CITIZENS COMMUNICATIONS COMPANY


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


                     OF THE SECURITIES EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008








<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                  For the quarterly period ended March 31, 2008
                                                 --------------

                                       or
                                       --

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

              For the transition period from _________to__________

                        Commission file number: 001-11001
                                                ---------

                         CITIZENS COMMUNICATIONS COMPANY
                         -------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                 06-0619596
   -------------------------------          ------------------------------------
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

          3 High Ridge Park
         Stamford, Connecticut                           06905
----------------------------------------              ------------
(Address of principal executive offices)               (Zip Code)

                                 (203) 614-5600
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes X   No
                                    ---    ---

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

<S>                          <C>                   <C>                         <C>
Large accelerated filer [X]  Accelerated filer [ ]  Non-accelerated filer [ ]  Smaller reporting company  [ ]
</TABLE>

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                  Yes     No X
                                     ---    ---

The number of shares  outstanding of the  registrant's  Common Stock as of April
25, 2008 was 324,241,946.

<PAGE>
<TABLE>
<CAPTION>

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

                                      Index





                                                                                                               Page No.
                                                                                                               --------
   Part I.  Financial Information (Unaudited)

    Financial Statements

<S>                                                                                                              <C>
       Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007                                     2

       Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007                   3

       Consolidated Statements of Shareholders' Equity for the year ended
       December 31, 2007 and the three months ended March 31, 2008                                                4

       Consolidated  Statements  of  Comprehensive  Income for
       the three months ended March 31, 2008 and 2007                                                             4

       Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007                   5

       Notes to Consolidated Financial Statements                                                                 6

     Management's Discussion and Analysis of Financial Condition and Results of Operations                       16

     Quantitative and Qualitative Disclosures about Market Risk                                                  28

     Controls and Procedures                                                                                     28

   Part II.  Other Information

     Legal Proceedings                                                                                           29

     Risk Factors                                                                                                29

     Unregistered Sales of Equity Securities and Use of Proceeds                                                 29

     Exhibits                                                                                                    31

     Signature                                                                                                   32

</TABLE>

                                       1

<PAGE>
<TABLE>
<CAPTION>

                          PART I. FINANCIAL INFORMATION

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

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                ($ in thousands)

                                                                                       (Unaudited)
                                                                                     March 31, 2008     December 31, 2007
                                                                                    ------------------  -------------------
ASSETS
------
Current assets:
<S>                                                                                       <C>                  <C>
    Cash and cash equivalents                                                             $   227,634          $   226,466
    Accounts receivable, less allowances of $34,111 and $32,748, respectively                 213,585              234,762
    Other current assets                                                                       53,308               62,926
                                                                                    ------------------  -------------------
      Total current assets                                                                    494,527              524,154

Property, plant and equipment, net                                                          3,288,135            3,335,244
Goodwill, net                                                                               2,636,159            2,634,559
Other intangibles, net                                                                        501,800              547,735
Investments                                                                                    20,530               21,191
Other assets                                                                                  187,450              193,186
                                                                                    ------------------  -------------------
           Total assets                                                                   $ 7,128,601          $ 7,256,069
                                                                                    ==================  ===================

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
    Long-term debt due within one year                                                    $     3,814          $     2,448
    Accounts payable and other current liabilities                                            364,954              443,443
                                                                                    ------------------  -------------------
      Total current liabilities                                                               368,768              445,891

Deferred income taxes                                                                         712,234              711,645
Other liabilities                                                                             360,546              363,737
Long-term debt                                                                              4,747,265            4,736,897

Shareholders' equity:
    Common stock, $0.25 par value (600,000,000 authorized shares; 326,434,000
      and 327,749,000 outstanding, respectively, and 349,456,000
      issued at March 31, 2008 and December 31, 2007)                                          87,364               87,364
    Additional paid-in capital                                                              1,186,851            1,280,508
    Retained earnings                                                                          59,590               14,001
    Accumulated other comprehensive loss, net of tax                                          (77,578)             (77,995)
    Treasury stock                                                                           (316,439)            (305,979)
                                                                                    ------------------  -------------------
      Total shareholders' equity                                                              939,788              997,899
                                                                                    ------------------  -------------------
           Total liabilities and shareholders' equity                                     $ 7,128,601          $ 7,256,069
                                                                                    ==================  ===================

</TABLE>

        The accompanying Notes are an integral part of these Consolidated
                             Financial Statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>
                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                 ($ in thousands, except for per-share amounts)
                                   (Unaudited)


                                                                          2008            2007
                                                                     ---------------  --------------
<S>                                                                       <C>             <C>
Revenue                                                                   $ 569,205       $ 556,147

Operating expenses:
     Network access expenses                                                 60,549          51,397
     Other operating expenses                                               203,264         189,267
     Depreciation and amortization                                          141,080         122,181
                                                                     ---------------  --------------
Total operating expenses                                                    404,893         362,845
                                                                     ---------------  --------------
Operating income                                                            164,312         193,302

Investment and other (loss) income, net                                      (1,235)         10,017
Interest expense                                                             90,860          93,964
                                                                     ---------------  --------------
     Income before income taxes                                              72,217         109,355
Income tax expense                                                           26,628          41,688
                                                                     ---------------  --------------

Net income available for common shareholders                              $  45,589       $  67,667
                                                                     ===============  ==============

Basic income per common share                                             $    0.14       $    0.21
                                                                     ===============  ==============

Diluted income per common share                                           $    0.14       $    0.21
                                                                     ===============  ==============

</TABLE>

        The accompanying Notes are an integral part of these Consolidated
                             Financial Statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 FOR THE YEAR ENDED DECEMBER 31, 2007 AND THE THREE MONTHS ENDED MARCH 31, 2008
           ($ and shares in thousands, except for per-share amounts)
                                   (Unaudited)



                                                                               Accumulated
                                     Common Stock     Additional                 Other        Treasury Stock         Total
                                   ------------------  Paid-In     Retained   Comprehensive --------------------  Shareholders'
                                   Shares    Amount    Capital     Earnings       Loss       Shares     Amount       Equity
                                   -------- --------- ----------- ------------ ------------ -------- -----------   -----------

<S>                               <C>       <C>      <C>           <C>          <C>         <C>      <C>           <C>
Balance January 1, 2007            343,956   $85,989  $1,207,399    $ 134,705    $ (81,899)  (21,691) $ (288,162)   $1,058,032
   Stock plans                           -         -      (6,237)         667            -     1,824      25,399        19,829
   Acquisition of Commonwealth       5,500     1,375      77,939            -            -    12,640     168,121       247,435
   Conversion of EPPICS                  -         -        (549)           -            -       291       3,888         3,339
   Conversion of Commonwealth Notes      -         -       1,956            -            -     2,508      34,775        36,731
   Dividends on common stock of
     $1.00 per share                     -         -           -     (336,025)           -         -           -      (336,025)
   Shares repurchased                    -         -           -            -            -   (17,279)   (250,000)     (250,000)
   Net income                            -         -           -      214,654            -         -           -       214,654
   Other comprehensive income,
     net of tax and
     reclassifications adjustment        -         -           -            -        3,904         -           -         3,904
                                   -------- --------- ----------- ------------ ------------  -------- -----------   -----------
Balance December 31, 2007          349,456   $87,364  $1,280,508    $  14,001    $ (77,995)  (21,707) $ (305,979)   $  997,899
   Stock plans                           -         -     (11,547)           -            -       999      14,277         2,730
   Conversion of EPPICS                  -         -          (7)           -            -         2          37            30
   Acquisition of Commonwealth           -         -           -            -            -         1          10            10
   Dividends on common stock of
     $0.25 per share                     -         -     (82,103)           -            -         -           -       (82,103)
   Shares repurchased                    -         -           -            -            -    (2,317)    (24,784)      (24,784)
   Net income                            -         -           -       45,589            -         -           -        45,589
   Other comprehensive income,
     net of tax and
     reclassifications adjustment        -         -           -            -          417         -           -           417
                                   -------- --------- ----------- ------------ ------------  -------- -----------   -----------
Balance March 31, 2008             349,456   $87,364  $1,186,851    $  59,590    $ (77,578)  (23,022) $ (316,439)   $  939,788
                                   ======== ========= =========== ============ ============  ======== ===========   ===========

</TABLE>


                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                                ($ in thousands)
                                   (Unaudited)

                                                2008                 2007
                                         ------------------  -------------------

Net income                                        $ 45,589             $ 67,667
Other comprehensive income (loss),
   net of tax and reclassifications
   adjustments                                         417                  (20)
                                         ------------------  -------------------
Total comprehensive income                        $ 46,006             $ 67,647
                                         ==================  ===================

        The accompanying Notes are an integral part of these Consolidated
                             Financial Statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                                ($ in thousands)
                                   (Unaudited)

                                                                                 2008              2007
                                                                            ----------------  ----------------

Cash flows provided by (used in) operating activities:
<S>                                                                               <C>             <C>
Net income                                                                        $  45,589       $    67,667
Adjustments to reconcile income to net cash provided by
   operating activities:
       Depreciation and amortization expense                                        141,080           122,181
       Stock based compensation expense                                               3,019             3,407
       Loss on extinguishment of debt                                                 6,290             4,026
       Other non-cash adjustments                                                    (1,413)            2,982
       Deferred income taxes                                                           (282)           23,614
       Change in accounts receivable                                                 19,057            10,366
       Change in accounts payable and other liabilities                             (70,261)          (57,242)
       Change in other current assets                                                (1,568)           (1,714)
                                                                            ----------------  ----------------
Net cash provided by operating activities                                           141,511           175,287

Cash flows provided from (used by) investing activities:
       Capital expenditures                                                         (47,986)          (45,111)
       Cash paid for Commonwealth (net of cash acquired)                                  -          (649,507)
       Other assets (purchased) distributions received, net                             654               571
                                                                            ----------------  ----------------
Net cash used by investing activities                                               (47,332)         (694,047)

Cash flows provided from (used by) financing activities:
       Long-term debt borrowings                                                    135,000           950,000
       Long-term debt payments                                                     (129,332)         (327,815)
       Settlement of interest rate swaps                                             15,521                 -
       Financing costs paid                                                            (857)          (13,841)
       Premium paid to retire debt                                                   (6,290)                -
       Issuance of common stock                                                         591             5,119
       Common stock repurchased                                                     (24,784)          (12,016)
       Dividends paid                                                               (82,103)          (85,462)
       Repayment of customer advances for construction                                 (757)             (602)
                                                                            ----------------  ----------------
Net cash (used by) provided from financing activities                               (93,011)          515,383

Increase (decrease) in cash and cash equivalents                                      1,168            (3,377)
Cash and cash equivalents at January 1,                                             226,466         1,041,106
                                                                            ----------------  ----------------

Cash and cash equivalents at March 31,                                            $ 227,634       $ 1,037,729
                                                                            ================  ================
Cash paid during the period for:
       Interest                                                                   $ 121,396       $    97,416
       Income taxes                                                               $   1,859       $     6,786

Non-cash investing and financing activities:
       Change in fair value of interest rate swaps                                $   7,909       $     2,349
       Conversion of EPPICS                                                       $      30       $     3,205
       Conversion of Commonwealth Notes                                           $       -       $    33,553
       Shares issued for Commonwealth acquisition                                 $      10       $   246,225
       Acquired debt                                                              $       -       $   245,749
       Other acquired liabilities                                                 $       -       $   110,648

</TABLE>

        The accompanying Notes are an integral part of these Consolidated
                             Financial Statements.

                                       5
<PAGE>

                           PART II. OTHER INFORMATION
                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

(1)  Summary of Significant Accounting Policies:
     -------------------------------------------
     (a)  Basis of Presentation and Use of Estimates:
          -------------------------------------------
          Citizens  Communications  Company and its subsidiaries are referred to
          as "we," "us," "our," or the  "Company" in this report.  Our unaudited
          consolidated  financial  statements  have been  prepared in accordance
          with accounting  principles generally accepted in the United States of
          America  (U.S.  GAAP)  and  should  be read in  conjunction  with  the
          consolidated  financial  statements  and notes  included in our Annual
          Report on Form 10-K for the year  ended  December  31,  2007.  Certain
          reclassifications  of balances  previously  reported have been made to
          conform to the  current  presentation.  All  significant  intercompany
          balances and transactions have been eliminated in consolidation. These
          unaudited  consolidated  financial  statements include all adjustments
          (consisting  of normal  recurring  accruals)  considered  necessary to
          present fairly the results for the interim periods shown.

          The  preparation of financial  statements in conformity with U.S. GAAP
          requires management to make estimates and assumptions which affect the
          reported  amounts  of  assets  and  liabilities  at  the  date  of the
          financial   statements,   the  disclosure  of  contingent  assets  and
          liabilities  and the reported  amounts of revenue and expenses  during
          the reporting period.  Actual results may differ from those estimates.
          Estimates  and judgments  are used when  accounting  for allowance for
          doubtful accounts, impairment of long-lived assets, intangible assets,
          depreciation and amortization,  employee benefit plans,  income taxes,
          purchase price allocations, contingencies, long-term incentive program
          and  pension  and  postretirement  benefits  expenses,  among  others.
          Certain information and footnote disclosures have been excluded and/or
          condensed  pursuant to Securities  and Exchange  Commission  rules and
          regulations.  The results of the interim  periods are not  necessarily
          indicative of the results for the full year.

