense. For the ten months ended
September 30, 2002 commitment fees totaled $0.5 million. iPCS' obligations under
the iPCS credit facility are secured by all of iPCS' operating assets, but not
any assets of AirGate. The interest rate for the iPCS credit facility is
determined on a margin above either the prime lending rate in the United States
or the London Interbank Offer Rate. At September 30, 2002 and 2001, the weighted
average interest rate on outstanding borrowings was 5.7% and 6.8%, respectively.

Following the merger with iPCS, the Company proposed a new business plan for
iPCS for fiscal year 2002 which would have violated the EBITDA loss covenants of
the iPCS credit facility in the second half of the fiscal year 2002. On February
14, 2002, iPCS entered into an amendment, which provided relief under the EBITDA
covenant and modified certain other requirements. The iPCS credit facility was
also amended during November 2002, reducing the availability of the iPCS credit
facility by $10.0 million to $130.0 million. In exchange, iPCS' liquidity
covenant was waived, as well as the minimum subscriber covenant at December 31,
2002.

The iPCS credit facility contains ongoing financial covenants, including
reaching defined subscriber levels, maximum annual spending on capital
expenditures, attaining minimum subscriber revenues and certain levels of
EBITDA, and maintaining certain leverage and other ratios such as debt to total
capitalization, debt to EBITDA and EBITDA to fixed charges. The iPCS credit
facility restricts the ability of iPCS and its subsidiaries to: create liens;
incur indebtedness; make certain payments, including payments of dividends and
distributions in respect of capital stock; consolidate, merge and sell assets;
engage in certain transactions with affiliates; and fundamentally change its
business. As of September 30, 2002, iPCS was in compliance in all material
respects with all operational and financial covenants governing the iPCS credit
facility. As discussed in Note 15, however, as of December 30, 2002, iPCS was in
default of certain of these covenants. Because of iPCS' inability to cure such
default, all amounts under the iPCS credit facility have been classified as
current liabilities in the accompanying consolidated balance sheet.

iPCS Notes

On July 12, 2000, iPCS received proceeds of $152.3 million from the issuance of
300,000 units, each unit consisting of $1,000 principal amount at maturity of
14.0% senior subordinated discount notes due 2010 (the "iPCS notes") and
warrants to purchase 2,982,699 shares of common stock at $5.50 per share. These
warrants were subsequently exchanged for warrants on approximately 475,351
shares of the Company's common stock (see note 8(b)). The accreted value
outstanding as of September 30, 2002 of the iPCS notes was $222.9 million. The
iPCS notes contain certain covenants relating to limitations on iPCS's ability
to, among other acts, sell assets, incur additional indebtedness, and make
certain payments.

The iPCS notes restrict the ability of iPCS and its subsidiaries to: create
liens; incur indebtedness; make certain payments, including payments of
dividends and distributions in respect of capital stock; consolidate, merge and
sell assets; engage in certain transactions with affiliates; and fundamentally
change its business. As of September 30, 2002, iPCS was in compliance in all
material respects with all covenants governing the iPCS notes. As discussed in
Note 15, however, as of December 30, 2002, iPCS was in default of certain of
these covenants. Because of iPCS' inability to cure such default, all amounts
under the iPCS notes have been classified as a current liability in the
accompanying consolidated balance sheet.

(7)  Fair Value of Financial Instruments

Fair value estimates and assumptions and methods used to estimate the fair value
of the Company's financial instruments are made in accordance with the
requirements of SFAS No. 107, "Disclosure about Fair Value of Financial
Instruments." The Company has used available information to derive its
estimates. However, because these estimates are made as of a specific point in
time, they are not necessarily indicative of amounts the Company could realize
currently. The use of different assumptions or estimating methods may have a
material effect on the estimated fair value amounts (dollars in thousands).

<TABLE>
<CAPTION>
                                  September 30, 2002           September 30, 2001
                               -------------------------    ------------------------
                                Carrying      Estimated      Carrying     Estimated
                                 amount      fair value       amount      fair value
                               ------------ -------------   ----------   -----------
<S>                            <C>           <C>            <C>          <C>

Cash and cash equivalents .... $   32,475    $  32,475      $  14,290     $   14,290
Accounts receivable, net .....     38,127       38,127         23,798         23,798
</TABLE>

                                      F-17

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Receivable from Sprint PCS ........  44,953     44,953     10,200     10,200
Accounts payable ..................  18,152     18,152     10,210     10,210
Accrued expenses ..................  20,950     20,950     13,840     13,840
Payable to Sprint PCS .............  88,360     88,360     32,564     32,564
AirGate credit facility ........... 136,124    112,302     74,726     74,726
iPCS credit facility .............. 130,000     81,250          -          -
AirGate notes ..................... 220,164     25,125    191,600    192,574
iPCS notes ........................ 222,908     13,500          -          -

(a) Cash and cash equivalents, accounts receivable net, receivable from Sprint
PCS, accounts payable, accrued expenses and payable to Sprint PCS.

Management believes that the carrying amounts of these items are a reasonable
estimate of their fair value due to the short-term nature of the instruments.

(b)  Long-term debt

Long-term debt is comprised of the AirGate credit facility, AirGate notes, iPCS
credit facility and iPCS notes. The fair value of the AirGate notes and the iPCS
notes are stated at quoted market prices as of September 30, 2002 and 2001. As
there is no active market for the AirGate and iPCS credit facilities, management
has estimated the fair values of the AirGate and iPCS credit facilities based
upon the Company's analysis and discussions with individuals knowledgeable about
such matters.

(8)  Stockholders' Equity (Deficit)

(a)  Common stock

On May 26, 2000, at a Special Meeting of the stockholders of AirGate, the
stockholders voted to amend AirGate's Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of its common stock,
par value $0.01 per share, from 25,000,000 to 150,000,000 shares.

In October 1999, the Company's Board of Directors authorized the issuance of
12,533 additional shares of common stock to the affiliates of Weiss, Peck &
Greer Venture Partners and the affiliates of JAFCO America Ventures, Inc.
pursuant to a previously authorized promissory note issued by the Company. The
shares were authorized for issuance in consideration of $0.1 million of interest
that accrued from the period June 30, 1999 to September 28, 1999 on promissory
notes issued to the affiliates of Weiss, Peck & Greer Venture Partners and the
affiliates of JAFCO America Ventures, Inc. The promissory notes and related
accrued interest were converted into shares of common stock at a price 48% less
than the price of a share of common stock sold in the Company's initial public
offering of common stock in accordance with their original terms. The amount
related to the fair value of the beneficial conversion feature of $0.1 million
has been recorded as additional paid-in-capital and recognized as interest
expense in the year ended September 30, 2000.

(b)  Common Stock Purchase Warrants

In August 1998, the Company issued stock purchase warrants to stockholders in
consideration for: (1) loans made by the stockholders to the Company which have
been converted to common stock, (2) guarantees of certain bank loans provided by
the stockholders, and (3) in connection with $4.8 million in convertible notes
provided by the stockholders.

In connection with a refinancing of the convertible notes payable to
stockholders in May 1999, the Company cancelled the August 1998 warrants and
issued new warrants to Weiss, Peck & Greer Venture Partners Affiliated Funds to
purchase shares of common stock for an aggregate amount up to $2.7 million at an
exercise price 25% less than the price of a share of common stock sold in the
initial public offering, or $12.75 per share. The warrants for 214,413 shares
were exercisable upon issuance. The Company allocated $1.7 million of the
proceeds (calculated using the Black-Scholes option pricing model) from this
refinancing to the fair value of the warrants and recorded a discount on the
related debt, which was recognized as interest expense from the date of issuance
(May 1999) to the expected date of conversion (August 1999). In July 2000, all
of such warrants were exercised.

