**UNITED        STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D. C.        20549**

**FORM        10-K**

**ALLTEL        CORPORATION**

|                                                                         |   |                                |
|------------------------------------------------------------------------------|--------|-------------------------------------|
| DELAWARE                                                                     |   | 34-0868285                          |
|                                                                         |
| (State or other jurisdiction ofincorporation or                organization) |   | (I.R.S. EmployerIdentification No.) |
|                                                                         |   |                                |
| One Allied Drive, Little Rock, Arkansas                                      |   | 72202                               |
|                                                                         |
| (Address of principal executive offices)                                     |   | (Zip Code)                          |

|                                                 |   |   |   |                                      |
|------------------------------------------------------|--------|--------|--------|-------------------------------------------|
| Title of each                  class                 |   |   |   | Name of each exchange on which registered |
| Common Stock                                         |   |   |   | New York and Pacific                      |
| $2.06 No Par Cumulative                  Convertible |   |   |   |                                      |
|   Preferred                  Stock         |   |   |   | New York and                Pacific       |

|                                                                                          |   |   |   |              |
|-----------------------------------------------------------------------------------------------|--------|--------|--------|-------------------|
| Document                                                                                      |   |   |   | Incorporated Into |
| Proxy statement                  for the                  2006 Annual Meeting of Stockholders |   |   |   | Part III          |
| The Exhibit Index                  is                  located on pages 35 to 42.        |   |   |   |              |

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**THE        COMPANY**

**GENERAL**

**www.alltel.com**

**FORWARD-LOOKING        STATEMENTS**

1 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**THE        COMPANY (continued)**

**PENDING        SPIN OFF OF WIRELINE OPERATIONS**

**ACQUISITIONS**

2 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**THE        COMPANY (continued)**

**ACQUISITIONS        (Continued)**

3 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**THE        COMPANY (continued)**

**ACQUISITIONS        (Continued)**

**DISPOSITIONS**

**MANAGEMENT**

4 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**THE        COMPANY (continued)**

**EMPLOYEES**

**ORGANIZATIONAL        STRUCTURE AND OPERATING        SEGMENTS**

**WIRELESS        OPERATIONS**

5 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**PRODUCT        OFFERINGS AND PRICING**

6 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**PRODUCT        OFFERINGS AND PRICING (continued)**

**MARKETING**

7 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**DISTRIBUTION**

**COMPETITION**

8 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**TECHNOLOGY**

**REGULATION**

9 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**REGULATION        – WIRELESS SPECTRUM**

10 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**REGULATION        – UNIVERSAL SERVICE**

11 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**REGULATION        – UNIVERSAL SERVICE (continued)**

**REGULATION        – E-911 SERVICE**

12 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**REGULATION        – E-911 SERVICE (continued)**

**REGULATION        – COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT**

**REGULATION        – INTER-CARRIER COMPENSATION**

13 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 1.Business**

**WIRELESS        OPERATIONS (continued)**

**REGULATION        – TELEPHONE NUMBERS**

**REGULATION        – CUSTOMER BILLING**

**REGULATION        – CMRS ROAMING**

14 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELESS        OPERATIONS (continued)**

**REGULATION–        WIRELESS TERMINATION FEES**

**WIRELINE        OPERATIONS**

**COMPETITION**

15 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**COMPETITION**
**        (continued****)**

**REGULATION**

**LOCAL        SERVICE – FEDERAL REGULATION**

16 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**LOCAL        SERVICE – FEDERAL REGULATION**
** (continued)**

**LOCAL        SERVICE – STATE REGULATION**

| **•** |   | Alltel’s regulated Alabama wireline subsidiary has operated since 1996                under a PSC established alternative regulation plan. In 2005 the                previous                alternative regulation plan was replaced by two alternative regulation                plans approved by the PSC. Alltel elected to be regulated under the                price                flexibility plan. Under this plan basic residential local service                rates                are capped for two years. Also in 2005, the legislature passed the                Alabama                Communications Reform Act of 2005. Under this reform Act, only stand-alone                basic service, wholesale access services and certain calling features                remain regulated after February 1, 2007. Alltel has elected                to be                regulated under the Communications Reform Act, effective                February 2007.                                                     |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |
| **•** |   | Alltel’s regulated Arkansas wireline subsidiary has operated since                1997 under an alternative regulation plan established by statute.                Under                this plan, basic local rates and access rates may be adjusted annually                by                up to 75 percent of the annual change in the Gross Domestic                Product-Price Index (“GDP-PI”). Other local rates may be changed without                PSC approval and become effective upon the filing of revised                tariffs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |
| **•** |   | Alltel’s regulated Florida wireline subsidiary operates under                alternative regulation established by Florida statute. Under this                plan,                basic local rates may be increased once in any twelve-month period                by an                amount not to exceed the twelve month change in the GDP-PI less one                percent. Alltel may increase rates for non-basic services as long                as the                annual increase for any category does not exceed six percent in any                twelve-month period. Non-basic rates can be increased by up to                20 percent annually in exchanges where another local provider                is                providing service. Intrastate access rates can be increased by the                annual                change in GDP-PI or three percent, whichever is less, only after                access                rates reach parity with Alltel’s interstate                rates. |

17 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**LOCAL        SERVICE – STATE REGULATION**
** (continued)**

| **•** |   | Alltel’s regulated Georgia wireline subsidiaries operate under an                alternative regulation plan established by statute. Under this plan,                basic                local rates may be increased annually based on the annual change                in                GDP-PI. Other local rates may be increased by filing revised                tariffs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |
| **•** |   | Alltel has two regulated operating subsidiaries in Kentucky. The                larger subsidiary is subject to rate of return regulation. The smaller                subsidiary has operated under alternative regulation established                by                statute beginning in 1998. Under this plan, the subsidiary may adjust                basic business and residential rates, once during any 24 month                period                by an amount not to exceed the sum of the annual percentage change                in                GDP-PI for the immediately preceding two calendar years subject to                the                following limitations: (1) basic business and residence rates may                not                exceed the average basic rates of the state’s largest telephone utility,                and (2) rates may not be increased by more than 20 percent.                Access                charges may not be adjusted if the change would result in intrastate                access rates that exceed Alltel’s interstate rates. Other local rates may                be adjusted by filing tariffs. |
|        |
| **•** |   | Alltel’s regulated Missouri wireline subsidiary is subject to                alternative regulation election established by statute. Under Missouri’s                alternative regulation, basic local service and intrastate access                rates                are adjusted annually based on changes to the telephone service component                of the Consumer Price Index. Prices for non-basic services may be                increased up to five percent per year after the initial twelve-month                period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |
| **•** |   | Alltel’s regulated Nebraska operations are subject to alternative                regulation established by statute. (Nebraska law exempts                telecommunications companies from rate-of-return regulation.) In                exchanges                where competition exists, companies are required to file rate lists,                which                are effective after 10 days notice to the PSC. In exchanges                where                competition does not exist, companies file rate lists for all services                except basic local with 10 days notice to the PSC and basic                local                rates may be increased after 90 days notice to affected subscribers.                Basic local rate increases are reviewed by the PSC only if rates                are                increased more than 10 percent in twelve consecutive months                or in                response to a formal complaint signed by two percent of affected                subscribers.                                                                                                                           |
|        |
| **•** |   | Alltel’s New York operations are subject to rate of return regulation.                In June 2005, the New York PSC opened a proceeding to examine potential                changes to the existing form or regulation in light of increasing                competition. A decision is expected in 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|        |
| **•** |   | Alltel’s regulated North Carolina subsidiary has operated since 1998                under alternative regulation plan approved by the State Utility                Commission. Local rates are adjusted annually by the annual change                in                GDP-PI. Rate changes are effective upon 14 days notice. Alltel has                recently obtained Commission approval for changes to its current                price                regulation plan that will allow greater pricing flexibility, shorter                implementation intervals for promotional offerings and deregulation                of                pricing for bundled services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |
| **•** |   | Alltel’s regulated Ohio wireline subsidiaries began in 2004 to operate                under an alternative regulation plan established by the Ohio Public                Utilities Commission. Under this plan, basic service rates have been                capped. Non-basic service rates are subject to limited pricing                flexibility. New rules for alternative regulatory treatment of basic                service, which include competitive market tests, are pending.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |
| **•** |   | In 1997, Alltel’s regulated Oklahoma wireline subsidiaries begun to                operate under an alternative regulation plan established by statute.                Under                this plan, basic service rates can be increased annually as long                as the                increase does not exceed a pre-determined amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |
| **•** |   | In July 2005, Alltel’s regulated Pennsylvania subsidiary began                operating under a new alternative regulation plan passed by the                Pennsylvania General Assembly in 2004. Under this plan, Alltel is                required                to make broadband access to the Internet available for purchase to                100 percent of its customer base by 2013. Rates for competitive                services are not regulated, but the PUC retains authority over the                quality                of these services. Rate increases for noncompetitive services are                restricted to the GDP-PI less two percent, annually. The total amount                of                an increase to basic local service rates cannot exceed $3.50 annually.                Revenue neutral rate rebalancing is also permitted for noncompetitive                services.                                                                                                                                                                                                                                                             |

18 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**LOCAL        SERVICE – STATE REGULATION**
** (continued)**

| **•** |   | Alltel’s regulated South Carolina operations are subject to                alternative regulation established by statute. Local rates can be                adjusted                pursuant to an inflation-based index. All other service rates may                be                increased subject to a complaint process for abuse of market position.                The                PSC has determined that any allegations of abuse of market position                will                be investigated on a case-by-case basis. Rate increases become effective                14 days after filing. |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |
| **•** |   | Alltel has two operating subsidiaries in Texas. These subsidiaries                are                subject to alternative regulation established by statute. All rates                are                capped for the duration of the plan.                                                                                                                                                                                                                                                                                                                                                                                 |

**REGULATION–        UNIVERSAL SERVICE**

19 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**REGULATION–        UNIVERSAL SERVICE**
** (continued)**

**REGULATION–        UNBUNDLED NETWORK ELEMENTS**

20 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**REGULATION–        UNBUNDLED NETWORK ELEMENTS**
** (continued)**

**NETWORK        ACCESS SERVICES – REGULATION**

21 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**NETWORK        ACCESS SERVICES – REGULATION**
** (continued)**

22 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**WIRELINE        OPERATIONS (continued)**

**NETWORK        ACCESS SERVICES – REGULATION**
** (continued)**

**TECHNOLOGY**

**CLEC        OPERATIONS**

23 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1.**
**Business**

**COMMUNICATIONS        SUPPORT SERVICES**

**LONG-DISTANCE        AND NETWORK MANAGEMENT        OPERATIONS**

**PRODUCT        DISTRIBUTION**

**DIRECTORY        PUBLISHING**

**TELECOMMUNICATIONS        INFORMATION SERVICES**

24 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1A.**
**Risk        Factors**

***Alltel        faces        intense competition in its businesses that could reduce its market share        or        adversely affect its financial performance.***

***Alltel        is        subject to government regulation of the telecommunications        industry.***

25 

**ALLTEL CorporationForm 10-K,        Part I**

**Item 1A.**
**Risk        Factors**

***Rapid        and        significant changes in technology could require Alltel to significantly increase        capital investment or could result in reduced demand for its        services.***

**Item 1B.**
**Unresolved        Staff        Comments**

26 

**ALLTEL        CorporationForm 10-K, Part I**

**Item 2.**
**Properties**

**WIRELINE        PROPERTY**

|                                                                   |   |       |    |   |
|------------------------------------------------------------------------|--------|------------|---------|--------|
|                                                                   |   | (Millions) |    |
|                                                                   |   |       |    |
| Land                                                                   |   | $          | 18.3    |   |
| Buildings and                  leasehold                  improvements |   |       | 303.2   |   |
| Central office                  equipment                              |   |       | 2,937.1 |   |
| Outside plant                                                          |   |       | 3,528.7 |   |
| Furniture, fixtures,                  vehicles and other               |   |       | 171.9   |   |
|                                                                   |   |       |    |
| Total                                                                  |   | $          | 6,959.2 |   |
|                                                                   |   |       |    |

**OTHER        PROPERTY**

|                                                                         |   |       |     |   |
|------------------------------------------------------------------------------|--------|------------|----------|--------|
|                                                                         |   | (Millions) |     |
|                                                                         |   |       |     |
| Land                                                                         |   | $          | 280.3    |   |
| Buildings and                  leasehold                  improvements       |   |       | 908.2    |   |
| Wireless plant                  and                  equipment               |   |       | 6,852.6  |   |
| Data processing                  equipment and computer software             |   |       | 1,187.2  |   |
| Non-regulated                  wireline                  plant and equipment |   |       | 476.2    |   |
| Furniture, fixtures,                  vehicles and other                     |   |       | 358.4    |   |
|                                                                         |   |       |     |
| Total                                                                        |   | $          | 10,062.9 |   |
|                                                                         |   |       |     |

**Item 3.**
**Legal        Proceedings**

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

27 

**ALLTEL        CorporationForm 10-K, Part II**

**Item 5.**
**Market        for the        Registrant’s Common Equity and Related Stockholder Matters**

| (a) |   | The outstanding shares of Alltel’s Common Stock are listed and traded                on the New York Stock Exchange and the Pacific Exchange and trade                under                the symbol AT. The following table reflects the range of high, low                and                closing prices of Alltel’s Common Stock as reported by Dow Jones &                Company, Inc. for each quarter in 2005 and 2004: |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |   |   |   |   |   |   |   |     |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------|
|   |   |   |   |   |   |   |   |   |   | Dividend |
| Year   |   | Qtr.   |   | High   |   | Low    |   | Close  |   | Declared |
|   |
| 2005   |   | 4th    |   | $68.19 |   | $58.00 |   | $63.10 |   | $.385    |
|   |   | 3rd    |   | $66.95 |   | $60.45 |   | $65.11 |   | $.38     |
|   |   | 2nd    |   | $62.36 |   | $54.82 |   | $62.28 |   | $.38     |
|   |   | 1st    |   | $59.85 |   | $54.20 |   | $54.85 |   | $.38     |
|   |
| 2004   |   | 4th    |   | $60.62 |   | $53.40 |   | $58.76 |   | $.38     |
|   |   | 3rd    |   | $55.80 |   | $49.23 |   | $54.91 |   | $.37     |
|   |   | 2nd    |   | $51.95 |   | $48.63 |   | $50.62 |   | $.37     |
|   |   | 1st    |   | $53.28 |   | $46.65 |   | $49.89 |   | $.37     |
|   |

|   |   | As of February 28, 2006, the approximate number of stockholders                of common stock including an estimate for those holding shares in                brokers’                accounts was 185,000. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)    |   | Not applicable.                                                                                                                                                                                                                                                        |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| (c)    |   | On January 23, 2004, ALLTEL announced a $750.0 million                stock                repurchase plan that expired on December 31, 2005. No repurchases                were made under this plan during the fourth quarter of                2005. |

**Item 6.**
**Selected        Financial        Data**

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

**Item 7A.**
**Quantitative        and        Qualitative Disclosures About Market Risk**

**Item 8.**
**Financial        Statements        and Supplementary Data**

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

28 

**ALLTEL        CorporationForm 10-K, Part II**

**Item 9(A).**
**Controls        and        Procedures**

| (a)    |   | Evaluation of disclosure controls and procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | The term “disclosure controls and procedures” (defined in SEC                Rule 13a-15(e)) refers to the controls and other procedures                of a                company that are designed to ensure that information required to                be                disclosed by a company in the reports that it files under the Securities                Exchange Act of 1934 (the “Exchange Act”) is recorded, processed,                summarized and reported within required time periods. Disclosure                controls                and procedures (as defined in SEC Rule 13a-15(e)) include, without                limitation, controls and procedures designed to ensure that information                required to be disclosed by a company in the reports that it files                or                submits under the Exchange Act is accumulated and communicated to                the                company’s management, including the company’s principal executive and                financial officers, as appropriate to allow timely decisions regarding                required disclosure. Alltel’s management, with the participation of the                Chief Executive Officer and Chief Financial Officer, have evaluated                the                effectiveness of the Company’s disclosure controls and procedures as of                the end of the period covered by this annual report (the “Evaluation                Date”). Based on that evaluation, Alltel’s Chief Executive Officer and                Chief Financial Officer have concluded that, as of the Evaluation                Date,                such controls and procedures were effective. On August 1,                2005,                Alltel completed its merger with Western Wireless Corporation. Alltel                continues to assess Western Wireless’ control systems and expects the                integration of Western Wireless’ control systems with Alltel’s control                systems to be completed during the first quarter of 2006. |
|   |
| (b)    |   | Management’s report on internal control over financial                reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |
|   |   | Management’s Report on Internal Control Over Financial Reporting,                which appears on page F-45 of the Financial Supplement, is incorporated                by                reference herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |
| (c)    |   | Changes in internal controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |
|   |   | The term “internal control over financial reporting” (defined in SEC                Rule 13a-15(f)) refers to the process of a company that is                designed                to provide reasonable assurance regarding the reliability of financial                reporting and the preparation of financial statements for external                purposes in accordance with generally accepted accounting principles.                Alltel’s management, with the participation of the Chief Executive Officer                and Chief Financial Officer, have evaluated any changes in the Company’s                internal control over financial reporting that occurred during the                period                covered by this annual report, and they have concluded that, except                for                the changes arising out of the third quarter 2005 merger with Western                Wireless, there were no changes to Alltel’s internal control over                financial reporting that have materially affected, or are reasonably                likely to materially affect, Alltel’s internal control over financial                reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

**Item 9(B).**
**Other        Information**

**Form 10-K,        Part III**

**Item 10.**
**Directors        and        Executive Officers of the Registrant**

|                |   |   |   |                                                                                                                                                                                                                                                                                         |   |                                                                          |
|---------------------|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|
| Name                |   | Age    |   |                                                                                       Position |
| Scott T. Ford       |   |   | 43     |                                                                                                                                                                                                                                                                                         |   | President and Chief Executive Officer                                         |
| Kevin L. Beebe      |   |   | 46     |                                                                                                                                                                                                                                                                                         |   | Group President — Operations                                            |
| Jeffrey H. Fox      |   |   | 43     |                                                                                                                                                                                                                                                                                         |   | Group President — Shared Services                                       |
| C.J. Duvall Jr.     |   |   | 47     |                                                                                                                                                                                                                                                                                         |   | Executive Vice President — Human Resources                              |
| Sharilyn S. Gasaway |   |   | 37     |                                                                                                                                                                                                                                                                                         |   | Executive Vice President — Chief Financial                Officer       |
| Richard N. Massey   |   |   | 48     |                                                                                                                                                                                                                                                                                         |   | Executive Vice President — General Counsel and                Secretary |
| Keith A. Kostuch    |   |   | 43     |                                                                                                                                                                                                                                                                                         |   | Senior Vice President — Strategic Planning                              |
| Sue P. Mosley       |   |   | 47     |                                                                                                                                                                                                                                                                                         |   | Controller                                                                    |
| John A. Ebner       |   |   | 37     |                                                                                                                                                                                                                                                                                         |   | Treasurer                                                                     |

29 

**ALLTEL        CorporationForm 10-K, Part III**

**Item 10.**
**Directors        and        Executive Officers of the Registrant**
**(continued)**

**Item 11.**
**Executive        Compensation**

**Item 12.**
**Security        Ownership of        Certain Beneficial Owners and Management and Related Stockholder        Matters**

|                                                                       |   |                                   |     |                               |   |                                                  |    |                  |   |                 |     |   |
|----------------------------------------------------------------------------|--------|----------------------------------------|----------|------------------------------------|--------|-------------------------------------------------------|---------|-----------------------|--------|----------------------|----------|--------|
|                                                                       |
| (Thousands, except per share                amounts)                       |   | (a)                                    |     | (b)                                |   | (c)                                                   |
|                                                                       |   |                                   |     |                               |   |                                                  |    |                  |   | Number of securities |
|                                                                       |   |                                   |     |                               |   |                                                  |    |                  |   | available for future |
|                                                                       |   | Number of securities                   |     |                               |   |                                                  |    | issuance under equity |
|                                                                       |   | to be issued upon                      |     | Weighted-average                   |   | compensation plans,                                   |
|                                                                       |   | exercise of                            |     | exercise price of                  |   | excluding securities                                  |
|                                                                       |   | outstanding                options (2) |     | outstanding                options |   | reflected                in                column (a) |
|                                                                       |   |                                   |     |                               |   |                                                  |    |                  |   |                 |     |   |
| Equity compensation                  plans approvedby security holders (1) |   |                                   | 15,396.0 |                               |   | $                                                     | 56.83   |                  |   |                 | 15,904.2 |   |
| Equity compensation                  plans not approvedby security holders |   |                                   | –  |                               |   |                                                  | – |                  |   |                 | –  |   |
|                                                                       |   |                                   |     |                               |   |                                                  |    |                  |   |                 |     |   |
| Totals                                                                     |   |                                   | 15,396.0 |                               |   | $                                                     | 56.83   |                  |   |                 | 15,904.2 |   |
|                                                                       |

| (1) |   | Includes the ALLTEL Corporation 1991 Stock Option Plan, ALLTEL                Corporation 1994 Stock Option Plan for Employees, ALLTEL Corporation                1994                Stock Option Plan for Nonemployee Directors, ALLTEL Corporation 1998                Equity Incentive Plan, and the ALLTEL Corporation 2001 Equity Incentive                Plan. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) |   | Does not include 1,920,503                stock options with a weighted-average exercise price of $30.77, which                were                assumed by Alltel in connection with the Company’s mergers with 360°                Communications Company in 1998, Aliant Communications Inc. in 1999                and                Western Wireless Corporation in 2005. These options were issued under                the                Amended and Restated 360° Communications Company 1996 Equity Incentive                Plan, 360° Communications Company 1996 Replacement Stock Option Plan, the                Lincoln Telecommunications Company 1989 Stock and Incentive Stock                Plan,                Western Wireless Corporation 2005 Long-Term Equity Incentive Plan                and the                Amended and Restated 1994 Management Incentive Stock Option Plan                of                Western Wireless Corporation. These plans have been frozen since                the                merger dates, with respect to the granting of any additional                options. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

30 

**ALLTEL        CorporationForm 10-K, Part III**

**Item 13.**
**Certain        Relationships        and Related Transactions**

**Item 14.**
**Principal        Accountant        Fees and Services**

**Form 10-K,        Part IV**

**Item 15**
**.        ****Exhibits, Financial Statement Schedules**

| (a) |   | The following documents are filed as a part of this                report: |
|-----|--------|----------------------------------------------------------------------------|

|   |   |                                                                                                                                                                                                                                                                                 |   |                                      |   |   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|
| 1.     |   | Financial Statements:The following                Consolidated Financial Statements of ALLTEL Corporation and subsidiaries                for the year ended December 31, 2005, included in the Financial                Supplement, which is incorporated by reference herein: |   |                                      |   |   |
|        |   |                                                                                                                                                                                                                                                                                 |   |                                      |   |   |
|        |   |                                                                                                                                                                                                                                                                                 |   | Financial                                 |
|        |   |                                                                                                                                                                                                                                                                                 |   | Supplement                                |
|        |   |                                                                                                                                                                                                                                                                                 |   | Page Number                               |
|        |   | Management’s Report on Internal Control Over                Financial Reporting                                                                                                                                                                                                |   | F-45                                      |
|        |   | Report of Independent Registered Public                Accounting Firm                                                                                                                                                                                                               |   | F-46                -                F-47 |
|        |   | Consolidated Statements of Income -                for the                years ended December 31, 2005, 2004 and 2003                                                                                                                                                          |   | F-48                                      |
|        |   | Consolidated Balance Sheets — as of                December 31, 2005 and 2004                                                                                                                                                                                             |   | F-49                                      |
|        |   | Consolidated Statements of Cash Flows                - for the                years ended December 31, 2005, 2004 and 2003                                                                                                                                                      |   | F-50                                      |
|        |   | Consolidated Statements of Shareholders’ Equity                - for the years ended December 31, 2005, 2004 and 2003                                                                                                                                                     |   | F-51                                      |
|        |   | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                           |   | F-52                -                F-87 |
|        |   |                                                                                                                                                                                                                                                                                 |   |                                      |   |   |
|        |   |                                                                                                                                                                                                                                                                                 |   | Form 10-K                            |
| 2.     |   | Financial Statement Schedules:                                                                                                                                                                                                                                                       |   | Page                Number                |
|        |   | Report of Independent Registered Public                Accounting Firm                                                                                                                                                                                                               |   |                                      | 33     |   |
|        |   | Schedule II. Valuation and Qualifying                Accounts                                                                                                                                                                                                                   |   |                                      | 34     |   |
|        |   |                                                                                                                                                                                                                                                                                 |   |                                      |   |   |
| 3.     |   | Exhibits:                                                                                                                                                                                                                                                                            |   |                                      |   |   |
|        |   | Exhibit Index                                                                                                                                                                                                                                                                   |   | 35-42                                     |

|   |   | Separate condensed financial statements of ALLTEL Corporation                have                been omitted since the Company meets the tests set forth in                Regulation S-X Rule 4-08(e)(3). All other schedules                are omitted                since the required information is not present or is not present in                amounts                sufficient to require submission of the schedule, or because the                information required is included in the consolidated financial statements                and notes thereto. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

31 

|   |   |                                                                |   |   |   |                      |
|--------|--------|---------------------------------------------------------------------|--------|--------|--------|---------------------------|
|        |   | ALLTEL Corporation                                                  |   |   |   |                      |
|        |   | Registrant                                                          |   |   |   |                      |
|        |   |                                                                |   |   |   |                      |
| By     |   | /s/ Scott T. Ford                                                   |   |   |   | Date: March 10, 2006 |
|        |   |                                                                |   |   |   |                      |
|        |   | Scott T. Ford, President and Chief Executive                Officer |   |   |   |                      |

|   |   |                                                                          |   |   |   |                      |
|--------|--------|-------------------------------------------------------------------------------|--------|--------|--------|---------------------------|
| By     |   | /s/ Sharilyn S. Gasaway                                                       |   |   |   | Date: March 10, 2006 |
|        |   |                                                                          |   |   |   |                      |
|        |   | Sharilyn S. Gasaway, Executive Vice                President                - |   |   |   |                      |
|        |   | Chief Financial Officer                                                       |   |   |   |                      |
|        |   | (Principal Financial Officer)                                                 |   |   |   |                      |

|                                                                 |   |                                                                          |   |   |   |                      |   |                                |
|----------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|--------|--------|---------------------------|--------|-------------------------------------|
| By                                                                   |   | /s/ Scott T. Ford                                                             |   |   |   |                      |   |                                |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
|                                                                      |   | Scott T. Ford, President, Chief Executive                Officer and Director |   |   |   |                      |   |                                |
|                                                                      |   |                                                                          |   |   |   | By                        |   | /s/ Sharilyn S. Gasaway             |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Sue P. Mosley, Controller                                           |   |                                                                          |   |   |   | * (Sharilyn S. Gasaway,   |
|                                                                      |   | (Principal Accounting Officer)                                                |   |   |   |                      |   |    Attorney-in-fact) |
|                                                                 |   |                                                                          |   |   |   | Date: March 10, 2006 |
| *Joe T. Ford, Chairman and                Director                   |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *John R. Belk, Director                                              |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *William H. Crown, Director                                          |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Dennis E. Foster, Director                                          |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Lawrence L. Gellerstedt                III,                Director |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Emon A. Mahony, Jr., Director                                       |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *John P. McConnell, Director                                         |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Josie C. Natori, Director                                           |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Gregory W. Penske, Director                                         |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Warren A. Stephens, Director                                        |   |                                                                          |   |   |   |                      |
|                                                                      |   |                                                                          |   |   |   |                      |   |                                |
| *Ronald Townsend, Director                                           |   |                                                                          |   |   |   |                      |

32 

**Report        of        Independent Registered Public Accounting Firm onFinancial Statement        Schedule**

33 

|                                                                                    |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|----------|--------|--------|--------|----------|--------|------------|--------|--------|---------|--------|--------|------------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Column A                                                                                |   | Column B   |   | Column C   |   | Column D |   |   |   |     |   | Column E   |
|                                                                                    |   |       |   | Additions  |   |     |   |   |   |     |   |       |
|                                                                                    |   | Balance at |   | Charged to |   |     |   |   |   | Charged  |   |       |   |   |    |   |   | Balance at |
|                                                                                    |   | Beginning  |   | Cost and   |   |     |   |   |   | to Other |   | Deductions |   |   |    |   |   | End of     |
| Description                                                                             |   | of Period  |   | Expenses   |   |     |   |   |   | Accounts |   | Describe   |   |   |    |   |   | Period     |
| Allowance for                  doubtful                  accounts, customers and other: |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| For the years                  ended:                                                   |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| December 31,                  2005                                                 |   | $          | 53.6   |       |   | $        | 221.7  |   |   |     |   |       |   | $      | – |   |   | $          | 190.6   | (A)    |   |   |   |   |   | $      | 84.7   |   |
| December 31,                  2004                                                 |   | $          | 46.3   |       |   | $        | 184.9  |   |   |     |   |       |   | $      | – |   |   | $          | 177.6   | (A)    |   |   |   |   |   | $      | 53.6   |   |
| December 31,                  2003                                                 |   | $          | 68.4   |       |   | $        | 184.7  |   |   |     |   |       |   | $      | – |   |   | $          | 206.8   | (A)    |   |   |   |   |   | $      | 46.3   |   |
|                                                                                    |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Valuation allowance                  for                  deferred tax assets:          |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| For the years                  ended:                                                   |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| December 31,                  2005                                                 |   | $          | 16.2   |       |   | $        | 2.6    |   |   |     |   |       |   | $      | 0.7     |   |   | $          | 5.3     | (B)    |   |   |   |   |   | $      | 14.2   |   |
| December 31,                  2004                                                 |   | $          | 13.5   |       |   | $        | 2.7    |   |   |     |   |       |   | $      | – |   |   | $          | – |   |   |   |   |   |   | $      | 16.2   |   |
| December 31,                  2003                                                 |   | $          | 6.0    |       |   | $        | 7.5    |   |   |     |   |       |   | $      | – |   |   | $          | – |   |   |   |   |   |   | $      | 13.5   |   |
|                                                                                    |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Accrued liabilities                  related to restructuring and other charges:        |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| For the years                  ended:                                                   |   |       |   |       |   |     |   |   |   |     |   |       |   |   |    |   |   |       |    |   |   |   |   |   |   |   |   |   |
| December 31,                  2005                                                 |   | $          | 0.7    |       |   | $        | 58.7   | (C)    |   |     |   |       |   | $      | – |   |   | $          | 29.7    | (D)    |   |   |   |   |   | $      | 29.7   |   |
| December 31,                  2004                                                 |   | $          | 3.8    |       |   | $        | 50.9   | (E)    |   |     |   |       |   | $      | – |   |   | $          | 54.0    | (F)    |   |   |   |   |   | $      | 0.7    |   |
| December 31,                  2003                                                 |   | $          | 13.1   |       |   | $        | 19.0   | (G)    |   |     |   |       |   | $      | – |   |   | $          | 28.3    | (H)    |   |   |   |   |   | $      | 3.8    |   |

|   | (A) |   | Accounts charged off net of recoveries of amounts previously written                off.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | (B) |   | Reduction in valuation allowance due to utilization of state net                operating loss carryforwards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |
|   | (C) |   | During 2005, the Company recorded integration expenses of                22.9 million in connection with Alltel’s exchange of wireless assets                with Cingular Wireless LLC (“Cingular”), merger with Western Wireless                Corporation and the acquisition of wireless properties from Public                Service                Cellular, Inc. (“PS Cellular”) Alltel also incurred $4.4 million of                severance and employee benefit costs related to a workforce reduction                in                its wireline operations. The Company also incurred $31.3 million                of                incremental costs, principally consisting of investment banker, audit                and                legal fees, related to the pending spin off its wireline business                to                Alltel stockholders and merger with Valor Communications Group, Inc. |
|   |
|   | (D) |   | Includes cash outlays of $14.7 million for expenses paid                in 2005                and non-cash charges of $15.0 million, primarily consisting                of                handset subsidies incurred to migrate the acquired Cingular and PS                Cellular customer base to CDMA handsets. The handset subsidies were                included in the total amount of integration expenses discussed in                Note                (C).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |
|   | (E) |   | During 2004, the Company recorded restructuring and other charges                of                $28.4 million related to a planned workforce reduction and the exit                of its                competitive local exchange carrier operations in the Jacksonville,                Florida                market. In addition, the Company recorded a $2.3 million reduction                in                the liabilities associated with various restructuring activities                initiated                prior to 2003. The Company also recorded a write-down in the carrying                value of certain corporate and regional facilities to fair value                in                conjunction with the proposed leasing or sale of those facilities                of                $24.8 million.                                                                                                                           |
|   |
|   | (F) |   | Includes cash outlays of $28.4 million for expenses paid                in 2004                and non-cash charges of $25.6 million, primarily consisting                of the                carrying value of certain corporate and regional facilities discussed                in                Note (E).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |
|   | (G) |   | During 2003, the Company recorded restructuring and other charges                of                $8.5 million in connection with the restructuring of the Company’s call                center operations. The Company also recorded a $2.7 million                reduction                in the liabilities associated with various restructuring activities                initiated prior to 2003, and Alltel also wrote off $13.2 million                of                capitalized software development costs that had no alternative future                use                or functionality.                                                                                                                                                                                                                                                                                                                                                   |
|   |
|   | (H) |   | Includes cash outlays of $13.1 million for expenses paid                in 2003                and non-cash charges of $15.2 million, primarily consisting                of the                write-off of capitalized computer software development costs discussed                in                Note (G).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

