FRONTIER COMMUNICATIONS CORPORATION


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


                     OF THE SECURITIES EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 June 30, 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
                                                ---------

                       FRONTIER COMMUNICATIONS CORPORATION
             ------------------------------------------------------
             (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)

                         Citizens Communications Company
               ----------------------------------------------------
               (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 July 25,
2008 was 315,956,718.

<PAGE>
<TABLE>
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              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                      Index




                                                                                                     Page No.
                                                                                                     --------

   Part I.  Financial Information (Unaudited)

    Financial Statements

<S>                                                                                                     <C>
       Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007                              2

       Consolidated Statements of Operations for the three months ended June 30, 2008 and 2007            3

       Consolidated Statements of Operations for the six months ended June 30, 2008 and 2007              4

       Consolidated Statements of Shareholders' Equity for the year ended
       December 31, 2007 and the six months ended June 30, 2008                                           5

       Consolidated  Statements of  Comprehensive  Income for the three
       and six months ended June 30, 2008 and 2007                                                        5

       Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007              6

       Notes to Consolidated Financial Statements                                                         7

     Management's Discussion and Analysis of Financial Condition and Results of Operations               17

     Quantitative and Qualitative Disclosures about Market Risk                                          29

     Controls and Procedures                                                                             30

   Part II.  Other Information

     Legal Proceedings                                                                                   31

     Risk Factors                                                                                        31

     Unregistered Sales of Equity Securities and Use of Proceeds                                         31

     Submission of Matters to a Vote of Security Holders                                                 33

     Other Information                                                                                   34

     Exhibits                                                                                            34

     Signature                                                                                           35

</TABLE>

                                       1
<PAGE>
<TABLE>
<CAPTION>

                          PART I. FINANCIAL INFORMATION

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


              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                ($ in thousands)

                                                                                       (Unaudited)
                                                                                      June 30, 2008     December 31, 2007
                                                                                    ------------------  -------------------
ASSETS
------
Current assets:
<S>                                                                                       <C>                  <C>
    Cash and cash equivalents                                                             $   178,874          $   226,466
    Accounts receivable, less allowances of $32,965 and $32,748, respectively                 224,463              234,762
    Other current assets                                                                       45,390               62,926
                                                                                    ------------------  -------------------
      Total current assets                                                                    448,727              524,154

Property, plant and equipment, net                                                          3,265,260            3,335,244
Goodwill, net                                                                               2,633,310            2,634,559
Other intangibles, net                                                                        455,917              547,735
Investments                                                                                    21,703               21,191
Other assets                                                                                  188,312              193,186
                                                                                    ------------------  -------------------
           Total assets                                                                   $ 7,013,229          $ 7,256,069
                                                                                    ==================  ===================

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
    Long-term debt due within one year                                                    $     3,828          $     2,448
    Accounts payable and other current liabilities                                            368,704              443,443
                                                                                    ------------------  -------------------
      Total current liabilities                                                               372,532              445,891

Deferred income taxes                                                                         712,597              711,645
Other liabilities                                                                             351,239              363,737
Long-term debt                                                                              4,746,612            4,736,897

Shareholders' equity:
    Common stock, $0.25 par value (600,000,000 authorized shares; 318,421,000
      and 327,749,000 outstanding, respectively, and 349,456,000
      issued at June 30, 2008 and December 31, 2007)                                           87,364               87,364
    Additional paid-in capital                                                              1,188,509            1,280,508
    Retained earnings                                                                          35,147               14,001
    Accumulated other comprehensive loss, net of tax                                          (77,161)             (77,995)
    Treasury stock                                                                           (403,610)            (305,979)
                                                                                    ------------------  -------------------
      Total shareholders' equity                                                              830,249              997,899
                                                                                    ------------------  -------------------
           Total liabilities and shareholders' equity                                     $ 7,013,229          $ 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)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007
                 ($ in thousands, except for per-share amounts)
                                   (Unaudited)


                                                                2008            2007
                                                           ---------------  --------------
<S>                                                             <C>             <C>
Revenue                                                          $562,550        $578,826

Operating expenses:
     Network access expenses                                       53,998          53,678
     Other operating expenses                                     202,333         213,388
     Depreciation and amortization                                144,250         140,462
                                                           ---------------  --------------
Total operating expenses                                          400,581         407,528
                                                           ---------------  --------------
Operating income                                                  161,969         171,298

Investment and other income (loss), net                             6,393          (6,517)
Interest expense                                                   90,710          98,649
                                                           ---------------  --------------
     Income before income taxes                                    77,652          66,132
Income tax expense                                                 21,874          25,573
                                                           ---------------  --------------

Net income available for common shareholders                     $ 55,778        $ 40,559
                                                           ===============  ==============

Basic income per common share                                    $   0.17        $   0.12
                                                           ===============  ==============

Diluted income per common share                                  $   0.17        $   0.12
                                                           ===============  ==============
</TABLE>

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

                                       3
<PAGE>
<TABLE>
<CAPTION>

                    PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                 ($ in thousands, except for per-share amounts)
                                   (Unaudited)


                                                                  2008            2007
                                                            ---------------  --------------
<S>                                                            <C>             <C>
Revenue                                                        $ 1,131,755     $ 1,134,973

Operating expenses:
     Network access expenses                                       114,547         105,075
     Other operating expenses                                      405,597         402,655
     Depreciation and amortization                                 285,330         262,643
                                                            ---------------  --------------
Total operating expenses                                           805,474         770,373
                                                            ---------------  --------------
Operating income                                                   326,281         364,600

Investment and other income (loss), net                              5,158           3,500
Interest expense                                                   181,570         192,613
                                                            ---------------  --------------
     Income before income taxes                                    149,869         175,487
Income tax expense                                                  48,502          67,261
                                                            ---------------  --------------

Net income available for common shareholders                   $   101,367     $   108,226
                                                            ===============  ==============

Basic income per common share                                  $      0.31     $      0.33
                                                            ===============  ==============

Diluted income per common share                                $      0.31     $      0.32
                                                            ===============  ==============
</TABLE>


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

                                       4
<PAGE>
<TABLE>
<CAPTION>
                    PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 2007 AND THE SIX MONTHS ENDED JUNE 30, 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
     adjustments                         -         -           -            -        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                           -         -      (9,883)           -            -    1,047      14,912       5,029
   Conversion of EPPICS                  -         -         (13)           -            -        7          93          80
   Acquisition of Commonwealth           -         -           -            -            -        1          23          23
   Dividends on common stock of
      $0.50 per share                    -         -     (82,103)     (80,221)           -        -           -    (162,324)
   Shares repurchased                    -         -           -            -            -  (10,383)   (112,659)   (112,659)
   Net income                            -         -           -      101,367            -        -           -     101,367
   Other comprehensive income, net
     of tax and reclassifications
     adjustments                         -         -           -            -          834        -           -         834
                                   -------- --------- ----------- ------------ ------------ -------- ----------- -----------
Balance June 30, 2008              349,456   $87,364  $1,188,509    $  35,147    $ (77,161) (31,035) $ (403,610) $  830,249
                                   ======== ========= =========== ============ ============ ======== =========== ===========



                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                                ($ in thousands)
                                   (Unaudited)

                                          For the three months ended June 30,         For the six months ended June 30,
                                         ---------------------------------------    ---------------------------------------
                                               2008                 2007                  2008                 2007
                                         ------------------  -------------------    ------------------  -------------------

