CITIZENS COMMUNICATIONS COMPANY


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


                     OF THE SECURITIES EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006


<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934

                  For the quarterly period ended March 31, 2006
                                                 --------------

                                       or
                                       --

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

              For the transition period from _________to__________

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

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

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

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

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

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

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

                                Yes  X     No
                                    ----      ----

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

Large accelerated filer [X]  Accelerated filer [ ]   Non-accelerated filer [ ]

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

                                Yes        No  X
                                   ----       ----

The number of shares  outstanding of the  registrant's  Common Stock as of April
28, 2006 was 324,961,334.

<PAGE>
<TABLE>
<CAPTION>
                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

                                      Index


                                                                                                     Page No.
                                                                                                     --------

   Part I.  Financial Information (Unaudited)

    Financial Statements

<S>                                                                                                     <C>
       Consolidated Balance Sheets at March 31, 2006 and December 31, 2005                               2

       Consolidated Statements of Operations for the three months ended March 31, 2006 and 2005          3

       Consolidated Statements of Stockholders' Equity for the year ended
       December 31, 2005 and the three months ended March 31, 2006                                       4

       Consolidated  Statements  of  Comprehensive  Income  for the three
       months ended March 31, 2006 and 2005                                                              4

       Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and 2005          5

       Notes to Consolidated Financial Statements                                                        6

    Management's Discussion and Analysis of Financial Condition and Results of Operations               20

    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, Issuer Purchases of Equity
    Securities                                                                                          31

    Exhibits                                                                                            32

    Signature                                                                                           33
</TABLE>

                                       1

<PAGE>
<TABLE>
<CAPTION>

                          PART I. FINANCIAL INFORMATION

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

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                ($ in thousands)
                                                                                       (Unaudited)
                                                                                     March 31, 2006     December 31, 2005
                                                                                    ------------------  -------------------
ASSETS
------
Current assets:
<S>                                                                                       <C>                  <C>
    Cash and cash equivalents                                                             $   284,437          $   268,917
    Accounts receivable, less allowances of $33,332 and $31,631, respectively                 190,268              213,434
    Other current assets                                                                       43,340               40,200
    Assets of discontinued operations                                                         159,868              162,716
                                                                                    ------------------  -------------------
      Total current assets                                                                    677,913              685,267

Property, plant and equipment, net                                                          3,011,649            3,058,312
Goodwill, net                                                                               1,921,465            1,921,465
Other intangibles, net                                                                        527,138              558,733
Investments                                                                                    15,529               15,999
Other assets                                                                                  190,422              192,959
                                                                                    ------------------  -------------------
           Total assets                                                                   $ 6,344,116          $ 6,432,735
                                                                                    ==================  ===================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
    Long-term debt due within one year                                                    $   227,695          $   227,693
    Accounts payable and other current liabilities                                            321,099              372,968
    Liabilities of discontinued operations                                                     43,065               46,266
                                                                                    ------------------  -------------------
      Total current liabilities                                                               591,859              646,927

Deferred income taxes                                                                         353,220              325,084
Other liabilities                                                                             429,682              423,785
Long-term debt                                                                              3,975,470            3,995,130

Stockholders' equity:
    Common stock, $0.25 par value (600,000,000 authorized shares; 327,860,000
      and 328,168,000 outstanding, respectively, and 343,956,000 issued at
      March 31, 2006 and December 31, 2005)                                                    85,989               85,989
    Additional paid-in capital                                                              1,280,906            1,374,610
    Accumulated deficit                                                                       (34,861)             (85,344)
    Accumulated other comprehensive loss, net of tax                                         (123,234)            (123,242)
    Treasury stock                                                                           (214,915)            (210,204)
                                                                                    ------------------  -------------------
      Total stockholders' equity                                                              993,885            1,041,809
                                                                                    ------------------  -------------------
           Total liabilities and stockholders' equity                                     $ 6,344,116          $ 6,432,735
                                                                                    ==================  ===================
</TABLE>
              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>

                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
                   ($ in thousands, except per-share amounts)
                                   (Unaudited)


                                                                                  2006            2005
                                                                             ---------------  --------------
<S>                                                                               <C>             <C>
Revenue                                                                           $ 506,861       $ 502,334

Operating expenses:
     Cost of services (exclusive of depreciation and amortization)                   40,218          39,722
     Other operating expenses                                                       187,301         184,037
     Depreciation and amortization                                                  122,004         134,094
                                                                             ---------------  --------------
Total operating expenses                                                            349,523         357,853
                                                                             ---------------  --------------

Operating income                                                                    157,338         144,481

Investment and other income (loss), net                                              (1,351)          3,968
Interest expense                                                                     85,393          83,725
                                                                             ---------------  --------------

     Income from continuing operations before income taxes                           70,594          64,724
Income tax expense                                                                   26,607          25,216
                                                                             ---------------  --------------

     Income from continuing operations                                               43,987          39,508

Discontinued operations (see Note 5):
     Income from operations of discontinued CLEC business                            10,458           1,376
     Income from operations of discontinued conferencing business
        (including gain on disposal of $14,061)                                           -          15,550
     Income tax expense                                                               3,962          13,800
                                                                             ---------------  --------------

     Income from discontinued operations                                              6,496           3,126
                                                                             ---------------  --------------

Net income available to common stockholders                                       $  50,483       $  42,634
                                                                             ===============  ==============

Basic income per common share:
     Income from continuing operations                                            $    0.13       $    0.12
     Income from discontinued operations                                               0.02            0.01
                                                                             ---------------  --------------
     Net income available to common stockholders                                  $    0.15       $    0.13
                                                                             ===============  ==============

Diluted income per common share:
     Income from continuing operations                                            $    0.13       $    0.11
     Income from discontinued operations                                               0.02            0.01
                                                                             ---------------  --------------
     Net income available to common stockholders                                  $    0.15       $    0.12
                                                                             ===============  ==============
</TABLE>
              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 FOR THE YEAR ENDED DECEMBER 31, 2005 AND THE THREE MONTHS ENDED MARCH 31, 2006
                                ($ in thousands)
                                   (Unaudited)

                                                                                Accumulated
                                     Common Stock     Additional                   Other       Treasury Stock       Total
                                   ------------------  Paid-In    Accumulated  Comprehensive -------------------  Stockholders'
                                   Shares    Amount    Capital      Deficit        Loss      Shares     Amount      Equity
                                   -------- --------- ----------- ------------ ------------  ------- ----------- -----------

<S>                               <C>       <C>      <C>          <C>           <C>             <C> <C>         <C>
Balance January 1, 2005            339,635   $84,909  $1,664,627   $ (287,719)   $ (99,569)      (2) $       (8) $1,362,240
   Stock plans                       2,096       524      24,039            -            -    2,598      34,689      59,252
   Conversion of EPPICS              2,225       556      24,308            -            -      391       5,115      29,979
   Dividends on common stock of
      $1.00 per share                    -         -    (338,364)           -            -        -           -    (338,364)
   Shares repurchased                    -         -           -            -            -  (18,775)   (250,000)   (250,000)
   Net income                            -         -           -      202,375            -        -           -     202,375
   Other comprehensive loss, net of
     tax and reclassifications
     adjustments                         -         -           -            -      (23,673)       -           -     (23,673)
                                   -------- --------- ----------- ------------ ------------ -------- ----------- -----------
Balance December 31, 2005          343,956    85,989   1,374,610      (85,344)    (123,242) (15,788)   (210,204)  1,041,809
   Stock plans                           -         -      (8,953)           -            -    1,350      17,957       9,004
   Conversion of EPPICS                  -         -      (2,118)           -            -    1,145      15,248      13,130
   Dividends on common stock of
      $0.25  per share                   -         -     (82,633)           -            -        -           -     (82,633)
   Shares repurchased                    -         -           -            -            -   (2,803)    (37,916)    (37,916)
   Net income                            -         -           -       50,483            -        -           -      50,483
   Other comprehensive income, net
     of tax and reclassifications
     adjustments                         -         -           -            -            8        -           -           8
                                   -------- --------- ----------- ------------ ------------ -------- ----------- -----------
 Balance March 31, 2006            343,956   $85,989  $1,280,906   $  (34,861)   $(123,234) (16,096) $ (214,915) $  993,885
                                   ======== ========= =========== ============ ============ ======== =========== ===========


                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
                                ($ in thousands)
                                   (Unaudited)

                                                For the three months ended March 31,
                                               ---------------------------------------
                                                        2006                2005
                                               -------------------  ------------------

Net income                                               $ 50,483            $ 42,634
Other comprehensive income (loss), net
  of tax and reclassifications adjustments*                     8                (807)
                                               -------------------  ------------------
  Total comprehensive income                             $ 50,491            $ 41,827
                                               ===================  ==================
</TABLE>

               * Consists of unrealized holding (losses)/gains of
           marketable securities and for 2005 realized gains taken to
                  income as a result of the sale of securities.

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


                                       4

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

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
                                ($ in thousands)
                                   (Unaudited)

                                                                                2006              2005
                                                                           ---------------   ---------------

Cash flows provided by (used in) operating activities:
<S>                                                                           <C>                  <C>
Net income                                                                    $    50,483         $  42,634
       Deduct: Gain on sale of discontinued operations                                  -            (1,167)
               Income from discontinued operations                                 (6,496)           (1,959)
Adjustments to reconcile income to net cash provided by
   operating activities:
       Depreciation and amortization expense                                      122,004           134,094
       Gain on expiration/settlement of customer advances                               -               (80)
       Stock based compensation expense                                             2,677             2,265
       Investment gain                                                                  -              (493)
       Other non-cash adjustments                                                   4,362               872
       Deferred income taxes                                                       24,163            25,109
       Change in accounts receivable                                               23,166            26,034
       Change in accounts payable and other liabilities                           (52,606)          (31,796)
       Change in other current assets                                              (3,140)            1,083
                                                                           ---------------   ---------------
Net cash provided by continuing operating activities                              164,613           196,596

Cash flows from investing activities:
       Proceeds from sale of discontinued operations                                    -            43,565
       Securities sold                                                                  -             1,112
       Capital expenditures                                                       (43,765)          (49,414)
       Other assets (purchased) distributions received, net                           324            (1,103)
                                                                           ---------------   ---------------
Net cash used by investing activities                                             (43,441)           (5,840)

Cash flows from financing activities:
       Repayment of customer advances for
         construction and contributions in aid of construction                       (473)           (1,237)
       Long-term debt payments                                                       (240)             (259)
       Debt issuance costs                                                              -              (385)
       Issuance of common stock                                                     9,452             5,552
       Common stock repurchased                                                   (37,916)                -
       Dividends paid                                                             (82,633)          (85,081)
                                                                           ---------------   ---------------
Net cash used by financing activities                                            (111,810)          (81,410)

Cash flows of discontinued operations (revised - see Note 5):
       Operating cash flows                                                         8,580             8,458
       Investing cash flows                                                        (2,422)           (2,776)
       Financing cash flows                                                             -               (48)
                                                                           ---------------   ---------------
                                                                                    6,158             5,634

Increase in cash and cash equivalents                                              15,520           114,980
Cash and cash equivalents at January 1,                                           268,917           171,797
                                                                           ---------------   ---------------
Cash and cash equivalents at March 31,                                        $   284,437         $ 286,777
                                                                           ===============   ===============
Cash paid during the period for:
       Interest                                                               $    95,079         $  71,336
       Income taxes (refunds)                                                 $      (133)        $  (1,859)

Non-cash investing and financing activities:
       Change in fair value of interest rate swaps                            $    (8,811)        $ (11,992)
       Conversion of EPPICS                                                   $    13,130         $   1,543
       Debt-for-debt exchange, net                                            $       (70)        $       -

</TABLE>

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

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

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

     (1)  Summary of Significant Accounting Policies:
          -------------------------------------------
          (a)  Basis of Presentation and Use of Estimates:
               -------------------------------------------
               Citizens Communications Company and its subsidiaries are referred
               to as "we," "us," "our," or the  "Company"  in this  report.  Our
               unaudited consolidated financial statements have been prepared in
               accordance with accounting  principles  generally accepted in the
               United States of America (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,
               2005. 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,  which consist of
               normal recurring accruals necessary to present fairly the results
               for the interim periods shown.

