===============================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------
                                   FORM 10-K/A
                                 AMENDMENT NO. 2
                                       TO
                                 ---------------
(Mark One)
    X        Annual Report Pursuant to Section 13 or 15(d) of the Securities
   ---       Exchange Act of 1934


             For the Fiscal Year Ended December 31, 1997

                       or

   ___       Transition Report Pursuant to Section 13 or 15(d) of the
             Securities Exchange Act of 1934

             For the transition period from _________ to _________

                        Commission File Number: 1-13526

                             PRICELLULAR CORPORATION
             (Exact name of Registrant as specified in its charter)

         Delaware                                            22-3043811
 (State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

711 Westchester Avenue
White Plains, New York                                        10604
(Address of  principal                                     (Zip Code)
executive offices)

       Registrant's telephone number, including area code: (914) 422-0800

                                 ---------------

           Securities registered pursuant to Section 12(b) of the Act:
    
                                                     Name of each exchange
   Title of each class                                on which registered
-------------------------                          ---------------------------
Class A Common Stock, par                            American Stock Exchange
 value $0.01 per share

   
        Securities registered pursuant to Section 12(g) of the Act: NONE
    

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

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 knowledge of the registrant, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. [ ]

   
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of May 20, 1998 was approximately $212,000,000.

The number of shares outstanding of each class of the registrant's common stock,
as of May 20, 1998, was 21,987,847 shares of Class A Common Stock and
12,970,994 shares of Class B Common Stock.

Documents incorporated by reference: PriceCellular's Annual Reports on Form 10-K
for the years ended December 31, 1996 and 1995.

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


                                Table of Contents

Part I

Item 1.           Business................................................    2
                  General.................................................    2
                  Cellular Markets and Systems............................    4
                  Acquisitions and Dispositions...........................    6
                  Recent Developments.....................................    9
                  Business Strategy.......................................    9
                  Cellular Operations.....................................   11
                  Overview of Cellular Telephone Industry.................   17
                  Regulations.............................................   21
Item 2.           Properties..............................................   25
Item 3.           Legal Proceedings.......................................   25
Item 4.           Submission of Matters to a Vote of Security Holders.....   25

Part II

Item 5.           Market for the Company's Common Equity and
                    Related Stockholder Matters...........................   26
Item 6.           Selected Financial Data.................................   27
Item 7.           Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...................   29
Item 8.           Financial Statements and Supplementary Data.............   35
Item 9.           Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure...................   35

Part III

Items 10., 11.,
 12. and 13.      Directors and Executive Officers of the Registrant,
                    Executive Compensation, Security Ownership of
                    Certain Beneficial Owners and Management and
                    Certain Relationships and Related Transactions........   36

Part IV

Item 14.          Exhibits, Financial Statement Schedules and Reports
                    on Form 8-K...........................................   49

Exhibit Index       ......................................................   49

Signatures          ......................................................   52




                                     Part I

Unless otherwise indicated all references herein to "PriCellular" or the
"Company" include its subsidiaries and predecessors. See "Item 1.
Business-Certain Terms" for the definitions of certain other terms used herein.

Item 1. Business

General

PriCellular, through its subsidiaries, owns and operates FCC licensed cellular
telephone systems in the United States, primarily in smaller MSAs and
strategically located RSAs. PriCellular owns cellular interests representing
approximately 5.1 million Net Pops. These interests consist principally of four
large operating clusters of cellular Systems:

   Upper Midwest Cluster--a 1.8 million Net Pop cluster of 15 Systems covering
   approximately 78,000 contiguous square miles in Minnesota, Wisconsin and
   Michigan. Mid-Atlantic Cluster--an 857,000 Net Pop cluster of five contiguous
   Systems consisting of five RSAs in Ohio, Pennsylvania and West Virginia
   covering approximately 10,000 contiguous square miles. New York Cluster--a
   1.1 million Net Pop cluster of two MSAs and two RSAs covering more than 8,000
   contiguous square miles in suburban New York located between the New York
   City MSA of AT&T Wireless Services Inc. ("AT&T"), a subsidiary of AT&T Corp.,
   and Southwestern Bell's Albany, NY MSA. Kentucky Cluster--a 1.0 million Net
   Pop cluster of four RSAs adjacent to Louisville and Lexington, KY and one RSA
   in Tennessee which abuts Knoxville, TN. The 38 counties in Kentucky and the
   six counties in Tennessee cover more than 15,000 square miles.

In addition, the Company owns a 44.5% interest in a joint venture with
Southwestern Bell (which is managed and operated by Southwestern Bell),
representing 264,000 Net Pops, and certain other cellular interests.

PriCellular completed an Initial Public Offering of its Class A common stock in
December 1994. Its principal stockholders include members of the Price family,
AT&T, Spectrum Equity Investors, L.P. ("Spectrum"), The Thomas H. Lee Company,
and The Public School Employees' Retirement System of Pennsylvania.

The Company has a strategic alliance with AT&T which allows the Company to take
advantage of AT&T's acquisition experience, and benefit from AT&T's volume
purchasing power. The Company purchases landline interlata telephone service for
its switched cellular systems and cellular telephones at volume discounts
through its relationship with AT&T thereby minimizing two of the principal costs
associated with providing cellular service and acquiring new subscribers. The
volume discounts also extend to certain of the equipment necessary for the
Company's system development and expansion thereby reducing the Company's
capital expenditures. The Company believes that the proximity of three of its
operating clusters to AT&T's Systems affords significant opportunities for joint
marketing, promotions and other programs. The Company's Upper Midwest Cluster is
contiguous to AT&T's Systems serving the Minneapolis/St. Paul, MN MSA and the
St. Cloud, MN MSA. The Company's Mid-Atlantic Cluster borders the Pittsburgh,
PA, Steubenville, OH and Wheeling, WV MSAs, which are owned by AT&T. The
Company's New York Cluster abuts the northern border of AT&T's New York City
MSA, including Westchester and Rockland counties. The New York Cluster is also
adjacent to three MSAs owned by Southwestern Bell, with whom the Company has a
joint venture in Illinois and Texas.

The Company's acquisition strategy is to continue to expand its current clusters
through the acquisition of contiguous properties and, secondarily, to target for
purchase other small to mid-sized MSAs and strategic RSAs that it believes are
undervalued, underdeveloped or that possess traits indicative of potentially
high cellular usage and superior financial performance. The operation of
contiguous markets permits the Company to provide broad areas of uninterrupted
service and achieve certain economies of scale, including certain centralized
marketing, administrative and engineering functions. The Company believes that
smaller MSAs and certain RSAs often exhibit a concentration of small businesses,
longer commute times and well-traveled roads, all indicators of strong cellular
use. Many of these markets serve as hubs for retail trading areas and as
business, cultural or medical centers for populations spread over wide
geographic areas. In addition, management believes that because its markets are
less densely populated, they are less likely to face the level of competition
expected to be experienced in large urban areas.

The Company's operating strategy is, upon acquiring a cellular system, to effect
certain management, operational and organizational changes in order to increase
the number and quality of subscribers and enhance operating cash flow, while
controlling costs to acquire subscribers and promoting superior customer
service. Management believes that the majority of its Systems are in the early
stages of their growth cycle and represent significant growth opportunities. In
addition, many of these systems were underdeveloped prior to their acquisition
by the Company. After selectively upgrading the engineering in its cellular
network, the Company has implemented aggressive marketing programs to add
subscribers and reduce deactivations or "churn." In its Systems, the Company
markets under the CELLULARONE(R) brand name and participates in the North
American Cellular Network ("NACN"), a cellular network whose goal is to make
cellular service "seamless" across system borders throughout North America.

A key element of the Company's operating strategy is the positioning of its
cellular systems as the quality local service provider. The Company's chain of
95 local retail stores, which are staffed with sales and customer service
representatives, differentiate the Company from many of its larger competitors,
which frequently centralize customer service and other functions outside the
local market. In addition, these stores provide the Company with more control
over the sales process than if it relied upon independent agents. Management
believes that the Company's local presence enhances its ability to provide a
higher level of customer service and satisfaction.

The Company was incorporated under the laws of the State of Delaware on February
20, 1990. The principal executive offices of the Company are located at 711
Westchester Avenue, White Plains, New York 10604 and its telephone number is
(914) 422-0800.

Cellular Markets and Systems

The following table summarizes certain information concerning the Company's
markets.

<TABLE>
                                                Total                                      Date of
                  Market(a)                      Pops        Ownership      Net Pops     Acquisition
    --------------------------------------- --------------- ------------- -------------- -------------
<S>                                            <C>              <C>           <C>           <C>
    Upper Midwest Cluster
    Duluth, MN/Superior, WI MSA                240,234          100.0%        240,234       04/28/94
    Eau Claire, WI MSA                         143,701           96.7%        139,001       04/28/94
    Wausau, WI MSA                             121,727           95.1%        115,715       03/28/95
    MN-2A RSA                                   38,766          100.0%         38,766       07/07/95
    MN-3 RSA                                    59,528          100.0%         59,528       04/28/94
    MN-4 RSA                                    15,226          100.0%         15,226       08/10/95
    MN-5 RSA                                   207,107          100.0%        207,107       07/07/95
    MN-6 RSA                                   220,067          100.0%        220,067       11/23/94
    WI-1 RSA                                   110,749          100.0%        110,749       04/28/94
    WI-2 RSA                                    85,645          100.0%         85,645       11/18/96
    WI-3 RSA                                   140,697          100.0%        140,697       11/23/94
    WI-4 RSA                                   118,993          100.0%        118,993       01/07/97
    WI-5 RSA                                    81,194          100.0%         81,194       05/29/97
    WI-6A RSA                                   32,939          100.0%         32,939       11/23/94
    MI-1 RSA                                   203,391          100.0%        203,391       03/07/95

    Mid-Atlantic Cluster
    OH-7 RSA                                   257,290          100.0%        257,290       09/27/95
    OH-10A RSA                                  62,345          100.0%         62,345       09/29/95
    PA-9 RSA                                   188,096          100.0%        188,096       02/02/96
    WV-2 RSA                                    79,567          100.0%         79,567       12/20/95
    WV-3 RSA                                   269,709          100.0%        269,709       07/23/96

    New York Cluster
    Orange County, NY MSA                      327,053          100.0%        327,053       10/17/96
    Poughkeepsie, NY MSA                       263,723           95.6%        251,997       04/23/96
    NY-5 RSA                                   382,180          100.0%        382,180       12/29/95
    NY-6 RSA                                   111,373          100.0%        111,373       04/23/96

    Kentucky Cluster
    KY-4 RSA                                   245,952          100.0%        245,952       01/07/97
    KY-5 RSA                                   158,204          100.0%        158,204       01/07/97
    KY-6 RSA                                   260,920          100.0%        260,920       01/07/97
    KY-8 RSA                                   119,840          100.0%        119,840       01/07/97
    TN-4 RSA                                   263,553          100.0%        263,553       01/15/98

    Southwestern Bell Joint Venture
    Laredo, TX MSA                             176,162           44.5%         78,392       11/30/95
    IL-4 RSA                                   216,119           44.5%         96,173       11/30/95
    IL-6 RSA                                   201,234           44.5%         89,550       11/30/95
    Other Interests                              n/a              n/a          45,842        various
                                            -----------                   ------------
    Total                                    5,403,284                      5,097,288
                                            ===========                   ============
</TABLE>

(a)  All of the Company's licenses are non-wireline licenses with the exception
     of the license for the Laredo, TX MSA.


Markets

Upper Midwest Cluster

The Upper Midwest Cluster consists of approximately 1.8 million Net Pops in 15
contiguous Systems and covers over 78,000 square miles. The Upper Midwest
Cluster includes three of the Company's original Systems acquired in April 1994
and has grown steadily to 15 Systems through the acquisition of three Systems in
November 1994, two Systems in March 1995, three Systems in July 1995, one System
in August 1995, one System in November 1996, one System in January 1997 and one
system in May 1997.

The Systems in the Upper Midwest Cluster all operate under the CELLULARONE(R)
brand name. The Systems in the Upper Midwest Cluster compete against various
wireline cellular service providers marketing under six different names.
Management believes that the diversity of competitors operating under various
names and the Company's use of the CELLULARONE(R) brand name affords the Company
marketing, advertising and other operational advantages relative to those
competitors. These advantages include advertising and marketing the Company's
services as a single brand name on a regional basis, allowing the Company to set
regional roaming rates, be a single cellular service provider to corporate
accounts, allow calls to be handed-off between cell sites that cross market
borders and reduce the number of dropped calls as subscribers exit an individual
license area.

The Mid-Atlantic Cluster

The Mid-Atlantic Cluster comprises approximately 857,000 Pops and includes
portions of southeastern Ohio as well as adjacent portions of Pennsylvania and
northern West Virginia south of Pittsburgh. The Mid-Atlantic Cluster was
established with the acquisition of two Systems in September 1995 and currently
includes five contiguous RSAs as a result of acquisitions in December 1995,
February 1996 and July 1996. In addition, the Mid-Atlantic Cluster abuts
Columbus, OH and three MSAs owned by AT&T including its Pittsburgh, PA System,
affording the opportunity for joint marketing and promotions.

The New York Cluster

The Company's New York Cluster consists of approximately 1.1 million Net Pops
and over 8,000 square miles in suburban New York. The New York Cluster is
adjacent to AT&T's New York City MSA and is located between it and Southwestern
Bell's Albany, NY MSA. The New York Cluster was established with the acquisition
of the NY-5 RSA in December 1995 and currently includes two MSAs and two RSAs as
a result of acquisitions in April and October of 1996. With the addition of the
Orange County, NY MSA, the Company's New York Cluster includes the entire Hudson
Valley/Catskill region, thereby creating significant marketing and promotional
synergies and opportunities.

The Orange County, NY MSA is directly north of AT&T's New York City MSA and
abuts Westchester, Putnam and Rockland counties. Serving as a residential
community of metropolitan New York, Orange County includes the cities of
Newburgh, Middletown, Port Jervis and the affluent towns of Tuxedo and Warwick.
Major tourist attractions include The United States Military Academy at West
Point, Storm King State Park and Sterling Forest. The MSA contains more than 40
miles of the New York State Thruway (I-87), approximately 50 miles of I-84 and
35 miles of Route 17.

The Kentucky Cluster

The Kentucky Cluster consists of four RSAs in Kentucky containing approximately
785,000 Pops and over 12,000 square miles and one RSA in Tennessee consisting of
approximately 264,000 Pops and over 2,000 square miles. Three of the Kentucky
RSAs (KY-4, 5 and 6) form a contiguous cluster encompassing all of Kentucky
south of Louisville and Lexington and north of the Nashville, TN MSA and other
Tennessee markets. The 120,000 Pop KY-8 RSA serves the northeastern suburbs of
Lexington. The Tennessee RSA (TN-4) is located south of the Kentucky RSAs and
contains some of the most visited areas in the country, including the towns of
Gatlinburg and Pigeon Forge, the Dollywood tourist attraction and the entrance
to the Great Smoky Mountain National Park.

The Southwestern Bell Joint Venture

The Company owns 44.5% of a joint venture with Southwestern Bell in which the
Company contributed its System serving the Laredo, TX MSA and Southwestern Bell
contributed its Systems serving the IL-4 RSA and IL-6 RSA (the "Southwestern
Joint Venture"). The Company owns 44.5% of the Systems serving the combined
593,515 Pops, or 264,115 Net Pops. The Southwestern Joint Venture was
consummated on November 30, 1995.

Pursuant to the Southwestern Joint Venture, the Company receives guaranteed
preferential distributions in the first four years of the Southwestern Joint
Venture increasing from $3.3 million in the first year to $5.8 million in the
final year. The Company has the option to remain in the Southwestern Joint
Venture for four years or "put" its Joint Venture interest in the Southwestern
Joint Venture to Southwestern Bell at any time during the four year period at a
price beginning at $28.5 million and increasing to approximately $39.0 million
at the end of the four year period. Southwestern Bell had the right to purchase
the Company's interest during the first year at approximately $56.0 million and
has the right to purchase the Company's interest on the day prior to
Southwestern Joint Venture's fourth anniversary at 5% above the then "put"
price. Southwestern Bell has operating control of these properties during the
term of the Southwestern Joint Venture.

Acquisitions and Dispositions

Recent Transactions

During 1995, 1996, 1997 and January 1998, the Company consummated several
strategic acquisitions which expanded its Upper Midwest Cluster and established
the Mid-Atlantic Cluster, the New York Cluster and the Kentucky Cluster. In
addition during July 1996, November 1996 and January 1997, the Company disposed
of its standalone wireline Systems in Alabama and its MI-2 RSA which were
considered by management to be non-strategic.

Expansion of Upper Midwest Cluster

On March 7, 1995, the Company acquired from Buckhead Telephone Company the
assets of the System serving the MI-1 RSA (which represents 203,391 Pops) for
approximately $17.7 million in cash.

On March 28, 1995, the Company acquired a 50.02% general partnership interest
and a 0.58% limited partnership interest in Wausau Cellular Limited Partnership,
a Delaware limited partnership that wholly owns the System serving the Wausau,
WI MSA (115,715 Net Pops), for $5.4 million in cash.

On July 7, 1995, the Company consummated a transaction with Western Wireless
Corporation ("Western Wireless") pursuant to which the Company exchanged the
wireline System serving the Lubbock, TX MSA (229,051 Pops) for approximately
340,000 Net Pops, most of which are now part of the Upper Midwest Cluster. The
Net Pops acquired consist of the System serving the MN-5 RSA, the portion of the
System serving the MN-3 RSA that the Company did not own, a portion of the MN-2
RSA (Beltrami County), approximately 87.0% of the System serving the
Alton/Granite City, IL MSA, an additional 10.0% of the System serving the Eau
Claire, WI MSA and an additional 14.5% of the System serving the Wausau, WI MSA.
In addition, Western Wireless agreed to pay the Company $3.0 million in exchange
for the Company's agreement not to compete with Western Wireless within the
Lubbock, TX MSA for a period of three years following the exchange. Western
Wireless retained ownership of certain cell sites and other capital equipment.

On August 10, 1995, the Company acquired from Louise Hart 49.0% of the System
serving the MN-4 RSA (7,461 Net Pops), for approximately $75,000.

On November 18, 1996, the Company acquired from Wisconsin II Venture the 85,645
Pop WI-2 RSA for approximately $4.3 million in cash. Prior thereto, the Company
had interim operating authority for the WI-2 RSA.

In January 1997, the Company entered into two transactions with a subsidiary of
Bell South Corporation. The stand-alone wireline systems serving the Florence,
AL MSA (136,816 Pops) and AL-1B RSA (62,035 Pops) were sold for $24.0 million in
cash, of which $2.0 million is attributable to a two year covenant not to
compete. The transactions resulted in a gain of approximately $8.0 million. In
addition, the Company acquired for $6.0 million the WI-4 RSA (118,993 Pops). The
WI-4 RSA abuts the Company's MI-1 RSA to the northeast, its WI-3 RSA to the
northwest and its Wausau, WI MSA to the west.

In May 1997, the Company acquired from United States Cellular Corporation
("USCC") three counties in the WI-5 RSA containing 81,194 Pops for approximately
$10.6 million in cash and the contribution of approximately 18,000 minority
Pops. The WI-5 RSA abuts the Company's Eau Claire, WI MSA, its WI-1 RSA and
AT&T's Minneapolis, MN MSA.

The Mid-Atlantic Cluster Acquisitions

On September 27, 1995, the Company acquired from USCC substantially all of the
assets of the System serving the OH-7 RSA (257,290 Pops) for $39.8 million in
cash.

On December 20, 1995, the Company acquired from USCC substantially all of the
assets of the System serving the WV-2 RSA (79,567 Pops) for $7.8 million in
cash.

On February 2, 1996, the Company acquired from USCC substantially all of the
assets of the System serving the PA-9 RSA (188,096 Pops) for $26.1 million in
cash.

On July 23, 1996, the Company acquired substantially all of the assets of the
System serving the WV-3 RSA (269,709 Pops) from a subsidiary of Horizon Cellular
Telephone Company, L.P. ("Horizon") for $35.0 million in cash.

The New York Cluster Acquisitions

On December 29, 1995, the Company acquired from Cellular Upstate New York, Inc.
substantially all of the assets of the System serving the NY-5 RSA (382,180
Pops) for approximately $65.9 million in cash.

On April 23, 1996, the Company acquired from subsidiaries of USCC the System
serving the NY-6 RSA (111,373 Pops) and 83% of the System serving the
Poughkeepsie, NY MSA (218,890 Net Pops). The Company acquired substantially all
of the assets serving the NY-6 RSA for approximately $19.8 million in cash and
83.0% of the stock of the Dutchess County Cellular Telephone Company serving the
Poughkeepsie, NY MSA for approximately $38.9 million, with one half paid in cash
and the balance in a three-year note bearing interest at the prime rate (the
"Poughkeepsie Note"). The note was subsequently repaid in November 1996.

On October 17, 1996, the Company consummated an exchange transaction with
Vanguard Cellular Systems, Inc. The Company exchanged an aggregate of 520,528
Pops consisting of its OH-9 RSA, a portion of its OH-10 RSA (excluding Perry and
Hocking counties) and the Parkersburg, WV/Marietta, OH MSA for the Orange
County, NY MSA (327,053 Pops), 11.1% of the Company's majority-owned
Poughkeepsie, NY MSA (29,367 Pops), 12.2% of the Janesville, WI MSA (18,296
Pops) and approximately 28,509 additional Pops, including small interests in the
Eau Claire, WI and Wausau, WI MSAs (in each of which the Company currently has a
majority interest). During 1997 the Company acquired an additional 1.3% of the
Poughkeepsie, NY MSA (3,740 Pops) from minority holders.

Kentucky Cluster Acquisition

In January 1997, the Company acquired from a subsidiary of Horizon four RSAs in
Kentucky (approximately 785,000 Net Pops) for $96.4 million in cash and
1,948,052 shares of the Company's Class A common stock (valued at approximately
$19.1 million). On February 4, 1997 the Company repurchased and retired the
1,948,052 shares from Horizon for $15.3 million.

In January 1998, the Company acquired from Bachtel Liquidity, L.P., an affiliate
of Bachow & Associates, Inc., the TN-4 RSA which contains approximately 264,000
Pops for approximately $73.0 million in cash (subject to adjustments). The RSA,
adjacent to three MSAs, including Knoxville, TN, is located south of the
Company's Kentucky Cluster.

Dispositions

During July 1996, the Company consummated the sale of its AL-4 RSA for $27.5
million in cash ($2.5 million of which is attributable to a two year covenant
not to compete). In November 1995, the Company had acquired this stand-alone RSA
for total consideration of $20.0 million. During October, 1996 the Company
consummated the sale of its MI-2 RSA for approximately $6.5 million in cash.

Remaining Shares of CIS

In April 1997, the Company acquired all of the outstanding shares of capital
stock of CIS not previously owned.

Recent Developments

On March 6, 1998, the Company and American Cellular Corporation, a Delaware
corporation ("ACC"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein, ACC will be merged with and into the Company, with
ACC to be the surviving corporation of such merger (the "Merger"). At the
Effective Time (as defined in the Merger Agreement) of the Merger, each issued
and outstanding share of Class A common stock, par value $0.01 per share, of the
Company (the "Class A Shares") and Class B common stock, par value $0.01 per
share, of the Company will in each case be converted into the right to receive
$14.00 in cash, without interest (the "Merger Consideration"), and each issued
and outstanding share of Series A Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), of the Company will be
converted into the right to receive the product of the Merger Consideration and
the number of Class A Shares into which each such share of Series A Preferred
Stock is convertible at such time in connection with a change of control. The
Merger Agreement permits the Company, under certain circumstances, to respond to
unsolicited third party acquisition proposals and, upon payment of certain fees
to ACC, to terminate the Merger Agreement.