     (b)  Revenue Recognition:
          --------------------
          Revenue is recognized  when services are provided or when products are
          delivered to  customers.  Revenue that is billed in advance  includes:
          monthly recurring network access services, special access services and
          monthly  recurring  local line charges.  The unearned  portion of this
          revenue is initially  deferred as a component of other  liabilities on
          our  consolidated  balance  sheet and  recognized  in revenue over the
          period  that the  services  are  provided.  Revenue  that is billed in
          arrears  includes:  non-recurring  network access  services,  switched
          access  services,   non-recurring  local  services  and  long-distance
          services.   The  earned  but  unbilled  portion  of  this  revenue  is
          recognized in revenue in our consolidated statements of operations and
          accrued in accounts  receivable  in the period that the  services  are
          provided.  Excise  taxes are  recognized  as a liability  when billed.
          Installation  fees and their related direct and incremental  costs are
          initially  deferred  and  recognized  as revenue and expense  over the
          average  term of a  customer  relationship.  We  recognize  as current
          period  expense  the  portion  of  installation   costs  that  exceeds
          installation fee revenue.

          The Company collects various taxes from its customers and subsequently
          remits such funds to governmental  authorities.  Substantially  all of
          these taxes are recorded  through the  consolidated  balance sheet and
          presented on a net basis in our consolidated statements of operations.
          We also collect Universal Service Fund (USF) surcharges from customers
          (primarily  federal USF) which have been  recorded on a gross basis in
          our  consolidated  statements of operations  and have been included in
          revenue and other operating  expenses at $8.5 million and $7.1 million
          for the three months ended March 31, 2008 and 2007, respectively.

     (c)  Derivative Instruments and Hedging Activities:
          ----------------------------------------------
          We account  for  derivative  instruments  and  hedging  activities  in
          accordance with SFAS No. 133,  "Accounting for Derivative  Instruments
          and  Hedging  Activities,"  as  amended.  SFAS No.  133,  as  amended,
          requires that all derivative instruments, such as interest rate swaps,
          be recognized in the financial  statements  and measured at fair value
          regardless of the purpose or intent of holding them.

          As of  December  31,  2007,  we had  interest  rate swap  arrangements
          related to a portion of our fixed rate debt. These  arrangements  were
          all terminated on January 15, 2008. These hedge  strategies  satisfied
          the fair value hedging  requirements of SFAS No. 133, as amended. As a
          result,  the  appreciation  in value of the swaps  through the time of
          termination  is  included  in the  consolidated  balance  sheet and is
          recognized  as  lower  interest  expense  over  the  duration  of  the
          remaining life of the underlying debt.

                                       6
<PAGE>

(2)  Recent Accounting Literature and Changes in Accounting Principles:
     ------------------------------------------------------------------

     Accounting for Endorsement Split-Dollar Life Insurance Arrangements
     -------------------------------------------------------------------
     In September 2006, the FASB reached  consensus on the guidance  provided by
     Emerging  Issues  Task Force  (EITF) No.  06-4,  "Accounting  for  Deferred
     Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar
     Life  Insurance  Arrangements."  The guidance is applicable to  endorsement
     split-dollar  life  insurance  arrangements,  whereby the employer owns and
     controls the insurance policies,  that are associated with a postretirement
     benefit.  EITF No. 06-4 requires  that for a  split-dollar  life  insurance
     arrangement  within the scope of the issue, an employer should  recognize a
     liability  for future  benefits  in  accordance  with SFAS No. 106 (if,  in
     substance,  a postretirement  benefit plan exists) or Accounting Principles
     Board  Opinion  (APB)  No. 12 (if the  arrangement  is,  in  substance,  an
     individual  deferred  compensation   contract)  based  on  the  substantive
     agreement  with the  employee.  EITF No. 06-4 is effective for fiscal years
     beginning   after  December  15,  2007.  Our  adoption  of  the  accounting
     requirements of EITF No. 06-4 in the first quarter of 2008 had no impact on
     our financial position, results of operations or cash flows.

     Fair Value Measurements
     -----------------------
     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements,"
     which defines fair value, establishes a framework for measuring fair value,
     and expands  disclosures about fair value  measurements.  In February 2008,
     the FASB amended SFAS No. 157 to defer the  application of this standard to
     nonfinancial  assets and liabilities until 2009. The provisions of SFAS No.
     157 related to financial  assets and  liabilities  were effective as of the
     beginning  of our 2008  fiscal  year.  Our  adoption  of SFAS No.  157,  as
     amended,  in the  first  quarter  of 2008 had no  impact  on our  financial
     position,  results of operations or cash flows. We are still in the process
     of  evaluating  this  standard  with respect to its effect on  nonfinancial
     assets and  liabilities  and therefore  have not yet  determined the impact
     that it will have on our financial  statements  upon full adoption in 2009.
     Nonfinancial  assets  and  liabilities  for which we have not  applied  the
     provisions  of SFAS  No.  157  include  those  measured  at fair  value  in
     impairment testing and those initially measured at fair value in a business
     combination.

     Fair Value Option for Financial Assets and Financial Liabilities
     ----------------------------------------------------------------
     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
     Financial Assets and Financial  Liabilities  Including an Amendment of FASB
     Statement  No.  115,"  which  permits  entities  to choose to measure  many
     financial instruments and certain other items at fair value. The provisions
     of SFAS No. 159 are  effective as of the beginning of our 2008 fiscal year.
     Our adoption of SFAS No. 159 in the first  quarter of 2008 had no impact on
     our financial position, results of operations or cash flows.

     Accounting for Collateral Assignment Split-Dollar Life Insurance
     ----------------------------------------------------------------
     Arrangements
     ------------
     In March 2007, the FASB ratified the consensus reached by the EITF on Issue
     No.  06-10,   "Accounting  for  Collateral  Assignment   Split-Dollar  Life
     Insurance  Arrangements." EITF No. 06-10 provides guidance on an employers'
     recognition  of a liability and related  compensation  costs for collateral
     assignment  split-dollar life insurance arrangements that provide a benefit
     to an employee that extends into postretirement  periods,  and the asset in
     collateral  assignment  split-dollar  life  insurance   arrangements.   The
     effective  date of EITF  No.  06-10 is for  fiscal  years  beginning  after
     December 15, 2007. Our adoption of the accounting  requirements of EITF No.
     06-10 in the first quarter of 2008 had no impact on our financial position,
     results of operations or cash flows.

     Business Combinations
     ---------------------
     In December  2007,  the FASB  revised  SFAS  Statement  No. 141,  "Business
     Combinations." The revised statement,  SFAS No. 141R, requires an acquiring
     entity to recognize all the assets  acquired and  liabilities  assumed in a
     transaction at the acquisition date at fair value, to remeasure liabilities
     related  to  contingent  consideration  at fair  value  in each  subsequent
     reporting  period  and  to  expense  all  acquisition  related  costs.  The
     effective date of SFAS No. 141R is for business  combinations for which the
     acquisition date is on or after the beginning of the first annual reporting
     period  beginning on or after  December 15, 2008.  This  standard  does not
     impact our currently reported results.


                                       7
<PAGE>

     Noncontrolling Interests in Consolidated Financial Statements
     -------------------------------------------------------------
     In December 2007, the FASB issued SFAS No. 160,  "Noncontrolling  Interests
     in   Consolidated   Financial   Statements."   SFAS  No.  160   establishes
     requirements for ownership  interest in subsidiaries  held by parties other
     than  the  Company  (sometimes  called  "minority   interest")  be  clearly
     identified,  presented  and  disclosed  in the  consolidated  statement  of
     financial  position  within  shareholder  equity,  but  separate  from  the
     parent's  equity.  All  changes  in the  parent's  ownership  interest  are
     required to be accounted for  consistently as equity  transactions  and any
     noncontrolling  equity  investments in unconsolidated  subsidiaries must be
     measured  initially  at  fair  value.  SFAS  No.  160  is  effective,  on a
     prospective  basis,  for fiscal years  beginning  after  December 15, 2008.
     However,  presentation and disclosure  requirements must be retrospectively
     applied to  comparative  financial  statements.  The  Company is  currently
     assessing the impact of SFAS No. 160 on its financial position,  results of
     operations and cash flows.

     Accounting for the Income Tax Benefits of Dividends on Share-Based  Payment
     ---------------------------------------------------------------------------
     Awards
     ------
     In June 2007, the FASB ratified EITF No. 06-11  "Accounting  for the Income
     Tax Benefits of Dividends on  Share-Based  Payment  Awards." EITF No. 06-11
     provides that tax benefits associated with dividends on share-based payment
     awards be recorded as a component of additional  paid-in capital.  EITF No.
     06-11 is effective,  on a  prospective  basis,  for fiscal years  beginning
     after  December  15,  2007.  The  implementation  of this  standard  had no
     material  impact on our financial  position,  results of operations or cash
     flows.

(3)  Acquisition of Commonwealth Telephone and Global Valley Networks:
     -----------------------------------------------------------------
     On March 8, 2007,  we acquired  Commonwealth  Telephone  Enterprises,  Inc.
     (Commonwealth or CTE) in a cash-and-stock taxable transaction,  for a total
     consideration of approximately $1.1 billion. We paid $804.1 million in cash
     ($663.7  million net,  after cash  acquired) and issued common stock with a
     value of $247.4 million.

     On October 31, 2007, we acquired Global Valley Networks, Inc. (GVN) and GVN
     Services (GVS) through the purchase from Country Road  Communications,  LLC
     of 100% of the outstanding common stock of Evans Telephone Holdings,  Inc.,
     the parent  Company of GVN and GVS. The purchase price of $62.0 million was
     paid with cash on hand.

     We have accounted for the acquisitions of Commonwealth and GVN as purchases
     under U.S. GAAP.  Under the purchase  method of accounting,  the assets and
     liabilities  of  Commonwealth  and GVN are recorded as of their  respective
     acquisition  dates, at their respective fair values,  and consolidated with
     those  of  Citizens.  The  reported  consolidated  financial  condition  of
     Citizens as of March 31, 2008  reflects the final  allocation of these fair
     values for Commonwealth  and a preliminary  allocation of these fair values
     for GVN.

     The  following  unaudited  pro forma  financial  information  presents  the
     combined results of operations of Citizens,  Commonwealth and GVN as if the
     acquisitions had occurred at the beginning of 2007. The historical  results
     of the  Company  include  the  results  of  Commonwealth  from  the date of
     acquisition on March 8, 2007,  and GVN from the date of its  acquisition on
     October 31, 2007. The pro forma  information is not necessarily  indicative
     of what the financial position or results of operations actually would have
     been  had the  acquisitions  been  completed  at the  dates  indicated.  In
     addition, the unaudited pro forma financial information does not purport to
     project  the future  financial  position or  operating  results of Citizens
     after completion of the acquisitions.

                                                       For the three
                                                        months ended
                                                       March 31, 2007
                                                      ------------------
($ in thousands, except per share amounts)
------------------------------------------

Revenue                                                    $ 622,077
Operating income                                           $ 207,193
Net income available for common shareholders               $  77,012

Basic income per common share:                             $    0.23

Diluted income per common share:                           $    0.22



                                       8
<PAGE>
<TABLE>
<CAPTION>

(4)  Accounts Receivable:
     --------------------
     The components of accounts  receivable,  net at March 31, 2008 and December
     31, 2007 are as follows:

    ($ in thousands)                                 March 31, 2008       December 31, 2007
    ----------------                             ---------------------  --------------------

<S>                                                         <C>                   <C>
End user                                                    $ 229,942             $ 244,592
Other                                                          17,754                22,918
Less:  Allowance for doubtful accounts                        (34,111)              (32,748)
                                                 ---------------------  --------------------
   Accounts receivable, net                                 $ 213,585             $ 234,762
                                                 =====================  ====================


     The Company  maintains an allowance  for  estimated  bad debts based on its
     estimate of  collectibility of its accounts  receivable.  Bad debt expense,
     which is  recorded as a reduction  of  revenue,  was $7.2  million and $4.9
     million for the three months ended March 31, 2008 and 2007, respectively.

(5)  Property, Plant and Equipment, Net:
     -----------------------------------
     Property,  plant and  equipment at March 31, 2008 and December 31, 2007 are
     as follows:

     ($ in thousands)                          March 31, 2008        December 31, 2007
     ----------------                       ---------------------   ---------------------

Property, plant and equipment                        $ 7,412,773             $ 7,375,297
Less: Accumulated depreciation                        (4,124,638)             (4,040,053)
                                            ---------------------   ---------------------
     Property, plant and equipment, net              $ 3,288,135             $ 3,335,244
                                            =====================   =====================


     Depreciation  expense is principally  based on the composite  group method.
     Depreciation  expense  was $95.1  million  and $86.6  million for the three
     months ended March 31, 2008 and 2007, respectively.