               The  preparation of financial  statements in conformity with GAAP
               requires  management  to make  estimates  and  assumptions  which
               affect  the  reported  amounts  of  assets  and  liabilities  and
               disclosure of contingent  assets and  liabilities  at the date of
               the financial  statements and the reported amounts of revenue and
               expenses during the reporting  period.  Actual results may differ
               from  those  estimates.  Estimates  and  judgments  are used when
               accounting  for  allowance for doubtful  accounts,  impairment of
               long-lived   assets,   intangible   assets,    depreciation   and
               amortization, employee benefit plans, income taxes, contingencies
               and pension and  postretirement  benefits  expenses among others.

               Certain  information and footnote  disclosures have been excluded
               and/or condensed  pursuant to Securities and Exchange  Commission
               rules and regulations. The results of the interim periods are not
               necessarily indicative of the results for the full year.

          (b)  Cash Equivalents:
               -----------------
               We  consider  all  highly  liquid  investments  with an  original
               maturity of three months or less to be cash equivalents.

          (c)  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  statement 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.

          (d)  Property, Plant and Equipment:
               ------------------------------
               Property, plant and equipment are stated at original cost or fair
               market value for our acquired properties,  including  capitalized
               interest.  Maintenance  and  repairs  are  charged  to  operating
               expenses as incurred.  The gross book value, of routine property,
               plant  and  equipment  retired  is  charged  against  accumulated
               depreciation.

          (e)  Goodwill and Other Intangibles:
               -------------------------------
               Intangibles  represent the excess of purchase price over the fair
               value of  identifiable  tangible  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.

               Statement  of  Financial  Accounting  Standards  (SFAS) No.  142,
               "Goodwill and Other Intangible  Assets," requires that intangible

                                       6
<PAGE>
               assets  (primarily  customer base) with estimated useful lives be
               amortized  over those lives and be  reviewed  for  impairment  in
               accordance  with 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 with  estimated  useful  lives to
               determine whether any changes to those lives are required.

          (f)  Impairment  of  Long-Lived  Assets  and  Long-Lived  Assets to Be
               -----------------------------------------------------------------
               Disposed of:
               ------------
               We review  long-lived  assets to be held and used and  long-lived
               assets  to be  disposed  of,  including  intangible  assets  with
               estimated useful lives, for impairment whenever events or changes
               in circumstances indicate that the carrying amount of such assets
               may not be recoverable.  Recoverability  of assets to be held and
               used is measured by comparing the carrying amount of the asset to
               the future  undiscounted  net cash flows expected to be generated
               by the asset.  Recoverability of assets held for sale is measured
               by comparing the carrying amount of the assets to their estimated
               fair market value.  If any assets are  considered to be impaired,
               the  impairment  is measured by the amount by which the  carrying
               amount of the assets exceeds the estimated fair value.

          (g)  Derivative Instruments and Hedging Activities:
               ----------------------------------------------
               We account for derivative  instruments and hedging  activities in
               accordance   with  SFAS  No.  133,   "Accounting  for  Derivative
               Instruments  and Hedging  Activities."  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.

               We have interest rate swap  arrangements  related to a portion of
               our fixed rate debt.  These  hedge  strategies  satisfy  the fair
               value  hedging  requirements  of SFAS No. 133,  as amended.  As a
               result,  the fair value of the  hedges is carried on the  balance
               sheet in other liabilities and the related underlying liabilities
               are also adjusted to fair value by the same amount.

          (h)  Stock Plans:
               ------------
               We have various employee  stock-based  compensation plans. Awards
               under these plans are  granted to eligible  officers,  management
               employees,  non-management  employees and non-employee directors.
               Awards  may be  made  in the  form of  incentive  stock  options,
               non-qualified   stock   options,   stock   appreciation   rights,
               restricted stock or other  stock-based  awards. We have no awards
               with market or performance  conditions.  Our general policy is to
               issue shares upon the grant of restricted  shares and exercise of
               options from treasury.

               On January 1, 2006,  we adopted  the  provisions  of SFAS No. 123
               (revised  2004),  "Share-Based  Payment"  ("SFAS  No.  123R") and
               elected to use the modified  prospective  transition  method. The
               modified prospective transition method requires that compensation
               cost be  recognized in the  financial  statements  for all awards
               granted after the date of adoption as well as for existing awards
               for which the  requisite  service has not been rendered as of the
               date of adoption. Estimated compensation cost for awards that are
               outstanding  at the effective  date will be  recognized  over the
               remaining  service period using the compensation  cost calculated
               for pro forma  disclosure  purposes.  Prior periods have not been
               restated.

               On November 10, 2005, the Financial  Accounting  Standards  Board
               (FASB)  issued FASB Staff  Position  No. FAS 123R-3,  "Transition
               Election  Related to  Accounting  for Tax Effects of  Share-Based
               Payment  Awards." We elected to adopt the alternative  transition
               method  provided for  calculating  the tax effects of share-based
               compensation  pursuant to FAS 123R.  The  alternative  transition
               method  includes a simplified  method to establish  the beginning
               balance  of the  additional  paid-in  capital  pool  (APIC  pool)
               related to the tax effects of employee share-based  compensation,
               which  is  available  to  absorb  tax   deficiencies   recognized
               subsequent to the adoption of FAS 123R.

               In  accordance  with  the  adoption  of SFAS  123R,  we  recorded
               stock-based  compensation  expense for the cost of stock options,
               restricted  shares and stock units  issued  under our stock plans
               (together,   "Stock-Based  Awards").   Stock-based   compensation
               expense for the first quarter of 2006 was $2,677,000  ($1,673,000
               after tax, or $0.01 per basic and diluted share of common stock).
               The  compensation  cost recognized is based on awards  ultimately
               expected to vest.  FAS 123R requires  forfeitures to be estimated
               and  revised,  if  necessary,  in  subsequent  periods  if actual
               forfeitures differ from those estimates.

                                       7
<PAGE>
               Prior to the  adoption of SFAS No.  123R,  we applied  Accounting
               Principles    Board   Opinions   (APB)   No.   25   and   related
               interpretations  to account for our stock plans  resulting in the
               use of the intrinsic-value based method to value the stock. Under
               APB 25, we were not  required to recognize  compensation  expense
               for the cost of stock options issued under the Management  Equity
               Incentive Plan (MEIP),  1996 Equity  Incentive Plan (EIP) and the
               Amended and Restated 2000 EIP stock plans.

               In the past,  we provided  pro forma net income and pro forma net
               income per share of common  stock  disclosures  for  employee and
               non-employee director stock option grants based on the fair value
               of the options at the date of grant.  For purposes of  presenting
               pro forma  information,  the fair  value of  options  granted  is
               computed using the Black-Scholes option-pricing model.

               Had we  determined  compensation  cost based on the fair value at
               the grant date for the MEIP,  EIP,  Employee  Stock Purchase Plan
               (ESPP) and Non-Employee  Directors' Deferred Fee Equity Plan, our
               pro forma net income  and net  income  per share of common  stock
               available for common stockholders would have been as follows:
<TABLE>
<CAPTION>
                                                                             Three Months Ended March 31,
                                                                                          2005
                                                                            -----------------------------
                     ($ in thousands)

                     Net income available
<S>                                                                                   <C>
                     for common stockholders              As reported                 $   42,634

                     Add: Stock-based employee
                     compensation expense included
                     in reported net income, net of
                     related tax effects                                                   1,416

                     Deduct: Total stock-based
                     employee compensation expense
                     determined under fair
                     value based method for all
                     awards, net of related tax
                     effects                                                              (2,361)
                                                                                       ----------
                                                          Pro forma                    $  41,689
                                                                                       ==========

                     Net income per share of common
                     stock available for common
                     stockholders                         As reported:
                                                             Basic                     $    0.13
                                                             Diluted                        0.12
                                                          Pro forma:
                                                             Basic                     $    0.12
                                                             Diluted                        0.12
</TABLE>
          (i)  Net  Income  Per  Share of  Common  Stock  Available  for  Common
               -----------------------------------------------------------------
               Stockholders:
               -------------
               Basic net income per share of common stock is computed  using the
               weighted  average  number of shares of common  stock  outstanding
               during the period being reported on. Except when the effect would
               be  antidilutive,  diluted  net income per share of common  stock
               reflects  the  dilutive  effect of the assumed  exercise of stock
               options  using the treasury  stock method at the beginning of the
               period  being  reported on as well as shares of common stock that
               would result from the conversion of convertible  preferred  stock
               (EPPICS). In addition,  the related interest on debt (net of tax)
               is added  back to  income  since it would not be paid if the debt
               was converted to common stock.

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

          Accounting for Conditional Asset Retirement Obligations
          -------------------------------------------------------
          In March 2005,  the FASB issued FIN 47,  "Accounting  for  Conditional
          Asset Retirement  Obligations," an interpretation of FASB No. 143. FIN
          47 clarifies that the term conditional asset retirement  obligation as
          used in FASB No. 143 refers to a legal  obligation to perform an asset
          retirement  activity in which the timing or method of  settlement  are
          conditional  on a  future  event  that  may or may not be  within  the


                                       8
<PAGE>
          control of the entity. FIN 47 also clarifies when an entity would have
          sufficient  information  to  reasonably  estimate the fair value of an
          asset  retirement  obligation.  Although  a  liability  exists for the
          removal of poles and asbestos, sufficient information is not available
          currently to estimate our  liability,  as the range of time over which
          we may settle  these  obligations  is unknown or cannot be  reasonably
          estimated.  The  adoption of FIN 47 during the fourth  quarter of 2005
          had no impact on our financial position, results of operations or cash
          flows.

          Partnerships
          ------------
          In June 2005,  the FASB issued EITF No. 04-5,  "Determining  Whether a
          General  Partner,  or the  General  Partners  as a Group,  Controls  a
          Limited  Partnership or Similar Entity When the Limited  Partners Have
          Certain  Rights," which provides new guidance on how general  partners
          in a limited  partnership  should  determine  whether  they  control a
          limited  partnership.  EITF No. 04-5 is effective  for fiscal  periods
          beginning after December 15, 2005.

          The  Company  has  applied  the   provisions  of  EITF  No.  04-5  and
          consolidated   the  Mohave  Cellular  Limited   Partnership   (Mohave)
          effective January 1, 2006. As permitted,  we elected to apply EITF No.
          04-5 retrospectively from the date of adoption. Revenues, depreciation
          and  operating  income  for  Mohave  were  $3,698,000,   $511,000  and
          $696,000,  respectively, for the three months ended March 31, 2005 and
          $4,443,000,  $516,000  and  $1,229,000,  respectively,  for the  three
          months ended March 31, 2006.

     (3)  Accounts Receivable:
          --------------------
          The  components  of  accounts  receivable,  net at March 31,  2006 and
          December 31, 2005 are as follows:

($ in thousands)                           March 31, 2006    December 31, 2005
                                          ----------------- --------------------

End user                                         $ 194,132            $ 210,470
Other                                               29,468               34,595
Less:  Allowance for doubtful accounts             (33,332)             (31,631)
                                          ----------------- --------------------
   Accounts receivable, net                      $ 190,268            $ 213,434
                                          ================= ====================

          The Company  maintains an allowance  for  estimated bad debts based on
          its estimate of collectibility of its accounts  receivables.  Bad debt
          expense,  which is recorded as a reduction of revenue,  was $4,373,000
          and  $2,922,000  for the three  months  ended March 31, 2006 and 2005,
          respectively.

     (4)  Property, Plant and Equipment, Net:
          -----------------------------------
          Property,  plant and equipment at March 31, 2006 and December 31, 2005
          is as follows:
<TABLE>
<CAPTION>
 ($ in thousands)                            March 31, 2006        December 31, 2005
                                           --------------------   ---------------------

<S>                                                <C>                     <C>
 Property, plant and equipment                     $ 6,468,652             $ 6,433,119
 Less: accumulated depreciation                     (3,457,003)             (3,374,807)
                                           --------------------   ---------------------
      Property, plant and equipment, net           $ 3,011,649             $ 3,058,312
                                           ====================   =====================
</TABLE>
          Depreciation  expense  is  principally  based on the  composite  group
          method.  Depreciation expense was $90,409,000 and $102,499,000 for the
          three months ended March 31, 2006 and 2005, respectively.

     (5)  Discontinued Operations:
          ------------------------
          In accordance with SFAS No. 144, any component of our business that we
          dispose of or classify as held for sale that has  operations  and cash
          flows  clearly  distinguishable  from  operations  and  for  financial
          reporting  purposes,  and that  will be  eliminated  from the  ongoing
          operations,   should  be   classified  as   discontinued   operations.
          Accordingly,  we have classified the results of operations of Electric
          Lightwave,   LLC  (ELI)  and  Conference-Call   USA,  LLC  (CCUSA)  as
          discontinued  operations in our consolidated  statement of operations.
          All prior periods have been  restated.  In addition,  our statement of
          cash flows for the three  months ended March 31, 2005 has been revised
          to separately disclose the operating, investing and financing portions
          of the cash flows attributable to our discontinued  operations,  which
          in prior periods were reported on a combined basis as a single amount.