On August 16, 1999, AirGate issued stock purchase warrants to Lucent
Technologies in consideration of the AirGate credit facility. The exercise price
of the warrants equals 120% of the price of one share of common stock at the
closing of the initial public offering, or $20.40 per share, and the warrants
were exercisable for an aggregate of 128,860 shares of AirGate's common stock.
AirGate allocated $0.7 million of the proceeds from the AirGate credit facility
to the fair value of the warrants calculated using the Black-Scholes option
pricing model and recorded an original issue discount on the AirGate credit
facility, which is recognized as interest expense over the period from the date
of issuance to the maturity date using the effective interest method. In
September 2000, all of such warrants were exercised.

                                      F-18

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In June 2000, AirGate issued stock purchase warrants to Lucent Technologies to
acquire 10,175 shares of common stock on terms identical to those discussed in
the previous paragraph, all of which were outstanding as of September 30, 2002.
These warrants expire on August 15, 2004. The Company recorded a discount on the
AirGate credit facility of $0.3 million, which represents the fair value of the
warrants on the date of grant using a Black-Scholes option pricing model. The
discount is recognized as interest expense over the period from the date of
issuance to maturity using the effective interest method.

Interest expense relating to both grants of Lucent Technologies warrants for the
year ended September 30, 2002 was $0.2 million and for each of the years ended
September 30, 2001 and 2000 was $0.2 million.

On September 30, 1999, as part of offering the AirGate notes, the Company issued
warrants to purchase 2.148 shares of common stock for each unit at a price of
$0.01 per share. In January 2000, the Company's registration statement on Form
S-1 relating to warrants to purchase 644,400 shares of common stock issued
together, as units, with AirGate's $300 million of 13.5% senior subordinated
discount notes due 2009, was declared effective by the Securities and Exchange
Commission. The Company allocated $10.9 million of the proceeds from the units
offering to the fair value of the warrants and recorded an original issue
discount on the notes, which is recognized as interest expense over the period
from issuance to the maturity date using the effective interest method. For the
years ended September 30, 2002, 2001 and 2000, accretion of the discount from
the warrants totaling $0.9 million, $0.8 million and $0.7 million, respectively,
was recorded as interest expense. The warrants became exercisable beginning upon
the effective date of the registration statement registering such warrants, for
an aggregate of 644,400 shares of common stock. The warrants expire October 1,
2009. As of September 30, 2002, warrants representing 604,230 shares of common
stock had been exercised (15,001 in 2002, 80,641 in 2001 and 508,588 in 2000),
and warrants representing 40,170 shares of common stock remain outstanding.

As part of the acquisition of iPCS by AirGate, AirGate assumed warrants
previously issued by iPCS in connection with the iPCS notes in exchange for
warrants on 475,351 shares of Company common stock with an exercise price of
$34.51 per share, all of which were outstanding on September 30, 2002.
Additionally, the Company assumed warrants on 183,584 shares of the Company's
common stock previously issued by iPCS in connection with iPCS' amendment of its
management agreement with Sprint with an exercise price of $31.06 per share. The
warrants related to the iPCS notes became exercisable on July 15, 2001 for a
period of ten years after the date of issuance. The warrants related to the
Sprint Agreements were issued as part of an amendment to the management
agreement iPCS had with Sprint in connection with iPCS' purchase of Sprint owned
PCS territories in Michigan, Iowa and Nebraska and became exercisable by Sprint
on July 15, 2001 and expire on July 15, 2007.

The following is a summary of activity in the Company's warrants from date of
issuance through September 30, 2002:

                        Warrants as of September 30, 2002
<TABLE>
<CAPTION>
                                                                                    Outstanding as of
                                                        Issued       Exercised         September 30
                                                     ---------      -----------     -----------------
<S>                                                  <C>            <C>             <C>
AirGate Weiss, Peck & Greer - May 1999 .............   214,413       (214,413)                -
AirGate Lucent Warrants - August 1999 ..............   128,860       (128,860)                -
AirGate Lucent Warrants - June 2000 ................    10,175              -            10,175
AirGate note warrants - September 1999 .............   644,400       (604,230)           40,170
iPCS note warrants - July 2000 .....................   475,351              -           475,351
iPCS Sprint Warrants - July 2000 ...................   183,584              -           183,584
                                                     ---------      ----------          -------
         Total warrants outstanding ................ 1,656,783       (947,503)          709,280
                                                     =========      =========           =======
</TABLE>

(c)  Stock Compensation Plans

In July 1999, the Board of Directors approved the 1999 Stock Option Plan, an
incentive stock option plan whereby 2,000,000 shares of common stock were
reserved for issuance to current and future employees. Options issued under the
plan vest at various terms up to a five-year period beginning at the grant date
and expire ten years from the date of grant. During the year ended September 30,
2000, unearned stock compensation of $2.2 million was recorded for grants of
common stock options made during that period representing the difference between
the exercise price at the date of grant and the fair value at the date of grant.
Non-cash stock compensation is recognized over the period in which the related
services are rendered.

The Company issued 12,067 shares of restricted stock to employees of the Company
during fiscal year 2002. The shares vest at various rates over a 5-year period.
The Company has recorded the fair value of the shares issued of $252,000 as
unearned stock compensation and is amortizing such amount to non-cash stock
compensation over the vesting period.

                                      F-19

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On January 31, 2001, the Board of Directors approved the 2001 Non-Executive
Stock Option Plan, whereby 150,000 shares of common stock were reserved for
issuance to current and future employees who were not eligible for grants under
the 1999 Stock Option Plan. Options issued under the plan vest ratably over a
four-year period beginning at the grant date and expire ten years from the date
of grant.

On July 31, 2001, the Board of Directors approved the AirGate PCS, Inc. 2001
Non-Employee Director Compensation Plan. Pursuant to the plan, non-employee
directors receive an annual retainer, which may be comprised of cash, restricted
stock or options to purchase shares of Company common stock. For each plan year,
each non-employee director of the Company that chairs one or more committees of
the board of directors receives an annual retainer of $12,000 and all other
non-employee directors receive an annual retainer of $10,000. The recipient may
elect to receive up to 50% of such amount in the form of restricted stock or
options to purchase shares of Company common stock.

Each non-employee director that joins the Company's Board of Directors also
receives an initial grant of options to acquire 5,000 shares of Company common
stock. The options vest in three equal annual installments beginning on the
first day of the plan year following the year of grant. In addition, each
participant receives an annual grant of options to acquire 5,000 shares of
Company common stock. In lieu of this annual grant, the recipient may elect to
receive three year's worth of annual option grants in a single upfront grant of
options to acquire 15,000 shares of Company common stock that vest in three
equal annual installments. All options are issued at an exercise price equal to
the fair market value of the Company's common stock on the date of grant. The
Company also reimburses each of the non-employee directors for reasonable travel
expenses to board and committee meetings.

On December 18, 2001, the Board of Directors approved the AirGate PCS, Inc. 2002
Long-Term Incentive Plan (the "2002 Plan"), whereby 1,500,000 shares of Company
common stock were reserved for issuance as incentive awards to select employees
and officers, directors and consultants of the Company, on such vesting terms as
the Company's compensation committee determines. The 2002 Plan was approved by
shareholders and became effective on February 26, 2002. Upon approval of the
2002 Plan by the Company's shareholders, no future issuances of options under
the 1999 Stock Option Plan or 2001 Non-Executive Stock Option Plan were
permitted, and shares issued under the Non-Employee Director Plan are reserved
under the authority of the 2002 Plan.

On January 31, 2001, the Board of Directors approved the 2001 Employee Stock
Purchase Plan, which made available for issuance 200,000 shares of common stock.
The 2001 Employee Stock Purchase Plan allows employees to make voluntary payroll
contributions towards the purchase of Company common stock. At the end of the
offering period, initially the calendar year, the employee will be able to
purchase common stock at a 15% discount to the market price of the Company's
common stock at the beginning or end of the offering period, whichever is lower.
For the year ended September 30, 2002, 18,343 shares of common stock were issued
to the 2001 Employee Stock Purchase Plan in exchange for $568,000 in cash, and
181,657 shares remain reserved for future issuance.