Net income                                        $ 55,778             $ 40,559             $ 101,367            $ 108,226
Other comprehensive income, net
   of tax and reclassifications adjustments            417                3,164                   834                3,144
                                         ------------------  -------------------    ------------------  -------------------
Total comprehensive income                        $ 56,195             $ 43,723             $ 102,201            $ 111,370
                                         ==================  ===================    ==================  ===================
</TABLE>


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


                                       5
<PAGE>
<TABLE>
<CAPTION>
                    PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                                ($ in thousands)
                                   (Unaudited)

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

Cash flows provided by (used in) operating activities:
<S>                                                                               <C>               <C>
Net income                                                                        $ 101,367        $  108,226
Adjustments to reconcile income to net cash provided by
   operating activities:
       Depreciation and amortization expense                                        285,330           262,643
       Stock based compensation expense                                               6,164             5,445
       Loss on extinguishment of debt                                                 6,290            20,186
       Other non-cash adjustments                                                    (7,303)            4,760
       Deferred income taxes (including FIN 48)                                      (8,996)           28,576
       Change in accounts receivable                                                  8,039             4,232
       Change in accounts payable and other liabilities                             (58,597)          (71,248)
       Change in other current assets                                                 6,561             6,736
                                                                            ----------------  ----------------
Net cash provided by operating activities                                           338,855           369,556

Cash flows provided from (used by) investing activities:
       Capital expenditures                                                        (123,723)         (111,769)
       Cash paid for Commonwealth (net of cash acquired)                                  -          (657,610)
       Other assets (purchased) distributions received, net                          (1,277)            3,851
                                                                            ----------------  ----------------
Net cash used by investing activities                                              (125,000)         (765,528)

Cash flows provided from (used by) financing activities:
       Long-term debt borrowings                                                    135,000           950,000
       Long-term debt payments                                                     (130,281)         (914,516)
       Settlement of interest rate swaps                                             15,521                 -
       Financing costs paid                                                            (857)          (15,753)
       Premium paid to retire debt                                                   (6,290)          (16,160)
       Issuance of common stock                                                         955            11,472
       Common stock repurchased                                                    (112,659)          (70,730)
       Dividends paid                                                              (162,324)         (170,841)
       Repayment of customer advances for construction                                 (512)             (506)
                                                                            ----------------  ----------------
Net cash used by financing activities                                              (261,447)         (227,034)

Decrease in cash and cash equivalents                                               (47,592)         (623,006)
Cash and cash equivalents at January 1,                                             226,466         1,041,106
                                                                            ----------------  ----------------

Cash and cash equivalents at June 30,                                             $ 178,874        $  418,100
                                                                            ================  ================
Cash paid during the period for:
       Interest                                                                   $ 184,552        $  176,558
       Income taxes                                                               $  49,585        $   47,426

Non-cash investing and financing activities:
       Change in fair value of interest rate swaps                                $   7,909        $   (3,628)
       Conversion of EPPICS                                                       $      80        $    3,279
       Conversion of Commonwealth Notes                                           $       -        $   36,732
       Shares issued for Commonwealth acquisition                                 $      23        $  247,315
       Acquired debt                                                              $       -        $  244,553
       Other acquired liabilities                                                 $       -        $  110,575

</TABLE>

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

                                       6
<PAGE>
                    PART I. FINANCIAL INFORMATION (Continued)
              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies:
     -------------------------------------------
     (a)  Basis of Presentation and Use of Estimates:
          -------------------------------------------
          Frontier Communications  Corporation (formerly Citizens Communications
          Company through July 30, 2008) 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,   income  taxes,   purchase   price
          allocations,  contingencies,  the  long-term  incentive  program,  and
          pension  and other  postretirement  benefits,  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 $9.9 million and $9.9 million
          for the three months ended June 30, 2008 and 2007,  respectively,  and
          at $18.5  million and $17.2  million for the six months ended June 30,
          2008 and 2007, respectively.

     (c)  Derivative Instruments and Hedging Activities:
          ----------------------------------------------
          We account  for  derivative  instruments  and  hedging  activities  in
          accordance with Statement of Financial Accounting Standards (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

                                       7
<PAGE>
          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.

     (d)  Goodwill and Other Intangibles:
          -------------------------------
          Intangibles represent the excess of purchase price over the fair value
          of identifiable  tangible net assets acquired. We undertake studies to
          determine  the fair  values of assets  and  liabilities  acquired  and
          allocate   purchase  prices  to  assets  and  liabilities,   including
          property,  plant  and  equipment,   goodwill  and  other  identifiable
          intangibles.  We  annually  (during  the fourth  quarter)  examine the
          carrying  value of our goodwill  and trade name to  determine  whether
          there  are any  impairment  losses.  We  test  for  impairment  at the
          "operating  segment"  level,  as that term is defined in SFAS No. 142,
          "Goodwill  and Other  Intangibles  Assets." The Company  currently has
          four  "operating  segments"  which are aggregated  into one reportable
          segment.

          SFAS No. 142 requires that  intangible  assets with  estimated  useful
          lives be amortized  over those lives and be reviewed for impairment in
          accordance  with the SFAS  No.  144,  "Accounting  for  Impairment  or
          Disposal of  Long-Lived  Assets" to  determine  whether any changes to
          these lives are required.  We periodically reassess the useful life of
          our intangible  assets to determine whether any changes to those lives
          are required.

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

     Accounting for Endorsement Split-Dollar Life Insurance Arrangements
     -------------------------------------------------------------------
     In September 2006, the Financial  Accounting Standards Board (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
     (not applicable) 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


                                       8
<PAGE>
     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.  EITF No.
     06-10 is effective 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.

     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 in the first
     quarter of 2008 had no material impact on our financial  position,  results
     of operations or cash flows.

     Business Combinations
     ---------------------
     In December 2007, the FASB revised SFAS 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.

     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.

(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  Frontier.  The  reported  consolidated  financial  condition  of
     Frontier as of June 30, 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 Frontier,  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 its
     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  beginning  of 2007.  In
     addition, the unaudited pro forma financial information does not purport to
     project  the future  financial  position or  operating  results of Frontier
     after completion of the acquisitions.

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                   For the three        For the six
                                                   months ended         months ended
                                                   June 30, 2007       June 30, 2007
                                                 ------------------   -----------------
($ in thousands, except per share amounts)
 -----------------------------------------
<S>                                                   <C>               <C>
Revenue                                               $ 582,556         $ 1,204,633
Operating income                                      $ 171,555         $   378,748
Net income available for common shareholders          $  38,479         $   115,491

Basic and Diluted income per common share             $    0.11         $      0.34

(4)  Accounts Receivable:
     --------------------
     The  components of accounts  receivable,  net at June 30, 2008 and December
     31, 2007 are as follows:

($ in thousands)                                    June 30, 2008        December 31, 2007
----------------                                 ---------------------  --------------------

End user                                                    $ 240,577             $ 244,592
Other                                                          16,851                22,918
Less:  Allowance for doubtful accounts                        (32,965)              (32,748)
                                                 ---------------------  --------------------
   Accounts receivable, net                                 $ 224,463             $ 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 $8.4  million and $6.7
     million for the three  months  ended June 30, 2008 and 2007,  respectively,
     and $15.6  million and $11.6 million for the six months ended June 30, 2008
     and 2007, respectively.