34 

|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|-----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (2)(a)    |   | Distribution Agreement, dated as                of                December 8, 2005, between ALLTEL Corporation and ALLTEL Holding                Corp.                (incorporated herein by reference to Exhibit 2.1 to Current                Report on                Form 8-K, dated December 9, 2005).                                                                                                                                  |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (2)(b)    |   | Agreement and Plan of Merger, dated                as of                December 8, 2005, among ALLTEL Corporation, ALLTEL Holding                Corp., and                Valor Communications Group, Inc. (incorporated herein by reference                to                Exhibit 2.2 to Current Report on Form 8-K, dated December                9,                2005).                                                             |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (3)(a)(1) |   | Amended and Restated Certificate                of                Incorporation of ALLTEL Corporation (incorporated herein by reference                to                Exhibit B to Proxy Statement, dated March 9, 1990).                                                                                                                                                                                                                       |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (a)(2)    |   | Amendment No. 1 to Amended                and Restated                Certificate of Incorporation of ALLTEL Corporation (incorporated                herein by                reference to Annex F of ALLTEL Corporation Registration Statement                (File                No. 333-51915) on Form S-4 dated May 6, 1998).                                                                                                      |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (b)       |   | Bylaws of ALLTEL Corporation (As                amended as                of January 29, 1998) (incorporated herein by reference to                Exhibit 3(b) to Form 10-K for the fiscal year ended                December 31, 1997).                                                                                                                                                                                                |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (4)(a)    |   | Rights Agreement dated as of January 30,                l997, between ALLTEL Corporation and First Union National Bank of                North                Carolina (incorporated herein by reference to Form 8-K dated                February                3, 1997, filed with the Commission on February 4, 1997).                                                                                                                    |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (a)(1)    |   | Amendment No. 1 to January 30,                1997                Rights Agreement dated as of February 2, 2005 between ALLTEL                Corporation and Computershare Investor Services, LLC (incorporated                herein                by reference to Exhibit 4(a)(1) to Form 10-Q for the                period                ended March 31, 2005).                                                         |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (b)       |   | The Company agrees to provide to                the                Commission, upon request, copies of any agreement defining rights                of                long-term debt holders.                                                                                                                                                                                                                                                                |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (c)       |   | Indenture dated as of March 7,                1996,                between 360° Communications                Company and Citibank, N.A., as Trustee (the “1996 360° Indenture”) (incorporated herein                by                reference to Exhibit 4.2 to 360° Communications Company’s Annual                Report on Form 10-K for the fiscal year ended December 31,                1995). |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (d)       |   | First Supplemental Indenture dated                as of                February 1, 1999, among 360°                Communications Company, ALLTEL Corporation and Citibank, N.A. as                trustee                (incorporated herein by reference to Exhibit 4(e) to Form 10-Q                for the period ended March 31, 2003).                                                                                       |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (e)       |   | Indenture dated as of March 1,                1997,                between 360° Communications                Company and Citibank, N.A., as Trustee (the “1997 360° Indenture”) (incorporated herein                by                reference to Exhibit 4.6 to 360° Communications Company’s Current                Report on Form 8-K dated March 17, 1997).                                       |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (f)       |   | Form of 7.60% Senior Note Due 2009                issued                under the 1997 360° Indenture                (incorporated herein by reference to Exhibit 4.7 to 360° Communications Company’s Current                Report on Form 8-K dated March 17, 1997).                                                                                                                                                       |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (g)       |   | Form of 6.65% Senior Note Due 2008                issued                under the 1997 360° Indenture                (incorporated herein by reference to Exhibit 4.8 to 360° Communications Company’s Current                Report on Form 8-K dated January 13, 1998).                                                                                                                                                     |   | *      |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| (h)       |   | First Supplemental Indenture dated                as of                February 1, 1999, among 360°                Communications Company, ALLTEL Corporation and Citibank, N.A. as                trustee                (incorporated herein by reference to Exhibit 4(i) to Form 10-Q                for the period ended March 31, 2003).                                                                                       |   | *      |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

35 

|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (10)(a)(1) |   | Five Year Revolving Credit Agreement                dated as                of July 28, 2004, between ALLTEL Corporation and Bank of America,                N.A., JPMorgan Chase Bank, Banc of America Securities LLC and J.P.                Morgan                Securities Inc., Citicorp USA, Inc., KeyBank National Association,                Wachovia Bank, National Association, and Barclays Bank PLC (incorporated                herein by reference to Form 10-Q for the period ended June 30,                2004).                              |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (a)(2)     |   | 364-Day Revolving Credit Agreement                dated as                of August 1, 2005 between ALLTEL Corporation and Bank of America,                N.A., JPMorgan Chase Bank, N.A., Banc of America Securities LLC and                J.P.                Morgan Securities Inc., Citicorp USA, Inc., KeyBank National Association,                Wachovia Bank, National Association, and Barclays Bank PLC. (incorporated                herein by reference to Exhibit 10.1 to Current Report on                Form 8-K dated August 1, 2005). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (b)(1)     |   | Agreement by and between ALLTEL Corporation                and Joe T. Ford effective as of July 26, 2001 (incorporated                herein by                reference to Exhibit 10(b)(4) to Form 10-K for the                fiscal year                ended December 31, 2001).                                                                                                                                                                                                                                                                       |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (b)(2)     |   | Employment Agreement by and between                ALLTEL                Corporation and Scott T. Ford effective as of July 24, 2003                (incorporated herein by reference to Exhibit 10(c)(9) to                Form 10-Q for the period ended September 30, 2003).                                                                                                                                                                                                                                                                             |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(1)     |   | Change in Control Agreement by and                between                the Company and Scott T. Ford effective as of April 25, 1996                (incorporated herein by reference to Exhibit 10(c)(6) to                Form 10-Q for the period ended June 30, 1996).                                                                                                                                                                                                                                                                                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(1)(a)  |   | Amendment to Change in Control Agreement                by                and between the Company and Scott T. Ford effective as of July 24,                2003 (incorporated herein by reference to Exhibit 10(c)(10)                to                Form 10-Q for the period ended September 30, 2003).                                                                                                                                                                                                                                                |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(2)     |   | Change in Control Agreement by and                between                the Company and Kevin L. Beebe effective as of July 23, 1998                (incorporated herein by reference to Exhibit 10(c)(2) to                Form 10-K for the fiscal year ended December 31, 1998).                                                                                                                                                                                                                                                                        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(2)(a)  |   | Amendment to Change in Control Agreement                by                and between the Company and Kevin L. Beebe effective as of                October 23, 2003 (incorporated herein by reference to Exhibit                10(c)(2)(a) to Form 10-K for the fiscal year ended December 31,                2003).                                                                                                                                                                                                                                           |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(3)     |   | Change in Control Agreement by and                between                the Company and Jeffrey H. Fox effective as of January 30,                1997                (incorporated herein by reference to Exhibit 10(c)(4) to                Form 10-K for the fiscal year ended December 31, 1998).                                                                                                                                                                                                                                                      |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(3)(a)  |   | Amendment to Change in Control Agreement                by                and between the Company and Jeffrey H. Fox effective as of                October 23, 2003 (incorporated herein by reference to Exhibit                10(c)(3)(a) to Form 10-K for the fiscal year ended December 31,                2003).                                                                                                                                                                                                                                           |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(4)     |   | Change in Control Agreement by and                between                the Company and Sharilyn S. Gasaway effective as of January 18,                2006.                                                                                                                                                                                                                                                                                                                                                                                                              |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| (c)(5)     |   | Change in Control Agreement by and                between                the Company and Keith A. Kostuch effective as of February 15,                2001                (incorporated herein by reference to Exhibit 10(c)(9) to                Form 10-K for the fiscal year ended December 31, 2000).                                                                                                                                                                                                                                                   |   | *      |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

36 

|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
|------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (10)(c)(6) |   | Change in Control Agreement by and                between                the Company and C.J. Duvall Jr. effective as of January 22,                2004                (incorporated herein by reference to Exhibit 10(c)(7)(a) to                Form 10-Q for the period ended June 30, 2004).                                                      |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (c)(7)     |   | Change in Control Agreement by and                between                the Company and Sue P. Mosley effective as of January 18,                2006.                                                                                                                                                                                                               |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (c)(8)     |   | Change in Control Agreement by and                between                the Company and John A. Ebner effective as of July 21, 2005.                                                                                                                                                                                                                                 |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (d)(1)     |   | Amended and Restated ALLTEL Corporation                Supplemental Executive Retirement Plan (incorporated herein by reference                to Exhibit 10(e)(1) to Form 10-K for the fiscal year                ended                December 31, 2001).                                                                                                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (d)(2)     |   | Amendment No. 1 to Amended                and Restated                ALLTEL Corporation Supplemental Executive Retirement Plan effective                October 23, 2003 (incorporated herein by reference to Exhibit                (e)(2)                to Form 10-K for the fiscal year ended December 31,                2003).                  |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (d)(3)     |   | Amendment No. 2 to the ALLTEL                Corporation Supplemental Executive Retirement Plan effective                December 29, 2005 (incorporated herein by reference to                Exhibit 10.1 to Current Report on Form 8-K dated December 29,                2005, filed with the Commission on January 11, 2006).                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(1)     |   | Executive Deferred Compensation Plan                of                ALLTEL Corporation, as amended and restated effective October 1,                1993                (incorporated herein by reference to Exhibit 10(e) to Form 10-K                for the fiscal year ended December 31, 1993).                                                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(2)     |   | Amendment No. 1 to Executive                Deferred                Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement)                effective January 29, 1998 (incorporated herein by reference                to                Exhibit 10(f)(2) to Form 10-K for the fiscal year ended                December 31, 1997). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(3)     |   | Amendment No. 2 to Executive                Deferred                Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement)                effective April 23, 1998 (incorporated herein by reference                to Exhibit                10(f)(3) to Form 10-K for the fiscal year ended December 31,                2002).   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(4)     |   | Amendment No. 3 to Executive                Deferred                Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement)                effective January 28, 1999 (incorporated herein by reference                to                Exhibit 10(f)(4) to Form 10-K for the fiscal year ended                December 31, 2002). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(5)     |   | Amendment No. 4 to Executive                Deferred                Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement)                effective April 21, 1999 (incorporated herein by reference                to Exhibit                10(f)(5) to Form 10-K for the fiscal year ended December 31,                2002).   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(6)     |   | Amendment No. 5 to Executive                Deferred                Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement)                effective April 25, 2002 (incorporated herein by reference                to Exhibit                10(f)(6) to Form 10-K for the fiscal year ended December 31,                2002).   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(7)     |   | Amendment No. 6 to Executive                Deferred                Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement)                effective December 8, 2005.                                                                                                                                                                        |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(8)     |   | Deferred Compensation Plan for Directors                of                ALLTEL Corporation, as amended and restated effective October 1,                1993                (incorporated herein by reference to Exhibit 10(f) to Form 10-K                for the fiscal year ended December 31, 1993).                                             |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| (e)(9)     |   | Amendment No. 1 to Deferred                Compensation                Plan for Directors of ALLTEL Corporation (October 1, 1993                Restatement) (incorporated herein by reference to Exhibit 10(f)(3)                to                Form 10-K for the fiscal year ended December 31, 1996).                                       |   | *      |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

37 

|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (10)(e)(10) |   | Amendment No. 2 to Deferred                Compensation                Plan for Directors of ALLTEL Corporation (October 1, 1993                Restatement) effective April 25, 2002 (incorporated herein                by                reference to Exhibit 10(f)(9) to Form 10-K for the                fiscal year                ended December 31, 2002). |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(11)     |   | ALLTEL Corporation 1999 Nonemployee                Directors                Stock Compensation Plan (as Amended and Restated effective                January 22, 2004)(incorporated herein by reference to Exhibit                (f)(10)                to Form 10-K for the fiscal year ended December 31, 2003).                                                                   |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(12)     |   | ALLTEL Corporation 1998 Management                Deferred                Compensation Plan, effective June 23, 1998 (incorporated herein                by                reference to Exhibit 10(f)(5) to Form 10-Q for the                period ended                June 30, 1998).                                                                                     |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(13)     |   | Amendment No. 1 to the ALLTEL                Corporation 1998 Management Deferred Compensation Plan effective                June 23, 1998 (incorporated herein by reference to                Exhibit 10(f)(11) to Form 10-K for the fiscal year                ended                December 31, 2002).                                                               |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(14)     |   | Amendment No. 2 to the ALLTEL                Corporation 1998 Management Deferred Compensation Plan effective                April 25, 2002 (incorporated herein by reference to                Exhibit 10(f)(12) to Form 10-K for the fiscal year                ended                December 31, 2002).                                                              |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(15)     |   | Amendment No. 3 to the ALLTEL                Corporation 1998 Management Deferred Compensation Plan effective                December 8, 2005.                                                                                                                                                                                                                                         |   | (a)    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(16)     |   | ALLTEL Corporation 1998 Directors’ Deferred                Compensation Plan, effective June 23, 1998 (incorporated herein                by                reference to Exhibit 10(f)(6) to Form 10-Q for the                period ended                June 30, 1998).                                                                                              |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (e)(17)     |   | Amendment No. 1 to the ALLTEL                Corporation 1998 Directors’ Deferred Compensation Plan, effective                April 25, 2002 (incorporated herein by reference to                Exhibit 10(f)(14) to Form 10-K for the fiscal year                ended                December 31, 2002).                                                       |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(1)      |   | ALLTEL Corporation 1991 Stock Option                Plan                (incorporated herein by reference to Exhibit A to Proxy Statement,                dated March 8, 1991).                                                                                                                                                                                                        |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(2)      |   | First Amendment to ALLTEL Corporation                1991                Stock Option Plan (incorporated herein by reference to                Exhibit 10(g)(3) to Form 10-K for the fiscal year ended                December 31, 2000).                                                                                                                                         |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(3)      |   | ALLTEL Corporation 1994 Stock Option                Plan for                Employees (incorporated herein by reference to Exhibit A to                Proxy                Statement dated March 4, 1994).                                                                                                                                                                            |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(4)      |   | First Amendment to ALLTEL Corporation                1994                Stock Option Plan for Employees (incorporated herein by reference                to                Exhibit 10(g)(5) to Form 10-K for the fiscal year ended                December 31, 2000).                                                                                                            |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(5)      |   | ALLTEL Corporation 1994 Stock Option                Plan for                Nonemployee Directors (incorporated herein by reference to Exhibit B                to Proxy Statement dated March 4, 1994).                                                                                                                                                                               |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(6)      |   | First Amendment to ALLTEL Corporation                1994                Stock Option Plan for Nonemployee Directors (incorporated herein                by                reference to Exhibit 10(g)(5) to Form 10-K for the                fiscal year                ended December 31, 1996).                                                                                 |   | *      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                             |   |   |
| (f)(7)      |   | Second, Third and Fourth Amendments                to ALLTEL                Corporation 1994 Stock Option Plan for Nonemployee Directors (incorporated                herein by reference to Exhibit 10(g)(8) to Form 10-K                for the                fiscal year ended December 31, 2000).                                                                            |   | *      |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

38 

|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (10)(f)(8) |   | ALLTEL Corporation 1998 Equity Incentive                Plan                (incorporated herein by reference to Annex G of ALLTEL Corporation                Registration Statement (File No. 333-51915) on Form S-4                dated                May 6, 1998).                                                                                                                                              |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (f)(9)     |   | First and Second Amendments to ALLTEL                Corporation 1998 Equity Incentive Plan (incorporated herein by reference                to Exhibit 10(g)(9) to Form 10-K for the fiscal year                ended                December 31, 2000).                                                                                                                                                            |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (f)(10)    |   | ALLTEL Corporation 2001 Equity Incentive                Plan                (incorporated herein by reference to Appendix C to Proxy Statement                dated March 5, 2001).                                                                                                                                                                                                                                       |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (g)(1)     |   | Amended and Restated 360° Communications                Company 1996 Equity Incentive Plan (incorporated herein by reference                to                Form S-8 (File No. 333-88923) of ALLTEL Corporation                filed with                the Commission on October 13, 1999).                                                                                                                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (g)(2)     |   | Lincoln Telecommunications Company                1989 Stock                and Incentive Stock Plan (incorporated herein by reference to                Form S-8 (File No. 333-88907) of ALLTEL Corporation                filed with                the Commission on October 13, 1999).                                                                                                                           |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (g)(3)     |   | Western Wireless Corporation 2005                Long-Term                Equity Incentive Plan (incorporated herein by reference to Form S-8                (File No. 333-127081) of ALLTEL Corporation filed with the                Commission                on August 1, 2005).                                                                                                                                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (g)(4)     |   | Amended and Restated 1994 Management                Incentive Stock Option Plan of Western Wireless Corporation (incorporated                herein by reference to Form S-8 (File No. 333-127081)                of ALLTEL                Corporation filed with the Commission on August 1, 2005).                                                                                                                 |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (h)(1)     |   | ALLTEL Corporation Performance Incentive                Compensation Plan as amended, effective January 1, 1993                (Exhibit 10(i) to Form SE dated February 17, 1993).                                                                                                                                                                                                                                   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (h)(2)     |   | Amendment No. 1 to ALLTEL                Corporation                Performance Incentive Compensation Plan, effective January 29,                1998                (incorporated herein by reference to Exhibit 10(i)(1) to                Form 10-K for the fiscal year ended December 31, 1997).                                                                                                      |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (i)(1)     |   | ALLTEL Corporation Long-Term Performance                Incentive Compensation Plan, as amended and restated effective January                1,                1993 (Exhibit 10(j) to Form SE dated February 17,                1993).                                                                                                                                                                              |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (i)(2)     |   | Amendment No. 1 to ALLTEL                Corporation                Long-Term Performance Incentive Compensation Plan as amended and                restated                effective January 1, 1993 (incorporated herein by reference                to                Exhibit 10(j)(1) to Amendment No. 1 to Form 10-K                for the                fiscal year ended December 31, 1993). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (i)(3)     |   | Amendment No. 2 to ALLTEL                Corporation                Long-Term Performance Incentive Compensation Plan (January 1,                1993                Restatement), effective January 29, 1998 (incorporated herein                by                reference to Exhibit 10(j)(2) to Form 10-K for the                fiscal year                ended December 31, 1997).            |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(1)     |   | ALLTEL Corporation Pension Plan                (January 1, 2001 Restatement) (incorporated herein by reference                to                Exhibit 10(k) to Form 10-K for the fiscal year ended                December 31, 2001).                                                                                                                                                                              |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(2)     |   | Amendment No. 1 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein by                reference to Exhibit 10(k)(1) to Form 10-Q for the                period ended                September 30, 2002).                                                                                                                                        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(3)     |   | Amendment No. 2 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein by                reference to Exhibit 10(k)(3) to Form 10-K for the                fiscal year                ended December 31, 2002).                                                                                                                                    |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(4)     |   | Amendment No. 3 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein by                reference to Exhibit 10(k)(4) to Form 10-Q for the                period ended                June 30, 2003).                                                                                                                                             |   | *      |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

39 

|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (10)(j)(5) |   | Amendment No. 4 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein by                reference to Exhibit 10(k)(9) to Form 10-Q for the                period ended                June 30, 2004).                             |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(6)     |   | Amendment No. 5 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein by                reference to Exhibit 10(k)(5) to Form 10-K for the                fiscal year                ended December 31, 2003).                    |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(7)     |   | Amendment No. 6 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(6) to Form 10-K for the fiscal                year                ended December 31, 2003).   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(8)     |   | Amendment No. 7 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(7) to Form 10-K for the fiscal                year                ended December 31, 2003).   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(9)     |   | Amendment No. 8 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(8) to Form 10-K for the fiscal                year                ended December 31, 2003).   |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(10)    |   | Amendment No. 9 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(10) to Form 10-K for the fiscal                year                ended December 31, 2005).  |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(11)    |   | Amendment No. 10 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(11) to Form 10-K for the fiscal                year                ended December 31, 2005). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(12)    |   | Amendment No. 11 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(12) to Form 10-K for the fiscal                year                ended December 31, 2005). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(13)    |   | Amendment No. 12 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(k)(13) to Form 10-Q for the period                ended                September 30, 2005).     |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(14)    |   | Amendment No. 13 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement).                                                                                                                                                                                          |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (j)(15)    |   | Amendment No. 14 to ALLTEL                Corporation                Pension Plan (January 1, 2001 Restatement).                                                                                                                                                                                          |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(1)     |   | ALLTEL Corporation Profit-Sharing                Plan                (January 1, 2002 Restatement) (incorporated herein by reference                to                Exhibit 10(l) to Form 10-Q for the period ended March 31,                2002).                                           |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(2)     |   | Amendment No. 1 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated                herein by reference to Exhibit 10(l)(2) to Form 10-K                for the                fiscal year ended December 31, 2002).        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(3)     |   | Amendment No. 2 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated                herein by reference to Exhibit 10(I)(3) to Form 10-K                for the                fiscal year ended December 31, 2003).        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(4)     |   | Amendment No. 3 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated                herein by reference to Exhibit 10(I)(4) to Form 10-K                for the                fiscal year ended December 31, 2003).        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(5)     |   | Amendment No. 4 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated                herein by reference to Exhibit 10(I)(5) to Form 10-K                for the                fiscal year ended December 31, 2003).        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(6)     |   | Amendment No. 5 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated                herein by reference to Exhibit (10)(l)(6) to Form 10-K for                the fiscal                year ended December 31, 2005).           |   | *      |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

40 

|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| (10)(k)(7) |   | Amendment No. 6 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement). (incorporated                herein by reference to Exhibit (10)(l)(7) to Form 10-Q for                the period                ended September 30, 2005).              |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (k)(8)     |   | Amendment No. 7 to ALLTEL                Corporation                Profit-Sharing Plan (January 1, 2002 Restatement).                                                                                                                                                                                    |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (l)        |   | ALLTEL Corporation Benefit Restoration                Plan                (January 1, 1996 Restatement) (incorporated herein by reference                to                Exhibit 10(m) to Form 10-K for the fiscal year ended                December 31, 1995).                              |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (m)(1)     |   | Amended and Restated ALLTEL Corporation                Supplemental Medical Expense Reimbursement Plan (incorporated herein                by                reference to Exhibit 10(p) to Form 10-K for the fiscal                year                ended December 31, 1990).                     |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (m)(2)     |   | First Amendment to ALLTEL Corporation                Supplemental Medical Expense Reimbursement Plan (incorporated herein                by                reference to Exhibit 10(n)(1) to Form 10-K for the                fiscal year                ended December 31, 2001).                    |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(1)     |   | ALLTEL Corporation 401(k) Plan                (January 1, 2001 Restatement) (incorporated herein by reference                to                Exhibit 10(o) to Form 10-K for the fiscal year ended                December 31, 2001).                                                          |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(2)     |   | Amendment No. 1 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit 10(o)(2) to Form 10-K for the                fiscal year                ended December 31, 2002). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(3)     |   | Amendment No. 2 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit 10(o)(3) to Form 10-K for the                fiscal year                ended December 31, 2002). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(4)     |   | Amendment No. 3 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit 10(o)(4) to Form 10-Q for the                period ended                June 30, 2003).          |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(5)     |   | Amendment No. 4 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit 10(o)(5) to Form 10-K for the                fiscal year                ended December 31, 2003). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(6)     |   | Amendment No. 5 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit 10(o)(6) to Form 10-K for the                fiscal year                ended December 31, 2003). |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(7)     |   | Amendment No. 6 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit 10(o)(7) to Form 10-Q for the                period ended                June 30, 2004).          |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(8)     |   | Amendment No. 7 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(o)(8) to Form 10-K for the fiscal                year                ended December 31, 2005).    |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(9)     |   | Amendment No. 8 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement) (incorporated herein                by                reference to Exhibit (10)(o)(9) to Form 10-Q for the period                ended                September 30, 2005).        |   | *      |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (n)(10)    |   | Amendment No. 9 to ALLTEL                Corporation                401(k) Plan (January 1, 2001 Restatement).                                                                                                                                                                                            |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (11)       |   | Statement Re: Computation of per                share                earnings.                                                                                                                                                                                                                                      |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (12)       |   | Statement Re: Computation of ratios.                                                                                                                                                                                                                                                                                |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (21)       |   | Subsidiaries of ALLTEL Corporation.                                                                                                                                                                                                                                                                                 |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (23)       |   | Consent of PricewaterhouseCoopers                LLP.                                                                                                                                                                                                                                                               |   | (a)    |
|       |   |                                                                                                                                                                                                                                                                                                                |   |   |
| (24)       |   | Powers of attorney.                                                                                                                                                                                                                                                                                                 |   | (a)    |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

41 

|   |   |                                                                                                                                                                                                      |   |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| 31(a)  |   | Certification of Chief Executive                Officer                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                    |   | (a)    |
|   |   |                                                                                                                                                                                                      |   |   |
| 31(b)  |   | Certification of Chief Financial                Officer                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                    |   | (a)    |
|   |   |                                                                                                                                                                                                      |   |   |
| 32(a)  |   | 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. |   | (a)    |
|   |   |                                                                                                                                                                                                      |   |   |
| 32(b)  |   | 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. |   | (a)    |

|   |   |                                                          |
|--------|--------|---------------------------------------------------------------|
| *      |   | Incorporated herein by reference as                indicated. |
| (a)    |   | Filed                herewith.                                |

42 

**ALLTEL        CORPORATION**

**FINANCIAL        SUPPLEMENTTO ANNUAL REPORT ON FORM 10-KFOR THE YEAR ENDED DECEMBER 31,        2005**

**ALLTEL        CORPORATION**

**INDEX        TO        FINANCIAL SUPPLEMENTTO ANNUAL REPORT ON FORM 10-KFOR THE YEAR ENDED        DECEMBER 31, 2005**

|                                                                                                                                                                    |   |                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|
| **Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations**                                       |   | F-2 – F-41                 |
| **Selected                  Financial Data**                                                                                                                            |   | F-42 – F-43                |
| **Management’s                  Responsibility for Financial Statements**                                                                                         |   | F-44                             |
| **Management’s                  Report on Internal Control Over Financial Reporting**                                                                             |   | F-45                             |
| **Report                  of                  Independent Registered Public Accounting Firm**                                                                           |   | F-46 – F-47                |
| **Annual                  Financial Statements:**                                                                                                                       |   |                             |
| Consolidated                  Statements                  of Income for the years ended December 31, 2005, 2004                  and                  2003    |   | F-48                             |
| Consolidated                  Balance                  Sheets as of December 31, 2005 and 2004                                                                |   | F-49                             |
| Consolidated                  Statements                  of Cash Flows for the years ended December 31, 2005, 2004                  and 2003                 |   | F-50                             |
| Consolidated                  Statements                  of Shareholders’ Equity for the years ended December 31,                  2005, 2004 and 2003 |   | F-51                             |
| Notes to Consolidated                  Financial Statements                                                                                                             |   | F-52 –                F-87 |

F-1 

**MANAGEMENT’S        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF        OPERATIONS**

| •   | Wireless revenues and sales increased 24 percent over 2004                reflecting the effects of Alltel’s August 1, 2005 acquisition of                Western Wireless Corporation (“Western Wireless”) and the exchange of                wireless properties with Cingular Wireless LLC (“Cingular”) completed                during the second quarter of 2005. Excluding the effects of acquisitions,                wireless revenues and sales increased 11 percent from a year                ago                driven by Alltel’s continued focus on quality customer growth,                improvements in data revenues, additional Eligible Telecommunications                Carrier (“ETC”) subsidies, and growth in wholesale minutes. Average                revenue per customer increased 7 percent from a year ago to                $51.44,                while retail revenue per customer increased to $46.68, a 5 percent                increase from a year ago. Excluding the acquired markets, both average                revenue per customer and retail revenue per customer increased                5 percent from the same period a year ago, reflecting Alltel’s                continued focus on quality customer growth, improvements in data                revenues                and additional ETC subsidies. Retail minutes of use per wireless                customer                per month increased to 597 minutes, a 21 percent increase                from the                same period of 2004. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Wireless gross customer additions were 4.5 million in 2005,                and                net customer additions were 2.0 million. Within its non-acquired                or                heritage markets, Alltel added 344,000 net postpay wireless customers                and                added 91,000 net prepaid customers during 2005. The net gain in prepaid                customers included the addition of 90,000 net customers in the fourth                quarter of 2005, driven by significant success of Simple Freedom,                Alltel’s                phone-in-the-box prepay service that is sold primarily through Wal-Mart.                In the acquired markets excluding Western Wireless, Alltel incurred                approximate net losses of 138,000 customers, primarily driven by                the                conversion of customers from GSM technology to CDMA technology in                those                markets, which conversion has been completed. In the former Western                Wireless markets, net customer additions for the year were 46,000,                which                includes the addition of 25,000 customers resulting from conforming                these                markets to Alltel’s disconnect policies. Wireless postpay churn was                1.77 percent and total churn, which includes prepay customer                losses,                was 2.17 percent. Comparatively, in Alltel’s heritage markets, postpay                churn declined 8 basis points year-over-year to                1.66 percent. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Wireless segment income increased 23 percent from a year                ago,                primarily reflecting the acquisition-related growth in revenues and                sales                noted above. Excluding the effects of acquisitions, wireless segment                income increased 10 percent from the same period a year ago                driven by                revenue growth. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | In its wireline business, Alltel added 154,000 broadband customers,                increasing Alltel’s broadband customer base to nearly 400,000. During                2005, the Company lost approximately 124,000 wireline access lines,                a                year-over-year decline of 4 percent. Average revenue per wireline                customer increased 2 percent from 2004 to $67.21 due primarily                to                growth in broadband revenues and selling additional services and                features                to existing wireline customers. Wireline segment income decreased                2 percent from a year ago, reflecting the 2 percent                decline in                wireline revenues and sales attributable to the loss of access lines                and                additional costs related to the growth in broadband                customers. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-2 