                                       9
<PAGE>
          ELI
          ---
          In February  2006, we entered into a definitive  agreement to sell all
          of the outstanding  membership interests in ELI, our competitive local
          exchange  carrier  business,   to  Integra  Telecom   Holdings,   Inc.
          (Integra),  for $247,000,000,  including $243,000,000 in cash plus the
          assumption of approximately  $4,000,000 in capital lease  obligations,
          subject to  customary  adjustments  under the terms of the  agreement.
          This transaction is expected to close during the third quarter of 2006
          and is  subject  to  regulatory  and  other  customary  approvals  and
          conditions,  as well  as the  funding  of  Integra's  fully  committed
          financing. We expect to recognize a pre-tax gain on the sale of ELI of
          approximately $115,000,000 - $120,000,000.

          ELI had revenues of approximately $159,200,000 and operating income of
          approximately  $21,300,000  for the year ended  December 31, 2005.  At
          December   31,   2005,   ELI's  net   assets   totaled   approximately
          $116,500,000.  We  ceased  to record  depreciation  expense  effective
          February 1, 2006.

          Summarized financial information for ELI is set forth below:
<TABLE>
<CAPTION>
                                                      March 31,       December 31,
($ in thousands)                                        2006              2005
                                                   ----------------  ----------------
<S>                                                       <C>               <C>
Current assets                                            $ 21,776          $ 24,986
Net property, plant and equipment                          138,092           137,730
                                                   ----------------  ----------------
Total assets held for sale                                $159,868          $162,716
                                                   ================  ================

Current liabilities                                       $ 18,654          $ 21,605
Long-term debt                                               4,187             4,246
Other liabilities                                           20,224            20,415
                                                   ----------------  ----------------
Total liabilities related to assets held for sale         $ 43,065          $ 46,266
                                                   ================  ================

                                               For the three months ended March 31,
                                            --------------------------------------------
($ in thousands)                                   2006                    2005
                                            --------------------   ---------------------

Revenue                                                $ 42,494                $ 37,980
Operating income                                         10,458                   1,376
Income taxes                                              3,962                     457
Net income                                                6,496                     919

          CCUSA
          -----
          In February  2005,  we entered  into a  definitive  agreement  to sell
          CCUSA,  our  conferencing  services  business.  On March 15, 2005,  we
          completed the sale for  $43,565,000  in cash,  subject to  adjustments
          under  the terms of the  agreement.  The  pre-tax  gain on the sale of
          CCUSA  was   $14,061,000.   Our  after-tax   gain  was   approximately
          $1,167,000.  The book income taxes  recorded  upon sale are  primarily
          attributable to a low tax basis in the assets sold.

          We had no  outstanding  debt  specifically  identified  with CCUSA and
          therefore  no  interest   expense  was   allocated   to   discontinued
          operations.  In  addition,  we ceased to record  depreciation  expense
          effective February 16, 2005.

          Summarized financial information for CCUSA is set forth below:

                                              For the three months ended March 31,
                                         --------------------------------------------
($ in thousands)                                2006                    2005
                                         --------------------   ---------------------

Revenue                                          $      -                 $ 4,607
Operating income                                        -                   1,489
Income taxes                                            -                     449
Net income                                              -                   1,040
Gain on disposal of CCUSA, net of tax                   -                   1,167
</TABLE>
                                       10
<PAGE>
     (6)  Other Intangibles:
          ------------------
          Other  intangibles  at March 31,  2006 and  December  31,  2005 are as
          follows:
<TABLE>
<CAPTION>
($ in thousands)                                       March 31, 2006         December 31, 2005
                                                   ------------------------  ---------------------

<S>                              <C>                           <C>                    <C>
Customer base - amortizable over 96 months                     $   994,605            $   994,605
Trade name - non-amortizable                                       122,058                122,058
                                                   ------------------------  ---------------------
   Other intangibles                                             1,116,663              1,116,663
Accumulated amortization                                          (589,525)              (557,930)
                                                   ------------------------  ---------------------
    Total other intangibles, net                               $   527,138            $   558,733
                                                   ========================  =====================
</TABLE>
          Amortization  expense was $31,595,000 for the three months ended March
          31,  2006 and 2005.  Amortization  expense,  based on our  estimate of
          useful lives,  is estimated to be  $126,380,000  per year through 2008
          and  $57,533,000  in 2009,  at which point these assets will have been
          fully amortized.

     (7)  Long-Term Debt:
          ---------------
          The activity in our long-term debt from December 31, 2005 to March 31,
          2006 is as follows:
<TABLE>
<CAPTION>
                                                              Three Months Ended March 31, 2006
                                                   --------------------------------------------------------
                                                                                                            Interest Rate*
                                                                                                                  at
                                     December 31,               Interest                       March 31,       March 31,
($ in thousands)                        2005         Payments   Rate Swap   Reclassification     2006            2006
                                        -----        --------   ---------   ----------------     -----           ----

FIXED RATE

  Rural Utilities Service Loan
<S>                                  <C>             <C>          <C>           <C>              <C>             <C>
   Contacts                          $     22,809    $  (240)     $     -       $      -         $   22,569       6.080%

  Senior Unsecured Debt                 4,120,781          -       (8,811)           (70)         4,111,900       8.189%

  EPPICS                                   33,785          -            -        (13,130)            20,655       5.000%

  Industrial Development Revenue
   Bonds                                   58,140          -            -              -             58,140       5.559%
                                     ------------- ----------   ----------     ----------        ----------

TOTAL LONG TERM DEBT                 $  4,235,515    $  (240)     $(8,811)      $(13,200)        $4,213,264
                                     ------------- ==========   ==========     ==========        ----------

  Less:  Debt Discount                    (12,692)                                                  (10,099)
  Less:  Current Portion                 (227,693)                                                 (227,695)
                                     -------------                                               -----------

                                     $  3,995,130                                                $3,975,470
                                     =============                                               ===========
</TABLE>
* Interest rate includes  amortization of debt issuance costs,  debt premiums or
discounts. The interest rate for Rural Utilities Service Loan Contracts,  Senior
Unsecured  Debt, and Industrial  Development  Revenue Bonds represent a weighted
average of multiple issuances.

          In February 2006,  our Board of Directors  authorized us to repurchase
          up  to  $150,000,000  of  our  outstanding  debt  over  the  following
          twelve-month period. These repurchases may require us to pay premiums,
          which would result in pre-tax  losses to be recorded in investment and
          other income (loss).

          For the  quarter  ended  March  31,  2006,  we  retired  an  aggregate
          principal amount of $13,440,000 of debt,  including  $13,130,000 of 5%
          Company  Obligated   Mandatorily   Redeemable   Convertible  Preferred
          Securities  due 2036 (EPPICS) that were converted to our common stock.
          During the first  quarter of 2006,  we entered into two  debt-for-debt
          exchanges  of our debt  securities.  As a result,  $47,500,000  of our
          7.625% notes due 2008 were exchanged for approximately  $47,430,000 of
          our 9.00%  notes due 2031.  The 9.00%  notes are  callable on the same
          general terms and conditions as the 7.625% notes that were  exchanged.
          No cash  was  exchanged  in these  transactions,  however  a  non-cash
          pre-tax loss of approximately  $2,392,000 was recognized in accordance
          with  EITF No.  96-19,  "Debtor's  Accounting  for a  Modification  or
          Exchange  of Debt  Instruments,"  which is  included  in other  income
          (loss), net.

                                       11
<PAGE>
          As of March 31, 2006, EPPICS  representing a total principal amount of
          $191,100,000  have been converted into 15,383,117 shares of our common
          stock. Approximately $10,150,000 of EPPICS, which are convertible into
          885,041  shares of our common  stock,  were  outstanding  at March 31,
          2006.

          The total  outstanding  principal  amounts of  industrial  development
          revenue  bonds were  $58,140,000  at March 31, 2006 and  December  31,
          2005.  The earliest  maturity  date for these bonds is in August 2015.
          Under the terms of our  agreements to sell our former gas and electric
          operations in Arizona, completed in 2003, we are obligated to call for
          redemption,  at  their  first  available  call  dates,  three  Arizona
          industrial    development   revenue   bond   series   aggregating   to
          approximately $33,440,000. The first call dates for these bonds are in
          2007.  We expect to retire all called  bonds with cash.  In  addition,
          holders of  $11,150,000  principal  amount of  industrial  development
          bonds may tender such bonds to us at par and we have the  simultaneous
          option to call such bonds at par on August 1, 2007.  We expect to call
          the bonds and retire them with cash.

          As of March 31, 2006, we have available lines of credit with financial
          institutions  in the  aggregate  amount  of  $250,000,000.  Associated
          facility  fees vary,  depending on our debt  leverage  ratio,  and are
          0.375% per annum as of March 31,  2006.  The  expiration  date for the
          facility is October 29,  2009.  During the term of the 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. There have never been any borrowings under the facility.

     (8)  Net Income Per Share of Common Stock:
          -------------------------------------
          The reconciliation of the income per share of common stock calculation
          for the three months ended March 31, 2006 and 2005,  respectively,  is
          as follows:
<TABLE>
<CAPTION>
($ in thousands, except per-share amounts)                         For the three months ended March 31,
                                                                  ----------------------------------------
                                                                         2006                 2005
                                                                  -------------------  -------------------
Net income used for basic and diluted earnings
----------------------------------------------
   per share of common stock:
   --------------------------
<S>                                                                         <C>                  <C>
Income from continuing operations                                           $ 43,987             $ 39,508
Income from discontinued operations                                            6,496                3,126
                                                                  -------------------  -------------------
Total basic net income available to common stockholders                     $ 50,483             $ 42,634
                                                                  ===================  ===================
Effect of conversion of preferred securities - EPPICS                            182                  418
                                                                  -------------------  -------------------
Total diluted net income available to common stockholders                   $ 50,665             $ 43,052
                                                                  ===================  ===================
Basic earnings per share of common stock:
-----------------------------------------
Weighted-average common stock outstanding - basic                            327,132              338,450
                                                                  -------------------  -------------------
Income from continuing operations                                           $   0.13             $   0.12
Income from discontinued operations                                             0.02                 0.01
                                                                  -------------------  -------------------
Net income per share available to common stockholders                       $   0.15             $   0.13
                                                                  ===================  ===================
Diluted earnings per share of common stock:
-------------------------------------------
Weighted-average common stock outstanding                                    327,132              338,450
Effect of dilutive shares                                                        960                3,910
Effect of conversion of preferred securities - EPPICS                          1,458                4,510
                                                                  -------------------  -------------------
Weighted-average common stock outstanding - diluted                          329,550              346,870
                                                                  ===================  ===================
Income from continuing operations                                           $   0.13             $   0.11
Income from discontinued operations                                             0.02                 0.01
                                                                  -------------------  -------------------
Net income per share available to common stockholders                       $   0.15             $   0.12
                                                                  ===================  ===================
</TABLE>
          Stock Options
          -------------
          For the three  months  ended  March  31,  2006 and  2005,  options  to
          purchase  1,960,000 and 2,481,000  shares,  respectively,  at exercise
          prices   ranging  from  $12.82  to  $18.46   issuable  under  employee
          compensation  plans  were  excluded  from the  computation  of diluted
          earning  per share of  common  stock 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.

                                       12
<PAGE>
          In  addition,  for the three  months  ended  March 31,  2006 and 2005,
          restricted   stock  awards  of   1,488,000   and   1,489,000   shares,
          respectively,  are excluded from our basic weighted  average shares of
          common stock outstanding and included in our dilutive shares of common
          stock until the shares are no longer  contingent upon the satisfaction
          of all specified conditions.

          EPPICS
          ------
          As a result of our July 2004 dividend announcement with respect to our
          common  stock,  our EPPICS  began to convert into shares of our common
          stock.  As  of  March  31,  2006,  approximately  95%  of  the  EPPICS
          outstanding,  or about  $191,100,000  aggregate  principal  amount  of
          EPPICS,  have  converted  to  15,383,117  shares of our common  stock,
          including 2,260,867 shares issued from treasury.