(6)  Other Intangibles:
     ------------------
     Other intangibles at March 31, 2008 and December 31, 2007 are as follows:

     ($ in thousands)                           March 31, 2008         December 31, 2007
     ----------------                      ------------------------  ---------------------

Customer base                                          $ 1,271,085            $ 1,271,085
Trade name                                                 132,381                132,381
                                           ------------------------  ---------------------
   Other intangibles                                     1,403,466              1,403,466
Less: Accumulated amortization                            (901,666)              (855,731)
                                           ------------------------  ---------------------
    Total other intangibles, net                       $   501,800            $   547,735
                                           ========================  =====================
</TABLE>

     Amortization  expense  was $45.9  million  and $35.5  million for the three
     months ended March 31, 2008 and 2007,  respectively.  Amortization  expense
     for the three months ended March 31, 2008 is comprised of $31.6 million for
     amortization  associated with our "legacy" properties and $14.3 million for
     intangible  assets  (customer  base  and  trade  name),   acquired  in  the
     Commonwealth and GVN acquisitions.

                                       9
<PAGE>
<TABLE>
<CAPTION>

(7)  Long-Term Debt:
     ---------------
     The activity in our long-term debt from December 31, 2007 to March 31, 2008
     is as follows:

                                                      Three months ended March 31, 2008
                                      -------------------------------------------------------------------
                                                                                                                          Interest
                                                                           Interest                                       Rate* at
                             December 31,                       New          Rate        Conversion to        March 31,   March 31,
($ in thousands)                 2007         Payments       Borrowings      Swap         Common Stock          2008        2008
----------------            --------------- --------------- ------------- ------------  -----------------  -------------- ----------

  Rural Utilities Service
<S>                            <C>              <C>            <C>           <C>                 <C>          <C>            <C>
    Loan Contracts             $    17,555      $     (233)    $       -     $      -            $     -      $    17,322    6.07%

  Senior Unsecured Debt          4,715,013        (129,099)      135,000       (7,909)                 -        4,713,005    7.67%

  EPPICS (see Note 13)              14,521               -             -            -                (30)          14,491    5.00%

  Industrial Development
     Revenue Bonds                  13,550               -             -            -                  -           13,550    6.31%
                            --------------- --------------- ------------- ------------  -----------------  ---------------

TOTAL LONG-TERM DEBT           $ 4,760,639      $ (129,332)    $ 135,000     $ (7,909)           $   (30)     $ 4,758,368    7.65%
                            =============== =============== ============= ============  =================  ===============

  Less: Debt Discount              (21,294)                                                                        (7,289)
  Less: Current Portion             (2,448)                                                                        (3,814)
                            ---------------                                                                ---------------
                               $ 4,736,897                                                                    $ 4,747,265
                            ===============                                                                ===============
</TABLE>

     * Interest rate includes amortization of debt issuance costs, debt premiums
     or discounts,  and deferred gain on interest  rate swap  terminations.  The
     interest rates for Rural Utilities Service Loan Contracts, Senior Unsecured
     Debt, and Industrial Development Revenue Bonds represent a weighted average
     of multiple issuances.

     During the first quarter of 2008, we retired an aggregate  principal amount
     of $129.4 million of debt,  including  $128.7 million of 9.25% Senior Notes
     due 2011,  $0.6 million of other senior  unsecured debt and rural utilities
     service  loan  contracts,   and  $0.1  million  of  5%  Company   Obligated
     Mandatorily Redeemable Convertible Preferred Securities due 2036 (EPPICS).

     On March 28, 2008, we borrowed $135.0 million under a senior unsecured term
     loan facility that was  established  on March 10, 2008. The loan matures in
     2013 and bears  interest  of 4.56% as of March 31,  2008 based on the prime
     rate or LIBOR, at our election, plus a margin which varies depending on our
     debt leverage ratio.  We used the proceeds to repurchase,  during the first
     quarter of 2008,  $128.7 million principal amount of our 9.25% Senior Notes
     due 2011 and to pay for the $6.3 million of premium on early  retirement of
     these notes.

     As of March 31,  2008,  EPPICS  representing  a total  principal  amount of
     $197.3  million have been converted  into  15,920,799  shares of our common
     stock.  Approximately  $4.0 million of EPPICS,  which are convertible  into
     347,642 shares of our common stock, were outstanding at March 31, 2008. The
     above table  indicates  $14.5  million of EPPICS  outstanding  at March 31,
     2008,  of which  $10.5  million  is debt of related  parties  for which the
     Company has an offsetting receivable.

     As of March 31,  2008,  we had an available  line of credit with  financial
     institutions  in the aggregate  amount of $250.0  million and there were no
     outstanding standby letters of credit issued under the facility. Associated
     facility fees vary,  depending on our debt leverage ratio,  and were 0.225%
     per annum as of March 31, 2008. The expiration date for this $250.0 million
     five year revolving  credit  agreement is May 18, 2012.  During the term of
     the credit  facility we may borrow,  repay and reborrow  funds.  The credit
     facility is available for general corporate purposes but may not be used to
     fund dividend payments.

     We are in compliance with all of our debt and credit facility covenants.

                                       10
<PAGE>
<TABLE>
<CAPTION>

(8)  Net Income Per Common Share:
     ----------------------------
     The  reconciliation  of the net income per common share calculation for the
     three months ended March 31, 2008 and 2007, respectively, is as follows:


($ in thousands, except per share amounts)         For the three months ended March 31,
------------------------------------------         ----------------------------------
                                                        2008              2007
                                                   ----------------  ----------------
Net income used for basic and diluted earnings
----------------------------------------------
   per common share:
   -----------------
Total basic net income available for common
<S>                                                       <C>               <C>
   shareholders                                           $ 45,589          $ 67,667

Effect of conversion of preferred securities -
   EPPICS                                                       31                58
                                                   ----------------  ----------------
Total diluted net income available for common
   shareholders                                           $ 45,620          $ 67,725
                                                   ================  ================

Basic earnings per common share:
--------------------------------
Weighted average shares outstanding - basic                326,173           326,542
                                                   ----------------  ----------------
Net income per share available for common
   shareholders                                           $   0.14          $   0.21
                                                   ================  ================

Diluted earnings per common share:
----------------------------------
Weighted average shares outstanding - basic                326,173           326,542
Effect of dilutive shares                                      139               832
Effect of conversion of preferred securities -
   EPPICS                                                      348               503
                                                   ----------------  ----------------
Weighted average shares outstanding - diluted              326,660           327,877
                                                   ================  ================
Net income per share available for common
   sharesholders                                          $   0.14          $   0.21
                                                   ================  ================
</TABLE>

     Stock Options
     -------------
     For the three  months  ended March 31,  2008 and 2007,  options to purchase
     2,658,000 and 1,803,000 shares,  respectively,  (at exercise prices ranging
     from $11.15 to $18.46)  issuable  under  employee  compensation  plans were
     excluded from the computation of diluted earnings per share (EPS) for those
     periods  because the exercise  prices were greater than the average  market
     price of our common stock and, therefore, the effect would be antidilutive.
     In  calculating  diluted EPS we apply the treasury stock method and include
     future unearned compensation as part of the assumed proceeds.

     In addition, for the three months ended March 31, 2008 and 2007, restricted
     stock awards of 1,764,000 and 1,404,000 shares, respectively,  are excluded
     from our basic  weighted  average  shares  outstanding  and included in our
     dilutive shares until the shares are no longer subject to restriction after
     the satisfaction of all specified conditions.

     EPPICS
     ------
     As a result of our July 2004  dividend  announcement  with  respect  to our
     common stock,  our EPPICS began to convert into shares of our common stock.
     As of March 31, 2008, approximately 99% of the EPPICS outstanding, or about
     $197.3 million  aggregate  principal amount of EPPICS,  have converted into
     15,920,799  shares  of our  common  stock,  including  shares  issued  from
     treasury.

     We had 79,707 and 82,977 shares of potentially dilutive EPPICS at March 31,
     2008 and 2007,  respectively,  which were convertible into our common stock
     at a 4.3615 to 1 ratio at an  exercise  price of $11.46 per  share.  If all
     remaining  EPPICS had been  converted,  we would have issued  approximately
     347,642  and  361,904  shares of our common  stock as of March 31, 2008 and
     2007,  respectively.  These  securities  have been  included in the diluted
     income per common  share  calculation  for the three months ended March 31,
     2008 and 2007.



                                       11
<PAGE>
     Stock Units
     -----------
     At March  31,  2008 and 2007,  we had  290,724  and  385,178  stock  units,
     respectively,  issued under our Non-Employee Directors' Deferred Fee Equity
     Plan (Deferred Fee Plan),  Non-Employee  Directors'  Equity  Incentive Plan
     (Directors' Equity Plan) and Non-Employee Directors' Retirement Plan. These
     securities have not been included in the diluted income per share of common
     stock  calculation  because their  inclusion would have had an antidilutive
     effect.

     Share Repurchase Programs
     -------------------------
     In February 2008, our Board of Directors  authorized us to repurchase up to
     $200.0 million of our common stock in public or private  transactions  over
     the following  twelve-month period. This share repurchase program commenced
     on March 4, 2008.  As of March 31, 2008, we had  repurchased  approximately
     2,317,000  shares of our common stock at an aggregate cost of approximately
     $24.8 million.

(9)  Stock Plans:
     ------------
     At March 31, 2008, we had five stock-based  compensation  plans under which
     grants have been made and awards remained  outstanding.  At March 31, 2008,
     there were  16,058,182  shares  authorized  for grant under these plans and
     4,240,518  shares  available  for grant.  No further  awards may be granted
     under the MEIP, the 1996 EIP or the Deferred Fee Plan.

     On March 17, 2008,  the Company  adopted the Citizens  Long-Term  Incentive
     Program  (LTIP).  The LTIP will be offered under the Company's  Amended and
     Restated 2000 Equity Incentive Plan and covers the named executive officers
     and certain other  officers.  The LTIP is designed to incent and reward the
     Company's  senior  executives  in the form of common  stock if they achieve
     aggressive  growth  goals for revenue and free cash flow over a  three-year
     period (the  Measurement  Period).  For  purposes  of the LTIP,  revenue is
     defined as the Company's total revenues less regulatory revenues,  and free
     cash flow is defined as the  Company's  publicly  reported  free cash flow,
     adjusted  to  reflect  the  Company  as a full  cash  taxpayer  during  the
     Measurement  Period.  The growth in these  numbers will be measured  from a
     2007 base, which in the case of free cash flow was also adjusted to reflect
     the Company as a full cash taxpayer and for certain other items.

     The following  summary presents  information  regarding  outstanding  stock
     options as of March 31, 2008 and changes during the three months then ended
     with regard to options under the MEIP and the EIPs:
<TABLE>
<CAPTION>
                                                                                  Weighted        Weighted
                                                                Shares             Average         Average          Aggregate
                                                              Subject to        Option Price      Remaining         Intrinsic
                                                                Option            Per Share      Life in Years        Value
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>           <C>                      <C>         <C>
Balance at January 1, 2008                                        3,955,000     $     13.13              3.4         $ 5,727,000
     Options granted                                                      -     $         -
     Options exercised                                              (80,000)    $      6.72                          $   277,000
     Options canceled, forfeited or lapsed                          (23,000)    $     11.37
----------------------------------------------------------------------------
Balance at March 31, 2008                                         3,852,000     $     13.05              3.2         $ 1,601,000
============================================================================

Exercisable at March 31, 2008                                     3,835,000     $     13.05              3.2         $ 1,601,000
============================================================================
</TABLE>
     There were no options  granted during the first three months of 2008.  Cash
     received upon the exercise of options during the first three months of 2008
     totaled $0.6 million.

     The total intrinsic value of stock options exercised during the first three
     months of 2007 was $2.3 million. The total intrinsic value of stock options
     outstanding  and  exercisable at March 31, 2007 was $14.0 million and $12.0
     million, respectively. There were no options granted during the first three
     months of 2007. Cash received upon the exercise of options during the first
     three months of 2007 totaled $5.1 million.

                                       12
<PAGE>
     The following summary presents  information  regarding unvested  restricted
     stock as of March 31, 2008 and changes  during the three  months then ended
     with regard to restricted stock under the MEIP and the EIPs:
<TABLE>
<CAPTION>
                                                                                    Weighted
                                                                                     Average
                                                                 Number of          Grant Date          Aggregate
                                                                  Shares            Fair Value          Fair Value
--------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>                   <C>
Balance at January 1, 2008                                        1,209,000      $     14.06           $ 15,390,000
     Restricted stock granted                                       879,000      $     11.02           $  9,226,000
     Restricted stock vested                                       (313,000)     $     13.98           $  3,282,000
     Restricted stock forfeited                                     (11,000)     $     13.76           $    121,000
----------------------------------------------------------------------------
Balance at March 31, 2008                                         1,764,000      $     12.56           $ 18,505,000
============================================================================
</TABLE>

     For purposes of determining  compensation  expense,  the fair value of each
     restricted  stock grant is  estimated  based on the average of the high and
     low market price of a share of our common stock on the date of grant. Total
     remaining   unrecognized   compensation   cost   associated  with  unvested
     restricted  stock  awards  at March  31,  2008 was  $20.7  million  and the
     weighted  average  period over which this cost is expected to be recognized
     is approximately three years.