In connection with the execution of the Merger Agreement, AT&T Wireless, Inc.,
The Thomas H. Lee Company, Steven Price and Eileen Farbman (collectively, the
"Principal Shareholders") entered into a Voting Agreement with ACC. Pursuant to
the agreement, the Principal Shareholders, the beneficial owners of
approximately 39% of the outstanding Common Stock and Preferred Stock of the
Company (or 57% of the fully diluted voting power of the Company), agreed to
vote their shares in favor of the approval and adoption of the Merger Agreement.
The Voting Agreement terminates upon termination of the Merger Agreement.

Business Strategy

Acquisition Strategy

The Company's strategy is to continue to expand its current clusters through the
acquisition of contiguous properties and, secondarily, to target for purchase
other small to mid-sized MSAs and strategic RSAs that it believes are
undervalued, underdeveloped or that possess traits indicative of potentially
high cellular usage and superior financial performance. The operation of
contiguous markets permits the Company to provide broad areas of uninterrupted
service and achieve certain economies of scale, including certain centralized
marketing, administrative and engineering functions. The Company believes that
smaller MSAs and certain RSAs often exhibit a concentration of small businesses,
longer commute times and well-travelled roads, all indicators of strong cellular
use. Many of these markets serve as hubs for retail trading areas and as
business, cultural or medical centers for populations spread over wide
geographic areas. In addition, management believes that because its markets are
less densely populated than the national average, they are less likely to face
the level of competition expected to be experienced in large urban areas.

Operating Strategy

Upon acquiring a cellular system, the Company's operating strategy is to effect
certain management, operational and organizational changes in order to increase
the number and quality of subscribers and enhance operating cash flow, while
controlling subscriber acquisition costs and promoting superior customer
service. The Company seeks to accomplish these changes by employing the
following practices:

   -   Decentralized Management. The Company manages each of its Systems on a
       decentralized basis, delegating direct responsibility for hiring,
       marketing, distribution, customer service, churn control, billing,
       roaming and other day-to-day operating decisions to the general manager
       of each System. General managers must strictly adhere to a budget
       designed to improve operating cash flow and increase the subscriber base.
       Their compensation is linked to their ability to meet or exceed their
       budgeted goals. The Company believes that its decentralized management
       structure fosters a strong sense of customer service and community
       spirit, enabling it to customize its marketing strategy to the needs of
       the local market, and eliminate the need for a large corporate staff or
       for a centralized multi-system customer service center that is located
       outside of the local market. The Company believes that placing
       decision-making responsibility in the hands of its general managers
       fosters the decisive actions necessary to meet local competitive
       challenges.

   -   Aggressive Marketing and Promoting of Cellular Service. The Company
       aggressively markets to increase subscriber activations and reduce churn.
       Many of its marketing programs are designed to distinguish the Company as
       the local market's highest quality cellular service provider, stressing
       its localized sales offices, customer service and commitment to the
       community. These programs also include offering distinctive rate plans
       and roaming rates to emphasize "value" and the "advantage" of the
       Company's cellular service, launching targeted advertising campaigns
       aimed at the most attractive cellular user segments, creating regional
       marketing alliances with neighboring cellular carriers and taking an
       active, visible role in community, government and charity organizations.
       Management believes that the Company's positioning of its cellular system
       as the local service provider often contrasts with its larger
       competitors, which frequently centralize customer service and other
       functions outside of the local market.

   -   Strong Retail and Direct Sales Effort. A key element of the Company's
       positioning in its markets is its use of local retail stores, as well as
       a local direct sales force. A retail location complemented by a direct
       sales force provides the Company with more control over the sales process
       than if it were to rely exclusively on independent agents. The Company
       has aggressively opened its own retail stores and currently operates 95
       retail locations. Management believes that this local presence enhances
       its ability to provide quality customer service, and that customers who
       purchase cellular service directly from the Company through its retail
       stores and direct sales force tend to have fewer complaints and higher
       usage than subscribers who activate with independent agents or retailers.

   -   Dedication to Customer Service. The Company strives to maintain a high
       level of customer satisfaction through a variety of techniques, including
       tying sales commissions to subscriber retention, outbound telemarketing
       to subscribers on a regular basis and active ongoing contact with new
       customers. The Company believes that its emphasis on superior local
       customer service has helped reduce its average monthly churn rate. The
       Company's average monthly churn rate for the year ended December 31, 1997
       was 1.5%, well below the industry average of approximately 2.1%.

   -   System Development and Expansion. The Company develops or builds out its
       cellular service areas by adding channels to existing cell sites and by
       building new cell sites with an emphasis on improving coverage for
       hand-held phones in heavily-trafficked areas. Such development is done
       for the purpose of increasing capacity and improving coverage in response
       to projected subscriber demand and competitive factors. Projected
       subscriber demand is calculated for each cellular service area on a
       cell-by-cell basis. These projections involve a traffic analysis of usage
       by existing subscribers, coverage quality analysis and an estimate of the
       number of additional subscribers in each such area. In calculating
       projected subscriber demand, the Company builds into its design
       assumptions a maximum call "blockage" rate of 2% (percentage of calls
       that are not connected on the first attempt at peak usage time during the
       day). After calculating projected subscriber demand, the Company
       determines the most cost-efficient manner of meeting such projected
       demand. The Company has historically met such demand through a
       combination of augmenting channel capacity in existing cell sites and
       building new cell sites. Cell site expansion is expected to enable the
       Company to continue to add subscribers, enhance use of the systems by
       existing subscribers, increase roamer traffic due to the larger
       geographic area covered by the cellular network and further enhance the
       overall quality of the network.

Cellular Operations

General

The Company has concentrated its recent efforts on creating an integrated
network of cellular systems in its operating clusters. The Company operates four
clusters of cellular systems as well as certain other markets and minority
interests. As of December 31, 1997, PriCellular had over 250,000 subscribers, or
5.2% penetration. Through the participation of its non-wireline Systems in NACN
and other special networking arrangements between the Company and other
non-wireline operators of cellular systems in the United States, management
believes the Company's subscribers are able to receive quality coverage
throughout the United States.

Management believes that the majority of its Systems are in the early stages of
their growth cycle and afford significant opportunities for improvements in
performance, particularly with respect to rates of penetration and churn. There
can be no assurances, however, that the Company will be able to maintain such
improvements or achieve similar improvements with respect to its other Systems.
Management believes that prior to the Company's assumption of ownership many of
these Systems had been significantly undermanaged or underdeveloped. Some of the
Systems had minimal signal coverage, had never been actively marketed and had
never developed a subscriber base. Certain other markets had adequate signal
coverage but the sales and marketing activity had largely been dormant. The
following table sets forth certain information with respect to the performance
of the Company's Systems owned as of the dates indicated.

<TABLE>
                                                                    Years ended December 31

                                                 -------------------------------------------------------------
                                                    1997         1996        1995        1994         1993
                                                 ------------ ----------- ----------- ------------ -----------
<S>                                                  <C>           <C>         <C>         <C>          <C>
   Ending subscribers (1)                         250,441       150,328      78,227     17,344        9,886
   Ending penetration (2)                             5.2%          3.8%        2.2%       .95%         .53%
   Ending Pops (in millions)                          4.8           3.9         3.6        1.8          1.8
   Churn (3)                                          1.5%          1.6%        2.0%       2.7%         3.2%
   Average monthly revenue per subscriber (4)         $72           $82        $107       $123         $156
   Average marketing cost per net subscriber         $399          $371        $403       $497         $496
     addition (5)
</TABLE>
------------------------
(1)  Each billable telephone number in service represents one subscriber, not
     including test, demonstration or other telephone numbers for which payment
     is not expected.

(2)  Represents the ratio of ending subscribers to the estimated total
     population of majority owned Systems and the Southwestern Bell Joint
     Venture.

(3)  Represents the average monthly churn for the periods presented. Churn
     equals the ratio of disconnected monthly subscribers to average monthly
     subscribers.

(4)  Represents the ratio of total monthly service revenues to average monthly
     subscribers.

(5)  Determined by dividing the amount of marketing costs by the net subscribers
     added. Marketing cost represents all selling expenses and losses incurred
     on equipment sales.

Subscribers and System Usage

The Company's cellular subscribers have increased to approximately 250,000 as of
December 31, 1997 from approximately 150,000 as of December 31, 1996 and
approximately 78,000 as of December 31, 1995. The Company's subscribers fall
into 12 major categories: construction, professional/management, medical, sales,
real estate, agriculture, service industry, transportation, financial,
government, manufacturing and other, which includes low usage subscribers.
Reductions in the cost of cellular services have led to an increase in cellular
telephone usage by general consumers for non-business purposes. In addition, the
Company believes that several categories of its subscribers will develop
requirements for specialized cellular applications, such as wireless data
technology. As a result, the Company believes that there is an opportunity for
significant growth in each of its existing service areas. The Company will
continue to seek to broaden its subscriber base for basic cellular services as
well as to increase its offering of customized services. The sale of custom
calling features typically results in increased usage of cellular telephones by
subscribers, thereby further enhancing revenues.

Marketing

The Company markets all of its cellular products and services under the name
CELLULARONE(R), one of the most recognized brand names in the cellular industry
(see "Service Marks"). The national advertising campaign conducted by the
Cellular One Group enhances the Company's advertising exposure at a fraction of
the cost of what could be achieved by the Company alone. The Company also
obtains substantial marketing benefits from the name recognition associated with
this widely used service mark, both with existing subscribers traveling outside
of the Company's service areas and with potential new subscribers moving into
the Company's service areas. In addition, travelers who subscribe to
CELLULARONE(R) service in other markets may be more likely to use the Company's
Systems when they travel in the Company's service areas, primarily due to the
technical operation of the cellular telephone. Cellular telephones of
non-wireline subscribers are programmed to select the non-wireline carrier (such
as the Company) when roaming, unless the non-wireline carrier in the roaming
area is not yet operational or the subscriber either dials a special code or has
a cellular telephone equipped with an "A/B" (non-wireline/wireline) switch and
selects the wireline carrier.

Through its membership in NACN and other special networking arrangements, the
Company provides extended regional and national service to its subscribers in
other markets, thereby allowing them to make and receive calls while in other
cellular service areas without dialing special access codes. This service
distinguishes the Company's service and call delivery features from those of
some of its competitors. NACN is the largest wireless telephone network system
in the world, linking non-wireline cellular operators throughout the United
States and Canada. NACN connects key areas across North America so that
customers can use their cellular phones to place and receive calls in these
areas as easily as they do in their home areas. Through NACN, customers receive
calls automatically without the use of complicated roaming codes as they "roam"
in more than 7,000 cities, in the United States and Canada. By dialing
subscribers' cellular telephone numbers, a caller can reach the Company's
subscribers without knowing their location or having to dial additional roaming
access numbers. In addition, special services such as call forwarding and call
waiting automatically follow the subscribers as they travel.

The Company's marketing strategy is designed to generate continued net
subscriber growth by focusing on subscribers who are likely to generate higher
than industry average monthly revenues and lower than industry average churn
rates, while simultaneously maintaining a low cost of adding net subscribers.
The Company principally uses in-house sales and marketing staff and its own
retail outlets.

Management has implemented its marketing strategy by training and compensating
its sales force in a manner designed to stress the importance of customer
service, high penetration levels and minimum acquisition costs per subscriber.
The Company believes that its internal sales force is better able to select and
screen new subscribers and select pricing plans that realistically match
subscriber means and needs than are independent agents. In addition, the Company
motivates its direct sales force to sell appropriate rate plans to subscribers,
thereby reducing churn, by linking payment of commissions to subscriber
retention. As a result, the Company's use of an internal sales force keeps
marketing costs lower than when independent agents are used because commissions
are lower and subscriber retention is higher.

The Company believes that it helps minimize its churn rate through an after-sale
telemarketing program implemented through its sales force and customer service
personnel. This program not only enhances customer loyalty, which reduces churn,
but also increases add-on sales and customer referrals. The telemarketing
program allows the sales staff to check customer satisfaction as well as to
offer additional calling features, such as voicemail, call waiting and call
forwarding.

The Company's sales force works principally out of its own retail stores in
which the Company offers a full line of cellular products and services. As of
December 31, 1997, the Company maintained 95 retail locations. Ranging from 250
square feet to 4,000 square feet, each store is fully equipped to handle
customer service and telephone maintenance and installation. Some of these
stores are also authorized warranty repair centers. The Company's stores provide
subscriber-friendly retail environments (extended hours, large selection, an
expert sales staff and convenient locations) which make the sales process quick
and easy for the subscriber.

Products and Services

In addition to providing high-quality cellular telephone service in each of its
markets, the Company also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer transfer. In 1998, the Company intends to upgrade its systems to provide
digital services in some of its markets such as caller I.D., message waiting
indicator, short messaging services and sleep mode for longer battery life.

Several rate plans are presented to prospective customers so that they may
choose the plan that will best fit their expected calling needs. Unlike some of
its competitors, the Company designs rate plans on a market-by-market basis. The
Company's local general managers generally have the authority to modify existing
rate plans and initiate new rate plans depending upon market and competitive
conditions. These rate plans include a high-volume user plan, a medium-volume
user plan, a basic plan and an economy plan. Most rate plans combine a fixed
monthly access fee, a designated amount of free minutes, per-minute usage
charges and additional charges for custom-calling features in a package which
offers value to the customer while enhancing airtime use and revenues for the
Company. In general, rate plans which include a higher monthly access fee
typically include a lower usage rate per minute. An ongoing review of equipment
and service pricing is maintained to ensure the Company's competitiveness.

Reciprocal agreements between the Company and other cellular operators allow
their respective subscribers to place calls, or roam, in most cellular service
areas throughout the country. Roamers, subscribers placing calls outside their
home market, are typically charged a higher per minute rate than would be
charged for home users. Roaming revenues derived from this usage not only have
higher yields than home usage revenues, but have almost no associated marketing
or customer service costs, therefore, achieving higher margins than home service
revenues. The Company's markets, strategically surrounding or between major
metropolitan areas, encompass significant portions of heavily traveled corridors
which results in significant roaming revenues for the Company.

Customer Service

Customer service is an essential element of the Company's marketing and
operating philosophy. The Company is committed to attracting new subscribers and
retaining existing subscribers by providing consistently high-quality customer
service. In each of its cellular service areas, the Company maintains a local
staff, including a market manager, customer service representatives, technical
and engineering staff, sales representatives and installation and repair
facilities. Each cellular service area handles its own customer-related
functions such as credit evaluation, customer activations, account adjustments
and rate plan changes. Local offices and installation and repair facilities
enable the Company to better service customers, schedule installations and make
repairs. Through the use of sophisticated monitoring equipment, technicians at
the customer service center are able to monitor the technical performance of its
cellular system.

In addition, the Company's customers are able to report cellular telephone
service or account problems to a local office representative. Management
believes its decentralized philosophy and emphasis on customer service in each
of its markets affords it a competitive advantage over its large competitors who
typically centralize customer service outside of the local market.

System Development and Expansion

The Company develops or builds out its cellular service areas by adding channels
to existing cell sites and by building new cell sites with an emphasis on
improving coverage for hand-held phones in heavily-trafficked areas. Such
development is done for the purpose of increasing capacity and improving
coverage in response to projected subscriber demand and competitive factors.
Projected subscriber demand is calculated for each cellular service area on a
cell-by-cell basis. These projections involve a traffic analysis of usage by
existing subscribers and an estimation of the number of additional subscribers
in each such area. In calculating projected subscriber demand, the Company
builds into its design assumptions a maximum call "blockage" rate of 2%
(percentage of calls that are not connected on first attempt at peak usage time
during the day). After calculating projected subscriber demand, the Company has
historically met such demand through a combination of augmenting channel
capacity in existing cell sites and building new cell sites.

Cell site expansion is expected to enable the Company to continue to add
subscribers, enhance use of the Systems by existing subscribers, increase roamer
traffic due to the larger geographic area covered by the cellular network and
further enhance the overall quality of the network. The Company believes that
the increased cellular coverage will have a positive impact on market
penetration, subscriber usage and roaming revenue.

The Company also continues to evaluate expansion through acquisitions of other
cellular properties that will further enhance its network. In evaluating
acquisition targets, the Company considers, among other things, demographic
factors, including population size and density, traffic patterns, cell site
coverage and required capital expenditures.

Competitors and Adjoining Systems

The Company competes with various competitors in each of its clusters.
Management believes that its integrated network of contiguous cellular systems
operating as CELLULARONE(R) affords it significant advantages over many of its
cellular competitors. In the Upper Midwest Cluster, the Company competes against
six distinct operators, in the Mid-Atlantic Cluster, the Company competes
against four distinct operators, and in the Kentucky Cluster, the Company
competes against five distinct operators.

The following chart lists the Company's cellular competitors in each of its
clusters and the major adjoining operators.

<TABLE>
     Company Cluster                   Competitors                         Adjoining Systems
--------------------------- ---------------------------------- -------------------------------------------
<S>                         <C>                                <C>
Upper Midwest Cluster       Air Touch Communications, Inc.     AT&T
                            United States Cellular Corp.       BellSouth
                            CelluLink                          Western Wireless
                            Cellular 2000
                            CellCom
                            Century Telephone Enterprises

Mid-Atlantic Cluster        United States Cellular Corp.       AT&T
                            360 Communications                 Airtouch Communications Inc.
                            Ameritech                          Vanguard Cellular Systems, Inc. ("Vanguard")
                            Bell Atlantic Mobile

New York Cluster            Bell Atlantic Mobile               Bell Atlantic Mobile
                                                               AT&T
                                                               Southwestern Bell
                                                               Vanguard

Kentucky Cluster            BellSouth Mobility                 GTE Corp.
                            Ramcell, Inc.                      United States Cellular Corp.
                            Bluegrass Cellular
                            United States Cellular Corp.
                            360 Communications
</TABLE>

Telecommunications Act of 1996; Other Regulatory Developments

The Telecommunications Act of 1996 ("Telecom Act") is the first legislation
enacted in over 60 years that attempts comprehensive reform of
telecommunications regulation, although the legislation did not have as a
principal focus the cellular industry in particular or the wireless
communications industry in general. The Telecom Act's goal is to remove
statutory, regulatory, and court-ordered barriers that historically prohibited
new entrants into many segments of the telecommunications industry. Certain of
the provisions of the Telecom Act have been declared unconstitutional, including
several provisions relating to restrictions on Regional Bell Operating Companies
that were deemed a bill of attainder by the United States District Court in
Wichita Falls, Texas. That ruling has been appealed. The Company cannot predict
the outcome of that litigation or the eventual impact of the result of that
litigation on the Company.

To facilitate the entry of competitors, the Telecom Act imposes certain
requirements on local exchange carriers, including interconnection, universal
service, equal access, and facilitating local wireline telephone service. The
FCC has adopted regulations implementing these provisions, including rules on
telephone number portability pursuant to which subscribers will be able to
migrate their landline telephone numbers to a cellular carrier or other
Commercial Mobile Radio Service ("CMRS") or landline carrier, or from a cellular
carrier to another CMRS or landline carrier.

In August 1996, the FCC released its decision implementing the interconnection
portions of the Telecom Act. However, major portions of the FCC's
interconnection rules were reversed by the United States Court of Appeals for
the Eighth Circuit, which held that the rules interfered with matters left to
the jurisdiction of the states by the Telecom Act. The Eighth Circuit's decision
has been appealed to the United States Supreme Court, which has decided to
expedite its review of petitions for certiorari with regard to the Eighth
Circuit's decision. The Company cannot predict the eventual outcome of the
judicial review of the FCC's interconnection rules or the effect of the eventual
implementation of interconnection rules by the FCC. However, pursuant to the
provisions of the Telecom Act, the Company has renegotiated many of its
interconnection agreements with incumbent local exchange carriers and thereby
reduced the cost of interconnection with the local telephone facilities.

The FCC's interconnection decision concluded that CMRS providers are entitled to
reciprocal compensation arrangements with incumbent local exchange carriers and
prohibited local exchange carriers from charging CMRS providers for terminating
traffic initiated on the local exchange carrier's network. While the FCC noted
the potential for asserting jurisdiction over certain aspects of CMRS
interconnection with landline local exchange carriers, it has so far determined
to defer primarily to the states in implementing interconnection policies
pursuant to general guidelines established by the FCC, some of which survive the
Eighth Circuit decision.

The FCC declined to require cellular carriers to comply with certain
interconnection provisions of the Telecom Act applicable to local exchange
carriers. Prior to the passage of the Telecom Act, the FCC had proposed to
require CMRS providers to interconnect directly with other mobile service
providers but tentatively concluded that it would be premature to adopt such a
requirement. The FCC has since stated that it would revisit this issue in the
future.

The Telecom Act requires telecommunications carriers providing interstate
service to contribute to a federal Universal Service Support Fund established by
the FCC. The Universal Service Fund will support telephone service in high-cost
and low-income areas and support access to telecommunications facilities by
schools and libraries. States will also be implementing requirements that
carriers contribute universal service funding from intrastate telecommunications
revenues. The Company has revised its customer billing to reflect additional
costs related to these universal service fund requirements. There can be no
guarantee that the Company will be able to continue to pass the costs of the
fund requirements on to its customers in the future.

The FCC has eliminated its PCS-cellular cross ownership rule, but retained a
spectrum cap on aggregation of CMRS spectrum. A cellular licensee and its
affiliates may not hold an attributable interest in more than 45 MHz of licensed
cellular, broadband personal communications service ("PCS"), and specialized
mobile radio ("SMR") spectrum in a particular geographic area.

The FCC has revised its rules pertaining to cellular licensees' obligations to
allow resale of cellular service. The FCC requires a cellular carrier (and
certain other wireless carriers) to permit unrestricted resale of its service
(including to other FCC-licensed wireless carriers). This rule contains a sunset
provision that provides that the rule will lapse five years following the FCC's
grant of the last group of initial broadband PCS licenses.

Pursuant to an earlier amendment of the Communications Act of 1934, as amended,
Congress preempted state or local regulation of entry into, or rates charged by,
any CMRS or private mobile service carrier. States were allowed to petition the
FCC for authorization to continue their authority to regulate rates and entry by
August 1994. While eight states sought such authority, the FCC denied all such
requests.

Service Marks

CELLULARONE(R) is a registered service mark with the U.S. Patent and Trademark
Office. The service mark is owned by Cellular One Group, a Delaware general
partnership of Cellular One Marketing, Inc., a subsidiary of Southwestern Bell
Mobile Systems, Inc., together with Cellular One Development, Inc., a subsidiary
of AT&T and Vanguard Cellular Systems, Inc. The Company uses the CELLULARONE(R)
service mark to identify and promote its cellular telephone service pursuant to
licensing agreements with Cellular One Group (the "Licensor"). Licensing and
advertising fees are determined based upon the population of the licensed areas.
The licensing agreements require the Company to provide high-quality cellular
telephone service to its customers and to maintain a certain minimum overall
customer satisfaction rating in surveys commissioned by the Licensor. The
licensing agreements, which the Company has entered into, are for original
five-year terms expiring on various dates. These agreements may be renewed at
the Company's option for three additional five-year terms.

Employees and Agents

Currently, the Company has approximately 800 employees. In addition, the Company
has agreements with independent sales agents, including car dealerships,
electronics stores, paging services companies and independent contractors. None
of the Company's employees are represented by a labor organization, and the
Company's management considers its employee relations to be good.

Overview of Cellular Telephone Industry

The cellular telephone industry is a regulated duopoly. The FCC has designated
734 distinct markets in the country, 306 MSAs and 428 RSAs. Since it became
operational in 1983, the cellular telephone industry has experienced significant
growth. For the year ended December 31, 1996, the cellular industry reported
total revenues of $23.6 billion, versus $19.1 and $14.0 billion for the years
ended 1995 and 1994, respectively. The "Dick Tracy" Wireless Communications
Industry Report, published by Donaldson, Lufkin & Jenrette, predicts continued
rapid growth for the cellular industry and forecasts in their fall 1997 issue
that the penetration rate of cellular telephones will be 58.0% of U.S. Pops at
year-end 2006.