          At March 31,  2006,  we had  202,991  shares of  potentially  dilutive
          EPPICS,  which were  convertible  into our common stock at a 4.36 to 1
          ratio at an  exercise  price of $11.46  per  share.  If all  remaining
          EPPICS are converted we would issue  approximately  885,041  shares of
          our common stock.  These  securities have been included in the diluted
          income per share of common  stock  calculation  for the  period  ended
          March 31, 2006.

          At March 31, 2005, we had  1,034,318  shares of  potentially  dilutive
          EPPICS,  which were  convertible  into our common stock at a 4.36 to 1
          ratio at an exercise price of $11.46 per share.  These securities have
          been  included  in the  diluted  income  per  share  of  common  stock
          calculation for the period ended March 31, 2005.

          Stock Units
          -----------
          At March 31, 2006 and 2005,  we had 259,320 and 211,759  stock  units,
          respectively,  issuable under our Non-Employee Directors' Deferred Fee
          Equity  Plan  and  Non-Employee   Directors'  Retirement  Plan.  These
          securities  have not been included in the diluted  income per share of
          common stock  calculation  because their  inclusion  would have had an
          antidilutive effect.

     (9)  Stock Plans:
          ------------
          At March 31, 2006, we have four stock-based  compensation plans, which
          are  described  below.  Prior to the  adoption  of SFAS No.  123R,  we
          applied  APB No. 25 and  related  interpretations  to account  for our
          stock plans  resulting in the use of the intrinsic  value to value the
          stock.  Under APB 25, we were not required to  recognize  compensation
          expense for the cost of stock options. In accordance with the adoption
          of SFAS 123R,  we recorded  stock-based  compensation  expense for the
          cost of stock  options,  restricted  shares  and  stock  units  issued
          pursuant to the  Management  Equity  Incentive  Plan (MEIP),  the 1996
          Equity  Incentive  Plan (1996 EIP) and the Amended and  Restated  2000
          Equity  Incentive  Plan (2000  EIP).  Our  general  policy is to issue
          shares  upon the grant of  restricted  shares and  exercise of options
          from  treasury.  At March  31,  2006,  there  were  30,342,864  shares
          authorized for grant under these plans and 3,868,376  shares available
          for grant.

                        Management Equity Incentive Plan
                        --------------------------------
          Under the MEIP,  awards of our common  stock were  granted to eligible
          officers,  management  employees and  non-management  employees in the
          form of incentive stock options,  non-qualified  stock options,  stock
          appreciation  rights  (SARs),  restricted  stock or other  stock-based
          awards.   The  Compensation   Committee  of  the  Board  of  Directors
          administered the MEIP.

          Since the expiration date of the MEIP plan on June 21, 2000, no awards
          can be granted  under the MEIP.  The exercise  price of stock  options
          issued  was  equal to or  greater  than the fair  market  value of the
          underlying  common stock on the date of grant.  Stock  options are not
          ordinarily  exercisable on the date of grant but vest over a period of
          time  (generally  4 years).  Under  the terms of the MEIP,  subsequent
          stock  dividends  and stock splits have the effect of  increasing  the
          option shares outstanding, which correspondingly decreases the average
          exercise price of outstanding options.

                             Equity Incentive Plans
                             ----------------------
          In May 1996, our  stockholders  approved the 1996 EIP and in May 2001,
          our stockholders approved the 2000 EIP. Under the EIP plans, awards of
          our  common  stock may be  granted to  eligible  officers,  management
          employees and non-management  employees in the form of incentive stock
          options,  non-qualified stock options, SARs, restricted stock or other
          stock-based  awards.  As discussed under the  Non-Employee  Directors'
          Compensation  Plans below directors  receive an award of stock options
          under the 2000 EIP upon  commencement of service.  SARs may be granted
          under  the  1996  EIP.  The  Compensation  Committee  of the  Board of
          Directors administers the EIP plans.

                                       13
<PAGE>
          At March 31, 2006, there were 27,389,711  shares  authorized for grant
          under  these  plans and  3,336,564  shares  available  for  grant,  as
          adjusted to reflect  stock  dividends.  No awards will be granted more
          than 10 years  after the  effective  dates  (May 23,  1996 and May 18,
          2000) of the EIP plans.  The exercise  price of stock options and SARs
          generally  shall be equal to or greater  than the fair market value of
          the  underlying  common stock on the date of grant.  Stock options are
          not ordinarily exercisable on the date of grant but vest over a period
          of time (generally 4 years).

          Under the terms of the EIP plans, subsequent stock dividends and stock
          splits have the effect of increasing  the option  shares  outstanding,
          which   correspondingly   decrease  the  average   exercise  price  of
          outstanding options.

          In connection with the payment of the special,  non-recurring dividend
          of $2.00 per share of common stock on September 2, 2004,  the exercise
          price and number of all  outstanding  options was  adjusted  such that
          each option had the same value to the holder  after the dividend as it
          had before the dividend. In accordance with FASB Interpretation No. 44
          (FIN  44),  "Accounting  for  Certain  Transactions   Involving  Stock
          Compensation"  and EITF 00-23,  "Issues  Related to the Accounting for
          Stock  Compensation  under  APB  No.  25  and  FIN  44,"  there  is no
          accounting  consequence for changes made to the exercise price and the
          number of shares of a fixed stock  option or award as a direct  result
          of the special, non-recurring dividend.

          The following summary presents information regarding outstanding stock
          options as of March 31, 2006 and changes  during the three months then
          ended with regard to options under the MEIP and EIP plans:
<TABLE>
<CAPTION>
                                                                           Weighted       Weighted        Aggregate
                                                            Shares         Average         Average        Intrinsic
                                                          Subject to     Option Price     Remaining        Value at
                                                            Option        Per Share     Life in Years   March 31, 2006
           --------------------------------------------- -------------- --------------- -------------- -----------------
<S>                                                        <C>               <C>
           Balance at January 1, 2006                       7,985,000         $11.52
               Options granted                                      -              -
               Options exercised                             (968,000)          9.74                       $ 3,146,000
               Options canceled, forfeited or lapsed          (44,000)          9.90
           --------------------------------------------- --------------
           Balance at March 31, 2006                        6,973,000          11.78         5.21          $16,683,000
           ============================================= ==============

           Exercisable at March 31, 2006                    5,587,000         $12.29         4.79          $11,783,000
           ============================================= ==============
</TABLE>
          There were no option  grants  made  during the first  quarter of 2006.
          Cash received upon the exercise of options during the first quarter of
          2006 totaled approximately  $9,452,000.  Total remaining  unrecognized
          compensation  cost associated with unvested stock options at March 31,
          2006 was  $2,263,000  and the weighted  average period over which this
          cost is expected to be recognized is approximately one year.

          The total intrinsic value of stock options  exercised during the first
          quarter of 2005 was  $1,968,000.  The total  intrinsic  value of stock
          options  outstanding and exercisable at March 31, 2005 was $27,211,000
          and $17,914,000,  respectively.  The weighted average  grant-date fair
          value of options  granted during the three months ended March 31, 2005
          was  $3.01.  Options  granted  during the first  three  months of 2005
          totaled 30,000.  Cash received upon the exercise of options during the
          first quarter of 2005 totaled approximately $5,552,000.

          For purposes of determining  compensation  expense,  the fair value of
          each  option  grant  is  estimated  on the  date of  grant  using  the
          Black-Scholes  option-pricing  model which requires the use of various
          assumptions including:  expected life of the option; expected dividend
          rate; expected  volatility;  and risk-free interest rate. The expected
          life (estimated  period of time  outstanding) of stock options granted
          was estimated using the historical exercise behavior of employees. The
          risk free interest rate is based on the U.S.  Treasury  yield curve in
          effect  at the  time of the  grant.  Expected  volatility  is based on
          historical  volatility  for a  period  equal  to  the  stock  option's
          expected life, calculated on a monthly basis.

                                       14
<PAGE>
          The following table presents the weighted average assumptions used for
          grants in fiscal 2005:

                                                       2005
                      ---------------------------- --------------
                      Dividend yield                    7.72%
                      Expected volatility                 46%
                      Risk-free interest rate           4.16%
                      Expected life                   6 years
                      ---------------------------- --------------

          The  following  summary  presents   information   regarding   unvested
          restricted  stock as of March 31,  2006 and  changes  during the three
          months then ended with regard to  restricted  stock under the MEIP and
          EIP plans:
<TABLE>
<CAPTION>
                                                                   Weighted
                                                                    Average          Aggregate
                                                  Number of       Grant Date       Fair Value at
                                                   Shares         Fair Value       March 31, 2006
             ---------------------------------- -------------- ------------------ ----------------
<S>                                             <C>                  <C>
             Unvested at January 1, 2006          1,456,000            $12.47
                 Granted                            680,000             12.83      $ 9,027,000
                 Vested                            (522,000)            12.37      $ 6,923,000
                 Forfeited                         (126,000)            12.27
             ---------------------------------- --------------
             Unvested at March 31, 2006           1,488,000            $12.68      $19,752,000
             ================================== ==============
</TABLE>
          For purposes of determining  compensation  expense,  the fair value of
          each  restricted  stock grant is estimated based on the average of the
          high and low market  price of a share of our common  stock on the date
          of grant.  Total remaining  unrecognized  compensation cost associated
          with  unvested   restricted   stock  awards  at  March  31,  2006  was
          $17,435,000  and the weighted  average  period over which this cost is
          expected to be recognized is approximately three years.

          The total fair  value of shares  granted  and vested  during the three
          months  ended  March  31,  2005  was   approximately   $4,050,000  and
          $5,794,000,  respectively. The total fair value of unvested restricted
          stock  at  March  31,  2005  was  $19,267,000.  The  weighted  average
          grant-date  fair value of restricted  shares  granted during the three
          months  ended  March 31, 2005 was $13.10.  Shares  granted  during the
          first three months of 2005 totaled 313,000.

                   Non-Employee Directors' Compensation Plans
                   -------------------------------------------
          Upon  commencement  of his or her  service on the Board of  Directors,
          each  non-employee  director receives a grant of 10,000 stock options,
          which is awarded under our 2000 EIP. The price of these options, which
          are exercisable six months after the grant date, is set at the average
          of the high and low market prices of our common stock on the effective
          date of the director's initial election to the Board of Directors.

          Annually,  each  non-employee  director also receives a grant of 3,500
          stock units under our Non-Employee Directors' Deferred Fee Equity Plan
          (the  "Deferred  Fee Plan"),  which  commenced  in 1997 and  continues
          through  May 22,  2007.  Prior to April 20,  2004,  each  non-employee
          director received an award of 5,000 stock options.  The exercise price
          of the options  granted under the Deferred Fee Plan was set at 100% of
          the average of the high and low market  prices of our common  stock on
          the third, fourth,  fifth, and sixth trading days of the year in which
          the options were granted.  The options became  exercisable  six months
          after the grant date and remain  exercisable  for ten years  after the
          grant date.  In  addition,  on September  1, 1996,  each  non-employee
          director  received  a grant,  under the  Formula  Plan,  of options to
          purchase 2,500 shares of common stock.  The options  granted under the
          Deferred Fee Plan became  exercisable  six months after the grant date
          and remain exercisable for ten years after the grant date.

          Effective April 2004, the Deferred Fee Plan was amended to replace the
          annual  grant of stock  options  with an annual  grant of 3,500  stock
          units.  The stock units are awarded on the first  business day of each
          calendar year. Each  non-employee  director must elect, by December 31
          of the  preceding  year,  whether  the stock units  awarded  under the
          Deferred  Fee  Plan  will  be  redeemed  in  cash or  stock  upon  the
          director's termination of service.

                                       15
<PAGE>
          In addition,  each non-employee  director is also entitled to annually
          receive a retainer,  meeting  fees,  and,  when  applicable,  fees for
          serving as a committee  chair or as Lead  Director,  which are awarded
          under the Non-Employee  Directors' Deferred Fee Equity Plan. For 2006,
          each  non-employee  director had to elect,  by December  31, 2005,  to
          receive  $40,000  cash or 5,760  stock  units as an  annual  retainer.
          Directors  making a stock unit election must also elect to convert the
          units to either common stock  (convertible  on a one-to-one  basis) or
          cash upon  retirement  or death.  Prior to June 30,  2003,  a director
          could elect to receive  20,000 stock options as an annual  retainer in
          lieu of cash or stock units.  The exercise  price of the stock options
          was set at the average of the high and low market prices of our common
          stock on the date of grant.  The options were  exercisable  six months
          after the date of grant and had a 10-year term.