     The total fair value of shares  granted and vested  during the three months
     ended  March 31, 2007 was  approximately  $10.3  million and $6.8  million,
     respectively.  The total fair value of unvested  restricted  stock at March
     31, 2007 was $21.1 million.  The weighted  average grant date fair value of
     restricted  shares granted during the three months ended March 31, 2007 was
     $15.08.  Shares  granted  during  the first  three  months of 2007  totaled
     691,000.

(10) Segment Information:
     --------------------
     We operate in one  reportable  segment,  Frontier.  Frontier  provides both
     regulated and  unregulated  voice,  data and video services to residential,
     business and wholesale customers and is typically the incumbent provider in
     its service areas.

     As permitted by SFAS No. 131, we have utilized the aggregation  criteria in
     combining our markets because all of our Frontier  properties share similar
     economic  characteristics,  in that  they  provide  the same  products  and
     services to similar  customers using comparable  technologies in all of the
     states in which we operate.  The regulatory structure is generally similar.
     Differences  in  the  regulatory  regime  of  a  particular  state  do  not
     materially  impact the economic  characteristics  or operating results of a
     particular property.

(11) Derivative Instruments and Hedging Activities:
     ----------------------------------------------
     On January 15, 2008, we terminated all of our interest rate swap agreements
     representing $400.0 million notional amount of indebtedness associated with
     our  Senior  Notes  due in  2011  and  2013.  Cash  proceeds  on  the  swap
     terminations of approximately  $15.5 million were received in January 2008.
     The  related  gain has been  deferred  on the  balance  sheet  and is being
     amortized into interest expense over the term of the associated debt.

     As of January 16, 2008, we no longer have any derivative  instruments.  For
     the three months ended March 31, 2007, the interest expense  resulting from
     these interest rate swaps totaled approximately $1.3 million.

                                       13
<PAGE>

(12) Investment and Other (Loss) Income, Net:
     ----------------------------------------
     The components of investment and other (loss) income, net are as follows:

                                         For the three months ended March 31,
                                          ---------------------------------
($ in thousands)                               2008             2007
----------------                          ---------------  ----------------
Interest and dividend income                     $ 5,104          $ 14,526
Bridge loan fee                                        -            (4,026)
Premium on debt repurchases                       (6,290)                -
Equity earnings/minority interest in joint
   ventures, net                                    (297)             (998)
Other, net                                           248               515
                                          ---------------  ----------------
     Total investment and other (loss)
         income, net                             $(1,235)         $ 10,017
                                          ===============  ================


(13) Company Obligated Mandatorily Redeemable Convertible Preferred Securities:
     --------------------------------------------------------------------------
     As of March 31,  2008,  EPPICS  representing  a total  principal  amount of
     $197.3  million have been converted  into  15,920,798  shares of our common
     stock. A total of  approximately  $4.0 million of EPPICS was outstanding as
     of March 31, 2008 and if all  outstanding  EPPICS were  converted,  347,642
     shares of our  common  stock  would be issued  upon  such  conversion.  Our
     long-term debt footnote  indicates  $14.5 million of EPPICS  outstanding at
     March 31, 2008, of which $10.5 million is debt of related parties for which
     the Company has an offsetting receivable.

(14) Retirement Plans:
     -----------------
     The following tables provide the components of net periodic benefit cost:

                                                       Pension Benefits
                                                  ----------------------------
                                                  For the three months ended
                                                          March 31,
                                                  ---------------------------
                                                      2008          2007
                                                  -------------  ------------
($ in thousands)
----------------
Components of net periodic benefit cost
---------------------------------------
Service cost                                          $  1,619      $  2,009
Interest cost on projected benefit obligation           12,875        11,930
Expected return on plan assets                         (16,354)      (15,676)
Amortization of prior service cost and unrecognized
       net obligation                                      (64)          (27)
Amortization of unrecognized loss                        1,272         2,900
                                                  -------------  ------------
Net periodic benefit cost/(income)                    $   (652)     $  1,136
                                                  =============  ============


                                                 Other Postretirement Benefits
                                                  ----------------------------
                                                  For the three months ended
                                                           March 31,
                                                  ---------------------------
                                                      2008          2007
                                                  -------------  ------------
($ in thousands)
----------------
Components of net periodic benefit cost
---------------------------------------
Service cost                                          $    149      $    175
Interest cost on projected benefit obligation            2,742         2,208
Expected return on plan assets                            (122)         (254)
Amortization of prior service cost and transition
       obligation                                       (1,934)       (1,447)
Amortization of unrecognized loss                        1,404         1,190
                                                  -------------  ------------
Net periodic benefit cost                             $  2,239      $  1,872
                                                  =============  ============

     We expect that our 2008 pension and other  postretirement  benefit expenses
     will be between $5.0 million and $10.0  million,  and that no  contribution
     will be required to be made by us to the pension plan in 2008.


                                       14
<PAGE>

(15) Commitments and Contingencies:
     ------------------------------
     We anticipate capital expenditures of approximately $300.0 million - $310.0
     million for 2008. Although we from time to time make short-term  purchasing
     commitments to vendors with respect to these expenditures,  we generally do
     not enter into firm, written contracts for such activities.

     Ronald A. Katz  Technology  Licensing  LP, filed suit against us for patent
     infringement on June 8, 2007 in the U.S. District Court for the District of
     Delaware.  Katz Technology alleges that, by operating  automated  telephone
     systems,  including  customer service systems,  that allow our customers to
     utilize telephone calling cards, order internet, DSL, and dial-up services,
     and  perform a  variety  of  account  related  tasks  such as  billing  and
     payments,  we have  infringed  thirteen  of Katz  Technology's  patents and
     continue to infringe three of Katz  Technology's  patents.  Katz Technology
     seeks unspecified damages resulting from our alleged infringement,  as well
     as  a  permanent  injunction  enjoining  us  from  continuing  the  alleged
     infringement.  Katz Technology  subsequently  filed a tag-along notice with
     the Judicial  Panel on  Multi-District  Litigation,  notifying them of this
     action and its relatedness to In re Katz Interactive Dial Processing Patent
     Litigation  (MDL No. 1816),  pending in the Central  District of California
     before  Judge R.  Gary  Klausner.  The  Judicial  Panel  on  Multi-District
     Litigation has transferred the case to the Central  District of California.
     In January 2008, we received notice of the accused services and 40 asserted
     claims from Katz  Technology.  The case is now in the  discovery  phase and
     interrogatories have been served and answered.  The parties have engaged in
     settlement discussions but have not reached agreement. In the event that we
     are not able to  settle,  we  intend  to  vigorously  defend  against  this
     lawsuit.

     We are party to  various  other  legal  proceedings  arising  in the normal
     course  of  our  business.   The  outcome  of  individual  matters  is  not
     predictable.  However,  we believe that the ultimate resolution of all such
     matters,  after considering  insurance  coverage,  will not have a material
     adverse effect on our financial  position,  results of  operations,  or our
     cash flows.

     We sold all of our utility businesses as of April 1, 2004. However, we have
     retained  a  potential  payment  obligation  associated  with our  previous
     electric  utility  activities  in the state of Vermont.  The Vermont  Joint
     Owners (VJO), a consortium of 14 Vermont  utilities,  including us, entered
     into a purchase power  agreement with  Hydro-Quebec  in 1987. The agreement
     contains "step-up" provisions that state that if any VJO member defaults on
     its  purchase   obligation  under  the  contract  to  purchase  power  from
     Hydro-Quebec,  then the other VJO participants  will assume  responsibility
     for the defaulting party's share on a pro-rata basis. Our pro-rata share of
     the purchase power  obligation is 10%. If any member of the VJO defaults on
     its  obligations  under  the  Hydro-Quebec  agreement,  then the  remaining
     members  of  the  VJO,   including  us,  may  be  required  to  pay  for  a
     substantially larger share of the VJO's total power purchase obligation for
     the remainder of the agreement  (which runs through 2015).  Paragraph 13 of
     FIN No. 45  requires  that we disclose  "the  maximum  potential  amount of
     future  payments  (undiscounted)  the  guarantor  could be required to make
     under  the  guarantee."  Paragraph  13 also  states  that we must make such
     disclosure  "... even if the likelihood of the  guarantor's  having to make
     any  payments  under  the  guarantee  is  remote..."  As noted  above,  our
     obligation  only arises as a result of default by another VJO member,  such
     as upon bankruptcy.  Therefore,  to satisfy the "maximum  potential amount"
     disclosure  requirement  we  must  assume  that  all  members  of  the  VJO
     simultaneously  default,  a highly  unlikely  scenario  given  that the two
     members of the VJO that have the largest potential payment  obligations are
     publicly  traded with credit ratings equal to or superior to ours, and that
     all VJO  members  are  regulated  utility  providers  with  regulated  cost
     recovery. Despite the remote chance that such an event could occur, or that
     the State of Vermont could or would allow such an event,  assuming that all
     the members of the VJO defaulted on January 1, 2008 and remained in default
     for the duration of the contract  (another 8 years),  we estimate  that our
     undiscounted   purchase   obligation   for  2008   through  2015  would  be
     approximately  $1.1 billion.  In such a scenario the Company would then own
     the power and could seek to recover its costs.  We would do this by seeking
     to recover our costs from the defaulting members and/or reselling the power
     to other utility  providers or the northeast power grid. There is an active
     market for the sale of power.  We could  potentially  lose money if we were
     unable to sell the power at cost.  We caution  that we cannot  predict with
     any degree of certainty any potential outcome.


                                       15
<PAGE>


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

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

This quarterly report on Form 10-Q contains forward-looking  statements that are
subject to risks and  uncertainties  that could cause  actual  results to differ
materially from those  expressed or implied in the  statements.  Statements that
are not historical  facts are  forward-looking  statements  made pursuant to the
safe harbor provisions of the Private Securities  Litigation Reform Act of 1995.
Words such as  "believe,"  "anticipate,"  "expect" and similar  expressions  are
intended  to identify  forward-looking  statements.  Forward-looking  statements
(including oral  representations)  are only predictions or statements of current
plans, which we review continuously.  Forward-looking statements may differ from
actual future  results due to, but not limited to, and our future results may be
materially affected by, any of the following possibilities:

     *    Reductions in the number of our access lines and  high-speed  internet
          subscribers;

     *    The effects of  competition  from cable,  wireless and other  wireline
          carriers (through voice over internet protocol (VOIP) or otherwise);

     *    The effects of greater  than  anticipated  competition  requiring  new
          pricing,  marketing  strategies or new product  offerings and the risk
          that we will not respond on a timely or profitable basis;

     *    The  effects of general and local  economic,  business,  industry  and
          employment conditions on our revenues;

     *    Our ability to effectively manage service quality;

     *    Our ability to successfully introduce new product offerings, including
          our ability to offer bundled  service  packages on terms that are both
          profitable to us and attractive to our customers;

     *    Our  ability to sell  enhanced  and data  services  in order to offset
          ongoing  declines  in revenue  from local  services,  switched  access
          services and subsidies;

     *    Changes in accounting  policies or practices adopted voluntarily or as
          required by generally accepted accounting principles or regulators;

     *    The effects of ongoing changes in the regulation of the communications
          industry as a result of federal and state  legislation and regulation,
          including potential changes in state rate of return limitations on our
          earnings,  access charges and subsidy payments, and regulatory network
          upgrade and reliability requirements;

     *    Our ability to effectively  manage our operations,  operating expenses
          and capital expenditures,  to pay dividends and to reduce or refinance
          our debt;

     *    Adverse  changes in the credit  markets and/or in the ratings given to
          our debt securities by nationally  accredited  ratings  organizations,
          which could limit or restrict  the  availability  and/or  increase the
          cost of financing;

     *    The effects of bankruptcies in the telecommunications  industry, which
          could result in potential bad debts;

     *    The effects of  technological  changes and  competition on our capital
          expenditures and product and service offerings,  including the lack of
          assurance that our ongoing network  improvements will be sufficient to
          meet or exceed the capabilities and quality of competing networks;

     *    The effects of  increased  medical,  retiree and pension  expenses and
          related funding requirements;

     *    Changes in income tax rates, tax laws, regulations or rulings,  and/or
          federal or state tax assessments;


                                       16
<PAGE>

     *    The  effects  of state  regulatory  cash  management  policies  on our
          ability  to  transfer  cash among our  subsidiaries  and to the parent
          company;

     *    Our ability to successfully  renegotiate  union contracts  expiring in
          2008 and thereafter;

     *    Our ability to pay a $1.00 per common share dividend  annually,  which
          may be  affected by our cash flow from  operations,  amount of capital
          expenditures,  debt service  requirements,  cash paid for income taxes
          (which will increase in the future) and our liquidity;

     *    The  effects  of  fully  utilizing  our  federal  net  operating  loss
          carryforwards and alternative minimum tax (AMT) credit  carryforwards,
          that were generated in prior years, have  significantly  increased our
          cash taxes in 2007 and will continue to do so in 2008 and 2009;

     *    The  effects  of  any  future   liabilities  or  compliance  costs  in
          connection with worker health and safety matters; and

     *    The  effects of any  unfavorable  outcome  with  respect to any of our
          current  or future  legal,  governmental  or  regulatory  proceedings,
          audits or disputes.