(5)  Property, Plant and Equipment, Net:
     -----------------------------------
     Property, plant and equipment at June 30, 2008 and December 31, 2007 are as
     follows:

($ in thousands)                               June 30, 2008         December 31, 2007
----------------                            ---------------------   ---------------------

Property, plant and equipment                        $ 7,482,934             $ 7,375,297
Less: Accumulated depreciation                        (4,217,674)             (4,040,053)
                                            ---------------------   ---------------------
     Property, plant and equipment, net              $ 3,265,260             $ 3,335,244
                                            =====================   =====================

     Depreciation  expense is principally  based on the composite  group method.
     Depreciation  expense  was $98.3  million  and $93.3  million for the three
     months ended June 30, 2008 and 2007,  respectively,  and $193.5 million and
     $179.9   million  for  the  six  months  ended  June  30,  2008  and  2007,
     respectively.

(6)  Other Intangibles:
     ------------------
     Other intangibles at June 30, 2008 and December 31, 2007 are as follows:

($ in thousands)                             June 30, 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                         (947,549)              (855,731)
                                        ------------------------  ---------------------
    Total other intangibles, net                    $   455,917            $   547,735
                                        ========================  =====================
</TABLE>
     Amortization  expense  was $45.9  million  and $47.2  million for the three
     months ended June 30, 2008 and 2007,  respectively,  and $91.8  million and
     $82.7   million  for  the  six  months   ended  June  30,  2008  and  2007,
     respectively. Amortization expense for the three and six months ended June

                                       10
<PAGE>
     30, 2008 is comprised of $31.6 million and $63.2 million, respectively, for
     amortization  associated with our "legacy" properties and $14.3 million and
     $28.6 million, respectively, for intangible assets (customer base and trade
     name) that were acquired in the Commonwealth and GVN acquisitions.

(7)  Long-Term Debt:
     ---------------
     The activity in our long-term  debt from December 31, 2007 to June 30, 2008
     is as follows:
<TABLE>
<CAPTION>
                                                          Six months ended June 30, 2008
                                           --------------------------------------------------------------                   Interest
                                                                           Interest                                         Rate* at
                            December 31,                      New            Rate        Conversion to        June 30,      June 30,
($ 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     $     (470)    $       -       $      -              $   -      $    17,085    6.07%

  Senior Unsecured Debt         4,715,013       (129,811)      135,000         (7,909)                 -        4,712,293    7.65%

  EPPICS                           14,521              -             -              -                (80)          14,441    5.00%

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

TOTAL LONG-TERM DEBT          $ 4,760,639     $ (130,281)    $ 135,000       $ (7,909)             $ (80)     $ 4,757,369    7.63%
                           =============== ============== =============   ============  =================  ===============

  Less: Debt Discount             (21,294)                                                                         (6,929)
  Less: Current Portion            (2,448)                                                                         (3,828)
                           ---------------                                                                 ---------------
                              $ 4,736,897                                                                     $ 4,746,612
                           ===============                                                                 ===============
</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 six months of 2008,  we  retired  an  aggregate  principal
     amount of $130.4 million of debt,  including $128.7 million of 9.25% Senior
     Notes due 2011,  $1.6  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 4.37% as of June 30,  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.

     During the first  quarter of 2007,  we incurred and expensed  approximately
     $4.0 million of fees associated  with the bridge loan facility  established
     to temporarily fund our acquisition of Commonwealth.  On April 26, 2007, we
     redeemed  $495.2  million  principal  amount of our 7.625% Senior Notes due
     2008 at a price of  103.041%  plus  accrued and unpaid  interest.  The debt
     retirement  generated a pre-tax loss on the early extinguishment of debt at
     a premium of approximately  $16.3 million in the second quarter of 2007 and
     is included in investment and other income (loss), net. As a result of this
     debt  redemption,  we also  terminated  three interest rate swap agreements
     hedging  an  aggregate  $150.0  million  notional  amount of  indebtedness.
     Payments on the swap  terminations of approximately  $1.0 million were made
     in the second quarter of 2007.

     As of June 30, 2008, EPPICS representing a total principal amount of $197.3
     million have been converted into 15,925,159 shares of our common stock.
     Approximately $3.9 million of EPPICS, which are convertible into 343,281
     shares of our common stock, were outstanding at June 30, 2008. The above
     table indicates $14.4 million of EPPICS outstanding at June 30, 2008, of
     which $10.5 million is debt of related parties for which the Company has an
     offsetting receivable.

     As of June 30,  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 June 30, 2008. The expiration  date for this $250.0 million
     five year revolving  credit  agreement is May 18, 2012.  During the term of

                                       11
<PAGE>
     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.

(8)  Net Income Per Common Share:
     ----------------------------
     The  reconciliation  of the net income per common share calculation for the
     three and six months  ended  June 30,  2008 and 2007,  respectively,  is as
     follows:
<TABLE>
<CAPTION>

($ in thousands, except per share amounts)         For the three months ended June 30,  For the six months ended June 30,
------------------------------------------         ----------------------------------   ---------------------------------
                                                        2008              2007               2008              2007
                                                   ----------------  ----------------   ----------------  ---------------
Net income used for basic and diluted earnings
----------------------------------------------
   per common share:
   -----------------
Total basic net income available for common
<S>                                                       <C>               <C>               <C>              <C>
  shareholders                                            $ 55,778          $ 40,559          $ 101,367        $ 108,226

Effect of conversion of preferred securities -
  EPPICS                                                        31                32                 62               89
                                                   ----------------  ----------------   ----------------  ---------------
Total diluted net income available for common
  shareholders                                            $ 55,809          $ 40,591          $ 101,429        $ 108,315
                                                   ================  ================   ================  ===============
Basic earnings per common share:
--------------------------------
Weighted average shares outstanding - basic                320,838           340,469            323,340          332,331
                                                   ----------------  ----------------   ----------------  ---------------
Net income per share available for common
  shareholders                                            $   0.17          $   0.12          $    0.31        $    0.33
                                                   ================  ================   ================  ===============
Diluted earnings per common share:
----------------------------------
Weighted average shares outstanding - basic                320,838           340,469            323,340          332,331
Effect of dilutive shares                                      122               760                286              953
Effect of conversion of preferred securities -
  EPPICS                                                       347               359                348              441
                                                   ----------------  ----------------   ----------------  ---------------
Weighted average shares outstanding - diluted              321,307           341,588            323,974          333,725
                                                   ================  ================   ================  ===============
Net income per share available for common
  shareholders                                            $   0.17          $   0.12          $    0.31        $    0.32
                                                   ================  ================   ================  ===============
</TABLE>
     Stock Options
     -------------
     For the three and six months  ended  June 30,  2008,  options  to  purchase
     2,640,000  shares  (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.

     For the three and six months  ended  June 30,  2007,  options  to  purchase
     1,221,150  shares  (at  exercise  prices  ranging  from  $15.94 to  $18.46)
     issuable  under  employee   compensation   plans  were  excluded  from  the
     computation  of diluted EPS for those periods  because the exercise  prices
     were greater than the average market price of common shares and, therefore,
     the effect would be antidilutive.