The Company applies the provisions of APB Opinion No. 25 and related
interpretations in accounting for its stock option plans. Had compensation costs
for the Company's stock option plans been determined in accordance with SFAS No.
123, the Company's net loss and basic and diluted net loss per share of common
stock for the year ended September 30, 2002, 2001 and 2000 would have increased
to the pro forma amounts indicated below (dollars in thousands, except for per
share amounts):
<TABLE>
<CAPTION>
                                                                        Years Ended September 30,
                                                                   2002           2001          2000
                                                                   ----           ----          ----
<S>                                                            <C>           <C>            <C>
   Net loss:
       As reported ........................................... $  (996,617)  $ (110,990)    $(81,323)
       Pro forma ............................................. $(1,005,755)  $ (117,017)    $(84,521)
   Basic and diluted net loss per share of common stock:

       As reported ........................................... $    (41.96)  $    (8.48)    $  (6.60)
       Pro forma ............................................. $    (42.34)  $    (8.94)    $  (6.86)
</TABLE>

The fair value of stock option grants for the years ended September 30, 2002,
2001, and 2000 was $26.29, $31.10, and $20.02, respectively. The fair value of
stock options granted was estimated as of the date of the grant using the
Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                                         Years Ended September 30,
                                                                         -------------------------
                                                                   2002           2001          2000
                                                                   ----           ----          ----
<S>                                                            <C>           <C>            <C>
   Risk-free interest return .................................     2.3%           3.5%           6.5%
   Volatility ................................................    180.0%         100.0%         120.0%
</TABLE>

                                      F-20

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

      Dividend yield ...........................     0%     0%      0%
      Expected life in years ...................     4      4       5

The following table summarizes activity under the Company's stock option plans:

                                                                    Weighted-
                                                     Number of       average
                                                      options     exercise price
                                                    -----------   --------------
Options outstanding as of September 30, 1999 ......  1,075,000     $  14.00
   Granted ........................................    600,500        51.63
   Exercised ......................................    (84,605)       14.00
   Forfeited ......................................    (86,250)       19.15
                                                    ----------     --------
Options outstanding as of September 30, 2000 ......  1,504,645        28.72
   Granted ........................................    502,587        41.35
   Exercised ......................................   (467,556)       14.39
   Forfeited ......................................    (82,741)       36.66
                                                    ----------     --------
Options outstanding as of September 30, 2001 ......  1,456,935        37.23
    Options assumed in acquisition of iPCS ........    478,069        31.99
    Granted .......................................    637,689        27.45
    Exercised .....................................    (33,558)       26.86
    Forfeited .....................................   (279,372)       35.30
                                                    ----------     --------
Options outstanding as of September 30, 2002 ......  2,259,763       $33.95
                                                    ==========     ========

As previously discussed, the Company maintains several stock option plans with
total reserved shares of approximately 3,500,000. Shares of the Company's common
stock available for future grant under the Company's stock option plans were
1,268,961 at September 30, 2002.

The following table summarizes information for stock options outstanding and
exercisable at September 30, 2002:

<TABLE>
<CAPTION>
                         Options outstanding                               Options exercisable
                      ----------------------------------------------     -------------------------
                                          Weighted
                                    average remaining     Weighted                        Weighted
     Range of           Number       contractual life      average        Number          average
  exercise prices     outstanding       (in years)     exercise price    exercisable   exercise price
 ----------------     -----------   -----------------  --------------    -----------   --------------
  <S>                 <C>                 <C>           <C>               <C>            <C>

   $0.88 - 14.00        734,937           7.91          $11.48            239,320        $ 14.00
   15.95 - 34.52        379,249           6.99           31.57            266,617          32.02
   35.63 - 36.75        231,266           8.12           36.65             62,527          36.61
   39.22 - 46.62        230,912           7.83           42.86            102,788          42.94
   46.66 - 46.88        256,577           9.01           46.71             16,275          46.88
   47.50 - 65.13        266,822           8.09           55.94             94,069          54.20
       66.94            150,000           7.92           66.94             67,499          66.94
       98.50             10,000           7.44           98.50              5,750          98.50
                     ----------          -----          ------           --------        -------
  $0.88 - $98.50      2,259,763           7.91          $33.95            854,845        $ 34.59
                     ==========          =====          ======           ========        =======
</TABLE>


At September 30, 2001, 406,445 options were exercisable and the weighted average
exercise price was $30.05. At September 30, 2000, 285,395 options were
exercisable and the weighted average exercise price was $14.00.

(d)  Preferred Stock

The Company's articles of incorporation authorize the Company's Board of
Directors to issue up to 5 million shares of preferred stock without stockholder
approval. The Company has not issued any preferred stock as of September 30,
2002.

(9)  Income Taxes

The provision for income taxes includes income taxes currently payable and those
deferred because of temporary differences between the financial statement and
tax bases of assets and liabilities that will result in taxable or deductible
amounts in the future and any increase or decrease in the valuation allowance
for deferred income tax assets.

                                      F-21

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Income tax benefit for the years ended September 30, 2002, 2001 and 2000,
differed from the amounts computed by applying the statutory U.S. Federal income
tax rate of 34% to loss before income tax benefit as a result of the following
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                                         Years ended September 30,

                                                                                   2002             2001            2000
                                                                                   ----             ----            ----
<S>                                                                           <C>               <C>             <C>
Computed "expected" income tax benefit ......................................... $(348,629)       $(37,737)      $(27,650)
(Increase) decrease in income tax benefit resulting from:
Stock option deductions ........................................................    (1,585)         (2,224)           --
State income tax benefits, net of Federal effect ...............................   (23,466)         (6,120)        (5,116)
Increase in the valuation allowance for deferred income tax assets .............   184,197          44,697         31,000
Nondeductible interest expense .................................................     4,244           1,308          1,224
Asset impairments ..............................................................   154,015             --             --
Other, net .....................................................................     2,463              76            542
                                                                                  --------        --------       --------
            Total income tax benefit ........................................... $ (28,761)       $    --        $    --
                                                                                 =========        ========       ========
</TABLE>


Differences between financial accounting and tax bases of assets and liabilities
giving rise to deferred income tax assets and liabilities are as follows at
September 30 (in thousands):
<TABLE>
<CAPTION>

                                                                                                     2002              2001
                                                                                                     ----              ----
<S>                                                                                                <C>               <C>
Deferred income tax assets:
      Net operating loss carryforwards .........................................................    $56,544           $67,818
      Capitalized start-up costs ...............................................................      2,576             3,942
      Accrued expenses .........................................................................     14,145               409
      Deferred interest expense ................................................................     36,133            15,735
                                                                                                   --------          --------
      Gross deferred income tax assets .........................................................    209,398            87,904
      Less valuation allowance for deferred income tax assets ..................................   (184,197)          (81,459)
                                                                                                   --------          --------
      Net deferred income tax assets ...........................................................     25,201             6,445
Deferred income tax liabilities, principally due to differences in depreciation and
      amortization .............................................................................    (25,201)           (6,445)
                                                                                                   --------          --------
      Net deferred income tax assets ...........................................................    (25,201)           (6,445)
                                                                                                    $    --            $   --
                                                                                                   ========          ========
</TABLE>


Deferred income tax assets and liabilities are recognized for differences
between the financial statement carrying amounts and the tax basis of assets and
liabilities which result in future deductible or taxable amounts and for net
operating loss and tax credit carryforwards. In assessing the realizability of
deferred income tax assets, management considers whether it is more likely than
not that some portion of the deferred income tax assets will be realized. The
ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management has provided a valuation allowance
against all of its deferred income tax assets because the realization of those
deferred tax assets is uncertain.