**PENDING        TRANSACTIONS TO BE COMPLETED DURING 2006**

F-3 

**ACQUISITIONS        COMPLETED DURING 2005, 2004 AND 2003**

F-4 

|                                                                                              |   |   |    |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| **CONSOLIDATED                RESULTS OF OPERATIONS**                                             |   |
| (Millions, except per share amounts)                                                              |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                                              |
| Revenues and                  sales:                                                              |   |   |    |   |   |   |    |   |   |   |    |   |
| Service                  revenues                                                                 |   | $      | 8,380.5 |   |   | $      | 7,374.3 |   |   | $      | 7,156.1 |   |
| Product sales                                                                                     |   |   | 1,106.5 |   |   |   | 871.8   |   |   |   | 823.8   |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Total revenues                  and                  sales                                        |   |   | 9,487.0 |   |   |   | 8,246.1 |   |   |   | 7,979.9 |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Costs and                  expenses:                                                              |   |   |    |   |   |   |    |   |   |   |    |   |
| Cost of                  services                                                                 |   |   | 2,743.8 |   |   |   | 2,374.2 |   |   |   | 2,273.6 |   |
| Cost of products                  sold                                                            |   |   | 1,315.3 |   |   |   | 1,075.5 |   |   |   | 1,043.5 |   |
| Selling, general,                  administrative and other                                       |   |   | 1,795.5 |   |   |   | 1,524.2 |   |   |   | 1,498.1 |   |
| Depreciation                  and                  amortization                                   |   |   | 1,482.6 |   |   |   | 1,299.7 |   |   |   | 1,247.7 |   |
| Restructuring                  and other                  charges                                 |   |   | 58.7    |   |   |   | 50.9    |   |   |   | 19.0    |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Total costs and                  expenses                                                         |   |   | 7,395.9 |   |   |   | 6,324.5 |   |   |   | 6,081.9 |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Operating                  income                                                                 |   |   | 2,091.1 |   |   |   | 1,921.6 |   |   |   | 1,898.0 |   |
|                                                                                              |
| Non-operating                  income                  (expense), net                             |   |   | 133.1   |   |   |   | 22.9    |   |   |   | (3.2    | )      |
| Interest                  expense                                                                 |   |   | (332.6  | )      |   |   | (352.5  | )      |   |   | (378.6  | )      |
| Gain on disposal                  of                  assets, write-down of investments and other |   |   | 218.8   |   |   |   | – |   |   |   | 17.9    |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Income from continuing                  operations before income taxes                            |   |   | 2,110.4 |   |   |   | 1,592.0 |   |   |   | 1,534.1 |   |
| Income taxes                                                                                      |   |   | 801.9   |   |   |   | 565.3   |   |   |   | 580.6   |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Income from continuing                  operations                                                |   |   | 1,308.5 |   |   |   | 1,026.7 |   |   |   | 953.5   |   |
| Income from                  discontinued operations, net of income taxes                         |   |   | 30.3    |   |   |   | 19.5    |   |   |   | 361.0   |   |
| Cumulative effect                  of                  accounting change, net of income taxes     |   |   | (7.4    | )      |   |   | – |   |   |   | 15.6    |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Net income                                                                                        |   | $      | 1,331.4 |   |   | $      | 1,046.2 |   |   | $      | 1,330.1 |   |
|                                                                                              |
| Basic earnings                  per                  share:                                       |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing                  operations                                                |   |   | $3.84   |   |   |   | $3.34   |   |   |   | $3.06   |   |
| Income from                  discontinued operations                                              |   |   | .09     |   |   |   | .06     |   |   |   | 1.16    |   |
| Cumulative effect                  of                  accounting change                          |   |   | (.02    | )      |   |   | – |   |   |   | .05     |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Net income                                                                                        |   |   | $3.91   |   |   |   | $3.40   |   |   |   | $4.27   |   |
|                                                                                              |
| Diluted earnings                  per                  share:                                     |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing                  operations                                                |   |   | $3.80   |   |   |   | $3.33   |   |   |   | $3.05   |   |
| Income from                  discontinued operations                                              |   |   | .09     |   |   |   | .06     |   |   |   | 1.15    |   |
| Cumulative effect                  of                  accounting change                          |   |   | (.02    | )      |   |   | – |   |   |   | .05     |   |
|                                                                                              |   |   |    |   |   |   |    |   |   |
| Net income                                                                                        |   |   | $3.87   |   |   |   | $3.39   |   |   |   | $4.25   |   |
|                                                                                              |

F-5 

F-6 

F-7 

|                                                                                                       |     |   |     |   |   |   |    |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------|----------|--------|----------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                                                                                                       |     |
| (Millions)                                                                                                 | Wireless |   | Wireline |   | Total  |   |
|                                                                                                       |
| Severance and                  employee                  benefit costs                                     |     | $      | –  |   |   | $      | 4.4     |   |   | $      | 4.4    |   |
| Relocation                  costs                                                                          |     |   | 0.7      |   |   |   | – |   |   |   | 0.7    |   |
| Computer system                  conversion and other integration costs                                    |     |   | 22.3     |   |   |   | – |   |   |   | 22.3   |   |
| Costs associated                  with                  pending spin off and merger of wireline operations |     |   | –  |   |   |   | 31.3    |   |   |   | 31.3   |   |
|                                                                                                       |     |   |     |   |   |   |    |   |   |   |   |   |
| Total restructuring                  and                  other charges                                    |     | $      | 23.0     |   |   | $      | 35.7    |   |   | $      | 58.7   |   |
|                                                                                                       |

F-8 

|                                                                  |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |   |   |   |   |   |
|-----------------------------------------------------------------------|----------|--------|----------|----------|--------|------------|---------|----------------|--------|-----------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                                                                  |
|                                                                  |     |   |     |     |   |       |    | Communications |   |      |    |   |   |
|                                                                  |     |   |     |     |   |       |    | Support        |   | Corporate |    |   |   |
| (Millions)                                                            | Wireless |   | Wireline | Services |   | Operations |    | Total          |   |
|                                                                  |
| Severance and employee                benefit costs                   |     | $      | 8.6      |     |   | $          | 11.2    |           |   | $         | 0.5     |   |   | $      | 2.1     |   |   | $      | 22.4   |   |
| Relocation                costs                                       |     |   | 2.7      |     |   |       | 1.2     |           |   |      | 0.1     |   |   |   | 0.1     |   |   |   | 4.1    |   |
| Lease and contract                termination costs                   |     |   | 0.5      |     |   |       | (1.9    | )              |   |      | – |   |   |   | (0.1    | )      |   |   | (1.5   | )      |
| Write-down in the                carrying value of certain facilities |     |   | 0.7      |     |   |       | – |           |   |      | – |   |   |   | 24.1    |   |   |   | 24.8   |   |
| Other exit                costs                                       |     |   | 0.4      |     |   |       | 0.7     |           |   |      | – |   |   |   | – |   |   |   | 1.1    |   |
|                                                                  |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |
| Total restructuring                and                other charges   |     | $      | 12.9     |     |   | $          | 11.2    |           |   | $         | 0.6     |   |   | $      | 26.2    |   |   | $      | 50.9   |   |
|                                                                  |

|                                                                |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |   |   |   |   |   |
|---------------------------------------------------------------------|----------|--------|----------|----------|--------|------------|---------|----------------|--------|-----------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                                                                |     |
|                                                                |     |   |     |     |   |       |    | Communications |   |      |    |   |   |
|                                                                |     |   |     |     |   |       |    | Support        |   | Corporate |    |   |   |
| (Millions)                                                          | Wireless |   | Wireline | Services |   | Operations |    | Total          |   |
|                                                                |
| Severance and employee                benefit costs                 |     | $      | 1.3      |     |   | $          | 7.0     |           |   | $         | – |   |   | $      | (2.0    | )      |   | $      | 6.3    |   |
| Lease and contract                termination costs                 |     |   | –  |     |   |       | – |           |   |      | (0.5    | )      |   |   | – |   |   |   | (0.5   | )      |
| Write-down of software                development costs             |     |   | 7.6      |     |   |       | 1.8     |           |   |      | 3.8     |   |   |   | – |   |   |   | 13.2   |   |
|                                                                |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |
| Total restructuring                and                other charges |     | $      | 8.9      |     |   | $          | 8.8     |           |   | $         | 3.3     |   |   | $      | (2.0    | )      |   | $      | 19.0   |   |
|                                                                |

F-9 

|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Non-Operating                Income (Expense), Net                               |   |
| (Millions)                                                                       |   | 2005   |   |   | 2004   |   |   | 2003   |   |
|                                                                             |
| Equity earnings                  in                  unconsolidated partnerships |   | $      | 43.4   |   |   | $      | 68.5   |   |   | $      | 64.4   |   |
| Minority interest                  in                  consolidated partnerships |   |   | (69.1  | )      |   |   | (80.1  | )      |   |   | (78.6  | )      |
| Other income,                  net                                               |   |   | 158.8  |   |   |   | 34.5   |   |   |   | 11.0   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Non-operating                  income                  (expense), net            |   | $      | 133.1  |   |   | $      | 22.9   |   |   | $      | (3.2   | )      |
|                                                                             |

F-10 

F-11 

F-12 

|                                                                         |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                         |
| (Millions)                                                                   |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                         |
| Revenues and                  sales                                          |   | $      | 455.4   |   |   | $      | – |   |   | $      | 210.3   |   |
| Operating                  expenses                                          |   |   | 368.1   |   |   |   | – |   |   |   | 148.1   |   |
|                                                                         |   |   |    |   |   |   |    |   |   |
| Operating                  income                                            |   |   | 87.3    |   |   |   | – |   |   |   | 62.2    |   |
| Minority interest                  in                  consolidated entities |   |   | (5.9    | )      |   |   | – |   |   |   | – |   |
| Other income                  (expense),                  net                |   |   | (1.1    | )      |   |   | – |   |   |   | (0.1    | )      |
| Gain on sale                  of                  discontinued operations    |   |   | – |   |   |   | – |   |   |   | 555.1   |   |
|                                                                         |   |   |    |   |   |   |    |   |   |
| Pretax income                  from                  discontinued operations |   |   | 80.3    |   |   |   | – |   |   |   | 617.2   |   |
| Income tax expense                  (benefit)                                |   |   | 50.0    |   |   |   | (19.5   | )      |   |   | 256.2   |   |
|                                                                         |   |   |    |   |   |   |    |   |   |
| Income from                  discontinued operations                         |   | $      | 30.3    |   |   | $      | 19.5    |   |   | $      | 361.0   |   |
|                                                                         |

F-13 

|                                                                                                          |   |   |     |   |   |    |    |   |   |   |    |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|---------|---------|--------|--------|--------|---------|--------|
|                                                                                                          |
| **RESULTS                OF OPERATIONS BY BUSINESS                SEGMENT**Communications-Wireless Operations |   |
| (Millions, customers in thousands)                                                                            |   | 2005   |     |   | 2004   |    |    | 2003   |   |
|                                                                                                          |
| Revenues and                  sales:                                                                          |   |   |     |   |   |    |    |   |   |   |    |   |
| Service                  revenues                                                                             |   | $      | 5,895.2  |   |   | $  | 4,791.2 |   |   | $      | 4,466.5 |   |
| Product sales                                                                                                 |   |   | 380.7    |   |   |    | 286.9   |   |   |   | 261.9   |   |
|                                                                                                          |   |   |     |   |   |    |    |   |   |
| Total revenues                  and                  sales                                                    |   |   | 6,275.9  |   |   |    | 5,078.1 |   |   |   | 4,728.4 |   |
|                                                                                                          |   |   |     |   |   |    |    |   |   |
| Costs and                  expenses:                                                                          |   |   |     |   |   |    |    |   |   |   |    |   |
| Cost of                  services                                                                             |   |   | 1,917.7  |   |   |    | 1,543.6 |   |   |   | 1,367.8 |   |
| Cost of products                  sold                                                                        |   |   | 697.6    |   |   |    | 573.7   |   |   |   | 536.7   |   |
| Selling, general,                  administrative and other                                                   |   |   | 1,445.2  |   |   |    | 1,201.8 |   |   |   | 1,154.9 |   |
| Depreciation                  and                  amortization                                               |   |   | 960.7    |   |   |    | 738.8   |   |   |   | 671.0   |   |
|                                                                                                          |   |   |     |   |   |    |    |   |   |
| Total costs and                  expenses                                                                     |   |   | 5,021.2  |   |   |    | 4,057.9 |   |   |   | 3,730.4 |   |
|                                                                                                          |   |   |     |   |   |    |    |   |   |
| Segment income                                                                                                |   | $      | 1,254.7  |   |   | $       | 1,020.2 |   |   | $      | 998.0   |   |
|                                                                                                          |
| Customers                                                                                                     |   |   | 10,662.3 |   |   |    | 8,626.5 |   |   |   | 8,023.4 |   |
| Average                  customers                                                                            |   |   | 9,550.8  |   |   |    | 8,295.9 |   |   |   | 7,834.5 |   |
| Gross customer                  additions (a)                                                                 |   |   | 4,523.2  |   |   |    | 2,812.7 |   |   |   | 2,856.8 |   |
| Net customer                  additions                  (a)                                                  |   |   | 2,035.8  |   |   |    | 603.1   |   |   |   | 421.8   |   |
| Market                  penetration                                                                           |   |   | 14.0     | %      |   |    | 13.8    | %      |   |   | 13.3    | %      |
| Postpay customer                  churn                                                                       |   |   | 1.77     | %      |   |    | 1.74    | %      |   |   | 2.09    | %      |
| Total churn                                                                                                   |   |   | 2.17     | %      |   |    | 2.23    | %      |   |   | 2.59    | %      |
| Retail minutes                  of use                  per customer per month (b)                            |   |   | 597      |   |   |    | 494     |   |   |   | 375     |   |
| Retail revenue                  per                  customer per month (c)                                   |   |   | $46.68   |   |   |    | $44.39  |   |   |   | $43.39  |   |
| Average revenue                  per                  customer per month (d)                                  |   |   | $51.44   |   |   |    | $48.13  |   |   |   | $47.51  |   |
| Cost to acquire                  a new                  customer (e)                                          |   |   | $340     |   |   |    | $315    |   |   |   | $308    |   |
|                                                                                                          |

F-14 

|   | (a) |   | Includes the effects of acquisitions and dispositions.                                                                                                                                                                                                                                                                 |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | (b) |   | Represents the average monthly minutes that Alltel’s customers use on                both the Company’s network and while roaming on other carriers’                networks.                                                                                                                        |
|   |
|   | (c) |   | Retail revenue per customer is calculated by dividing wireless                retail                revenues by average customers for the period. A reconciliation of                the                revenues used in computing retail revenue per customer per month                was as                follows: |

|                                     |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                     |
| (Millions)                               |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                     |
| Service                  revenues        |   | $      | 5,895.2 |   |   | $      | 4,791.2 |   |   | $      | 4,466.5 |   |
| Less wholesale                  revenues |   |   | (545.1  | )      |   |   | (372.4  | )      |   |   | (387.5  | )      |
|                                     |   |   |    |   |   |   |    |   |   |
| Total retail                  revenues   |   | $      | 5,350.1 |   |   | $      | 4,418.8 |   |   | $      | 4,079.0 |   |
|                                     |

|   | (d) |   | Average revenue per customer per month is calculated by dividing                wireless service revenues by average customers for the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | (e) |   | Cost to acquire a new customer is calculated by dividing the sum                of                product sales, cost of products sold and sales and marketing expenses                (included within “Selling, general, administrative and other”), as                reported above, by the number of internal gross customer additions                during                the period. Customer acquisition costs exclude amounts related to                the                Company’s customer retention efforts. A reconciliation of the revenues,                expenses and customer additions used in computing cost to acquire                a new                customer was as follows: |

|                                                                            |   |   |    |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                            |
| (Millions, except customers in thousands)                                       |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                            |
| Product sales                                                                   |   | $      | (230.3  | )      |   | $      | (209.9  | )      |   | $      | (176.4  | )      |
| Cost of products                  sold                                          |   |   | 320.8   |   |   |   | 322.7   |   |   |   | 296.8   |   |
| Sales and marketing                  expense                                    |   |   | 870.5   |   |   |   | 743.9   |   |   |   | 714.0   |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Total costs incurred                  to                  acquire new customers |   | $      | 961.0   |   |   | $      | 856.7   |   |   | $      | 834.4   |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Gross customer                  additions, excluding acquisitions               |   |   | 2,830.1 |   |   |   | 2,720.3 |   |   |   | 2,709.4 |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Cost to acquire                  a new                  customer                |   | $      | 340     |   |   | $      | 315     |   |   | $      | 308     |   |
|                                                                            |

F-15 

F-16 

F-17 

F-18 

|                                                                       |   |   |    |   |   |   |    |   |   |   |    |   |
|----------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                       |
| (Millions)                                                                 |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                       |
| Severance and                  employee                  benefit costs     |   | $      | – |   |   | $      | 8.6     |   |   | $      | 1.3     |   |
| Relocation                  costs                                          |   |   | 0.7     |   |   |   | 2.7     |   |   |   | – |   |
| Lease and contract                  termination costs                      |   |   | – |   |   |   | 0.5     |   |   |   | – |   |
| Computer system                  conversion and other integration costs    |   |   | 22.3    |   |   |   | – |   |   |   | – |   |
| Write-down of                  software                  development costs |   |   | – |   |   |   | – |   |   |   | 7.6     |   |
| Write-down of                  certain                  facilities         |   |   | – |   |   |   | 0.7     |   |   |   | – |   |
| Other exit                  costs                                          |   |   | – |   |   |   | 0.4     |   |   |   | – |   |
|                                                                       |   |   |    |   |   |   |    |   |   |
| Total restructuring                  and                  other charges    |   | $      | 23.0    |   |   | $      | 12.9    |   |   | $      | 8.9     |   |
|                                                                       |

F-19 

F-20 

F-21 

F-22 

|                                                                                  |   |    |    |   |   |    |    |   |   |    |    |   |
|---------------------------------------------------------------------------------------|--------|---------|---------|--------|--------|---------|---------|--------|--------|---------|---------|--------|
| Communications-Wireline                Operations                                     |   |
| (Dollars in millions, except access                lines in                thousands) |   | 2005    |    |   | 2004   |    |    | 2003   |   |
|                                                                                  |
| Revenues and                  sales:                                                  |   |    |    |   |   |    |    |   |   |    |    |   |
| Local service                                                                         |   | $  | 1,083.4 |   |   | $  | 1,115.7 |   |   | $  | 1,136.8 |   |
| Network access                  and                  long-distance                    |   |    | 1,039.9 |   |   |    | 1,047.9 |   |   |    | 1,055.5 |   |
| Miscellaneous                                                                         |   |    | 255.8   |   |   |    | 256.2   |   |   |    | 243.8   |   |
|                                                                                  |   |    |    |   |   |    |    |   |   |
| Total revenues                  and                  sales                            |   |    | 2,379.1 |   |   |    | 2,419.8 |   |   |    | 2,436.1 |   |
|                                                                                  |   |    |    |   |   |    |    |   |   |
| Costs and                  expenses:                                                  |   |    |    |   |   |    |    |   |   |    |    |   |
| Cost of                  services                                                     |   |    | 705.5   |   |   |    | 704.3   |   |   |    | 737.2   |   |
| Cost of products                  sold                                                |   |    | 32.9    |   |   |    | 28.7    |   |   |    | 29.1    |   |
| Selling, general,                  administrative and other                           |   |    | 256.3   |   |   |    | 244.3   |   |   |    | 259.4   |   |
| Depreciation                  and                  amortization                       |   |    | 480.7   |   |   |    | 516.5   |   |   |    | 526.5   |   |
|                                                                                  |   |    |    |   |   |    |    |   |   |
| Total costs and                  expenses                                             |   |    | 1,475.4 |   |   |    | 1,493.8 |   |   |    | 1,552.2 |   |
|                                                                                  |   |    |    |   |   |    |    |   |   |
| Segment income                                                                        |   | $  | 903.7   |   |   | $  | 926.0   |   |   | $  | 883.9   |   |
|                                                                                  |
| Access lines                  in service                  (excludes DSL lines)        |   |    | 2,885.7 |   |   |    | 3,009.4 |   |   |    | 3,095.6 |   |
| Average access                  lines in                  service                     |   |    | 2,950.0 |   |   |    | 3,061.5 |   |   |    | 3,136.8 |   |
| Average revenue                  per                  customer per month (a)          |   |         | $67.21  |   |   |         | $65.87  |   |   |         | $64.72  |   |
|                                                                                  |

|   | (a) |   | Average revenue per customer per month is calculated by dividing                total                wireline revenues by average access lines in service for the                period. |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-23 

F-24 

|                                                                                                       |   |    |    |   |   |    |    |   |   |    |    |   |
|------------------------------------------------------------------------------------------------------------|--------|---------|---------|--------|--------|---------|---------|--------|--------|---------|---------|--------|
|                                                                                                       |   |
| (Millions)                                                                                                 |   | 2005    |    |   | 2004   |    |    | 2003   |   |
|                                                                                                       |
| Severance and                  employee                  benefit costs                                     |   | $  | 4.4     |   |   | $  | 11.2    |   |   | $  | 7.0     |   |
| Relocation                  costs                                                                          |   |    | – |   |   |    | 1.2     |   |   |    | – |   |
| Lease and contract                  termination costs                                                      |   |    | – |   |   |    | (1.9    | )      |   |    | – |   |
| Costs associated                  with                  pending spin off and merger of wireline operations |   |    | 31.3    |   |   |    | – |   |   |    | – |   |
| Write-down of                  software                  development costs                                 |   |    | – |   |   |    | – |   |   |    | 1.8     |   |
| Other exit                  costs                                                                          |   |    | – |   |   |    | 0.7     |   |   |    | – |   |
|                                                                                                       |   |    |    |   |   |    |    |   |   |
| Total restructuring                  and                  other charges                                    |   | $  | 35.7    |   |   | $  | 11.2    |   |   | $       | 8.8     |   |
|                                                                                                       |

F-25 

| o      |   | Level of competition in its markets. Sources of competition to                Alltel’s local exchange business include, but are not limited to,                resellers of local exchange services, interexchange carriers, satellite                transmission services, wireless communications providers, cable television                companies, and competitive access service providers including those                utilizing Unbundled Network Elements-Platform (“UNE-P”), VoIP providers                and providers using other emerging technologies. Alltel’s ILEC operations                have begun to experience competition in their local service areas.                Through                December 31, 2005, this competition has not had a material                adverse                effect on the results of operations of Alltel’s ILEC operations, primarily                because these subsidiaries provide wireline telecommunications services                in                mostly rural areas. To date, ILEC subsidiaries have not been required                to                discount intrastate service rates in response to competitive                pressures. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| o      |   | Level of revenues and access lines currently subject to rate-of-return                regulation or which could revert back to rate-of-return regulation                in the                future. For the ILEC subsidiaries that follow SFAS No. 71,                all                interstate revenues are subject to rate-of-return regulation. The                majority                of the ILEC subsidiaries’ remaining intrastate revenues are either subject                to rate-of-return regulation or could become subject to rate-of-return                regulation upon election by the Company, subject in certain cases                to                approval by the state public service commissions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |
| o      |   | Level of profitability of the ILEC subsidiaries. Currently, the                prices                charged to customers for interstate and intrastate services continue                to be                sufficient to recover the specific costs of the ILEC subsidiaries                in                providing these services to customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

F-26 

F-27 

F-28 

F-29 

|                                                                            |   |   |    |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Communications                Support Services Operations                       |   |
| (Millions, except customers in thousands)                                       |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                            |
| Revenues and                  sales:                                            |   |   |    |   |   |   |    |   |   |   |    |   |
| Product                  distribution                                           |   | $      | 548.2   |   |   | $      | 421.2   |   |   | $      | 407.4   |   |
| Long-distance                  and                  network management services |   |   | 305.5   |   |   |   | 304.9   |   |   |   | 320.1   |   |
| Directory                  publishing                                           |   |   | 154.7   |   |   |   | 155.9   |   |   |   | 122.6   |   |
| Telecommunications                  information services                        |   |   | 17.2    |   |   |   | 41.8    |   |   |   | 108.9   |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Total revenues                  and                  sales                      |   |   | 1,025.6 |   |   |   | 923.8   |   |   |   | 959.0   |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Costs and                  expenses:                                            |   |   |    |   |   |   |    |   |   |   |    |   |
| Cost of                  services                                               |   |   | 236.1   |   |   |   | 257.9   |   |   |   | 299.0   |   |
| Cost of products                  sold                                          |   |   | 621.9   |   |   |   | 514.2   |   |   |   | 486.9   |   |
| Selling, general,                  administrative and other                     |   |   | 65.5    |   |   |   | 54.7    |   |   |   | 60.5    |   |
| Depreciation                  and                  amortization                 |   |   | 33.9    |   |   |   | 34.3    |   |   |   | 36.2    |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Total costs and                  expenses                                       |   |   | 957.4   |   |   |   | 861.1   |   |   |   | 882.6   |   |
|                                                                            |   |   |    |   |   |   |    |   |   |
| Segment income                                                                  |   | $      | 68.2    |   |   | $      | 62.7    |   |   | $      | 76.4    |   |
|                                                                            |
| Long-distance                  customers                                        |   |   | 1,750.8 |   |   |   | 1,770.8 |   |   |   | 1,680.2 |   |
|                                                                            |

F-30 

|                                                                       |   |   |       |   |   |   |                             |   |
|----------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|----------------------------------|--------|
|                                                                       |
| (Millions)                                                                 |   | 2004   |       | 2003   |
|                                                                       |
| Severance and                  employee                  benefit costs     |   |        | $ 0.5 |   |   |        | $    – |   |
| Relocation                  costs                                          |   |   | 0.1        |   |   |   | –                          |   |
| Lease and contract                  termination costs                      |   |   | –    |   |   |   | (0.5                             | )      |
| Write-down of                  software                  development costs |   |   | –    |   |   |   | 3.8                              |   |
|                                                                       |   |   |       |   |   |   |                             |   |
| Total restructuring                  and                  other charges    |   |        | $ 0.6 |   |   |        | $ 3.3                       |   |
|                                                                       |

|                                                              |   |                 |           |        |   |   |    |   |   |   |           |   |   |     |        |   |   |   |           |   |   |   |    |   |   |   |           |   |
|-------------------------------------------------------------------|--------|----------------------|----------------|-------------|--------|--------|---------|--------|--------|--------|----------------|--------|--------|----------|-------------|--------|--------|--------|----------------|--------|--------|--------|---------|--------|--------|--------|----------------|--------|
|                                                              |
|                                                              |   |                 |           |        |   |   |    |   |   |   |           |   |   | Software |        |   |
| (Millions)                                                        |   | Capital Expenditures |           | Development |   | Totals |
|                                                              |
| Wireless                                                          |   |                      | $ 1,159.5 |        |   |   | – |   |   |        | $ 1,259.5 |   |   |          | $ 40.5 |   |   |        | $ 1,200.0 |   |   |   | – |   |   |        | $ 1,300.0 |   |
| Wireline (a)                                                      |   |                 | 168.0          |        |   |   | – |   |   |   | 178.0          |   |   |     | 2.0         |   |   |   | 170.0          |   |   |   | – |   |   |   | 180.0          |   |
| Communications                  support                  services |   |                 | 15.0           |        |   |   | – |   |   |   | 20.0           |   |   |     | –     |   |   |   | 15.0           |   |   |   | – |   |   |   | 20.0           |   |
| Corporate                                                         |   |                 | 5.0            |        |   |   | – |   |   |   | 10.0           |   |   |     | –     |   |   |   | 5.0            |   |   |   | – |   |   |   | 10.0           |   |
|                                                              |   |                 |           |        |   |   |    |   |   |   |           |   |   |     |        |   |   |   |           |   |   |   |    |   |   |   |           |   |
| Totals                                                            |   |                      | $ 1,347.5 |        |   |   | – |   |   |        | $ 1,467.5 |   |   |          | $ 42.5 |   |   |        | $ 1,390.0 |   |   |   | – |   |   |        | $ 1,510.0 |   |
|                                                              |

|   | (a) |   | Capital expenditures for the wireline operations are for the first                half of 2006 only. |
|--------|-----|--------|------------------------------------------------------------------------------------------------------|

F-31 

|                                                                                   |   |   |     |   |   |   |     |   |   |   |     |   |
|----------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
| **FINANCIAL                CONDITION, LIQUIDITY AND CAPITAL                RESOURCES** |   |
| (Millions, except per share amounts)                                                   |   | 2005   |     |   | 2004   |   |     | 2003   |   |
|                                                                                   |
| Cash flows from                  (used                  in):                           |   |   |     |   |   |   |     |   |   |   |     |   |
| Operating activities                  from continuing operations                       |   | $      | 2,697.0  |   |   | $      | 2,466.8  |   |   | $      | 2,474.7  |   |
| Investing activities                  from continuing operations                       |   |   | (1,999.2 | )      |   |   | (1,258.4 | )      |   |   | (1,265.9 | )      |
| Financing activities                  from continuing operations                       |   |   | (770.4   | )      |   |   | (1,381.2 | )      |   |   | (1,218.2 | )      |
| Discontinued                  operations                                               |   |   | 616.1    |   |   |   | –  |   |   |   | 531.8    |   |
| Effect of exchange                  rate                  changes                      |   |   | (39.2    | )      |   |   | (0.1     | )      |   |   | 0.8      |   |
|                                                                                   |   |   |     |   |   |   |     |   |   |
| Change in cash                  and                  short-term investments            |   | $      | 504.3    |   |   | $      | (172.9   | )      |   | $      | 523.2    |   |
|                                                                                   |
| Total capital                  structure                  (a)                          |   | $      | 19,004.2 |   |   | $      | 12,707.0 |   |   | $      | 12,881.6 |   |
| Percent equity                  to total                  capital (b)                  |   |   | 68.5%    |   |   |   | 56.1%    |   |   |   | 54.5%    |   |
| Book value per                  share                  (c)                             |   |        | $33.93   |   |   |        | $23.58   |   |   |        | $22.46   |   |
|                                                                                   |

|   | (a) |   | Computed as the sum of long-term debt including current maturities,                redeemable preferred stock and total shareholders’ equity.                               |
|--------|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | (b) |   | Computed by dividing total shareholders’ equity by total capital                structure as computed in (a) above.                                                    |
|   |
|   | (c) |   | Computed by dividing total shareholders’ equity less preferred stock                by the total number of common shares outstanding at the end of the                year. |

F-32 

F-33 

F-34 

|                                                             |   |          |   |       |   |   |
|------------------------------------------------------------------|--------|---------------|--------|------------|--------|--------|
|                                                             |
|                                                             |   |          |   | Standard   |   |   |
| Description                                                      |   | Moody’s |   | & Poor |   | Fitch  |
|                                                             |
| Commercial paper                  credit                  rating |   | Prime-1       |   | A-2        |   | F1     |
| Long-term debt                  credit                  rating   |   | A2            |   | A -        |   | A      |
| Outlook                                                          |   | Negative      |   | Stable     |   | Stable |
|                                                             |

F-35 

F-36 

|                                                                               |   |                                  |    |   |   |    |    |   |   |    |                   |   |   |   |    |   |   |   |     |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|--------|---------|---------|--------|--------|---------|------------------------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
|                                                                               |   |
|                                                                               |   | Payments                Due by Period |    |
|                                                                               |   | Less than                             |    |   | 1-3    |    |    | 3-5    |   |    | More than              |   |   |   |    |
| (Millions)                                                                         |   | 1                Year                 |    |   | Years  |    |    | Years  |   |    | 5                Years |   |   | Total  |    |
| Long-term debt,                  excluding commercial paper (a)                    |   | $                                     | 205.1   |   |   | $  | 1,532.0 |   |   | $  | 665.0                  |   |   | $      | 2,569.2 |   |   | $      | 4,971.3  |   |
| Commercial                  paper                                                  |   |                                  | 1,000.0 |   |   |    | – |   |   |    | –                |   |   |   | – |   |   |   | 1,000.0  |   |
| Interest payments                  on                  long-term debt obligations  |   |                                  | 326.5   |   |   |    | 514.9   |   |   |    | 442.7                  |   |   |   | 2,051.1 |   |   |   | 3,335.2  |   |
| Operating                  leases                                                  |   |                                  | 237.8   |   |   |    | 338.9   |   |   |    | 162.8                  |   |   |   | 151.7   |   |   |   | 891.2    |   |
| Cash payment                  to                  complete pending acquisition (b) |   |                                  | 1,075.0 |   |   |    | – |   |   |    | –                |   |   |   | – |   |   |   | 1,075.0  |   |
| Purchase obligations                  (c)                                          |   |                                  | 104.2   |   |   |    | 66.6    |   |   |    | 1.8                    |   |   |   | – |   |   |   | 172.6    |   |
| Site maintenance                  fees –                  cell sites (d)     |   |                                  | 31.7    |   |   |    | 68.2    |   |   |    | 75.1                   |   |   |   | 253.2   |   |   |   | 428.2    |   |
| Other long-term                  liabilities (e)                                   |   |                                  | 212.1   |   |   |    | 484.5   |   |   |    | 344.0                  |   |   |   | 1,432.1 |   |   |   | 2,472.7  |   |
|                                                                               |   |                                  |    |   |   |    |    |   |   |    |                   |   |   |   |    |
| Total contractual                  obligations and commitments                     |   | $                                     | 3,192.4 |   |   | $  | 3,005.1 |   |   | $  | 1,691.4                |   |   | $      | 6,457.3 |   |   | $      | 14,346.2 |   |
|                                                                               |

|   | (a) |   | Includes current maturities of $205.1 million. Excludes                $(11.9)                million of unamortized discounts and the fair value of interest rate                swap                agreements of $28.6 million included in long-term debt at                December 31, 2005.                                                                                                                                                                                                                                                                                                                                         |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | (b) |   | As previously discussed, on November 18, 2005, Alltel announced                that it had entered into a definitive agreement to purchase Midwest                Wireless for $1.075 billion in cash. This transaction is expected                to                close by mid-year of 2006.                                                                                                                                                                                                                                                                                                                                                |
|   |
|   | (c) |   | Purchase obligations represent amounts payable under noncancellable                contracts and include commitments for wireless handset purchases,                network                facilities and transport services, agreements for software licensing                and                long-term marketing programs.                                                                                                                                                                                                                                                                                                                          |
|   |
|   | (d) |   | In connection with the leasing of 1,773 of the Company’s cell site                towers to American Tower, Alltel is obligated to pay American Tower                a                monthly fee per tower for management and maintenance services for                the                duration of the fifteen-year lease agreement, which expires in phases                during 2016 and 2017.                                                                                                                                                                                                                                               |
|   |
|   | (e) |   | Other long-term liabilities primarily consist of deferred tax                liabilities, minority interests, other postretirement benefit obligations,                and deferred compensation. Deferred rental revenue of $337.2 million                related to Alltel’s agreement to lease cell site towers to American Tower                was not included in the table above. The deferred rental revenue                represents cash proceeds received in advance by Alltel under terms                of the                agreement and will be recognized as revenue ratably over the remaining                lease term. |