The following table sets forth information published by the Cellular
Telecommunication Industry Association ("CTIA") with respect to the number of
subscribers served by cellular, PCS and ESMR telephone systems in the United
States and the combined penetration rate of such operators as of the dates
indicated:

<TABLE>
                                                            As of December 31
                                        1996         1995          1994         1993          1992
                                    ------------- ------------ ------------- ------------ -------------
<S>                                    <C>           <C>          <C>           <C>          <C>
Subscribers (in thousands)             44,706        33,786       24,134        16,009       11,033
Ending penetration (1)                  16.9%         12.8%         9.1%          6.1%         4.1%
</TABLE>

(1) Determined by dividing the aggregate number of subscribers by estimated
population as determined by Donnelly's 1996 United States population estimates.
Rates reflect combined penetration of both wireline and non-wireline cellular
operators.

Cellular telephone technology is based upon the division of a given market area
into a number of smaller geographic areas or "cells." Each cell has "base
stations" or "cell sites," which are physical locations equipped with
transmitter receivers and other equipment that communicate by radio signal with
cellular telephones located within range of the cell. Cells generally have a
high quality operating range of one to ten miles. Each cell site transmits to a
mobile telephone switching office ("MTSO") which, in turn, transmits to the
local landline telephone network. As cellular telephone systems are fully
interconnected with the landline telephone network and long-distance networks,
subscribers can receive and originate both local and long-distance calls from
their cellular telephones on a worldwide basis.

When a cellular subscriber in a particular cell dials a number, the cellular
telephone sends the call by radio signal to the cell's transmitter-receiver,
which then sends it to the MTSO. The MTSO then completes the call by connecting
it with the landline telephone network or another cellular telephone unit.
Incoming calls are received by the MTSO, which instructs the appropriate cell to
complete the communications link by radio signal between the cell's
transmitter-receiver and the cellular telephone. Each conversation on a cellular
system occurs on a pair of radio talking paths, thus providing full duplex
telephone service. The relatively short-range transmissions between cell sites
and cellular telephones permit the two distinguishing features of cellular
telephone systems: frequency re-use, enabling the simultaneous use of the same
frequency in two or more adequately separated cells, and call hand-off,
occurring when the MTSO routes a mobile user to an adjacent cell that can
provide a higher quality signal without interrupting an ongoing call.

Frequency re-use allows for the efficient use of the radio frequencies allocated
to each cellular operator. Each cell in a cellular telephone system is assigned
a specific set of frequencies for use between that cell's base station and
cellular telephones within the operations range of the cell, so that the radio
frequencies being used in one cell do not interfere with those being used in
adjacent cells. Due to the relatively low transmission power of the base
stations and cellular telephones, two or more cells which are sufficiently far
apart can use the same frequencies within the same market without interfering
with one another.

A cellular telephone system's capacity can be increased in various ways. Within
certain limitations, increasing demand may be met by simply adding available
frequency capacity to cells as required, or by using directional antennae to
divide a cell into discrete multiple sectors or coverage areas, thereby reducing
the required distance between cells using the same frequency. Furthermore, areas
within a system may be served by more than one cell through procedures which
utilize available channels in adjacent cells. When all possible channels are in
use, further growth can be accomplished through a process called "cell
splitting." Cell splitting entails dividing a single cell into a number of
smaller cells served by lower-power transmitters, thereby increasing the re-use
factor and the number of calls that can be handled in a given area. Although the
Company has generally not experienced any material capacity constraints in its
systems, the Company plans to implement a program of cell splitting to meet
projected capacity demands for the next several years. System capacity can also
be expanded through the implementation of digital cellular technology described
below.

Call hand-off in a cellular telephone system is automatic and virtually
unnoticeable to the user. The MTSO and base stations continuously monitor the
signal strength of the call in progress. The signal strength of the transmission
between the cellular telephone and the base station declines as the caller moves
away from the base station in that cell. When the signal strength of a call
declines to a predetermined threshold level, the MTSO automatically determines
if the signal strength is greater in an adjacent cell and, if so, hands off the
call to that cell. If the cellular telephone user leaves the service areas of
the cellular telephone system, the call can often be handed off to an adjacent
system through intersystem networking arrangements. The Company currently has
several such networking arrangements and will continue to work towards
establishing intersystem networking with all adjacent Systems.

Digital Cellular Technology

Some cellular operators have upgraded their cellular systems, especially in the
more populated markets, to support both analog and digital technology. Over the
next few years, it is expected that many other cellular systems will upgrade to
support both analog and digital technology. These upgrades are being undertaken
due in part to capacity constraints in many of the largest cellular markets,
such as New York, Los Angeles and Chicago. As carriers reach limited capacity
levels of analog only networks, certain calls may be unable to be completed,
especially during peak hours. The industry-wide migration from analog to digital
technology is expected to be a process that will take a number of years to
complete.

The FCC has not mandated a single national digital standard (as it did with
analog Advanced Mobile Phone System) and, as a result, three distinct
technologies have evolved as standards and are being deployed nationally.

   1.  CDMA-Code division multiple access is a spread-spectrum technology that
       is predominantly being used by Sprint and Bell Atlantic.

   2.  GSM-Global system mobile is a digital standard that originated in Europe
       and is being deployed by several 1.9 GHz license holders such as Western
       Wireless and TDS Aerial Communications.

   3.  TDMA-Time division multiple access is the standard adopted and certified
       by CTIA. It is the digital standard being deployed nationally by AT&T.
       TDMA is the most widely supported and enhanced digital standard utilized
       domestically today, with support from all of the large infrastructure
       providers, such as Nortel, Lucent and Ericsson. TDMA encodes three voice
       calls on a single 30 KHz channel effectively yielding a
       spectral-efficient, three fold increase in system capacity.

Digital technology increases system capacity while simultaneously providing an
architecture that supports delivery of revenue enhancing features and services,
commonly referred to as PCS (or simply Digital PCS). Digital PCS features
include extended (60 + hours) battery life on hand-held model phones, improved
call security, intelligent system selection/zone billing, alphanumeric paging,
internet based electronic mail receipt, presentation of calling party
identification, voice mail message waiting information and enhanced
data/facsimile transmission. Management does not believe that its network will
experience capacity constraints in the foreseeable future that would require
converting its network from analog to digital technology. However the Company
has concluded a successful TDMA digital trial in 1997 and is planning for a
limited cost, broad scale TDMA digital infrastructure upgrade in 1998 so as to
position the Company to offer the revenue enhancing digital PCS feature set to
its subscribers.

Competition; New Technology

The Company currently competes with one other cellular licensee in each of its
cellular markets. Many of these licensees are larger, and have greater financial
resources, than the Company. In addition, the Company competes in many of its
markets with providers of other CMRS such as PCS, SMR and paging. The Company
also competes with local landline telephone companies for telephone usage by
customers.

Although current policies of the FCC authorize only two cellular system
licensees in each market, the Company expects that it will face competition from
not only the other cellular licensee in each cellular market in which the
Company operates, but also from PCS and other CMRS licensees. Competition for
subscribers among CMRS providers is based principally upon the services and
enhancements offered, the technical quality of the system, sound quality,
reliability of connections, customer service, system coverage, capacity and
price.

The FCC requires all cellular system operators to provide service to
"resellers." A reseller provides cellular service to customers but does not hold
an FCC cellular license or own cellular facilities. Instead, the reseller buys
blocks of cellular telephone numbers from a licensed carrier and resells service
to the public through its own distribution methods. Thus, a reseller may be both
a customer of a cellular licensee's services and, also, a competitor of that
licensee. The Company does not know of any significant resellers currently
operating in competition with the Company's Systems.

Cellular telephones have remained the technology of choice for mobile
communications. Potential users of cellular systems may, however, find their
communications needs satisfied by other current and developing technologies,
particularly in the broadband personal communications services. PCS operators
providing digital communication technology may compete with cellular service
with regard to rates, enhanced privacy, and additional features such as
electronic mail and built-in paging. One-way paging or beeper services that
feature voice message and data display as well as tones, may be adequate for
potential subscribers who do not need to speak to the caller. In the future,
cellular service may also compete more directly with traditional landline
telephone service providers.

There are six potential broadband PCS providers in each PCS service area.
Licensing areas for broadband PCS are divided into 51 Major Trading Areas
("MTAs") and 493 smaller Basic Trading Areas ("BTAs") based on the geographic
divisions in the 1992 Rand McNally Commercial Atlas & Marketing Guide. Three
licensees per market hold 30 MHz of PCS spectrum, two licensed for each MTA and
one licensed for each BTA. The BTA licenses were awarded to small business and
rural telephone entities qualifying for participation in an "Entrepreneurs'
Block." The 30 MHz frequency blocks permit licensees to offer a broad range of
two-way voice, data and related communications services employing digital
micro-cellular technology. Three 10 MHz frequency blocks were licensed in each
BTA, with one per BTA licensed to an Entrepreneurs' Block entity. It is
anticipated that the 10 MHz licensees will provide niche services or will be
purchased by existing CMRS, including cellular operators for added spectrum. The
FCC's PCS rules, among other things, limit a cellular licensee until the year
2000 to two 10 MHz PCS licenses in areas in which it also provides cellular
services to 10 percent or more of the population. Thus, given the 25 MHz of
spectrum afforded cellular carriers under the cellular rules, cellular carriers
are subject to a 45 MHz spectrum cap for their combined cellular and PCS
spectrum in areas where they offer both services. After January 1, 2000,
cellular licensees will be permitted to acquire an additional five MHz for a
total of 15 MHz of PCS spectrum in their cellular service areas.

The FCC has also adopted rules for narrowband PCS services in the 900 MHz
frequency band and awarded national and regional licenses by auction. Narrowband
PCS services typically are advanced paging and messaging services. In addition,
the FCC allocated 30 MHz to unlicensed PCS, which will consist of new cordless
telephones, local area networks in offices and other kinds of short-range
communications. Unlicensed PCS operations are restricted to very low power.

SMR and other land mobile radio systems, such as those historically used by
taxicabs, tow truck services, and other communications services that have the
technical capability to handle mobile telephone calls (including interconnection
to the landline telephone network), may provide competition to cellular and PCS
services in certain markets. Beginning in February 1991, the FCC granted waivers
of certain of its SMR rules to permit several large operators of SMR systems to
construct and operate Enhanced Specialized Mobile Radio ("ESMR") systems. These
waivers allow SMR operators to use digital technology to provide a wide-area
mobile communications service that substantially increases the number of
customers that can be served. The ESMR system incorporates characteristics of
cellular technology, including multiple low power transmitters and
interconnection with the landline telephone network. ESMR service may compete
with cellular service by providing digital communication technology, lower
rates, enhanced privacy and additional features such as electronic mail and
built-in paging. The FCC has and will be auctioning SMR licenses in the 800 and
900 MHz frequency bands for the provision of wide area SMR licensing. The new
licenses were designed to promote wide-area systems that would make SMR more
competitive with other wireless services, including cellular.

Continuing technological advances in the telecommunications industry make it
impossible to predict the extent of future competition. A consortium of
telecommunications providers known as American Mobile Satellite Corporation has
been licensed by the FCC to provide mobile satellite service. In addition, the
FCC has issued licenses for low-orbit satellite systems that would provide voice
and data mobile communications to subscribers throughout the world. Other
proposals for additional mobile satellite service and spectrum are pending
before the FCC. The FCC and international and foreign regulatory authorities are
considering additional aspects of mobile satellite systems and services. The
International Maritime Satellite Organization ("Inmarsat") has been planning for
several years an "Inmarsat-P" international global satellite telephone and data
service that is expected to commence service in 1999 or 2000.

Mobile satellite systems could augment or replace communications within land
based cellular systems. Similar technological advances may make available
alternatives to cellular service, creating additional sources of competition.

In addition, the FCC has auctioned off 25 MHz of spectrum for unspecified fixed
and mobile services, collectively known as the General Wireless Communications
Service ("WCS"). The FCC defined WCS as any fixed or mobile service except
broadcasting, radiolocation, and satellite service. Among the services the FCC
anticipates the WCS may be used for are voice, video and data transmission,
private microwave, broadcast auxiliary, and ground-to-air voice and data. The
FCC has scheduled for February 1998 an auction for Local Multipoint Distribution
Service ("LMDS") frequencies in the 28 and 31 GHz frequency bands for which the
FCC will permit flexible use. It is anticipated that LMDS licenses will be used
to provide video and data transmission and Internet access, although voice use
is also permitted. Frequencies in the 38 GHz band have also been licensed for
similar uses.

As a result of the above, the Company's cellular operations may face increased
competition from entities providing other communication technologies and
services. The Company cannot predict the success of such competing technologies
or their operational abilities. While some of these technologies are currently
operational, others are operational on only a limited basis or are not yet
operational. Broadband PCS operators will compete directly with the Company and
may have access to substantial capital resources, although such resources have
generally not been available to Entrepreneurs' Block licensees. There can be no
assurance that the Company will be able to provide or that it will choose to
pursue, depending on the economics thereof, such services and features in
addition to those already provided. The Company believes that traditional tested
cellular service is economically proven. While the Company believes that
competition from other technologies will increase over both the short and long
terms, it also believes that the development of cellular technology and
expansion of the Company's cellular clusters is its best strategy. Nonetheless,
there can be no assurance that one or more of the technologies currently used by
the Company will not become obsolete sometime in the future.

Regulations

Regulation and Licensing of Cellular Telephone Systems

The FCC regulates the construction, operation and acquisition of cellular
systems in the United States pursuant to the Communications Act. FCC regulations
specify that two cellular radio licenses are available for any given area within
each of the 734 FCC designated markets in the United States (306 MSAs and 428
RSAs). Frequency block "B" was initially awarded to incumbent landline local
exchange carriers (the "Wireline" license) and frequency block "A" was initially
awarded to nonincumbents (the "Non-Wireline" license). Apart from the different
frequency blocks, there is no technical difference between Wireline and
Non-Wireline cellular systems and the operational requirements imposed on
Wireline and Non-Wireline licensees are the same. The regulatory distinction
between Wireline and Non-Wireline systems only concerns an applicant's
eligibility to apply for an initial authorization. After initial authorization,
a Non-Wireline company may purchase interests in a Wireline system, subject to
restrictions on common ownership of Wireline and Non-Wireline systems in the
same market and to any necessary prior approval of the FCC. Likewise, a company
affiliated with a landline telephone service provider may purchase an interest
in a Non-Wireline system, subject to the same restrictions on common ownership
and prior FCC approval where necessary.

FCC licensing of all MSA markets and the FCC's initial lotteries of all of the
RSA markets have been completed. Additional lotteries are to be held for several
RSA markets in which the initially selected applicant has been disqualified.

For Systems below the top 90 MSA markets (including all RSA markets), the
issuance of a construction permit initiates an 18-month period during which the
permittee must construct at least one cell and begin providing service via those
facilities. A permittee that does not complete initial construction within 18
months is subject to having its permit canceled. A small number of RSA
permittees forfeited their permits on this ground.

Following notice of completion of construction, a cellular operator obtains an
initial license. Cellular licenses are issued generally for a 10-year term
beginning on the date of the grant of the Initial Operating Authority and are
renewable upon application to the FCC for periods of up to 10 years. The FCC may
revoke a license prior to the end of its term in extraordinary circumstances
(such as when serious violations of FCC rules have occurred).

Under FCC rules, the authorized service area of a cellular provider in each of
its markets is referred to as the "Cellular Geographic Service Area" ("CGSA").
The CGSA may be coincident with, or smaller than, the related FCC-designated MSA
or RSA. A cellular licensee has the exclusive right to expand its CGSA
boundaries within the licensee's MSA or RSA for a period of five years after
grant of the licensee's construction permit. At the end of the five-year period,
however, any entity may apply to serve portions of the MSA or RSA outside the
licensee's CGSA. The five-year exclusivity period has expired for some licensees
and parties have filed "unserved area" applications. The FCC has granted a
number of unserved area applications for areas within both MSA and RSA markets,
some filed by incumbent operators and others filed by new entrants.

Near the conclusion of the license term (the years 1997 to 2007, in the case of
the Company's current licenses), licensees must file applications for renewal of
licenses to obtain authority to operate for up to an additional 10-year term.
Applications for license renewal may be denied if the FCC determines that the
grant of an application would not serve the public interest. In addition, at
license renewal time, other parties may file competing applications for the
authorization. In the event that qualified competitors file applications for a
licensee's market, the FCC may be required to hold a hearing to determine
whether the incumbent or the competitor will receive the license. In 1993, the
FCC adopted specific standards to apply to cellular renewals, concluding that it
will award a renewal expectancy to a cellular licensee that meets certain
standards of past performance. If the existing licensee receives a renewal
expectancy, it is very likely that the existing licensee's cellular license will
be renewed without a full comparative hearing. To receive a renewal expectancy,
a licensee must show that it (i) has provided "substantial" service during its
past license term; and (ii) has substantially complied with applicable FCC rules
and policies and the Communications Act. "Substantial" service is defined as
service which is sound, favorable and substantially above a level of mediocre
service that might only minimally warrant renewal.

Cellular radio service providers also must satisfy a variety of FCC requirements
relating to technical and reporting matters. One such requirement is the
coordination of proposed frequency usage with adjacent cellular users,
permittees and licensees in order to avoid interference between adjacent
Systems. In addition, the height and power of base station transmitting
facilities and the type of signals they emit must fall within specified
parameters. The FCC also regulates cellular service resale practices and the
terms under which certain ancillary services may be provided through cellular
facilities. Cellular systems are subject to certain Federal Aviation
Administration regulations respecting the location, lighting and construction of
cellular transmitter towers and antennae and may be subject to regulation under
the National Environmental Policy Act and the environmental regulations of the
FCC. State or local zoning and land use regulations may also apply. The Company
uses common carrier point to point microwave facilities to connect cell sites
and to link them to the main switching office. These facilities are separately
licensed by the FCC and are subject to regulation as to technical parameters and
service.

In July 1994, the FCC issued a notice proposing to require that all cellular
carriers provide interexchange carriers with equal access. Currently, only
AT&T's cellular carriers and the cellular affiliates of the Regional Bell
Operating Companies ("RBOCs") are required to provide equal access. The FCC also
proposed requiring all CMRS providers to provide interconnection to other mobile
service providers. In April 1995, however, the FCC tentatively concluded that it
would be premature to adopt such a requirement.

Congress amended the Communications Act to preempt, as of August 10, 1994, state
or local regulation of the entry of, or the rates charged by, any commercial
mobile service or any private mobile service which includes cellular telephone
service.

Transfers and Assignments of Cellular Licenses

The Communications Act and FCC rules require the FCC's prior approval of the
assignment or transfer of control of a construction permit or license for a
cellular system. Subject to FCC approval, a license or permit granted to a
non-wireline entity may be transferred or assigned to a wireline entity and vice
versa. In most cases, noncontrolling interests in an entity that holds a
cellular license or cellular system generally may be bought or sold without
prior FCC approval. In the case of a sale proposed to occur before the
expiration of certain holding periods, the FCC may prohibit or impose
limitations on such a sale or require the seller to make certain representations
as a condition precedent to such a sale. For RSAs, the minimum holding period
generally expires upon completion of initial construction. The FCC has permitted
sales prior to completion of initial construction under certain circumstances.
Specifically, the seller must demonstrate that it did not file its application
for the purpose of speculating in cellular licenses. Any acquisition by the
Company of cellular interests may also require the prior approval of state or
local regulatory authorities having jurisdiction over the cellular telephone
industry.

In certain circumstances, the FCC's rules prohibit the alienation of cellular
interests. No ownership interest in an RSA application, or an entity holding
such an application, may be transferred or otherwise alienated prior to the
grant of a construction permit. For cellular unserved areas, no substantial
change in ownership may take place until after the FCC has granted both a
construction permit and a license and the licensee has provided service to the
public for at least one year. These restrictions prevent prospective purchasers,
including the Company, from entering into agreements for assignment or transfer
of unserved areas and RSA acquisitions prior to the lapse of the applicable
transfer restriction periods. These transfer restrictions should not have a
greater effect on the Company than on any other prospective buyer.

Character and Citizenship Requirements

Applications for FCC authority may be denied and, in extreme cases, licenses may
be revoked if the FCC finds that an entity lacks the requisite "character"
qualifications to be a licensee. In making that determination, the FCC considers
whether an applicant or licensee has been the subject of adverse findings in a
judicial or administrative proceeding involving felonies, the possession or sale
of unlawful drugs, fraud, antitrust violations or unfair competition, employment
discrimination, misrepresentations to the FCC or other government agencies, or
serious violations of the Communications Act or FCC regulations. The FCC also
requires licensees to comply with statutory restrictions on the direct or
indirect ownership or control of radio licenses by non-U.S. persons or entities.
The FCC has found the Company to be qualified to hold FCC licenses.

Other Restrictions

The Communications Act currently limits the interest of foreign governments and
non-U.S. corporations and citizens in radio licensees, which include cellular
licensees. This limitation will be relaxed with regard to certain foreign
investors pursuant to a World Trade Organization treaty and FCC actions,
implementing the treaty. The cellular industry is also subject to other rules
and policies of the FCC and state commissions.

Certain Terms

Interests in cellular markets that are licensed by the Federal Communications
Commission (the "FCC") are commonly measured on the basis of the population of
the market served, with each person in the market area referred to as a "Pop."
The number of Pops or Net Pops owned is not necessarily indicative of the number
of subscribers or potential subscribers. As used in this Form 10-K, unless
otherwise indicated, the term "Pops" means the estimate of the 1996 population
of a Metropolitan Statistical Area ("MSA") or Rural Service Area ("RSA"), as
derived from the 1996 Donnelley Market Information Service population estimates.
The term "Net Pops" means the estimated population with respect to a given
service area multiplied by the percentage interest that the Company owns in the
entity licensed in such service area. MSAs and RSAs are also referred to as
"markets." The term "wireline" license refers to the license for any market
initially awarded to a company or group that was affiliated with a local
landline telephone carrier in the market, and the term "non-wireline" license
refers to the license for any market that was initially awarded to a company,
individual or group not affiliated with any landline carrier. The term "System"
means an FCC-licensed cellular telephone system.

Item 2. Properties

The Company maintains its corporate headquarters in White Plains, N.Y. The
Company leases this space which is approximately 12,000 square feet. In addition
to its corporate headquarters, the Company's cellular operations lease sales and
administrative offices and lease and own locations for cell site and switching
equipment. The Company reviews these leases from time to time and may, in the
future, lease or acquire new facilities as needed. PriCellular does not
anticipate that it will encounter any material difficulties in meeting its
future needs for any leased space.

Item 3. Legal Proceedings

The Company is not currently involved in any pending legal proceedings that
individually, or in the aggregate are material to the Company.

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

   None




                                     Part II

Item 5. Market for the Company's Common Equity and Related
         Stockholder Matters.

The Company's Class A Common Stock is listed on the American Stock Exchange
under the symbol "PC." The Company's Class A Common Stock is also traded on the
Chicago Stock Exchange under the symbol "PC.M" and on the Pacific Stock Exchange
under the symbol "PC.P." The table below sets forth, for the periods indicated,
the high and low sale prices of the Company's Class A Common Stock as reported
on the American Stock Exchange Composite Tape.

<TABLE>
                           Period                High              Low
------------------------------------------ ----------------- -----------------
<S>                                              <C>                <C>
1996:
   First Quarter                               $ 10.70           $  7.20
   Second Quarter                                11.60              9.40
   Third Quarter                                 11.90              7.40
   Fourth Quarter                                12.75             10.63
1997:
   First Quarter                               $ 11.38           $  8.00
   Second Quarter                                 9.25              7.31
   Third Quarter                                 10.25              7.50
   Fourth Quarter                                12.13              9.13
1998:
   First Quarter through March 18, 1998        $ 13.63           $ 10.25
</TABLE>

The above prices were adjusted for the 5 for 4 stock splits in October 1996 and
March 1996.