The valuation allowance for deferred income tax assets as of September 30, 2002
and 2001 was $184.2 million and $81.5 million, respectively. The net change in
the total valuation allowance for the years ended September 30, 2002, 2001 and
2000 was an increase of $184.2 million, $44.7 million and $31.0 million,
respectively. The increase in valuation allowance is offset by $81.5 million of
valuation allowance associated with the acquisition of iPCS.

At September 30, 2002, the Company has net operating loss carryforwards for
Federal income tax purposes of approximately $445 million, which will expire in
various amounts beginning in the year 2019. The net operating loss carryforwards
that the Company may use to offset taxable income in future years is limited as
a result of an ownership change, as defined under Internal Revenue Code Section
382, which occurred effective with the Company's acquisition of iPCS on November
30, 2001. The amount of this annual limitation is approximately $74.3 million
per year. At September 30, 2002, the Company also has a South Carolina general
business credit carryforward of approximately $0.5 million available to offset
income tax expense from this state that will expire in the year 2009.

The net operating loss carryforward of $445 million includes deductions of
approximately $8.6 million related to the exercise of stock options, which will
be credited to additional paid in capital if recognized.

                                      F-22

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(10)  Goodwill and intangible assets

The changes in the carrying amount of goodwill between September 30, 2001 and
September 30, 2002 are as follows (dollars in thousands):
<TABLE>
<CAPTION>

<S>                                                                                                               <C>
Balance of goodwill as of September 30, 2001 .................................................................... $     -
   Goodwill acquired on November 30, 2001 (preliminary purchase price allocation) ...............................  387,392
   Adjustments to preliminary purchase price allocation during period ended March 31, 2002 ......................   73,528
   Goodwill impairments ......................................................................................... (460,920)
                                                                                                                  --------
Balance as of September 30, 2002 ................................................................................ $     -
                                                                                                                  ========
</TABLE>

The amortization of intangible assets for the years ended September 30, 2002 and
2001 was $39,332 and $46 (dollars in thousands), respectively.

The adjustment to the preliminary purchase price resulted from the receipt of
the final purchase price allocation report from the Company's valuation expert.
These adjustments reduced the intangible assigned to the right to provide
service under the Sprint Agreements by $94 million, increased goodwill by $73.5
million, adjusted other assets and liabilities by $6.9 million, and reduced the
deferred income tax liability by $27.4 million.

The amortization period, gross carrying amount, impairments, accumulated
amortization, and net carrying amount of intangible assets at September 30,
2002, are as follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                  Gross                                          Net
                                               Amortization      carrying                      Accumulated     carrying
                                                  period          amount      Impairments     amortization      amount
                                               ------------       -------     -----------     ------------     ---------
<S>                                            <C>               <C>          <C>             <C>              <C>
Non-competition agreements - iPCS
    acquisition ............................... 6 months          $ 3,900     $      -          $ (3,900)      $    -
Non-competition agreements -
    AirGate store acquisitions ................ 24 months             159            -              (127)           32
Acquired subscriber base - iPCS acquisition ... 30 months          52,400        (6,640)         (17,465)       28,295
Right to provide service under the Sprint
    agreements - iPCS acquisition ............ 205 months         323,289      (305,403)         (17,886)           -
                                                                 --------     ---------         --------       -------
      Total ..................................                   $379,748     $(312,043)        $(39,378)      $28,327
                                                                 ========     =========         ========       =======
</TABLE>

The weighted average estimated useful lives of intangibles assets was
approximately 178.7 months or 14.9 years for the year ended September 30, 2002
with remaining useful lives of 20 months or 1.7 years for future periods as a
result of the impairments described in note 2.

      Estimated future amortization expense on intangible assets for the fiscal
years ended September 30,

     2003 ............................................................  $ 17,009
                                                                          ======
     2004 ............................................................  $ 11,318
                                                                          ======

(11)  Merger with iPCS, Inc.

On November 30, 2001, the Company completed the acquisition of iPCS. In light of
consolidation in the wireless communications industry in general and among
Sprint PCS network partners in particular, the Company's Board of Directors
believed that the merger represented a strategic opportunity to significantly
expand the size and scope of the Company's operations. The Company's Board of
Directors believed that, following the merger, the Company would have greater
financial flexibility, operational efficiencies and growth potential than the
Company would have on its own. In connection with the iPCS acquisition, the
Company issued 12.4 million shares of Company common stock valued at $57.16 per
share on November 30, 2001, which totaled $706.6 million. The Company reserved
an additional 1.1 million shares for issuance upon exercise of outstanding iPCS
options and warrants valued at $47.7 million using a Black-Scholes option
pricing model. The transaction was accounted for under the purchase method of
accounting. Accordingly, the Company engaged a nationally recognized valuation
expert to assist in the allocation of purchase price to the fair value of
identifiable assets and liabilities. Subsequently, certain

                                      F-23

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

former shareholders of iPCS sold 4.0 million shares of Company common stock in
an underwritten offering on December 18, 2001. The accounts of iPCS are included
in the Company's consolidated financial statements as of September 30, 2002 and
the results of operations subsequent to November 30, 2001.

The Company considers itself the acquiring entity for the following reasons. The
Company was the issuer of the equity shares in the merger, Company stockholders,
subsequent to the merger, held 53 percent of the combined entity, senior
management of the combined entity subsequent to the merger is comprised of
former senior management of the Company, Company stockholders, subsequent to the
merger, have the majority voting rights to elect the governing body of the
combined company, and the Company was the larger of the two entities prior to
the merger.

The total purchase price and the fair values of identifiable assets and
liabilities as of November 30, 2001 are summarized below (dollars in thousands).

     Stock issued .................................................  $ 706,645
     Value of options and warrants converted ......................     47,727
     Costs associated with acquisition ............................      7,730
     Liabilities assumed ..........................................    394,165
                                                                    ----------
              Total purchase price ................................ $1,156,267
                                                                    ==========

     Tangible assets ..............................................  $ 313,843
     Intangible assets ............................................    379,589
     Goodwill .....................................................    462,835
                                                                    ----------
              Total ............................................... $1,156,267
                                                                    ==========

As a result of the acquisition of iPCS, the Company recorded goodwill of
$462,835 and intangible assets of $379,589 (dollars in thousands):

<TABLE>
<CAPTION>


                                                                              Value         Amortization
                                                                            Assigned           Period
                                                                            --------        ------------

<S>                                                                     <C>                 <C>
     Acquired subscriber base ............................................   $52,400          30 months
     Non-competition agreements ..........................................     3,900           6 months
     Right to provide service under the Sprint Agreements ................   323,289         205 months
                                                                            --------
                                                                            $379,589
                                                                            ========
</TABLE>


The weighted average estimated useful lives of intangibles assets was
approximately 178.7 months or 14.9 years for the year ended September 30, 2002
and approximately 20 months or 1.6 years for future periods as a result of the
impairments described in note 2.

All of the goodwill and the majority of the intangibles were subsequently
impaired (see Note 2).

The unaudited pro forma condensed consolidated statements of operations for the
years ended September 30, 2002 and 2001, set forth below, present the results of
operations as if the acquisition had occurred at the beginning of each period
and are not necessarily indicative of future results or actual results that
would have been achieved had the acquisition occurred as of the beginning of
each period (dollars in thousands).