          The number of shares of common stock authorized for issuance under the
          Deferred Fee Plan is one percent (1%) of the total outstanding  shares
          of our common stock as of June 30, 2003, or 2,953,153 shares,  subject
          to  adjustment  in the event of  changes  in our  corporate  structure
          affecting  capital stock. At March 31, 2006, there were 531,812 shares
          available  for grant.  There were 11  directors  participating  in the
          Deferred  Fee Plan  during  the first  quarter  of 2006.  In the first
          quarter of 2006, the total plan units earned was 52,690.  At March 31,
          2006,  454,032 options were exercisable at a weighted average exercise
          price of $9.85.

          In 2006,  each  non-employee  director will receive fees of $2,000 for
          each Board of Directors and  committee  meeting  attended  ($1,000 for
          telephonic   meetings).   The  chairs  of  the  Audit,   Compensation,
          Nominating and Corporate  Governance and  Retirement  Plan  Committees
          were paid an additional  annual stipend of $25,000,  $15,000,  $7,500,
          and $5,000,  respectively.  In addition,  the Lead Director, who heads
          the ad hoc committee of non-employee directors, received an additional
          annual  stipend of $15,000.  A director must elect,  by December 31 of
          the preceding year, to receive  meeting and other fees in cash,  stock
          units,  or a combination  of both.  All fees paid to the  non-employee
          directors in 2006 are paid  quarterly.  If the  director  elects stock
          units,  the  number of units  credited  to the  director's  account is
          determined as follows: the total cash value of the fees payable to the
          director  are divided by 85% of the average of the high and low market
          prices of our common  stock on the first  trading  day of the year the
          election is in effect.  Units are credited to the  director's  account
          quarterly.

          We account for the Deferred Fee Plan in accordance with SFAS No. 123R.
          If cash is elected, it is considered a liability-based award. If stock
          units  are  elected,   they  are   considered   equity-based   awards.
          Compensation  expense for stock units is based on the market  value of
          our common  stock at the date of grant.  For awards  granted  prior to
          1999, a director could elect to be paid in stock  options.  Generally,
          compensation cost was not recorded because the options were granted at
          the fair market  value of our common stock on the grant date under APB
          No. 25 and related interpretations.

          We had also  maintained  a  Non-Employee  Directors'  Retirement  Plan
          providing   for  the  payment  of  specified   sums  annually  to  our
          non-employee directors, or their designated beneficiaries, starting at
          the director's  retirement,  death or termination of directorship.  In
          1999, we terminated this Plan. The vested benefit of each non-employee
          director,  as of May 31, 1999, was credited to the director's  account
          in the form of stock  units.  Such  benefit  will be  payable  to each
          director upon retirement,  death or termination of directorship.  Each
          participant  had until July 15, 1999 to elect whether the value of the
          stock units awarded would be payable in our common stock  (convertible
          on a  one-for-one  basis)  or in  cash.  As of  March  31,  2006,  the
          liability  for such payments was  approximately  $644,000 all of which
          will be payable in stock (based on the July 15, 1999 stock price).

     (10) Segment Information:
          --------------------
          As of  January 1, 2006,  we  operate  in a single  segment,  Frontier.
          Frontier  provides  both  regulated  and  unregulated   communications
          services to  residential,  business  and  wholesale  customers  and is
          typically the incumbent provider in its service areas.

          As  permitted  by SFAS  No.  131,  we have  utilized  the  aggregation
          criteria  in  combining  our  markets  because  all of  the  Company's
          Frontier  properties  share  similar  economic  characteristics:  they
          provide the same  products  and  services to similar  customers  using
          comparable  technologies in all the states 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.

                                       16
<PAGE>
     (11) Derivative Instruments and Hedging Activities:
          ----------------------------------------------
          Interest rate swap  agreements are used to hedge a portion of our debt
          that is subject to fixed interest rates.  Under our interest rate swap
          agreements,  we agree to pay an amount  equal to a specified  variable
          rate of interest times a notional  principal amount, and to receive in
          return an amount equal to a specified fixed rate of interest times the
          same notional  principal amount. The notional amounts of the contracts
          are not  exchanged.  No  other  cash  payments  are  made  unless  the
          agreement is  terminated  prior to maturity,  in which case the amount
          paid or received in settlement is established by agreement at the time
          of termination  and  represents the market value,  at the then current
          rate of interest,  of the remaining  obligations to exchange  payments
          under the terms of the contracts.

          The interest  rate swap  contracts  are reflected at fair value in our
          consolidated  balance sheet and the related portion of fixed-rate debt
          being  hedged is  reflected  at an amount equal to the sum of its book
          value and an amount  representing the change in fair value of the debt
          obligations  attributable to the interest rate risk being hedged.  The
          notional  amounts of  fixed-rate  indebtedness  hedged as of March 31,
          2006  and  December  31,  2005  was  $550,000,000  and   $500,000,000,
          respectively.  Such  contracts  require  us to pay  variable  rates of
          interest  (estimated  average pay rates of  approximately  8.76% as of
          March 31, 2006 and  approximately  8.60% as of December  31, 2005) and
          receive fixed rates of interest  (average receive rates of 8.26% as of
          March 31, 2006 and 8.46% as of December 31, 2005,  respectively).  The
          fair value of these  derivatives is reflected in other  liabilities as
          of March 31, 2006 and December 31, 2005, in the amount of  $17,538,000
          and  $8,727,000,  respectively.  The related  underlying debt has been
          decreased by a like  amount.  The amounts paid during the three months
          ended  March  31,  2006 as a result  of these  contracts  amounted  to
          $534,000 and are included as interest expense.

          During  September  2005, we entered into a series of separate  forward
          rate  agreements  with  our  swap   counter-parties   that  fixed  the
          underlying  variable rate component of some of our swaps at the market
          rate as of the  date of  execution  for  certain  future  rate-setting
          dates.  At March 31, 2006 and December 31,  2005,  the rates  obtained
          under these forward rate agreements were below market rates.  The fair
          value of these  derivatives is reflected in other current assets as of
          March 31, 2006 and December  31,  2005,  in the amount of $822,000 and
          $1,129,000,  respectively. A gain for the changes in the fair value of
          these forward rate  agreements of $384,000 is included in other income
          (loss), net for the three months ended March 31, 2006.

          We do not  anticipate  any  nonperformance  by  counterparties  to our
          derivative  contracts  as all  counterparties  have  investment  grade
          credit ratings.

     (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 March 31,
                                                        -----------------------------------------
($ in thousands)                                              2006                   2005
                                                        ------------------    -------------------
<S>                                                               <C>                    <C>
Investment income                                                $  3,827                $ 1,987
Loss on exchange of debt                                           (2,392)                     -
Investment gain                                                         -                    493
Other, net                                                         (2,786)                 1,488
                                                        ------------------    -------------------
     Total investment and other income (loss), net               $ (1,351)               $ 3,968
                                                        ==================    ===================
</TABLE>
     (13) Company  Obligated  Mandatorily   Redeemable   Convertible  Preferred
          ---------------------------------------------------------------------
          Securities:
          ------------
          In 1996, our consolidated wholly owned subsidiary,  Citizens Utilities
          Trust  (the  Trust),  issued,  in  an  underwritten  public  offering,
          4,025,000 shares of EPPICS, representing preferred undivided interests
          in the assets of the Trust,  with a liquidation  preference of $50 per
          security  (for a total  liquidation  amount  of  $201,250,000).  These
          securities  have an adjusted  conversion  price of $11.46 per share of
          our common  stock.  The  conversion  price was reduced  from $13.30 to
          $11.46  during the third  quarter of 2004 as a result of the $2.00 per
          share of common stock special,  non-recurring  dividend.  The proceeds
          from the issuance of the Trust Convertible  Preferred Securities and a
          Company  capital  contribution  were  used  to  purchase  $207,475,000
          aggregate  liquidation amount of 5% Partnership  Convertible Preferred
          Securities  due 2036 from another  wholly owned  subsidiary,  Citizens
          Utilities  Capital  L.P.  (the  Partnership).  The  proceeds  from the
          issuance of the  Partnership  Convertible  Preferred  Securities and a

                                       17
<PAGE>
          Company   capital   contribution   were  used  to  purchase   from  us
          $211,756,000 aggregate principal amount of 5% Convertible Subordinated
          Debentures due 2036. The sole assets of the Trust are the  Partnership
          Convertible  Preferred  Securities,  and our Convertible  Subordinated
          Debentures are  substantially  all the assets of the Partnership.  Our
          obligations  under the  agreements  related to the  issuances  of such
          securities,  taken  together,  constitute  a  full  and  unconditional
          guarantee  by us of the  Trust's  obligations  relating  to the  Trust
          Convertible  Preferred  Securities and the  Partnership's  obligations
          relating to the Partnership Convertible Preferred Securities.

          In accordance  with the terms of the issuances,  we paid the annual 5%
          interest in quarterly  installments  on the  Convertible  Subordinated
          Debentures in the first quarter of 2006 and the four quarters of 2005.
          Only cash was paid (net of investment  returns) to the  Partnership in
          payment of the interest on the  Convertible  Subordinated  Debentures.
          The cash was then distributed by the Partnership to the Trust and then
          by the Trust to the holders of the EPPICS.

          As of March 31, 2006, EPPICS  representing a total principal amount of
          $191,100,000  have been converted into 15,383,117 shares of our common
          stock. A total of $10,150,000 of EPPICS is outstanding as of March 31,
          2006 and if all outstanding  EPPICS were converted,  885,041 shares of
          our common stock would be issued upon such conversion.

     (14) Retirement Plans:
          -----------------
          The following  table provides the  components of net periodic  benefit
          cost:
<TABLE>
<CAPTION>
                                                                            For three months ended March 31,
                                                         --------------------------------------------------------------
                                                            2006           2005            2006             2005
                                                         -------------  -------------   --------------  ---------------
                                                              Pension Benefits           Other Postretirement Benefits
                                                         ----------------------------   -------------------------------
($ in thousands)
Components of net periodic benefit cost
---------------------------------------
<S>                                                           <C>            <C>                <C>              <C>
Service cost                                                 $  1,759       $  1,495          $   174          $   282
Interest cost on projected benefit obligation                  11,504         11,764            2,211            3,177
Return on plan assets                                         (15,126)       (14,390)            (245)            (565)
Amortization of prior service cost and unrecognized
       net obligation                                             (61)           (61)          (1,026)             (51)
Amortization of unrecognized loss                               3,085          2,527            1,513            1,311
                                                         -------------  -------------   --------------  ---------------
Net periodic benefit cost                                    $  1,161       $  1,335          $ 2,627          $ 4,154
                                                         =============  =============   ==============  ===============
</TABLE>
          We expect that our pension and other  postretirement  benefit expenses
          for 2006 will be $15,000,000 - $18,000,000  (down from  $19,000,000 in
          2005) and no  contribution  will be  required  to be made by us to the
          pension plan in 2006.

     (15) Commitments and Contingencies:
          ------------------------------
          We anticipate  capital  expenditures of  approximately  $270,000,000 -
          $280,000,000  for 2006.  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.

          The City of Bangor, Maine, filed suit against us on November 22, 2002,
          in the U.S.  District  Court for the District of Maine (City of Bangor
          v. Citizens Communications  Company, Civ. Action No. 02-183-B-S).  The
          City has alleged,  among other things, that we are responsible for the
          costs of  cleaning  up  environmental  contamination  alleged  to have
          resulted  from the  operation  of a  manufactured  gas plant  owned by
          Bangor Gas  Company  from 1852 - 1948,  and by us from  1948-1963.  In
          acquiring  the  operation  in 1948 we acquired the stock of Bangor Gas
          Company and merged it into the Company. The City alleged the existence
          of extensive  contamination  of the Penobscot  River and asserted that
          money  damages and other  relief at issue in the lawsuit  could exceed
          $50,000,000. The City also requested that punitive damages be assessed
          against  us. We filed an answer  denying  liability  to the City,  and
          asserted a number of counterclaims  against the City. In addition,  we
          identified a number of other potentially  responsible parties that may
          be liable  for the  damages  alleged  by the City and  joined  them as
          parties to the lawsuit.  These  additional  parties include  Honeywell
          Corporation,  Guilford  Transportation  (operating  as  Maine  Central
          Railroad),  UGI Utilities,  Inc.,  and  Centerpoint  Energy  Resources
          Corporation.  The Court  dismissed  all but two of the  City's  claims
          including  its  claims  for  joint  and  several  liability  under the
          Comprehensive Environmental Response,  Compensation, and Liability Act
          (CERCLA),  and the claim  against us for punitive  damages.  Trial was
          conducted  in  September  and October  2005 for the first  (liability)
          phase  of the  case.  A  decision  from  the  court  has not yet  been
          rendered. We intend to continue to defend ourselves vigorously against
          the City's lawsuit.