F-37 

F-38 

F-39 

F-40 

F-41 

**SELECTED        FINANCIAL DATA**

|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                                   |
| (Millions, except per share amounts)                                                                   |   | 2005   |    |   | 2004   |   |    | 2003   |   |   | 2002    |   |   | 2001   |    |   | 2000   |   |
|                                                                                                   |
| **Revenues                  and                  sales**                                               |   | $      | 9,487.0 |   |   | $      | 8,246.1 |   |   | $      | 7,979.9 |   |   | $      | 7,112.4 |   |   | $      | 6,615.8 |   |   | $      | 6,308.9 |   |
|                                                                                                   |
| Operating                  expenses                                                                    |   |   | 7,337.2 |   |   |   | 6,273.6 |   |   |   | 6,062.9 |   |   |   | 5,322.8 |   |   |   | 4,990.8 |   |   |   | 4,757.4 |   |
| Restructuring                  and other                  charges                                      |   |   | 58.7    |   |   |   | 50.9    |   |   |   | 19.0    |   |   |   | 69.9    |   |   |   | 76.3    |   |   |   | 15.3    |   |
|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| Total costs and                  expenses                                                              |   |   | 7,395.9 |   |   |   | 6,324.5 |   |   |   | 6,081.9 |   |   |   | 5,392.7 |   |   |   | 5,067.1 |   |   |   | 4,772.7 |   |
|                                                                                                   |
| **Operating                  income**                                                                  |   |   | 2,091.1 |   |   |   | 1,921.6 |   |   |   | 1,898.0 |   |   |   | 1,719.7 |   |   |   | 1,548.7 |   |   |   | 1,536.2 |   |
| Non-operating                  income                  (expense), net                                  |   |   | 133.1   |   |   |   | 22.9    |   |   |   | (3.2    | )      |   |   | (5.3    | )      |   |   | (14.1   | )      |   |   | 27.6    |   |
| Interest                  expense                                                                      |   |   | (332.6  | )      |   |   | (352.5  | )      |   |   | (378.6  | )      |   |   | (355.1  | )      |   |   | (261.2  | )      |   |   | (284.3  | )      |
| Gain on disposal                  of                  assets, write-down of investments and other, net |   |   | 218.8   |   |   |   | – |   |   |   | 17.9    |   |   |   | 1.0     |   |   |   | 357.6   |   |   |   | 1,928.5 |   |
|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| Income from continuing                  operations before income taxes                                 |   |   | 2,110.4 |   |   |   | 1,592.0 |   |   |   | 1,534.1 |   |   |   | 1,360.3 |   |   |   | 1,631.0 |   |   |   | 3,208.0 |   |
| Income taxes                                                                                           |   |   | 801.9   |   |   |   | 565.3   |   |   |   | 580.6   |   |   |   | 510.2   |   |   |   | 653.0   |   |   |   | 1,325.3 |   |
|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| Income from continuing                  operations                                                     |   |   | 1,308.5 |   |   |   | 1,026.7 |   |   |   | 953.5   |   |   |   | 850.1   |   |   |   | 978.0   |   |   |   | 1,882.7 |   |
| Discontinued                  operations, net of tax                                                   |   |   | 30.3    |   |   |   | 19.5    |   |   |   | 361.0   |   |   |   | 74.2    |   |   |   | 69.5    |   |   |   | 82.7    |   |
|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| Income before                  cumulative effect of accounting change                                  |   |   | 1,338.8 |   |   |   | 1,046.2 |   |   |   | 1,314.5 |   |   |   | 924.3   |   |   |   | 1,047.5 |   |   |   | 1,965.4 |   |
| Cumulative effect                  of                  accounting change, net of tax                   |   |   | (7.4    | )      |   |   | – |   |   |   | 15.6    |   |   |   | – |   |   |   | 19.5    |   |   |   | (36.6   | )      |
|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| **Net                  income**                                                                        |   |   | 1,331.4 |   |   |   | 1,046.2 |   |   |   | 1,330.1 |   |   |   | 924.3   |   |   |   | 1,067.0 |   |   |   | 1,928.8 |   |
| Preferred                  dividends                                                                   |   |   | 0.1     |   |   |   | 0.1     |   |   |   | 0.1     |   |   |   | 0.1     |   |   |   | 0.1     |   |   |   | 0.1     |   |
|                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |
| Net income applicable                  to common shares                                                |   | $      | 1,331.3 |   |   | $      | 1,046.1 |   |   | $      | 1,330.0 |   |   | $      | 924.2   |   |   | $      | 1,066.9 |   |   | $      | 1,928.7 |   |
|                                                                                                   |

| **Basic                  earnings                  per share:**          |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Income from continuing                  operations                       |   |        | $3.84  |   |   |        | $3.34   |   |   |        | $3.06  |   |   |        | $2.73   |   |   |        | $3.14  |   |   |        | $5.99  |   |
| Income from                  discontinued operations                     |   |   | .09    |   |   |   | .06     |   |   |   | 1.16   |   |   |   | .24     |   |   |   | .22    |   |   |   | .26    |   |
| Cumulative effect                  of                  accounting change |   |   | (.02   | )      |   |   | – |   |   |   | .05    |   |   |   | – |   |   |   | .06    |   |   |   | (.12   | )      |
|                                                                     |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Net income                                                               |   |        | $3.91  |   |   |        | $3.40   |   |   |        | $4.27  |   |   |        | $2.97   |   |   |        | $3.42  |   |   |        | $6.13  |   |
|                                                                     |
| **Diluted                  earnings per share:**                         |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Income from continuing                  operations                       |   |        | $3.80  |   |   |        | $3.33   |   |   |        | $3.05  |   |   |        | $2.72   |   |   |        | $3.12  |   |   |        | $5.94  |   |
| Income from                  discontinued operations                     |   |   | .09    |   |   |   | .06     |   |   |   | 1.15   |   |   |   | .24     |   |   |   | .22    |   |   |   | .26    |   |
| Cumulative effect                  of                  accounting change |   |   | (.02   | )      |   |   | – |   |   |   | .05    |   |   |   | – |   |   |   | .06    |   |   |   | (.12   | )      |
|                                                                     |   |   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Net income                                                               |   |        | $3.87  |   |   |        | $3.39   |   |   |        | $4.25  |   |   |        | $2.96   |   |   |        | $3.40  |   |   |        | $6.08  |   |
|                                                                     |

|                                                                   |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |        |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Dividends per                  common                  share      |   |        | $1.525 |   |   |        | $1.49  |   |   |        | $1.42  |   |   |        | $1.37  |   |   |        | $1.33  |   |   |        | $1.29  |   |
| Weighted average                  common                  shares: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   |   | 340.8  |   |   |   | 307.3  |   |   |   | 311.8  |   |   |   | 311.0  |   |   |   | 311.4  |   |   |   | 314.4  |   |
| Diluted                                                           |   |   | 344.1  |   |   |   | 308.4  |   |   |   | 312.8  |   |   |   | 312.3  |   |   |   | 313.5  |   |   |   | 317.2  |   |
|                                                              |

| Pro forma amounts                  assuming accounting changes applied retroactively:               |   |   |     |   |   |   |     |   |   |   |     |   |   |   |     |   |   |   |     |   |   |   |     |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
| Net income                                                                                          |   | $      | 1,338.8  |   |   | $      | 1,045.8  |   |   | $      | 1,314.1  |   |   | $      | 925.1    |   |   | $      | 1,047.5  |   |   | $      | 1,970.1  |   |
| Basic earnings                  per                  share                                          |   |        | $3.93    |   |   |        | $3.40    |   |   |        | $4.21    |   |   |        | $2.97    |   |   |        | $3.36    |   |   |        | $6.27    |   |
| Diluted earnings                  per                  share                                        |   |        | $3.89    |   |   |        | $3.39    |   |   |        | $4.20    |   |   |        | $2.96    |   |   |        | $3.34    |   |   |        | $6.21    |   |
|                                                                                                |
| Total assets                                                                                        |   | $      | 24,013.1 |   |   | $      | 16,603.7 |   |   | $      | 16,661.1 |   |   | $      | 16,244.6 |   |   | $      | 12,500.7 |   |   | $      | 12,087.2 |   |
| Total shareholders’                  equity                                                   |   | $      | 13,015.5 |   |   | $      | 7,128.7  |   |   | $      | 7,022.2  |   |   | $      | 5,998.1  |   |   | $      | 5,565.8  |   |   | $      | 5,095.4  |   |
| Total redeemable                  preferred stock and long-term debt (including current maturities) |   | $      | 5,988.8  |   |   | $      | 5,578.3  |   |   | $      | 5,859.4  |   |   | $      | 6,641.1  |   |   | $      | 3,913.0  |   |   | $      | 4,673.3  |   |
|                                                                                                |

|   |   | See Note 14 to the consolidated financial statements for a discussion                of the Company’s discontinued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| A.     |   | Net income for 2005 included $18.5 million of integration                expenses incurred in connection with the Company’s exchange of wireless                assets with Cingular Wireless LLC (“Cingular”) and purchase of wireless                properties from Public Service Cellular, Inc. The integration expenses                primarily consisted of handset subsidies incurred to migrate the                acquired                customer base to CDMA handsets. Alltel also incurred $4.5 million                of                integration expenses related to its acquisition of Western Wireless                Corporation, primarily consisting of system conversion and relocation                costs. In addition, the Company incurred $4.4 million of severance                and employee benefit costs related to a workforce reduction in its                wireline operations. The Company also incurred $31.3 million                of                incremental costs, principally consisting of investment banker, audit                and                legal fees, related to the pending spin off its wireline business                to                Alltel stockholders and merger with Valor Communications Group, Inc.                These                transactions decreased net income $48.1 million or $.14 per                share.                (See Note 10 to the consolidated financial statements.) Net income                for                2005 included the effect of a special cash dividend of $111.0 million                related to the Company’s investment in Fidelity National Financial, Inc.                (“Fidelity National”) common stock, which increased net income                $69.8 million or $.20 per share. (See Note 11 to the consolidated                financial statements.) Net income for 2005 included pretax gains                of                $158.0 million related to Alltel’s exchange of certain wireless                assets with Cingular. During 2005, Alltel also completed the sale                of all                of its shares of Fidelity National common stock and recognized a                pretax                gain of $75.8 million. In addition, Alltel incurred pretax termination                fees of $15.0 million related to the early retirement of long-term                debt and a related interest rate swap agreement. These transactions                increased net income $136.7 million or $.40 per share. (See                Note 12                to the consolidated financial statements.) Effective December 31,                2005, Alltel adopted FIN 47 in accounting for conditional asset retirement                obligations. The cumulative effect of this accounting change resulted                in a                one-time non-cash charge of $7.4 million, net of income tax                benefit                of $4.6 million, or $.02 per share. (See Note 2 to the consolidated                financial statements.) |

F-42 

**, **

| B.     |   | Net income for 2004 included pretax charges of $28.4 million                related to a planned workforce reduction and the exit of its competitive                local exchange carrier operations in the Jacksonville, Florida market.                In                addition, Alltel recorded a $2.3 million reduction in the                liabilities                associated with various restructuring activities initiated prior                to 2003.                Alltel also recorded a write-down in the carrying value of certain                corporate and regional facilities to fair value in conjunction with                the                proposed leasing or sale of those facilities of $24.8 million.                These                transactions decreased net income $31.1 million or $.10 per                share.                (See Note 10 to the consolidated financial statements.) Net income                for                2004 also reflected a reduction in income tax expense associated                with                continuing operations of $19.7 million, or $.06 per share,                resulting                from Alltel’s adjustment of its income tax contingency reserves to reflect                the results of audits of the Company’s consolidated federal income tax                returns for the fiscal years 1997 through 2001. (See Note 2 to the                consolidated financial statements.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| C.     |   | Net income for 2003 included pretax charges of $8.5 million                primarily related to the closing of certain call center locations                and the                write-off of $13.2 million of certain capitalized software                development costs with no alternative future use or functionality.                The                Company also recorded a $2.7 million reduction in the liabilities                associated with various restructuring activities initiated prior                to 2003                to reflect differences between estimated and actual costs paid in                completing the previous planned restructuring activities. These                transactions decreased net income $11.5 million or $.04 per                share.                (See Note 10 to the consolidated financial statements.) Net income                for                2003 also included a pretax gain of $31.0 million realized                from the                sale of certain assets of the telecommunications information services                operations, partially offset by pretax write-downs totaling                $6.0 million to reflect other-than-temporary declines in the                fair                value of certain investments in unconsolidated limited partnerships.                In                addition, Alltel incurred pretax termination fees of $7.1 million                related to the early retirement of long-term debt. These transactions                increased net income $10.7 million or $.04 per share. (See                Note 12 to                the consolidated financial statements.) Effective January 1,                2003,                Alltel adopted SFAS No. 143 in accounting for asset retirement                obligations. The cumulative effect of this accounting change resulted                in a                one-time non-cash credit of $15.6 million, net of income tax                expense                of $10.3 million, or $.05 per share. (See Note 2 to the consolidated                financial statements.) |
|   |
| D.     |   | Net income for 2002 included pretax charges of $34.0 million                incurred in connection with restructuring Alltel’s competitive local                exchange carrier, call center and retail store operations and with                the                closing of seven product distribution centers. The Company also incurred                integration expenses of $28.8 million related to its acquisitions                of                wireline properties from Verizon Communications, Inc. and wireless                properties from CenturyTel, Inc. Alltel also recorded write-downs                in the                carrying value of certain cell site equipment of $7.1 million.                These                charges decreased net income $42.3 million or $.14 per share.                Net                income for 2002 included a pretax gain of $22.1 million realized                from                the sale of a wireless property, partially offset by pretax write-downs                of                $16.3 million related to investments in marketable securities.                Alltel                also recorded a pretax adjustment of $4.8 million to reduce                the gain                recognized from the dissolution of a wireless partnership that was                initially recorded in 2001. These transactions increased net income                $0.6 million or less than $.01 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |
|   |   | Effective January 1, 2002, the Company changed its accounting                for                goodwill and other indefinite-lived intangible assets from an amortization                method to an impairment-only approach in accordance with SFAS                No. 142. Accordingly, the Company ceased amortization of goodwill                and                indefinite-lived intangible assets as of January 1, 2002.                The                adjusted after-tax income from continuing operations, income before                cumulative effect of accounting change, net income and the related                earnings per share effects, assuming that the change in accounting                to                eliminate the amortization of goodwill and other indefinite-lived                intangible assets was applied retroactively were as follows for the                years                ended December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

|                                                                  |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                  |   |
| (Millions, except per share amounts)                                  |   | 2001   |    |   | 2000   |   |
|                                                                  |
| Income from continuing                  operations                    |   | $      | 1,068.9 |   |   | $      | 1,972.7 |   |
| Basic earnings                  per                  share            |   |        | $3.43   |   |   |        | $6.27   |   |
| Diluted earnings                  per                  share          |   |        | $3.41   |   |   |        | $6.22   |   |
|                                                                  |
| Income before                  cumulative effect of accounting change |   | $      | 1,140.6 |   |   | $      | 2,057.0 |   |
| Basic earnings                  per                  share            |   |        | $3.66   |   |   |        | $6.55   |   |
| Diluted earnings                  per                  share          |   |        | $3.64   |   |   |        | $6.49   |   |
|                                                                  |
| Net income                                                            |   | $      | 1,160.1 |   |   | $      | 2,020.4 |   |
| Basic earnings                  per                  share            |   |        | $3.72   |   |   |        | $6.43   |   |
| Diluted earnings                  per                  share          |   |        | $3.70   |   |   |        | $6.37   |   |
|                                                                  |

| E.     |   | Net income for 2001 included pretax gains of $347.8 million                from                the sale of PCS licenses, a pretax gain of $9.5 million from                the                dissolution of a wireless partnership and a pretax gain of                $3.2 million from the sale of certain investments. Net income                also                included pretax termination fees of $2.9 million incurred                due to the                early retirement of debt. These transactions increased net income                $212.7 million or $.68 per share. Net income also included                pretax                charges of $61.2 million incurred in connection with the                restructuring of the Company’s regional communications, product                distribution and corporate operations. The Company also recorded                write-downs in the carrying value of certain cell site equipment                totaling                $15.1 million. These charges decreased net income $45.3 million                or $.14 per share. Effective January 1, 2001, the Company                changed its                method of accounting for a subsidiary’s pension plan to conform to the                Company’s primary pension plan. The cumulative effect of this accounting                change resulted in a non-cash credit of $19.5 million, net                of income                tax expense of $13.0 million, or $.06 per share.                                                             |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| F.     |   | Net income for 2000 included pretax gains of $1,345.5 million                from the exchange of wireless properties with Bell Atlantic Corporation                and GTE Corporation, pretax gains of $36.0 million from the                sale of                certain wireless assets and pretax gains of $562.0 million from the                sale                of investments, principally consisting of WorldCom, Inc. common stock.                Net                income also included a pretax write-down of $15.0 million                in the                Company’s investment in an Internet access service provider. These                transactions increased net income $1,124.3 million or $3.58                per                share. Net income also included integration costs and other charges                of                $15.3 million primarily incurred in connection with the acquisition                of wireless assets. The Company also incurred a pretax charge of                $11.5                million in connection with a litigation settlement. These charges                decreased net income $16.1 million or $.05 per share. Effective                January 1, 2000, the Company changed its method of recognizing                wireless access revenues and certain customer activation fees. The                cumulative effect of this accounting change resulted in a non-cash                charge                of $36.6 million, net of income tax benefit of $23.3 million                or $.12                per share. |

F-43 

**MANAGEMENT’S        RESPONSIBILITY FOR FINANCIAL STATEMENTS**

|                    |   |                                   |
|-------------------------|--------|----------------------------------------|
| Scott T. Ford           |   | Sharilyn S. Gasaway                    |
| President and           |   | Executive Vice President-              |
| Chief Executive Officer |   | Chief Financial                Officer |

F-44 

**MANAGEMENT’S        REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

|                    |   |                                   |
|-------------------------|--------|----------------------------------------|
| Scott T. Ford           |   | Sharilyn S. Gasaway                    |
| President and           |   | Executive Vice President-              |
| Chief Executive Officer |   | Chief Financial                Officer |

F-45 

**REPORT        OF        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

F-46 

F-47 

**CONSOLIDATED        STATEMENTS OF INCOME**

|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| (Millions, except per share amounts)                                                                                                                                                        |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                                                                                                                                        |
| **Revenues                  and                  sales:**                                                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |
| Service                  revenues                                                                                                                                                           |   | $      | 8,380.5 |   |   | $      | 7,374.3 |   |   | $      | 7,156.1 |   |
| Product sales                                                                                                                                                                               |   |   | 1,106.5 |   |   |   | 871.8   |   |   |   | 823.8   |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Total revenues                  and                  sales                                                                                                                                  |   |   | 9,487.0 |   |   |   | 8,246.1 |   |   |   | 7,979.9 |   |
|                                                                                                                                                                                        |
| **Costs                  and                  expenses:**                                                                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |
| Cost of services                  (excluding depreciation of $996.1, $958.4 and $906.3 in 2005, 2004                  and                  2003, respectively included below)               |   |   | 2,743.8 |   |   |   | 2,374.2 |   |   |   | 2,273.6 |   |
| Cost of products                  sold                                                                                                                                                      |   |   | 1,315.3 |   |   |   | 1,075.5 |   |   |   | 1,043.5 |   |
| Selling, general,                  administrative and other                                                                                                                                 |   |   | 1,795.5 |   |   |   | 1,524.2 |   |   |   | 1,498.1 |   |
| Depreciation                  and                  amortization                                                                                                                             |   |   | 1,482.6 |   |   |   | 1,299.7 |   |   |   | 1,247.7 |   |
| Restructuring                  and other                  charges                                                                                                                           |   |   | 58.7    |   |   |   | 50.9    |   |   |   | 19.0    |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Total costs and                  expenses                                                                                                                                                   |   |   | 7,395.9 |   |   |   | 6,324.5 |   |   |   | 6,081.9 |   |
|                                                                                                                                                                                        |
| **Operating                  income**                                                                                                                                                       |   |   | 2,091.1 |   |   |   | 1,921.6 |   |   |   | 1,898.0 |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |   |    |   |
| Equity earnings                  in                  unconsolidated partnerships                                                                                                            |   |   | 43.4    |   |   |   | 68.5    |   |   |   | 64.4    |   |
| Minority interest                  in                  consolidated partnerships                                                                                                            |   |   | (69.1   | )      |   |   | (80.1   | )      |   |   | (78.6   | )      |
| Other income,                  net                                                                                                                                                          |   |   | 158.8   |   |   |   | 34.5    |   |   |   | 11.0    |   |
| Interest                  expense                                                                                                                                                           |   |   | (332.6  | )      |   |   | (352.5  | )      |   |   | (378.6  | )      |
| Gain on disposal                  of                  assets, write-down of investments and other                                                                                           |   |   | 218.8   |   |   |   | – |   |   |   | 17.9    |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Income from continuing                  operations before income taxes                                                                                                                      |   |   | 2,110.4 |   |   |   | 1,592.0 |   |   |   | 1,534.1 |   |
| Income taxes                                                                                                                                                                                |   |   | 801.9   |   |   |   | 565.3   |   |   |   | 580.6   |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Income from continuing                  operations                                                                                                                                          |   |   | 1,308.5 |   |   |   | 1,026.7 |   |   |   | 953.5   |   |
| Discontinued                  operations                  (net of income tax expense (benefit) of $50.0 in 2005, $(19.5)                  in                  2004 and $256.2 in 2003) |   |   | 30.3    |   |   |   | 19.5    |   |   |   | 361.0   |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Income before                  cumulative effect of accounting change                                                                                                                       |   |   | 1,338.8 |   |   |   | 1,046.2 |   |   |   | 1,314.5 |   |
| Cumulative effect                  of                  accounting change (net of income tax expense (benefit) of                  $(4.6) in                  2005 and $10.3 in 2003)   |   |   | (7.4    | )      |   |   | – |   |   |   | 15.6    |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Net income                                                                                                                                                                                  |   |   | 1,331.4 |   |   |   | 1,046.2 |   |   |   | 1,330.1 |   |
| Preferred                  dividends                                                                                                                                                        |   |   | 0.1     |   |   |   | 0.1     |   |   |   | 0.1     |   |
|                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |
| Net income applicable                  to common shares                                                                                                                                     |   | $      | 1,331.3 |   |   | $      | 1,046.1 |   |   | $      | 1,330.0 |   |
|                                                                                                                                                                                        |

|                                                                     |   |   |   |   |   |   |    |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| **Earnings                  per                  share:**                |   |   |   |   |   |   |    |   |   |   |   |   |
| Basic:                                                                   |   |   |   |   |   |   |    |   |   |   |   |   |
| Income from continuing                  operations                       |   |   | $3.84  |   |   |   | $3.34   |   |   |   | $3.06  |   |
| Income from                  discontinued operations                     |   |   | .09    |   |   |   | .06     |   |   |   | 1.16   |   |
| Cumulative effect                  of                  accounting change |   |   | (.02   | )      |   |   | – |   |   |   | .05    |   |
|                                                                     |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income                                                               |   |   | $3.91  |   |   |   | $3.40   |   |   |   | $4.27  |   |
|                                                                     |
| Diluted:                                                                 |   |   |   |   |   |   |    |   |   |   |   |   |
| Income from continuing                  operations                       |   |   | $3.80  |   |   |   | $3.33   |   |   |   | $3.05  |   |
| Income from                  discontinued operations                     |   |   | .09    |   |   |   | .06     |   |   |   | 1.15   |   |
| Cumulative effect                  of                  accounting change |   |   | (.02   | )      |   |   | – |   |   |   | .05    |   |
|                                                                     |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income                                                               |   |   | $3.87  |   |   |   | $3.39   |   |   |   | $4.25  |   |
|                                                                     |

|                                                                                                                      |   |   |    |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Pro forma amounts                  assuming changes in accounting principles were applied                  retroactively: |   |   |    |   |   |   |    |   |   |   |    |   |
| Net income as                  reported:                                                                                  |   | $      | 1,331.4 |   |   | $      | 1,046.2 |   |   | $      | 1,330.1 |   |
| Effect of recognition                  of conditional asset retirement obligations                                        |   |   | 7.4     |   |   |   | (0.4    | )      |   |   | (0.4    | )      |
| Effect of recognition                  of asset retirement obligations                                                    |   |   | – |   |   |   | – |   |   |   | (15.6   | )      |
|                                                                                                                      |   |   |    |   |   |   |    |   |   |
| Net income as                  adjusted                                                                                   |   | $      | 1,338.8 |   |   | $      | 1,045.8 |   |   | $      | 1,314.1 |   |
|                                                                                                                      |
| Earnings per                  share as                  adjusted:                                                         |   |   |    |   |   |   |    |   |   |   |    |   |
| Basic                                                                                                                     |   |   | $3.93   |   |   |   | $3.40   |   |   |   | $4.21   |   |
| Diluted                                                                                                                   |   |   | $3.89   |   |   |   | $3.39   |   |   |   | $4.20   |   |
|                                                                                                                      |

F-48 

**CONSOLIDATED        BALANCE SHEETS**

|                                                                                                                                                                                                                           |   |   |     |   |   |   |     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|
| **Assets**                                                                                                                                                                                                                     |   | 2005   |     |   | 2004   |   |
|                                                                                                                                                                                                                           |
| **Current                  Assets:**                                                                                                                                                                                           |   |   |     |   |   |   |     |   |
| Cash and short-term                  investments                                                                                                                                                                               |   | $      | 989.2    |   |   | $      | 484.9    |   |
| Accounts receivable                  (less allowance for doubtful accounts of $84.7 and $53.6,                  respectively)                                                                                                  |   |   | 1,077.2  |   |   |   | 912.7    |   |
| Inventories                                                                                                                                                                                                                    |   |   | 232.6    |   |   |   | 156.8    |   |
| Prepaid expenses                  and                  other                                                                                                                                                                   |   |   | 115.2    |   |   |   | 62.4     |   |
| Assets held for                  sale                                                                                                                                                                                          |   |   | 1,951.2  |   |   |   | –  |   |
|                                                                                                                                                                                                                           |   |   |     |   |   |   |
| Total current                  assets                                                                                                                                                                                          |   |   | 4,365.4  |   |   |   | 1,616.8  |   |
|                                                                                                                                                                                                                           |
| Investments                                                                                                                                                                                                                    |   |   | 358.4    |   |   |   | 804.9    |   |
| Goodwill                                                                                                                                                                                                                       |   |   | 8,677.3  |   |   |   | 4,875.7  |   |
| Other                  intangibles                                                                                                                                                                                             |   |   | 2,179.1  |   |   |   | 1,306.1  |   |
|                                                                                                                                                                                                                           |
| **Property,                  Plant                  and Equipment:**                                                                                                                                                           |   |   |     |   |   |   |     |   |
| Land                                                                                                                                                                                                                           |   |   | 298.6    |   |   |   | 278.1    |   |
| Buildings and                  improvements                                                                                                                                                                                    |   |   | 1,211.4  |   |   |   | 1,134.8  |   |
| Wireline                                                                                                                                                                                                                       |   |   | 6,942.0  |   |   |   | 6,735.8  |   |
| Wireless                                                                                                                                                                                                                       |   |   | 6,852.6  |   |   |   | 5,764.0  |   |
| Information                  processing                                                                                                                                                                                        |   |   | 1,187.2  |   |   |   | 1,048.4  |   |
| Other                                                                                                                                                                                                                          |   |   | 530.3    |   |   |   | 489.9    |   |
| Under                  construction                                                                                                                                                                                            |   |   | 475.4    |   |   |   | 385.3    |   |
|                                                                                                                                                                                                                           |   |   |     |   |   |   |
| Total property,                  plant                  and equipment                                                                                                                                                          |   |   | 17,497.5 |   |   |   | 15,836.3 |   |
| Less accumulated                  depreciation                                                                                                                                                                                 |   |   | 9,433.9  |   |   |   | 8,288.2  |   |
|                                                                                                                                                                                                                           |   |   |     |   |   |   |
| Net property,                  plant and                  equipment                                                                                                                                                            |   |   | 8,063.6  |   |   |   | 7,548.1  |   |
|                                                                                                                                                                                                                           |
| Other assets                                                                                                                                                                                                                   |   |   | 369.3    |   |   |   | 452.1    |   |
|                                                                                                                                                                                                                           |
| **Total                  Assets**                                                                                                                                                                                              |   | $      | 24,013.1 |   |   | $      | 16,603.7 |   |
|                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                           |   |   |     |   |   |   |     |   |
| **Liabilities                  and                  Shareholders’ Equity**                                                                                                                                               |   |   |     |   |   |   |     |   |
|                                                                                                                                                                                                                           |
| **Current                  Liabilities:**                                                                                                                                                                                      |   |   |     |   |   |   |     |   |
| Current maturities                  of                  long-term debt                                                                                                                                                         |   | $      | 205.1    |   |   | $      | 225.0    |   |
| Accounts                  payable                                                                                                                                                                                              |   |   | 645.4    |   |   |   | 448.2    |   |
| Advance payments                  and                  customer deposits                                                                                                                                                       |   |   | 240.5    |   |   |   | 219.3    |   |
| Accrued taxes                                                                                                                                                                                                                  |   |   | 174.7    |   |   |   | 158.2    |   |
| Accrued                  dividends                                                                                                                                                                                             |   |   | 147.8    |   |   |   | 105.9    |   |
| Accrued                  interest                                                                                                                                                                                              |   |   | 102.5    |   |   |   | 120.2    |   |
| Current deferred                  income                  taxes                                                                                                                                                                |   |   | 339.0    |   |   |   | –  |   |
| Other current                  liabilities                                                                                                                                                                                     |   |   | 255.4    |   |   |   | 183.5    |   |
| Liabilities related                  to                  assets held for sale                                                                                                                                                  |   |   | 294.4    |   |   |   | –  |   |
|                                                                                                                                                                                                                           |   |   |     |   |   |   |
| Total current                  liabilities                                                                                                                                                                                     |   |   | 2,404.8  |   |   |   | 1,460.3  |   |
|                                                                                                                                                                                                                           |
| Long-term debt                                                                                                                                                                                                                 |   |   | 5,782.9  |   |   |   | 5,352.4  |   |
| Deferred income                  taxes                                                                                                                                                                                         |   |   | 1,860.9  |   |   |   | 1,715.1  |   |
| Other                  liabilities                                                                                                                                                                                             |   |   | 949.0    |   |   |   | 947.2    |   |
|                                                                                                                                                                                                                           |
| **Shareholders’                  Equity:**                                                                                                                                                                               |   |   |     |   |   |   |     |   |
| Preferred stock,                  Series C, $2.06, no par value, 11,122 shares in 2005 and                  12,288                  shares in 2004 issued and outstanding                                                 |   |   | 0.3      |   |   |   | 0.3      |   |
| Common stock,                  par value                  $1 per share, 1.0 billion shares authorized, 383,605,936                  shares in                  2005 and 302,267,959 shares in 2004 issued and outstanding |   |   | 383.6    |   |   |   | 302.3    |   |
| Additional paid-in                  capital                                                                                                                                                                                    |   |   | 5,339.3  |   |   |   | 197.9    |   |
| Unrealized holding                  gain                  on investments                                                                                                                                                       |   |   | 22.3     |   |   |   | 153.9    |   |
| Foreign currency                  translation adjustment                                                                                                                                                                       |   |   | (2.8     | )      |   |   | 0.5      |   |
| Retained                  earnings                                                                                                                                                                                             |   |   | 7,272.8  |   |   |   | 6,473.8  |   |
|                                                                                                                                                                                                                           |   |   |     |   |   |   |
| Total shareholders’                  equity                                                                                                                                                                              |   |   | 13,015.5 |   |   |   | 7,128.7  |   |
|                                                                                                                                                                                                                           |
| **Total                  Liabilities and Shareholders’ Equity**                                                                                                                                                          |   | $      | 24,013.1 |   |   | $      | 16,603.7 |   |
|                                                                                                                                                                                                                           |