Any of the foregoing events, or other events, could cause financial  information
to vary from management's  forward-looking  statements  included in this report.
You should  consider  these  important  factors,  as well as the risks set forth
under Item 1A. "Risk  Factors,"  in our Annual  Report on Form 10-K for the year
ended December 31, 2007, in evaluating any statement in this report on Form 10-Q
or otherwise made by us or on our behalf. The following information is unaudited
and should be read in conjunction with the consolidated financial statements and
related notes included in this report. We have no obligation to update or revise
these forward-looking statements.

Overview
--------
We are a full-service  communications  provider and one of the largest  exchange
telephone carriers in the country. We offer our incumbent local exchange carrier
(ILEC)  services under the  "Frontier"  name. On March 8, 2007, we completed the
acquisition of Commonwealth Telephone Enterprises,  Inc., which includes a small
competitive  local exchange carrier (CLEC) component.  This acquisition  expands
our  presence  in  Pennsylvania  and  strengthens  our  position  as  a  leading
full-service  communications  provider to rural markets. On October 31, 2007, we
completed the acquisition of Global Valley Networks, Inc. and GVN Services which
expands our presence in California and also  strengthens our rural position.  As
of March 31, 2008, we operated in 24 states with approximately 5,800 employees.

Competition in the  telecommunications  industry is intense and  increasing.  We
experience competition from many telecommunications service providers, including
cable  operators,   wireless  carriers,  voice  over  internet  protocol  (VOIP)
providers,  long  distance  providers,   competitive  local  exchange  carriers,
internet providers and other wireline carriers.  We believe that as of March 31,
2008,  approximately  58% of the  households in our  territories  are able to be
served by alternate  phone  providers.  We also believe  that  competition  will
continue to  intensify in 2008 and 2009 across all of our products and in all of
our  markets.  Our  Frontier  business  experienced  erosion in access lines and
switched  access minutes in 2007 and the first three months of 2008 primarily as
a result of  competition.  Competition  in our  markets  may  result in  reduced
revenues in 2008 and 2009.

The communications  industry is undergoing  significant  changes.  The market is
extremely  competitive,  resulting in lower  prices.  These trends are likely to
continue and result in a challenging  revenue  environment.  These factors could
also  result in more  bankruptcies  in the  sector  and,  therefore,  affect our
ability to collect money owed to us by carriers.

We employ a number of  strategies  to combat  the  competitive  pressures  noted
above. Our strategies are focused in three areas; customer retention,  upgrading
and  up-selling  services  to  our  existing  customer  base,  and  new  product
deployment.

                                       17
<PAGE>

We hope to achieve our customer  retention goals by bundling services around the
local access line and providing  exemplary  customer  service.  Bundled services
include high-speed internet, unlimited long distance calling, enhanced telephone
features  and video  offerings.  We tailor  these  services  to the needs of our
residential  and  business  customers  in the  markets we serve and  continually
evaluate the introduction of new and complementary products and services,  which
can  also be  purchased  separately.  Customer  retention  is also  enhanced  by
offering 1, 2 and 3 year price protection plans where customers commit to a term
in exchange for predictable pricing.  Additionally,  we are focused on enhancing
the  customer  experience  as  we  believe  exceptional  customer  service  will
differentiate  us from our  competition.  Our commitment to providing  exemplary
customer  service is  demonstrated  by the  expansion of our  customer  services
hours,   shorter   scheduling   windows   for  in-home   appointments   and  the
implementation  of call reminders and follow-up calls for service  appointments.
In addition,  due to a recent  realignment and restructuring of approximately 65
local area  markets,  those  markets  are now  operated by local  managers  with
responsibility  for the  customer  experience  in those  markets  as well as the
financial results.

We utilize  targeted and innovative  promotions to upgrade and up-sell a variety
of service offerings  including  high-speed  internet,  video, and enhanced long
distance  and  feature  packages in order to  maximize  the average  revenue per
access line (wallet  share) paid to Citizens.  We intend to continue to evaluate
the need and  effectiveness  of offering such  promotions to drive sales and may
offer additional promotions during 2008.

Lastly,  we are  focused  on  introducing  a  number  of new  products  that our
customers  desire  including  wireless data,  internet  portal  advertising  and
"Frontier  Peace  of Mind"  product  suite.  This  last  category  is a suite of
products aimed at managing our customers'  computer  environment  and protecting
residential and business customers against catastrophic  computer meltdowns.  It
includes one or a combination of hard drive back-up, access to an enhanced level
of help desk support and inside wire  maintenance.  We intend to offer our Peace
of Mind  services both to our customers and to other users inside and outside of
our service  territories.  Although we are  optimistic  about the  opportunities
provided by each of these  initiatives,  we can provide no assurance about their
long term profitability or impact on revenue.

We believe that the  combination of offering  multiple  products and services to
our customers  pursuant to price protection  programs,  billing them on a single
bill and providing  superior customer service will make our customers more loyal
to us, and will help us generate new, and retain existing, customer revenue.

Revenues from data and internet services such as high-speed internet continue to
increase as a percentage  of our total  revenues and revenues from services such
as local line and access  charges  (including  federal and state  subsidies) are
decreasing as a percentage of our total  revenues.  The decreasing  revenue from
historical  sources,  along with the potential for increasing  operating  costs,
could cause our profitability and our cash generated by operations to decrease.

                                       18
<PAGE>


a)  Liquidity and Capital Resources
    -------------------------------

As of March  31,  2008,  we had cash and  cash  equivalents  aggregating  $227.6
million.  Our  primary  sources of funds  continued  to be cash  generated  from
operations  and  incremental  borrowings.  For the three  months ended March 31,
2008, we used cash flow from operations, incremental borrowing and cash and cash
equivalents to fund capital  expenditures,  dividends,  interest payments,  debt
repayments and stock repurchases.

                       Cash Flow from Operating Activities
                       -----------------------------------

We believe our operating cash flows, existing cash balances, and credit facility
will be  adequate  to finance our working  capital  requirements,  fund  capital
expenditures, make required debt payments through 2009, pay taxes, pay dividends
to our  stockholders  in  accordance  with our  dividend  policy and support our
short-term and long-term  operating  strategies.  However,  a number of factors,
including  but not limited to,  increased  cash taxes,  losses of access  lines,
increases in competition  and lower subsidy and access  revenues are expected to
reduce our cash  generated  by  operations.  Our  below-investment  grade credit
ratings may make it more difficult and expensive to refinance our maturing debt,
although  we do  not  have  any  significant  maturities  until  2011.  We  have
approximately  $2.9 million of debt maturing during the last nine months of 2008
and  approximately  $3.9 million and $7.2  million of debt  maturing in 2009 and
2010, respectively.

We have in recent  years paid  relatively  low amounts of cash taxes.  We expect
that in 2008 and  beyond  our cash  taxes  will  increase  substantially  as our
federal net operating loss  carryforwards  and AMT tax credit  carryforwards are
estimated  to be fully  utilized  during 2007 and 2008.  We paid $1.9 million in
cash taxes during the first three months of 2008 and expect to pay approximately
$110.0  million  to  $120.0  million  for the full  year of  2008.  Our cash tax
estimate reflects the currently  estimated impact of the "Economic  Stimulus Act
of 2008."

                     Cash Flow used by Investing Activities
                     --------------------------------------

Acquisitions
------------
On  March  8,  2007,  we  acquired  Commonwealth  in  a  cash-and-stock  taxable
transaction,  for a total  consideration of approximately $1.1 billion.  We paid
$804.1  million in cash ($663.7  million net,  after cash  acquired)  and issued
common stock with a value of $247.4 million.

On October 31, 2007, we completed  the  acquisition  of Global Valley  Networks,
Inc. and GVN Services for a total cash consideration of $62.0 million.

Capital Expenditures
--------------------
For the three months ended March 31, 2008, our capital  expenditures  were $48.0
million.  We  continue  to  closely  scrutinize  all  of our  capital  projects,
emphasize  return on investment and focus our capital  expenditures on areas and
services that have the greatest opportunities with respect to revenue growth and
cost  reduction.  We anticipate  capital  expenditures of  approximately  $300.0
million to $310.0 million for 2008.

                     Cash Flow used by Financing Activities
                     --------------------------------------

Debt Reduction and Debt Exchanges
---------------------------------
For the three  months ended March 31,  2008,  we retired an aggregate  principal
amount of $129.4 million of debt,  including $128.7 million  principal amount of
our 9.25% Senior Notes due 2011, $0.6 million of other senior unsecured debt and
rural utilities service loan contracts, and $0.1 million of 5% Company Obligated
Mandatorily  Redeemable  Convertible  Preferred  Securities  (EPPICS)  that were
converted into our common stock.

During the first  quarter of 2007,  we  temporarily  borrowed and repaid  $200.0
million  utilized to temporarily  fund the acquisition of  Commonwealth,  and we
paid down the $35.0 million Commonwealth credit facility. Through March 31, 2007
we retired  $114.6  million face amount of  Commonwealth  convertible  notes for
which we paid  $92.2  million  in cash and $22.4  million  in common  stock.  No
additional amounts have been retired since that time.


                                       19
<PAGE>

We may from time to time repurchase our debt in the open market,  through tender
offers,  exchanges  of  debt  securities,  by  exercising  rights  to call or in
privately negotiated transactions.  We may also exchange existing debt for newly
issued debt obligations.

Issuance of Debt Securities
---------------------------
On March 28, 2008, we borrowed $135.0 million under a senior unsecured term loan
facility that was  established  on March 10, 2008.  The loan matures in 2013 and
bears interest based on the prime rate or LIBOR, at our election,  plus a margin
which  varies  depending  on our debt  leverage  ratio.  We used the proceeds to
repurchase, during the first quarter of 2008, $128.7 million principal amount of
our 9.25%  Senior  Notes due 2011 and to pay for the $6.3  million of premium on
early retirement of these notes.

On March 23, 2007, we issued in a private  placement an aggregate $300.0 million
principal  amount of 6.625% Senior Notes due 2015 and $450.0  million  principal
amount of 7.125% Senior Notes due 2019.  Proceeds from the sale were used to pay
down $200.0 million  principal amount of indebtedness  incurred on March 8, 2007
under a bridge loan facility in connection  with the acquisition of Commonwealth
and redeem,  on April 26, 2007,  $495.2 million  principal  amount of our 7.625%
Senior Notes due 2008 at a price of 103.041%  plus accrued and unpaid  interest.
In the second  quarter of 2007,  we  completed  an exchange  offer (to  publicly
register the debt) for the $750.0  million in total of private  placement  notes
described  above, in addition to the $400.0 million  principal  amount of 7.875%
Senior Notes due 2027 issued in a private  placement  on December 22, 2006,  for
registered notes.

EPPICS
------
As of March 31, 2008,  EPPICS  representing a total  principal  amount of $197.3
million have been converted into  15,920,799  shares of our common stock,  and a
total of $4.0 million remains  outstanding to third parties.  Our long-term debt
footnote  indicates  $14.5 million of EPPICS  outstanding  at March 31, 2008, of
which $10.5  million is debt of related  parties for which we have an offsetting
receivable.

Interest Rate Management
------------------------
In order to manage our interest expense,  we had entered into interest rate swap
agreements.  Under the terms of these agreements, we made semi-annual,  floating
rate interest payments based on six month LIBOR and received a fixed rate on the
notional amount.  The underlying  variable rate on these swaps was set either in
advance or in arrears.

The notional amounts of fixed-rate  indebtedness  hedged as of December 31, 2007
were  $400.0  million.  Such  contracts  required  us to pay  variable  rates of
interest  (estimated average pay rates of approximately 8.54% as of December 31,
2007) and receive fixed rates of interest  (average  receive rate of 8.50% as of
December 31, 2007).  All swaps are accounted for under SFAS No. 133 (as amended)
as fair value  hedges.  For the three months ended March 31, 2007,  the interest
expense  resulting  from these  interest rate swaps totaled  approximately  $1.3
million.

On January 15, 2008,  we  terminated  all of our interest  rate swap  agreements
representing $400.0 million notional amount of indebtedness  associated with our
Senior Notes due in 2011 and 2013.  Cash  proceeds on the swap  terminations  of
approximately  $15.5 million were received in January 2008. The related gain has
been deferred on the balance sheet and is being amortized into interest  expense
over the term of the associated debt.