                                       18
<PAGE>
          We have  demanded that various of our  insurance  carriers  defend and
          indemnify us with respect to the City's  lawsuit,  and on December 26,
          2002, we filed a declaratory  judgment  action against those insurance
          carriers in the Superior  Court of Penobscot  County,  Maine,  for the
          purpose of  establishing  their  obligations to us with respect to the
          City's lawsuit.  We intend to vigorously pursue this lawsuit to obtain
          from our insurance carriers  indemnification  for any damages that may
          be assessed against us in the City's lawsuit as well as to recover the
          costs of our defense of that lawsuit.

          On  June  7,  2004,  representatives  of  Robert  A.  Katz  Technology
          Licensing, LP, contacted us regarding possible infringement of several
          patents  held  by  that  firm.  The  patents  cover  a wide  range  of
          operations  in which  telephony is supported by  computers,  including
          obtaining  information  from  databases  via  telephone,   interactive
          telephone   transactions,   and   customer   and   technical   support
          applications.  We were cooperating with the patent holder to determine
          if we are currently  using any of the processes  that are protected by
          its  patents but we have not had any  communication  with them on this
          issue since mid-2004. If we determine that we are utilizing the patent
          holder's intellectual  property, we expect to commence negotiations on
          a license agreement.

          On June 24, 2004, one of our subsidiaries,  Frontier  Subsidiary Telco
          Inc., received a "Notice of Indemnity Claim" from Citibank, N.A., that
          is related to a complaint  pending against  Citibank and others in the
          U.S. Bankruptcy Court for the Southern District of New York as part of
          the Global Crossing  bankruptcy  proceeding.  Citibank bases its claim
          for indemnity on the provisions of a credit agreement that was entered
          into in October 2000 between Citibank and our subsidiary. We purchased
          Frontier  Subsidiary  Telco,  Inc.,  in  June  2001  as  part  of  our
          acquisition of the Frontier telephone companies. The complaint against
          Citibank, for which it seeks indemnification,  alleges that the seller
          improperly   used  a  portion  of  the  proceeds   from  the  Frontier
          transaction  to  pay  off  the  Citibank  credit  agreement,   thereby
          defrauding  certain debt holders of Global Crossing North America Inc.
          Although  the  credit  agreement  was paid off at the  closing  of the
          Frontier transaction,  Citibank claims the indemnification  obligation
          survives.  Damages sought against Citibank and its co-defendants could
          exceed  $1,000,000,000.  In August 2004 we notified Citibank by letter
          that we believe its claims for indemnification are invalid and are not
          supported   by   applicable   law.   We  have   received   no  further
          communications from Citibank since our August 2004 letter.

          We are party to 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.

          The Company  sold all of its 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  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 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
          investment  grade  credit  ratings,  and  that  all  VJO  members  are
          regulated utility providers with regulated cost recovery.  Regardless,
          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, 2007 and  remained in


                                       19
<PAGE>
          default  for the  duration  of the  contract  (another  10 years),  we
          estimate that our  undiscounted  purchase  obligation for 2007 through
          2015 would be  approximately  $1,264,000,000.  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.

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  Litigation  Reform Act of 1995.  Words such as
"believes,"  "anticipates,"  "expects" 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:

          *    Changes  in the number of our  revenue  generating  units,  which
               consists of access lines plus high-speed internet subscribers;

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

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

          *    Our ability to effectively manage our operations,  costs, capital
               spending, regulatory compliance and 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;

          *    Our ability to comply with Section 404 of the  Sarbanes-Oxley Act
               of 2002, which requires management to assess its internal control
               systems and  disclose  whether the internal  control  systems are
               effective,  and the identification of any material  weaknesses in
               our internal control over financial reporting;

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

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

          *    Our  ability  to  comply  with   federal  and  state   regulation
               (including state rate of return  limitations on our earnings) and
               our ability to successfully renegotiate state regulatory plans as
               they expire or come up for renewal from time to time;

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

          *    Adverse  changes 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 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;

                                       20
<PAGE>

          *    The effects of  bankruptcies in the  telecommunications  industry
               which could result in more price  competition  and  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;

          *    The  effect of changes in the  communications  market,  including
               significantly increased price and service competition;

          *    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 expiring union contracts
               covering  approximately  1,300  employees  that are  scheduled to
               expire during the remainder of 2006;

          *    Our ability to pay a $1.00 per common share dividend annually 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 any future  liabilities  or  compliance  costs in
               connection with worker health and safety matters;

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

          *    The  effects  of  more  general  factors,  including  changes  in
               economic, business and industry conditions.

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 evaluating any statement in this 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 communications  company providing services to rural areas and small and
medium-sized  towns and cities as an incumbent local exchange carrier,  or ILEC.
We offer our ILEC  services  under the  "Frontier"  name.  In  February  2006 we
entered  into a  definitive  agreement to sell our  competitive  local  exchange
carrier (CLEC),  Electric  Lightwave,  LLC (ELI). We are accounting for ELI as a
discontinued operation in our consolidated statements of operations. The sale is
expected to close in the third quarter of 2006.

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 competition will
continue to intensify in 2006 across all products and in all of our markets. Our
Frontier  business  experienced  erosion  in access  lines and  switched  access
minutes in 2006 as a result of  competition.  Competition  in our markets  could
result in reduced revenues in 2006.

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

                                       21
<PAGE>

Revenues from data and internet services such as high-speed internet continue to
increase as a percentage  of our total  revenues  and revenues  from high margin
services such as local line and access charges and subsidies are decreasing as a
percentage  of our  revenues.  These  factors,  along  with  the  potential  for
increasing operating costs, could cause our profitability and our cash generated
by operations to decrease.

(a)  Liquidity and Capital Resources
     -------------------------------
For the three  months ended March 31,  2006,  we used cash flow from  continuing
operations  and  cash  and  cash  equivalents  to  fund  capital   expenditures,
dividends, interest payments, debt repayments and stock repurchases. As of March
31, 2006, we had cash and cash equivalents aggregating $284.4 million.

For the three months ended March 31, 2006, our capital  expenditures  were $43.8
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  $270.0 -
280.0 million for 2006.

Increasing  competition,  offering new services  such as wireless and VOIP,  and
improving the  capabilities or reducing the  maintenance  costs of our plant may
cause our capital  expenditures  to increase in the future.

As of  March  31,  2006,  we  had  available  lines  of  credit  with  financial
institutions in the aggregate amount of $250.0 million. Associated facility fees
vary, depending on our debt leverage ratio, and are 0.375% per annum as of March
31, 2006. The expiration  date for the facility is October 29, 2009.  During the
term of the  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 have never borrowed any money under the facility.

Our  ongoing  annual  dividends  of $1.00 per share of  common  stock  under our
current policy utilize a significant portion of our cash generated by operations
and therefore  could limit our operating  and  financial  flexibility.  While we
believe that the amount of our dividends will allow for adequate amounts of cash
flow for other  purposes,  any reduction in cash generated by operations and any
increases in capital  expenditures,  interest expense or cash taxes would reduce
the amount of cash  generated in excess of  dividends.  Losses of access  lines,
increases  in  competition,  lower  subsidy  and access  revenues  and the other
factors  described above are expected to reduce our cash generated by operations
and may require us to  increase  capital  expenditures.  The  downgrades  in our
credit ratings in July 2004 to below investment grade may make it more difficult
and  expensive to  refinance  our  maturing  debt.  We have in recent years paid
relatively low amounts of cash taxes. We expect that over the next several years
our cash taxes will increase substantially.

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 2007, pay taxes, pay dividends
to our  stockholders  in  accordance  with our  dividend  policy and support our
short-term and long-term  operating  strategies.  We have  approximately  $227.7
million,  $37.8 million and $653.4  million of debt  maturing in 2006,  2007 and
2008, respectively.

Share Repurchase Programs
-------------------------
On May 25, 2005, our Board of Directors authorized us to repurchase up to $250.0
million of our common stock. This share repurchase program commenced on June 13,
2005.  As of December 31,  2005,  we completed  the  repurchase  program and had
repurchased  a total of  18,775,156  shares of our common  stock at an aggregate
cost of $250.0 million.

In February  2006,  our Board of Directors  authorized  us to  repurchase  up to
$300.0  million of our common stock in public or private  transactions  over the
following  twelve-month period. This share repurchase program commenced on March
6, 2006. As of March 31, 2006, we had committed to repurchase  3,402,900  shares
of our common stock at an aggregate cost of approximately $45.9 million. Of that
amount,  2,802,900  shares  had  settled  by March 31,  2006,  at a cash cost of
approximately  $37.9 million. We may in the future purchase additional shares of
our common stock.

                                       22
<PAGE>

Debt Reduction and Debt Exchanges
---------------------------------
For the quarter ended March 31, 2006, we retired an aggregate  principal  amount
of $13.4  million of debt,  including  $13.1  million  of 5%  Company  Obligated
Mandatorily  Redeemable  Convertible Preferred Securities due 2006 (EPPICS) that
were  converted  into our common  stock.  During the first  quarter of 2006,  we
entered into two  debt-for-debt  exchanges of our debt securities.  As a result,
$47.5  million of our 7.625%  notes due 2008 were  exchanged  for  approximately
$47.4  million of our 9.00% notes due 2031.  The 9.00% notes are callable on the
same general  terms and  conditions as the 7.625% notes  exchanged.  No cash was
exchanged   in  these   transactions,   however  a  non-cash   pre-tax  loss  of
approximately  $2.4 million was  recognized in  accordance  with EITF No. 96-19,
"Debtor's  Accounting for a Modification or Exchange of Debt Instruments," which
is included in other income (loss), net.

In February  2006,  our Board of Directors  authorized  us to  repurchase  up to
$150.0 million of our outstanding debt over the following  twelve-month  period.
These repurchases may require us to pay premiums,  which would result in pre-tax
losses to be recorded in investment and other income (loss).

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

Interest Rate Management
------------------------
In order to manage our interest  expense,  we have entered  into  interest  swap
agreements.  Under the terms of these agreements, we make semi-annual,  floating
rate interest  payments based on six month LIBOR and receive a fixed rate on the
notional  amount.  The underlying  variable rate on these swaps is set either in
advance, in arrears or based on each period's daily average six-month LIBOR.

The notional amounts of fixed-rate  indebtedness hedged as of March 31, 2006 and
December 31, 2005 were $550.0  million and $500.0  million,  respectively.  Such
contracts  require us to pay variable rates of interest  (estimated  average pay
rates of approximately  8.76% as of March 31, 2006 and approximately 8.60% as of
December 31, 2005) and receive fixed rates of interest  (average receive rate of
8.26% as of March 31, 2006 and 8.46% as of  December  31,  2005).  All swaps are
accounted  for under SFAS No. 133 (as  amended)  as fair value  hedges.  For the
three months ended March 31, 2006,  the interest  expense  resulting  from these
interest rate swaps totaled approximately $0.5 million.

Sale of Non-Strategic Investments
---------------------------------
On February 1, 2005,  we sold 20,672 shares of  Prudential  Financial,  Inc. for
approximately $1.1 million in cash.

On March 15, 2005, we completed the sale of our conferencing business, CCUSA for
approximately $43.6 million in cash.

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.

EPPICS
------
In 1996, our consolidated wholly owned subsidiary, Citizens Utilities Trust (the
Trust),  issued,  in an underwritten  public  offering,  4,025,000  shares of 5%
Company Obligated  Mandatorily  Redeemable  Convertible Preferred Securities due
2036 (Trust Convertible Preferred Securities or EPPICS),  representing preferred
undivided interests in the assets of the Trust, with a liquidation preference of
$50 per  security  (for a total  liquidation  amount of $201.3  million).  These
securities have an adjusted  conversion  price of $11.46 per share of our common
stock.  The conversion  price was reduced from $13.30 to $11.46 during the third
quarter  of 2004 as a result of the $2.00  per  share of common  stock  special,
non-recurring  dividend. The proceeds from the issuance of the Trust Convertible
Preferred  Securities and a Company capital  contribution  were used to purchase
$207.5  million  aggregate  liquidation  amount  of 5%  Partnership  Convertible
Preferred Securities due 2036 from another wholly owned consolidated subsidiary,
Citizens  Utilities  Capital  L.P.  (the  Partnership).  The  proceeds  from the
issuance  of the  Partnership  Convertible  Preferred  Securities  and a Company
capital  contribution  were used to purchase  from us $211.8  million  aggregate
principal  amount of 5% Convertible  Subordinated  Debentures due 2036. The sole
assets of the Trust are the Partnership  Convertible Preferred  Securities,  and
our Convertible  Subordinated Debentures are substantially all the assets of the
Partnership.  Our obligations  under the agreements  related to the issuances of
such securities,  taken together,  constitute a full and unconditional guarantee
by us of the Trust's  obligations  relating to the Trust  Convertible  Preferred
Securities  and  the  Partnership's  obligations  relating  to  the  Partnership
Convertible Preferred Securities.