     In  addition,  for the three and six months  ended June 30,  2008 and 2007,
     restricted  stock awards of 1,748,000 and 1,389,000  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 June 30, 2008, approximately 99% of the EPPICS outstanding,  or about
     $197.3 million  aggregate  principal amount of EPPICS,  have converted into
     15,925,159  shares  of our  common  stock,  including  shares  issued  from
     treasury.

                                       12
<PAGE>

     We had 78,707 and 81,507 shares of potentially  dilutive EPPICS at June 30,
     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
     343,281  and  355,493  shares of our common  stock as of June 30,  2008 and
     2007,  respectively.  These  securities  have been  included in the diluted
     income per common share calculation for the periods ended June 30, 2008 and
     2007.

     Stock Units
     -----------
     At June 30,  2008  and  2007,  we had  279,645  and  191,450  stock  units,
     respectively,  issued under our Non-Employee Directors' Deferred Fee Equity
     Plan (Deferred Fee Plan) and our Non-Employee  Directors'  Equity Incentive
     Plan (Directors'  Equity 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 June 30, 2008,  we had  repurchased  approximately
     10,383,000 shares of our common stock at an aggregate cost of approximately
     $112.7 million.

(9)  Stock Plans:
     ------------
     At June 30, 2008, we had five  stock-based  compensation  plans under which
     grants have been made and awards  remained  outstanding.  At June 30, 2008,
     there were  16,058,182  shares  authorized  for grant under these plans and
     4,246,415  shares  available  for grant.  No further  awards may be granted
     under  the  Management  Equity  Incentive  Plan  (MEIP),  the  1996  Equity
     Incentive Plan (EIP) or the Deferred Fee Plan.

     On March 17, 2008,  the Company  adopted the  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 June 30,  2008 and  changes  during the six 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                                    (131,000)  $      7.29                           $   507,000
     Options canceled, forfeited or lapsed                 (53,000)  $     10.11
-------------------------------------------------------------------
Balance at June 30, 2008                                 3,771,000   $     13.38                  3.0      $ 2,586,000
===================================================================

Exercisable at June 30, 2008                             3,756,000   $     13.38                  3.0      $ 2,586,000
===================================================================
</TABLE>

     There were no  options  granted  during the first six months of 2008.  Cash
     received  upon the exercise of options  during the first six months of 2008
     totaled $1.0 million.

     The total intrinsic value of stock options  exercised  during the first six
     months of 2007 was $4.9 million. The total intrinsic value of stock options
     outstanding and exercisable at June 30, 2007 was $12.6 million.  There were
     no options  granted during the first six months of 2007. Cash received upon
     the exercise of options  during the first six months of 2007 totaled  $11.5
     million.

                                       13
<PAGE>
<TABLE>
<CAPTION>

     The following summary presents  information  regarding unvested  restricted
     stock as of June 30, 2008 and changes during the six months then ended with
     regard to restricted stock under the MEIP and the EIPs:

                                                                   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                         883,000   $     11.02           $ 10,007,000
     Restricted stock vested                         (326,000)  $     13.96           $  3,699,000
     Restricted stock forfeited                       (18,000)  $     13.55           $    200,000
--------------------------------------------------------------
Balance at June 30, 2008                            1,748,000   $     12.55           $ 19,818,000
==============================================================
</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 June 30, 2008 was $18.8 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 six months
     ended June 30,  2007 was  approximately  $10.6  million  and $7.2  million,
     respectively. The total fair value of unvested restricted stock at June 30,
     2007 was $21.2  million.  The  weighted  average  grant  date fair value of
     restricted  shares  granted  during the six months  ended June 30, 2007 was
     $15.08. Shares granted during the first six months of 2007 totaled 696,000.

(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  operating  segments  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 consolidated balance sheet and is
     being amortized into interest expense over the term of the associated debt.
     We recognized  $3.4 million of deferred gain during the first six months of
     2008 and  anticipate  recognizing  $1.6  million  during the second half of
     2008.

     As of January 16, 2008, we no longer have any derivative  instruments.  For
     the six months ended June 30, 2007,  the interest  expense  resulting  from
     these interest rate swaps totaled approximately $2.0 million.

                                       14
<PAGE>

(12) Investment and Other Income (Loss), Net:
     ----------------------------------------
     The components of investment and other income (loss), net are as follows:
<TABLE>
<CAPTION>
                                          For the three months ended June 30,  For the six months ended June 30,
                                          ----------------------------------- ----------------------------------
($ in thousands)                                2008             2007              2008              2007
----------------                          ---------------  ------------------ ----------------  ----------------
<S>                                              <C>               <C>              <C>              <C>
Interest and dividend income                     $ 1,424          $  8,444          $ 6,528          $ 22,970
Bridge loan fee                                        -                 -                -            (4,026)
Premium on debt repurchases                            -           (17,092)          (6,290)          (18,217)
Gains on expiration/settlement of customer
   advances, net                                   2,883                 -            2,883             1,068
Equity earnings/minority interest in joint
   ventures, net                                   2,405             1,575            2,108               578
Other, net                                          (319)              556              (71)            1,127
                                          ---------------  ------------------ ----------------  ----------------
     Total investment and other income
       (loss), net                               $ 6,393          $ (6,517)         $ 5,158          $  3,500
                                          ===============  ================== ================  ================


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

                                                                        Pension Benefits
                                                  ---------------------------------------------------------
                                                   For the three months ended    For the six months ended
                                                            June 30,                      June 30,
                                                  ---------------------------   ---------------------------
                                                      2008          2007            2008          2007
                                                  -------------  ------------   -------------  ------------
($ in thousands)
----------------
Components of net periodic benefit cost
---------------------------------------
Service cost                                          $  1,619      $  2,754        $  3,238      $  4,763
Interest cost on projected benefit obligation           12,875        13,115          25,750        25,045
Expected return on plan assets                         (16,354)      (17,106)        (32,708)      (32,781)
Amortization of prior service cost and unrecognized
       net obligation                                      (64)           81            (128)           53
Amortization of unrecognized loss                        1,272         2,906           2,544         5,806
                                                  -------------  ------------   -------------  ------------
Net periodic benefit cost/(income)                    $   (652)     $  1,750        $ (1,304)     $  2,886
                                                  =============  ============   =============  ============


                                                                 Other Postretirement Benefits
                                                  ---------------------------------------------------------
                                                    For the three months ended   For the six months ended
                                                             June 30,                     June 30,
                                                  ---------------------------   ---------------------------
                                                      2008          2007            2008          2007
                                                  -------------  ------------   -------------  ------------
($ in thousands)
---------------
Components of net periodic benefit cost
---------------------------------------
Service cost                                          $    149      $    175        $    298      $    350
Interest cost on projected benefit obligation            2,742         2,218           5,484         4,426
Expected return on plan assets                            (122)         (254)           (244)         (508)
Amortization of prior service cost and transition
       obligation                                       (1,934)       (1,447)         (3,868)       (2,894)
Amortization of unrecognized loss                        1,404         1,171           2,808         2,361
                                                  -------------  ------------   -------------  ------------
Net periodic benefit cost                             $  2,239      $  1,863        $  4,478      $  3,735
                                                  =============  ============   =============  ============
</TABLE>

     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.

                                       15
<PAGE>

(14) 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) Subsequent Event:
     -----------------
     Effective July 31, 2008, Citizens  Communications Company (CZN) changed its
     name and stock symbol to Frontier Communications Corporation (FTR).