F-49 

**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

|                                                                                                                            |   |   |     |   |   |   |     |   |   |   |     |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
| (Millions)                                                                                                                      | 2005   |   | 2004     |   | 2003   |
|                                                                                                                            |
| **Cash                  Provided                  from Operations:**                                                            |   |   |     |   |   |   |     |   |   |   |     |   |
| Net income                                                                                                                      |   | $      | 1,331.4  |   |   | $      | 1,046.2  |   |   | $      | 1,330.1  |   |
| Adjustments to                  reconcile net income to net cash provided from operations:                                      |   |   |     |   |   |   |     |   |   |   |     |   |
| Income from                  discontinued operations                                                                            |   |   | (30.3    | )      |   |   | (19.5    | )      |   |   | (361.0   | )      |
| Cumulative effect                  of                  accounting change                                                        |   |   | 7.4      |   |   |   | –  |   |   |   | (15.6    | )      |
| Depreciation                  and                  amortization                                                                 |   |   | 1,482.6  |   |   |   | 1,299.7  |   |   |   | 1,247.7  |   |
| Provision for                  doubtful                  accounts                                                               |   |   | 221.7    |   |   |   | 184.9    |   |   |   | 184.7    |   |
| Non-cash portion                  of                  restructuring and other charges                                           |   |   | 15.0     |   |   |   | 25.6     |   |   |   | 13.2     |   |
| Non-cash portion                  of                  gain on disposal of assets, write-down of investments and other           |   |   | (232.7   | )      |   |   | –  |   |   |   | (25.0    | )      |
| Increase in deferred                  income taxes                                                                              |   |   | 78.6     |   |   |   | 263.4    |   |   |   | 225.0    |   |
| Reversal of income                  tax                  contingency reserves due to IRS audits                                 |   |   | –  |   |   |   | (19.7    | )      |   |   | –  |   |
| Other, net                                                                                                                      |   |   | 8.0      |   |   |   | (14.4    | )      |   |   | (11.4    | )      |
| Changes in operating                  assets and liabilities, net of effects of acquisitions and                  dispositions: |   |   |     |   |   |   |     |   |   |   |     |   |
| Accounts                  receivable                                                                                            |   |   | (233.8   | )      |   |   | (206.1   | )      |   |   | (79.7    | )      |
| Inventories                                                                                                                     |   |   | (45.0    | )      |   |   | (33.9    | )      |   |   | 17.1     |   |
| Accounts                  payable                                                                                               |   |   | 145.6    |   |   |   | (27.2    | )      |   |   | 21.8     |   |
| Other current                  liabilities                                                                                      |   |   | (77.5    | )      |   |   | 70.6     |   |   |   | 30.2     |   |
| Other, net                                                                                                                      |   |   | 26.0     |   |   |   | (102.8   | )      |   |   | (102.4   | )      |
|                                                                                                                            |   |   |     |   |   |   |     |   |   |
| Net cash provided                  from                  operations                                                             |   |   | 2,697.0  |   |   |   | 2,466.8  |   |   |   | 2,474.7  |   |
|                                                                                                                            |
| **Cash                  Flows from                  Investing Activities:**                                                     |   |   |     |   |   |   |     |   |   |   |     |   |
| Additions to                  property,                  plant and equipment                                                    |   |   | (1,302.4 | )      |   |   | (1,125.4 | )      |   |   | (1,137.7 | )      |
| Additions to                  capitalized software development costs                                                            |   |   | (47.2    | )      |   |   | (32.3    | )      |   |   | (56.7    | )      |
| Additions to                  investments                                                                                       |   |   | (0.9     | )      |   |   | (3.2     | )      |   |   | (13.5    | )      |
| Purchases of                  property,                  net of cash acquired                                                   |   |   | (1,137.6 | )      |   |   | (185.1   | )      |   |   | (160.6   | )      |
| Proceeds from                  the sale                  of assets                                                              |   |   | 84.4     |   |   |   | –  |   |   |   | 46.1     |   |
| Proceeds from                  the sale                  of investments                                                         |   |   | 353.9    |   |   |   | –  |   |   |   | –  |   |
| Proceeds from                  the                  return on investments                                                       |   |   | 36.9     |   |   |   | 88.6     |   |   |   | 48.3     |   |
| Other, net                                                                                                                      |   |   | 13.7     |   |   |   | (1.0     | )      |   |   | 8.2      |   |
|                                                                                                                            |   |   |     |   |   |   |     |   |   |
| Net cash used                  in                  investing activities                                                         |   |   | (1,999.2 | )      |   |   | (1,258.4 | )      |   |   | (1,265.9 | )      |
|                                                                                                                            |
| **Cash                  Flows from                  Financing Activities:**                                                     |   |   |     |   |   |   |     |   |   |   |     |   |
| Dividends on                  common and                  preferred stock                                                       |   |   | (490.5   | )      |   |   | (467.6   | )      |   |   | (436.4   | )      |
| Reductions in                  long-term                  debt                                                                  |   |   | (2,677.8 | )      |   |   | (277.3   | )      |   |   | (763.4   | )      |
| Repurchases of                  common                  stock                                                                   |   |   | –  |   |   |   | (595.3   | )      |   |   | –  |   |
| Distributions                  to                  minority investors                                                           |   |   | (65.6    | )      |   |   | (66.9    | )      |   |   | (67.5    | )      |
| Long-term debt                  issued,                  net of issuance costs                                                  |   |   | 1,000.0  |   |   |   | –  |   |   |   | –  |   |
| Common stock                  issued                                                                                            |   |   | 1,463.5  |   |   |   | 25.9     |   |   |   | 49.1     |   |
|                                                                                                                            |   |   |     |   |   |   |     |   |   |
| Net cash used                  in                  financing activities                                                         |   |   | (770.4   | )      |   |   | (1,381.2 | )      |   |   | (1,218.2 | )      |
|                                                                                                                            |
| **Cash                  Flows from                  Discontinued Operations: (Revised See Note 2)**                             |   |   |     |   |   |   |     |   |   |   |     |   |
| Cash provided                  from                  (used in) operating activities                                             |   |   | 147.4    |   |   |   | –  |   |   |   | (231.5   | )      |
| Cash provided                  from                  investing activities                                                       |   |   | 534.5    |   |   |   | –  |   |   |   | 763.4    |   |
| Cash used in                  financing                  activities                                                             |   |   | (65.8    | )      |   |   | –  |   |   |   | (0.1     | )      |
|                                                                                                                            |   |   |     |   |   |   |     |   |   |
| Net cash provided                  from                  discontinued operations                                                |   |   | 616.1    |   |   |   | –  |   |   |   | 531.8    |   |
|                                                                                                                            |
| Effect of exchange                  rate                  changes on cash and short-term investments                            |   |   | (39.2    | )      |   |   | (0.1     | )      |   |   | 0.8      |   |
|                                                                                                                            |
|                                                                                                                            |   |   |     |   |   |   |     |   |   |   |     |   |
| Increase                  (decrease) in cash and short-term investments                                                    |   |   | 504.3    |   |   |   | (172.9   | )      |   |   | 523.2    |   |
| **Cash                  and                  Short-term Investments:**                                                          |   |   |     |   |   |   |     |   |   |   |     |   |
| Beginning of                  the                  year                                                                         |   |   | 484.9    |   |   |   | 657.8    |   |   |   | 134.6    |   |
|                                                                                                                            |   |   |     |   |   |   |     |   |   |
| End of the                  year                                                                                                |   | $      | 989.2    |   |   | $      | 484.9    |   |   | $      | 657.8    |   |
|                                                                                                                            |

F-50 

**CONSOLIDATED        STATEMENTS OF SHAREHOLDERS’ EQUITY**

|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
|------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|--------|---------------|---------|-------------|--------|-------------|---------|----------|--------|------------|---------|---------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   | Unrealized |    | Foreign |   |   |    |   |   |
|                                                                                           |   |          |    |   |   |          |    |        |   | Additional  |    | Holding  |   | Currency   |    |    |   |   |    |   |
|                                                                                           |   | Preferred     |    | Common |   | Paid-In       |    | Gain On     |   | Translation |    | Retained |   |       |    |
|                                                                                           |   | Stock         |    | Stock  |   | Capital       |    | Investments |   | Adjustment  |    | Earnings |   | Total      |    |
|                                                                                           |
| Balance at                  December 31, 2002                                             |   | $   | 0.4     |   |   | $             | 311.2   |        |   | $           | 695.7   |     |   | $          | – |    |   | $      | (6.9    | )      |   | $      | 4,997.7 |   |   |   | $5,998.1 |   |
|                                                                                           |
| Net income                                                                                     |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | 1,330.1 |   |   |   | 1,330.1  |   |
| Other comprehensive                  income, net of tax: (See Note 15)                         |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
| Unrealized holding                  gains on investments, net of reclassification adjustments  |   |          | – |   |   |          | – |        |   |        | – |     |   |       | 73.6    |    |   |   | – |   |   |   | – |   |   |   | 73.6     |   |
| Foreign currency                  translation adjustment, net of reclassification adjustments  |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | 7.5     |   |   |   | – |   |   |   | 7.5      |   |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Comprehensive                  income                                                          |   |          | – |   |   |          | – |        |   |        | – |     |   |       | 73.6    |    |   |   | 7.5     |   |   |   | 1,330.1 |   |   |   | 1,411.2  |   |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Employee plans,                  net                                                           |   |          | – |   |   |          | 1.4     |        |   |        | 47.7    |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 49.1     |   |
| Tax benefit for                  non-qualified stock options                                   |   |          | – |   |   |          | – |        |   |        | 6.7     |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 6.7      |   |
| Dividends:                                                                                     |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
| Common – $1.42 per                  share                                                |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | (442.8  | )      |   |   | (442.8   | )      |
| Preferred                                                                                      |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | (0.1    | )      |   |   | (0.1     | )      |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Balance at                  December 31, 2003                                             |   | $             | 0.4     |   |   | $   | 312.6   |        |   | $           | 750.1   |     |   | $          | 73.6    |    |   | $      | 0.6     |   |   | $      | 5,884.9 |   |   |   | $7,022.2 |   |
|                                                                                           |
| Net income                                                                                     |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | 1,046.2 |   |   |   | 1,046.2  |   |
| Other comprehensive                  income, net of tax: (See Note 15)                         |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
| Unrealized holding                  gains on investments, net of reclassification adjustments  |   |          | – |   |   |          | – |        |   |        | – |     |   |       | 80.3    |    |   |   | – |   |   |   | – |   |   |   | 80.3     |   |
| Foreign currency                  translation adjustment                                       |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | (0.1    | )      |   |   | – |   |   |   | (0.1     | )      |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Comprehensive                  income                                                          |   |          | – |   |   |          | – |        |   |        | – |     |   |       | 80.3    |    |   |   | (0.1    | )      |   |   | 1,046.2 |   |   |   | 1,126.4  |   |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Employee plans,                  net                                                           |   |          | – |   |   |          | 0.6     |        |   |        | 25.2    |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 25.8     |   |
| Restricted stock,                  net                  of unearned compensation               |   |          | – |   |   |          | 0.2     |        |   |        | 2.8     |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 3.0      |   |
| Tax benefit for                  non-qualified stock options                                   |   |          | – |   |   |          | – |        |   |        | 3.9     |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 3.9      |   |
| Conversion of                  preferred                  stock                                |   |          | (0.1    | )      |   |          | 0.1     |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | –  |   |
| Repurchases of                  stock                                                          |   |          | – |   |   |          | (11.2   | )           |   |        | (584.1  | )        |   |       | – |    |   |   | – |   |   |   | – |   |   |   | (595.3   | )      |
| Dividends:                                                                                     |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
| Common – $1.49 per                  share                                                |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | (457.2  | )      |   |   | (457.2   | )      |
| Preferred                                                                                      |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | (0.1    | )      |   |   | (0.1     | )      |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Balance at                  December 31, 2004                                             |   | $             | 0.3     |   |   | $   | 302.3   |        |   | $           | 197.9   |     |   | $          | 153.9   |    |   | $      | 0.5     |   |   | $      | 6,473.8 |   |   |   | $7,128.7 |   |
|                                                                                           |
| Net income                                                                                     |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | 1,331.4 |   |   |   | 1,331.4  |   |
| Other comprehensive                  income, net of tax: (See Note 15)                         |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
| Unrealized holding                  losses on investments, net of reclassification adjustments |   |          | – |   |   |          | – |        |   |        | – |     |   |       | (131.6  | )       |   |   | – |   |   |   | – |   |   |   | (131.6   | )      |
| Foreign currency                  translation adjustment                                       |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | (3.3    | )      |   |   | – |   |   |   | (3.3     | )      |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Comprehensive                  income                                                          |   |          | – |   |   |          | – |        |   |        | – |     |   |       | (131.6  | )       |   |   | (3.3    | )      |   |   | 1,331.4 |   |   |   | 1,196.5  |   |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Acquisitions                  (See Note                  3)                                    |   |          | – |   |   |          | 54.3    |        |   |        | 3,688.2 |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 3,742.5  |   |
| Settle purchase                  obligation related to equity units (See Note 5)               |   |          | – |   |   |          | 24.5    |        |   |        | 1,360.5 |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 1,385.0  |   |
| Employee plans,                  net                                                           |   |          | – |   |   |          | 2.3     |        |   |        | 77.5    |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 79.8     |   |
| Restricted stock,                  net                  of unearned compensation               |   |          | – |   |   |          | 0.2     |        |   |        | 5.3     |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 5.5      |   |
| Tax benefit for                  non-qualified stock options                                   |   |          | – |   |   |          | – |        |   |        | 9.9     |     |   |       | – |    |   |   | – |   |   |   | – |   |   |   | 9.9      |   |
| Dividends:                                                                                     |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |   |    |   |   |   |     |   |
| Common – $1.525 per                  share                                               |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | (532.3  | )      |   |   | (532.3   | )      |
| Preferred                                                                                      |   |          | – |   |   |          | – |        |   |        | – |     |   |       | – |    |   |   | – |   |   |   | (0.1    | )      |   |   | (0.1     | )      |
|                                                                                           |   |          |    |   |   |          |    |        |   |        |    |     |   |       |    |    |   |   |    |   |   |
| Balance at                  December 31, 2005                                             |   | $             | 0.3     |   |   | $   | 383.6   |        |   | $           | 5,339.3 |     |   | $          | 22.3    |    |   | $      | (2.8    | )      |   | $      | 7,272.8 |   |   | $      | 13,015.5 |   |
|                                                                                           |

F-51 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **1.** |   | **Summary of Significant Accounting                Policies**:Description of Business– ALLTEL Corporation                (“Alltel” or the “Company”), a Delaware corporation, is a customer-focused                communications company. Alltel owns subsidiaries that provide wireless                and                wireline local, long-distance, network access, and Internet services.                Telecommunications products are warehoused and sold by the Company’s                distribution subsidiary. A subsidiary also publishes telephone directories                for affiliates and other independent telephone companies. In addition,                a                subsidiary provides billing, customer care and other data processing                and                outsourcing services to telecommunications companies. (See Note 18                for                additional information regarding Alltel’s business segments.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Basis of Presentation– Alltel prepares its consolidated                financial statements in accordance with accounting principles generally                accepted in the United States, which require management to make estimates                and assumptions that affect the reported amounts of assets, liabilities,                revenues and expenses and disclosure of contingent assets and liabilities.                The estimates and assumptions used in the accompanying consolidated                financial statements are based upon management’s evaluation of the                relevant facts and circumstances as of the date of the financial                statements. Actual results may differ from the estimates and assumptions                used in preparing the accompanying consolidated financial statements,                and                such differences could be material. The consolidated financial statements                include the accounts of Alltel, its subsidiary companies, majority-owned                partnerships and controlled business ventures. Investments in                20 percent to 50 percent owned entities and all unconsolidated                partnerships are accounted for using the equity method. Investments                in                less than 20 percent owned entities and in which the Company                does not                exercise significant influence over operating and financial policies                are                accounted for under the cost method. All intercompany transactions,                except                those with certain affiliates described below, have been eliminated                in the                consolidated financial statements. Certain prior year amounts have                been                reclassified to conform to the 2005 financial statement presentation.                                                                                |
|   |
|   |   | Service revenues consist of wireless access and network usage                revenues, local service, network access, Internet access, long-distance                and miscellaneous wireline operating revenues and telecommunications                information services processing revenues. Product sales primarily                consist                of the product distribution and directory publishing operations and                sales                of communications equipment. Cost of services include the costs related                to                completing calls over the Company’s telecommunications network, including                access, interconnection, toll and roaming charges paid to other wireless                providers, as well as the costs to operate and maintain the network.                Additionally, cost of services includes the costs to provide                telecommunications information services, bad debt expense and business                taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |
|   |   | Regulatory Accounting– The Company’s wireline subsidiaries,                except for certain operations acquired in Kentucky in 2002 and Nebraska                in                1999, follow the accounting for regulated enterprises prescribed                by                Statement of Financial Accounting Standards (“SFAS”) No. 71,                “Accounting for the Effects of Certain Types of Regulation”. This                accounting recognizes the economic effects of rate regulation by                recording                costs and a return on investment as such amounts are recovered through                rates authorized by regulatory authorities. Accordingly, SFAS No. 71                requires the Company’s wireline subsidiaries to depreciate wireline plant                over the useful lives approved by regulators, which could be different                than the useful lives that would otherwise be determined by management.                SFAS No. 71 also requires deferral of certain costs and obligations                based upon approvals received from regulators to permit recovery                of such                amounts in future years. Criteria that would give rise to the                discontinuance of SFAS No. 71 include (1) increasing                competition                restricting the wireline subsidiaries’ ability to establish prices to                recover specific costs and (2) significant changes in the                manner in                which rates are set by regulators from cost-based regulation to another                form of regulation. The Company reviews these criteria on a quarterly                basis to determine whether the continuing application of SFAS No. 71                is appropriate. In assessing the continued applicability of SFAS                No. 71, the Company monitors the following: |

|   | **•** |   | Level of competition in its markets. To date, competition has not              had              a significant adverse effect on the operating results of the Company’s              ILEC subsidiaries, primarily because these subsidiaries provide wireline              telecommunications services in mostly rural areas. To date, ILEC              subsidiaries have not been required to discount intrastate service              rates              in response to competitive pressures.                                                                                                                                                                                 |
|--------|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | **•** |   | Level of revenues and access lines currently subject to rate-of-return              regulation or which could revert back to rate-of-return regulation              in the              future. For the ILEC subsidiaries that follow SFAS No. 71, all              interstate revenues are subject to rate-of-return regulation. The majority              of the ILEC subsidiaries’ remaining intrastate revenues are either subject              to rate-of-return regulation or could become subject to rate-of-return              regulation upon election by the Company, subject in certain cases to              approval by the state public service commissions. |
|   |
|   | **•** |   | Level of profitability of the ILEC subsidiaries. Currently, the              prices              charged to customers for interstate and intrastate services continue              to be              sufficient to recover the specific costs of the ILEC subsidiaries in              providing these services to customers.                                                                                                                                                                                                                                                                                                                                                         |

F-52 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **1.** |   | **Summary of Significant Accounting Policies,                Continued**:Transactions with Certain Affiliates– ALLTEL                Communications Products, Inc. sells equipment to wireline subsidiaries                of                the Company ($134.4 million in 2005, $85.9 million                in 2004 and                $123.7 million in 2003) as well as to other affiliated and                non-affiliated communications companies and other companies in related                industries. The cost of equipment sold to the wireline subsidiaries                is                included, principally, in wireline plant in the consolidated financial                statements. ALLTEL Publishing Corporation (“ALLTEL Publishing”) contracts                with the wireline subsidiaries to provide directory publishing services                which include the publication of a standard directory at no charge.                ALLTEL                Publishing bills the wireline subsidiaries for services not covered                by the                standard contract ($7.6 million in 2005, $7.0 million                in 2004                and $7.3 million in 2003). Wireline revenues and sales include                directory royalties received from ALLTEL Publishing ($35.8 million                in                2005, $40.1 million in 2004 and $42.9 million in 2003) and                amounts                billed to other affiliates ($64.8 million in 2005, $96.2 million                in 2004 and $92.7 million in 2003) for interconnection and                toll                services. These intercompany transactions have not been eliminated                because                the revenues received from the affiliates and the prices charged                by the                communications products and directory publishing subsidiaries are                included                in the wireline subsidiaries’ (excluding the acquired operations in                Kentucky and Nebraska) rate base and/or are recovered through the                regulatory process.                                                                                                                     |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Cash and Short-term Investments– Cash and short-term                investments consist of highly liquid investments with original maturities                of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |
|   |   | Accounts Receivable – Accounts receivable consist principally                of trade receivables from customers and are generally unsecured and                due                within 30 days. Expected credit losses related to trade accounts                receivable are recorded as an allowance for doubtful accounts in                the                consolidated balance sheets. In establishing the allowance for doubtful                accounts, Alltel considers a number of factors, including historical                collection experience, aging of the accounts receivable balances,                current                economic conditions, and a specific customer’s ability to meet its                financial obligations to the Company. When internal collection efforts                on                accounts have been exhausted, the accounts are written off by reducing                the                allowance for doubtful accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |
|   |   | Inventories– Inventories are stated at the lower of cost or                market value. Cost is determined using either an average original                cost or                specific identification method of valuation. For wireless equipment,                market is determined using replacement cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |
|   |   | Goodwill and Other Intangible Assets– Goodwill represents the                excess of cost over the fair value of net identifiable tangible and                intangible assets acquired through various business combinations.                The                Company has acquired identifiable intangible assets through its                acquisitions of interests in various wireless and wireline properties.                The                cost of acquired entities at the date of the acquisition is allocated                to                identifiable assets, and the excess of the total purchase price over                the                amounts assigned to identifiable assets is recorded as goodwill.                In                accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”,                goodwill is to be assigned to a company’s reporting units and tested for                impairment annually using a consistent measurement date, which for                the                Company is January 1st of each year. The impairment test for goodwill                requires a two-step approach, which is performed at a reporting unit                level. Step one of the test identifies potential impairments by comparing                the fair value of a reporting unit to its carrying amount. Step two,                which                is only performed if the fair value of a reporting unit is less than                its                carrying value, calculates the impairment loss as the difference                between                the carrying amount of the reporting unit’s goodwill and the implied fair                value of that goodwill. Alltel completed step one of the annual impairment                reviews of goodwill for both 2005 and 2004 and determined that no                write-down in the carrying value of goodwill for any of its reporting                units was required. For purposes of completing the annual impairment                reviews, fair value of the reporting units was determined utilizing                a                combination of the discounted cash flows of the reporting units and                calculated market values of comparable public companies. |
|   |
|   |   | The Company’s indefinite-lived intangible assets consist of its                cellular and Personal Communications Services (“PCS”) licenses (the                “wireless licenses”) and the wireline franchise rights in Kentucky                acquired in August 2002. The Company determined that the wireless                licenses and wireline franchise rights met the indefinite life criteria                outlined in SFAS No. 142, because the Company expects both                the                renewal by the granting authorities and the cash flows generated                from                these intangible assets to continue indefinitely. The Company’s intangible                assets with finite lives are amortized over their estimated useful                lives,                which are 3 to 10 years for customer lists, 41 months                for the                roaming agreement and 15 years for franchise rights. SFAS                No. 142 also requires intangible assets with indefinite lives                to be                tested for impairment on an annual basis, by comparing the fair value                of                the assets to their carrying amounts. The wireless licenses are operated                as a single asset supporting the Company’s wireless business, and                accordingly are aggregated for purposes of testing impairment. For                purposes of completing the annual impairment reviews, the fair value                of                the wireless licenses was determined based on the discounted cash                flows of                the wireless business segment, while the fair value of the wireline                franchise rights was determined based on the discounted cash flows                of the                acquired operations in Kentucky. Upon completing the annual impairment                reviews of its wireless licenses and wireline franchise rights for                both                2005 and 2004, the Company determined that no write-down in the carrying                value of these assets was required.                                                                                                      |

F-53 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **1.** |   | **Summary of Significant Accounting Policies,                Continued**:Investments– Investments in unconsolidated                partnerships are accounted for using the equity method. Investments                in                equity securities are classified as available for sale and are recorded                at                fair value in accordance with SFAS No. 115, “Accounting for Certain                Investments in Debt and Equity Securities”. All other investments are                accounted for using the cost method. Investments are periodically                reviewed                for impairment. If the carrying value of the investment exceeds its                fair                value and the decline in value is determined to be other-than-temporary,                an impairment loss would be recognized for the difference. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Investments were as follows at                December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                                        |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                        |
| (Millions)                                                  |   | 2005   |   |   | 2004   |
|                                                        |
| Investments in                  unconsolidated partnerships |   | $      | 157.2  |   |   | $      | 257.8  |   |
| Equity                  securities                          |   |   | 166.5  |   |   |   | 511.8  |   |
| Other cost                  investments                     |   |   | 34.7   |   |   |   | 35.3   |   |
|                                                        |   |   |   |   |   |   |
|                                                        |   | $      | 358.4  |   |   | $      | 804.9  |   |
|                                                        |

|   |   | Investments in unconsolidated partnerships include the related                excess                of the purchase price paid over the underlying net book value of                the                wireless partnerships. The carrying value of excess cost included                in                investments was $4.7 million and $19.5 million at                December 31, 2005 and 2004, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Property, Plant and Equipment– Property, plant and equipment                are stated at original cost. Wireless plant consists of cell site                towers,                switching, controllers and other radio frequency equipment. Wireline                plant                consists of aerial and underground cable, conduit, poles, switches                and                other central office and transmission-related equipment. Information                processing plant consists of data processing equipment, purchased                software                and internal use capitalized software development costs. Other plant                consists of furniture, fixtures, vehicles, machinery and equipment.                The                costs of additions, replacements and substantial improvements, including                related labor costs, are capitalized, while the costs of maintenance                and                repairs are expensed as incurred. For Alltel’s non-regulated operations,                when depreciable plant is retired or otherwise disposed of, the related                cost and accumulated depreciation are deducted from the plant accounts,                with the corresponding gain or loss reflected in operating results.                The                Company’s wireline subsidiaries utilize group composite depreciation.                Under this method, when plant is retired, the original cost, net                of                salvage value, is charged against accumulated depreciation, and no                gain or                loss is recognized on the disposition of the plant. Depreciation                expense                amounted to $1,370.0 million in 2005, $1,239.0 million in                2004 and                $1,187.4 million in 2003. Depreciation for financial reporting                purposes is computed using the straight-line method over the following                estimated useful lives: |

|                                        |   |              |   |   |
|---------------------------------------------|--------|-------------------|--------|--------|
|                                        |   | Depreciable Lives |   |
|                                        |   |              |
| Buildings and                  improvements |   | 5-50 years        |
| Wireline                                    |   | 5-56 years        |
| Wireless                                    |   | 3-21 years        |
| Information                  processing     |   | 3-16 years        |
| Other                                       |   | 3-23 years        |

|   |   | The Company capitalizes interest in connection with the acquisition                or                construction of plant assets. Capitalized interest is included in                the cost                of the asset with a corresponding reduction in interest expense.                Capitalized interest amounted to $19.2 million in 2005,                $16.7 million in 2004 and $15.2 million in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Capitalized Software Development Costs– Software development                costs incurred in the application development stage of internal use                software are capitalized and recorded in information processing plant                in                the accompanying consolidated balance sheets. Modifications and upgrades                to internal use software are capitalized to the extent such enhancements                provide additional functionality. Software maintenance and training                costs                are expensed as incurred. Internal use software is amortized over                periods                ranging from three to ten years.                                                                                                                                                                                                                                                                  |
|   |
|   |   | Impairment of Long-Lived Assets– Long-lived assets and                intangible assets subject to amortization are reviewed for impairment                whenever events or changes in circumstances indicate that the carrying                value of the asset may not be recoverable from future, undiscounted                net                cash flows expected to be generated by the asset. If the asset is                not                fully recoverable, an impairment loss would be recognized for the                difference between the carrying value of the asset and its estimated                fair                value based on discounted net future cash flows or quoted market                prices.                Assets to be disposed of that are not classified as discontinued                operations are reported at the lower of their carrying amount or                fair                value less cost to sell. |

F-54 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **1.** |   | **Summary of Significant Accounting Policies,                Continued:**Derivative Instruments– The Company uses                derivative instruments to manage its exposure to fluctuations in                foreign                currency exchange rates and to obtain a targeted mixture of variable                and                fixed-interest-rate long-term debt, such that the portion of debt                subject                to variable rates does not exceed 30 percent of Alltel’s total                long-term debt outstanding. The Company has established policies                and                procedures for risk assessment and the approval, reporting and monitoring                of derivative instrument activities. Derivative instruments are entered                into for periods consistent with the related underlying exposure                and are                not entered into for trading or speculative purposes. The Company                has                entered into interest rate swap agreements and designated these                derivatives as fair value hedges. During 2005, Alltel entered into                foreign                currency forward exchange contracts to hedge the foreign currency                exposure                of its net investment in its Austrian and Irish operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | In accordance with SFAS No. 133, “Accounting for Derivative                Instruments and Hedging Activities” and related amendments and                interpretations, all derivatives are recorded as either assets or                liabilities in the consolidated balance sheets at fair value. Changes                in                the fair values of the derivative instruments not qualifying as hedges                or                any ineffective portion of hedges are recognized in earnings in the                current period. Changes in the fair values of derivative instruments                used                effectively as fair value hedges are recognized in earnings along                with the                corresponding changes in the fair value of the hedged item. Net amounts                due related to interest rate swap agreements are recorded as adjustments                to interest expense in the consolidated statements of income when                earned                or payable. Changes in the fair value of the foreign currency forward                contract due to exchange rate fluctuations are recorded in shareholders’                equity (foreign currency translation adjustment) and offset the effect                of                foreign currency changes in the fair value of the net investment                being                hedged. In the event a designated hedged item is sold, extinguished                or                matures prior to the termination of the related derivative instrument,                the                derivative instrument would be closed and the resulting gain or loss                would                be recognized in income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |
|   |   | Preferred Stock– Cumulative preferred stock is issuable in                series. The Board of Directors is authorized to designate the number                of                shares and fix the terms. There are 50.0 million shares of no par                value                cumulative non-voting preferred stock and 50.0 million shares                of $25                par value voting cumulative preferred stock authorized. Two series                of no                par value preferred stock, Series C and Series D, were                outstanding at December 31, 2005 and 2004. There were no shares                of                $25 par value preferred stock outstanding at December 31,                2005 and                2004. The Series C non-redeemable preferred shares are convertible                at                any time into 5.963 shares of Alltel common stock. The Series D                redeemable preferred shares are convertible at any time prior to                redemption into 5.486 shares of Alltel common stock. The Series D                shares may be redeemed at the option of the Company or the holder                at the                $28 per share stated value. There were 27,737 shares and 32,190 shares                of                Series D stock outstanding at December 31, 2005 and                2004,                respectively. The outstanding Series D stock of $0.8 million                and                $0.9 million at December 31, 2005 and 2004, respectively,                is                included in other liabilities in the accompanying consolidated balance                sheets. During 2005, $125,000 of Series D stock was converted                into                Alltel common stock compared to $94,000 in 2004 and $19,000 in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |
|   |   | Mandatorily Redeemable Financial Instruments– At                December 31, 2004, four of Alltel’s consolidated non-wholly owned                wireless partnerships had finite lives specified in their partnership                agreements, and accordingly, were legally required to be dissolved                and                terminated at a specified future date, usually 50 or 99 years                after                formation, and the proceeds distributed to the partners. Under the                provisions of SFAS No. 150, “Accounting for Certain Financial                Instruments with Characteristics of both Liabilities and Equity”, the                minority interests associated with these partnerships are considered                mandatorily redeemable financial instruments, and as such, would                be                required to be reported as liabilities in Alltel’s consolidated financial                statements, initially measured at settlement value, and subsequently                remeasured at each balance sheet date with changes in settlement                values                reported as a component of interest expense. In November 2003,                the                FASB issued Staff Position No. 150-3, “Effective Date, Disclosures,                and Transition for Mandatorily Redeemable Financial Instruments of                Certain                Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling                Interests under FASB Statement No. 150” (“FSP No. 150-3”). FSP                No. 150-3 deferred indefinitely the recognition and measurement                provisions of SFAS No. 150 applicable to mandatorily redeemable                noncontrolling interests, including the minority interests associated                with                Alltel’s consolidated non-wholly owned partnerships with finite lives. In                accordance with FSP No. 150-3, the minority interests associated                with                the Company’s finite-lived partnerships continue to be reported at book                value. During 2005, Alltel acquired the remaining ownership interest                in                one of the finite-lived partnerships. The estimated settlement value                and                carrying value of the minority interests for the partnerships within                the                scope of SFAS No. 150 and FSP No. 150-3 were as follows                at                December 31: |

|                                                                           |       |   |     |   |       |   |     |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------|------------|--------|----------|--------|------------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
|                                                                           |
| (Millions)                                                                     | 2005       |   | 2004     |
|                                                                           |
|                                                                           | Settlement |   | Carrying |   | Settlement |   | Carrying |
|                                                                           | Value      |   | Amount   |   | Value      |   | Amount   |
|                                                                           |       |   |     |   |       |   |     |
| Minority interest                  liability – finite-lived partnerships | $19.6      |   | $4.7     |   | $27.5      |   | $10.1    |
|                                                                           |