A recent last sales price for the shares of Class A Common Stock as reported on
the American Stock Exchange Composite Tape was $13.00 on March 18, 1998. On
March 18, 1998 the Company estimates there were approximately 4,000 holders of
Class A Common Stock of which 143 were of record.

There is no established public trading market for the Company's Class B Common
Stock. On March 6, 1998, there were 16 holders of Class B Common Stock of
record.

The Company anticipates that any income generated in the foreseeable future will
be retained for the development and expansion of its business and the servicing
and repayment of indebtedness and, therefore, does not anticipate paying cash
dividends on its Common Stock. The Company has not paid cash dividends since
inception.

Item 6. Selected Financial Data.

The Company acquired all of its existing Systems (excluding minority interests)
between April 1994 and January 1998. Many of the Systems at the time of
acquisition were relatively dormant or running at a minimum level of operating
efficiency. Accordingly, the following historical financial data is not
necessarily indicative of future results of operations. The selected financial
data set forth below for the Company for the years ended December 31, 1997, 1996
and 1995 and as of December 31, 1997 and 1996, is derived from, and qualified by
reference to, the audited consolidated financial statements included elsewhere
herein. The selected financial data set forth below for the Company for the
years ended December 31, 1994 and 1993 and as of December 31, 1995, 1994 and
1993 are derived from audited consolidated financial statements not included
elsewhere herein. The selected financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein.

<TABLE>
                                                                   Years ended December 31
                                                 1997         1996          1995           1994        1993 (3)
                                             ------------- ------------ -------------- ------------- -------------
                                                              (In thousands, except share data)

<S>                                              <C>          <C>           <C>             <C>             <C>
Statement of Operations Data:

   Operating revenues                         $ 181,000      $112,616     $ 41,504         $5,209      $  3,809
   Cost of cellular service                      48,691       29,571        10,694          1,892           835
   Cost of equipment sold                        12,841       10,073         4,951            814           255
                                             ------------- ------------ -------------- ------------- -------------
   Gross margin                                 119,468       72,972        25,859          2,503         2,719
   Selling, general and administrative           53,485       34,502        16,512          6,005         1,659
   Depreciation and amortization                 28,759       19,537        10,337          2,720         1,695
                                             ------------- ------------ -------------- ------------- -------------
   Operating income (loss)                       37,224       18,933          (990)        (6,222)         (635)
   Gain (loss) on sale of investments
     in cellular operations                       8,423       (1,401)       11,598          6,819        11,986
   Interest expense, net                        (62,528)     (42,201)      (18,839)        (1,940)         (271)
   Other income (expense), net                    3,250        1,626           520            (97)         (439)
                                             ------------- ------------ -------------- ------------- -------------
   Income (loss) before provision for
     income taxes and extraordinary item        (13,631)     (23,043)       (7,711)        (1,440)       10,641
   Provision for income taxes                                                                              (172)
   Gain on early extinguishment
     of debt, net of tax                                                                                    147
                                             ------------- ------------ -------------- ------------- -------------
Net income (loss)                             $ (13,631)     $(23,043)    $ (7,711)      $ (1,440)     $ 10,616
                                             ============= ============ ============== ============= =============
Net income (loss) after adjustment for
   accrued preferred stock dividends          $ (20,171)     $(29,221)    $ (7,711)      $ (1,440)     $ 10,616
                                             ============= ============ ============== ============= =============
Net income (loss) per common share (1)        $   (0.55)     $ (0.76)     $  (0.24)      $  (0.06)     $   1.05
                                             ============= ============ ============== ============= =============
Net income (loss) per common share-
   assuming dilution (1)                      $   (0.55)     $ (0.76)     $  (0.24)      $  (0.06)     $    .45
                                             ============= ============ ============== ============= =============
Weighted average shares outstanding (2)          36,751       38,493        32,214         23,023        12,695
                                             ============= ============ ============== ============= =============
Adjusted weighted average shares for
   assumed conversions (2)                       36,751       38,493        32,214         23,023        23,725
                                             ============= ============ ============== ============= =============
</TABLE>

<TABLE>
                                                                 As of December 31
                                            1997          1996          1995          1994          1993
                                        ------------- ------------- ------------- ------------- -------------
                                                                   (In thousands)
<S>                                      <C>            <C>           <C>          <C>            <C>
Balance Sheet Data:

   Working capital (deficit)             $  44,518      $ 89,749      $ 116,415    $  26,488      $  (139)
   Net fixed assets                        104,854        73,327         52,041       26,144          389
   Total assets                            747,656       735,816        544,766      215,744        6,755
   Long-term debt                          568,323       524,517        315,216      113,683        4,000
   Total liabilities                       613,476       555,897        339,038      137,508        4,680
Stockholders' equity                       134,180       179,919        205,728       78,236        2,075
</TABLE>

(1)--The earnings (loss) per share amounts prior to 1997 have been restated to
comply with Statement of Financial Accounting Standards No. 128, Earnings
Per Share. For further discussion of earnings per share and the impact of
Statement No. 128, see the notes to the consolidated financial
statements.

(2)--Weighted average shares outstanding for the year ended December 31, 1993
were computed based upon the number of shares of common stock outstanding
immediately prior to the closing of the Initial Public Offering. Adjusted
weighted average shares and assumed conversions for the year ended December 31,
1993 were computed based upon the number of shares of common stock outstanding
immediately prior to the closing of the Initial Public Offering (i) after giving
effect to the conversion of Series A and B Convertible Preferred Stock and the
exercise of all options and warrants outstanding (applying the treasury stock
method) as if such shares were outstanding on January 1, 1993 and (ii) after
giving retroactive effect for the October 1996, March 1996 and August 1995
5-for-4 Class A and Class B Common Stock Splits. Weighted average shares
outstanding for the year ended December 31, 1994 were computed by using the pro
forma shares outstanding as calculated above plus the weighted average shares
outstanding in connection with the Initial Public Offering after giving effect
for the October 1996, March 1996 and August 1995 5-for-4 Class A and Class B
Common Stock splits. Weighted average shares outstanding for the years ended
December 31, 1996 and 1995 were computed using the weighted average shares
outstanding during the period after giving effect for the October 1996, March
1996 and August 1995 5-for-4 Class A and Class B Common Stock splits.

(3)--For 1993 basic earnings before extraordinary item per common share and net
income before extraordinary item per common share, assuming dilutions, were
$1.04 and $0.44, respectively. The extraordinary item on a per share basis would
have been $0.01 for both basic earnings and net income per common share assuming
dilution.

Item 7. Management's Discussion and Analysis of Financial Condition
          and Results of Operations.

General

The results for the current year reflect the continued strong growth of the
Company's fiscal operations and subscriber additions. The Company continued its
policy of strategic acquisitions through the purchase in January 1997 of the
Kentucky Cluster with its 785,000 Pops and the WI-4 RSA with its 119,000 Pops
and in May 1997 with the acquisition of the WI-5 RSA with its 85,000 Pops. In
addition, the Company sold its stand-alone systems serving the Florence, AL MSA
and the AL-1B RSA with their combined 199,000 Pops. In January 1998, the Company
completed the acquisition of the TN-4 RSA which contains 264,000 Pops giving the
Company a total of 5.1 million Net Pops. The Company ended the year with 250,441
subscribers which represents an increase of over 100,000 subscribers from the
end of 1996. Approximately 86,000 of the increase resulted from internal growth.
The Company achieved a penetration rate of 5.2% at the end of 1997 compared to
3.8% at the end of 1996 which equates to an increase of 37.0%.

Historical Results of Operations

Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996

Operating revenue increased from $112.6 million in 1996 (consisting of $105.2 of
cellular service, $3.4 of equipment sales and $4.0 of other) to $181.0 million
in 1997 (consisting of $168.4 million of cellular service, $5.4 million of
equipment sales and $7.2 million of other). The primary reason for the increase
in cellular service revenue and equipment sales is the addition of the Kentucky
cluster, the WI-4 RSA and the WI-5 RSA in 1997 and the fact that Poughkeepsie,
NY-6, and WV-3 markets were acquired over the course of 1996 and therefore
generated a full year of revenue in 1997 but were included for only part of the
year in 1996.

Total costs and expenses increased from $93.7 million in 1996 (consisting of
$29.6 million for cellular service, $10.1 million for cost of equipment sold,
$34.5 million for selling, general and administrative and $19.5 million for
depreciation and amortization) to $143.8 million in 1997 (consisting of $48.7
million for cellular service, $12.8 million for cost of equipment sold, $53.5
million for selling, general and administrative and $28.8 for depreciation and
amortization). The increases are principally a result of the markets added in
1996 and 1997 as stated above.

The increase in interest expense from $47.1 million in 1996 to $67.4 million in
1997 is a result of a full year's worth of interest on the $170.0 million 10
3/4% notes issued in November 1996 compared to only one and one-half months in
1996.

The gain on sale of investments in cellular operations resulted from the sale in
January 1997 of the Florence AL MSA and AL-1B RSA ("Florence License"). In 1996,
the net loss resulted from the sale of the AL-4 RSA ($1.6 million loss), the
sale of the MI-2 RSA ($1.6 million loss) offset by the sale of minority Pops
($1.8 million gain).

Other income increased to $3.3 million in 1997 from $1.6 million in 1996
principally due to the amortization of the covenant not to compete associated
with the sale of the Florence License in January 1997.

Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995

Operating revenues increased from $41.5 million in 1995 (consisting of cellular
revenues of $38.8 million, equipment sales of $1.7 million and other revenues of
$1.0 million) to $112.6 million in 1996 (consisting of cellular revenues of
$105.2 million, equipment sales of $3.4 million and other revenues of $4.0
million). The significant increase in cellular revenues and equipment sales
resulted from properties added in 1996 which were not present in 1995 including
the addition of the New York Cluster significant additions to the Mid-Atlantic
Cluster and Upper Midwest Cluster in the latter half of 1995 for which a full
year of revenue was earned in 1996. The increase in other revenue from $1.0
million in 1995 to $4.0 million in 1996 is principally a function of the
inclusion of the guaranteed preferential distributions from the Joint Venture
agreement with SBC Corporation for a full year in 1996 ($3.4 million) compared
to only one month in 1995 ($275,000) partially offset by the income recorded in
1995 from the management of the AL-4 RSA ($755,000) which is not present in
1996.

Total costs and expenses rose from $42.5 million for 1995 to $93.7 million for
1996. The increase is principally a result of the factors stated above: new
markets in 1996 for which no expenses were incurred in 1995 and the addition in
1995 toward the latter part of the year of a significant number of markets which
therefore have a full year of expenses for 1996 but less than six months of
expenses for 1995.

The result of these factors is an increase in the cost of cellular service to
$29.6 million in 1996 from $10.7 million in 1995, an increase to $10.1 million
in 1996 for the cost of equipment sold from $5.0 million in 1995 and an increase
in selling, general and administrative expenses to $34.5 million in 1996 from
$16.5 million in 1995. The Company's aggressive marketing and sales promotion
efforts are geared towards increasing subscribers. The addition of retail
locations combined with the increase in the number of markets also contributed
to this increase.

Depreciation and amortization increased to $19.5 million in 1996 from $10.3
million in 1995 because of the additional equipment and cellular licenses
associated with the acquisition of new markets in 1996 and a full year's
depreciation and amortization in 1996 for markets acquired during 1995.

The loss on sale of investments in cellular operations in 1996 of $1.4 million
is a result of the loss from the sale of the AL-4 RSA of $1.6 million and the
MI-2 RSA of $1.6 million partially offset by the gain on the sale of minority
Pops of $1.8 million. The gain in 1995 of $11.6 million is due to the
disposition of the Company's interest in the nonwireline system serving the
Abilene, TX MSA.

The increase in interest expense from $23.0 million in 1995 to $47.1 million in
1996 is a function of a full year of interest for the current year on the
12-1/4% Senior Subordinated Discount Notes issued in September 1995 compared
with only three months in the prior year, combined with additional interest
related to the issuance of the 10-3/4% Poughkeepsie Note in the amount of $19.0
million for approximately six and one-half months and the interest for one and
one-half months on the 10-3/4% Senior Notes, face amount of $170.0 million
issued in November 1996.

Other income for 1996 includes $625,000 related to the two year covenant not to
compete from the sale of the AL-4 RSA in July 1996, $1.0 million for the
covenant not to compete from the Lubbock/Minnesota exchange in July 1995 for
which one-half year or $500,000 is included for 1995.

The increase in interest income from $4.1 million in 1995 to $4.9 million in
1996 is a result of the increased cash flow for 1996 combined with the cash on
hand resulting from the proceeds of the $170.0 million 10-3/4% Senior Notes
received in November 1996.

Liquidity and Capital Resources

The cellular telephone business requires substantial capital to acquire,
construct and expand cellular telephone systems and to fund operating
requirements. The Company historically has financed its acquisitions and other
capital needs through the proceeds from the issuance of debt securities, the
sale of equity interests, borrowings, vendor credit facilities and more recently
internally generated cash flows. As of December 31, 1997, the Company had $61.4
million of cash and cash equivalents and $44.5 million of working capital. In
addition, the Company had $13.0 million segregated on the Balance Sheet at
December 31, 1997 as cash committed for the acquisition of the TN-4 RSA.

During 1997, the $49.0 million of cash provided by operations was the Company's
principal source of cash. In addition $22.4 million was generated from the sale
of the Florence License and $7.3 million was provided by the return of monies
placed in escrow as well as the return of a deposit. The Company's principal
uses of cash in 1997 were $53.9 million for the purchase and retirement of 2.2
million shares of the Company's Class A common stock and 4.0 million shares of
the Company's Class B common stock, the purchase of cellular equipment in the
amount of $25.7 million and $39.0 million for the acquisition of cellular
operations (including $13.0 million committed for an acquisition in 1998). In
January 1998, a wholly owned subsidiary of the Company entered into a $60.0
million credit agreement with Morgan Guaranty Trust Company of New York due
December 31, 2005. The proceeds were used to acquire substantially all of the
assets of the TN-4 RSA. Repayment of the loan will commence with the quarter
ending June 30, 2001. Interest is payable quarterly at the LIBOR rate plus a
premium ranging from 1.50% to 2.25% based on the ratio of total debt (as
defined) to annualized cash flow (as defined) for the most recent fiscal
quarter.

Even though EBITDA equaled $69.2 million only $49.0 million of cash was provided
by operations principally due to the payment of interest in 1997. Beginning in
1998, the Company has two instruments requiring cash interest payments; the
first is the 14.0%, $165.0 million face Senior Subordinated Discount Notes due
2001 issued by the Company's wholly owned subsidiary, PriCellular Wireless
Corporation ("Wireless"), requiring $23.1 million of cash interest payments. The
second issue requiring cash interest is the 10 3/4%, $170.0 million Notes
requiring $18.3 million of cash interest payments in 1998. Wireless' 12 1/4%
Senior Subordinated Discount Notes due 2003 and the Company's 10 3/4% Senior
Subordinated Convertible Discount Notes due 2004 were each issued with an
original issue discount and do not pay cash interest until April 1999 and
February 2001, respectively.

During 1996 EBITDA approximated cash flow from operations, the Company's
principal sources of cash were (i) the issuance by Wireless of $170.0 million
aggregate principal amount 10 3/4% Senior Notes due 2004, (ii) an aggregate of
$36.8 million of proceeds from the disposition of certain non-strategic Systems
(the Systems serving the AL-4 RSA and the MI-2 RSA and certain minority pops)
and (iii) $39.4 million of cash provided by operating activities. The Company's
principal uses of cash in 1996 were (i) $111.0 million to finance acquisitions
(the acquisitions of the Systems serving the PA-9 RSA, NY-6 RSA, Poughkeepsie,
NY MSA, WV-3 RSA, and WI-2 RSA) and (ii) $29.5 million of capital expenditures
related to the build-out and improvement of its Systems. In connection with the
acquisition of the Poughkeepsie, NY MSA, a subsidiary of the Company issued a
$19.0 million aggregate principal amount three-year note bearing interest at the
prime rate (the "Poughkeepsie Note"). The Poughkeepsie Note was repaid in
November 1996.

Earnings before interest, taxes, depreciation and amortization ("EBITDA")
amounted to $69.2 million compared to $40.1 million for 1996 or an increase of
72.6%. Management believes that EBITDA is an effective measure of operating
performance because it is industry practice to use a multiple of EBITDA as one
method of evaluating cellular properties. EBITDA does not represent cash flow
from operations as defined by GAAP, and is not necessarily indicative of cash
available to fund all cash flow needs and should not be considered as an
alternative to net income. The Company in fact expects to report losses for
accounting purposes for the foreseeable future due to interest and non-cash
charges such as depreciation and amortization.

Comparison of operating results may not be meaningful because of significant
acquisitions. However, a comparison can be made of those markets that were owned
by the Company throughout the 12 months of 1997 and 1996. The markets included
account for approximately 59% of the 1997 Net Pops and 63% of the 1996 Net Pops.
The following represents certain operating results (000's omitted except for
subscriber additions) for these markets:

                                          Year ended December 31
                                            1997          1996
                                       ------------- ------------

Total revenue                             $99,476       $74,202
Operating income                           21,712        11,679
EBITDA                                     39,010        26,022
Net subscriber additions                   56,477        48,582
Penetration                                  5.71%         3.75%

The above data reflects a 34.1% growth in revenue, an 85.9% growth in operating
income, a 49.9% growth in EBITDA, a 16.3% growth in subscriber additions and an
increase in penetration of 52.3%. These statistics demonstrate the Company's
ability to generate significant internal growth from operations aside from
acquisitions. There can be no assurance, however, that the Company will be able
to maintain these growth rates for these systems or achieve similar rates of
growth for its other systems.

As was previously mentioned, the cellular telephone industry requires
significant expenditures for capital additions. Certain of the Company's new
acquisitions will require substantial expenditures as the Company seeks to
better develop subscriber coverage and in general enhance the market's
performance as has been the Company's operating strategy. The Company continues
to expand its marketing efforts which include, but are not limited to, the
increase in funds for advertising, cellular telephone inventory purchases and
other expenditures relating to subscriber growth.

The Company has reviewed the possible effect of the Year 2000 on the operating
software currently in use including the software that is an integral part of the
switches and the related billing information. It does not believe that any
significant financial requirement is currently required to make any
modifications that may become necessary. The Company has obtained assurances
from its third party billing provider and its principal source of cellular
equipment that they have addressed the potential problems of the Year 2000.

The Company continually reviews plans for future growth through acquisitions
which may require additional financing. Although the Company has historically
been able to obtain such financing, there is no guarantee that such financing
will continue to be available.

Forward Looking Statements

The Company has made in this report, and from time to time may otherwise make,
statements which constitute forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers primarily with respect to the Company's operations
and financial performance. Investors are cautioned that any such forward looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those in the
forward looking statements as a result of various factors. Some of these factors
may include (i) the Company's limited operating history and history of net
losses, (ii) the Company's high degree of leverage and the requirement for
significant and sustained growth in the Company's cash flow to meet its debt
service requirements, (iii) the status of any pending potential acquisitions or
dispositions of Systems and the risk that new Systems and Systems recently
acquired may not perform as expected, (iv) competition from the other cellular
operator in the Company's Clusters or from other technologies, (v) dependence on
corporate management, (vi) reliance on the CELLULARONE(R) trademark, (vii)
potential for adverse regulatory change and the need for renewal of cellular
licenses, (viii) fluctuations in market value of licenses, (ix) equipment
failure or natural disaster and (x) concerns about radio frequency emissions.

Fluctuations in Quarterly Results

The Company's revenues in the fourth quarter are historically lower than the
third quarter due to the fact that less cellular calls are made in the Company's
markets during the inclement weather. Losses increase in the forth quarter due
to the lower revenues coupled with higher sales and marketing costs incurred
during the holiday selling season.

Item 8. Financial Statements and Supplementary Data

The information required by Item 8 of Part II is incorporated herein by
reference to the Consolidated Financial Statements filed with this report; see
Item 14 of Part IV.

Quarterly Results of Operations

The following is a summary of the quarterly results of operations for the years
ended December 31, 1997 and 1996.

<TABLE>
                                                              Three months ended
                                           March 31        June 30       September 30    December 31
                                        --------------- --------------- --------------- ---------------
                                                    (In thousands, except per share data)

<S>                                          <C>             <C>             <C>             <C>
     1997

     Operating revenues (1)                 $35,566         $ 43,172        $ 52,498        $ 49,764
     Operating income (1)                     5,823            8,624          14,618           8,159
     Net income (loss) (1)                      390           (5,405)           (997)         (7,619)
     Basic and diluted earnings (loss)
        per common share (2)                  $(.03)           $(.18)          $(.07)          $(.27)

     1996

     Operating revenues                     $21,262         $ 27,106        $ 32,847        $ 31,401
     Operating income                         2,005            5,192           8,157           3,579
     Net income (loss)                       (6,948)          (5,354)           (941)         (9,800)
     Basic and diluted earnings (loss)
        per common share (2)                  $(.22)           $(.18)          $(.07)          $(.29)
</TABLE>
----------
(1)--The quarterly results of operations for 1997 include the acquisitions in
January of the Kentucky Cluster and the WI-4 RSA.

(2)--In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share exclude any dilutive
effects of options, warrants and convertible securities. All earnings (loss) per
share amounts for all periods have been presented and, where appropriate,
restated to conform to Statement 128 requirements. In computing dilutive
earnings (loss) per share for the years ended December 31, 1997, 1996 and 1995,
no effect has been given to options outstanding under the Company's 1994 Stock
Option Plan, outstanding warrants to purchase Class B Common Stock, the 12-3/4%
Senior Convertible Discount Notes or the Cumulative Convertible Preferred Stock,
since the exercise of any of these items would have an antidilutive effect on
net loss per share.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.
    

PART III

Item 10   Directors and Officers of the Registrant.

Directors

               Robert Price has been a Director since 1990.  He served as
President and Assistant Treasurer of the Company from 1990 through May 1997.
Robert Price concurrently serves as the Chief Executive Officer and President
of Price Communications ("Price Communications") since 1979.  Mr. Price, an
attorney, is a former General Partner of Lazard Freres & Co. He has served as
an Assistant United States Attorney, practiced law in New York and served as
Deputy Mayor of New York City. After leaving public office, Robert Price
became Executive Vice President of The Dreyfus Corporation and an Investment
Officer of The Dreyfus Fund. In 1972 he joined Lazard Freres & Co. Robert
Price has served as a Director of Holly Sugar Corporation, Atlantic States
Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant,
Inc., and is currently a member of The Council on Foreign Relations. Robert
Price serves as the Representative of The Majority Leader and President Pro Tem
of the New York Senate and on the Board of Directors of the Municipal
Assistance Corporation for the City of New York. Robert Price also was
appointed by Governor George Pataki of New York to, and served, a seven year
term as a Member of the Board of Trustees of the City University of New York.
Robert Price is also a Director and President of TLM Corporation. Robert Price
was elected to the Company's Board of Directors as a nominee of the Price
family pursuant to a stockholders agreement among the principal stockholders
of the Company (the "Stockholders Agreement"). Robert Price is the father of
Steven Price.