                                       16
<PAGE>

                    PART I. FINANCIAL INFORMATION (Continued)
              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

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;

                                       17
<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  significantly  increased cash taxes in 2008 and future
          years; 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 June 30, 2008, we operated in 24 states with approximately 5,700 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 June 30,
2008,  approximately  58% of the  households in our  territories  are able to be
served VOIP service by cable  operators.  We also believe that  competition will
continue  to  intensify  in 2008 and 2009 and may result in reduced  revenues in
those  years.  Our  business  experienced  erosion in access  lines and switched
access minutes in the first half 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.  In  addition,  the slowing
economic  environment  in 2008 may be  impacting  consumer  behavior  to  reduce
household  expenditures by  disconnecting  wireline  services.  These trends are
likely to  continue  and  result in a  challenging  revenue  environment.  These
factors  could  also  result in more  bankruptcies  and,  therefore,  affect our
ability to collect money owed to us by customers.

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.

                                       18
<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 and/or promotional offers. 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  70 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 Frontier.  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 the
"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 loss of data as a result of computer
failure.  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 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.

                                       19
<PAGE>


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

As of June  30,  2008,  we had  cash and  cash  equivalents  aggregating  $178.9
million.  Our  primary  source  of funds  continued  to be cash  generated  from
operations.  For the six  months  ended  June 30,  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  $1.9 million of debt maturing  during the last six months of 2008
and  approximately  $3.9 million and $7.2  million of debt  maturing in 2009 and
2010, respectively.

We paid  $49.6  million  in cash  taxes  during the first six months of 2008 and
expect to pay  approximately  $100  million to $110 million for the full year of
2008.  Our cash tax estimate  reflects  the  currently  estimated  impact of the
"Economic  Stimulus  Act of 2008." We expect  that our cash taxes will  increase
further in 2009.

                     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 six months ended June 30,  2008,  our capital  expenditures  were $123.7
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 six months ended June 30, 2008, we retired an aggregate principal amount
of $130.4  million of debt,  including  $128.7 million  principal  amount of our
9.25% Senior Notes due 2011,  $1.6  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.

For the six months ended June 30, 2007, we retired an aggregate principal amount
of $935.6 million of debt, including $3.3 million of EPPICS and $17.8 million of
3.25% Commonwealth  convertible notes that were converted into our common stock.
On April 26, 2007, we redeemed  $495.2  million  principal  amount of our 7.625%
Senior Notes due 2008 at a price of 103.041%  plus accrued and unpaid  interest.
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 June 30, 2007
we retired  $183.3  million face amount of  Commonwealth  convertible  notes for
which we paid $165.4 million in cash and $36.7 million in common stock.  We also
paid down $14.2 million of industrial development revenue bonds and $3.9 million
of rural utilities service loan contracts.

                                       20
<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 of 4.37% as of June 30, 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.

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 June 30, 2008,  EPPICS  representing  a total  principal  amount of $197.3
million have been converted into  15,925,159  shares of our common stock,  and a
total of $3.9 million remains  outstanding to third parties.  Our long-term debt
footnote  indicates  $14.4  million of EPPICS  outstanding  at June 30, 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 were accounted for under SFAS No. 133 (as amended)
as fair value  hedges.  For the six months  ended June 30,  2007,  the  interest
expense  resulting  from these  interest rate swaps totaled  approximately  $2.0
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  consolidated  balance sheet and is being  amortized  into
interest expense over the term of the associated debt.

Credit Facilities
-----------------
As  of  June  30,  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 June 30, 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  Law.  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.

                                       21
<PAGE>

Our  $200.0  million  term  loan  facility  with  the  Rural  Telephone  Finance
Cooperative  (RTFC),  that matures in 2011,  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 six months ended
June 30,  2008 and  2007,  we  received  approximately  $1.0  million  and $11.5
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 June 30, 2008, we had repurchased approximately 10,383,000 shares
of our common stock at an aggregate cost of approximately $112.7 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,  the
long-term  incentive  program,  income taxes,  contingencies  and purchase price
allocations, among others.

                                       22
<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 Measurements (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)
          --------

                                       23
<PAGE>

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

                                     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 June 30, 2008  decreased  $16.3
million, or 3%, as compared with the prior year period. Consolidated revenue for
the six months ended June 30, 2008  decreased  $3.2 million as compared with the
prior year  period.  Excluding  the  additional  revenue  due to the CTE and GVN
acquisitions,  revenue decreased $63.7 million during the first half of 2008, or
6%, as compared with the prior 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  revenue  of $38.7  million.  Excluding  the
additional revenue due to the one-time favorable settlement in the first quarter
of 2007 and the  additional  revenue  due to the CTE and GVN  acquisitions,  our
revenue  for the six months  ended  June 30,  2008  would  have  declined  $25.0
million,  or 3%, as compared to the first six months of 2007.  This decline is a
result of lower local  services  revenue,  subsidy  revenue and switched  access
revenue,  partially  offset by a $22.6  million  increase  in data and  internet
services revenue.

Change in the number of our access  lines is one factor that 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  88,400 access
lines during the six months ended June 30, 2008, but added approximately  36,500
high-speed  internet  subscribers  during  this same  period.  The loss of lines
during the first six months of 2008 was primarily  among  residential  customers
throughout our markets.  The non-residential line losses were principally in our
eastern and central regions and Rochester, New York.

While access lines is an important  metric to gauge some revenue  trends,  it is
not  necessarily  the best or only measure to evaluate the business.  Management
believes  that  understanding  the  different  components  of  revenue  is  most
important.  For this reason,  presented on page 26 is a revenue  breakdown  that
categorizes  revenue into customer revenue and regulatory  revenue (switched and
subsidy  revenue).  Despite the decline in access lines,  our customer  revenue,
which is all revenue except switched access and subsidy, has remained relatively
flat overall.  The average monthly customer revenue per access line has improved
and resulted in an increased wallet share, primarily from residential customers.
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 the second half
of 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 and six months ended June 30, 2008 and 2007,  including the results of our
acquisitions.
<TABLE>
<CAPTION>
                                                         REVENUE


                            For the three months ended June 30,             For the six months ended June 30,
                         ------------------------------------------  -------------------------------------------------
($ in thousands)
----------------           2008       2007     $ Change    % Change      2008         2007        $ Change   % Change
                         ---------- --------- ----------- ---------  ------------- -----------   ---------  ----------
<S>                      <C>        <C>        <C>              <C>   <C>         <C>           <C>              <C>
Local services           $ 214,703  $226,363   $ (11,660)      -5%    $   431,861  $  430,807    $  1,054          0%
Data and internet
  services                 151,655   138,243      13,412       10%        297,637     256,267      41,370         16%
Access services            101,003   113,429     (12,426)     -11%        208,821     252,453     (43,632)       -17%
Long distance services      46,912    47,053        (141)       0%         93,365      87,481       5,884          7%
Directory services          29,070    28,664         406        1%         57,698      57,334         364          1%
Other                       19,207    25,074      (5,867)     -23%         42,373      50,631      (8,258)       -16%
                         ---------- --------- -----------            ------------- -----------   ---------
                         $ 562,550  $578,826   $ (16,276)      -3%    $ 1,131,755  $1,134,973    $ (3,218)         0%
                         ========== ========= ===========            ============= ===========   =========

</TABLE>
                                       24
<PAGE>

Local Services
Local services  revenue for the three months ended June 30, 2008 decreased $11.7
million, or 5%, as compared with the prior year period. The loss of access lines
accounted for $8.7 million of the decline in local services revenue.