<TABLE>
<CAPTION>

                                                                                      Years Ended September 30,
                                                                                  ----------------------------------
                                                                                        2002             2001
                                                                                        ----             ----

<S>                                                                                 <C>                <C>
    Total revenues .............................................................    $   483,612        $ 259,214
                                                                                    ===========        =========
    Net loss ...................................................................    $(1,045,361)       $(246,032)
                                                                                    ===========        =========
    Basic and diluted net loss per share .......................................    $    (40.57)       $   (9.67)
                                                                                    ===========        =========
</TABLE>



                                      F-24

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(12) Commitments and Contingencies

(a) Operating Leases

The Company is obligated under non-cancelable operating lease agreements for
office space, cell sites, vehicles and office equipment. Future minimum annual
lease payments under non-cancelable operating lease agreements with remaining
terms greater than one year for the next five years and in the aggregate at
September 30, 2002, are as follows (dollars in thousands):

        Years ending September 30,
        --------------------------

        2003 ..............................................  $ 32,310
        2004 ..............................................    30,906
        2005 ..............................................    25,374
        2006 ..............................................    17,462
        2007 ..............................................    11,860
        Thereafter ........................................    28,401
                                                             --------
           Total future minimum annual lease payments .....  $146,313
                                                             ========

Rental expense for all operating leases was $30.0 million, $15.2 million and
$9.8 million for the years ended September 30, 2002, 2001 and 2000,
respectively.

(b) Employment Agreements

The Company has entered into employment agreements with certain employees that
define employment terms including salary, bonus and benefits to be provided to
the respective employees.

In May 2000, the Company entered into a retention bonus agreement with Thomas M.
Dougherty, its Chief Executive Officer. So long as Mr. Dougherty is not
terminated for cause or does not voluntarily terminate employment, the Company
must make on specified payment dates, generally quarterly, extending to January
15, 2004, periodic retention bonuses totaling $3.6 million. For the years ended
September 30, 2002, 2001 and 2000, the Company has recorded compensation expense
of $0.7 million, $0.7 million and $1.2 million, respectively, related to amounts
earned under the retention bonus agreement. Under the terms of the agreement,
partial acceleration of the future payments would occur upon a change in control
of the Company. The Company's commitment with respect to future payments at
September 30, 2002 was $1 million.

(c) Litigation

On July 3, 2002 the Federal Communications Commission (the "FCC") issued an
order in Sprint PCS v. AT&T for declaratory judgment holding that PCS wireless
carriers could not unilaterally impose terminating long distance access charges
pursuant to FCC rules. This FCC order did not preclude a finding of a
contractual basis for these charges, nor did it rule whether or not Sprint PCS
had such a contract with carriers such as AT&T. AirGate and iPCS have previously
received $3.9 and $1.0 million, respectively. This is comprised of $4.3 and $1.1
million, respectively, of terminating long distance access revenues, less $0.4
and $0.1 million, respectively, of associated affiliation fees held by Sprint
PCS and Sprint PCS has asserted its right to recover these revenues net of the
affiliation fees. As a result of this ruling, and our assessment of this
contingency under SFAS No. 5, "Accounting for Contingencies", the Company
recorded a charge to revenues during the quarter ended June 30, 2002 to fully
accrue for these amounts. However, we will continue to assess the ability of
Sprint, Sprint PCS or other carriers to recover these charges and the Company is
continuing to review the availability of defenses it may have against Sprint
PCS' claim to recover these revenues.

In May 2002, putative class action complaints were filed in the United States
District Court for the Northern District of Georgia against AirGate PCS, Inc.,
Thomas M. Dougherty, Barbara L. Blackford, Alan B. Catherall, Credit Suisse
First Boston, Lehman Brothers, UBS Warburg LLC, William Blair & Company, Thomas
Wiesel Partners LLC and TD Securities. The complaints do not specify an amount
or range of damages that the plaintiffs are seeking. The complaints seek class
certification and allege that the prospectus used in connection with the
secondary offering of Company stock by certain former iPCS shareholders on
December 18, 2001 contained materially false and misleading statements and
omitted material information necessary to make the statements in the prospectus
not false and misleading. The alleged omissions included (i) failure to disclose
that in order to complete an effective integration of iPCS, drastic changes
would have to be made to the Company's distribution channels, (ii) failure to
disclose that the sales force in the acquired iPCS markets would require
extensive restructuring and (iii) failure to disclose that the "churn" or
"turnover" rate for subscribers would increase as a result of an increase in the
amount of sub-prime credit quality subscribers the Company added from its merger
with iPCS. On July 15, 2002, certain plaintiffs and their counsel

                                      F-25

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

filed a motion seeking appointment as lead plaintiffs and lead counsel. On
November 26, 2002, the Court entered an Order requiring the Plaintiffs to
provide additional information in connection with their Motion for Appointment
as Lead Plaintiff and in December 2002, Plaintiffs submitted Declarations in
Support of Motion for Appointment of Lead Plaintiff. The Company believes the
plaintiffs' claims are without merit and intends to vigorously defend against
these claims. However, no assurance can be given as to the outcome of the
litigation.

(d)  401(k) Plan

Employer contributions under the Company's 401(k) plans for the years ended
September 30, 2002, 2001 and 2000 were $0.7, $0.6, and $0.2 million,
respectively.

(e)  Other

The Company is committed to make expenditures for certain outdoor advertising
and marketing sponsorships subsequent to September 30, 2002 totaling $1.1
million and $250,000, respectively. Additionally, the Company is committed to
making a future payment under a consulting contract of $580,000.

(13) Related Party Transactions and Transactions between AirGate and iPCS

See Note 4 for a discussion of transactions with Sprint.

Transactions between AirGate and iPCS

The Company formed AirGate Service Company, Inc. ("ServiceCo") to provide
management services to both AirGate and iPCS. ServiceCo is a wholly-owned
restricted subsidiary of AirGate. Personnel who provide general management
services to AirGate and iPCS have been leased to ServiceCo, which includes 190
employees at September 30, 2002. Generally, the management personnel include the
corporate staff in the Company's principal corporate offices in Atlanta and the
accounting staff in Geneseo, Illinois. ServiceCo expenses are allocated between
AirGate and iPCS based on the percentage of subscribers they contribute to the
total number of Company subscribers (the "ServiceCo Allocation"), which is
currently 60% AirGate and 40% iPCS. Expenses that are related to one company are
allocated to that company. Expenses that are related to ServiceCo or both
companies are allocated in accordance with the ServiceCo Allocation. For the
year ended September 30, 2002, iPCS paid ServiceCo a net total of $1.7 million
for ServiceCo expenses.

AirGate has completed transactions at arms-length in the normal course of
business with its unrestricted subsidiary iPCS. These transactions are comprised
of roaming revenue and expenses, inventory sales and purchases and sales of
network operating equipment as further described below.

In the normal course of business under AirGate's and iPCS' Sprint agreements,
AirGate's subscribers incur minutes of use in iPCS' territory causing AirGate to
incur roaming expense. In addition, iPCS' subscribers incur minutes of use in
AirGate's territory for which AirGate receives roaming revenue. AirGate received
$0.4 million of roaming revenue from iPCS and incurred $0.4 million of roaming
expense to iPCS during the year ended September 30, 2002. The reciprocal roaming
rate charged and other terms are established under AirGate's and iPCS' Sprint
agreements.

In order to optimize the most efficient use of certain models of handset
inventories in relation to regional demand, AirGate sold approximately $0.1
million of wireless handset inventories to iPCS. Additionally AirGate purchased
approximately $0.2 million of wireless handset inventories from iPCS. These
transactions were completed at fair value. At September 30, 2002, neither
AirGate nor iPCS were carrying any wireless handset inventory purchased from
each other.

AirGate sold approximately $0.2 million of network operating equipment to iPCS
in fiscal 2002 at fair value. Additionally, iPCS sold to AirGate approximately
$0.7 million of network operating equipment at fair value.

All of these transactions are eliminated in consolidation.

The terms and conditions of each of the transactions described above are
comparable to those that could have been obtained in transactions with
unaffiliated entities.

Transactions Involving Board Members

AirGate purchases certain telecommunication services for its network from New
South Communications. James Akerhielm, a member of AirGate's board of directors
during the year ended September 30, 2002, is the president and chief executive
officer and a member of the board of directors of New South Communications, Inc.
Mr. Akerhielm was elected to the board of directors of AirGate during May 2002.
For the year ended September 30, 2002, AirGate purchased $0.7 million of
telecommunication

                                      F-26

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

services from New South Communications, less than 1% of AirGate's revenues. The
terms and conditions of such transactions are comparable to those that could
have been obtained in transactions with unaffiliated entities.