                                       23
<PAGE>

In accordance with the terms of the issuances, we paid the annual 5% interest in
quarterly installments on the Convertible  Subordinated  Debentures in the first
quarter  of 2006  and the four  quarters  of 2005.  Only  cash was paid  (net of
investment  returns)  to the  Partnership  in  payment  of the  interest  on the
Convertible  Subordinated  Debentures.  The  cash was  then  distributed  by the
Partnership to the Trust and then by the Trust to the holders of the EPPICS.

As of March 31, 2006,  EPPICS  representing a total  principal  amount of $191.1
million have been converted into  15,383,117  shares of our common stock,  and a
total of $10.2 million remains outstanding to third parties.  Our long-term debt
footnote  indicates  $20.7  million of EPPICS  outstanding  at March 31, 2006 of
which $10.5 million is intercompany debt of related parties.

Covenants
---------
The terms and  conditions  contained  in our  indentures  and credit  facilities
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 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.

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

Our $250.0 million credit facility  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 4.50 to 1.  Although  the credit  facility  is
unsecured,  it 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.

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

Discontinued Operations
-----------------------
In February  2006,  we entered  into a  definitive  agreement to sell all of the
outstanding  membership  interest in ELI, our CLEC business,  to Integra Telecom
Holdings, Inc. (Integra),  for $247.0 million,  including $243.0 million in cash
plus the assumption of approximately  $4.0 million in capital lease obligations,
subject  to  customary  adjustments  under  the  terms  of the  agreement.  This
transaction is expected to close during the third quarter of 2006 and is subject
to  regulatory  and other  customary  approvals and  conditions,  as well as the
funding of Integra's fully committed financing. We expect to recognize a pre-tax
gain on the sale of ELI of approximately $115.0 - $120.0 million.

On March 15, 2005, we completed the sale of Conference Call USA, LLC (CCUSA) for
$43.6 million in cash,  subject to adjustments under the terms of the agreement.
The pre-tax gain on the sale of CCUSA was $14.1 million.  Our after-tax gain was
$1.2  million.   The  book  income  taxes   recorded  upon  sale  are  primarily
attributable to a low tax basis in the assets sold.

Rural Telephone Bank
--------------------
In August 2005,  the Board of Directors of the Rural  Telephone Bank (RTB) voted
to dissolve the bank. In November 2005, the  liquidation  and dissolution of the
RTB was initiated with the signing of the 2006 Agricultural  Appropriation  bill
by President  Bush.  We received  approximately  $64.6  million in cash from the
dissolution of the RTB in April 2006,  which will result in the recognition of a
pre-tax gain of approximately $62.0 million during the second quarter of 2006.

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 and
disclosure of the contingent assets and liabilities at the date of the financial
statements 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,   employee   benefit  plans,   income  taxes,
contingencies, and pension and postretirement benefits expenses among others.


                                       24
<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 them.

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, 2005.

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

Accounting for Conditional Asset Retirement Obligations
In March  2005,  the FASB  issued  FIN 47,  "Accounting  for  Conditional  Asset
Retirement  Obligations,"  an  interpretation  of FASB No. 143. FIN 47 clarifies
that the term conditional  asset  retirement  obligation as used in FASB No. 143
refers to a legal  obligation to perform an asset  retirement  activity in which
the timing or method of settlement are conditional on a future event that may or
may not be within  the  control of the  entity.  FIN 47 also  clarifies  when an
entity would have sufficient  information to reasonably  estimate the fair value
of an asset retirement  obligation.  Although a liability exists for the removal
of poles and asbestos,  sufficient  information  is not  available  currently to
estimate  our  liability,  as the range of time over which we may settle  theses
obligations is unknown or cannot be reasonably estimated. The adoption of FIN 47
during  the  fourth  quarter  of 2005 had no impact on our  financial  position,
results of operations or cash flows.

Partnerships
In June 2005,  the FASB issued  EITF No.  04-5,  "Determining  Whether a General
Partner,  or the General Partners as a Group,  Controls a Limited Partnership or
Similar  Entity When the Limited  Partners Have Certain  Rights," which provides
new guidance on how general partners in a limited  partnership  should determine
whether  they  control a limited  partnership.  EITF No. 04-5 is  effective  for
fiscal periods beginning after December 15, 2005.

The Company applied the provisions of EITF No. 04-5 and  consolidated the Mohave
Cellular Limited  Partnership  (Mohave) effective January 1, 2006. As permitted,
we elected to apply EITF No.  04-5  retrospectively  from the date of  adoption.
Revenues,  depreciation and operating income for Mohave were $3.7 million,  $0.5
million and $0.7  million,  respectively,  for the three  months ended March 31,
2005 and $4.4  million,  $0.5 million and $1.2  million,  respectively,  for the
three months ended March 31, 2006.

Stock-Based Compensation
In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment"  ("SFAS No. 123R").  SFAS No. 123R requires that  stock-based  employee
compensation be recorded as a charge to earnings.  In April 2005, the Securities
and Exchange  Commission  required  adoption of SFAS No. 123R for annual periods
beginning after June 15, 2005. Accordingly, we have adopted SFAS 123R commencing
January 1, 2006 using a modified prospective  application,  as permitted by SFAS
No. 123R. Accordingly,  prior period amounts have not been restated.  Under this
application,  we are  required  to record  compensation  expense  for all awards
granted  after the date of adoption and for the unvested  portion of  previously
granted awards that remain outstanding at the date of adoption.

Prior to the adoption of SFAS No. 123R, we applied  Accounting  Principles Board
Opinions (APB) No. 25 and related interpretations to account for our stock plans
resulting in the use of the intrinsic value to value the stock. Under APB 25, we
were  not  required  to  recognize  compensation  expense  for the cost of stock
options.  In accordance with the adoption of SFAS 123R, we recorded  stock-based
compensation expense for the cost of stock options,  restricted shares and stock
units issued under our stock plans (together, "Stock-Based Awards"). Stock-based
compensation  expense  for the  first  quarter  of 2006 was $2.7  million  ($1.7
million after tax or $0.01 per basic and diluted share of common stock).

                                       25
<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 under
either a monthly  recurring  fee or based on usage at a tariffed rate and is not
dependent  upon  significant  judgments by  management,  with the exception of a
determination of a provision for uncollectible amounts.

Consolidated  revenue for the three months ended March 31, 2006  increased  $4.5
million, or 1%, as compared with the prior year period.

In February 2006, we entered into a definitive agreement to sell ELI to Integra.
As a result,  we have  classified  ELI's results of  operations as  discontinued
operations  in our  consolidated  statements of  operations  and restated  prior
periods.

On March 15, 2005, we completed the sale of our conferencing  service  business,
CCUSA. As a result of the sale, we have classified CCUSA's results of operations
as  discontinued  operations in our  consolidated  statements of operations  and
restated prior periods.

Change  in the  number of our  access  lines is  important  to our  revenue  and
profitability.  We have lost  access  lines  primarily  because of  competition,
changing consumer behavior, economic conditions, changing technology and by some
customers  disconnecting second lines when they add high-speed internet or cable
modem service. We lost approximately 26,300 access lines during the three months
ended  March  31,  2006  but  added  approximately  19,400  high-speed  internet
subscribers  during this same  period.  The loss of lines during the first three
months of 2006 was primarily among residential  customers.  The  non-residential
line losses were  principally  in  Rochester,  New York,  while the  residential
losses were  throughout our markets.  We expect to continue to lose access lines
but to increase high-speed internet subscribers during 2006. A continued loss of
access  lines,  combined  with  increased  competition  and  the  other  factors
discussed  in MD&A,  may cause our  revenues,  profitability  and cash  flows to
decrease in 2006.
<TABLE>
<CAPTION>
                           TELECOMMUNICATIONS REVENUE

($ in thousands)                                For the three months ended March 31,
                                      -------------------------------------------------------
                                          2006           2005         $ Change     % Change
                                      -------------- ------------- --------------- ----------
<S>                                       <C>           <C>               <C>             <C>
Access services                           $ 160,968     $ 156,824         $ 4,144         3%
Local services                              203,566       209,957          (6,391)       -3%
Long distance services                       39,158        43,750          (4,592)      -10%
Data and internet services                   50,358        38,609          11,749        30%
Directory services                           28,797        27,963             834         3%
Other                                        24,014        25,231          (1,217)       -5%
                                      -------------- ------------- ---------------
                                          $ 506,861     $ 502,334         $ 4,527         1%
                                      ============== ============= ===============
</TABLE>

Access Services
Access services revenue for the three months ended March 31, 2006 increased $4.1
million or 3%, as compared with the prior year period.  Special  access  revenue
increased $3.6 million primarily due to growth in high-capacity circuits. Access
service  revenue  includes  subsidy  payments we receive  from federal and state
agencies.  Subsidy revenue increased $2.5 million primarily due to significantly
higher  recovery of costs.  Switched access revenue  decreased $2.4 million,  as
compared  with the prior year period,  primarily  due to a decline in minutes of
use.

Increases  in the  number of  competitive  communications  companies  (including
wireless companies) receiving federal subsidies may lead to further increases in
the national  average cost per loop (NACPL),  thereby  resulting in decreases in
our subsidy  revenue in the future.  The 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.
The FCC is also reviewing the mechanism by which subsidies are funded. We cannot
predict when or how these  matters will be decided nor the effect on our subsidy
revenues.  Future reductions in our subsidy and access revenues are not expected
to be  accompanied  by  proportional  decreases  in our  costs,  so any  further
reductions in those  revenues will directly  affect our  profitability  and cash
flows.

                                       26
<PAGE>

Local Services
Local services  revenue for the three months ended March 31, 2006 decreased $6.4
million or 3% as compared with the prior year period.  Local  revenue  decreased
$7.9  million  primarily  due to  continued  losses  of access  lines.  Enhanced
services revenue increased $1.5 million, as compared with the prior year period,
primarily due to sales of additional  feature packages.  Economic  conditions or
increasing  competition  could make it more  difficult  to sell our packages and
bundles and cause us to lower our prices for those products and services,  which
would adversely affect our revenues, profitability and cash flow.

Long Distance Services
Long  distance  services  revenue  for the three  months  ended  March 31,  2006
decreased  $4.6  million or 10%,  as  compared  with the prior  period.  We have
actively  marketed  packages  of long  distance  minutes  particularly  with our
bundled  service  offerings.  The sale of packaged  minutes  has  resulted in an
increase in minutes used by our long  distance  customers and has had the effect
of lowering  our  overall  average  rate per minute  billed.  Our long  distance
minutes of use increased  slightly  during the first quarter of 2006 compared to
the first quarter of 2005.  Our long distance  revenues may continue to 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 2006.

Data and Internet Services
Data and  internet  services  revenue for the three  months ended March 31, 2006
increased  $11.7 million,  or 30%, as compared with the prior year primarily due
to growth in data and high-speed internet services.

                             COST OF SERVICES

    ($ in thousands)               For the three months ended March 31,
                          ------------------------------------------------------
                              2006           2005         $ Change     % Change
                          -------------- ------------- --------------- ---------
    Network access          $ 40,218      $ 39,722           $ 496         1%

As we  continue  to  increase  our  sales of data  products  such as  high-speed
internet and expand the  availability  of our unlimited  long  distance  calling
plans, our network access expense is likely to increase.
<TABLE>
<CAPTION>
                            OTHER OPERATING EXPENSES

($ in thousands)                              For the three months ended March 31,
                                      -------------------------------------------------------
                                          2006           2005         $ Change     % Change
                                      -------------- ------------- --------------- ----------
<S>                                       <C>           <C>               <C>             <C>
Operating expenses                        $ 138,246     $ 137,062         $ 1,184         1%
Taxes other than income taxes                25,835        26,432            (597)       -2%
Sales and marketing                          23,220        20,543           2,677        13%
                                      -------------- ------------- ---------------
                                          $ 187,301     $ 184,037         $ 3,264         2%
                                      ============== ============= ===============
</TABLE>

Operating  expenses  for the three months  ended March 31, 2006  increased  $1.2
million,  or 1%, as compared  with the prior year period  primarily  due to $3.7
million of  severance  payments  associated  with a voluntary  early  retirement
program  offered to certain  employees  during  the first  quarter of 2006.  The
program resulted in a reduction of 62 employees. We expect to realize annualized
cost savings of  approximately  $3.9 million from this headcount  reduction.  We
routinely  review our  operations,  personnel and facilities to achieve  greater
efficiencies. These reviews may result in additional reductions in personnel and
further increases in severance costs.