Credit Facilities
-----------------
As of  March  31,  2008,  we  had  available  lines  of  credit  with  financial
institutions  in the  aggregate  amount of  $250.0  million  and  there  were no
outstanding  standby  letters of credit  issued under the  facility.  Associated
facility fees vary,  depending on our debt leverage  ratio,  and were 0.225% per
annum as of March 31, 2008.  The  expiration  date for this $250.0  million five
year revolving credit  agreement is May 18, 2012.  During the term of the credit
facility  we may  borrow,  repay and  reborrow  funds.  The credit  facility  is
available  for general  corporate  purposes but may not be used to fund dividend
payments.

Covenants
---------
The terms  and  conditions  contained  in our  indentures  and  credit  facility
agreements  include the timely  payment of principal  and interest when due, the
maintenance  of our  corporate  existence,  keeping  proper books and records in
accordance with U.S. GAAP, restrictions on the allowance of liens on our assets,
and  restrictions  on asset sales and  transfers,  mergers and other  changes in
corporate control. We currently have no restrictions on the payment of dividends
either by contract, rule or regulation, other than those imposed by the Delaware
General  Corporate  laws.  However,  we would be  restricted  under  our  credit
facilities  from declaring  dividends if an event of default has occurred and is
continuing at the time or will result from the dividend declaration.


                                       20
<PAGE>

Our  $200.0  million  term  loan  facility  with  the  Rural  Telephone  Finance
Cooperative  (RTFC)  contains  a  maximum  leverage  ratio  covenant.  Under the
leverage  ratio  covenant,  we are  required  to  maintain  a ratio of (i) total
indebtedness  minus cash and cash equivalents in excess of $50.0 million to (ii)
consolidated  adjusted  EBITDA (as defined in the agreement)  over the last four
quarters no greater than 4.00 to 1.

Our $250.0  million credit  facility,  and our $150.0 million and $135.0 million
senior  unsecured term loans,  each contain a maximum  leverage ratio  covenant.
Under the leverage  ratio  covenant,  we are required to maintain a ratio of (i)
total indebtedness minus cash and cash equivalents in excess of $50.0 million to
(ii)  consolidated  adjusted EBITDA (as defined in the agreements) over the last
four  quarters no greater than 4.50 to 1. Although all of these  facilities  are
unsecured, they will be equally and ratably secured by certain liens and equally
and ratably  guaranteed by certain of our  subsidiaries if we issue debt that is
secured or guaranteed.

Our credit  facilities  and certain  indentures  for our senior  unsecured  debt
obligations limit our ability to create liens or merge or consolidate with other
companies and our  subsidiaries'  ability to borrow funds,  subject to important
exceptions and qualifications.

We are in compliance with all of our debt and credit facility covenants.

Proceeds from the Sale of Equity Securities
-------------------------------------------
We receive  proceeds  from the issuance of our common stock upon the exercise of
options  pursuant to our stock-based  compensation  plans.  For the three months
ended March 31, 2008 and 2007, we received  approximately  $0.6 million and $5.1
million, respectively, upon the exercise of outstanding stock options.

Share Repurchase Programs
-------------------------
In February  2008,  our Board of Directors  authorized  us to  repurchase  up to
$200.0  million of our common stock in public or private  transactions  over the
following twelve month period.  This share repurchase program commenced on March
4, 2008. As of March 31, 2008, we had repurchased approximately 2,317,000 shares
of our common stock at an aggregate cost of approximately $24.8 million.

In February  2007,  our Board of Directors  authorized  us to  repurchase  up to
$250.0  million of our common stock in public or private  transactions  over the
following twelve month period.  This share repurchase program commenced on March
19, 2007 and was  completed on October 15, 2007.  During  2007,  we  repurchased
17,279,600 shares of our common stock at an aggregate cost of $250.0 million.

Dividends
---------
We expect to pay  regular  quarterly  dividends.  Our  ability to fund a regular
quarterly  dividend  will be  impacted  by our  ability  to  generate  cash from
operations.  The  declarations  and payment of future  dividends  will be at the
discretion  of our  Board of  Directors,  and will  depend  upon  many  factors,
including our financial  condition,  results of  operations,  growth  prospects,
funding requirements,  applicable law, restrictions in our credit facilities and
other factors our Board of Directors deems relevant.

Off-Balance Sheet Arrangements
------------------------------
We do not maintain any off-balance sheet arrangements, transactions, obligations
or other  relationships with  unconsolidated  entities that would be expected to
have a material current or future effect upon our financial statements.

Critical Accounting Policies and Estimates
------------------------------------------
We  review  all  significant  estimates  affecting  our  consolidated  financial
statements  on a  recurring  basis  and  record  the  effect  of  any  necessary
adjustment  prior to  their  publication.  Uncertainties  with  respect  to such
estimates  and   assumptions  are  inherent  in  the  preparation  of  financial
statements;  accordingly,  it is possible that actual  results could differ from
those  estimates  and changes to  estimates  could  occur in the near term.  The
preparation of our financial  statements  requires  management to make estimates
and  assumptions  that affect the reported  amounts of assets and liabilities at
the date of the financial  statements,  the disclosure of the contingent  assets
and  liabilities  and the reported  amounts of revenue and  expenses  during the
reporting period. Estimates and judgments are used when accounting for allowance
for doubtful  accounts,  impairment of  long-lived  assets,  intangible  assets,
depreciation  and  amortization,  pension  and  other  postretirement  benefits,
long-term  incentive  program,  income taxes,  contingencies  and purchase price
allocations, among others.

                                       21
<PAGE>

Management  has  discussed  the  development  and  selection  of these  critical
accounting  estimates with the Audit Committee of our Board of Directors and our
Audit Committee has reviewed our disclosures relating to such estimates.

There have been no material  changes to our  critical  accounting  policies  and
estimates from the information provided in "Item 7. Management's  Discussion and
Analysis  of  Financial  Condition  and Results of  Operations"  included in our
Annual Report on Form 10-K for the year ended December 31, 2007.

New Accounting Pronouncements
-----------------------------

The following new accounting  standards were adopted by the Company in the first
quarter of 2008 without any material  financial  statement impact.  All of these
standards  are more  fully  described  in Note 2 to the  consolidated  financial
statements.

     *    Accounting for Endorsement  Split-Dollar  Life Insurance  Arrangements
          ----------------------------------------------------------------------
          (EITF No. 06-4)
          ---------------

     *    Fair Value Measurement (SFAS No. 157), as amended
          -------------------------------------------------

     *    The Fair Value Option for Financial Assets and Financial Liabilities -
          ----------------------------------------------------------------------
          Including an Amendment of FASB Statement No. 115 (SFAS No. 159)
          ---------------------------------------------------------------

     *    Accounting  for  Collateral  Assignment  Split-Dollar  Life  Insurance
          ----------------------------------------------------------------------
          Arrangements (EITF No. 06-10)
          -----------------------------

     *    Accounting  for the Income Tax Benefits of  Dividends  on  Share-Based
          ----------------------------------------------------------------------
          Payment Awards (EITF No. 06-11)
          -------------------------------

The following new  accounting  standards  that will be adopted by the Company in
2008 and 2009 are currently being evaluated by the Company.

     *    Business Combinations (SFAS No. 141R)
          -------------------------------------

     *    Noncontrolling  Interests in Consolidated  Financial  Statements (SFAS
          ----------------------------------------------------------------------
          No. 160)
          --------

                                       22
<PAGE>

(b)  Results of Operations
     ---------------------

In the  paragraphs  below,  the Company has shown  adjustments  to its financial
presentations  to exclude the effects of the acquisitions of CTE and GVN because
of the aggregate magnitude of the acquisitions and their impact on the Company's
financial results in 2007 and 2008. The Company's  variance  explanations  below
are based upon an  analysis  of 2007 and 2008 for  Citizens  (excluding  CTE and
GVN),  except  that the first  sentence  in each  section of revenue or expenses
shows the revenue,  expenses and/or variances based upon an analysis of Citizens
including the acquired properties.

                                     REVENUE

Revenue is generated  primarily through the provision of local,  network access,
long  distance,  and data and  internet  services.  Such  services  are provided
through  either a monthly  recurring  fee or a fee based on usage at a  tariffed
rate and revenue  recognition  is not dependent  upon  significant  judgments by
management,   with  the  exception  of  a  determination   of  a  provision  for
uncollectible amounts.

Consolidated  revenue for the three months ended March 31, 2008 increased  $13.1
million, or 2%, as compared with the prior year period. Excluding the additional
revenue due to the CTE and GVN  acquisitions,  revenue  decreased  $48.9 million
during the first three  months of 2008 as compared  with the prior year  period.
During the first quarter of 2007, we had a significant favorable settlement of a
carrier dispute that resulted in a favorable  one-time impact to our revenues of
$38.7 million.  Excluding the  additional  revenue due to the  Commonwealth  and
Global Valley  acquisitions and the one-time  favorable  settlement in the first
quarter of 2007,  our  revenue for the three  months  ended March 31, 2008 would
have declined  $10.2  million,  or 2%, as compared to the first quarter of 2007.
This decline is a result of lower  access  lines,  subsidy  revenue and switched
access  revenue,  partially  offset  by a $12.7  million  increase  in data  and
internet services revenue.

Change  in the  number of our  access  lines is  important  to our  revenue  and
profitability.  We have lost  access  lines  primarily  because of  competition,
changing consumer behavior, economic conditions, changing technology and by some
customers  disconnecting second lines when they add high-speed internet or cable
modem service. We lost approximately 43,100 access lines during the three months
ended  March  31,  2008,  but added  approximately  20,200  high-speed  internet
subscribers  during this same  period.  The loss of lines during the first three
months of 2008 was primarily among residential customers throughout our markets.
The  non-residential  line  losses were  principally  in our central and eastern
regions and Rochester,  New York. We expect to continue to lose access lines but
to increase  high-speed  internet  subscribers  during the  remainder of 2008. A
continued  loss of access lines,  combined with  increased  competition  and the
other factors  discussed herein may cause our revenues,  profitability  and cash
flows to decrease in 2008.

Our historical  results include the results of operations of  Commonwealth  from
the date of its  acquisition  on  March 8,  2007 and of GVN from the date of its
acquisition  on  October  31,  2007.  The  financial   tables  below  include  a
comparative  analysis of our results of operations on a historical basis for the
three months ended March 31, 2008 and 2007.  We have also  presented an analysis
of each  category  for the three  months  ended  March 31, 2008 and 2007 for the
results of Citizens (excluding CTE and GVN) and the results of our acquisitions,
as included in the consolidated results of operations.
<TABLE>
<CAPTION>
                                     REVENUE

                                   For the three months                For the three months
                                   ended March 31, 2008                ended March 31, 2007
                           --------------------------------------  -----------------------------------
                                                       Citizens                             Citizens
($ in thousands)                As                    (excluding       As                  (excluding
----------------             Reported   Acquisitions  CTE and GVN)  Reported   Acquisition    CTE)      $ Change  % Change
                           -----------  ------------ ------------  ----------- ----------- -----------  --------- ---------
<S>                         <C>           <C>         <C>          <C>         <C>         <C>          <C>            <C>
Local services              $ 217,158     $ 29,498    $ 187,660    $ 204,444   $  7,075    $ 197,369    $ (9,709)     -5%
Data and internet services    145,982       19,370      126,612      118,024      4,155      113,869      12,743      11%
Access services               107,818       20,548       87,270      139,024      5,695      133,329     (46,059)    -35%
Long distance services         46,453        8,409       38,044       40,428      2,047       38,381        (337)     -1%
Directory services             28,628          597       28,031       28,670         68       28,602        (571)     -2%
Other                          23,166        4,215       18,951       25,557      1,626       23,931      (4,980)    -21%
                           -----------  ------------ ------------  ----------- ----------- -----------  ---------
                            $ 569,205     $ 82,637    $ 486,568    $ 556,147   $ 20,666    $ 535,481    $(48,913)     -9%
                           ===========  ============ ============  =========== =========== ===========  =========
</TABLE>


                                       23
<PAGE>

Local Services
Local services revenue for the three months ended March 31, 2008 increased $12.7
million, or 6%, as compared with the prior year period. Excluding the additional
local services  revenue due to the CTE and GVN acquisitions of $29.5 million and
$7.1 million for the three  months ended March 31, 2008 and 2007,  respectively,
local services revenue decreased $9.7 million, or 5%, as compared with the prior
year period.  The loss of access lines accounted for $7.3 million of the decline
in local services revenue.  Enhanced services revenue decreased $1.2 million, as
compared with the prior year period,  primarily due to a decline in local access
lines  and a shift  in  customers  purchasing  individual  features  versus  our
unlimited voice communications packages.

Economic  conditions and/or increasing  competition could make it more difficult
to sell our packages and bundles and cause us to increase our promotions  and/or
lower our prices for those products and services,  which would adversely  affect
our revenues, profitability and cash flow.