F-55 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **1.** |   | **Summary of Significant Accounting Policies,                Continued:**Unrealized Holding Gain on Investments–                Equity securities of certain publicly traded companies owned by Alltel                have been classified as available-for-sale and are reported at fair                value,                with cumulative unrealized net gains reported, net of tax, as a separate                component of shareholders’ equity. The unrealized gains, including the                related tax impact, are non-cash items, and accordingly, have been                excluded from the accompanying consolidated statements of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Foreign Currency Translation Adjustment– For the Company’s                foreign operations, assets and liabilities are translated from the                applicable local currency to U.S. dollars using the current exchange                rate                as of the balance sheet date. Revenue and expense accounts are translated                using the weighted average exchange rate in effect during the period.                The                resulting translation gains or losses are recorded as a separate                component                of shareholders’ equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |
|   |   | Revenue Recognition– Communications revenues are primarily                derived from providing access to and usage of the Company’s networks and                facilities. Access revenues from wireless postpaid customers and                wireline                local access revenues are generally billed one month in advance and                are                recognized over the period that the corresponding services are rendered                to                customers. Revenues derived from usage of the Company’s networks,                including airtime, roaming and long-distance revenues are recognized                when                the services are provided and are included in unbilled revenues until                billed to the customer. Prepaid wireless airtime sold to customers                is                recorded as deferred revenue prior to the commencement of services                and is                recognized when the airtime is used or expires. The Company offers                enhanced services including caller identification, call waiting,                call                forwarding, three-way calling, voice mail, text and picture messaging,                as                well as downloadable wireless data applications, including ringtones,                music, games, and other informational content. Generally, these enhanced                features and data applications generate additional service revenues                through monthly subscription fees or increased usage through utilization                of the features and applications. Other optional services, such as                mobile-to-mobile calling, roadside assistance and equipment protection                plans may also be provided for a monthly fee and are either sold                separately or bundled and included in packaged rate plans. Revenues                from                enhanced features and optional services are recognized when earned.                Access                and usage-based services are billed throughout the month based on                the bill                cycle assigned to a particular customer. As a result of billing cycle                cut-off times, Alltel must estimate service revenues earned but not                yet                billed at the end of each reporting period. Included in accounts                receivable are unbilled receivables related to communications revenues                of                $121.7 million and $85.5 million at December 31, 2005                and 2004,                respectively. |
|   |
|   |   | Sales of communications products including wireless handsets and                accessories represent a separate earnings process and are recognized                when                products are delivered to and accepted by customers. The Company                accounts                for transactions involving both the activation of service and the                sale of                equipment in accordance with Emerging Issues Task Force (“EITF”) Issue                No. 00-21, “Accounting for Revenue Arrangements with Multiple                Deliverables”. Fees assessed to communications customers to activate                service are not a separate unit of accounting and are allocated to                the                delivered item (equipment) and recognized as product sales                to the                extent that the aggregate proceeds received from the customer for                the                equipment and activation fee do not exceed the fair value of the                equipment. Any activation fee not allocated to the equipment would                be                deferred upon activation and recognized as service revenue on a                straight-line basis over the expected life of the customer relationship.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |
|   |   | ALLTEL Publishing recognizes directory publishing and advertising                revenues and related directory costs when the directories are published                and delivered. For directory contracts with a secondary delivery                obligation, ALLTEL Publishing defers a portion of its revenues and                related                directory costs until secondary delivery occurs. Included in accounts                receivable are unbilled receivables related to directory advertising                revenues earned but not yet billed of $60.7 million and                $64.0 million at December 31, 2005 and 2004, respectively.                The                royalties paid by ALLTEL Publishing to the Company’s regulated wireline                subsidiaries (excluding the acquired operations in Kentucky and Nebraska)                are recognized as revenue over the life of the corresponding contract,                which is generally twelve months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |
|   |   | Telecommunications information services revenues are recognized                in                accordance with the American Institute of Certified Public Accountants’                Statement of Position (“SOP”) 97-2 “Software Revenue Recognition” and SOP                98-9 “Modification of SOP 97-2, Software Revenue Recognition, With Respect                to Certain Transactions”. Data processing revenues are recognized as                services are performed. When the arrangement with the customer includes                significant production, modification or customization of the software,                the                Company uses contract accounting, as required by SOP 97-2. For those                arrangements accounted for under SOP 81-1 “Accounting for Performance of                Construction-Type and Certain Production-Type Contracts”, the Company uses                the percentage-of-completion method. Under this method, revenue and                profit                are recognized throughout the term of the contract, based upon estimates                of the total costs to be incurred and revenues to be generated throughout                the term of the contract. Changes in estimates for revenues, costs                and                profits are recognized in the period in which they are determinable.                When                such estimates indicate that costs will exceed future revenues and                a loss                on the contract exists, a provision for the entire loss is then                recognized. For all other operations, revenue is recognized when                products                are delivered to and accepted by customers or when services are rendered                to customers in accordance with contractual terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

F-56 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **1.** |   | **Summary of Significant Accounting Policies,                Continued:**Advertising– Advertising costs are expensed                as incurred. Advertising expense totaled $239.9 million in                2005,                $202.5 million in 2004 and $200.3 million in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Operating Leases– Certain of the Company’s operating lease                agreements for cell sites and for office and retail locations include                scheduled rent escalations during the initial lease term and/or during                succeeding optional renewal periods. The Company accounts for these                operating leases in accordance with SFAS No. 13, “Accounting for                Leases”, and Financial Accounting Standards Board (“FASB”) Technical                Bulletin No. 85-3, “Accounting for Operating Leases with Scheduled                Rent Increases”. Accordingly, the scheduled increases in rent expense are                recognized on a straight-line basis over the initial lease term and                those                renewal periods that are reasonably assured. The difference between                rent                expense and rent paid is recorded as deferred rent and included in                other                liabilities in the accompanying consolidated balance sheets. Leasehold                improvements are amortized over the shorter of the estimated useful                life                of the asset or the lease term, including renewal option periods                that are                reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |
|   |   | Stock-Based Compensation– The Company’s stock-based                compensation plans are more fully discussed in Note 8. Alltel accounts                for                these plans under the recognition and measurement principles of Accounting                Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued                to Employees” and related interpretations. For fixed stock options granted                under these plans, the exercise price of the option equals the market                value of Alltel’s common stock on the date of grant. Accordingly, Alltel                does not record compensation expense for any of the fixed stock options                granted, and no compensation expense related to stock options was                recognized in 2005, 2004 or 2003. In January 2005 and 2004,                the                Company granted to certain senior management employees restricted                stock of                approximately 205,000 and 173,000 shares, respectively. The restricted                shares granted in 2005 vest three years from the date of grant, except                that one-third of the restricted shares may vest after each of the                first                two-year anniversaries from the grant date if the Company achieves                a                certain targeted total stockholder return for its peer group during                the                three-year period preceding each of those two years. The restricted                shares                granted in 2004 will vest in equal increments over a three-year period                following the date of grant. Compensation expense related to the                foregoing                shares amounted to $6.3 million in 2005 and $2.8 million                in                2004. At December 31, 2005 and 2004, unrecognized compensation                expense for the restricted shares amounted to $4.2 million                and $5.7                million, respectively, and was included in additional paid-in capital                in                the accompanying consolidated balance sheet and statement of shareholders’                equity. |
|   |
|   |   | The following table illustrates the effects on net income and                earnings                per share had the Company applied the fair value recognition provisions                of                SFAS No. 123, “Accounting for Stock-Based Compensation”, to its                stock-based employee compensation plans for the years ended                December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|                                                                                                                                                    |   |        |   |             |     |             |   |             |     |   |    |   |     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|------------------|----------|------------------|--------|------------------|----------|--------|---------|--------|----------|--------|
|                                                                                                                                                    |
| (Millions, except per share amounts)                                                                                                                    |   |        |   | 2005   |     | 2004   |   | 2003   |
|                                                                                                                                                    |
| Net income as reported                                                                                                                                  |   |        |   |             | $1,331.4 |             |   |             | $1,046.2 |   |    |   | $1,330.1 |   |
|      Add                stock-based compensation expense included in net income, net of related                tax effects     |   |        | 4.2    |             |     |             | 1.8    |             |     |   | – |   |
|      Deduct                stock-based employee compensation expense determined under fair value                method for all |   |        |   |             |     |             |   |             |     |   |    |   |
|           awards,                net of related tax effects                                           |   |        | (23.3  | )                |     |             | (26.3  | )                |     |   | (24.6   | )      |
|                                                                                                                                                    |   |        |   |             |     |             |   |             |     |   |    |   |     |   |
| Pro forma net income                                                                                                                                    |   |        |   |             | $1,312.3 |             |   |             | $1,021.7 |   |    |   | $1,305.5 |   |
|                                                                                                                                                    |
| Basic earnings per                  share:                                                                                                              |   | As reported |   |             | $3.91    |             |   |             | $3.40    |   |    |   | $4.27    |   |
|                                                                                                                                                         |   | Pro forma   |   |             | $3.85    |             |   |             | $3.32    |   |    |   | $4.19    |   |
|                                                                                                                                                    |
| Diluted earnings                  per                  share:                                                                                           |   | As reported |   |             | $3.87    |             |   |             | $3.39    |   |    |   | $4.25    |   |
|                                                                                                                                                         |   | Pro forma   |   |             | $3.81    |             |   |             | $3.31    |   |    |   | $4.17    |   |
|                                                                                                                                                    |

|   |   | The pro forma amounts presented above may not be representative                of the                future effects on reported net income and earnings per share, since                the                pro forma compensation expense is allocated over the periods in which                options become exercisable, and new option awards may be granted                each                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Income Taxes– Income taxes are accounted for under the asset                and liability method. Deferred tax assets and liabilities are recognized                for the estimated future tax consequences attributable to differences                between the financial statement carrying amounts of existing assets                and                liabilities and their respective tax bases. Deferred tax balances                are                adjusted to reflect tax rates, based on currently enacted tax laws,                which                will be in effect in the years in which the temporary differences                are                expected to reverse. The effect on deferred tax assets and liabilities                of                a change in tax rates is recognized in the results of operations                in the                period that includes the enactment date. For the Company’s regulated                operations, the adjustment in deferred tax balances for the change                in tax                rates is reflected as regulatory assets or liabilities. These regulatory                assets and liabilities are amortized over the lives of the related                depreciable asset or liability concurrent with recovery in rates.                A                valuation allowance is recorded to reduce the carrying amounts of                deferred                tax assets unless it is more likely than not that such assets will                be                realized. |

F-57 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **1.** |   | **Summary of Significant Accounting Policies,                Continued:**Earnings Per Share– Basic earnings per share                of common stock was computed by dividing net income applicable to                common                shares by the weighted average number of common shares outstanding                during                each year. Diluted earnings per share reflects the potential dilution                that                could occur assuming conversion or exercise of all dilutive unexercised                stock options and outstanding restricted and preferred stock. The                dilutive                effects of stock options and preferred stock were determined using                the                treasury stock method. The number of stock options that were not                included                in the computation of diluted earnings per share because the exercise                price of the stock options was greater than the average market price                of                the common stock were approximately 7.0 million, 9.7 million                and                12.2 million shares of common stock at December 31,                2005, 2004                and 2003, respectively. A reconciliation of the net income and numbers                of                shares used in computing basic and diluted earnings per share was                as                follows for the years ended December 31: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                          |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------|--------|--------|--------|---------------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|
|                                                                                                          |
| (Millions, except per share amounts)                                                                          |   | 2005   |                        |   | 2004   |   |                                              | 2003   |   |
|                                                                                                          |
| Basic earnings                  per                  share:                                                   |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Income from continuing                  operations                                                            |   |        | $1,308.5                    |   |   |        | $1,026.7                                          |   |   |        | $   953.5                          |   |
| Income from                  discontinued operations                                                          |   |   | 30.3                        |   |   |   | 19.5                                              |   |   |   | 361.0                                             |   |
| Cumulative effect                  of                  accounting change                                      |   |   | (7.4                        | )      |   |   | –                                           |   |   |   | 15.6                                              |   |
| Less preferred                  dividends                                                                     |   |   | (0.1                        | )      |   |   | (0.1                                              | )      |   |   | (0.1                                              | )      |
|                                                                                                          |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Net income applicable                  to common shares                                                       |   |        | $1,331.3                    |   |   |        | $1,046.1                                          |   |   |        | $1,330.0                                          |   |
|                                                                                                          |
| Weighted average                  common                  shares outstanding for the year                     |   |   | 340.8                       |   |   |   | 307.3                                             |   |   |   | 311.8                                             |   |
|                                                                                                          |
| Basic earnings                  per                  share:                                                   |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Income from continuing                  operations                                                            |   |        | $3.84                       |   |   |        | $3.34                                             |   |   |        | $3.06                                             |   |
| Income from                  discontinued operations                                                          |   |   | .09                         |   |   |   | .06                                               |   |   |   | 1.16                                              |   |
| Cumulative effect                  of                  accounting change                                      |   |   |    (.02      | )      |   |   |        – |   |   |   |     .05                       |   |
| Net income                                                                                                    |   |        | $3.91                       |   |   |        | $3.40                                             |   |   |        | $4.27                                             |   |
|                                                                                                          |
| Diluted earnings                  per                  share:                                                 |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Net income applicable                  to common shares                                                       |   |        | $1,331.3                    |   |   |        | $1,046.1                                          |   |   |        | $1,330.0                                          |   |
| Adjustment for                  interest                  expense on convertible notes, net of tax            |   |   | 1.4                         |   |   |   | –                                           |   |   |   | –                                           |   |
| Adjustment for                  convertible preferred stock dividends                                         |   |   | 0.1                         |   |   |   | 0.1                                               |   |   |   | 0.1                                               |   |
|                                                                                                          |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Net income applicable                  to common shares assuming conversion of preferred stock                |   |        | $1,332.8                    |   |   |        | $1,046.2                                          |   |   |        | $1,330.1                                          |   |
|                                                                                                          |
| Weighted average                  common                  shares outstanding for the year                     |   |   | 340.8                       |   |   |   | 307.3                                             |   |   |   | 311.8                                             |   |
| Increase in shares                  resulting from:                                                           |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Assumed exercise                  of                  stock options                                           |   |   | 1.5                         |   |   |   | 0.8                                               |   |   |   | 0.7                                               |   |
| Assumed conversion                  of                  convertible notes                                     |   |   | 1.5                         |   |   |   | –                                           |   |   |   | –                                           |   |
| Assumed conversion                  of                  convertible preferred stock                           |   |   | 0.2                         |   |   |   | 0.3                                               |   |   |   | 0.3                                               |   |
| Non-vested restricted                  stock awards                                                           |   |   |     0.1 |   |   |   |        – |   |   |   |        – |   |
| Weighted average                  common                  shares, assuming conversion of the above securities |   |   | 344.1                       |   |   |   | 308.4                                             |   |   |   | 312.8                                             |   |
|                                                                                                          |
| Diluted earnings                  per                  share:                                                 |   |   |                        |   |   |   |                                              |   |   |   |                                              |   |
| Income from continuing                  operations                                                            |   |        | $3.80                       |   |   |        | $3.33                                             |   |   |        | $3.05                                             |   |
| Income from                  discontinued operations                                                          |   |   | .09                         |   |   |   | .06                                               |   |   |   | 1.15                                              |   |
| Cumulative effect                  of                  accounting change                                      |   |   |    (.02      | )      |   |   |        – |   |   |   |     .05                       |   |
| Net income                                                                                                    |   |        | $3.87                       |   |   |        | $3.39                                             |   |   |        | $4.25                                             |   |
|                                                                                                          |

|   |   | Recently Issued Accounting Pronouncements– On December 16,                2004, the FASB issued SFAS No. 123(R), “Share-Based Payment”, which is a                revision of SFAS No. 123 and supercedes APB Opinion No. 25.                SFAS                No. 123(R) requires all share-based payments to employees,                including                grants of employee stock options, to be valued at fair value on the                date                of grant, and to be expensed over the applicable vesting period.                Pro forma                disclosure of the income statement effects of share-based payments                is no                longer an alternative. SFAS No. 123(R) was effective for all                stock-based awards granted on or after July 1, 2005, and companies                must also recognize compensation expense related to any awards that                were                not fully vested as of the effective date. Compensation expense for                the                unvested awards will be measured based on the fair value of the awards                previously calculated in developing the pro forma disclosures in                accordance with the provisions of SFAS No. 123. On March 25,                2005,                the SEC staff issued Staff Accounting Bulletin (“SAB”) 107, which                summarized the staff’s views regarding the interaction between SFAS                No. 123(R) and certain SEC rules and regulations and provides                additional guidance regarding the valuation of share-based payment                arrangements for public companies. In addition, on April 15,                2005,                the SEC amended Rule 4-01(a) of Regulation S-X regarding                the                date public companies were required to comply with the provisions                of SFAS                No. 123(R), such that calendar year companies were now be                required to                comply with the standard beginning January 1, 2006. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-58 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **1.** |   | **Summary of Significant Accounting Policies,                Continued:**Upon adoption of the standard on January 1,                2006, the Company will follow the modified prospective transition                method                and expects to value its share-based payment transactions using a                Black-Scholes valuation model. Under the modified prospective transition                method, Alltel will recognize compensation cost in its consolidated                financial statements for all awards granted after January 1,                2006 and                for all existing awards for which the requisite service has not been                rendered as of the date of adoption. Prior period operating results                will                not be restated. At December 31, 2005, the total unamortized                compensation cost for nonvested stock option awards amounted to                $40.4 million and is expected to be recognized over a weighted                average period of 3 years. The pro forma compensation expense                amounts                reflected in the table under “Stock-Based Compensation” on page F-57 are                expected to approximate the effect of the adoption of SFAS No. 123(R)                on Alltel’s future reported consolidated results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | **2. Accounting Changes**:Change in Reporting Cash                Flows From Discontinued Operations– Effective December 31, 2005,                the Company retrospectively changed its financial statement presentation                to separately disclose the operating, investing and financing portions                of                the cash flows attributable to discontinued operations. Previously,                these                amounts had been disclosed in the notes to the consolidated financial                statements and had been combined and presented as a single amount                within                the consolidated statements of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |
|   |   | Changes in Accounting Estimates– Effective September 1,                2005 and July 1, 2005, the Company prospectively reduced depreciation                rates for its ILEC operations in Florida, Georgia and South Carolina                to                reflect the results of studies of depreciable lives completed by                Alltel in                the second quarter of 2005. The depreciable lives were lengthened                to                reflect the estimated remaining useful lives of the wireline plant                based                on the Company’s expected future network utilization and capital                expenditure levels required to provide service to its customers.                The                effect of these changes resulted in a decrease in depreciation expense                of                $21.8 million and an increase in net income of $13.5 million                or                $.04 per share for the year ended December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |
|   |   | During the third quarter of 2004, Alltel prospectively changed                the                depreciable lives of certain wireless telecommunications equipment.                The                depreciable lives were shortened in response to the rapid pace of                technological development and the increasing demands of Alltel’s customers                for new products and services. Effective April 1, 2004, the                Company                also prospectively reduced depreciation rates for its ILEC operations                in                Nebraska, reflecting the results of a triennial study of depreciable                lives                completed by the Company in the second quarter of 2004, as required                by the                Nebraska Public Service Commission. The effects of these changes                resulted                in a net decrease in depreciation expense of $16.5 million                and a net                increase in net income of $10.6 million or $.03 per share                for the                year ended December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |
|   |   | The Company is routinely audited by federal, state and foreign                taxing                authorities. The outcome of these audits may result in the Company                being                assessed taxes in addition to amounts previously paid. Accordingly,                Alltel                maintains tax contingency reserves for such potential assessments.                The                reserves are determined based upon the Company’s best estimate of possible                assessments by the Internal Revenue Service (“IRS”) or other taxing                authorities and are adjusted, from time to time, based upon changing                facts                and circumstances. During the third quarter of 2004, the IRS issued                its                proposed audit adjustments related to Alltel’s consolidated federal income                tax returns for the fiscal years 1997 through 2001. With the exception                of                three issues which are pending at appeals, Alltel agreed with the                IRS                findings. As a result, Alltel reassessed its income tax contingency                reserves to reflect the IRS findings. Based upon this reassessment,                Alltel                recorded a $129.3 million reduction in these reserves in the third                quarter                of 2004. The reserve adjustments primarily related to acquisition-related                issues and included interest charges on potential assessments. The                corresponding effects of the adjustments to the tax contingency reserves                resulted in a reduction in goodwill of $94.5 million (see                Note 4) and                a reduction in income tax expense associated with continuing operations                of                $19.7 million. In addition, $15.1 million of the adjustments                to                the tax contingency reserves related to the financial services division                of                Alltel’s information services subsidiary, ALLTEL Information Services,                Inc., that was sold to Fidelity National Financial Inc. (“Fidelity                National”) on April 1, 2003. (See Note 14.) Pursuant to the terms of                the sale agreement, Alltel retained, as of the date of sale, all                income                tax liabilities related to the sold operations and agreed to indemnify                Fidelity National from any future tax liability imposed on the financial                services division for periods prior to the date of sale. The adjustment                of                the tax contingency reserves related to the disposed financial services                division has been reported as “discontinued operations”. |
|   |
|   |   | Changes in Accounting Principle– During the fourth quarter of                2005, Alltel adopted FASB Interpretation No. 47, “Accounting for                Conditional Asset Retirement Obligations” (“FIN 47”). The Company                evaluated the effects of FIN 47 on its operations and determined                that, for                certain buildings containing asbestos, Alltel is legally obligated                to                remediate the asbestos if the Company were to abandon, sell or otherwise                dispose of the buildings. In addition, for its acquired Kentucky                and                Nebraska wireline operations not subject to SFAS No. 71, ”, upon                adoption of FIN 47, the Company recorded a liability to reflect is                legal                obligation to properly dispose of its chemically-treated telephone                poles                at the time they are removed from service.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

F-59 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **2.** |   | **Accounting Changes, Continued**:In accordance with                federal and state regulations, depreciation expense for the Company’s                wireline operations that follow the accounting prescribed by SFAS                No. 71 have historically included an additional provision                for cost of                removal, and accordingly, the adoption of FIN 47 had no impact to                these                operations. The cumulative effect of this change in 2005 resulted                in a                non-cash charge of $7.4 million, net of income tax benefit                of                $4.6 million, and was included in net income for the year                ended                December 31, 2005. On a pro forma basis assuming the change                in                accounting for conditional asset retirement obligations had been                applied                retrospectively for all periods presented, the liability for conditional                asset retirement obligations would have been as follows: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                  |   |       |   |   |
|-----------------------------------------------------------------------|--------|------------|--------|--------|
|                                                                  |
| Balance, as of:                                                       |   | (Millions) |   |
|                                                                  |
|      January 1,                  2003   |   |       | $12.8  |   |
|      December 31,                  2003 |   |       | $13.2  |   |
|      December 31,                  2004 |   |       | $13.7  |   |
|      December 31,                  2005 |   |       | $14.0  |   |
|                                                                  |

|   |   | Effective January 1, 2005, the Company changed its accounting                for                operating leases with scheduled rent increases. Previously, Alltel                had not                recognized the scheduled increases in rent expense on a straight-line                basis in accordance with the provisions of SFAS No. 13 and                FASB                Technical Bulletin No. 85-3. The effect of this change, which                is                included in cost of services, was not material to Alltel’s 2005 or                previously reported consolidated results of operations, financial                position                or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Except for certain wireline subsidiaries as further discussed                below,                Alltel adopted SFAS No. 143, “Accounting for Asset Retirement                Obligations”, effective January 1, 2003. SFAS No. 143 addresses                financial accounting and reporting for obligations associated with                the                retirement of tangible long-lived assets and the associated asset                retirement costs. This standard applies to legal obligations associated                with the retirement of long-lived assets that result from the acquisition,                construction, development, or normal use of the assets. SFAS No. 143                requires that a liability for an asset retirement obligation be recognized                when incurred and reasonably estimable, recorded at fair value, and                classified as a liability in the balance sheet. When the liability                is                initially recorded, the entity capitalizes the cost and increases                the                carrying value of the related long-lived asset. The liability is                then                accreted to its present value each period, and the capitalized cost                is                depreciated over the estimated useful life of the related asset.                At the                settlement date, the entity will settle the obligation for its recorded                amount and recognize a gain or loss upon settlement. Alltel has evaluated                the effects of SFAS No. 143 on its operations and has determined                that, for telecommunications and other operating facilities in which                the                Company owns the underlying land, Alltel has no contractual or legal                obligation to remediate the property if the Company were to abandon,                sell                or otherwise dispose of the property. Certain of the Company’s cell site                and switch site operating lease agreements contain clauses requiring                restoration of the leased site at the end of the lease term. Similarly,                certain of the Company’s lease agreements for office and retail locations                require restoration of the leased site upon expiration of the lease                term.                Accordingly, Alltel is subject to asset retirement obligations associated                with these leased facilities under the provisions of SFAS No. 143.                The application of SFAS No. 143 to the Company’s cell site and switch                site leases and leased office and retail locations did not have a                material                impact on Alltel’s consolidated results of operations, financial position,                or cash flows as of and for the year ended December 31, 2003. |
|   |
|   |   | In accordance with federal and state regulations, depreciation                expense                for Alltel’s wireline operations has historically included an additional                provision for cost of removal. The additional cost of removal provision                does not meet the recognition and measurement principles of an asset                retirement obligation under SFAS No. 143. In December 2002,                the                Federal Communications Commission (“FCC”) notified wireline carriers that                they should not adopt the provisions of SFAS No. 143 unless                specifically required by the FCC in the future. As a result of the                FCC                ruling, Alltel continues to record a regulatory liability for cost                of                removal for its wireline subsidiaries that follow the accounting                prescribed by SFAS No. 71. The regulatory liability for cost                of                removal included in accumulated depreciation amounted to                $156.9 million and $147.9 million at December 31,                2005 and                2004, respectively. For the acquired Kentucky and Nebraska wireline                operations not subject to SFAS No. 71, effective January 1,                2003, the Company ceased recognition of the cost of removal provision                in                depreciation expense and eliminated the cumulative cost of removal                included in accumulated depreciation. The effect of these changes                in 2003                was to decrease depreciation expense by $6.4 million and increase                income before cumulative effect of accounting change by $4.0 million.                The cumulative effect of retroactively applying these changes to                periods                prior to January 1, 2003, resulted in a non-cash credit of                $15.6 million, net of income tax expense of $10.3 million,                and                was included in net income for the year ended December 31,                2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

F-60 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **3.** |   | **Acquisitions:**On August 1, 2005, Alltel and                Western Wireless Corporation (“Western Wireless”) completed the merger of                Western Wireless into a wholly-owned subsidiary of Alltel. As a result                of                the merger, Alltel added approximately 1.3 million domestic                wireless                customers, adding wireless operations in nine new states, including                California, Idaho, Minnesota, Montana, Nevada, North Dakota, South                Dakota,                Utah and Wyoming, and expanding its wireless operations in Arizona,                Colorado, New Mexico and Texas. In the merger, each share of Western                Wireless common stock was exchanged for 0.535 shares of Alltel common                stock and $9.25 in cash unless the shareholder made an all-cash election,                in which case the shareholder received $40 in cash. Western Wireless                shareholders making an all-stock election were subject to proration                and                received approximately 0.539 shares of Alltel common stock and $9.18                in                cash. In the aggregate, Alltel issued approximately 54.3 million                shares of stock valued at $3,430.4 million and paid approximately                $933.4 million in cash. Through its wholly-owned subsidiary                that                merged with Western Wireless, Alltel also assumed debt of approximately                $2.1 billion and acquired cash of $12.6 million. On                the date of                closing, Alltel repaid approximately $1.3 billion of term                loans                representing all borrowings outstanding under Western Wireless’ credit                facility that, as a result of a change in control, became due and                payable                immediately upon the closing of the merger. On August 1, 2005,                Alltel                also announced a tender offer to purchase all of the issued and                outstanding 9.25 percent senior notes due July 15,                2013 of                Western Wireless, representing an aggregate principal amount of                $600.0 million, as well as a related consent solicitation                to amend                the indenture governing the senior notes. During the third quarter                of                2005, Alltel repurchased all $600.0 million of the senior                notes. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | Under the purchase method of accounting, the assets and liabilities                of                Western Wireless were recorded at their respective fair values as                of the                date of acquisition. During the fourth quarter of 2005, Alltel completed                the purchase price allocation for this acquisition based upon a fair                value                analysis of the tangible and identifiable intangible assets acquired                and                the liabilities assumed. The excess of the aggregate purchase price                over                the fair market value of the tangible net assets acquired of                $4,268.1 million was assigned to customer list, roaming agreement,                cellular licenses and goodwill. The customer list recorded in connection                with this transaction is being amortized over a weighted-average                period of                five years using the sum-of-the-years digits method. The roaming                agreement                acquired is being amortized on a straight-line basis over its estimated                useful life of 41 months. The cellular licenses are classified                as                indefinite-lived intangible assets and are not subject to amortization.                Alltel assigned goodwill resulting from the acquisition of Western                Wireless to the Company’s wireless business segment. None of the goodwill                or other intangible assets recorded in this acquisition are deductible                for                income tax purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |
|   |   | As part of the acquisition, Alltel assumed $115.0 million                of                4.625 percent convertible subordinated notes due 2023 that                were                issued by Western Wireless in June 2003 (the “Western Wireless                notes”). Upon closing of the merger, each $1,000 principal amount of                Western Wireless notes became convertible into 34.6144 shares of                Alltel                common stock and $598.47 in cash based on the mixed-election exchange                ratio. The Western Wireless notes have been recorded at fair value                as of                the merger date, with a portion of the fair value allocated to the                conversion component. The fair value of the conversion component                of                $216.6 million has been reflected as an increase in Alltel’s                additional paid in capital balance as of the merger date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |
|   |   | Employee stock options issued by Western Wireless that were                outstanding as of the merger date were exchanged for an equivalent                number                of Alltel stock options based on the specified exchange ratio of                the                Western Wireless stock options to Alltel common stock equivalents                of .6762                per share. Compensation expense attributable to the vested Western                Wireless stock options that were exchanged totaling $95.5 million                was                capitalized as part of the purchase price and resulted in a corresponding                increase in Alltel’s additional paid in capital balance as of the merger                date. In addition, Alltel also incurred $28.1 million of direct                costs                for legal, financial advisory and other services related to the                transaction that were also capitalized as part of the purchase price.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |
|   |   | Alltel’s integration of the acquired operations of Western Wireless is                currently underway. In connection with this integration, the Company                expects to incur significant nonrecurring expenses over the next                several                quarters, principally consisting of branding, signage, retail store                redesigns and computer system conversion costs. (See Note 10 for                a                discussion of integration expenses recorded by Alltel in 2005). In                addition, employee termination benefits of $23.8 million,                including                involuntary severance and related benefits to be provided to 337                former                Western Wireless employees, and employee retention bonuses of                $7.4 million payable to approximately 1,150 former Western                Wireless                employees were recorded during 2005. These employee benefit costs                were                recognized in accordance with EITF Issue No. 95-3, “Recognition of                Liabilities in Connection with a Purchase Business Combination”, as                liabilities assumed in the business combination. As of December 31,                2005, Alltel had paid $13.7 million in employee termination                and                retention benefits, and 183 of the scheduled employee terminations                had                been completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