Included in operating expenses is stock compensation expense. Stock compensation
expense was $2.7 million and $2.3 million for the first three months of 2006 and
2005, respectively. In 2006, we began expensing the cost of the unvested portion
of outstanding  stock options  pursuant to SFAS No. 123R. We expect to recognize
approximately  $2.2 million of incremental  stock  compensation  expense for the
year  ended  December  31,  2006  assuming  no  modifications  and  that  actual
forfeitures equal estimated forfeitures.

Included  in  operating  expenses is pension  and other  postretirement  benefit
expenses.  In future periods,  if the value of our pension assets decline and/or
projected  pension and/or  postretirement  benefit costs  increase,  we may have
increased pension and/or postretirement  expenses.  Based on current assumptions
and plan asset  values,  we estimate  that our pension and other  postretirement
expenses will decrease from $19.0 million in 2005 to approximately $15.0 million
to $18.0 million in 2006 and that no contribution will be required to be made by
us to the pension plan in 2006.

                                       27
<PAGE>

Sales and marketing expenses for the three months ended March 31, 2006 increased
$2.7 million,  or 13%, as compared  with the prior year period  primarily due to
increased marketing and advertising in an increasingly  competitive  environment
and the launch of new products.  As our markets become more  competitive  and we
launch new products,  we expect that our marketing costs will increase.  We hope
to shift  spending  from other expense  categories  to compensate  for sales and
marketing expense increases.
<TABLE>
<CAPTION>
                      DEPRECIATION AND AMORTIZATION EXPENSE

       ($ in thousands)                     For the three months ended March 31,
                                   -------------------------------------------------------
                                       2006           2005         $ Change     % Change
                                   -------------- ------------- --------------- ----------
<S>                                     <C>          <C>             <C>              <C>
       Depreciation  expense           $  90,409     $ 102,499       $ (12,090)      -12%
       Amortization expense               31,595        31,595               -         0%
                                   -------------- ------------- ---------------
                                       $ 122,004     $ 134,094       $ (12,090)       -9%
                                   ============== ============= ===============
</TABLE>
Depreciation  expense for the three months ended March 31, 2006 decreased  $12.1
million, or 12%, as compared with the prior year period due to a declining asset
base and changes in the remaining useful lives of certain assets. Effective with
the  completion of an  independent  study of the  estimated  useful lives of our
plant assets, we adopted new lives beginning October 1, 2005. Based on the study
and our planned capital  expenditures,  we expect that our depreciation  expense
will decline in 2006 to approximately $350.0 million or by 11% compared to 2005.
The decrease is due to a declining  asset base and the result of  extending  the
remaining useful lives of our copper facilities from approximately 16 years to a
range of 26 to 30 years.  The decrease was partially offset by the shortening of
lives for our switching  software  assets all in accordance with the independent
study.
<TABLE>
<CAPTION>
          INVESTMENT AND OTHER INCOME (LOSS), NET / INTEREST EXPENSE /
                               INCOME TAX EXPENSE

       ($ in thousands)                          For the three months ended March 31,
                                      -------------------------------------------------------
                                          2006           2005         $ Change       % Change
                                      -------------- ------------- --------------- ----------
       Investment and
<S>                                        <C>           <C>             <C>            <C>
         other income (loss), net          $ (1,351)     $  3,968        $ (5,319)     -134%
       Interest expense                    $ 85,393      $ 83,725        $  1,668         2%
       Income tax expense                  $ 26,607      $ 25,216        $  1,391         6%
</TABLE>
Investment  and other  income,  net for the three  months  ended  March 31, 2006
decreased $5.3 million as compared with the prior year period primarily due to a
$2.4 million  loss we incurred on the exchange of debt during the first  quarter
of 2006.

Interest  expense  for the three  months  ended March 31,  2006  increased  $1.7
million,  or 2%, as  compared  with the prior  year  period.  Higher  short term
interest rates have caused the amount we pay under our swap  agreements  ($550.0
million in  principal  amount is swapped to floating  rate at March 31, 2006) to
increase and such increase accounts for all of the increase in interest expense.
Our  composite  average  borrowing  rate  (including  the  effect  of  our  swap
agreements) for the three months ended March 31, 2006 as compared with the prior
year period was 23 basis points higher, increasing from 7.84% to 8.07%.

Income taxes for the three months ended March 31, 2006  increased  $1.4 million,
or 6%, as  compared  with the prior  year  period  primarily  due to  changes in
taxable  income.  The effective tax rate for the first quarter of 2006 was 37.7%
as compared with 39.0% for the first quarter of 2005.

                                       28
<PAGE>
<TABLE>
<CAPTION>
                             DISCONTINUED OPERATIONS

       ($ in thousands)                 For the three months ended March 31,
                              -------------------------------------------------------
                                  2006           2005         $ Change     % Change
                              -------------- ------------- --------------- ----------
<S>                                <C>           <C>              <C>             <C>
       Revenue                     $ 42,494      $ 42,587         $   (93)        0%
       Operating income            $ 10,458      $  2,865         $ 7,593       265%
       Income taxes                $  3,962      $    906         $ 3,056       337%
       Net income                  $  6,496      $  1,959         $ 4,537       232%

</TABLE>

In February  2006, we entered into a definitive  agreement to sell ELI, our CLEC
business,  to Integra  Telecom  Holdings,  Inc.  (Integra),  for $247.0 million,
including  $243.0  million in cash plus the  assumption  of  approximately  $4.0
million in capital lease obligations, subject to customary adjustments under the
terms of the agreement.  This  transaction is expected to close during the third
quarter of 2006 and is subject to regulatory and other  customary  approvals and
conditions,  as well as the funding of Integra's fully committed  financing.  We
expect to  recognize a pre-tax gain on the sale of ELI of  approximately  $115.0
million to $120.0 million.

On March 15,  2005,  we completed  the sale of CCUSA for $43.6  million in cash,
subject to adjustments under the terms of the agreement. The pre-tax gain on the
sale of CCUSA was $14.1 million.  Our after-tax gain was $1.2 million.  The book
income taxes recorded upon sale are primarily attributable to a low tax basis in
the assets sold. Revenue, operating income, income taxes and net income of CCUSA
were $4.6  million,  $1.5  million,  $0.5 million and $1.0 million for the three
months ended March 31, 2005, respectively.

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.  Market  risk refers to the
potential  change  in fair  value  of a  financial  instrument  as a  result  of
fluctuations in interest rates and equity and commodity  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 or to hedge  long-term  interest  rate risk.  Our  primary  market risk
exposures are interest rate risk and equity and commodity 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 and interest on our
long-term  debt and capital  lease  obligations.  The long term debt and capital
lease  obligations  include  various  instruments  with various  maturities  and
weighted average interest rates.

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,  a majority of our borrowings 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 and
capital lease  obligations.  A hypothetical 10% adverse change in interest rates
would  increase  the amount that we pay on our  variable  obligations  and could
result in  fluctuations in the fair value of our fixed rate  obligations.  Based
upon our overall interest rate exposure at March 31, 2006, a near-term change in
interest rates would not materially affect our consolidated  financial position,
results of operations or cash flows.

In order to  manage  our  interest  rate risk  exposure,  we have  entered  into
interest  rate  swap  agreements.  Under the  terms of the  agreements,  we make
semi-annual,  floating  interest rate interest payments based on six month LIBOR
and receive a fixed rate on the notional amount.

Sensitivity analysis of interest rate exposure
At March 31,  2006,  the fair value of our  long-term  debt was  estimated to be
approximately $4.1 billion,  based on our overall weighted average rate of 8.09%
and our overall weighted maturity of 11 years. There has been no material change
in the weighted  average maturity  applicable to our obligations  since December
31, 2005.

                                       29
<PAGE>

The overall  weighted  average  interest rate  increased  approximately  4 basis
points  during the first  quarter of 2006. A  hypothetical  increase of 81 basis
points (10% of our overall weighted  average  borrowing rate) would result in an
approximate  $208.8  million  decrease  in the  fair  value  of our  fixed  rate
obligations.

Equity Price Exposure

Our exposure to market  risks for changes in equity  prices as of March 31, 2006
is limited and relates to our investment in Adelphia Communications  Corporation
(Adelphia), and our pension assets.

As of March  31,  2006 and  December  31,  2005,  we owned  3,059,000  shares of
Adelphia  common stock.  The stock price of Adelphia was $0.04 at March 31, 2006
and December 31, 2005.

Sensitivity analysis of equity price exposure
At March 31,  2006,  the fair  value of the  equity  portion  of our  investment
portfolio  was  estimated to be $0.1  million.  A  hypothetical  10% decrease in
quoted market prices would result in an approximate $13,000 decrease in the fair
value of the equity portion of our investment portfolio.

Disclosure of limitations of sensitivity analysis
Certain  shortcomings  are  inherent in the method of analysis  presented in the
computation  of fair value of financial  instruments.  Actual  values may differ
from those presented should market  conditions vary from assumptions used in the
calculation of the fair value.  This analysis  incorporates only those exposures
that  exist as of March  31,  2006.  It does not  consider  those  exposures  or
positions, which could arise after that date. As a result, our ultimate exposure
with respect to our market risks will depend on the exposures  that arise during
the period and the fluctuation of interest rates and quoted market prices.

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,  regarding the  effectiveness  of the design and operation of
our  disclosure  controls  and  procedures.  Based  upon  this  evaluation,  our
principal executive officer and principal financial officer concluded, as of the
end of the period  covered by this report,  March 31, 2006,  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 March 31, 2006.
There have been no changes in our  internal  control  over  financial  reporting
identified  in an  evaluation  thereof  that  occurred  during the first  fiscal
quarter of 2006, that materially  affected or is reasonably likely to materially
affect our internal control over financial reporting.

                                       30
<PAGE>
                           PART II. OTHER INFORMATION
                CITIZENS COMMUNICATIONS COMPANY 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, 2005.

We are party to 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.

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, 2005.

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

There were no unregistered  sales of equity  securities during the quarter ended
March 31, 2006.
<TABLE>
<CAPTION>
                                                                                        (d) Maximum
                                                                                         Approximate
                                                                    (c) Total Number   Dollar Value of
                                                                         of Shares       Shares that
                                          (a) Total                  Purchased as Part    May Yet Be
                                          Number of    (b) Average      of Publicly       Purchased
                                           Shares     Price Paid Per  Announced Plans  Under the Plans
Period                                    Purchased       Share         or Programs      or Programs
------------------------------------------------------------------------------------------------------

January 1, 2006 to January 31, 2006
<S>                                        <C>            <C>            <C>          <C>
Share Repurchase Program (1)                       -       $     -                -    $         -
Employee Transactions (2)                      8,499       $ 12.21                -        N/A

February 1, 2006 to February 28, 2006
Share Repurchase Program (1)                       -       $     -                -    $300,000,000
Employee Transactions (2)                     13,318       $ 12.83            N/A          N/A

March 1, 2006 to March 31, 2006
Share Repurchase Program (1)               2,802,900       $ 13.53         2,802,900   $262,100,000
Employee Transactions (2)                    152,001       $ 13.63            N/A          N/A


Totals January 1, 2006 to March 31, 2006
Share Repurchase Program (1)               2,802,900       $ 13.53         2,802,900   $262,100,000
Employee Transactions (2)                    173,818       $ 13.50            N/A          N/A

</TABLE>

(1)  In February 2006, our Board of Directors  authorized us to repurchase up to
     $300.0 million of our common stock, in public or private  transactions over
     the following  twelve-month period. This share repurchase program commenced
     on March 6, 2006.
(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.

                                       31
<PAGE>

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

a)       Exhibits:

         10.1   Offer  of  Employment  Letter  between  Citizens  Communications
                Company  and  Donald  R.  Shassian, effective March 7, 2006.

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

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

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

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


                                       32
<PAGE>


                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

                                    SIGNATURE
                                    ---------



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






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


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




Date: May 5, 2006

                                       33