Data and Internet Services
Data and  internet  services  revenue for the three  months ended March 31, 2008
increased  $28.0  million,  or 24%,  as  compared  with the prior  year  period.
Excluding the additional data and internet  services  revenue due to the CTE and
GVN  acquisitions  of $19.4  million and $4.2 million for the three months ended
March 31, 2008 and 2007,  respectively,  data and internet  services revenue for
the three  months  ended  March 31, 2008  increased  $12.7  million,  or 11%, as
compared  with the  prior  year  period,  primarily  due to  growth  in data and
high-speed internet customers.  The number of the Company's  high-speed internet
subscribers  has  increased by more than 62,100,  or 15%,  since March 31, 2007,
excluding  the acquired  properties.  Data and internet  services  also includes
revenue  from data  transmission  services  to other  carriers  and  high-volume
commercial  customers  with  dedicated  high-capacity  circuits  like DS-1's and
DS-3's.  Revenue from these  dedicated  high-capacity  circuits  increased  $4.8
million, or 9%, as compared with the prior year period,  primarily due to growth
in the number of those circuits.

Access Services
Access  services  revenue for the three  months  ended March 31, 2008  decreased
$31.2  million,  or 22%, as compared  with the prior year period.  Excluding the
additional  access services revenue due to the CTE and GVN acquisitions of $20.5
million  and $5.7  million for the three  months  ended March 31, 2008 and 2007,
respectively,  access services revenue for the three months ended March 31, 2008
decreased  $46.1  million,  or 35%,  as  compared  with the prior  year  period.
Switched access revenue of $59.3 million decreased $41.1 million,  primarily due
to the first  quarter of 2007  settlement  of a carrier  dispute  resulting in a
favorable  impact on our  revenue of $38.7  million (a  one-time  event) and the
impact of a decline in minutes of use related to access line  losses.  Excluding
the impact of that one-time  favorable  settlement in the first quarter of 2007,
our switched access revenue for the first quarter of 2008 would have declined by
$2.5 million, or 4%, from the comparable period in 2007. Access services revenue
includes  subsidy  payments we receive from federal and state agencies.  Subsidy
revenue of $27.9 million decreased $4.9 million, primarily due to lower receipts
under the  Federal  High Cost  Fund  program  resulting  from our  reduced  cost
structure and an increase in the program's  National Average Cost per Local Loop
(NACPL).

Increases in the number of  Competitive  Eligible  Telecommunications  Companies
(CETC) (including wireless companies)  receiving federal subsidies,  among other
factors,  may lead to further  increases  in the  NACPL,  thereby  resulting  in
decreases  in  our  federal   subsidy   revenue  in  the  future.   The  Federal
Communications Commission (FCC) and state regulators are currently considering a
number of proposals  for changing  the manner in which  eligibility  for federal
subsidies is determined as well as the amounts of such subsidies. On May 1, 2008
the FCC  issued  an order  to cap CETC  receipts  from  the  high  cost  Federal
Universal  Service  Fund.  While this  order will have no impact on our  current
receipt  levels,  we believe  this is a  positive  first step to limit the rapid
growth of the fund. The CETC cap will remain in place until the Commission takes
additional steps towards needed reform.  The FCC is also reviewing the mechanism
by which subsidies are funded.  Additionally,  the FCC has an open proceeding to
address reform to access charges and other intercarrier compensation.  We cannot
predict when or how these  matters will be decided nor the effect on our subsidy
or access  revenues.  In addition,  we have been approached by various  carriers
seeking  reductions  in  intrastate  access  rates  in  certain  states.  Future
reductions  in  our  subsidy  and  access  revenues  will  directly  affect  our
profitability and cash flows as those regulatory revenues do not have associated
variable expenses.

                                       24
<PAGE>
Long Distance Services
Long  distance  services  revenue  for the three  months  ended  March 31,  2008
increased  $6.0  million,  or 15%,  as  compared  with the  prior  year  period.
Excluding the additional long distance  services  revenue due to the CTE and GVN
acquisitions  of $8.4  million and $2.0 million for the three months ended March
31, 2008 and 2007,  respectively,  long distance  services revenue for the three
months ended March 31, 2008 decreased $0.3 million,  or 1%, as compared with the
prior year period,  despite an increase in our long distance  minutes of use. We
have actively  marketed a package of unlimited  long  distance  minutes with our
digital phone and state  unlimited  bundled service  offerings.  The sale of our
digital  phone  and  state  unlimited  products,  and its  associated  unlimited
minutes, has resulted in an increase in long distance customers, and the minutes
used by these  customers.  This has lowered our overall  average rate per minute
billed.

Our long distance  minutes of use increased by 14% during the three months ended
March 31,  2008  compared  to the three  months of 2007 and,  as noted  below in
network access expenses,  has increased our cost of services provided.  Our long
distance services revenues have remained relatively unchanged,  but may decrease
in the future due to lower rates and/or minutes of use.  Competing services such
as wireless,  VOIP,  and cable  telephony  are resulting in a loss of customers,
minutes of use and  further  declines in the rates we charge our  customers.  We
expect  these  factors  will  continue  to  adversely  affect our long  distance
revenues during the remainder of 2008.

Directory Services
Directory  services  revenue  for the three  months  ended  March  31,  2008 was
relatively unchanged as compared with the prior year period.

Other
Other revenue for the three months ended March 31, 2008  decreased $2.4 million,
or 9%, as compared with the prior year period.  Excluding the  additional  other
revenue due to the CTE and GVN acquisitions of $4.2 million and $1.6 million for
the three months ended March 31, 2008 and 2007, respectively,  other revenue for
the three  months  ended  March 31,  2008  decreased  $5.0  million,  or 21%, as
compared with the prior year period,  primarily due to higher bad debt expenses,
lower sales of customer  premise  equipment,  decreased  "bill and  collect" fee
revenue  and  reduced   cellular   revenue  from  the  Mohave  Cellular  Limited
Partnership.
                       OTHER FINANCIAL AND OPERATING DATA

                                   As of           As of             %
                              March 31, 2008   March 31, 2007     Change
                              --------------   --------------   -----------
Access lines                     2,387,108        2,538,471          -6%
High-speed internet (HSI)
  subscribers                      543,020          464,056          17%
Video subscribers                  101,410           76,009          33%
<TABLE>
<CAPTION>
                                For the three months ended March 31, 2008      For the three months ended March 31, 2007
                              --------------------------------------------  -------------------------------------------------
                                                              Citizens
                                   As                        (excluding          As                   Citizens          %
                                Reported      Acquisitions   CTE and GVN)     Reported  Acquisition (excluding CTE)   Change
                              --------------------------------------------  -------------------------------------------------
Switched access minutes of
<S>                               <C>              <C>            <C>          <C>          <C>        <C>           <C>
   use (in millions)              2,602            380            2,222        2,528        90         2,438           -9%
Average monthly revenue per
   average access line          $ 78.77        $ 63.77          $ 82.05       NA          NA           84.38  *        -3%

</TABLE>
* For the three months ended March 31, 2007, the calculation  includes the $38.7
million  favorable  impact from the first quarter 2007  settlement of a switched
access dispute.  The amount is $78.29 without the $38.7 million favorable impact
from the settlement.
<TABLE>
<CAPTION>
                             NETWORK ACCESS EXPENSES

                                 For the three months                 For the three months
                                 ended March 31, 2008                 ended March 31, 2007
                        ------------------------------------  ----------------------------------------
                                                  Citizens
     ($ in thousands)      As                    (excluding       As                     Citizens
     ----------------   Reported   Acquisitions  CTE and GVN)  Reported   Acquisition  (excluding CTE)  $ Change  % Change
                        ---------  ------------ ------------  ----------- ------------ ---------------  --------- ---------
<S>                     <C>          <C>          <C>          <C>         <C>             <C>           <C>            <C>
     Network access     $ 60,549     $ 12,059     $ 48,490     $ 51,397    $ 4,453         $ 46,944      $ 1,546        3%

</TABLE>
Consolidated  network access  expenses for the three months ended March 31, 2008
increased  $9.2  million,  or 18%,  as  compared  with the  prior  year  period.
Excluding  the  additional  network  access  expenses  due to the  CTE  and  GVN
acquisitions,  network access expenses for the three months ended March 31, 2008
increased $1.5 million, or 3%, as compared with the prior year period, primarily
due to increasing  rates and usage related to our long distance  product and our
data backbone. Additionally, the first quarter of 2008 included costs associated

                                       25
<PAGE>
with high-speed  internet promotions that subsidized the cost of new televisions
provided to  customers.  As we continue to increase  our sales of data  products
such as high-speed  internet and expand the  availability  of our unlimited long
distance  calling  plans,  our network  access  expense is likely to continue to
increase.  A decline in expenses  associated  with access line losses has offset
some of the increase.
<TABLE>
<CAPTION>

                            OTHER OPERATING EXPENSES


                        For the three months ended March 31, 2008           For the three months ended March 31, 2007
                     --------------------------------------------  --------------------------------------------------------
                                                   Citizens
($ in thousands)         As                       (excluding            As                       Citizens
----------------      Reported     Acquisitions   CTE and GVN)      Reported  Acquisitions    (excluding CTE)   $ Change   % Change
                     ------------  ------------  ----------------  ---------- -------------  ----------------- ----------  ---------
Wage and benefit
<S>                     <C>           <C>             <C>           <C>         <C>              <C>            <C>             <C>
  expenses              $100,146      $ 10,400        $  89,746     $ 99,828    $ 3,977          $  95,851      $ (6,105)      -6%
Severance and early
  retirement costs         2,891             -            2,891          182          -                182         2,709        NM
Stock based
  compensation             3,019             -            3,019        3,407          -              3,407          (388)     -11%
All other operating
  expenses                97,208        20,577 *         76,631       85,850      5,423 *           80,427        (3,796)      -5%
                     ------------  ------------  ----------------  ---------- -------------  ----------------- ----------
                        $203,264      $ 30,977        $ 172,287     $189,267    $ 9,400          $ 179,867      $ (7,580)      -4%
                     ============  ============  ================  ========== =============  ================= ==========
</TABLE>
*Includes $11.5 million and $3.8 million of common  corporate costs allocated to
the CTE and GVN  operations  for the three months ended March 31, 2008 and 2007,
respectively.

Consolidated  other operating expenses for the three months ended March 31, 2008
increased $14.0 million, or 7%, to $203.3 million as compared to the prior year,
primarily the result of our 2007  acquisitions  of CTE and GVN. Other  operating
expenses were impacted as follows:

Wage and benefit expenses
Wage and  benefit  expenses  for the three  months  ended  March  31,  2008 were
relatively  unchanged  as compared  with the prior year  period.  Excluding  the
additional  wage and benefit  expenses  due to the CTE and GVN  acquisitions  of
$10.4  million and $4.0  million for the three  months  ended March 31, 2008 and
2007, respectively, wage and benefit expenses decreased $6.1 million, or 6%, for
the three months ended March 31, 2008,  as compared  with the prior year period,
primarily due to headcount  reductions and associated  decreases in compensation
and benefits.

Included  in wage and  benefit  expenses  is  pension  and other  postretirement
benefit expenses. These costs for the three months ended March 31, 2008 and 2007
were approximately $1.6 million and $3.0 million, respectively. Based on current
assumptions  and plan asset values,  we estimate that our 2008 pension and other
postretirement  benefit  expenses  will be  approximately  $5.0 million to $10.0
million and that no contribution will be made by us to our pension plan in 2008.
In future  periods,  if the value of our  pension  plan  assets  decline  and/or
projected  pension and/or  postretirement  benefit costs  increase,  we may have
increased pension and/or postretirement expenses.

Severance and early retirement costs
Severance and early retirement costs in the first quarter of 2008 increased $2.7
million  as  compared  with the prior  year  period,  primarily  due to a charge
related to employee early  retirements and  terminations  for 38 Rochester,  New
York employees.

Stock based compensation
Stock based  compensation  for the three months  ended March 31, 2008  decreased
$0.4  million,  or 11%,  as  compared  with the prior year period due to reduced
costs  associated with stock units and stock options,  since we have fewer stock
option grants that remain unvested compared to the prior year period,  partially
offset  by  costs  associated  with the  recently  adopted  long-term  incentive
program.

All other operating expenses
All other operating expenses for the three months ended March 31, 2008 increased
$11.4  million,  or 13%, as compared  with the prior year period.  Excluding the
additional  expenses due to the CTE and GVN  acquisitions  of $20.6  million and
$5.4 million for the three  months ended March 31, 2008 and 2007,  respectively,
all other operating expenses for the three months ended March 31, 2008 decreased
$3.8 million,  or 5%, as compared  with the prior year period,  primarily due to
the allocation of common corporate costs over a larger base of operations, which
now includes  Commonwealth and Global Valley.  Our purchases of CTE and GVN have
enabled us to realize cost savings by leveraging  our  centralized  back office,
customer  service and  administrative  support  functions over a larger customer
base. An increase in consulting  and other outside  services of $3.8 million for
the three  months  ended March 31, 2008 offset some of the  decrease in expenses
noted above.