Local  services  revenue for the six months ended June 30, 2008  increased  $1.1
million,  as  compared  with the  prior  year  period.  Local  services  revenue
increased  $21.7  million  as a  result  of the  CTE and  GVN  acquisitions  and
decreased $18.4 million for our legacy Frontier operations, primarily due to the
continued  loss of  access  lines.  Enhanced  services  revenue  decreased  $2.2
million,  as compared with the prior year period,  primarily due to a decline in
access  lines  and  a  shift  in  customers   purchasing  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 June 30, 2008
increased  $13.4  million,  or 10%,  as  compared  with the prior  year  period,
primarily due to growth in data and high-speed internet services.

Data and  internet  services  revenue  for the six months  ended  June 30,  2008
increased  $41.4 million,  or 16%, as compared with the prior year period.  Data
and internet services revenue increased $18.8 million as a result of the CTE and
GVN acquisitions and another $15.6 million due to the overall growth in data and
high-speed internet customers.  The number of the Company's  high-speed internet
subscribers has increased by more than 80,000, or 17%, since June 30, 2007. 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  $8.5  million,  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 June 30, 2008 decreased $12.4
million, or 11%, as compared with the prior year period. Switched access revenue
of $72.7  million  decreased  $10.1  million,  as  compared  with the prior year
period,  primarily  due to the impact of a decline in minutes of use  related to
access line losses. Access services revenue includes subsidy payments we receive
from federal and state agencies. Subsidy revenue of $28.3 million decreased $2.3
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).

Access  services  revenue for the six months ended June 30, 2008 decreased $43.6
million, or 17%, as compared with the prior year period. Access services revenue
increased  $11.3 million as a result of the CTE and GVN  acquisitions.  Switched
access revenue, excluding the impact of the CTE and GVN acquisitions,  of $116.7
million  decreased  $45.6  million,  primarily  due to the  first  quarter  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  six  months of 2007,  our  switched  access
revenue for the first half of 2008 would have declined by $6.9  million,  or 6%,
from the comparable period in 2007. Subsidy revenue, excluding the impact of the
CTE and GVN acquisitions, of $52.5 million decreased $9.3 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 NACPL.

Many 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 Competitive Eligible Telecommunications Companies
(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 FCC takes additional steps towards needed reform.  The
FCC is also reviewing the mechanism by which subsidies are funded. Additionally,
the FCC and certain  states have open  proceedings  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,  and/or are  involved  in formal  state
proceedings with, 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.

                                       25
<PAGE>

Long Distance Services
Long  distance  services  revenue for the three  months  ended June 30, 2008 was
relatively unchanged as compared with the prior year period.

Long distance  services revenue for the six months ended June 30, 2008 increased
$5.9 million, or 7%, as compared with the prior year period, as a result of $6.9
million  in  additional  long  distance  services  revenue  from the CTE and GVN
acquisitions.  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 23% during the six months ended
June 30, 2008  compared to the six months of 2007.  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 and six months ended June 30, 2008 was
relatively unchanged as compared with the prior year periods.

Other
Other  revenue for the three and six months ended June 30, 2008  decreased  $5.9
million,  or 23%,  and $8.3  million,  or 16%, as  compared  with the prior year
periods,  primarily due to higher bad debt expenses,  fewer  equipment sales and
decreased "bill and collect" fee revenue.

                       OTHER FINANCIAL AND OPERATING DATA

                                As of                 As of                %
                            June 30, 2008         June 30, 2007         Change
                            -----------------   ------------------   -----------
Access lines:
   Residential                     1,516,402            1,654,854        -8%
   Business                          825,345              848,864        -3%
                            -----------------   ------------------
Total access lines                 2,341,747            2,503,718        -6%
                            -----------------   ------------------

High-speed internet (HSI)
  subscribers                        559,345              479,317        17%
Video subscribers                    107,596               81,092        33%

<TABLE>
<CAPTION>

                                   For the three months ended June 30,                 For the six months ended June 30,
                            -------------------------------------------------- -----------------------------------------------------

                                2008           2007     $ Change    % Change       2008           2007       $ Change      % Change
                            -------------------------------------------------- -----------------------------------------------------
Revenue:
<S>                            <C>           <C>         <C>              <C>    <C>           <C>              <C>            <C>
   Residential                 $ 239,633     $ 248,550   $  (8,917)      -4%     $  480,995    $  470,328       $ 10,667       2%
   Business                      221,914       216,847       5,067        2%        441,939       412,192         29,747       7%
                            -------------   ----------- -----------            ------------- -------------   ------------
Total customer revenue           461,547       465,397      (3,850)      -1%        922,934       882,520         40,414       5%
                            -------------   ----------- -----------            ------------- -------------   ------------

   Regulatory (Access
     Services)                   101,003       113,429     (12,426)     -11%        208,821       252,453        (43,632)    -17%
                            -------------   ----------- -----------            ------------- -------------   ------------
Total revenue                  $ 562,550     $ 578,826   $ (16,276)      -3%     $1,131,755    $1,134,973       $ (3,218)      0%
                            -------------   ----------- -----------            ------------- -------------   ------------

Switched access minutes
   of use (in millions)            2,538         2,748                   -8%          5,141         5,276                     -3%
Average monthly total
   revenue per access line     $   79.31     $   76.53                    4%     $    79.04    $    78.75 (1)                  0%
Average monthly customer
   revenue per access line     $   65.07     $   61.53                    6%     $    64.46    $    64.04 (2)                  1%

</TABLE>

(1)  For the six months ended June 30, 2007,  the  calculation  excludes CTE and
     GVN data and excludes the $38.7 million favorable  one-time impact from the
     first quarter 2007 settlement of a switched  access dispute.  The amount is
     $81.82  with  the  $38.7  million   favorable   one-time  impact  from  the
     settlement.

(2)  For the six months ended June 30, 2007,  the  calculation  excludes CTE and
     GVN data.

                                       26
<PAGE>
<TABLE>
<CAPTION>
                                  NETWORK ACCESS EXPENSES

                             For the three months ended June 30,              For the six months ended June 30,
                         -------------------------------------------  ---------------------------------------------------
      ($ in thousands)
      ----------------     2008       2007     $ Change    % Change      2008         2007        $ Change    % Change
                         ---------- --------- ----------- ----------  ------------ ------------  ----------  ------------
<S>                      <C>        <C>           <C>          <C>     <C>          <C>           <C>              <C>
      Network access     $ 53,998   $ 53,678      $ 320        1%      $ 114,547    $ 105,075     $ 9,472          9%


Network access  expenses for the three months ended June 30, 2008 increased $0.3
million, or 1%, as compared with the prior year period.

Network  access  expenses for the six months ended June 30, 2008  increased $9.5
million,  or 9%, as  compared  with the prior year  period,  as a result of $9.8
million  in  additional   network  access  expenses  due  to  the  CTE  and  GVN
acquisitions.