               Steven Price has been the Chief Executive Officer and President
of the Company since May 1997.  He has served as Chief Operating Officer and
Executive Vice President of the Company since April 1997, and as a Director
since September 1996.  Mr. Price has also been the Chief Executive Officer and
President of PriCellular Wireless Corporation, the Company's principal
operating subsidiary, since April 1997.  From December 1994 to April 1997, he
was a Senior Vice President of the Company. Prior thereto, he was Director of
Business Development of the Company since April 1993. From 1990 to 1993, Mr.
Price was an attorney with Davis Polk & Wardwell. Prior thereto, Mr. Price was
appointed by President Bush to serve in the U.S. State Department as Special
Assistant to the Chief U.S. Nuclear Arms Negotiator and worked in the mergers
and acquisitions department of Goldman, Sachs & Co. Mr. Price graduated magna
cum laude from Brown University, where he was elected to Phi Beta Kappa, and
has a J.D. degree from Columbia University. Steven Price is the son of Robert
Price. Steven Price was elected to the Company's Board of Directors as a
nominee of the Price family pursuant to the Stockholders Agreement.

               Kim I. Pressman has been an Executive Vice President of the
Company since April 1997, and a Director and Secretary since 1990. Ms.
Pressman served as a Vice President of the Company from 1990 to April 1997, and
as the Treasurer from 1990 until December 1994. Ms. Pressman is a certified
public accountant and is a graduate of Indiana University and holds an M.B.A.
from New York University. Since 1990, she has served as Executive Vice
President of Price Communications and is currently also a Director. Prior to
joining Price Communications in 1984, Ms. Pressman was employed for three
years by Peat, Marwick, Mitchell & Co., a national certified public accounting
firm, and for more than three years thereafter was Supervisor, Accounting
Policies for International Paper Company and then Manager, Accounting
Operations for Corinthian Broadcasting Division of Dun & Bradstreet Company, a
large group owner of broadcasting stations. Ms. Pressman is the Chairman and a
Vice President and Treasurer of TLM Corporation. Ms. Pressman was elected to
the Company's Board of Directors as a nominee of the Price family pursuant to
the Stockholders Agreement.

                Brion B. Applegate has been a Director of the Company since
June 1994. He is a founder and general partner of Spectrum Equity Investors,
L.P. ("Spectrum"), a venture capital fund specializing in communications and
telecommunications investments. Prior thereto, he was a general partner of
funds managed by Burr, Egan, Deleage & Co. Mr. Applegate serves on the board
of several private communications entities. Mr. Applegate originally was
elected to the Company's Board of Directors as Spectrum's nominee pursuant to
the Stockholders Agreement. An affiliate of Spectrum, Spectrum Equity
Investors II, L.P., is one of the founding stockholders of American Cellular
Corporation ("ACC"); the Company has signed an Agreement and Plan of Merger
dated as of March 6, 1998 with ACC, pursuant to which ACC will merge with and
into the Company. See Item 13, "Certain Relationships and Related
Transactions--Merger with American Cellular Corporation."

               Scott M. Sperling has been a Director of the Company since
February 1996. Mr. Sperling is a Managing Director of the Thomas H. Lee
Company and a General Partner of its affiliated Equity Funds. Prior to this
position, he served for ten years as the Managing Partner of the Aeneas Group
Inc., the affiliate of the Harvard Management Company, responsible for all
private capital market investments, including venture capital, company buyouts
and real estate. From 1981-1984, Mr. Sperling was a Senior Consultant with the
Boston Consulting Group, Inc. He holds an M.B.A. from Harvard Business School
and a B.S. from Purdue University. He is a Director of Beacon Properties,
Inc., Softkey International, KAI Inc., Livent, Inc. and several private
companies. Mr. Sperling is also a member of the corporation for the Brigham
and Womens Hospital and Medical Center and is the director of several
charitable organizations. Mr. Sperling was elected to the Company's Board of
Directors as a nominee of The Thomas H. Lee Company pursuant to the
Stockholders Agreement.

               Scott I. Anderson has been a Director of the Company since
April 1997.  Mr. Anderson served as Senior Vice President-Acquisitions and
Development of AT&T Wireless Services, Inc., formerly McCaw Cellular
Communications, Inc. ("AT&T Wireless/McCaw'") from 1991 to March 1997.  Prior
thereto, he served as Vice President-Law of AT&T Wireless since 1988.
Previously, Mr. Anderson served on the Company's Board of Directors from April
1995 to August 1996 as AT&T Wireless/McCaw's nominee pursuant to the
Stockholders Agreement.  Mr. Anderson served as an advisor to the Board of
Directors from August 1996 to April 1997.

Committees of the Board -- Board Meetings

               The Board of Directors held seven meetings, the Audit Committee
held no meetings, the Compensation and Stock Option Committee held two
meetings and the Executive Committee held seven meetings in 1997.  All of the
Directors attended at least 75% of the meetings of the Board and the
respective Committees of the Board of which they are members.

               The Board of Directors has the following standing committees:

Audit Committee

               The Audit Committee recommends the annual engagement of
auditors, with whom the Audit Committee will review the scope of audit and
non-audit assignments, related fees, the accounting principles used in
financial reporting, internal financial auditing procedures and the adequacy
of internal control procedures. The Company anticipates that additional
directors will be appointed to the Audit Committee as soon as practicable to
ensure that a majority of the Audit Committee members are independent
directors.

               The members of the Audit Committee are Ms. Pressman and Messrs.
Applegate and Sperling.

Compensation and Stock Option Committee

               The Compensation and Stock Option Committee reviews and
approves the remuneration arrangements for the officers and directors of the
Company and reviews and recommends new executive compensation or stock plans
in which the officers and/or directors are eligible to participate, including
the granting of stock options.

               The members of the Compensation and Stock Option Committee are
Messrs. Anderson, Applegate and Sperling.

               Executive Committee

               The by-laws of the Company provide for the establishment of an
Executive Committee, which the Board of Directors has established. The by-laws
provide that the Executive Committee shall consist of three members, one of
which shall be designated by each of the Price family, AT&T Wireless/McCaw and
Thomas H. Lee Equity Fund III, L.P. (the "THL Equity Fund") except during any
period in which there is a significant overlap between the PCS licensed areas
directly or indirectly owned, operated or controlled by, or attributed to AT&T
Wireless/McCaw, or any affiliate of either and the cellular geographic service
areas directly or indirectly owned, operated or controlled by, or attributed
to, the Company or any affiliate thereof, in which case it shall consist of
two members, one of which shall be designated by each of the Price family and
THL Equity Fund.

               The affirmative vote of the Executive Committee of the Company
with no members voting against will be required to designate any class or
series of Preferred Stock or incur any indebtedness other than trade
indebtedness incurred in the ordinary course of the Company's business and
other than indebtedness not in excess of $1,000,000. The right of AT&T
Wireless/McCaw and the THL Equity Fund to nominate a member to the Executive
Committee shall terminate (a) with respect to AT&T Wireless/McCaw on the
earlier to occur of (i) April 28, 2001 or (ii) such time as the number of
fully diluted shares held by AT&T Wireless/McCaw is less than 7% of the total
number of fully diluted shares then outstanding and (c) with respect to THL
Equity Fund at such time as the number of fully diluted shares held by THL
Equity Fund and the other purchasers of shares of Series A Cumulative
Convertible Preferred Stock, par value $.01 per share, of the Company is less
than 4,375,000 (without giving effect to certain reductions to the conversion
value provided in the certificate of designation to such shares and subject
to appropriate adjustment for subdivision, combination, consolidation or
reclassification of such shares into a greater or lesser number of shares).

               The members of the Executive Committee are Messrs. Steven Price
and Sperling.

Compensation of Directors

               Directors of the Company are not paid fees, other than Scott
Anderson, who receives $35,000 per annum.

Executive Officers

               The following table sets forth certain information with respect
to the executive officers of the Company.


<TABLE>
    Name                                  Age     Office
-------------------------------------    -----    ----------------------------------------------------
<S>                                      <C>      <C>
Robert Price.........................     65      Director, Chairman
Steven Price.........................     36      Director, Chief Executive Officer and President
Stuart B. Rosenstein.................     37      Executive Vice President, Chief Financial Officer,
                                                  Treasurer and Assistant Secretary
Kim I. Pressman......................     41      Director, Executive Vice President and Secretary
</TABLE>

               Stuart B. Rosenstein has been an Executive Vice President of
the Company since April 1997 and Chief Financial Officer and Assistant
Secretary since December 1993. Mr. Rosenstein has also served as Treasurer of
the Company since December 1994. From September 1996 to April 1997, he was a
Senior Vice President of the Company. From 1990 to December 1993, he was the
Company's Controller and from 1990 to September 1996, he was a Vice President.
Prior to that time, Mr. Rosenstein, a certified public accountant, was a
senior manager with the accounting firm of Ernst & Young. Mr. Rosenstein has a
B.S. degree from SUNY at Buffalo, where he graduated magna cum laude.

Item 11  Compensation of Executive Officers

               The following table sets forth the compensation earned in 1995,
1996, and 1997 by the Company's chief executive officer and each other
executive officer whose total annual salary and bonus exceeded $100,000 for the
year ended December 31, 1997.


                          Summary Compensation Table

<TABLE>
                                                                                               Long-Term
                                                                                             Compensation
                                                                 Annual Compensation            Awards
                                                               -----------------------       ------------
                                                                                               Number of
                                                                                               Securities
                                                                                               Underlying           All Other
Name and Principal Position                       Year          Salary        Bonus(1)         Options(2)         Compensation
---------------------------------------------     ----         --------       --------        -----------         ------------
<S>                                               <C>          <C>            <C>             <C>                 <C>
Robert Price, Chairman (3)...................     1997         $325,000       $325,000                 0                 0
                                                  1996          325,000        325,000                 0                 0
                                                  1995          237,500        325,000           180,664                 0

Steven Price, Chief Executive Officer
and President................................     1997         $200,000       $325,000                 0            $    0
                                                  1996          195,609        165,000                 0                 0
                                                  1995          160,000        135,000           153,320                 0

Stuart B. Rosenstein, Executive Vice
President, Chief Financial Officer and
Treasurer....................................     1997         $225,000       $225,000                 0            $    0
                                                  1996          201,218        165,000            43,750                 0
                                                  1995          160,000        135,000           153,320                 0

Kim Pressman, Executive Vice
President and Secretary......................     1997          $98,333        $50,000                 0            $2,100
                                                  1996           26,154         50,000                 0                 0
                                                  1995           20,000         10,000                 0                 0

</TABLE>
------------
(1) Bonuses for 1995 were paid in April 1996, bonuses for 1996 were paid in
    February 1997, and bonuses for 1997 were paid in January 1998. See
    "--Compensation Committee Report to Stockholders--Compensation of the Chief
    Executive Officer."
(2) The stock options have been restated to give effect to all stock splits.
(3) Mr. Robert Price served as President of the Company until May, 1997.





                     Option/SAR Grants in Last Fiscal Year
                               Individual Grants

<TABLE>
                                             Percent of
                                               Total
                             Number of        Options/                                           Potential Realizable
                             Securities         SARs                                                   Value at
                             Underlying      Granted to                                             Assumed Annual
                              Options/       Employees       Exercise or                            Rates of Stock
                                SARs         in Fiscal       Base Price       Expiration          Price Appreciation
          Name               Granted(#)         1997          ($/Share)          Date              For Option Term
-----------------------      ----------      ----------      -----------      -----------        --------------------
                                                                                                  5%             10%
                                                                                                 ----           -----
<S>                          <C>             <C>             <C>              <C>                <C>             <C>
Robert Price............          0             0%               --               --              --              --

Steven Price............          0             0%               --               --              --              --

Stuart B. Rosenstein....          0             0%               --               --              --              --
__________________

</TABLE>

            Aggregated Option/SAR Exercises in Last Fiscal Year and

                       Fiscal Year-End Option/SAR Values

<TABLE>
                                                                    Number of
                                                                    Securities                 Value of
                                                                    Underlying               Unexercised
                                                                   Unexercised               In-the-Money
                                  Shares                           Options/SARs              Options/SARs
                                 Acquired                      at December 31, 1997      at December 31, 1997
                                    on           Value             Exercisable/              Exercisable/
            Name                 Exercise       Realized          Unexercisable             Unexercisable
----------------------------     --------      ---------       --------------------      --------------------
<S>                              <C>           <C>             <C>                       <C>

Robert Price................     742,188       $4,702,347              0/0                       0/0

Steven Price................        0              0              248,697/51,107         $1,575,606/$294,887

Stuart B. Rosenstein........        0              0              248,697/94,857         $1,575,606/$294,887

Kim I. Pressman.............        0              0              68,490/35,464            $297,282/$20,314
</TABLE>

Compensation Committee Interlocks and Insider Participation

               The Compensation Committee is comprised of Messrs. Anderson,
Applegate and Sperling.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

               Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), requires the Company's executive officers and
Directors, and beneficial owners of more than 10% of the Class A Common Stock
of the Company, to file initial reports of ownership and reports of changes in
ownership with the SEC.  Executive officers and Directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.  Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
Directors, the Company noted that no individual who, at any time during 1997,
was a Director, officer or beneficial owner of more than 10% of the Class A
Common Stock of the Company failed to file the reports required by Section
16(a) of the 1934 Act on a timely basis.

Item 12  Security Ownership of Management and Principal Stockholders of
         PriCellular

               The following table provides information with respect to the
beneficial ownership of PriCellular's Common Stock by (i) each person known by
PriCellular to be the beneficial owner of more than 5% of any class of
PriCellular voting securities, (ii) each director, PriCellular's President and
Chief Executive Officer and the four most highly compensated other executive
officers and (iii) all directors and executive officers as a group.  Except
as otherwise indicated, the address of each holder is the same as PriCellular.
Except as discussed in the notes hereto, each holder has sole voting and
investment power with respect to all shares of stock listed as owned by such
person.  All Information is provided as of December 31, 1997 unless otherwise
indicated.

<TABLE>
<CAPTION>

                                                                                Beneficial Ownership of
                                                                             Class A and B Common Stock(1)
                                                                ---------------------------------------------------------
                                                                                      Percentage of         Percentage of
                                                                                         Combined              Combined
Name of Beneficial Owner                                          Shares                 Classes                Voting
------------------------                                        ----------            -------------         -------------
<S>                                                             <C>                   <C>                   <C>
Directors and Officers
Robert Price(2)..........................................        6,725,788                 12.36%                27.75%
Stuart B. Rosenstein(3)..................................          269,465                   0.5                  0.16
Kim I. Pressman(4).......................................           71,144                  0.13                  0.06
Steven Price(5)..........................................        3,472,371                  6.38                  16.5
Brion B. Applegate(6)....................................        2,780,452                  5.11                 11.26
Scott M. Sperling(7).....................................        7,244,640                 13.31                  3.83
All directors and officers as a group (6 persons)........       20,563,860                 37.78                 59.56

Other 5% Stockholders
AT&T Wireless Services, Inc.(8)..........................        6,537,544                 12.01                 15.96
  (formerly McCaw)
  5400 Carillon Point
  Kirkland, WA 98033
The Thomas H. Lee Company(9).............................        7,244,640                 13.31                  3.83
  75 State Street
  Boston, MA 02109
Putnam Investments, Inc.(10).............................        5,736,289                 10.54                  3.03
  One Post Office Square
  Boston, MA 02109
Eileen Farbman(11).......................................        3,714,644                  6.82                 19.58
  c/o Suite 3200
  45 Rockefeller Plaza
  NY, NY 10020
Janus Capital Corp.(12)..................................        3,914,449                  7.19                  2.07
  100 Fillmore Street
  Denver, CO 80206
Spectrum Equity Investors, L.P.(13)......................        2,780,452                  5.11                 11.26
  One International Place, 29th Floor
  Boston, MA 02110
The Public School Employees' Retirement System(14).......        3,622,320                  6.65                  1.92
  5 North 5th Street, Box 125
  Harrisburg, PA 17108
Price Communications Corporation(15).....................        3,124,334                  5.74                 10.32
  Suite 3200
  45 Rockefeller Plaza
  NY, NY 10020
Leo Farbman(16)..........................................        1,523,436                  2.8                   8.06
  c/o Suite 3200
  45 Rockefeller Plaza
  NY, NY 10020
Alexandra Farbman(17)....................................        1,523,436                  2.8                   8.06
  c/o Suite 3200
  45 Rockefeller Plaza
  NY, NY 10020
College Retirement Equities Fund(18).....................        2,130,650                  3.91                  1.13
 730 Third Avenue
 NY, NY 10017
</TABLE>


(1)  As used in this table, "beneficial ownership" means the sole or shared
     power to vote or direct the voting or to dispose or direct the disposition
     of any security. A person is deemed as of any date to have "beneficial
     ownership" of any security that such person has a right to acquire within
     60 days after such date. Any security that any person named above has the
     right to acquire within 60 days is deemed to be outstanding for purposes of
     calculating the ownership percentage of such person, but is not deemed to
     be outstanding for purposes of calculating the ownership percentage of any
     other person.

(2)  Consists of 1,580,139 shares of Class B Common Stock and 106,588 shares of
     Class A Common Stock owned directly by Robert Price, 14,000 shares of Class
     A Common Stock held by Robert Price and Eileen Farbman, as joint tenants
     (see also footnote 11), 1,304,750 shares of Class A Common Stock held by
     Price Communications and warrants to purchase 1,819,584 shares of Class B
     Common Stock held by Price Communications that are currently exercisable
     (see also footnote 15) and 50,000 shares of Class A Common Stock and 50,000
     shares Class B Common Stock held by Mr. Price as custodian for certain of
     his grandchildren.

(3)  Consists of 3,906 shares of Class B Common Stock owned directly by Mr.
     Rosenstein and options to purchase 265,559 shares of Class A Common Stock
     granted pursuant to the Company's 1994 Stock Option Plan that are currently
     exercisable.  Does not include options to purchase 95,495 shares of Class A
     Common Stock granted pursuant to the Company's 1994 Stock Option Plan that
     are not exercisable within 60 days.

(4)  Consists of 3,906 shares of Class B Common Stock owned directly by Ms.
     Pressman and options to purchase 67,238 shares of Class A Common Stock
     granted pursuant to the Company's 1994 Stock Option Plan that are currently
     exercisable. Does not include options to purchase 66,716 shares of Class A
     Common Stock granted pursuant to the Company's 1994 Stock Option Plan that
     are not exercisable within 60 days. Includes 25,000 options to purchase
     shares of Class A Common Stock that are currently exercisable held in
     custody for her children.

(5)  Consists of 3,080,537 shares of Class B Common Stock owned directly by
     Steven Price, 30,038 shares of Class A Common Stock owned directly by
     Steven Price and options to purchase 250,976 shares of Class A Common Stock
     granted pursuant to the Company's 1994 Stock Option Plan that are currently
     exercisable. Includes 110,820 options to purchase shares of Class A Common
     Stock held in custody for his daughter. Does not include options to
     purchase 48,828 shares of Class A Common Stock granted pursuant to the
     Company's 1994 Stock Option Plan that are not exercisable within 60 days.

(6)  All of such shares are owned by Spectrum (see footnote 13).  Pursuant to
     the definition of beneficial ownership in footnote 1, Brion Applegate may
     be deemed to have beneficial ownership of such shares as the general
     partner of the partnership which is the general partner of Spectrum.

(7)  All of such shares are owned by The Thomas H. Lee Company and attributed to
     Scott M. Sperling, a Managing Director of The Thomas H. Lee Company,
     pursuant to the definition of beneficial ownership provided in footnote 1.

(8)  Consists of 2,625,781 shares of Class B Common Stock and 3,911,763 shares
     of Class A Common Stock.

(9)  Consists of 7,244,640 shares of Class A Common Stock currently issuable
     (subject to adjustments) upon conversion of 54,728 shares of the Company's
     Series A Preferred Stock held by Thomas H. Lee Equity Fund III L.P. and
     5,272 shares of Series A Preferred Stock held by THL-CCI Investors Limited
     Partnership.

(10) Consists of 4,589,804 shares of Class A Common Stock issuable upon
     conversion of the Company's outstanding 10 3/4% Senior Subordinated
     Convertible Discount Notes due 2004 and 1,146,485 shares of Class A
     Common Stock. Information with respect to the shares of Class A Common
     Stock held is based on a Schedule 13G dated February 8, 1995, which
     reflects the collective beneficial ownership of Marsh & McLennan
     Companies, Inc., Putnam Investments, Inc. and its two wholly owned
     registered investment advisers (Putnam Investment Management, Inc. and
     The Putnam Advisory Company, Inc.) and the Putnam New Opportunities Fund
     (the "Fund") (collectively, the "Putnam Entities"). According to the
     Schedule 13G, none of the Putnam Entities have the sole power to vote or
     dispose of any such shares of Class A Common Stock nor (except the Fund
     with respect to 506,250 of such shares) the shared power to vote any of
     such shares and all of the Putnam Entities have the shared power to
     dispose of such shares.

(11) Consists of 652,772 shares of Class B Common Stock and 1,000 shares of
     Class A Common Stock owned directly by Ms. Farbman, 14,000 shares of
     Class A Common Stock held by Robert Price and Eileen Farbman, as joint
     tenants (see also footnote 2), 761,718 shares of Class B Common Stock
     held by Eileen Farbman and Leo Farbman, as joint tenants, 761,718 shares
     of Class B Common Stock held by Eileen Farbman and Alexandra Farbman, as
     joint tenants and 761,718 shares of Class B Common Stock held by Eileen
     Farbman as custodian for Leo Farbman UGTMA until age 21 and 761,718
     shares of Class B Common Stock held by Eileen Farbman as custodian for
     Alexandra Farbman UGTMA until age 21 (see also footnotes 16 and 17).
     Eileen Farbman is the daughter of Robert Price.

(12) Consists of 3,914,449 shares of Class A Common Stock.  Information with
     respect to the shares of Class A Common Stock held is based on a
     Schedule 13G dated February 13, 1998, which reflects the collective
     beneficial ownership of Janus Capital Corporation, Janus Enterprise
     Fund, and Thomas H. Bailey, President of Janus Capital (collectively,
     the "Janus Reporting Persons").  According to the Schedule 13G, none of
     the Janus Reporting Persons has either the sole power to vote or to
     dispose of any such shares, and all of the Janus Reporting Persons have
     the shared power to vote and dispose of all such shares (except that
     Janus Enterprise Fund has shared power to vote and dispose of 1,077,025
     shares only).

(13) Consists of 724,464 shares of Class A Common Stock currently issuable
     upon conversion of 6,000 shares of the Series A Preferred Stock and
     2,055,988 shares of Class B Common Stock.  Information with respect to
     the shares of Class B Common Stock and Series A Preferred Stock held is
     based on a Schedule 13D dated March 16, 1998 filed by Spectrum Equity
     Investors, L.P. ("SEI"), Spectrum Equity Associates, L.P. ("SEA"),
     Spectrum Equity Investors II, L.P., Spectrum Equity Associates II, L.P.
     and certain individual general partners of those partnerships including
     Brion Applegate (collectively, the "Spectrum Reporting Persons").
     According to the 13D, none of the Spectrum Reporting Persons has either
     the sole power to vote or to dispose of any such shares; SEA, by virtue
     of being the general partner of Spectrum, and William Collatos and Brion
     Applegate, by virtue of being the general partners of SEA, may be deemed
     to have the shared power to vote and dispose of all of such shares.  The
     above Schedule 13D was also filed by various entities and individuals
     associated with Sandler Capital Management (the "Sandler Reporting
     Persons"), who may be deemed to be a group with the Spectrum Reporting
     Persons.  According to the Schedule 13D, neither the Sandler Reporting
     Persons nor the Spectrum Reporting Persons affirm the existence of such
     a group.

(14) Consists of 3,622,320 shares of Class A Common Stock currently issuable
     upon conversion of 30,000 shares of the Series A Preferred Stock.

(15) Consists of 1,304,750 shares of Class A Common Stock currently
     outstanding and 1,819,584 shares of Class B Common Stock issuable
     pursuant to warrants that are currently exercisable. See also footnote
     2.  The per share price at which shares may be purchased pursuant to the
     warrants is $5.01 subject to adjustment.