F-61 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **3.** |   | **Acquisitions, Continued:**The premium paid by                Alltel in this transaction is attributable to the strategic importance                of                the Western Wireless merger. As a result of the merger, Alltel increased                its wireless revenue mix from approximately 60 percent to                65 percent of its total consolidated revenues. The Company                also                achieved additional scale by adding approximately 1.3 million                domestic wireless customers in 19 midwestern and western states that                are                contiguous to Alltel’s existing wireless properties, increasing the number                of wireless customers served by Alltel to more than 10 million                customers in 34 states. In addition, the merger increased Alltel’s retail                position in these domestic, rural markets where it can leverage the                Company’s brand and marketing experience and bring significant value to                customers by offering competitive national rate plans. In addition,                the                Company became a leading independent roaming partner for the four                national                carriers in the markets served by Alltel. Finally, Alltel expects                to                achieve reductions in centralized operations costs and interest expense                savings as a result of merger.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | As a condition of receiving approval for the merger from the U.S.                Department of Justice (“DOJ”) and FCC, Alltel agreed to divest certain                wireless operations of Western Wireless in 16 markets in Arkansas,                Kansas                and Nebraska, as well as the “Cellular One” brand. On December 19,                2005, Alltel completed an exchange of wireless properties with United                States Cellular Corporation (“U.S. Cellular”) that included a substantial                portion of the divestiture requirements related to the Company’s merger                with Western Wireless. During December 2005, Alltel completed                the                sale of the Cellular One brand to Dobson Cellular Systems, Inc. and                announced an agreement to sell the remaining market in Arkansas to                Cingular Wireless LLC (“Cingular”). During the third and fourth quarters                of 2005, Alltel completed the sale of Western Wireless’ international                operations in Georgia, Ghana and Ireland and has pending definitive                agreements to sell the Western Wireless international operations                in                Austria, Bolivia and Haiti. Alltel also plans to wind down the remaining                international operations in Slovenia acquired from Western Wireless.                Accordingly, the acquired international operations and interests                of                Western Wireless and the 16 domestic markets required to be divested                by                Alltel have been classified as assets held for sale and discontinued                operations in the accompanying consolidated financial statements.                (See                Note 14).                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |
|   |   | Under terms of the agreement with U.S. Cellular, Alltel acquired                two                rural markets in Idaho that are adjacent to the Company’s existing                operations and received $48.2 million in cash in exchange                for 15                rural markets in Kansas and Nebraska formerly owned by Western Wireless.                During December 2005, Alltel completed a preliminary purchase price                allocation for this exchange based upon a fair value analysis of                the                tangible and identifiable intangible assets acquired and the wireless                property interests relinquished. The excess of the aggregate purchase                price over the fair market value of the tangible net assets acquired                of                $98.4 million was assigned to customer list, cellular licenses                and                goodwill. The customer list recorded in connection with this transaction                is being amortized over a weighted-average period of five years using                the                sum-of-the-years digits method. The cellular licenses are classified                as                indefinite-lived intangible assets and are not subject to amortization.                Given the close proximity to year end that this exchange transaction                was                completed, the values of certain assets and liabilities have been                based on                preliminary valuations and are subject to adjustment as additional                information is obtained. Such additional information includes, but                may not                be limited to, the following: valuations and physical counts of inventory                and property, plant and equipment and the exit from certain contractual                arrangements. Accordingly, the purchase price allocation is subject                to                adjustment based upon completion of the valuation studies and the                final                determination of fair values.                                                                                                                                                       |
|   |
|   |   | On April 15, 2005, Alltel and Cingular exchanged certain                wireless                assets. Under the terms of the agreement, Alltel acquired former                AT&T                Wireless properties, including licenses, network assets, and subscribers,                in select markets in Kentucky, Oklahoma, Texas, Connecticut and                Mississippi covering approximately 2.7 million potential customers                (“POPs”). Alltel also acquired 20MHz of spectrum and network assets owned                by AT&T Wireless in Kansas and wireless spectrum in several counties                in Georgia and Texas. In addition, Alltel and Cingular exchanged                partnership interests, with Cingular receiving interests in markets                in                Kansas, Missouri and Texas, and Alltel receiving more ownership in                majority-owned markets it manages in Michigan, Louisiana and Ohio.                Alltel                also paid Cingular approximately $153.0 million in cash. During                the                second quarter of 2005, Alltel completed the purchase price allocation                for                this exchange based upon a fair value analysis of the tangible and                identifiable intangible assets acquired and the partnership interests                relinquished. The excess of the aggregate purchase price over the                fair                market value of the tangible net assets acquired of $370.9 million                was assigned to customer list, cellular licenses and goodwill. The                customer list recorded in connection with this transaction is being                amortized on a straight-line basis over its estimated useful life                of three                years. The cellular licenses are classified as indefinite-lived intangible                assets and are not subject to amortization. In connection with this                transaction, Alltel recorded a pretax gain of approximately                $127.5 million in the second quarter of 2005 and an additional                gain                of $30.5 million in the third quarter of 2005 (see Note 12). |

F-62 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **3.** |   | **Acquisitions, Continued:**On February 28,                2005, Alltel completed the purchase of certain wireless assets from                Public                Service Cellular, Inc. (“PS Cellular”) for $48.1 million in cash,                acquiring wireless properties with a potential service area covering                approximately 900,000 POPs in Alabama and Georgia. During the first                quarter of 2005, Alltel completed the purchase price allocation for                this                acquisition based upon a fair value analysis of the tangible and                identifiable intangible assets acquired. The excess of the aggregate                purchase price over the fair market value of the tangible net assets                acquired of $36.6 million was assigned to customer list, cellular                licenses and goodwill. The customer list recorded in connection with                this                transaction is being amortized on a straight-line basis over its                estimated                useful life of four years. The cellular licenses are classified as                indefinite-lived intangible assets and are not subject to amortization. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | The accompanying consolidated financial statements include the                accounts and results of operations of the wireless properties acquired                from U.S. Cellular, Cingular and PS Cellular from the dates of                acquisition. The purchase prices paid for these acquisitions were                based on                estimates of future cash flows of the properties acquired. Alltel                paid a                premium (i.e. goodwill) over the fair value of the net tangible and                identifiable intangible assets acquired because the purchase of wireless                properties expanded the Company’s wireless footprint into new markets in                Alabama, Connecticut, Georgia, Kentucky, Idaho, Mississippi, Oklahoma                and                Texas and added 357,000 new customers to Alltel’s communications customer                base. Additionally, in the wireless properties acquired, Alltel should                realize, over time, accelerated customer growth and higher average                revenue                per customer as a result of the Company’s higher revenue national rate                plans.                               |
|   |
|   |   | During 2005, Alltel also acquired additional ownership interests                in                wireless properties in Michigan, Ohio and Wisconsin in which the                Company                owned a majority interest. In connection with these acquisitions,                the                Company paid $15.7 million in cash and assigned the excess                of the                aggregate purchase price over the fair market value of the tangible                net                assets acquired of $8.4 million to goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |
|   |   | The following table summarizes the fair value of the assets acquired                and liabilities assumed for the various business combinations completed                during 2005:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|                                                                          |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |     |   |   |     |   |
|-------------------------------------------------------------------------------|--------|------------------------------|----------|--------|----------|--------|---------|----------|--------|--------|---------|--------|--------|--------|---------|----------|--------|--------|----------|--------|
|                                                                          |
|                                                                          |   | Acquired                from |     |   |     |   |
|                                                                          |   | Western                      |     |   |     |   |    |     | U.S.   |   |    |   |   |   |    | Combined |   |
| (Millions)                                                                    |   | Wireless                     |     |   | Cingular |   |    | Cellular |   |   | Other   |   |   | Totals |    |
|                                                                          |
| Fair value of                  assets                  acquired:              |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |     |   |   |     |   |
| Current assets                                                                |   | $                            | 195.4    |   |     | $      | 1.1     |     |   | $      | 4.7     |   |   | $      | 4.3     |     |   | $      | 205.5    |   |
| Investments                                                                   |   |                         | 132.2    |   |     |   | – |     |   |   | – |   |   |   | – |     |   |   | 132.2    |   |
| Property, plant                  and                  equipment               |   |                         | 506.7    |   |     |   | 38.0    |     |   |   | 30.5    |   |   |   | 10.2    |     |   |   | 585.4    |   |
| Other assets                                                                  |   |                         | 7.1      |   |     |   | – |     |   |   | 2.1     |   |   |   | – |     |   |   | 9.2      |   |
| Assets held for                  sale                                         |   |                         | 2,751.0  |   |     |   | – |     |   |   | – |   |   |   | – |     |   |   | 2,751.0  |   |
| Goodwill                                                                      |   |                         | 3,431.0  |   |     |   | 269.0   |     |   |   | 57.1    |   |   |   | 39.7    |     |   |   | 3,796.8  |   |
| Cellular                  licenses                                            |   |                         | 505.0    |   |     |   | 91.0    |     |   |   | 17.3    |   |   |   | 3.4     |     |   |   | 616.7    |   |
| Customer list                                                                 |   |                         | 326.0    |   |     |   | 10.9    |     |   |   | 24.0    |   |   |   | 1.9     |     |   |   | 362.8    |   |
| Roaming                  agreement                                            |   |                         | 6.1      |   |     |   | – |     |   |   | – |   |   |   | – |     |   |   | 6.1      |   |
|                                                                          |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |
| Total assets                  acquired                                        |   |                         | 7,860.5  |   |     |   | 410.0   |     |   |   | 135.7   |   |   |   | 59.5    |     |   |   | 8,465.7  |   |
|                                                                          |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |
| Liabilities                  assumed:                                         |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |     |   |   |     |   |
| Current                  liabilities                                          |   |                         | (177.0   | )      |     |   | (5.5    | )        |   |   | (3.9    | )      |   |   | (2.4    | )        |   |   | (188.8   | )      |
| Deferred taxes                  established on acquired assets                |   |                         | (482.8   | )      |     |   | – |     |   |   | – |   |   |   | – |     |   |   | (482.8   | )      |
| Long-term debt                                                                |   |                         | (2,112.9 | )      |     |   | – |     |   |   | – |   |   |   | – |     |   |   | (2,112.9 | )      |
| Other                  liabilities                                            |   |                         | (25.7    | )      |     |   | – |     |   |   | – |   |   |   | – |     |   |   | (25.7    | )      |
| Liabilities related                  to                  assets held for sale |   |                         | (398.8   | )      |     |   | – |     |   |   | – |   |   |   | – |     |   |   | (398.8   | )      |
|                                                                          |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |
| Total liabilities                  assumed                                    |   |                         | (3,197.2 | )      |     |   | (5.5    | )        |   |   | (3.9    | )      |   |   | (2.4    | )        |   |   | (3,209.0 | )      |
|                                                                          |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |
| Common stock                  issued                                          |   |                         | (3,742.5 | )      |     |   | – |     |   |   | – |   |   |   | – |     |   |   | (3,742.5 | )      |
| Fair value of                  assets                  exchanged              |   |                         | –  |   |     |   | (265.9  | )        |   |   | (180.0  | )      |   |   | – |     |   |   | (445.9   | )      |
| Minority interest                  liability acquired                         |   |                         | –  |   |     |   | 14.4    |     |   |   | – |   |   |   | 6.7     |     |   |   | 21.1     |   |
|                                                                          |   |                         |     |   |     |   |    |     |   |   |    |   |   |   |    |
| Net cash paid                  (received)                                     |   | $                            | 920.8    |   |     | $      | 153.0   |     |   | $      | (48.2   | )      |   | $      | 63.8    |     |   | $      | 1,089.4  |   |
|                                                                          |

F-63 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **3.** |   | **Acquisitions, Continued:**The following unaudited                pro forma consolidated results of operations of the Company assume                that                the acquisition of wireless properties from Western Wireless occurred                as                of January 1, 2004: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                |   |   |     |   |   |   |    |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|
|                                                                                                |
| (Millions, except per share amounts)                                                                |   | 2005   |     |   | 2004   |   |
|                                                                                                |
| Revenues and                  sales                                                                 |   | $      | 10,083.0 |   |   | $      | 9,195.9 |   |
| Income from continuing                  operations                                                  |   | $      | 1,341.9  |   |   | $      | 1,207.2 |   |
| Earnings per                  share from                  continuing operations:                    |   |   |     |   |   |   |    |   |
| Basic                                                                                               |   |   | $3.51    |   |   |   | $3.13   |   |
| Diluted                                                                                             |   |   | $3.44    |   |   |   | $3.07   |   |
|                                                                                                |
| Income before                  cumulative effect of accounting change                               |   | $      | 1,372.2  |   |   | $      | 1,226.7 |   |
| Earnings per                  share                  before cumulative effect of accounting change: |   |   |     |   |   |   |    |   |
| Basic                                                                                               |   |   | $3.59    |   |   |   | $3.18   |   |
| Diluted                                                                                             |   |   | $3.52    |   |   |   | $3.12   |   |
|                                                                                                |
| Net income                                                                                          |   | $      | 1,364.8  |   |   | $      | 1,226.7 |   |
| Earnings per                  share:                                                                |   |   |     |   |   |   |    |   |
| Basic                                                                                               |   |   | $3.57    |   |   |   | $3.18   |   |
| Diluted                                                                                             |   |   | $3.50    |   |   |   | $3.12   |   |
|                                                                                                |

|   |   | The pro forma amounts represent the historical operating results                of                the properties acquired from Western Wireless with appropriate adjustments                that give effect to depreciation and amortization and interest expense.                The pro forma amounts also give effect to the May 17, 2005                issuance                of approximately 24.5 million shares of Alltel common stock                to settle                the purchase contract obligation related to the Company’s outstanding                equity units (see Note 5), the proceeds of which were used to finance                the                cash portion of the merger transaction and a portion of the repayment                of                Western Wireless’ long-term debt. The pro forma amounts include the                effects of non-acquisition-related special charges and unusual items,                as                more fully discussed in Notes 10, 11 and 12 below. The pro forma                amounts                are not necessarily indicative of the operating results that would                have                occurred if the Western Wireless properties had been operated by                Alltel                during the periods presented. In addition, the pro forma amounts                do not                reflect potential cost savings related to full network optimization                and                the redundant effect of selling and general and administrative expenses.                Unaudited pro forma financial information related to the Company’s other                acquisitions of wireless properties completed in 2005 has not been                included because these acquisitions, individually or in the aggregate                were                not material to Alltel’s consolidated results of operations for all                periods presented. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | On December 1, 2004, Alltel completed the purchase of certain                wireless assets from U.S. Cellular and TDS Telecommunications Corporation                (“TDS Telecom”) for $148.2 million in cash, acquiring wireless                properties with a potential service area covering approximately 584,000                POPs in Florida and Ohio. In addition, the Company also added partnership                interests in seven Alltel-operated markets in Georgia, Mississippi,                North                Carolina, Ohio and Wisconsin. Prior to this acquisition, Alltel owned                an                approximate 42 percent interest in the Georgia market, which                has a                potential service area covering approximately 229,000 POPs, and Alltel                owned a majority interest in the Mississippi, North Carolina, Ohio                and                Wisconsin markets. On November 2, 2004, the Company purchased                for                $35.6 million in cash wireless properties with a potential                service                area covering approximately 275,000 POPs in south Louisiana from                SJI, a                privately held company. During the fourth quarter of 2004, Alltel                also                acquired additional ownership interests in wireless properties in                Louisiana and Wisconsin in which the Company owned a majority interest                in                exchange for $1.4 million in cash and a portion of the Company’s ownership                interest in a wireless partnership serving the St. Louis, Missouri                market.                                                                                                                                                                                                                                                       |
|   |
|   |   | The accompanying consolidated financial statements include the                accounts and results of operations of the acquired wireless properties                from the dates of acquisition. During the fourth quarter of 2004,                Alltel                completed the purchase price allocation for each of these acquisitions                based upon a fair value analysis of the tangible and identifiable                intangible assets acquired. The excess of the aggregate purchase                price                over the fair market value of the tangible net assets acquired of                $145.2                million was assigned to customer list, cellular licenses and goodwill.                The                customer lists recorded in connection with these transactions are                being                amortized on a straight-line basis over their estimated useful lives                of                four years. The cellular licenses are classified as indefinite-lived                intangible assets and are not subject to amortization. The majority                of the                goodwill recorded in connection with the 2004 acquisitions was deductible                for income tax purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

F-64 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **3.** |   | **Acquisitions, Continued:**The following table                summarizes the fair value of the assets acquired and liabilities                assumed                for the various business combinations completed during 2004: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                              |   |                         |    |   |    |   |    |    |   |   |     |   |   |   |   |   |
|-----------------------------------------------------------------------------------|--------|------------------------------|---------|--------|---------|--------|---------|---------|--------|--------|----------|--------|--------|--------|--------|--------|
|                                                                              |
|                                                                              |   | Acquired                from |    |   |    |   |
|                                                                              |   | U.S.                         |    |   | TDS     |   |    | SJI and |   |   | Combined |   |
| (Millions)                                                                        |   | Cellular                     |    |   | Telecom |   |    | Other   |   |   | Totals   |   |
|                                                                              |
| Assets                  acquired:                                                 |   |                         |    |   |    |   |    |    |   |   |     |   |   |   |   |   |
| Current assets                                                                    |   | $                            | 2.0     |   |    | $      | 9.7     |    |   | $      | 2.2      |   |   | $      | 13.9   |   |
| Property, plant                  and                  equipment                   |   |                         | 5.2     |   |    |   | 23.7    |    |   |   | 3.4      |   |   |   | 32.3   |   |
| Goodwill                                                                          |   |                         | 55.8    |   |    |   | 33.4    |    |   |   | 26.8     |   |   |   | 116.0  |   |
| Cellular                  licenses                                                |   |                         | 3.8     |   |    |   | 6.3     |    |   |   | 3.9      |   |   |   | 14.0   |   |
| PCS licenses                                                                      |   |                         | – |   |    |   | – |    |   |   | 0.6      |   |   |   | 0.6    |   |
| Customer list                                                                     |   |                         | 4.1     |   |    |   | 6.9     |    |   |   | 4.2      |   |   |   | 15.2   |   |
| Other assets                                                                      |   |                         | 0.7     |   |    |   | 0.3     |    |   |   | –  |   |   |   | 1.0    |   |
| Less investments                  in                  unconsolidated partnerships |   |                         | – |   |    |   | (14.9   | )       |   |   | (2.8     | )      |   |   | (17.7  | )      |
|                                                                              |   |                         |    |   |    |   |    |    |   |   |     |   |
| Total assets                  acquired                                            |   |                         | 71.6    |   |    |   | 65.4    |    |   |   | 38.3     |   |   |   | 175.3  |   |
|                                                                              |   |                         |    |   |    |   |    |    |   |   |     |   |
| Liabilities                  assumed:                                             |   |                         |    |   |    |   |    |    |   |   |     |   |   |   |   |   |
| Current                  liabilities                                              |   |                         | (1.8    | )      |    |   | (2.4    | )       |   |   | (1.4     | )      |   |   | (5.6   | )      |
| Other                  liabilities                                                |   |                         | (1.6    | )      |    |   | – |    |   |   | (4.6     | )      |   |   | (6.2   | )      |
|                                                                              |   |                         |    |   |    |   |    |    |   |   |     |   |
| Total liabilities                  assumed                                        |   |                         | (3.4    | )      |    |   | (2.4    | )       |   |   | (6.0     | )      |   |   | (11.8  | )      |
|                                                                              |   |                         |    |   |    |   |    |    |   |   |     |   |
| Minority interest                  liability acquired                             |   |                         | 16.8    |   |    |   | 0.2     |    |   |   | 4.6      |   |   |   | 21.6   |   |
|                                                                              |   |                         |    |   |    |   |    |    |   |   |     |   |
| Net cash paid                                                                     |   | $                            | 85.0    |   |    | $      | 63.2    |    |   | $      | 36.9     |   |   | $      | 185.1  |   |
|                                                                              |

|   |   | On August 29, 2003, Alltel purchased for $22.8 million                in                cash a wireless property with a potential service area covering                approximately 205,000 POPs in an Arizona Rural Service Area (“RSA”).                During 2003, the Company also purchased for $5.7 million in                cash                additional ownership interests in wireless properties in Mississippi,                New                Mexico and Virginia in which the Company owned a majority interest.                The                Company completed the purchase price allocation for these acquisitions                based upon a fair value analysis of the tangible and identifiable                intangible assets acquired. The excess of the aggregate purchase                price                over the fair market value of the tangible net assets acquired of                $25.4                million was assigned to cellular licenses and goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   | On April 1, 2003, the Company paid $7.5 million                in cash to                increase its ownership interest from 43 percent to approximately                86 percent in a wireless property with a potential service                area                covering approximately 145,000 POPs in a Wisconsin RSA. During the                second                quarter of 2003, Alltel completed the purchase price allocation of                this                acquisition based upon a fair value analysis of the tangible and                identifiable intangible assets acquired. The excess of the aggregate                purchase price over the fair market value of the tangible net assets                acquired of $3.0 million was assigned to customer list, cellular                licenses and goodwill. On February 28, 2003, Alltel purchased                for                $72.0 million in cash wireless properties with a potential                service                area covering approximately 370,000 POPs in southern Mississippi,                from                Cellular XL Associates (“Cellular XL”), a privately held company. Of the                total purchase price, Alltel paid $64.6 million to Cellular                XL at the                date of purchase with the remaining cash payment, subject to adjustments                as specified in the purchase agreement, payable with interest,                12 months after the closing date. The remaining cash payment,                as                adjusted, of $7.5 million was paid on February 29, 2004. Alltel                completed the purchase price allocation of this acquisition based                upon a                fair value analysis of the tangible and identifiable intangible assets                acquired. The excess of the aggregate purchase price over the fair                market                value of the tangible net assets acquired of $67.0 million                was                assigned to customer list, cellular licenses and goodwill. On                February 28, 2003, the Company also purchased for $60.0 million                in cash the remaining ownership interest in wireless properties with                a                potential service area covering approximately 355,000 POPs in two                Michigan                RSAs. Prior to this acquisition, Alltel owned approximately                49 percent of the Michigan properties. The Company completed                the                purchase price allocation of this acquisition based upon a fair value                analysis of the tangible and identifiable intangible assets acquired.                The                excess of the aggregate purchase price over the fair market value                of the                tangible net assets acquired of $46.8 million was assigned                to                customer list, cellular licenses and goodwill. |
|   |
|   |   | The accompanying consolidated financial statements include the                accounts and results of operations of the acquired wireless properties                from the dates of acquisition. The customer lists recorded in connection                with these transactions are being amortized on a straight-line basis                over                their estimated useful lives of six years. The cellular licenses                are                classified as indefinite-lived intangible assets and are not subject                to                amortization. Substantially all of the goodwill recorded in connection                with the 2003 acquisitions was deductible for income tax purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

F-65 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **3.** |   | **Acquisitions, Continued:**The following table                summarizes the fair value of the assets acquired and liabilities                assumed                for the various business combinations completed during 2003: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                              |   |                         |    |     |   |     |    |   |   |     |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------|--------|------------------------------|---------|----------|--------|----------|---------|--------|--------|----------|--------|--------|--------|--------|--------|--------|
|                                                                              |
|                                                                              |   | Acquired                from |    |     |   |     |
|                                                                              |   |                         |    |     |   | Michigan |    |   |   |     |   |   |   |
|                                                                              |   | Cellular                     |    | Minority |   |     |    |   |   | Combined |
| (Millions)                                                                        |   | XL                           |    | Partners |   | Other    |    | Totals |
|                                                                              |
| Assets                  acquired:                                                 |   |                         |    |     |   |     |    |   |   |     |   |   |   |   |   |   |
| Current assets                                                                    |   | $                            | 0.4     |     |   | $        | 4.9     |   |   | $        | 4.2    |   |   | $      | 9.5    |   |
| Property, plant                  and                  equipment                   |   |                         | 5.4     |     |   |     | 22.5    |   |   |     | 8.2    |   |   |   | 36.1   |   |
| Goodwill                                                                          |   |                         | 53.4    |     |   |     | 35.4    |   |   |     | 4.2    |   |   |   | 93.0   |   |
| Cellular                  licenses                                                |   |                         | 9.6     |     |   |     | 8.0     |   |   |     | 23.8   |   |   |   | 41.4   |   |
| Customer list                                                                     |   |                         | 4.0     |     |   |     | 3.4     |   |   |     | 0.4    |   |   |   | 7.8    |   |
| Less investments                  in                  unconsolidated partnerships |   |                         | – |     |   |     | (12.5   | )      |   |     | (4.5   | )      |   |   | (17.0  | )      |
|                                                                              |   |                         |    |     |   |     |    |   |   |     |   |   |
| Total assets                  acquired                                            |   |                         | 72.8    |     |   |     | 61.7    |   |   |     | 36.3   |   |   |   | 170.8  |   |
|                                                                              |   |                         |    |     |   |     |    |   |   |     |   |   |
| Liabilities                  assumed:                                             |   |                         |    |     |   |     |    |   |   |     |   |   |   |   |   |   |
| Current                  liabilities                                              |   |                         | (8.2    | )        |   |     | (1.7    | )      |   |     | (1.9   | )      |   |   | (11.8  | )      |
|                                                                              |   |                         |    |     |   |     |    |   |   |     |   |   |
| Total liabilities                  assumed                                        |   |                         | (8.2    | )        |   |     | (1.7    | )      |   |     | (1.9   | )      |   |   | (11.8  | )      |
|                                                                              |   |                         |    |     |   |     |    |   |   |     |   |   |
| Minority interest                  liability acquired                             |   |                         | – |     |   |     | – |   |   |     | 1.6    |   |   |   | 1.6    |   |
|                                                                              |   |                         |    |     |   |     |    |   |   |     |   |   |
| Net cash paid                                                                     |   | $                            | 64.6    |     |   | $        | 60.0    |   |   | $        | 36.0   |   |   | $      | 160.6  |   |
|                                                                              |

|   |   | The purchase prices paid for each of the transactions completed                in                2004 and 2003 discussed above were based on estimates of future cash                flows                of the properties acquired. Alltel paid a premium (i.e., goodwill)                over                the fair value of the net tangible and identified intangible assets                acquired for a number of reasons, including but not limited to the                following: the 2004 acquisitions expanded the Company’s wireless                operations into new markets in Florida, Louisiana and Ohio and added                a                combined 92,000 new wireless customers to Alltel’s communications customer                base. The 2003 acquisitions expanded the Company’s wireless footprint into                new markets across Arizona, Michigan, Mississippi and Wisconsin and                added                a combined 147,000 new wireless customers to Alltel’s communications                customer base. Additionally, in the wireless properties acquired                in 2004                and 2003, Alltel should realize, over time, accelerated customer                growth                and higher average revenue per customer as a result of the Company’s                higher revenue national rate plans. Unaudited pro forma financial                information related to the Company’s 2004 and 2003 acquisitions has not                been presented because these acquisitions, individually or in the                aggregate were not material to the Company’s consolidated results of                operations for the years ended December 31, 2004 and 2003. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-66 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **4.** |   | **Goodwill and Other Intangible Assets:**The changes                in the carrying amount of goodwill by business segment were as                follows: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                       |   |     |     |   |     |   |           |     |   |   |    |   |   |   |     |   |
|----------------------------------------------------------------------------|--------|----------|----------|--------|----------|--------|----------------|----------|--------|--------|---------|--------|--------|--------|----------|--------|
|                                                                       |
|                                                                       |   |          |     |   |     |   | Communications |     |   |
|                                                                       |   |          |     |   |     |   |           | Support  |   |   |    |   |
| (Millions)                                                                 |   | Wireless |     |   | Wireline |   |           | Services |   |   | Total   |   |
|                                                                       |
| Balance at                  December 31, 2003                         |   |          | $3,604.3 |   |     |        | $1,247.6       |     |   |        | $2.3    |   |   |        | $4,854.2 |   |
| Acquired during                  the                  period               |   |     | 116.0    |   |     |   | –        |     |   |   | – |   |   |   | 116.0    |   |
| Other – reversal of                  income tax contingency reserves |   |     | (94.5    | )      |     |   | –        |     |   |   | – |   |   |   | (94.5    | )      |
|                                                                       |   |     |     |   |     |   |           |     |   |   |    |   |   |   |     |   |   |
| Balance at                  December 31, 2004                         |   |     | 3,625.8  |   |     |   | 1,247.6        |     |   |   | 2.3     |   |   |   | 4,875.7  |   |
| Acquired during                  the                  period               |   |     | 3,796.8  |   |     |   | –        |     |   |   | – |   |   |   | 3,796.8  |   |
| Other                  adjustments                                         |   |     | 4.8      |   |     |   | –        |     |   |   | – |   |   |   | 4.8      |   |
|                                                                       |   |     |     |   |     |   |           |     |   |   |    |   |   |   |     |   |   |
| Balance at                  December 31, 2005                         |   |          | $7,427.4 |   |     |        | $1,247.6       |     |   |        | $2.3    |   |   |        | $8,677.3 |   |
|                                                                       |

|                                              |   |   |     |   |   |   |    |   |
|---------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|
|                                              |
| (Millions)                                        |   | 2005   |     |   | 2004   |   |
|                                              |
| Cellular                  licenses                |   |        | $1,392.3 |   |   | $      | 775.6   |   |
| PCS licenses                                      |   |   | 79.1     |   |   |   | 79.1    |   |
| Franchise rights–                  wireline |   |   | 265.0    |   |   |   | 265.0   |   |
|                                              |   |   |     |   |   |   |    |
|                                              |   |        | $1,736.4 |   |   | $      | 1,119.7 |   |
|                                              |

|                               |   |   |   |   |         |   |    |         |   |   |   |   |
|------------------------------------|--------|--------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|
|                               |
|                               |   | 2005   |   |
|                               |   | Gross  |   |   | Accumulated  |   |    | Net Carrying |   |
| (Millions)                         |   | Cost   |   |   | Amortization |   |    | Value        |   |
|                               |
| Customer lists                     |   |        | $760.4 |   |         |        | $(329.2 | )            |   |        | $431.2 |   |
| Franchise                  rights  |   |   | 22.5   |   |         |   | (16.4   | )            |   |   | 6.1    |   |
| Roaming                  agreement |   |   | 6.1    |   |         |   | (0.7    | )            |   |   | 5.4    |   |
|                               |   |   |   |   |         |   |    |         |   |   |   |
|                               |   |        | $789.0 |   |         |        | $(346.3 | )            |   |        | $442.7 |   |
|                               |

|                              |   |   |   |   |         |   |    |         |   |   |   |   |
|-----------------------------------|--------|--------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|
|                              |   | 2004   |
|                              |   | Gross  |   |   | Accumulated  |   |    | Net Carrying |   |
| (Millions)                        |   | Cost   |   |   | Amortization |   |    | Value        |   |
|                              |
| Customer lists                    |   |        | $397.6 |   |         |        | $(218.8 | )            |   |        | $178.8 |   |
| Franchise                  rights |   |   | 22.5   |   |         |   | (14.9   | )            |   |   | 7.6    |   |
|                              |   |   |   |   |         |   |    |         |   |   |   |   |
|                              |   |        | $420.1 |   |         |        | $(233.7 | )            |   |        | $186.4 |   |
|                              |

|   |   | Intangible assets subject to amortization are amortized on a                straight-line basis over their estimated useful lives, which are                3 to                10 years for customer lists, 41 months for the roaming                agreement                and 15 years for franchise rights. Amortization expense for                intangible assets subject to amortization was $112.6 million                in 2005,                $60.7 million in 2004 and $60.3 million in 2003. Amortization                expense for intangible assets subject to amortization is estimated                to be                $142.4 million in 2006, $104.0 million in 2007, $73.2 million                in                2008, $35.1 million in 2009 and $18.6 million in 2010. See                Note 3 for                a discussion of the acquisitions completed during 2005 and 2004 that                resulted in the recognition of goodwill and other intangible assets. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-67 