Pursuant to his employment agreement, iPCS purchases consulting services from
Tim Yager who served on AirGate's Board of Directors during the year ended
September 30, 2002. For the year ended September 30, 2002, iPCS purchased $0.3
million of consulting services from Tim Yager.

Messrs. Akerhielm and Yager have both recently resigned from the Company's Board
of Directors.


(14)  Selected Quarterly Financial Data (Unaudited):
<TABLE>
<CAPTION>

                                                        First           Second          Third         Fourth
                                                       Quarter(a)      Quarter(b)      Quarter       Quarter(c)      Total
                                                       -------         -------         -------       -------         -----
<S>                                                   <C>             <C>             <C>           <C>            <C>
Year ended September 30, 2002:

      Total revenue ............................      $  81,699       $  114,897      $ 122,809     $  137,152     $  456,557
      Operating loss ...........................        (36,724)        (298,856)       (34,592)      (598,643)      (968,815)
      Net loss .................................        (29,644)        (301,910)       (50,079)      (614,984)      (996,617)
   Net loss per share--basic and diluted .......          (1.68)          (11.71)         (1.94)        (23.91)        (41.96)
Year ended September 30, 2001:
      Total revenue ............................      $  23,019       $   37,078      $  49,738     $   62,252     $  172,087
      Operating loss ...........................        (27,404)         (21,338)       (16,295)       (19,517)       (84,554)
      Net loss .................................        (33,863)         (28,372)       (23,743)       (25,012)      (110,990)
   Net loss per share--basic and diluted .......          (2.64)           (2.18)         (1.80)         (1.88)         (8.48)
</TABLE>

(a) Includes the acquisition of iPCS (see note 11)
(b) Includes a $261.2 million goodwill impairment charge (see note 2)
(c)  Includes impairment charges of $312.0 million related to intangible assets,
     $199.7 million related to goodwill and $44.5 million related to property
     and equipment (see notes 2 and 11)

(15)  Subsequent Events

During November 2002, the Company completed an amendment to the iPCS credit
facility that waived the minimum subscriber covenant for December 31, 2002 and
eliminated the $10.0 million liquidity requirement. The amount of the credit
facility was reduced by the same amount to $130.0 million and eliminated any
further availability under the iPCS credit facility.

On October 8, 2002 iPCS retained Houlihan Lokey Howard & Zukin Capital to review
iPCS' revised long range business plan, the strategic alternatives available to
iPCS and to assist iPCS in developing and implementing a plan to improve its
capital structure. Because current conditions in the capital markets make
additional financing unlikely, iPCS has undertaken efforts to restructure its
relationship with its secured lenders, its public noteholders and Sprint, and we
have begun restructuring discussions with informal committees of these
creditors. While the lenders and noteholders have expressed willingness to work
with iPCS, Sprint has informed us it is unwilling to restructure its agreements
with iPCS. Because of its deteriorating financial condition, iPCS expects to
seek protection under the federal bankruptcy laws in an effort to effect a
court-administered reorganization.

iPCS failed to deliver on December 30, 2002 the audited financial statements and
audit opinion required by the iPCS credit facility and the indenture under which
its notes are issued. Because of these events of default, the senior lenders
will have the ability to accelerate iPCS' payment obligations under the iPCS
credit facility and the holders of the iPCS notes will have the ability to
accelerate iPCS' payment obligations under iPCS' indenture, after giving notice
and the expiration of applicable cure periods. iPCS is working with its lenders
and noteholders on a forbearance agreement, however there is no assurance that
these negotiations will be successful. In any event, we anticipate that iPCS
will default on certain financial covenants as of March 31, 2003 and it is
probable that iPCS will file for bankruptcy in the near term. Such events are
also events of default under the iPCS credit facility.

On November 4, 2002, the Company was notified by Sprint that it intends to
reduce the reciprocal roaming rate from its current $0.10 per minute to $0.058
per minute in 2003. Currently the roaming revenue that the Company receives from
Sprint for Sprint and its network partners PCS subscribers using the Company's
network exceed those that the Company pays to Sprint and its PCS network
partners for the Company's subscribers using their networks. The change in the
roaming rate will decrease the Company's revenues, expenses and the Company's
net roaming margin, which is the difference between roaming revenue and roaming
expense, increase the Company's net loss and decrease cash flow from operations.

AirGate's credit facility requires that AirGate deliver audited financial
statements accompanied by an unqualified opinion of its independent auditors by
December 30, 2002, along with certain related documents. Similarly, AirGate's
notes require that

                                      F-27

<PAGE>

                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

AirGate deliver an audit opinion of its independent auditors, along with certain
related documents, by December 30, 2002. Because AirGate did not deliver the
required information on December 30, 2002, AirGate was in default under its
credit facility and the indenture governing its notes. Under the AirGate credit
facility and indenture, the default did not constitute an event of default until
the giving of notice and expiration of the applicable cure period. AirGate is
curing any defaults under the AirGate credit facility and indenture with the
filing of these consolidated financial statements.

On December 31, 2002, Standard & Poor's ("S&P") downgraded AirGate's corporate
rating from CCC+ to CCC- and its rating of the AirGate notes from CCC- to CC. In
addition, S&P downgraded iPCS' corporate rating from CCC- to CC and has placed
AirGate on credit watch with negative implications pending the cure of a default
under its credit facility and its notes.

In October 2002, the Company entered into a separation agreement and release
with its former Chief Financial Officer, who resigned as an officer of the
Company effective October 21, 2002, and as an employee of the Company effective
October 31, 2002. Pursuant to the separation agreement, the Company will pay to
the former Chief Financial Officer a severance payment in the amount equal to
$300,000, half of which will be paid bi-weekly for the first six months of
fiscal 2003. The remainder will be paid in a lump sum payment at the end of the
six-month period.

In addition, in connection with a reduction in workforce in October and December
2002, the Company became obligated in the three month period ended December 31,
2002 to pay a total of $1.1 million in severance payments.

(16)  Condensed Consolidating Financial Information

AGW Leasing Company, Inc. ("AGW") is a wholly-owned restricted subsidiary of
AirGate. AGW has fully and unconditionally guaranteed the AirGate notes and the
AirGate credit facility. AGW was formed to hold the real estate interests for
the Company's PCS network and retail operations. AGW also was a registrant under
the Company's registration statement declared effective by the Securities and
Exchange Commission on September 27, 1999. AGW jointly and severably guarantees
the Company's long-term debt.

AirGate Network Services LLC ("ANS") was created as a wholly-owned restricted
subsidiary of AirGate. ANS has fully and unconditionally guaranteed the AirGate
notes and AirGate credit facility. ANS was formed to provide construction
management services for the Company's PCS network. ANS jointly and severably
guarantees AirGate's long-term debt.

AirGate Service Company, Inc. ("Service Co") is a wholly-owned restricted
subsidiary of AirGate. Service Co has fully and unconditionally guaranteed the
AirGate notes and the AirGate credit facility. Service Co was formed to provide
management services to AirGate and iPCS. Service Co jointly and severably
guarantees AirGate's long-term debt.

iPCS is a wholly-owned unrestricted subsidiary of AirGate and operates as a
separate business. As an unrestricted subsidiary, iPCS provides no guarantee to
either the AirGate notes or the AirGate credit facility and AirGate and its
restricted subsidiaries provide no guarantee to the iPCS notes or the iPCS
credit facility.

                                      F-28

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

AGW, ANS, Service Co and iPCS are 100% owned by AirGate and no other persons
have equity interests in such entities.