(16) Consists of 761,718 shares of Class B Common Stock held by Eileen
     Farbman and Leo Farbman, as joint tenants and 761,718 shares of Class B
     Common Stock held by Eileen Farbman as custodian for Leo Farbman UGTMA
     until age 21 (see also footnote 11).  Leo Farbman is the son of Eileen
     Farbman and grandson of Robert Price.

(17) Consists of 761,718 shares of Class B Common Stock held by Eileen
     Farbman and Alexandra Farbman, as joint tenants and 761,718 shares of
     Class B Common Stock held by Eileen Farbman as custodian for Alexandra
     Farbman UGTMA until age 21 (see also footnote 11).  Alexandra Farbman is
     the daughter of Eileen Farbman and granddaughter of Robert Price.

(18) Consists of 2,130,650 shares of Class A Common Stock.  Information with
     respect to shares of Class A Common Stock held is based on a Schedule
     13G dated February 2, 1998, which reflects the collective beneficial
     ownership of College Retirement Equities Fund ("CREF") and its
     Investment adviser, TIAA-CREF Investment Management, LLC ("TIAA-CREF").
     According to the Schedule 13G, CREF has sole power to vote all of such
     shares, and shares with TIAA-CREF the power to dispose of all of such
     shares.

               Several of the above shareholders are party to a voting agreement
with American Cellular Corporation ("ACC"), dated as of March 6, 1998, pursuant
to which such shareholders have agreed to vote in favor of the merger of ACC
with and into the Company.  See Item 13, "Certain Relationships and Related
Transactions--Merger with American Cellular Corporation."

Item 13   Certain Relationships and Related Transactions

               Merger with American Cellular Corporation

               On March 6, 1998, the Company and American Cellular Corporation
("ACC") entered into an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement and subject to the terms and conditions set
forth therein, ACC will be merged with and into the Company, with the Company to
be the surviving corporation of such merger (the "Merger").  At the Effective
Time (as defined in the Merger Agreement) of the Merger, each issued and
outstanding share of Class A Common Stock, par value $0.01 per share of the
Company (the "Class A Shares") and Class B Common Stock, par value $0.01 per
share, of the Company will in each case be converted into the right to receive
$14.00 in cash, without interest (the "Merger Consideration"), and each issued
and outstanding share of Series A Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), of the Company will be
converted into the right to receive the product of the Merger Consideration and
the number of Class A Shares into which each such share of Series A Preferred
Stock is convertible at such time in connection with a change of control.  The
Merger Agreement permits the Company, under certain circumstances, to respond to
unsolicited third party acquisition proposals and, upon payment of certain fees
to ACC, to terminate the Merger Agreement.

               Brion Applegate, one of the Company's directors, and Spectrum
Equity Investors, L.P. ("Spectrum"), one of its principal stockholders, are each
affiliated with ACC.  Mr. Applegate is a general partner of Spectrum and an
affiliate of Spectrum, Spectrum Equity Investors II, L.P., is a founding
stockholder of ACC.  In his capacity as a general partner of Spectrum, Mr.
Applegate led the investor group that made ACC's acquisition proposal relating
to the merger.

               In connection with the execution of the Merger Agreement, AT&T
Wireless, Inc., The Thomas H. Lee Company, Steven Price and Eileen Farbman
(collectively, the "Principal Shareholders") entered into a voting agreement
(the "Voting Agreement") with ACC.  Pursuant to the agreement, the Principal
Shareholders, the beneficial owners of approximately 39% of the outstanding
Common Stock and Preferred Stock of the Company (or 57% of the fully diluted
voting power of the Company), agreed to vote their shares in favor of the
approval and adoption of the Merger Agreement.  The Voting Agreement terminates
upon termination of the Merger Agreement.

               In connection with the execution of the Merger Agreement and the
Voting Agreement, each of Spectrum and the Public School Employees' Retirement
System ("PSERS") executed side letters agreeing not to exercise certain
redemption rights associated with the shares of Series A Preferred Stock owned
by them that may arise at such time as the Merger is approved by the Company's
stockholders.

               Concurrently with the execution of the Merger Agreement, AT&T
Wireless Services, Inc. ("AT&T Wireless/McCaw"), a principal shareholder of
PriCellular, entered into a Consent and Waiver agreement with PriCellular.
Pursuant to the Consent and Waiver agreement, AT&T Wireless/McCaw agreed to
waive certain rights (including veto rights with respect to any merger between
PriCellular and any other corporation) arising under the AT&T Wireless/McCaw
Stockholders Agreement (see below) among PriCellular, AT&T Wireless/McCaw and
the other shareholders of PriCellular party thereto in connection with the
Merger.  The Consent and Waiver agreement will only be effective if (i) pursuant
to the Merger all outstanding shares of Class A Common Stock and Class B Common
Stock of PriCellular are converted into the right to receive an amount in cash
equal to not less than $14.00 per share; (ii) there is no material change to the
Merger Agreement; and (iii) the beneficial owners of ACC's securities at the
closing of the Merger are Spectrum, ACC's management and other financial
institutions or investment entities.

AT&T Wireless/McCaw Registration Rights

               AT&T Wireless/McCaw is a principal stockholder of the Company,
owning 2,625,781 shares of Class B Common Stock and 3,911,763  shares of Class A
Common Stock.  As of February 9, 1996, the Company agreed, and Harvard Private
Capital, Spectrum, THL Equity Fund, THL-CCI Investors Limited Partnership
("THL-CCI"), PSERS and Dominion Cellular, Inc. ("Dominion") consented, to
provide AT&T Wireless/McCaw with certain registration rights (the "McCaw
Registration Rights"). The McCaw Registration Rights are substantially the same
as the Registration Rights described below, except that AT&T Wireless/McCaw will
be entitled to one demand registration and participation rights in registrations
proposed to be effected by the Company.

Other Registration Rights

               On February 9, 1996, the Company, Aeneas Venture Corp., an
affiliate of Harvard Private Capital Group, Inc. ("Harvard"), Spectrum, THL
Equity Fund, THL-CCI, PSERS and Dominion entered into an Amended and Restated
Registration Rights Agreement (the "Registration Rights"), which superseded and
canceled the Amended and Restated Registration Rights Agreement dated as of
December 28, 1995 among the same parties. The agreement provided, subject to
certain limitations, that Spectrum will have the right to one demand
registration, Harvard Private Capital will have the right to two demand
registrations, THL Equity Fund (together with THL-CCI) will have the right to
two demand registrations and PSERS will have the right to two demand
registrations. The minimum amount of securities that must be registered pursuant
to these demand rights is, for each of Harvard, THL and PSERS, 20% of the
Harvard registrable securities, the THL registrable securities and the PSERS
registrable securities (or a lesser amount of shares whose aggregate offering
price is expected to be at least $10 million), respectively, or, for Spectrum,
40% of the Spectrum registrable securities. In each demand registration, holders
of registrable securities other than the holders initiating the registration may
include their securities in such registration, subject to certain notice
requirements. The Registration Rights further provide, subject to certain
limitations, that in the event the Company proposes to register any of its
equity securities in connection with a public offering, the Company will use its
best efforts to have such registration cover all of the registrable securities,
subject to certain notice requirements.

Harvard Share Repurchase

   
               In July, 1997, the Company repurchased and retired, under
separate authorization of its Board of Directors, 3,994,945 shares of Class B
Common Stock  from Harvard at $9.00 per share, which was the then current market
price at the date of the transaction.  In addition, 56,275 warrants to purchase
shares of Class B Common Stock, also owned by Harvard, were redeemed at a net
cash expenditure of $3.83 per warrant ($9.00, the then current market price,
less the exercise price of %5.17).
    

AT&T Operating Agreement

               During 1997, there remained in effect an Operating Agreement
between the Company and AT&T Wireless/McCaw dated as of April 28, 1994 (the
"1994 Operating Agreement"). The 1994 Operating Agreement provided that AT&T
Wireless/McCaw would (i) assist the Company and its subsidiaries in evaluating
potential acquisitions, (ii) make available to the Company its volume purchase
discounts on cellular system switches, cell site equipment and other equipment,
(iii) use its efforts to cause certain of its service vendors to provide
services to the Company on terms comparable to those provided to AT&T
Wireless/McCaw, (iv) assist the Company in negotiating favorable price terms
with vendors, (v) use reasonable efforts to help the Company secure financing
arrangements with vendors of cellular service equipment, (vi) assist the Company
in its capital financing efforts, (vii) along with the Company, use its best
efforts to design and construct adjacent cellular systems, and (viii) provide
the Company with access to information relating to sales and marketing,
technology, and cellular system operating techniques (subject to certain
restrictions). The 1994 Operating Agreement also provided that any of the
Company's adjacent systems had the right to enter into switch sharing and
roaming arrangements with AT&T Wireless/McCaw or certain of its affiliates.
During 1997, no fees were paid either to or by the Company pursuant to the 1994
Operating Agreement.  During 1997 and 1998, the Company engaged in discussions
with AT&T Wireless/McCaw to enter into a new agreement to replace the 1994
Operating Agreement.

               In addition, during 1997 the Company began a limited trial of
reselling AT&T Wireless/McCaw's cellular service in certain portions of the New
York City MSA. The arrangement was negotiated in the normal course of business
and the fees paid by the Company to AT&T Wireless/McCaw were consistent with
those paid by other resellers of AT&T Wireless/McCaw's cellular service.  At
December 31, 1997, the Company had approximately 1300 customers serviced by the
reselling arrangement, which generated approximately $550,000  in revenue during
1997.  The fees paid to AT&T Wireless/McCaw during 1997 totaled $367,000.  The
arrangement was discontinued in May, 1998.

Stockholders Agreements

               AT&T Wireless/McCaw Stockholders Agreement

               On April 28, 1994, in connection with the sale of 1,625,000
shares of the Company's Class B Common Stock, the Company and AT&T
Wireless/McCaw entered into, among other agreements, a Stockholders Agreement
(the "AT&T Wireless/McCaw Stockholders Agreement").  The AT&T Wireless/McCaw
Stockholders Agreement (as amended through July 28, 1995) contains, among other
provisions, agreements with respect to (i) preemptive rights on sales of
additional stock, (ii) asset purchase rights, (iii) rights of first refusal in
sales of existing stock, (iv) co-sale rights to participate in sales by certain
stockholders and (v) rights concerning the election of directors of the Company.
The preemptive rights provide, subject to certain limitations, that in the event
the Company issues to a third party any stock, rights or instruments, as defined
in the agreement, AT&T Wireless/McCaw will have the right to purchase such
stock, rights or instruments on the same terms as the third party so as to
maintain the same proportional interest of the fully diluted equity securities
of the Company as was held by AT&T Wireless/McCaw prior to the issuance of such
stock, rights or instruments.  The asset purchase rights provide, subject to
certain limitations, that in the event the Company offers to sell to a third
party any asset for a purchase price which exceeds five percent of the value of
the Company or $1.5 million, AT&T Wireless/McCaw shall have the right to
purchase such asset on the same terms as the third party. The rights of first
refusal provide, subject to certain limitations and modified in part by another
stockholders agreement to which the company is a party, that in any offer to
sell or otherwise dispose of shares of stock in the Company by a stockholder,
each of the Company and AT&T Wireless/McCaw shall have a right of first refusal
to acquire its pro rata portion of such stock.  The co-sale rights provide that
prior to any public offering AT&T Wireless/McCaw shall have the right to share
on a pro rata basis, as described in the agreement, in any sale of stock of the
Company by a member of the Price family (with certain exceptions).  With regard
to the composition of the board of directors of the Company, AT&T Wireless/McCaw
will be entitled to elect one director.

               The AT&T Wireless/McCaw Stockholders Agreement also contains a
series of negative covenants whereby the Company, among other provisions, agrees
that without the written consent of AT&T Wireless/McCaw it will not acquire
through the purchase of stock or assets an interest in any business or other
entity the value of which exceeds 10% of the value of the Company unless AT&T
Wireless/McCaw has made a bona fide attempt to acquire such stock or assets.
Pursuant to the negative covenants, the Company further agrees that it will not
(i) enter into any business not related to wireless communications, (ii) amend
its organizing documents in a manner that would have a material adverse effect
on the rights and preferences of AT&T Wireless/McCaw as a stockholder and (iii)
bid on or apply for a license to construct or operate any non-wireline system if
such bid or application would preclude AT&T Wireless/McCaw from bidding,
applying or obtaining such license or permit.

               Termination of the AT&T Wireless/McCaw Stockholders Agreement
occurs with respect to preemptive rights, asset purchase rights, rights of first
refusal and co-sale rights upon the earlier of the seventh anniversary of the
agreement or a reduction in AT&T Wireless/McCaw's ownership to 7% of the Company
on a fully diluted basis.  With regard to the board election rights and the
negative covenants of the Company, the AT&T Wireless/McCaw Stockholders
Agreement will terminate on the earlier of the dates described in the previous
sentence or on the third anniversary of the agreement if the Company is unable
to acquire assets representing two million Pops due, in substantial part, to (x)
AT&T Wireless/McCaw's refusal to consent to acquisitions by the Company of
cellular systems or (y) AT&T Wireless/McCaw's acquisition of non-contiguous,
non-wireline cellular systems which the Company would otherwise have acquired.

               Voting Agreement

               Since December, 1995, the Company and several of its principal
shareholders (including AT&T Wireless/McCaw, The Thomas H. Lee Company, Spectrum
and certain members of the Price family) have been parties to a Voting Agreement
(the "1995 Voting Agreement") pursuant to which certain shareholders were given
the right to designate nominees to the Company's Board, for which all other
parties to the Agreement would vote. Under the Agreement, each of Harvard, AT&T
Wireless/McCaw, Spectrum and The Thomas H. Lee Company were given the right to
designate one nominee for the Board (subject to certain limitations), and the
Price family was given the right to designate such number of nominees as would
constitute a majority of the Board. Each stockholder further agreed not to vote
to remove any member of the Board designated by one of the above parties unless
such designating party also voted to remove such director. The 1995 Voting
Agreement terminates (A) with respect to AT&T Wireless/McCaw, on the earlier to
occur of (i) April 28, 2001 or (ii) such time as the number of fully-diluted
shares (as defined therein) held by AT&T Wireless/McCaw is less than 7% of the
total number of fully diluted shares then outstanding and (B) with respect to
The Thomas H. Lee Company, at such time as the number of fully-diluted  shares
held by affiliates of The Thomas H. Lee Company plus those held by PSERS is less
than 2,800,000 (subject to adjustment).  The 1995 Voting Agreement has already
terminated with respect to Harvard and Spectrum.


   
                                    Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  1.  The Consolidated Financial Statements of PriCellular Corporation
         (see index to financial statements at F-1).

     2.  Financial Statement Schedules:

         Schedules not included with this. Additional financial data has been
         omitted because it is not applicable or the required information is
         shown in the Consolidated Financial Statements or Notes thereto.

     3.  Exhibits:

                                  Exhibit Index

         2.1    Contribution Agreement by and among Texas/Illinois Cellular
                Limited Partnership, a Delaware limited partnership,
                Southwestern Bell Mobile Systems, Inc., a Delaware and Virginia
                corporation, the Company, Cellular Information Systems of
                Laredo, Inc., a Texas corporation, dated as of April 10, 1995
                (certain schedules have been omitted but will be furnished
                supplementally to the Commission upon request) (1)

         2.2    Asset Acquisition Agreement dated as of October 15, 1996 among
                the Company, Cellular Information Systems of Florence, Inc. and
                Horizon Cellular Telephone Company of Central Kentucky, L.P.
                (2)

         3.1    Amended and Restated Certificate of Incorporation of the Company
                (3)

         3.2    Certificate of Amendment of the Amended and Restated Certificate
                of Incorporation dated April 25, 1994 (3)

         3.3    Certificate of Correction of the Amended and Restated
                Certificate of Incorporation dated August 9, 1994 (3)

         3.4    Certificate of Amendment of the Amended and Restated Certificate
                of Incorporation dated October 25, 1994 (3)

         3.5    Certificate of Amendment of the Amended and Restated Certificate
                of Incorporation of the Company dated November 16, 1994 (3)

         3.6    Certificate of Amendment of Restated Certificate of
                Incorporation of the Company dated November 22, 1994 (3)

         3.7    Certificate of Designation of Series A Cumulative Convertible
                Preferred Stock (4)

         3.8    By-Laws of the Company (3)

         3.9    Amendment to By-Laws of the Company (3)

         3.10   Second Amendment to By-Laws of the Company (4)

         4.1    Indenture to 14% Senior Subordinated Discount Notes due 2001
                among the Company, PriCellular Wireless Corporation and Bank of
                Montreal Trust Company, as Trustee (including form of Note) (3)

         4.2    Indenture of 12 1/4% Senior Subordinated Notes due 2003 among
                the Company, PriCellular Wireless Corporation and Bank of
                Montreal Trust Company, Trustee (including form of Note) (5)

         4.3    Indenture to 10 3/4% Senior Subordinated Convertible Discount
                Notes due 2004 between the Company and Bank of Montreal Trust
                Company, as Trustee (including form of Note) (5)

         4.4    Indenture to 10 3/4% Senior Notes due 2004 between PriCellular
                Wireless Corporation and Bank of Montreal Trust Company, as
                Trustee (including form of Note) (6)

         10.1   1994 Stock Option Plan (3)

         10.2   Stockholders' Agreement, dated as of April 28, 1994 by and
                between the Company and McCaw (3)

         10.3   Amended and Restated Registration Rights Agreement, dated as of
                December 28, 1995, by and among the Company and the parties
                named therein (4)

         10.4   Voting Agreement, dated as of December 28, 1995, by and among
                the Company and the parties named therein (4)

         10.5   Operating Agreement, dated as of April 28, 1994, by and between
                the Company and McCaw (3)

         10.6   Contribution Agreement by and among Texas/Illinois Cellular
                Limited Partnership, a Delaware limited partnership,
                Southwestern Bell Mobile Systems, Inc., a Delaware and Virginia
                corporation, the Company, Cellular Information Systems of
                Laredo, Inc., a Texas corporation, dated as of April 10, 1995
                (certain schedules have been omitted but will be furnished
                supplementally to the Commission upon request) (see Exhibit 2.2)

         10.7   Asset Acquisition Agreement dated as of October 15, 1996 among
                the Company, Cellular Information Systems of Florence, Inc. and
                Horizon Cellular Telephone Company of Central Kentucky, L.P.
                (see Exhibit 2.2)

         10.8   Warrant Agreement between the Company and Price Communications
                Corporation (2)

         10.9   Employment Agreement, dated as of December 28, 1995, by and
                between the Company and Robert Price (4)

         21.1   Subsidiaries of the Registrant*

         23.1   Consent of Ernst & Young LLP*

         27.1   Financial Data Schedule (included in electronic version only)*

------------
*      Previously filed.

  (1)  Incorporated herein by reference to PriCellular Wireless Corporation's
       Registration Statement on Form S-1, No. 33-95834.

  (2)  Incorporated herein by reference to the Company's Annual Report on Form
       10-K for the year ended December 31, 1996.

  (3)  Incorporated herein by reference to the Company's Registration Statement
       on Form S-1, No. 33-85678.

  (4)  Incorporated herein by reference to the Company's Annual Report on Form
       10-K for the year ended December 31, 1995.

  (5)  Incorporated herein by reference to the Company's Registration Statement
       on Form S-1, No. 33-98156.

  (6)  Incorporated herein by reference to PriCellular Wireless Corporation's
       Registration Statement on Form S-4, No. 333-17067.


                                   Signatures


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report or amendment thereto to
be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York, State of New York, on the 22rd day of May 1998.


                                                 PriCellular Corporation

                                                 By /s/Steven Price
                                                    ---------------------------
                                                    Steven Price
                                                    President


                        Form 10-K--Item 14(a)(1) and (2)
                    PriCellular Corporation and Subsidiaries
                   Index to Consolidated Financial Statements

<TABLE>
The following consolidated financial statements of PriCellular Corporation and
subsidiaries are included in Item 8:

<S>                                                                                                    <C>
   Report of Independent Auditors...................................................................    F-2
   Consolidated Balance Sheets--December 31, 1997 and 1996..........................................    F-3
   Consolidated Statements of Operations--Years Ended
     December 31, 1997, 1996 and 1995...............................................................    F-4
   Consolidated Statements of Stockholders' Equity--Years Ended
     December 31, 1997, 1996 and 1995...............................................................    F-5
   Consolidated Statements of Cash Flows--Years Ended
     December 31, 1997, 1996 and 1995...............................................................    F-6
   Notes to Consolidated Financial Statements.......................................................    F-8

The following consolidated financial statement schedules of PriCellular
Corporation are included in Item 14(a):

   Schedule I--Condensed Financial Information of Registrant.........................................   F-26
   Schedule II--Valuation and Qualifying Accounts....................................................   F-30

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

</TABLE>


                         Report of Independent Auditors

Board of Directors
PriCellular Corporation

We have audited the consolidated balance sheets of PriCellular Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. Our audits also included the
financial statement schedules listed in the Index at Item 14(a). These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 consolidated financial position of
PriCellular Corporation and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.

                                ERNST & YOUNG LLP

New York, New York
January 22, 1998, except for the third

   paragraph of Note 13 as to which
   the date is March 10, 1998
    




                    PriCellular Corporation and Subsidiaries
                           Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)

<TABLE>
                                                                                           December 31
                                                                                        1997         1996
                                                                                       ------       ------
<S>                                                                                     <C>          <C>
Assets
Current assets:

   Cash and cash equivalents                                                          $ 61,357     $100,364
   Accounts receivable (less allowance of $1,686 in 1997 and $1,767 in 1996)            19,465       13,429
   Inventory                                                                             2,232        2,096
   Other current assets                                                                  1,797        3,484
                                                                                      --------     --------
Total current assets                                                                    84,851      119,373
Fixed assets--at cost:
   Cellular facilities and equipment                                                   123,935       71,813
   Furniture and equipment                                                              10,221        5,142
   Deposits on cellular equipment                                                            -       10,100
                                                                                      --------     --------
                                                                                       134,156       87,055

   Less accumulated depreciation                                                       (29,302)     (13,728)
                                                                                      --------     --------
Net fixed assets                                                                       104,854       73,327

Investment in cellular operations                                                       37,017       39,641
Cellular licenses (less accumulated amortization of $23,119 in 1997 and $10,415 in     493,315      377,808
   1996)

Cellular license held for sale                                                               -       13,721
Deferred financing costs (less accumulated amortization of $5,191 in 1997 and           13,352       15,266
   $2,761 in 1996)

Cash committed for the acquisition of cellular operations                               13,000       91,400
Other assets                                                                             1,267        5,280
                                                                                      ========     ========
Total assets                                                                          $747,656     $735,816
Liabilities and stockholders' equity Current liabilities:

   Accounts payable and accrued expenses                                               $33,966     $ 22,317
   Deferred revenue                                                                      4,242        2,531
   Other current liabilities                                                             2,125        4,776
                                                                                      --------     --------
Total current liabilities                                                               40,333       29,624
Long-term debt                                                                         568,323      524,517
Deferred taxes                                                                           3,797            -
Other long-term liabilities                                                              1,023        1,756

Commitments and contingent liabilities
Stockholders' equity:
   Preferred Stock, $0.01 par:
     Series A, cumulative convertible: authorized 10,000,000 shares; issued and
       outstanding 96,000 shares                                                             1            1
   Common Stock, $0.01 par:
     Class A: Authorized 100,000,000 shares; issued and outstanding
       21,824,566 shares (1997) and 18,902,101 shares (1996)                               218          189
     Class B: Authorized 50,000,000 shares (1997) and 20,000,000 shares (1996);
       issued and outstanding 13,134,275 shares (1997) and 19,510,736 shares (1996)        131          195
   Additional paid-in capital                                                          180,704      212,777
   Accumulated deficit                                                                 (46,874)     (33,243)
                                                                                      --------     --------
Total stockholders' equity                                                             134,180      179,919
                                                                                      --------     --------
Total liabilities and stockholders' equity                                            $747,656     $735,816
                                                                                      ========     ========
</TABLE>
See notes to consolidated financial statements.