                                       26
<PAGE>
<TABLE>
<CAPTION>

                      DEPRECIATION AND AMORTIZATION EXPENSE

                                    For the three months                  For the three months
                                    ended March 31, 2008                  ended March 31, 2007
                          ----------------------------------------  --------------------------------------
                                                        Citizens
  ($ in thousands)            As                       (excluding       As                      Citizens
  ----------------         Reported    Acquisitions    CTE and GVN)  Reported   Acquisition  (excluding CTE)   $ Change   % Change
                          ----------   ------------   ------------- ---------   -----------   -------------   ----------  --------
<S>                        <C>          <C>              <C>         <C>          <C>          <C>            <C>            <C>
  Depreciation  expense    $  95,145    $ 15,298         $  79,847   $ 86,647     $ 2,960       $  83,687     $ (3,840)     -5%
  Amortization expense        45,935      14,340 *          31,595     35,534       3,939 *        31,595            -       -
                          ----------   ------------   ------------- ---------   -----------   -------------   ----------
                           $ 141,080    $ 29,638         $ 111,442   $122,181     $ 6,899       $ 115,282     $ (3,840)     -3%
                          ==========   ============   ============= =========   ===========   =============   ==========
</TABLE>

*Represents  amortization  expense  related to the customer base acquired in the
CTE and GVN acquisitions and the Commonwealth trade name.

Consolidated  depreciation and  amortization  expense for the three months ended
March 31, 2008 increased $18.9 million,  or 15%, as compared with the prior year
period as a result of our 2007 acquisitions of CTE and GVN. Excluding the impact
of our 2007  acquisitions,  depreciation and amortization  expense for the three
months ended March 31, 2008 decreased $3.8 million,  or 5%, as compared with the
prior year period,  primarily due to a declining net asset base partially offset
by changes in the remaining useful lives of certain assets. An independent study
updating the estimated  remaining  useful lives of our plant assets is performed
annually.  We adopted the lives proposed in the study effective October 1, 2007.
Our "composite  depreciation  rate" increased from 5.25% to 5.45% as a result of
the study. We anticipate depreciation expense of approximately $375.0 million to
$385.0 million and amortization  expense of $180.0 million to $190.0 million for
2008.
<TABLE>
<CAPTION>

 INVESTMENT AND OTHER (LOSS) INCOME, NET / INTEREST EXPENSE / INCOME TAX EXPENSE

                                 For the three   For the three
                                  months ended    months ended
     ($ in thousands)            March 31, 2008  March 31, 2007   $ Change    % Change
     ----------------            --------------  --------------  -----------  ----------

     Investment and
<S>                                <C>            <C>            <C>             <C>
       other (loss) income, net    $ (1,235)      $ 10,017       $ (11,252)     -112%
     Interest expense              $ 90,860       $ 93,964       $  (3,104)       -3%
     Income tax expense            $ 26,628       $ 41,688       $ (15,060)      -36%
</TABLE>

Investment and other (loss) income, net
Investment  and other  (loss)  income,  net for the three months ended March 31,
2008 decreased  $11.3 million,  or 112%, as compared with the prior year period,
primarily due to the loss on retirement of debt of $6.3 million during the first
quarter  of  2008,  a  decrease  of  $9.4  million  in  income  from  short-term
investments of cash,  partially  offset by the $4.0 million  expense of a bridge
loan fee recorded during the first quarter of 2007.

Our average cash balance was $227.1  million and $1,039.4  million for the three
months ended March 31, 2008 and 2007, respectively.

Interest expense
Consolidated  interest  expense  for the  three  months  ended  March  31,  2008
decreased $3.1 million, or 3%, as compared with the prior year period, primarily
due to the  amortization of the deferred gain associated with the termination of
our interest  rate swap  agreements  and  retirement  of related debt during the
first quarter of 2008.  Our average debt  outstanding  was $4,759.5  million and
$4,945.8   million  for  the  three  months  ended  March  31,  2008  and  2007,
respectively.  Our  composite  average  borrowing  rate as of March 31,  2008 as
compared with the prior year was 29 basis points lower, decreasing from 7.94% to
7.65%.

Income tax expense
Income tax expense for the three  months  ended March 31, 2008  decreased  $15.1
million,  or 36%,  as  compared  with the prior year  period,  primarily  due to
changes in taxable income.  The effective tax rate on a fully consolidated basis
for the first  three  months of 2008 was 36.9% as  compared  with  38.1% for the
first three months of 2007. Our cash taxes paid for the three months ended March
31,  2008 were $1.9  million,  a decrease of $4.9  million  from the first three
months of 2007. We expect to pay approximately  $110.0 million to $120.0 million
for the full year of 2008.  Our 2008 cash tax estimate  reflects  the  currently
estimated impact of the "Economic Stimulus Act of 2008."


                                       27
<PAGE>

There were no material  changes to the  liabilities  on our books as of December
31, 2007 related to uncertain tax positions  recorded under FASB  Interpretation
No.  (FIN) 48 for the three  months  ended  March 31,  2008.  As a result of the
expiration  of  certain  statute  of  limitations  on  April  15,  2008,   these
liabilities  are being reduced by $16.2  million in the second  quarter of 2008.
This reduction  will lower income tax expense by $7.5 million,  goodwill by $3.0
million and deferred income tax assets by $5.7 million during the second quarter
of 2008.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         ----------------------------------------------------------

Disclosure of primary market risks and how they are managed
We are exposed to market risk in the normal  course of our  business  operations
due to ongoing investing and funding activities, including those associated with
our pension assets.  Market risk refers to the potential change in fair value of
a financial  instrument as a result of fluctuations in interest rates and equity
prices.  We do not hold or issue derivative  instruments,  derivative  commodity
instruments or other financial instruments for trading purposes. As a result, we
do not undertake any specific actions to cover our exposure to market risks, and
we are not party to any  market  risk  management  agreements  other than in the
normal course of business.  Our primary  market risk exposures are interest rate
risk and equity price risk as follows:

Interest Rate Exposure

Our exposure to market risk for changes in interest  rates relates  primarily to
the interest-bearing  portion of our investment portfolio. Our long-term debt as
of March 31, 2008 was approximately 94% fixed rate debt with minimal exposure to
interest rate changes after the termination of our remaining  interest rate swap
agreements on January 15, 2008.

Our  objectives  in managing our  interest  rate risk are to limit the impact of
interest  rate  changes  on  earnings  and cash  flows and to lower our  overall
borrowing  costs.  To achieve these  objectives,  all but $283.1  million of our
borrowings at March 31, 2008 have fixed interest  rates.  Consequently,  we have
limited material future earnings or cash flow exposures from changes in interest
rates on our long-term  debt. An adverse change in interest rates would increase
the  amount  that  we  pay on our  variable  obligations  and  could  result  in
fluctuations  in the fair  value of our fixed rate  obligations.  Based upon our
overall interest rate exposure at March 31, 2008, a near-term change in interest
rates would not materially affect our consolidated  financial position,  results
of operations or cash flows.

On January 15, 2008,  we  terminated  all of our interest  rate swap  agreements
representing $400.0 million notional amount of indebtedness  associated with our
Senior Notes due in 2011 and 2013.  Cash  proceeds on the swap  terminations  of
approximately  $15.5 million were received in January 2008. The related gain has
been deferred on the balance sheet, and is being amortized into interest expense
over the term of the associated debt.

Sensitivity analysis of interest rate exposure
At March 31,  2008,  the fair value of our  long-term  debt was  estimated to be
approximately $4.4 billion, based on our overall weighted average borrowing rate
of 7.65% and our overall  weighted  average  maturity of approximately 13 years.
There has been no material change in the weighted average maturity applicable to
our obligations since December 31, 2007.

Equity Price Exposure

Our exposure to market risks for changes in security prices as of March 31, 2008
is limited to our pension assets.  We have no other security  investments of any
material amount.

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

(a) Evaluation of disclosure controls and procedures
We carried out an evaluation,  under the supervision and with the  participation
of our  management,  including  our  principal  executive  officer and principal
financial  officer,  regarding the  effectiveness of the design and operation of
our  disclosure  controls  and  procedures.  Based  upon  this  evaluation,  our
principal executive officer and principal financial officer concluded, as of the
end of the period  covered by this report,  March 31, 2008,  that our disclosure
controls and procedures are effective.


                                       28
<PAGE>


(b) Changes in internal control over financial reporting
We reviewed our internal  control  over  financial  reporting at March 31, 2008.
There  has been no change  in our  internal  control  over  financial  reporting
identified  in an  evaluation  thereof  that  occurred  during the first  fiscal
quarter of 2008 that materially  affected or is reasonably  likely to materially
affect our internal control over financial reporting.

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

There  have  been  no  material  changes  to  our  legal  proceedings  from  the
information  provided in Item 3. Legal Proceedings included in our Annual Report
on Form 10-K for the year ended December 31, 2007, except as set forth below:

Ronald A. Katz  Technology  Licensing  LP,  filed  suit  against  us for  patent
infringement  on June 8, 2007 in the U.S.  District  Court for the  District  of
Delaware.  Katz  Technology  alleges  that,  by  operating  automated  telephone
systems, including customer service systems, that allow our customers to utilize
telephone calling cards, order internet,  DSL, and dial-up services, and perform
a variety  of  account  related  tasks such as  billing  and  payments,  we have
infringed  thirteen of Katz Technology's  patents and continue to infringe three
of  Katz  Technology's   patents.  Katz  Technology  seeks  unspecified  damages
resulting  from our  alleged  infringement,  as well as a  permanent  injunction
enjoining  us  from  continuing  the  alleged   infringement.   Katz  Technology
subsequently  filed a tag-along notice with the Judicial Panel on Multi-District
Litigation,  notifying  them of this  action and its  relatedness  to In re Katz
Interactive  Dial Processing  Patent  Litigation (MDL No. 1816),  pending in the
Central District of California before Judge R. Gary Klausner. The Judicial Panel
on Multi-District Litigation has transferred the case to the Central District of
California.  In January 2008, we received notice of the accused  services and 40
asserted claims from Katz Technology. The case is now in the discovery phase and
interrogatories  have been  served and  answered.  The parties  have  engaged in
settlement discussions but have not reached agreement.  In the event that we are
not able to settle, we intend to vigorously defend against this lawsuit.

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

There have been no material  changes to our risk  factors  from the  information
provided in Item 1A. "Risk  Factors"  included in our Annual Report on Form 10-K
for the year ended December 31, 2007.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
          -----------------------------------------------------------

There were no unregistered  sales of equity  securities during the quarter ended
March 31, 2008.


                                       29
<PAGE>
<TABLE>
<CAPTION>

                      ISSUER PURCHASES OF EQUITY SECURITIES
-----------------------------------------------------------------------------------------------------------
                                                                                          (d) Maximum
                                                                                            Approximate
                                                                                          Dollar Value of
                                                                   (c) Total Number of    Shares that May
                                            (a) Total               Shares Purchased as  Yet Be Purchased
                                            Number of  (b) Average   Part of Publicly    Under the Plans or
                                              Shares    Price Paid   Announced Plans        Programs (in
Period                                      Purchased    per Share     or Programs            millions)
-----------------------------------------------------------------------------------------------------------

January 1, 2008 to January 31, 2008
<S>                                          <C>          <C>            <C>             <C>
Share Repurchase Program (1)                  -             -               -                 -
Employee Transactions (2)                       1,399     $ 12.49          N/A               N/A

February 1, 2008 to February 29, 2008
Share Repurchase Program (1)                  -             -               -               $     200.0
Employee Transactions (2)                      60,313     $ 10.89          N/A                N/A

March 1, 2008 to March 31, 2008
Share Repurchase Program (1)                2,316,768     $ 10.70        2,316,768          $     175.2
Employee Transactions (2)                       7,138     $ 10.31          N/A                N/A


Totals January 1, 2008 to March 31, 2008
Share Repurchase Program (1)                2,316,768     $ 10.70        2,316,768          $     175.2
Employee Transactions (2)                      68,850     $ 10.86          N/A                N/A

</TABLE>

(1)  In February 2008, our Board of Directors  authorized us to repurchase up to
     $200.0 million of our common stock in public or private  transactions  over
     the following  twelve-month period. This share repurchase program commenced
     on March 4, 2008.
(2)  Includes  restricted  shares  withheld  (under  the terms of  grants  under
     employee  stock  compensation  plans) to  offset  minimum  tax  withholding
     obligations that occur upon the vesting of restricted shares. The Company's
     stock compensation plans provide that the value of shares withheld shall be
     the average of the high and low price of the Company's  common stock on the
     date the relevant transaction occurs.


                                       30
<PAGE>


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

a)  Exhibits:

     10.1 Offer of Employment Letter between Citizens Communications Company and
          Cecilia K. McKenney, effective January 13, 2006.

     31.1 Certification  of  Principal   Executive   Officer  pursuant  to  Rule
          13a-14(a) under the Securities Exchange Act of 1934.

     31.2 Certification  of  Principal   Financial   Officer  pursuant  to  Rule
          13a-14(a) under the Securities Exchange Act of 1934.

     32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
          1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of
          2002.

     32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
          1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of
          2002.


                                       31
<PAGE>




                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

                                    SIGNATURE
                                    ---------



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.






                         CITIZENS COMMUNICATIONS COMPANY
                         -------------------------------
                                  (Registrant)


                           By:  /s/ Robert J. Larson
                                ---------------------------
                                Robert J. Larson
                                Senior Vice President and
                                Chief Accounting Officer






Date: May 6, 2008


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