The condensed consolidating financial information for AirGate, AGW, ANS, Service
Co and iPCS as of September 30, 2002 and for the year ended September 30, 2002
is as follows (dollars in thousands):
<TABLE>
<CAPTION>

                                       AGW     AirGate   AirGate                            iPCS
                                     Leasing   Network   Service              AirGate       Non-               Combined
                           AirGate   Company, Services,  Company,   Elimi-    Consol-     Guarantor  Elimi-     Company
                          PCS, Inc.    Inc.     LLC       Inc.      nation    idated(1)   Subsidiary  nations  Consolidated
                         ---------- --------- ---------  -------- --------- -----------  ----------- -------- ------------
<S>                     <C>          <C>       <C>        <C>      <C>       <C>         <C>         <C>      <C>
Cash and cash
  equivalents ......... $     4,769  $     --  $    118  $     --  $     --  $     4,887  $  27,588  $     --  $    32,475
Other current assets ..     122,869        --       529        --   (60,579)      62,819     35,593    (1,114)      97,298
                        -----------  --------  --------  --------  --------  -----------  ---------  --------  -----------
Total current assets ..     127,638        --       647        --   (60,579)      67,706     63,181    (1,114)     129,773
Property and
  equipment, net ......     168,163        --    45,614        --        --      213,777    185,378        --      399,155
Intangible assets,
  net .................       1,428        --        --        --        --        1,428     26,899        --       28,327
Investment in
  subsidiaries ........    (183,778)       --        --        --    84,506      (99,212)        --    99,212          --
Other noncurrent
  assets ..............       4,924        --        --        --        --        4,924     12,115        --       17,039
                        -----------  --------  --------  --------  --------  -----------  ---------  --------  -----------
Total assets .......... $   118,435  $     --  $ 46,261  $     --  $ 23,927  $   188,623  $ 287,573  $ 98,098  $   574,294
                        ===========  ========  ========  ========  ========  ===========  =========  ========  ===========

Current liabilities ... $    55,535  $ 44,859  $ 60,579  $ 25,329  $(60,579) $   125,723    369,564  $ (1,114) $   494,173
Long-term debt ........     354,264        --        --        --        --      354,264  $     564        --      354,828
Other long-term
  liabilities .........       1,583        --        --        --        --        1,583     16,657        --       18,240
                        -----------  --------  --------  --------  --------  ----------   ---------  --------  -----------
Total liabilities .....     411,382    44,859    60,579    25,329   (60,579)     481,570    386,785    (1,114)     867,241
                        -----------  --------  --------  --------  --------  -----------  ---------  --------  -----------

Stockholders' equity ..    (292,947)  (44,859)  (14,318)  (25,329)   84,506     (292,947)   (99,212)   99,212     (292,947)
                        -----------  --------  --------  --------  --------  -----------  ---------  --------  -----------
Total liabilities and
  stockholders' equity
  (deficit) ........... $   118,435  $     --  $ 46,261  $     --  $ 23,927  $   188,623  $ 287,573  $ 98,098  $  574,294
                        ===========  ========  ========  ========  ========  ===========  =========  ========  ===========

Total revenues ........ $   313,544  $     --  $     --  $     --  $     --  $   313,544  $ 144,080  $ (1,067) $   456,557

Cost of revenues ......    (214,546)  (15,219)       --    (3,140)    1,142     (231,763)  (124,031)    1,067     (354,727)
Selling and marketing .     (73,603)   (2,754)       --    (4,169)    1,516      (79,010)   (37,511)       --     (116,521)
General and
  administrative ......      (5,580)     (585)       --   (18,020)    6,554      (17,631)    (7,708)       --      (25,339)
Depreciation and
  amortization ........     (68,124)       --    (8,357)       --        --      (76,481)   (33,048)       --     (109,529)
Other, net ............     (36,759)       --     1,891        --        --      (34,868)   (22,464)       --      (57,332)
Loss on disposal of
  property and
  equipment ...........        (717)       --      (357)       --        --       (1,074)        --        --       (1,074)
Impairment of goodwill     (452,860)       --        --        --        --     (452,860)    (8,060)       --     (460,920)
Impairment of
  property and
  equipment ...........          --        --        --        --        --           --    (44,450)       --      (44,450)
Impairment of
  intangible assets ...    (312,043)       --        --        --        --     (312,043)        --        --     (312,043)
                        -----------  --------  --------  --------   -------  -----------  ---------  --------  -----------
Total expenses ........  (1,164,232)  (18,558)   (6,823)  (25,329)    9,212   (1,205,730)  (277,272)    1,067   (1,481,935)
                        -----------  --------  --------  --------  --------  -----------  ---------  --------  -----------

Loss in subsidiaries ..    (174,690)       --        --        --    41,498     (133,192)        --   133,192           --
Loss before income
  tax benefit .........  (1,025,378)  (18,558)   (6,823)  (25,329)   50,710   (1,025,378)  (133,192)  133,192   (1,025,378)
Income tax benefit ....      28,761        --        --        --        --       28,761         --        --       28,761
                        -----------  --------  --------  --------   -------  -----------  ---------  --------  -----------
Net loss .............. $  (996,617) $(18,558) $ (6,823) $(25,329) $ 50,710  $  (996,617) $(133,192) $133,192  $  (996,617)
                        ===========  ========  ========  ========  ========  ===========  =========  ========  ===========

Operating activities ..     (24,735)       --       275        --        --      (24,460)   (20,782)       --      (45,242)
Investing activities ..     (22,993)       --        --        --        --      (22,993)   (55,722)       --      (78,716)
Financing activities ..      62,452        --        --        --        --       62,452     79,691        --      142,143
                        -----------  --------  --------  --------   -------  -----------  ---------   -------  -----------

Increase in cash or
  cash equivalents ....      14,724        --       275        --        --       14,999      3,186        --       18,185
Cash and cash
  equivalents at
  beginning of year ...      (9,955) $     --      (157)       --        --      (10,112)    24,402        --       14,290
                        -----------  --------  --------  --------   -------  -----------  ---------   -------  -----------
Cash and cash
  equivalents at end
  of year ............. $     4,769  $     --  $    118  $     --  $     --   $    4,887  $  27,588   $    --  $    32,475
                        ===========  ========  ========  ========  ========   ==========  =========  ========  ===========

</TABLE>
(1)  Amounts in the column for AirGate consolidated include the effects of
     purchase accounting related to the iPCS acquisition.


                                      F-29

<PAGE>
                       AIRGATE PCS, INC. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The condensed consolidating financial information for the Company as of
September 30, 2001 and for the year ended September 30, 2001 is as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                       AGW          AirGate
                                                                     Leasing        Network
                                                      AirGate        Company,       Services,
                                                     PCS, Inc.         Inc.            LLC        Eliminations     Consolidation
                                                    ----------       --------       ---------     ------------     -------------
<S>                                                 <C>             <C>            <C>            <C>              <C>

Cash and cash equivalents ........................  $    14,447     $      --      $      (157)   $        --      $       14,290
Other current assets .............................