                    PriCellular Corporation and Subsidiaries
                      Consolidated Statements of Operations
                  (Dollars in thousands, except per share data)
<TABLE>
                                                            Year ended December 31
                                                   1997              1996             1995
                                                --------          --------         --------
<S>                                           <C>              <C>               <C>

Revenues                                          
Cellular service                             $    168,394      $    105,188      $    38,757
Equipment sales                                     5,364             3,430            1,717
Other                                               7,242             3,998            1,030
                                             ------------      ------------      -----------
                                                  181,000           112,616           41,504
Costs and expenses

Cost of cellular service                           48,691            29,571           10,694
Cost of equipment sold                             12,841            10,073            4,951
Selling, general and administrative                53,485            34,502           16,512
Depreciation and amortization                      28,759            19,537           10,337
                                             ------------      ------------      -----------
                                                  143,776            93,683           42,494
                                             ------------      ------------      -----------
Operating income (loss)                            37,224            18,933             (990)

Other income (expense)
Gain (loss) on sale of investments in

   cellular operations                              8,423            (1,401)          11,598
Interest expense                                  (67,392)          (47,076)         (22,953)
Interest income                                     4,864             4,875            4,114
Other income, net                                   3,250             1,626              520
                                             ------------      ------------      -----------
                                                  (50,855)          (41,976)          (6,721)
                                             ------------      ------------      -----------
Net income (loss)                            $    (13,631)     $    (23,043)     $    (7,711)
                                             ============      ============      ===========

Net income (loss) after adjustment for accrued preferred
   stock dividend                                                $    (20,171)     $    (29,221)     $    (7,711)
                                                                 ============      ============      ===========
Basic and diluted earnings (loss) per common share                    $(0.55)           $(0.76)          $(0.24)
                                                                 ============      ============      ===========
Weighted average number of common shares
   used in computation of basic and diluted
   earnings (loss) per share                                       36,751,000        38,493,000       32,214,000
                                                                 ============      ============      ===========
</TABLE>

See notes to consolidated financial statements.



                    PriCellular Corporation and Subsidiaries

                 Consolidated Statements of Stockholders' Equity

                                 (In thousands)

<TABLE>
                                                                       Series A               Class A                Class B
                                                                    Preferred Stock         Common Stock          Common Stock
                                                                 --------------------  ---------------------  -------------------
                                                                  Shares     Amount     Shares     Amount      Shares     Amount
                                                                 --------------------  ---------------------  -------------------
<S>                                                              <C>         <C>       <C>         <C>        <C>         <C>

Balance--December 31, 1994                                                                5,000      $  50      14,626     $ 146
Additional  shares  issued in  connection  with the initial                                 375          4
   public offering

Purchase and retirement of treasury stock                                                  (127)        (1)
Shares issued in connection with exercise of Harvard
   and Spectrum options                                                                     828          8
Common stock issued for cash                                                              2,000         20
Conversion of Class B common stock to Class A
   common stock                                                                             810          8        (810)       (8)
Shares issued in connection with acquisition of
   Parkersburg, WV/Marietta, OH MSA cellular system                                         797          8
Shares issued in connection with acquisition of AL-4
   RSA cellular system                                                                    1,175         12
Preferred stock issued for cash                                        96      $ 1
Net loss for the year ended December 31, 1995
                                                                 ----------------------------------------------------------------
Balance--December 31, 1995                                             96        1       10,858        109      13,816       138
Purchase and retirement of common stock                                                    (150)        (1)
Conversion of Class B common stock to Class A
   common stock                                                                           1,688         17      (1,688)      (17)
Shares issued as a result of common stock splits                                          6,498         64       7,383        74
Costs incurred in connection with common and
   preferred stock offerings
Exercise of employee stock options                                                            8          -
Net loss for the year ended December 31, 1996
                                                                 ----------------------------------------------------------------
Balance--December 31, 1996                                             96        1       18,902        189      19,511       195
Purchase and retirement of common stock                                                  (2,157)       (21)     (3,995)      (40)
Conversion of Class B common stock to Class A common stock                                2,382         24      (2,382)      (24)
Costs incurred in connection with common and
   preferred stock offerings
Shares issued in connection with the Kentucky Cluster acquisition                         1,948         19
Exercise of employee stock options                                                          750          7
Net loss for the year ended December 31, 1997
                                                                 ----------------------------------------------------------------
Balance--December 31, 1997                                             96      $ 1        21,825      $ 218      13,134     $ 131
                                                                 ================================================================
</TABLE>

<TABLE>
                                                                            Additional
                                                                              Paid-in           Accumulated        Stockholders'
                                                                              Capital             Deficit              Equity
                                                                            ----------          -----------        -------------
<S>                                                                         <C>                  <C>                <C>
Balance--December 31, 1994                                                  $  80,529            $  (2,489)         $  78,236
Additional  shares  issued in  connection  with the initial  public             2,563                                   2,567
   offering

Purchase and retirement of treasury stock                                        (769)                                  (770)
Shares issued in connection with exercise of Harvard
   and Spectrum options                                                         4,992                                  5,000
Common stock issued for cash                                                   24,046                                 24,066
Conversion of Class B common stock to Class A
   common stock                                                                                                            -
Shares issued in connection with acquisition of
   Parkersburg, WV/Marietta, OH MSA cellular system                             9,751                                  9,759
Shares issued in connection with acquisition of AL-4
   RSA cellular system                                                         14,970                                 14,982
Preferred stock issued for cash                                                79,598                                 79,599
Net loss for the year ended December 31, 1995                                                       (7,711)           (7,711)
                                                                            ----------------------------------------------------
Balance--December 31, 1995                                                    215,680              (10,200)          205,728
Purchase and retirement of common stock                                        (1,449)                                (1,450)
Conversion of Class B common stock to Class A
   common stock                                                                                                            -
Shares issued as a result of common stock splits                                 (138)                                     -
Costs incurred in connection with common and
   preferred stock offerings                                                   (1,364)                                (1,364)
Exercise of employee stock options                                                 48                                     48
Net loss for the year ended December 31, 1996                                                      (23,043)          (23,043)
                                                                            ----------------------------------------------------
Balance--December 31, 1996                                                    212,777              (33,243)          179,919
Purchase and retirement of common stock                                       (53,800)                               (53,861)
Conversion of Class B common stock to Class A common stock
Costs incurred in connection with common and
   preferred stock offerings                                                     (206)                                  (206)
Shares issued in connection with the Kentucky Cluster acquisition              19,106                                 19,125
Exercise of employee stock options                                              2,827                                  2,834
Net loss for the year ended December 31, 1997                                                      (13,631)          (13,631)
                                                                            ----------------------------------------------------
Balance--December 31, 1997                                                  $ 180,704            $ (46,874)        $ 134,180
                                                                            ====================================================
</TABLE>

See notes to consolidated financial statements.



                    PriCellular Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
                                                                               Year ended December 31
                                                                            1997         1996         1995
                                                                       ------------  ------------  -----------
<S>                                                                      <C>          <C>          <C>
Operating activities
Net income (loss)                                                        $(13,631)    $(23,043)    $ (7,711)
Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:
     Depreciation and amortization                                         28,759       19,537       10,337
     Interest on Senior Subordinated and Convertible Discount Notes        46,236       43,174       22,212
     (Gain) loss on sale of investment in cellular operations              (8,423)       1,401      (11,598)
     Loss from equity investments, net of distributions                         -            -         (275)
     Amortization of covenant not to compete                               (3,250)      (1,625)        (500)
     Provision for losses on accounts receivable                            2,331        2,079          936
     Proceeds from covenant not to compete                                  2,000        2,500        3,000
     Changes in operating assets and liabilities:
       Accounts receivable                                                 (7,543)      (9,098)      (4,529)
       Inventory                                                              103         (369)        (891)
       Other current assets                                                  (737)        (347)        (193)
       Other assets                                                          (410)        (210)           -
       Accounts payable and accrued expenses                                2,804        4,457           94
       Deferred revenue                                                       600        1,151          600
       Income taxes payable                                                     -         (448)      (2,553)
       Other current liabilities                                                -         (250)      (4,490)
       Other long-term liabilities                                            187          410         (388)
       Other, net                                                               -           52           59
                                                                         --------     --------     --------
Net cash provided by operating activities                                  49,026       39,371        4,110
                                                                         --------     --------     --------
Investing activities
Redemption of short-term investments                                            -            -          991
Purchase of cellular equipment                                            (25,717)     (29,470)      (6,794)
Amounts refunded from (deposited in) escrow to acquire cellular
   properties (net)                                                         7,337       (5,000)           -
Deposit required for Personal Communications Service auction (net)              -        1,640       (4,140)
Distributions to affiliate                                                      -            -          (36)
Proceeds from sale of cellular operations, net of cash                     22,396       31,500       19,478
Proceeds from sale of investment in cellular operations                     1,255        2,813            -
Acquisition of cellular operations, net of cash                           (26,032)    (110,977)    (213,686)
Investment in cellular operations                                          (2,523)         (75)        (166)
Cash committed for the acquisition of cellular operations                 (13,000)     (91,400)           -
                                                                         --------     --------     --------
Net cash used in investing activities                                     (36,284)    (200,969)    (204,353)
                                                                         --------     --------     --------
Financing activities
Purchase and retirement of common stock                                   (53,860)      (1,450)        (770)
Proceeds from sale of common stock                                              -            -       31,633
Proceeds from exercise of stock options                                     2,834           48            -
Proceeds from sale of preferred stock                                           -            -       79,599
Repayments of notes payable and due to stockholders                             -      (23,104)      (3,499)
Payments for deferred financing costs                                        (516)      (5,612)      (7,601)
Proceeds from issuance of long-term debt                                        -      170,000      178,914
Costs incurred in connection with common and preferred stock                 (207)      (1,364)           -
   offerings
                                                                         --------     --------     --------
Net cash provided by (used in) financing activities                       (51,749)     138,518      278,276
                                                                         --------     --------     --------
Increase (decrease) in cash and cash equivalents                          (39,007)     (23,080)      78,033
Cash and cash equivalents at beginning of year                            100,364      123,444       45,411
                                                                         ========     ========     ========
Cash and cash equivalents at end of year                                 $ 61,357     $100,364     $123,444
                                                                         ========     ========     ========
</TABLE>



                    PriCellular Corporation and Subsidiaries

                Consolidated Statements of Cash Flows (continued)
                             (Dollars in thousands)
<TABLE>

                                                                               Year ended December 31
                                                                               Year ended December 31
                                                                            1997         1996         1995
                                                                       ------------  ------------  -----------
<S>                                                                      <C>          <C>          <C>
Supplemental disclosure of cash flow information
Cash paid during the period for:
   Interest                                                               $18,275     $ 1,110      $   874
   Income taxes                                                               424         448        2,803

Supplemental schedule of noncash investing and financing activities
Shares (1997) and (1995) and debt (1996) issued in connection with
   the acquisition of cellular systems                                     19,125      19,429       24,741
Conversion of Class B common stock to Class A common stock                      -           -            8
Contribution of net assets into joint venture                                   -           -       35,516

See notes to consolidated financial statements.

</TABLE>

                    PriCellular Corporation and Subsidiaries

                   Notes to Consolidated Financial Statements

                                December 31, 1997



   
1. Organization

PriCellular Corporation and Subsidiaries, including its wholly-owned subsidiary,
PriCellular Wireless Corporation ("Wireless") (collectively, the "Company"), is
principally engaged in the ownership and operation of cellular telephone
systems.

2. Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated in the consolidated financial statements.

Use of Estimates

The preparation of the financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes.

Cash Equivalents

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or market.
Inventory consists primarily of cellular telephones and accessories.

Other Current Assets

In August 1996, the Company filed applications to participate in the auction for
10 MHz broadband Personal Communications Service ("PCS") licenses conducted by
the Federal Communications Commission (the "FCC") and deposited $2.5 million
with the FCC. In January 1997, $2.3 million of the deposit was returned with an
additional $653,000 being paid to the FCC. For 1996, the deposit with the FCC is
included in other current assets and for 1997 such amount is included in
Cellular licenses.

Investments in Cellular Operations

Investments in cellular operations in which the Company's interest is 20% or
more are accounted for under the equity method. Interest in investments that are
less than 20% are accounted for under the cost method.

On November 30, 1995 the Company entered into a Joint Venture with SBC
Communications, Inc. ("SBC"), formerly Southwestern Bell, in which the Company
contributed its system serving the Laredo, TX MSA (approximately 176,000 Pops)
and SBC contributed cellular properties in the Illinois-4 and -6 RSAs. The
Company owns 44.5% of the combined 594,000 Pops or approximately 264,000 Net
Pops. Under the terms of the Joint Venture agreement, the Company receives
preferential distributions in the first four years of the Joint Venture rising
from $3.3 million in the first year to $5.8 million in the final year. Such
preferential distributions are guaranteed by SBC. The Company also has an option
to put its Joint Venture interest to SBC at prices beginning at $28.5 million
and escalating to $39.0 million at the end of the four year period. SBC has
operating control of the properties and has certain rights to purchase the
Company's interests on the day prior to the fourth anniversary. The Company's
guaranteed preferential distribution from the Joint Venture for 1997, 1996 and
the month of December 1995 amounted to $4.3 million, $3.4 million and $275,000,
respectively, which are included in other revenue.

Cellular Licenses

The Company primarily uses a 40 year life to amortize cellular licenses
acquired. Amortization expense for the years ended December 31, 1997, 1996 and
1995 was $12.7 million, $9.5 million and $4.3 million, respectively.

The Company periodically reviews the carrying value of licenses to determine
whether such amounts are recoverable based on undiscounted future cash flows of
the market to which the license relates, and by comparing the cellular licenses
to the estimated market value of the cellular systems, in order to determine
whether a reduction to fair value is necessary. The Company has determined that
no such reductions were necessary through December 31, 1997.

Income Recognition

Revenues are recognized during the period service is provided or when equipment
is delivered.

Expense Recognition

Marketing costs relating to new subscribers are expensed in the period that they
are incurred. Advertising expense amounted to $3.7 million, $2.3 million and
$1.5 million for the years ended December 31, 1997, 1996 and 1995, respectively.

Fixed Assets

Fixed assets are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful life of the asset of three to
seven years.

Deferred Financing Costs

Deferred financing costs primarily represent underwriting discounts and related
fees incurred in connection with the issuance of the Company's long-term debt.
These costs are being amortized over the terms of the related debt and are
included in interest expense.

Common Stock Splits

On July 17, 1995, February 29, 1996 and October 1, 1996, the Company authorized
5-for-4 stock splits in the form of 25% stock dividends of Class A and Class B
common stock payable August 4, 1995, March 11, 1996 and October 21, 1996,
respectively. All footnote disclosures and applicable per share data have been
retroactively restated to reflect these splits.

Stock Based Compensation

The Company grants stock options for a fixed number of shares to employees with
an exercise price equal to the fair value of the shares at the date of grant.
The Company accounts for stock option grants in accordance with APB Opinion No.
25, Accounting for Stock Issued to Employees ("APB 25") and, accordingly, as
option grants are at fair market value, recognizes no compensation expense for
these grants (see Note 9--Commitments and Contingencies).

Net Income (Loss) per Share

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. All earnings (loss) per
share amounts for all periods have been presented and, where appropriate,
restated to conform to Statement 128 requirements. In computing dilutive
earnings (loss) per share for the years ended December 31, 1997, 1996 and 1995,
no effect has been given to options outstanding under the Company's 1994 Stock
Option Plan, outstanding warrants to purchase Class B common stock, the 12-3/4%
Senior Convertible Discount Notes or the Cumulative Convertible Preferred Stock,
since the exercise of any of these items would have an antidilutive effect on
net loss per share.

Reclassification

Certain items have been reclassified in the consolidated balance sheets and the
consolidated statements of cash flows to conform to the current presentation.

3. Acquisition of Cellular Operations

All acquisitions were accounted for utilizing the purchase method of accounting.
The allocation of purchase price for certain acquisitions described below is
subject to adjustments.

During the year ended December 31, 1997, the Company established its fourth
operating cluster by consummating the acquisition of four RSAs in Kentucky from
a subsidiary of Horizon Cellular Telephone Company, L.P. ("Horizon"). The
785,000 Pop cluster was acquired for approximately $96.4 million in cash and
1,948,052 shares of the Company's Class A common stock. On February 4, 1997, the
Company repurchased and retired the 1,948,052 shares from Horizon for $15.3
million. In addition, the Company strengthened its Upper Midwest cluster through
the acquisition of the WI-4 RSA, consisting of approximately 119,000 Pops on
January 7, 1997 from a subsidiary of BellSouth Corporation for approximately
$6.3 million in cash, and the acquisition of three counties in the WI-5 RSA
consisting of approximately 81,000 Pops on May 29, 1997 from United States
Cellular Corporation for approximately $10.6 million in cash and the
contribution of approximately 18,000 minority Pops.

The following acquisitions were completed during 1997 and 1996:
    

<TABLE>
                                                  Acquisition            Purchase          Net Pops
       System                 Market                 Date                 Price            Acquired
-------------------------------------------------------------------------------------------------------
<S>                      <C>                          <C>              <C>                   <C>

1997

Kentucky Cluster      KY-4, KY-5, KY-6 and

                      KY-8 RSAs               January 7, 1997       $115,500,000 (A)         785,000
                                                                                         --------------
                                                                                             785,000

Upper Midwest Cluster WI-4 RSA                January 7,1997           6,300,000             119,000
                      WI-5 RSA                May 29, 1997            10,600,000              81,000
                                                                                         --------------
                                                                                             200,000

                                                                                         --------------
Total for 1997                                                                               985,000
                                                                                         ==============

1996

Upper Midwest Cluster WI-2 RSA                November 18, 1996         4,300,000             85,645
                                                                                         --------------
                                                                                              85,645

Mid-Atlantic Cluster  PA-9 RSA                February 2, 1996         26,100,000            188,096
                      WV-3 RSA                July 23, 1996            35,000,000            269,709
                                                                                         --------------
                                                                                             457,805

                                                                                         --------------

New York Cluster      NY-6 RSA                April 23, 1996           19,800,000 (B)        111,373
                      Poughkeepsie, NY MSA    April 23, 1996           38,900,000 (B) (C)    218,890
                      Orange County, NY MSA   October 17, 1996                   (C)         327,053
                                                                                         --------------
                                                                                             657,316

                                                                                         --------------

Various               Various                 October 17, 1996                   (C)          70,740
                                                                                         --------------
Total for 1996                                                                             1,271,506
                                                                                         ==============
</TABLE>

(A)   The Company  acquired  from a subsidiary of Horizon the system  serving
      four RSAs in Kentucky for  approximately  $96.4  million in cash and
      1,948,052  shares of the Company's Class A common stock valued at
      approximately $19.1 million.

(B)   The Company acquired from a subsidiary of United States Cellular
      Corporation the system serving the NY-6 RSA for approximately $19.8
      million and 83% of the stock of the system serving the Poughkeepsie, NY
      MSA for approximately $38.9 million, with one-half paid in cash and the
      balance in a three-year note (subsequently repaid in November 1996, see
      Note 4--Long-Term Debt.)

(C)   The Company exchanged with Vanguard Cellular Systems, Inc. its OH-9 RSA,
      the majority of its OH-10 RSA and its Parkersburg, WV/Marietta, OH MSA for
      the Orange County, NY MSA, an additional 11.1% of the Poughkeepsie, NY
      MSA, 12.2% of the Janesville, WI MSA and 28,509 additional Pops, including
      small interests in the Eau Claire, WI and Wausau, WI MSAs (in each of
      which the Company currently has a majority interest).

The pro forma unaudited condensed consolidated results of operations for the
years ended December 31, 1996 and 1995, assuming the transactions were
consummated as of January 1, 1995, are as follows:

                                                    December 31
                                              1996             1995
                                          ------------     ------------
Revenue                                   $135,248,000     $ 82,109,000
                                          ============     ============
Net loss                                  $(32,536,000)    $(53,038,000)
                                          ============     ============
Basic and diluted loss per common share   $       (.89)    $      (1.65)
                                          ============     ============

   
No pro forma effect was given for 1997, 1996 and 1995 for the WI-4 or WI-5
acquisitions as their results are not significant nor is the pro forma effect
presented for one week in 1997 for the Kentucky Cluster acquisition as this is
also not significant.

4. Long-Term Debt

Long-term debt consists of the following:
    

<TABLE>
                                                                          December 31
                                                                  1997                  1996
                                                             ----------------    ---------------

<S>                                                          <C>                   <C>
14% Senior Subordinated Discount Notes due 2001           $   165,000,000       $   146,783,000
10-3/4% Senior Subordinated Convertible Discount Notes
   due 2004                                                    45,623,000            41,087,000
12-1/4% Senior Subordinated Discount Notes due 2003           187,700,000           166,647,000
10-3/4% Senior Notes due 2004                                 170,000,000           170,000,000
                                                          ---------------       ---------------
                                                          $   568,323,000       $   524,517,000
                                                          ===============       ===============
</TABLE>

   
On November 23, 1994, Wireless issued approximately $165.0 million aggregate
principal amount of 14% Senior Subordinated Discount Notes due 2001 (the "14%
Notes") primarily to finance the acquisition of Cellular Information Systems,
Inc. ("CIS"). The 14% Notes were issued at a price of 66.834% or $110.3 million.
The original issue discount on the 14% Notes accreted at a rate of 14%,
compounded semiannually, to an aggregate principal amount of approximately
$165.0 million. Interest is now accruing at the rate of 14% per annum, payable
semiannually in cash beginning May 15, 1998.

On August 21, 1995, the Company issued approximately $60.0 million aggregate
principal amount of 10-3/4% Senior Subordinated Convertible Discount Notes due
2004 (the "10-3/4% Notes"). The 10-3/4% Notes were issued at a price of 59.345%
or $35.6 million. The original issue discount on the 10-3/4% Notes accretes at a
rate of 10-3/4%, compounded semiannually, to an aggregate principal amount of
approximately $60.0 million by August 15, 2000. Interest will thereafter accrue
at 10-3/4% per annum, payable semiannually, in cash beginning February 15, 2001.
The 10-3/4% Notes are convertible into the Company's Class A common stock at a
conversion price of $9.94 per share. The Company can force conversion of the
10-3/4% Notes under certain circumstances if the Company's Class A common stock
trades at $13.91 per share for ten out of fifteen consecutive trading days.

On September 27, 1995, Wireless issued approximately $205.0 million aggregate
principal amount of 12-1/4% Senior Subordinated Discount Notes due 2003 (the
"12-1/4% Notes") to finance the acquisition of the OH-7 RSA, OH-9 RSA, OH-10
RSA, Parkersburg, WV/Marietta, OH MSA, WV-2 RSA, AL-4 RSA, PA-9 RSA and NY-5 RSA
cellular systems. The 12-1/4% Notes were issued at a price of 69.906% or $143.3
million. The original issue discount on the 12-1/4% Notes accretes at a rate of
12-1/4% compounded semiannually to an aggregate principal amount of
approximately $205.0 million by October 1, 1998. Interest will thereafter accrue
at 12-1/4% per annum payable semiannually in cash beginning April 1, 1999.

On November 6, 1996, Wireless issued $170.0 million principal amount of 10-3/4%
Senior Notes due 2004, primarily to finance the acquisition in January 1997 of
the Kentucky cluster for $115.5 million consisting of approximately $96.4
million in cash and $19.1 million in the Company's Class A common stock.
Approximately $19.0 million of the proceeds was used to repay the note issued in
connection with the purchase on April 23, 1996 of the Poughkeepsie, NY MSA.
Interest is payable semiannually on each May 1 and November 1.

The Company's long-term debt includes restrictions on Wireless' incurrence of
additional debt, the payment of dividends, the incurrence of liens, and on
payments and transfer of net assets from Wireless to the Company. Restricted net
assets of the Company as of December 31, 1997 approximated $177.8 million.