                            OTHER OPERATING EXPENSES


                                  For the three months ended June 30,                     For the six months ended June 30,
                           -----------------------------------------------------  --------------------------------------------------
($ in thousands)
----------------               2008          2007       $ Change      % Change       2008         2007      $ Change     % Change
                           ------------  ------------  -------------  ----------  ------------ -----------  -----------  -----------
Wage and benefit expenses     $ 95,317      $100,500      $  (5,183)        -5%     $195,463     $200,328     $ (4,865)        -2%
Severance and early
  retirement costs                 480         1,594         (1,114)       -70%        3,371        1,776        1,595         90%
Stock based compensation         3,145         2,038          1,107         54%        6,164        5,445          719         13%
All other operating
  expenses                     103,391       109,256         (5,865)        -5%      200,599      195,106        5,493          3%
                           ------------  ------------  -------------              ------------ -----------  -----------
                              $202,333      $213,388      $ (11,055)        -5%     $405,597     $402,655     $  2,942          1%
                           ============  ============  =============              ============ ===========  ===========
</TABLE>

Wage and benefit expenses
Wage and benefit  expenses for the three  months  ended June 30, 2008  decreased
$5.2  million,  or 5%, as compared to the prior year  period,  primarily  due to
headcount  reductions  and  associated  decreases  in  compensation  and benefit
expenses  attributable to the integration of the back office,  customer  service
and administrative  support functions of the CTE and GVN operations  acquired in
2007.

Wage and benefit  expenses for the six months ended June 30, 2008 decreased $4.9
million,  or 2%,  as  compared  with the prior  year  period.  Wage and  benefit
expenses increased $1.9 million as a result of the CTE and GVN acquisitions. All
other wage and benefit expenses  decreased $6.8 million for the six months ended
June 30,  2008,  as  compared  with the  prior  year  period,  primarily  due to
headcount  reductions  and  associated  decreases  in  compensation  and benefit
expenses from the integration of functions, as described above.

Included  in wage and  benefit  expenses  is  pension  and other  postretirement
benefit  expenses.  These costs for the six months  ended June 30, 2008 and 2007
were approximately $3.2 million and $6.6 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 other postretirement benefit expenses.

Severance and early retirement costs
Severance  and early  retirement  costs for the three months ended June 30, 2008
decreased $1.1 million as compared with the prior year period,  primarily due to
CTE related charges recorded in the second quarter of 2007.

Severance  and early  retirement  costs for the six months  ended June 30,  2008
increased $1.6 million as compared with the prior year period,  primarily due to
charges recorded in the first half of 2008 related to employee early retirements
and terminations for 42 Rochester, New York employees.

                                       27
<PAGE>

Stock based compensation
Stock based compensation for the three months ended June 30, 2008 increased $1.1
million, or 54%, as compared with the prior year period, due to costs associated
with the recently adopted long-term incentive program.

Stock based  compensation  for the six months ended June 30, 2008 increased $0.7
million, or 13%, as compared with the prior year period, due to costs associated
with the recently  adopted  long-term  incentive  program,  partially  offset by
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.

All other operating expenses
All other operating  expenses for the three months ended June 30, 2008 decreased
$5.9 million,  or 5%, as compared  with the prior year period,  primarily due to
the expense savings  realized by our  acquisitions  of  Commonwealth  and Global
Valley.  All other  operating  expenses  for the six months  ended June 30, 2008
increased $5.5 million, or 3%, as compared with the prior year period, primarily
due to the additional  expenses of $10.5 million  resulting from the CTE and GVN
acquisitions, as 2008 includes six months of expenses for CTE and GVN while 2007
includes approximately four months for CTE and no costs for GVN.
<TABLE>
<CAPTION>
                                        DEPRECIATION AND AMORTIZATION EXPENSE


                           For the three months ended June 30,                For the six months ended June 30,
                         ------------------------------------------  -------------------------------------------------
      ($ in thousands)
      ----------------      2008      2007     $ Change    % Change      2008         2007        $ Change   % Change
                         ---------- --------- ----------- ---------  ------------- -----------   ---------  ----------
<S>                       <C>       <C>          <C>            <C>     <C>         <C>          <C>               <C>
   Depreciation expense   $ 98,367  $ 93,286     $ 5,081        5%      $ 193,512   $ 179,933    $ 13,579          8%
   Amortization expense     45,883    47,176      (1,293)      -3%         91,818      82,710       9,108         11%
                         ---------- --------- -----------            ------------- -----------   ---------
                          $144,250  $140,462     $ 3,788        3%      $ 285,330   $ 262,643    $ 22,687          9%
                         ========== ========= ===========            ============= ===========   =========

Depreciation and  amortization  expense for the three months ended June 30, 2008
increased  $3.8  million,   or  3%,  as  compared  to  the  prior  year  period.
Depreciation  and  amortization  expense for the six months  ended June 30, 2008
increased  $22.7  million,  or 9%,  as  compared  with the  prior  year  period.
Depreciation  and  amortization  expense for the six months  ended June 30, 2008
increased $25.3 million as a result of our 2007  acquisitions of CTE and GVN and
includes  amortization  expense related to the customer base acquired in the CTE
and  GVN  acquisitions  and  the  Commonwealth  trade  name.   Depreciation  and
amortization  expense  for the six months  ended June 30,  2008  decreased  $2.6
million,  as compared  with the prior year period,  primarily due to a declining
net asset base for our legacy Frontier  properties,  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 $185.0 million for
2008.

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

                              For the three months ended June 30,            For the six months ended June 30,
                          ------------------------------------------  -------------------------------------------------
($ in thousands)
----------------             2008      2007     $ Change    % Change      2008        2007         $ Change  % Change
                          --------- ---------- ----------- ---------  ------------- ----------    ---------  ----------
Investment and
 other income (loss), net $  6,393   $ (6,517)   $ 12,910      198%      $   5,158   $   3,500     $   1,658        47%
Interest expense          $ 90,710   $ 98,649    $ (7,939)      -8%      $ 181,570   $ 192,613     $ (11,043)       -6%
Income tax expense        $ 21,874   $ 25,573    $ (3,699)     -14%      $  48,502   $  67,261     $ (18,759)      -28%

</TABLE>

Investment and other income (loss), net
Investment and other income (loss), net for the three months ended June 30, 2008
increased  $12.9  million,  or 198%,  as  compared  with the prior year  period,
primarily  due to the loss on  retirement  of debt of $17.1  million  during the
second quarter of 2007, partially offset by a decrease of $7.0 million in income
from short-term investments of cash.

                                       28
<PAGE>

Investment and other income  (loss),  net for the six months ended June 30, 2008
increased  $1.7  million,  or 47%,  as  compared  with the  prior  year  period,
primarily  due to a reduction in the loss on retirement of debt of $11.9 million
and the $4.0  million  expense of a bridge  loan fee  recorded  during the first
quarter of 2007,  partially offset by a decrease of $16.4 million in income from
short-term investments of cash.

Our  average  cash  balance was $211.0  million  and $832.3  million for the six
months ended June 30, 2008 and 2007, respectively.

Interest expense
Interest  expense  for the three  months  ended  June 30,  2008  decreased  $7.9
million,  or 8%, 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 lower average debt levels.  Our average debt
outstanding was $4,757.9 million and $5,064.5 million for the three months ended
June 30, 2008 and 2007, respectively.