Property and equipment, net ......................      160,203            --           49,123             --             209,326
Investment in subsidiaries .......................       37,540            --             --            (37,540)             --
Other assets .....................................      142,738            --              501          (85,845)           57,394
                                                    ------------    ------------   ------------   --------------   ---------------
      Total assets ...............................  $   354,928     $      --      $    49,467    $    (123,385)   $      281,010
                                                    ============    ============   ============   ==============   ===============
Current liabilities ..............................  $    64,580     $    26,301    $    56,962    $     (85,845)   $       61,998
Long-term debt ...................................      266,326            --             --               --             266,326
Other long-term liabilities ......................        5,410            --             --               --               5,410
                                                    ------------    ------------   ------------   --------------   ---------------
      Total liabilities ..........................      336,316          26,301         56,962          (85,845)          333,734
                                                    -----------     -----------    -----------    -------------    --------------
Stockholders' equity (deficit) ...................       18,612         (26,301)        (7,495)         (37,540)          (52,724)
                                                    ------------    ------------   ------------   --------------   ---------------
      Total liabilities and stockholders'
         equity (deficit) ........................  $   354,928     $      --      $    49,467    $    (123,385)   $      281,010
                                                    ============    ============   ============   ==============   ===============
</TABLE>



<TABLE>
<CAPTION>
                                                                        AGW          AirGate
                                                                      Leasing        Network
                                                      AirGate        Company,       Services,
                                                     PCS, Inc.         Inc.            LLC        Eliminations     Consolidation
                                                    ----------       --------       ---------     ------------     -------------
<S>                                                 <C>             <C>            <C>            <C>              <C>

Total revenues ...................................  $   172,087     $      --      $      --      $       --       $      172,087
Cost of revenues .................................     (124,022)        (12,928)          --              --             (136,950)
Selling and marketing ............................      (69,833)         (1,784)          --              --              (71,617)
General and administrative .......................      (14,563)           (866)          (313)           --              (15,742)
Depreciation and amortization ....................      (23,354)           --           (7,313)           --              (30,667)
Other, net .......................................      (30,092)           --            1,991            --              (28,101)
                                                    ------------    ------------   ------------   -------------    ---------------
      Total expenses .............................     (261,864)        (15,578)        (5,635)           --             (283,077)
                                                    ------------    ------------   ------------   -------------    ---------------
Loss in subsidiaries .............................      (21,213)           --             --             21,213               --
                                                    ------------    ------------   ------------   -------------    ---------------
Net loss .........................................  $  (110,990)    $   (15,578)   $    (5,635)   $       --       $     (110,990)
                                                    ============    ============   ============   =============    ===============
Operating activities .............................  $   (53,024)           --      $    12,174            --       $      (40,850)
Investing activities .............................      (59,693)           --          (12,079)           --              (71,772)
Financing activities .............................       68,528            --             --              --               68,528
                                                    ------------    ------------   ------------   -------------    ---------------
Decrease in cash or cash equivalents .............      (44,189)           --               95            --              (44,094)
Cash and cash equivalents at beginning of year ...       58,636            --             (252)           --               58,384
                                                    ------------    ------------   ------------   -------------    ---------------
Cash and cash equivalents at end of year .........  $    14,447     $      --      $      (157)   $       --       $       14,290
                                                    ============    ============   ============   =============    ===============

</TABLE>
The condensed consolidating financial information for the Company for the year
ended September 30, 2000 is as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                       AGW          AirGate
                                                                     Leasing        Network
                                                     AirGate        Company,       Services,
                                                     PCS, Inc.         Inc.            LLC        Eliminations     Consolidation
                                                    ----------       --------       ---------     ------------     -------------
<S>                                                 <C>             <C>            <C>            <C>              <C>

Total revenues ...................................  $    25,065     $      --      $      --       $       --      $       25,065
Cost of revenues .................................      (24,598)         (8,857)          --               --             (33,455)
Selling and marketing ............................      (27,832)           (525)          --               --             (28,357)
General and administrative .......................      (12,108)         (1,440)          (530)            --             (14,078)
Depreciation and amortization ....................       (8,583)           --           (3,451)            --             (12,034
Other, net .......................................      (18,464)           --             --               --             (18,464)
                                                    ------------    ------------   ------------    -------------   ---------------
      Total expenses .............................      (91,585)        (10,822)        (3,981)            --            (106,388)
                                                    ------------    ------------   ------------    -------------   ---------------
Loss in subsidiaries .............................      (14,803)           --             --              14,803              --
                                                    ------------    ------------   ------------   -------------    ---------------
Net loss .........................................  $   (81,323)    $   (10,822)   $    (3,981)    $      14,803   $      (81,323)
                                                    ===========     ============   ============    =============   ===============
Operating activities .............................  $   (89,165)           --      $    47,556             --      $      (41,609)
Investing activities .............................     (104,589)           --          (47,808)            --            (152,397)
Financing activities .............................       (6,510)           --             --               --              (6,510)
                                                    ------------    ------------   ------------    -------------   ---------------
Decrease in cash or cash equivalents .............     (200,264)           --             (252)            --            (200,516)
Cash and cash equivalents at beginning of year ...      258,900            --             --               --             258,900
                                                    ------------    ------------   ------------    -------------   ---------------
Cash and cash equivalents at end of year .........  $    58,636     $      --      $      (252)            --      $       58,384
                                                    ===========     ============   ============    =============   ===============

</TABLE>

                                      F-30

<PAGE>

Independent Auditors' Report

The Board of Directors
AirGate PCS, Inc.:

    Under date of January 10, 2003, we reported on the consolidated balance
sheets of AirGate PCS, Inc. and subsidiaries as of September 30, 2002 and 2001,
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
September 30, 2002. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related financial
statement schedule included in the annual report on Form 10-K, as listed in the
index under Item 15(b). This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

    In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

     As discussed in notes 1 and 6 to the consolidated financial statements, the
Company's wholly-owned, unrestricted subsidiary, iPCS, Inc., is in default under
provisions of its credit agreements, and substantially all of its debt is
classified as a current liability. iPCS, Inc. has been unable to restructure its
debt and secure additional financing necessary to fund its operations and,
accordingly, iPCS, Inc. intends to file for reorganization and protection from
its creditors under Chapter 11 of the United States Bankruptcy Code in early
2003 either as a part of a consensual restructuring or in an effort to effect a
court administered reorganization. iPCS, Inc. represents approximately 32% of
total consolidated revenues for the year ended September 30, 2002 and 50% of the
total consolidated assets at September 30, 2002. AirGate PCS, Inc. and its
restricted subsidiaries are generally precluded by its credit agreements from
providing financial support to iPCS, Inc. Although the ultimate impact of the
planned iPCS, Inc. bankruptcy filing is not presently determinable, management
believes that the bankruptcy proceedings will not have a significant adverse
effect on the liquidity of AirGate PCS, Inc. and its restricted subsidiaries
through fiscal 2003.


/s/ KPMG LLP

Atlanta, Georgia
January 10, 2003



                                      F-31


<PAGE>


                       AIRGATE PCS, INC. AND SUBSIDIARIES

           CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
              For the Years Ended September 30, 2002, 2001 and 2000
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                     Additions
                                                             ------------------------
                                              Balance at        Charges to                                Balance
                                             Beginning of       Costs and                                at End of
               Classification                  Period           Expenses      Other        Deductions    a Period
              ----------------              -------------    -------------  ---------     ------------  -----------
<S>                                        <C>                 <C>          <C>           <C>           <C>
September 30, 2002
      Allowance for Doubtful Accounts ....  $   2,759           26,933(1)   23,406(2)      (45,888)(3)  $   11,256
                                                                             4,046(4)
      Income Tax Valuation Allowance .....  $  81,459          184,197(6)       --         (81,459)(5)  $  184,197
September 30, 2001
      Allowance for Doubtful Accounts ....  $     563            8,125(1)    2,874(2)       (8,803)(3)  $    2,759
      Income Tax Valuation Allowance .....  $  36,762           44,697(6)       --              --      $   81,459
September 30, 2000
      Allowance for Doubtful Accounts ....  $     --               563(1)       --              --      $      563
      Income Tax Valuation Allowance .....  $   5,762           31,000(6)       --              --      $   36,762
</TABLE>


(1)  Amounts represent provisions for doubtful accounts charged to cost of
     service and roaming.
(2)  Amounts represent provisions for late payment fees, early cancellation
     fees, first payment default customers, and other billing adjustments
     charged to subscriber revenues.
(3)  Amounts represent write-offs of uncollectible customer accounts.
(4)  Amount represents the allowance for doubtful accounts of iPCS, Inc. as of
     November 30, 2001, the date of acquisition.
(5)  Amount represents a decrease in the valuation allowance associated with
     acquisition of iPCS, Inc. on November 30, 2001.
(6)  Amounts represent increases in the valuation allowance for deferred income
     tax assets to reduce them to the amount believed to be realizable.

                                      F-32