The maturities of the Company's long-term debt for each of the five years
subsequent to December 31, 1997 are as follows:

1998                                        $          -
1999                                                   -
2000                                                   -
2001                                         165,000,000
2002                                                   -
Thereafter                                   403,323,000
                                            ------------
Total                                       $568,323,000
                                            ============

5. Income Taxes

The significant components of the Company's deferred tax liabilities and assets
are as follows:
    

<TABLE>
                                                                  December 31
                                                            1997                1996
                                                     ------------------   ----------------

<S>                                                  <C>                 <C>
     Deferred tax liabilities:

        Depreciation                                 $    (9,652,000)    $    (4,340,000)
        Amortization                                     (11,407,000)         (5,957,000)
        License basis difference                          (3,797,000)                  -
        Other                                             (4,385,000)                  -
     Deferred tax assets:
        Net operating loss carryforwards                   6,915,000           3,715,000
        Amortization of original issue discount           33,726,000          19,745,000
        State and local deferred taxes                     2,280,000           2,017,000
        Accruals                                           2,049,000           2,658,000
        Other                                              2,504,000           1,805,000
                                                     ---------------     --------------
     Net deferred tax assets                              18,233,000          19,643,000
     Valuation allowance                                 (22,030,000)        (19,643,000)
                                                     ---------------     ---------------
     Net deferred tax liability                      $    (3,797,000)    $             -
                                                     ===============     ===============
</TABLE>

   
At December 31, 1997, the Company had tax net operating loss carryforwards
("NOLs") of approximately $20.3 million, which are available to offset future
taxable income. NOLs begin expiring in the year 2007 through 2012 as follows:
2007--$1.3 million, 2009--$2.9 million, 2010--$1.7 million, 2011--$5.6 million
and 2012--$8.8 million.

As a result of the acquisition of certain markets wherein the book and tax basis
of the Cellular licenses are different, the Company recorded a deferred tax
liability and an increase to the book basis of the licenses related to these
acquisitions.

6. Common Stock

On December 22, 1994, the Company closed on its Initial Public Offering ("IPO")
of 7,812,500 shares of Class A common stock resulting in proceeds of $34.7
million after deducting expenses related to the offering. Concurrent with the
closing of the IPO, certain shareholders converted their Series A and B
Convertible Preferred Stock into an aggregate of 10,157,955 shares of Class B
common stock.

In connection with the overallotment agreement with the underwriters of the IPO,
during January 1995, the Company sold an additional 585,938 shares of Class A
common stock, which resulted in net proceeds of approximately $2.6 million.

During 1995, the Company's Board of Directors authorized the Company to purchase
up to 750,000 shares of its Class A common stock in the open market or in
private transactions from time to time. During 1995, 1996 and 1997, the Company
purchased and retired 127,250 shares, not effected for the 1996 splits, 149,600
shares and 10,000 shares at prices ranging from $5.40 to $8.30 per share, $9.00
to $12.00 per share and $10.37 per share, respectively. To date, the Company has
repurchased and retired approximately 287,000 shares of its Class A common
stock.

On July 14, 1995, Harvard Private Capital Group, Inc. and Spectrum Equity
Investors L.P. exercised an option to purchase a total of 1,293,461 shares of
the Company's Class A common stock. The proceeds to the Company totaled $5.0
million.

During October 1995, the Company filed a $200.0 million shelf registration with
the SEC, to be used for acquisition purposes only. The shelf registration covers
$100.0 million of debt securities (including convertible debt securities), $75.0
million of preferred stock (including convertible preferred stock) and $25.0
million of Class A common stock to be issued upon approval of the Board of
Directors.

On November 22, 1995, the Company sold 3,125,000 shares of Class A common stock
to an institutional investor, realizing net proceeds of $24.1 million.

In January 1996, Price Communications, an affiliate of the Company, acquired
warrants which are now convertible directly into 1,820,000 shares of Class B
common stock from former executives of an acquired company. The effective
exercise price is $5.02 per share of Class B common stock and escalates to
$6.32.

On February 4, 1997, the Company purchased and retired, under separate
authorization of its Board of Directors, 1,948,052 shares of its Class A common
stock from Horizon, which Horizon received in connection with the Kentucky
Cluster acquisition.

In July 1997, the Company repurchased and retired 3,994,945 shares of its Class
B common stock from Aeneas Venture Corp., an affiliate of Harvard Private
Capital Group, Inc. ("Harvard") at $9.00 per share, which was the current market
price at the date of the transaction. In addition, 56,275 warrants to purchase
Class B common stock, also owned by Harvard, were redeemed at a net cash
expenditure of $3.83 per warrant ($9.00 current market price less the exercise
price of $5.17).

In November 1997, Robert Price, Chairman of the Board of the Company, exercised
options for 742,188 shares of the Company's Class A common stock. Subsequently,
the Company purchased from Robert Price 200,000 of the 742,188 shares issued at
market ($11.25 per share), and simultaneously retired the same shares.

Shares of Class A common stock reserved for issuance are as follows:

                                                      December 31
                                                   1997         1996
                                               ----------    ----------

Options issued to employees                     1,477,000     2,048,000
Options reserved for issuance                     401,000       588,000
Warrants                                        1,820,000     1,876,000
Shares reserved for convertible securities     32,856,000    39,239,000
                                               ==========    ==========
                                               36,554,000    43,751,000
                                               ==========    ==========

7. Preferred Stock

During December 1995, the Company issued 96,000 shares of Series A Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock") for gross proceeds of $80.0 million. The preferred stock accrues
dividends at the rate of 6.25% per annum compounded quarterly. Such dividends
will not be paid in cash but will accrue and be calculated on the face value of
$1,000 per share. The number of shares of Class A common stock into which the
Series A Preferred Stock is convertible is equal to the quotient obtained by
dividing the conversion value (initially $83.2 million and increasing to $96.0
million by the third anniversary of the original date of issuance or earlier
upon the occurrence of certain contingencies, plus, in each case, accrued
dividends through the date of conversion or, upon the occurrence of certain
contingencies, through the fifth anniversary of the date of issuance) by the
conversion price ($8.83 per share subject to adjustment). The Company can
effectively force the conversion of the cumulative convertible shares at such
time as the Company's Class A common stock trades at or above $14.72 per share
for 10 out of 15 trading days. The holder of each share of Series A Preferred
Stock is entitled to the number of votes equal to the number of shares of Class
A common stock the holder would receive upon conversion.

8. Sale of Cellular Operations

The Company made the following dispositions of cellular properties and
interests:
<TABLE>
<CAPTION>
      Date                            Description                   Sales Price        Gain (Loss)
---------------------------------------------------------------------------------------------------
<S>           <C>                                                 <C>               <C>
1997
January       Florence, AL MSA and AL-1B RSA, sale of license     $  22,396,000     $   8,451,000
April         Sale of Minority Pops                                   1,255,000           (28,000)
                                                                                    ===============
                                                                                    $   8,423,000
                                                                                    ===============
1996
July          AL-4 RSA, sale of license                           $  25,000,000     $  (1,640,000)
September     Sale of Minority Pops                                   2,813,000         1,817,000
November      MI-2 RSA, sale of license                               6,500,000        (1,578,000)
                                                                                    ===============
                                                                                    $  (1,401,000)
                                                                                    ===============
1995
January       Abilene, TX MSA, sale of assets                     $  15,928,000     $  11,598,000
March         MN-6 MSA, sale of a portion of the license
                 representing 31,000 Pops                             3,550,000                --
                                                                                    ===============
                                                                                    $  11,598,000
                                                                                    ===============
</TABLE>

9. Commitments and Contingencies

Stock Option Plan

Under the Company's 1994 Stock Option Plan (the "Plan"), the Board of Directors
can grant options to purchase up to 2,636,000 shares of Class A common stock to
certain eligible employees and directors (Class A shares are entitled to one
vote per share). During 1996, the Company registered approximately 2,636,000
shares of Class A common stock reserved for issuance under the Plan. The Plan
provides that the option price cannot be less than the fair market value of the
stock on the date of grant and, accordingly, no compensation expense is
recognized. All options granted subsequent to January 1, 1995 have a 10 year
term and vest and become fully exercisable at the end of three years of
continued employment. The Company has elected to follow APB 25 and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
No. 123, Accounting for Stock-Based Compensation, requires use of option
valuation models that were not developed for use in valuing employee stock
options and are highly subjective.

Pro forma information regarding net income (loss) and basic and diluted earnings
(loss) per common share is required by Statement No. 123, and has been
determined as if the Company has accounted for its employee stock options under
the fair value method of that statement.

The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 1995, 1996 and 1997 risk free interest rate of 6.25%; dividend
yield 0%; .480 for 1995 and 1996 and .323 for 1997 volatility factors of the
expected market price of the Company's Class A common stock; and a
weighted-average expected life of option of four years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.


9. Commitments and Contingencies (continued)

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows (in thousands):

<TABLE>
<CAPTION>
                                                             December 31
                                                         1997           1996
<S>                                                   -------------------------
 Net income (loss):                                   <C>            <C>
    As reported                                       $(20,171)      $(23,043)
    Pro forma                                         $(21,318)      $(23,818)

 Basic and diluted earnings (loss) per common share:
    As reported                                       $(0.55)        $(0.76)
    Pro forma                                         $(0.58)        $(0.78)
</TABLE>

Since compensation expense associated with option grants is recognized over the
vesting period, the initial impact of applying FAS 123 on pro forma net income
(loss) is not representative of the potential impact on pro forma net income
(loss) in future years when the effect of recognition of a portion of
compensation expense from multiple awards would be reflected.

A summary of the Company's stock option activity, and related information is as
follows:


                                            Number of
                                           Shares Under           Price Per
                                              Options               Share
                                        ------------------------------------

Balance at December 31, 1994             1,040,039              $3.71
Options granted                            770,117         $4.54 to $8.72
Options returned for future issuance       (41,016)        $4.54 to $4.67
                                        -----------
Balance at December 31, 1995             1,769,140         $3.71 to $8.72

Options granted                            343,125       $10.80 to $10.90
Options exercised                           (8,329)        $4.54 to $4.67
Options returned for future issuance       (55,704)       $4.54 to $10.90
                                        -----------
Balance at December 31, 1996             2,048,232        $3.71 to $10.90

Options granted                            217,500             $8.88
Options exercised                         (750,649)        $3.71 to $8.72
Options returned for future issuance       (38,102)       $4.55 to $10.90
                                        ===========
Balance at December 31, 1997             1,476,981        $3.71 to $10.90
                                        ===========


9. Commitments and Contingencies (continued)

The weighted average grant date fair value of options granted in 1997 and 1996
were $3.38 and $4.84, respectively.

The following table summarizes information about stock options outstanding at
December 31, 1997:

<TABLE>
<CAPTION>
                                                                                   Options
                                    Options Outstanding                          Exercisable
                  -------------------------------------------------- ------------------------------
                                         Weighted
                         Number           Average         Weighted         Number         Weighted
     Range of          Outstanding       Remaining         Average        Exercisable       Average
     Exercise          at December      Contractual        Exercise       at December      Exercise
      Prices            31, 1997            Life            Price          31, 1997          Price
-------------------- ---------------- ----------------- --------------- ---------------- -----------
<S>                  <C>              <C>               <C>              <C>             <C>
$3.71 to $4.67       848,957            7 years         $  4.29          676,821         $  4.20
$8.72 to $8.88       314,899          8.8 years         $  8.83           64,965         $  8.72
$10.80 to $11.40     313,125          8.6 years         $ 10.88          104,271         $ 10.88
</TABLE>

Lease Commitments

Total rent expense amounted to approximately $3,416,000, $2,378,000 and $877,000
for the years ended December 31, 1997, 1996 and 1995, respectively, of which
$47,000, $137,000 and $60,000 was paid to an affiliate during 1997, 1996 and
1995, respectively. At December 31, 1997, the Company is committed under the
following noncancellable operating leases:

Year
1998                $  3,513,000
1999                   3,040,000
2000                   2,382,000
2001                   1,708,000
2002                   1,063,000
Thereafter             2,946,000
                    ------------
                    $ 14,652,000
                    ============

10. Related Party Transactions

The Company and AT&T Wireless Services Inc. are parties to an operating
agreement dated April 28, 1994, which provides for, among other services, switch
sharing agreements with AT&T's adjacent systems, assistance in obtaining
cellular system service and equipment discounts, assistance in evaluating
potential acquisitions and in securing financing.

11. Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

   Cash and cash equivalents: The carrying amounts reported in the consolidated
   balance sheets approximate fair value.

   Long-term debt: The fair value of the Senior Subordinated Notes and Senior
   Subordinated Discount Notes is based on the quoted market price. The carrying
   amount of the Senior Convertible Discount Notes approximates their fair
   value.

The carrying amounts and fair values of the Company's financial instruments at
December 31, 1997 are as follows:

                                                  Carrying             Fair
                                                   Amount              Value
                                              ---------------------------------
Cash and cash equivalents                     $ 61,357,000        $ 61,357,000

Long-term debt:

 14% Senior Subordinated Discount Notes        165,000,000         182,738,000
 10-3/4% Senior Convertible Discount Notes      45,623,000          45,623,000
 12-1/4% Senior Subordinated Discount Notes    187,700,000         193,801,000
 10-3/4% Senior Notes                          170,000,000         187,000,000


12. Accounts Payable, Accrued Expenses and Other Current Liabilities

Accounts payable and accrued expenses consist of the following:

                                            December 31
                                      1997               1996
                                  -----------------------------
 Accounts payable                 $ 9,404,000     $ 4,592,000
 Interest payable                   5,920,000       2,792,000
 Accrued operating expenses        12,467,000       3,819,000
 Income and other taxes payable     1,847,000       2,597,000
 Other                              4,328,000       8,517,000
                                  -----------------------------
                                  $33,966,000     $22,317,000
                                  =============================

Other current liabilities consist of the following:

                                                December 31
                                          1997               1996
                                      --------------------------------
Amount due for untendered CIS shares  $          --      $   2,523,000
Unearned covenant not to compete          2,125,000          2,250,000
Other                                            --              3,000
                                      --------------------------------
                                     $   2,125,000      $   4,776,000
                                      ================================

13. Subsequent Events

Tennessee Acquisition

In January 1998, Kyle Cellular, a wholly owned subsidiary of the Company,
acquired, subject to FCC approval, the TN-4 RSA with approximately 264,000 Pops
from Bachtel Liquidity, L.P., an affiliate of Bachow & Associates, Inc. for
approximately $73.0 million in cash. The RSA, adjacent to three MSAs including
Knoxville, TN, is located south of the Company's Kentucky Cluster and features
such tourist attractions as the towns of Gatlinburg and Pigeon Forge, Dollywood
and the entrance to the Great Smoky Mountains National Park. $13.0 million will
be funded through available cash with the balance being provided by a $60.0
million Senior Secured Reducing Revolver (the "Borrowing") with J.P. Morgan
Securities Inc. The Borrowing matures eight years from the closing date with
repayment commencing in the year 2001 with final payment in the year 2005 in
amounts ranging from 10.0% to 25.0%. Interest will be charged at the LIBOR rate
plus a premium ranging from 1.500% to 2.250% depending on the ratio of debt to
cash flow as defined. The Borrowing requires the attainment of certain financial
ratios in order to maintain the permitted indebtedness. Violation of such ratios
requires the permanent prepayment of an amount to cure the deficiency. The
Borrowing is secured by the assets of Kyle Cellular.

Pursuant to the agreement the Company is required to enter into an interest rate
swap which effectively converts a portion of the interest on the outstanding
indebtedness from a variable rate basis to a fixed rate. The notional amount
required to be hedged is 50% of the aggregate outstanding principal amount.

Merger Agreement

On March 6, 1998, the Company and American Cellular Corporation, a Delaware
corporation ("ACC"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein, ACC will merge with and into the Company, with ACC
to be the surviving corporation of the merger (the "Merger"). At the effective
time, as defined in the Merger Agreement, each issued and outstanding share of
Class A common stock, par value $0.01 per share, of the Company (the "Class A
Shares") and Class B common stock, par value $0.01 per share, of the Company
will have the right to receive $14.00 in cash, without interest (the "Merger
Consideration"), and each issued and outstanding share of Series A Preferred
Stock of the Company will be converted into the right to receive the product of
the Merger Consideration and the number of Class A Shares into which each such
share of Series A Preferred Stock is convertible at such time in connection with
a change of control. The Merger Agreement permits the Company, under certain
circumstances, to respond to unsolicited third party acquisition proposals and,
upon payment of certain fees to ACC, to terminate the Merger Agreement.

In connection with the execution of the Merger Agreement, the Principal
Shareholders of the Company entered into a Voting Agreement with ACC. Pursuant
to the agreement, the Principal Shareholders, the beneficial owners of
approximately 39% of the outstanding Common Stock and Preferred Stock of the
Company (or 57% of the fully diluted voting power of the Company), agreed to
vote their shares in favor of the approval and adoption of the Merger Agreement.
The Voting Agreement terminates upon termination of the Merger Agreement. The
transaction is subject to, among other things, regulatory approvals.

    


                            PriCellular Corporation

           Schedule I--Condensed Financial Information of Registrant

                            Condensed Balance Sheets

                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                    December 31
                                                                 1997         1996
                                                               ---------------------
<S>                                                          <C>           <C>
Assets
Current assets:

   Cash and cash equivalents                                 $   1,795     $  33,032
   Other current assets                                          1,088         7,650
                                                             -----------------------
Total current assets                                             2,883        40,682

Investment in and advances to subsidiaries                     177,779       180,012
Other assets                                                     1,071         1,235
                                                             -----------------------
Total assets                                                 $ 181,733     $ 221,929
                                                             =======================

Liabilities and stockholders' equity Current liabilities:

   Accounts payable, accrued expenses and other

     current liabilities                                     $   1,930     $     923
Long-term debt                                                  45,623        41,087
Stockholders' equity                                           134,180       179,919
                                                             -----------------------
Total liabilities and stockholders' equity                   $ 181,733     $ 221,929
                                                             =======================
</TABLE>

See accompanying notes.





                            PriCellular Corporation

     Schedule I--Condensed Financial Information of Registrant (continued)

                       Condensed Statements of Operations

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                         Year ended December 31
                                                1997              1996             1995
                                             ---------------------------------------------
<S>                                              <C>                 <C>              <C>  
Revenue
Other                                        $       --        $      237       $       --

Costs and expenses
General and administrative                          558               384              293
                                             ---------------------------------------------
Operating loss                                     (558)             (147)            (293)

Other income (expense)
Interest expense, net                            (3,714)             (644)            (324)
                                             ---------------------------------------------

Loss before equity in net income (loss)
   of subsidiaries                               (4,272)             (791)            (617)
Equity in net income (loss) of subsidiaries      (9,359)          (22,252)          (7,094)
                                             ---------------------------------------------
Net income (loss)                            $  (13,631)       $  (23,043)      $   (7,711)
                                             =============================================
</TABLE>


See accompanying notes.





                            PriCellular Corporation

     Schedule I--Condensed Financial Information of Registrant (continued)

                       Condensed Statements of Cash Flows

                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                      Year ended December 31
                                                                  1997          1996         1995
                                                                ------------------------------------

<S>                                                             <C>          <C>          <C>      
Net cash provided by operating activities                       $  1,434     $   2,762    $     721
Investing activities:
   Repayments from and (advances to) subsidiaries                  4,062       (65,380)     (31,149)
   Amounts deposited in escrow to bid in PCS auction, net          2,500         1,640       (4,140)
   Dividend received from subsidiary                              12,000            --           --
   Junior Subordinated Note receivable from subsidiary                --            --      (20,000)
                                                                ------------------------------------
Net cash provided by (used in) investing activities               18,562       (63,740)     (55,289)
                                                                ------------------------------------

Financing activities:

   Proceeds from sale of common stock                                 --            --       31,633
   Proceeds from issuance of Senior Subordinated Convertible
     Discount Notes                                                   --            --       35,607
   Proceeds from issuance of preferred stock                          --            --       79,599
   Payments for deferred financing costs                              --            --       (1,455)
   Exercise of employee stock options                              2,834            48           --
   Purchase and retirement of common stock                       (53,860)       (1,450)        (770)
   Costs incurred in connection with common and preferred
     stock offerings                                                (207)       (1,364)           --
                                                                ------------------------------------
Net cash (used in) provided by financing activities              (51,233)       (2,766)     144,614
                                                                ------------------------------------

(Decrease) increase in cash and cash equivalents                 (31,237)      (63,744)      90,046
Cash and cash equivalents at beginning of year                    33,032        96,776        6,730
                                                                ------------------------------------
Cash and cash equivalents at end of year                        $  1,795     $  33,032    $  96,776
                                                                ====================================

Supplemental schedule of noncash financing activities
Conversion of Class B common stock to Class A
   common stock                                                       24            17            8
Shares issued in connection with the acquisition of
   cellular systems                                               19,125            --       24,741

</TABLE>

See accompanying notes.



                            PriCellular Corporation

     Schedule I--Condensed Financial Information of Registrant (continued)

                    Notes to Condensed Financial Statements

                               December 31, 1997

1. Basis of Presentation

In the parent company-only financial statements, the Company's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of
subsidiaries since the date of acquisition. The Company's share of net income or
(loss) of its unconsolidated subsidiaries is included in consolidated income or
(loss) using the equity method. The parent company-only financial statements
should be read in conjunction with the Company's consolidated financial
statements.

2. Long-Term Debt

On August 21, 1995, the Company issued approximately $60.0 million aggregate
principal amount of 10-3/4% Senior Subordinated Convertible Discount Notes due
2004. The notes were issued at a price of 59.345% or $35.6 million. The original
issue discount on the notes accretes at a rate of 10-3/4%, compounded
semiannually, to an aggregate principal amount of approximately $60.0 million by
August 15, 2000. Interest will thereafter accrue at 10-3/4% per annum, payable
semiannually beginning February 15, 2001. The notes are convertible into the
Company's Class A common stock at a conversion price of $9.94. The Company can
force conversion of the notes under certain circumstances if the Company's Class
A common stock trades at $13.91 per share for ten out of fifteen consecutive
trading days.

There are no maturities of long-term debt until 2004 at which time the entire
note becomes due.

3. Other

On September 30, 1996, the Company forgave the Junior Subordinated Note due from
its subsidiary, PriCellular Wireless Corporation, which amounted to $21.6
million.


                            PriCellular Corporation

                 Schedule II--Valuation and Qualifying Accounts

                             (Dollars in thousands)

 <TABLE>
 <CAPTION>
                                                          Additions       Additions
                                          Balance at      Charged to      Charged to                    Balance
                                          Beginning       Cost and         Other                        at End
              Description                  of Year        Expenses        Accounts       Deductions     of Year
-----------------------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>           <C>              <C>            <C>    
Year ended December 31, 1995
Allowance for doubtful accounts          $    735        $    936      $1,982 (A)       $(1,577)       $ 2,076
                                     ============================================================================
Valuation allowance for deferred
   income taxes                          $  1,538        $  7,151      $    -           $      -       $ 8,689
                                     ============================================================================

Year ended December 31, 1996
Allowance for doubtful accounts          $  2,076        $  2,079      $   58 (A)       $ (2,446)      $ 1,767
                                     ============================================================================

Valuation allowance for deferred
   income taxes                          $  8,689        $ 10,954      $    -           $      -       $19,643
                                     ============================================================================

Year ended December 31, 1997
Allowance for doubtful accounts          $  1,767        $  2,331      $  513 (A)       $ (2,925)      $ 1,686
                                     ============================================================================
Valuation allowance for deferred
   income taxes                          $19,643         $  2,387      $    -           $      -       $22,030
                                     ============================================================================

(A) Results principally from the acquisition of cellular systems.
</TABLE>