Interest expense for the six months ended June 30, 2008 decreased $11.0 million,
or 6%, 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,
along with slightly lower average debt levels.  Our average debt outstanding was
$4,758.8 million and $4,887.3 million for the six months ended June 30, 2008 and
2007, respectively.  Our composite average borrowing rate as of June 30, 2008 as
compared with the prior year was 31 basis points lower, decreasing from 7.94% to
7.63%.

Income tax expense
Income tax  expense for the three and six months  ended June 30, 2008  decreased
$3.7 million, or 14%, and $18.8 million, or 28%, respectively,  as compared with
the prior year  periods,  primarily  due to  changes  in taxable  income and the
reduction in income tax expense of $7.5 million  recorded in the second  quarter
of 2008 that resulted from the  expiration of certain  statute of limitations on
April 15,  2008.  The  effective  tax rate for the first six  months of 2008 was
32.4% as  compared  with 38.3% for the first six months of 2007.  Our cash taxes
paid for the six months ended June 30, 2008 were $49.6  million,  an increase of
$2.2 million from the first six months of 2007.  We expect to pay  approximately
$100  million  to $110  million  for the full  year of 2008.  Our 2008  cash tax
estimate reflects the currently  estimated impact of the "Economic  Stimulus Act
of 2008."

As a result of the  expiration of certain  statute of  limitations  on April 15,
2008, the  liabilities on our books as of December 31, 2007 related to uncertain
tax positions  recorded under FASB  Interpretation  No. (FIN) 48 were reduced by
$16.2 million in the second quarter of 2008.  This reduction  lowered 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 June 30, 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 $282.4  million of our
borrowings at June 30, 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 June 30, 2008, a near-term change in interest
rates would not materially affect our consolidated  financial position,  results
of operations or cash flows.

                                       29
<PAGE>

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  consolidated  balance sheet,  and is being  amortized into
interest expense over the term of the associated debt.

Sensitivity analysis of interest rate exposure
At June 30,  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 7.63% 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 June 30, 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,  June 30, 2008,  that our  disclosure
controls and procedures are effective.

(b) Changes in internal control over financial reporting
We reviewed our  internal  control  over  financial  reporting at June 30, 2008.
There  has been no change  in our  internal  control  over  financial  reporting
identified  in an  evaluation  thereof that  occurred  during the second  fiscal
quarter of 2008 that materially  affected or is reasonably  likely to materially
affect our internal control over financial reporting.

                                       30
<PAGE>

                           PART II. OTHER INFORMATION
              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES


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
June 30, 2008.

                                       31

<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
                                        Shares      Price Paid    Announced Plans or    or Programs (in
 Period                               Purchased     per Share         Programs             millions)
---------------------------------------------------------------------------------------------------------

April 1, 2008 to April 30, 2008
<S>                                    <C>           <C>             <C>                 <C>
Share Repurchase Program (1)            2,410,812     $ 10.51         4,727,580           $ 149.9
Employee Transactions (2)                     247     $ 10.81           N/A                N/A

May 1, 2008 to May 31, 2008
Share Repurchase Program (1)            2,582,411     $ 10.84         7,309,991           $ 121.9
Employee Transactions (2)                       -           -           N/A                N/A

June 1, 2008 to June 30, 2008
Share Repurchase Program (1)            3,073,533     $ 11.24        10,383,524           $  87.4
Employee Transactions (2)                     143     $  9.26           N/A                N/A


Totals April 1, 2008 to June 30, 2008
Share Repurchase Program (1)            8,066,756     $ 10.89        10,383,524           $  87.4
Employee Transactions (2)                     390     $ 10.24           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.


                                       32
<PAGE>


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

     (a)  The registrant held its 2008 Annual Meeting of the Stockholders on May
          15, 2008 (the "Meeting").

     (b)  Election of  directors.  At the  Meeting,  all  nominees  were elected
          pursuant to the following votes:

                                                    Number of Votes
                                                   -----------------
                         DIRECTOR                FOR              WITHHELD
                         --------                ---              --------
          Kathleen Q. Abernathy              277,530,899           8,356,519
          Leroy T. Barnes, Jr.               277,521,933           8,365,485
          Peter C.B. Bynoe                   277,598,311           8,289,107
          Michael T. Dugan                   277,636,905           8,250,513
          Jeri B. Finard                     277,574,695           8,312,723
          Lawton W. Fitt                     276,868,610           9,018,808
          William M. Kraus                   277,130,395           8,757,023
          Howard L. Schrott                  277,692,849           8,194,569
          Larraine D. Segil                  277,640,379           8,247,039
          David H. Ward                      277,383,897           8,503,521
          Myron A. Wick III                  277,129,109           8,758,309
          Mary Agnes Wilderotter             274,948,439          10,938,979

     (c)  Other matters submitted to stockholders at the Meeting:

          (1) Adoption of an amendment to the Company's Restated  Certificate of
          Incorporation   to   change   the   Company's   name   from   Citizens
          Communications  Company to Frontier  Communications  Corporation.  The
          matter passed with the following vote:

                  Number of votes FOR              274,962,708
                  Number of votes AGAINST            6,180,244
                  Number of votes ABSTAINING         4,744,466

          (2) Adoption of an amendment to the Company's Restated  Certificate of
          Incorporation to replace the enumerated purposes clause with a general
          purposes clause. The matter passed with the following vote:

                  Number of votes FOR              274,765,633
                  Number of votes AGAINST            5,198,721
                  Number of votes ABSTAINING         5,923,064

          (3) Stockholder proposal related to executive compensation. The matter
          did not pass with the following vote:

                  Number of votes FOR               89,901,631
                  Number of votes AGAINST          103,441,872
                  Number of votes ABSTAINING         8,801,979
                  Number of BROKER NON-VOTES        83,741,936

          (4)   Ratification  of  appointment  of  KPMG  LLP  as  the  Company's
          independent  registered  public  accounting  firm for 2008. The matter
          passed with the following vote:

                  Number of votes FOR              276,369,552
                  Number of votes AGAINST            5,825,909
                  Number of votes ABSTAINING         3,691,957


                                       33
<PAGE>

Item 5.   Other Information
          -----------------

As disclosed in our Proxy Statement for the 2008 Annual Meeting,  proposals that
stockholders  wish to include in our Proxy  Statement  and form of proxy for our
2009  annual  Stockholders  meeting  must be received  by the  Secretary  of the
Company no later than December 10, 2008. For a stockholder  proposal that is not
intended to be included in our Proxy Statement for our 2009 Annual Meeting,  the
proposal  must be received  by the  Secretary  of the  Company not earlier  than
January  15,  2009 nor later  than  February  14,  2009 in order to be  properly
presented at the 2009 Annual Meeting.  Furthermore, in accordance with the proxy
rules  and  regulations  of  the  Securities  and  Exchange  Commission,   if  a
stockholder  does not notify us of a proposal by  February  14,  2009,  then our
proxies  would  be  able  to  use  their  discretionary  voting  authority  if a
stockholder's proposal is raised at the meeting.

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

a) Exhibits:

    3.1    Certificate of Amendment of Restated Certificate of Incorporation
           effective July 31, 2008.

    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.


                                       34
<PAGE>


              FRONTIER COMMUNICATIONS CORPORATION 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.






                       FRONTIER COMMUNICATIONS CORPORATION
                       -----------------------------------
                                  (Registrant)


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






Date:  August 5, 2008



                                       35