**NOTES TO CONSOLIDATED FINANCIAL        STATEMENTS**          

| **5.** |   | **Debt:**Long-term debt was as follows at                December 31: |
|--------|--------|----------------------------------------------------------------------------|

|                                                                                                      |   |    |    |    |   |   |    |   |
|-----------------------------------------------------------------------------------------------------------|--------|---------|---------|---------|--------|--------|---------|--------|
|                                                                                                      |
| (Millions)                                                                                                |   | 2005    |    |    | 2004   |   |
|                                                                                                      |
| Issued by ALLTEL                  Corporation:                                                            |   |    |    |    |   |   |    |   |
| Equity unit senior                  notes, 4.656%, due 2007 (a)                                           |   | $       | 1,385.0 |    |   | $      | 1,385.0 |   |
| Commercial paper                  borrowings                                                              |   |    | 1,000.0 |    |   |   | – |   |
| Debentures and                  notes,                  without collateral:                               |   |    |    |    |   |   |    |   |
| 6.75%, due                  2005                                                                          |   |    | – |    |   |   | 200.0   |   |
| 7.00%, due                  2012                                                                          |   |    | 800.0   |    |   |   | 800.0   |   |
| 6.50%, due                  2013                                                                          |   |    | 200.0   |    |   |   | 200.0   |   |
| 7.00%, due                  2016                                                                          |   |    | 300.0   |    |   |   | 300.0   |   |
| 6.80%, due                  2029                                                                          |   |    | 300.0   |    |   |   | 300.0   |   |
| 7.875%, due                  2032                                                                         |   |    | 700.0   |    |   |   | 700.0   |   |
| Collateralized                  notes,                  10.00%, due 2005 and 2010                         |   |    | 0.3     |    |   |   | 0.4     |   |
| Industrial revenue                  bonds, 4.11% and 2.83%, due 2008                                      |   |    | 1.9     |    |   |   | 2.6     |   |
| Issued by subsidiaries                  of ALLTEL Corporation:                                            |   |    |    |    |   |   |    |   |
| Debentures and                  notes,                  without collateral:                               |   |    |    |    |   |   |    |   |
| ALLTEL Communications                  Inc. – 9.00%, due 2006                                       |   |    | 182.2   |    |   |   | 174.3   |   |
| ALLTEL Communications                  Inc. – 7.50%, due 2006 (b)                                   |   |    | – |    |   |   | 450.0   |   |
| ALLTEL Communications                  Inc. – 6.65%, due 2008 (b)                                   |   |    | 100.0   |    |   |   | 100.0   |   |
| ALLTEL Communications                  Inc. – 7.60%, due 2009 (b)                                   |   |    | 200.0   |    |   |   | 200.0   |   |
| ALLTEL Ohio Limited                  Partnership – 8.00%, due 2010 (b)                              |   |    | 425.0   |    |   |   | 425.0   |   |
| ALLTEL Georgia                  Communications Corp. – 6.50%, due annually to 2013                  |   |    | 80.0    |    |   |   | 90.0    |   |
| ALLTEL Communications                  Holdings of the Midwest, Inc. – 6.75%, due 2028              |   |    | 100.0   |    |   |   | 100.0   |   |
| Western Wireless                  LLC –                  4.625% convertible notes, due 2023 (b) (c) |   |    | 115.0   |    |   |   | – |   |
| Other subsidiaries–                  4.50% to 9.55%, due 2009 to 2018                               |   |    | 81.9    |    |   |   | 94.0    |   |
| First mortgage                  bonds –                  6.00%, due 2005                            |   |    | – |    |   |   | 2.1     |   |
| Market value                  of                  interest rate swaps                                     |   |    | 28.6    |    |   |   | 67.1    |   |
| Discount on long-term                  debt                                                               |   |    | (11.9   | )       |   |   | (13.1   | )      |
|                                                                                                      |   |    |    |    |   |   |
|                                                                                                      |   |    | 5,988.0 |    |   |   | 5,577.4 |   |
| Less current                  maturities                                                                  |   |    | (205.1  | )       |   |   | (225.0  | )      |
|                                                                                                      |   |    |    |    |   |   |
| Total long-term                  debt                                                                     |   | $       | 5,782.9 |    |   | $      | 5,352.4 |   |
|                                                                                                      |
| Weighted rate                                                                                             |   |    | 6.2     | %       |   |   | 7.1     | %      |
| Weighted                  maturity                                                                        |   | 8 years |    | 9 years |
|                                                                                                      |

|   | (a) |   | Interest rate was reset from 6.25 percent for periods subsequent                to February 17, 2005. |
|--------|-----|--------|-----------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Repayment of subsidiary’s debt obligation guaranteed by ALLTEL                Corporation. |
|--------|-----|--------|--------------------------------------------------------------------------------------------------|

|   | (c) |   | Subsequent to December 31, 2005, an aggregate principal                amount of                $100.0 million of the notes were converted into cash and shares                of                Alltel common stock. (See Note 21). |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-68 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **5.** |   | **Debt, Continued:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | obligations. As of December 31, 2005, the Company’s long-term                debt to capitalization ratio was 31.6 percent. In addition,                the                indentures and borrowing agreements, as amended, provide, among other                things, for various restrictions on the payment of dividends by the                Company. Retained earnings unrestricted as to the payment of dividends                by                the Company amounted to $6,941.3 million at December 31,                2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |
|   |   |   | Equity Units– During 2002, the Company issued and sold                27.7 million equity units in an underwritten public offering                and                received net proceeds of $1.34 billion. Each equity unit consisted                of                a corporate unit, with a $50 stated amount, comprised of a purchase                contract and a $50 principal amount senior note. The purchase contract                obligated the holder to purchase, and obligated Alltel to sell, on                May 17, 2005, a variable number of newly-issued common shares                of                Alltel common stock for $50. The number of Alltel shares issued to                the                holders of each equity unit to settle the purchase contract was calculated                by dividing $50 by the average closing price per share of Alltel’s common                stock for the 20 consecutive trading days that ended May 12,                2005.                Upon settlement of the purchase contract obligation, Alltel received                cash                proceeds of approximately $1,385.0 million and delivered                approximately 24.5 million shares of Alltel common stock in                the                aggregate to the holders of the equity units. The proceeds from the                stock                issuance were utilized to finance certain obligations associated                with                Alltel’s merger with Western Wireless, as further discussed in Note 3. The                $50 principal amount senior notes become payable on May 17,                2007. The                senior notes accrued interest through February 17, 2005 at                an initial                annual rate of 6.25 percent. On February 17, 2005,                Alltel                completed a remarketing of the senior notes that reset the annual                interest                rate on the notes to 4.656 percent for periods subsequent                to                February 17, 2005. The proceeds of the remarketed senior notes                were                used to purchase a portfolio of U.S. Treasury securities that were                pledged                to secure the corporate unit holders’ obligations under the purchase                contract component of the corporate unit until settlement. |
|   |
|   |   |   | Interest expense was as follows for the years ended                December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                        |
| (Millions)                                                  |   | 2005   |   |   | 2004   |   |   | 2003   |   |
|                                                        |
| Interest expense                  related to long-term debt |   | $      | 371.8  |   |   | $      | 408.5  |   |   | $      | 434.4  |   |
| Other interest                                              |   |   | 0.5    |   |   |   | 0.9    |   |   |   | 1.7    |   |
| Effects of interest                  rate swaps             |   |   | (20.5  | )      |   |   | (40.2  | )      |   |   | (42.3  | )      |
| Less capitalized                  interest                  |   |   | (19.2  | )      |   |   | (16.7  | )      |   |   | (15.2  | )      |
|                                                        |   |   |   |   |   |   |   |   |   |
|                                                        |   | $      | 332.6  |   |   | $      | 352.5  |   |   | $      | 378.6  |   |
|                                                        |

|   |   |   | Maturities and sinking fund requirements for the four years after                2006                for long-term debt outstanding, excluding commercial paper borrowings,                as                of December 31, 2005, were $1,407.8 million,                $124.2 million, $223.6 million and $441.4 million,                respectively. |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **6.** |   | **Financial Instruments and Investments**:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | The carrying amount of cash and short-term investments, accounts                receivable and trade accounts payable was estimated by management                to                approximate carrying value due to the relatively short period of                time to                maturity for those instruments. The fair values of the Company’s                investments, long-term debt, redeemable preferred stock, foreign                currency                forward exchange contracts and interest rate swaps were as follows                at                December 31: |

|                                                          |   |   |    |   |     |   |    |   |   |   |     |   |   |   |    |   |
|---------------------------------------------------------------|--------|--------|---------|--------|----------|--------|---------|--------|--------|--------|----------|--------|--------|--------|---------|--------|
|                                                          |
| (Millions)                                                    |   | 2005   |    |   | 2004     |   |
|                                                          |   |
|                                                          |   | Fair   |    |   | Carrying |   |    | Fair   |   |   | Carrying |   |
|                                                          |   | Value  |    |   | Amount   |   |    | Value  |   |   | Amount   |   |
| Investments                                                   |   | $      | 358.4   |   |     | $      | 358.4   |   |   | $      | 804.9    |   |   | $      | 804.9   |   |
| Long-term debt,                  including current maturities |   | $      | 6,580.9 |   |     | $      | 5,988.0 |   |   | $      | 6,111.7  |   |   | $      | 5,577.4 |   |
| Redeemable preferred                  stock                   |   | $      | 9.6     |   |     | $      | 0.8     |   |   | $      | 10.4     |   |   | $      | 0.9     |   |
| Foreign currency                  forward exchange contracts  |   | $      | 25.0    |   |     | $      | 25.0    |   |   | $      | –  |   |   | $      | – |   |
| Interest rate                  swaps                          |   | $      | 28.6    |   |     | $      | 28.6    |   |   | $      | 67.1     |   |   | $      | 67.1    |   |
|                                                          |

|   |   |   | The fair value of investments was based on quoted market prices                and                the carrying value of investments for which there were no quoted                market                prices. The fair value of long-term debt, including current maturities,                was estimated based on the overall weighted rates and maturities                of the                Company’s long-term debt compared to rates and terms currently available                in the long-term financing markets. The fair value of the redeemable                preferred stock was estimated based on the conversion of the Series D                convertible redeemable preferred stock to common stock of the Company.                Fair values of the foreign currency forward exchange contracts and                interest rate swaps were based on quoted market prices. There was                no                impact to earnings due to hedge ineffectiveness for either the foreign                currency forward exchange contracts or interest rate swap                agreements. |
|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-69 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **7.** |   | **Supplemental Cash Flow Information From Continuing                Operations**:                                                                |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | Supplemental cash flow information from continuing operations                was as                follows for the years ended December 31: |

|                                                                                          |   |   |   |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                          |
| (Millions)                                                                                    |   | 2005   |   |   | 2004   |   |    | 2003   |   |
|                                                                                          |
| Interest paid,                  net of                  amounts capitalized                   |   | $      | 374.9  |   |   | $      | 379.1   |   |   | $      | 425.7   |   |
| Income taxes                  paid                                                            |   | $      | 777.6  |   |   | $      | 285.9   |   |   | $      | 584.8   |   |
| Non-cash investing                  and                  financing activities:                |   |   |   |   |   |   |    |   |   |   |    |   |
| Change in fair                  value of                  investments in equity securities    |   | $      | (126.7 | )      |   | $      | 116.9   |   |   | $      | 120.5   |   |
| Change in fair                  value of                  foreign currency exchange contracts |   | $      | 25.0   |   |   | $      | – |   |   | $      | – |   |
| Change in fair                  value of                  interest rate swaps                 |   | $      | (37.5  | )      |   | $      | (12.6   | )      |   | $      | (25.5   | )      |
|                                                                                          |

|   | **8.** |   | **Stock-Based Compensation Plans:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | Under the Company’s stock-based compensation plans, Alltel may grant                fixed and performance-based incentive and non-qualified stock options,                restricted stock, and other equity securities to officers and other                management employees. The maximum number of shares of the Company’s common                stock that may be issued to officers and other management employees                under                all stock option plans in effect at December 31, 2005 was                30.6 million shares. Fixed options granted under the stock                option                plans generally become exercisable over a period of one to five years                after the date of grant. Certain fixed options granted in 2000 become                exercisable in increments of 50%, 25% and 25% over a five-year period                beginning three years after the date of grant. In January 2005                and                2004, the Company granted to certain senior management employees                restricted stock of approximately 205,000 and 173,000 shares, which                had an                aggregate value on the date of grant of $11.1 million and                $8.5 million, respectively. The restricted shares granted                in 2005                vest three years from the date of grant, except that one-third of                the                restricted shares may vest after each of the first two-year anniversaries                from the grant date if Alltel achieves a certain targeted total                stockholder return for its peer group during the three-year period                preceding each of those two years. The restricted shares granted                in 2004                will vest in equal increments over a three-year period following                the date                of grant. At December 31, 2005, the Company had 302,530 unvested                restricted shares outstanding. Under Alltel’s stock option plan for                non-employee directors (the “Directors’ Plan”), the Company grants fixed,                non-qualified stock options to directors for up to 1.0 million                shares                of common stock. Under the Directors’ Plan, directors receive a one-time                option grant to purchase 10,000 shares of common stock when they                join the                Board. Directors are also granted each year, on the date of the annual                meeting of stockholders, an option to purchase a specified number                of                shares of common stock (currently 6,500 shares). Options granted                under the                Directors’ Plan become exercisable the day immediately preceding the date                of the first annual meeting of stockholders following the date of                grant. |
|   |
|   |   |   | For all plans, the exercise price of the option equals the market                value of Alltel’s common stock on the date of grant. For fixed stock                options, the maximum term for each option granted is 10 years.                The                fair value of each stock option granted as identified below was calculated                using the Black-Scholes option-pricing model and the following weighted                average assumptions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

|                                     |   |      |   |      |   |      |   |   |   |   |   |   |
|------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|--------|--------|--------|--------|--------|
|                                     |
|                                     |   | 2005      |   | 2004      |   | 2003      |
| Expected life                            |   | 5.0 years |   | 4.9 years |   | 4.9 years |
| Expected                  volatility     |   |      | 27.4   | %         |   |      | 30.7   | %      |   |   | 32.4   | %      |
| Dividend yield                           |   |      | 2.7    | %         |   |      | 2.9    | %      |   |   | 2.9    | %      |
| Risk-free interest                  rate |   |      | 3.7    | %         |   |      | 3.2    | %      |   |   | 3.0    | %      |
|                                     |

|   |   |   | Set forth below is certain information related to stock options                outstanding under Alltel’s stock-based compensation                plans: |
|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                    |   |        |     |   |                     |   |     |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|----------|--------|--------------------------|--------|----------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                                                                                    |
|                                                                                                                                                    |   | (Thousands) |     |   | Weighted Average Price   |   |
|                                                                                                                                                    |   | Shares      |     |   | Per                Share |   |
|                                                                                                                                                    |   | 2005        |     |   | 2004                     |   |     | 2003   |   |   | 2005     |   |   | 2004   |   |   | 2003   |   |
| Outstanding at                  beginning of period                                                                                                     |   |        | 15,922.3 |   |                     |   | 15,912.3 |   |   |   | 18,317.5 |   |   | $      | 55.56  |   |   | $      | 55.32   |   |   | $      | 55.24   |   |
| Granted                                                                                                                                                 |   |        | 1,409.3  |   |                     |   | 1,351.3  |   |   |   | 2,097.2  |   |   |   | 55.53  |   |   |   | 50.78   |   |   |   | 48.87   |   |
| Converted from                  Western                  Wireless due to merger             |   |        | 2,889.5  |        |                     |   | –  |        |   |   | –  |        |   |   | 28.61  |   |   |   | – |   |   |   | – |   |
| Exercised                                                                                                                                               |   |        | (2,321.2 | )      |                     |   | (690.3   | )      |   |   | (1,462.8 | )      |   |   | 33.90  |   |   |   | 38.57   |   |   |   | 34.09   |   |
| Forfeited                                                                                                                                               |   |        | (576.6   | )      |                     |   | (651.0   | )      |   |   | (3,039.6 | )      |   |   | 56.72  |   |   |   | 57.86   |   |   |   | 60.56   |   |
| Expired                                                                                                                                                 |   |        | (6.8     | )      |                     |   | –  |   |   |   | –  |   |   |   | 8.92   |   |   |   | – |   |   |   | – |   |
|                                                                                                                                                    |   |        |     |   |                     |   |     |   |   |   |     |   |   |   |   |   |   |   |
| Outstanding at                  end of                  period                                                                                          |   |        | 17,316.5 |   |                     |   | 15,922.3 |   |   |   | 15,912.3 |   |   | $      | 53.94  |   |   | $      | 55.56   |   |   | $      | 55.32   |   |
|                                                                                                                                                    |
|                                                                                                                                                    |   |        |     |   |                     |   |     |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |    |   |
| Exercisable at                  end of                  period                                                                                          |   |        | 12,265.1 |   |                     |   | 10,075.3 |   |   |   | 8,267.1  |   |   | $      | 54.77  |   |   | $      | 55.66   |   |   | $      | 53.04   |   |
| Non-vested at                  end of                  period                                                                                           |   |        | 5,051.4  |   |                     |   | 5,847.0  |   |   |   | 7,645.2  |   |   |   |   |   |   |   |    |   |   |   |    |   |
| Weighted average                  fair                  value of stock options granted during the year                                                  |   |             | $13.30   |   |                     |        | $13.52   |   |   |        | $13.72   |   |   |   |   |   |   |   |    |   |   |   |    |   |
|                                                                                                                                                    |

F-70 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **8.** |   | **Stock-Based Compensation Plans, Continued:**                                                       |
|--------|--------|--------|------------------------------------------------------------------------------------------------------|
|   |   |   | The following is a summary of stock options outstanding as of                December 31, 2005: |

|                                                         |   |                               |     |                               |             |      |           |     |      |   |   |           |     |     |   |   |   |   |
|--------------------------------------------------------------|--------|------------------------------------|----------|------------------------------------|------------------|-----------|----------------|----------|-----------|--------|--------|----------------|----------|----------|--------|--------|--------|--------|
|                                                         |
|                                                         |   | Options                Outstanding |     | Options                Exercisable |
|                                                         |   |                               |     |                               |             | Weighted  |           | Weighted |      |   |   |           |     | Weighted |
|                                                         |   |                               |     |                               |             | Average   |           | Average  |      |   |   |           |     | Average  |
| Range of                                                     |   | Number of                          |     |                               | Remaining        |      | Exercise Price |     | Number of |   |   | Exercise Price |
| Exercise Price                                               |   | Shares                             |     |                               | Contractual Life |      | Per Share      |     | Shares    |   |   | Per Share      |
| $  4.95                  -                  $17.08 |   |                               | 656.6    |                               |             | 4.4 years |           | $        | 9.50      |   |   |           | 540.5    |     |   | $      | 7.91   |   |
| $26.61 -                  $32.50                             |   |                               | 812.6    |                               |             | 3.5 years |           |     | 31.84     |   |   |           | 714.8    |     |   |   | 31.77  |   |
| $33.88 -                  $40.30                             |   |                               | 1,162.1  |                               |             | 1.8 years |           |     | 34.52     |   |   |           | 1,160.7  |     |   |   | 34.51  |   |
| $43.12 -                  $50.28                             |   |                               | 2,928.7  |                               |             | 7.3 years |           |     | 48.06     |   |   |           | 1,101.3  |     |   |   | 47.32  |   |
| $50.81 -                  $58.46                             |   |                               | 4,782.7  |                               |             | 7.1 years |           |     | 54.91     |   |   |           | 2,059.7  |     |   |   | 55.10  |   |
| $62.19 -                  $68.25                             |   |                               | 6,832.3  |                               |             | 4.3 years |           |     | 65.61     |   |   |           | 6,546.6  |     |   |   | 65.51  |   |
| $70.75 -                  $73.13                             |   |                               | 141.5    |                               |             | 3.7 years |           |     | 72.43     |   |   |           | 141.5    |     |   |   | 72.43  |   |
|                                                         |   |                               |     |                               |             |      |           |     |      |   |   |           |     |     |   |
|                                                         |   |                               | 17,316.5 |                               |             | 5.4 years |           |     | $53.94    |   |   |           | 12,265.1 |     |   |   | $54.77 |   |
|                                                         |

|   | **9.** |   | **Employee Benefit Plans and Postretirement Benefits Other                Than                Pensions:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | The Company maintains a qualified defined benefit pension plan,                which                covers substantially all employees. Prior to January 1, 2005,                employees of Alltel’s directory publishing subsidiary did not participate                in the plan. The Company also maintains a supplemental executive                retirement plan that provides unfunded, non-qualified supplemental                retirement benefits to a select group of management employees. In                addition, Alltel has entered into individual retirement agreements                with                certain retired executives providing for unfunded supplemental pension                benefits. The Company provides postretirement healthcare and life                insurance benefits for eligible employees. Employees share in the                cost of                these benefits. Alltel funds the accrued costs of these plans as                benefits                are paid. In December 2005, the qualified defined benefit                pension                plan was amended such that future benefit accruals for all eligible                nonbargaining employees ceased as of December 31, 2005                (December 31, 2010 for employees who had attained age 40 with                two                years of service as of December 31, 2005). |
|   |
|   |   |   | The components of pension expense, including provision for executive                retirement agreements, and postretirement expense were as follows                for the                years ended December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                                                                 |   |                            |        |   |                                   |   |        |   |   |   |        |   |   |   |             |   |   |   |             |   |   |   |             |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------|-------------|--------|----------------------------------------|--------|-------------|--------|--------|--------|-------------|--------|--------|--------|------------------|--------|--------|--------|------------------|--------|--------|--------|------------------|--------|
|                                                                                 |
|                                                                                 |   | Pension                Benefits |        |   | Postretirement                Benefits |   |
| (Millions)                                                                           |   | 2005                            |        |   | 2004                                   |   |        | 2003   |   |   | 2005        |   |   | 2004   |             |   | 2003   |   |
| Benefits earned                  during the                  year                    |   |                                 | $ 36.2 |   |                                   |        | $ 30.5 |   |   |        | $ 26.6 |   |   |        | $  0.5 |   |   |        | $  0.5 |   |   |        | $  0.6 |   |
| Interest cost on                  benefit                  obligation                |   |                            | 56.3        |   |                                   |   | 51.9        |   |   |   | 52.2        |   |   |   | 14.0             |   |   |   | 16.5             |   |   |   | 14.8             |   |
| Amortization of                  transition                  (asset) obligation |   |                            | –     |   |                                   |   | –     |   |   |   | (1.2        | )      |   |   | 0.8              |   |   |   | 0.9              |   |   |   | 0.8              |   |
| Amortization of                  prior                  service (credit) cost   |   |                            | 0.5         |   |                                   |   | 0.2         |   |   |   | (0.1        | )      |   |   | 1.8              |   |   |   | 1.6              |   |   |   | 1.5              |   |
| Recognized net actuarial                  loss                                       |   |                            | 30.5        |   |                                   |   | 19.9        |   |   |   | 20.7        |   |   |   | 6.8              |   |   |   | 9.3              |   |   |   | 7.3              |   |
| Loss from plan                  curtailments                                         |   |                            | 2.5         |   |                                   |   | –     |   |   |   | –     |   |   |   | –          |   |   |   | –          |   |   |   | –          |   |
| Effects of Medicare                  subsidy                                         |   |                            | –     |   |                                   |   | –     |   |   |   | –     |   |   |   | –          |   |   |   | (2.9             | )      |   |   | –          |   |
| Expected return                  on plan                  assets                     |   |                            | (82.9       | )      |                                   |   | (70.5       | )      |   |   | (57.2       | )      |   |   | –          |   |   |   | –          |   |   |   | –          |   |
|                                                                                 |   |                            |        |   |                                   |   |        |   |   |   |        |   |   |   |             |   |   |   |             |   |   |   |             |   |
| Total net periodic                  benefit                  expense                 |   |                                 | $ 43.1 |   |                                   |        | $ 32.0 |   |   |        | $ 41.0 |   |   |        | $23.9            |   |   |        | $25.9            |   |   |        | $25.0            |   |
|                                                                                 |

|   |   |   | As a component of determining its annual pension cost, Alltel                amortizes unrecognized gains or losses that exceed 17.5 percent                of                the greater of the projected benefit obligation or market-related                value of                plan assets on a straight-line basis over five years. Unrecognized                actuarial gains and losses below the 17.5 percent corridor                are                amortized over the average remaining service life of active employees                (approximately 14 years). The Company uses a December 31                measurement date for its employee benefit plans. Actuarial assumptions                used to calculate the pension and postretirement expense were as                follows                for the years ended December 31: |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   |                            |   |   |                                   |   |   |   |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------------|--------|---------------------------------|--------|--------|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                             |
|                                                             |   | Pension                Benefits |   |   | Postretirement                Benefits |   |
|                                                             |   | 2005                            |   |   | 2004                                   |   |   | 2003   |   |   | 2005   |   |   | 2004   |    |   | 2003   |   |
| Discount rate                                                    |   |                            | 6.00   | %      |                                   |   | 6.40   | %      |   |   | 6.85   | %      |   |   | 6.00    | %      |   |   | 6.40    | %      |   |   | 6.85    | %      |
| Expected return                  on plan                  assets |   |                            | 8.50   | %      |                                   |   | 8.50   | %      |   |   | 8.50   | %      |   |   | – |   |   |   | – |   |   |   | – |   |
| Rate of compensation                  increase                   |   |                            | 3.50   | %      |                                   |   | 3.50   | %      |   |   | 3.50   | %      |   |   | – |   |   |   | – |   |   |   | – |   |
|                                                             |

F-71 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **9.** |   | **Employee Benefit Plans and Postretirement Benefits Other                Than                Pensions, Continued:**                                     |
|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | A summary of plan assets, projected benefit obligation and funded                status of the plans were as follows at                December 31: |

|                                                                                    |   |                            |    |   |                                   |   |    |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|----------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                    |
|                                                                                    |   | Pension                Benefits |    |   | Postretirement                Benefits |   |
| (Millions)                                                                              |   | 2005                            |    |   | 2004                                   |   |    | 2005   |   |   | 2004    |   |
| Fair value of plan                  assets                  at beginning of year        |   | $                               | 1,001.2 |   |                                   | $      | 862.8   |   |   | $      | – |   |   | $      | – |   |
| Employer                  contributions                                                 |   |                            | 5.2     |   |                                   |   | 104.9   |   |   |   | 15.6    |   |   |   | 15.7    |   |
| Participant                  contributions                                              |   |                            | – |   |                                   |   | – |   |   |   | 5.2     |   |   |   | 5.7     |   |
| Actual return on                  plan                  assets                          |   |                            | 66.8    |   |                                   |   | 90.1    |   |   |   | – |   |   |   | – |   |
| Benefits paid                                                                           |   |                            | (60.1   | )      |                                   |   | (56.6   | )      |   |   | (20.8   | )      |   |   | (21.4   | )      |
|                                                                                    |   |                            |    |   |                                   |   |    |   |   |   |    |   |
| Fair value of plan                  assets                  at end of year              |   |                            | 1,013.1 |   |                                   |   | 1,001.2 |   |   |   | – |   |   |   | – |   |
|                                                                                    |
| Projected benefit                  obligation at beginning of year                      |   |                            | 1,002.9 |   |                                   |   | 889.5   |   |   |   | 242.1   |   |   |   | 254.6   |   |
| Benefits earned                                                                         |   |                            | 36.2    |   |                                   |   | 30.5    |   |   |   | 0.5     |   |   |   | 0.5     |   |
| Interest cost on                  projected                  benefit obligation         |   |                            | 56.3    |   |                                   |   | 51.9    |   |   |   | 14.0    |   |   |   | 16.5    |   |
| Participant                  contributions                                              |   |                            | – |   |                                   |   | – |   |   |   | 5.2     |   |   |   | 5.7     |   |
| Plan amendments                                                                         |   |                            | 4.0     |   |                                   |   | 2.0     |   |   |   | – |   |   |   | 2.3     |   |
| Plan curtailments                                                                       |   |                            | (41.3   | )      |                                   |   | – |   |   |   | – |   |   |   | – |   |
| Effects of Medicare                  subsidy                                            |   |                            | – |   |                                   |   | – |   |   |   | – |   |   |   | (18.3   | )      |
| Actuarial loss                                                                          |   |                            | 57.9    |   |                                   |   | 85.6    |   |   |   | 2.0     |   |   |   | 2.2     |   |
| Benefits paid                                                                           |   |                            | (60.1   | )      |                                   |   | (56.6   | )      |   |   | (20.8   | )      |   |   | (21.4   | )      |
|                                                                                    |   |                            |    |   |                                   |   |    |   |   |   |    |   |
| Projected benefit                  obligation at end of year                            |   |                            | 1,055.9 |   |                                   |   | 1,002.9 |   |   |   | 243.0   |   |   |   | 242.1   |   |
|                                                                                    |
| Plan assets less                  than                  projected benefit obligation    |   |                            | (42.8   | )      |                                   |   | (1.7    | )      |   |   | (243.0  | )      |   |   | (242.1  | )      |
| Unrecognized actuarial                  loss                                            |   |                            | 234.5   |   |                                   |   | 226.9   |   |   |   | 87.4    |   |   |   | 92.2    |   |
| Unrecognized prior                  service                  cost                       |   |                            | 5.7     |   |                                   |   | 10.2    |   |   |   | 13.6    |   |   |   | 15.4    |   |
| Unrecognized net                  transition obligation                                 |   |                            | – |   |                                   |   | – |   |   |   | 5.8     |   |   |   | 6.6     |   |
|                                                                                    |   |                            |    |   |                                   |   |    |   |   |   |    |   |
| Net amount                  recognized                                                  |   | $                               | 197.4   |   |                                   | $      | 235.4   |   |   | $      | (136.2  | )      |   | $      | (127.9  | )      |
|                                                                                    |
| Amounts recognized                  in the                  consolidated balance sheet: |   |                            |    |   |                                   |   |    |   |   |   |    |   |   |   |    |   |
| Prepaid benefit                  cost                                                   |   | $                               | 249.5   |   |                                   | $      | 284.8   |   |   | $      | – |   |   | $      | – |   |
| Accrued benefit                  cost                  liability                        |   |                            | (52.1   | )      |                                   |   | (49.4   | )      |   |   | (136.2  | )      |   |   | (127.9  | )      |
|                                                                                    |   |                            |    |   |                                   |   |    |   |   |   |    |   |
| Net amount                  recognized                                                  |   | $                               | 197.4   |   |                                   | $      | 235.4   |   |   | $      | (136.2  | )      |   | $      | (127.9  | )      |
|                                                                                    |

|   |   |   | Employer contributions and benefits paid in the above table included                amounts contributed directly to or paid directly from both the retirement                plans and from Company assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   |   | The accumulated benefit obligation for all defined benefit pension                plans was $994.6 million and $916.2 million at December 31,                2005 and 2004, respectively. For the supplemental retirement pension                plans                with accumulated benefit obligations in excess of plan assets, the                projected benefit obligation and accumulated benefit obligation were                $64.3 million and $59.2 million at December 31,                2005,                respectively, and $61.3 million and $55.4 million at                December 31, 2004, respectively. There are no assets held                in these                supplemental retirement pension plans, as the Company funds the accrued                costs of the plans as benefits are paid. |
|   |
|   |   |   | Actuarial assumptions used to calculate the projected benefit                obligations were as follows for the years ended                December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

|                                                             |   |                            |   |   |                                   |   |   |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------------|--------|---------------------------------|--------|--------|----------------------------------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                             |
|                                                             |   | Pension                Benefits |   |   | Postretirement                Benefits |   |
|                                                             |   | 2005                            |   |   | 2004                                   |   |   | 2005   |   |   | 2004    |   |
| Discount rate                                                    |   |                            | 5.80   | %      |                                   |   | 6.00   | %      |   |   | 5.70    | %      |   |   | 6.00    | %      |
| Expected return                  on plan                  assets |   |                            | 8.50   | %      |                                   |   | 8.50   | %      |   |   | – |   |   |   | – |   |
| Rate of compensation                  increase                   |   |                            | 3.50   | %      |                                   |   | 3.50   | %      |   |   | – |   |   |   | – |   |
|                                                             |

|   |   |   | In developing the expected long-term rate of return assumption,                Alltel                evaluated historical investment performance and input from its investment                advisors. Projected returns by such advisors were based on broad                equity                and bond indices. The Company also considered the pension plan’s                historical returns since 1975 of 11.0 percent. The expected                long-term                rate of return on qualified pension plan assets is based on a targeted                asset allocation of 70 percent to equities, with an expected                long-term rate of return of 10 percent, and 30 percent                to fixed                income assets, with an expected long-term rate of return of                5 percent. |
|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-72 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **9.** |   | **Employee Benefit Plans and Postretirement Benefits Other                Than                Pensions, Continued:**                                                                                                                  |
|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   | The asset allocation at December 31, 2005 and 2004 and                target                allocation for 2006 for the Company’s qualified defined benefit pension                plan by asset category were as follows: |

|                                                                                            |   |       |                         |                                          |               |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------|--------|------------|------------------------------|-----------------------------------------------|--------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                            |
|                                                                                            |   |       |                         |                                          | Percentage of Plan |
|                                                                                            |   | Target     |                         | Assets                                        |
|                                                                                            |   | Allocation |                         | At                December                31: |
| Asset                Category                                                                   |   | 2006       |                         | 2005                                          |               | 2004   |
| Equity                  securities                                                              |   |       | 62.5% – 77.5           | %                                             |               |   | 71.6   | %      |   |   | 65.6   | %      |
| Fixed income                  securities                                                        |   |       | 15.0% – 35.0           | %                                             |               |   | 25.3   | %      |   |   | 23.3   | %      |
| Money market                  and other                  short-term interest bearing securities |   |       | 0.0% –   7.5 | %                                             |               |   | 3.1    | %      |   |   | 11.1   | %      |
|                                                                                            |   |       |                         |                                          |               |   |   |   |
|                                                                                            |   |       |                         |                                          |               |   | 100.0  | %      |   |   | 100.0  | %      |
|                                                                                            |

|   |   |   | Primarily due to cash contributions funded to the qualified pension                plan by Alltel in late December that had not yet been reinvested,                the                actual asset allocations at December 31, 2004 differed from                the                plan’s target allocation. None of the qualified pension plan assets are                invested in Alltel common stock. The Company’s investment strategy is to                maintain a diversified asset portfolio expected to provide long-term                asset                growth. Investments are generally restricted to marketable securities,                with investments in real estate, venture capital, leveraged or other                high-risk derivatives not permitted. Equity securities include stocks                of                both large and small capitalization domestic and international companies.                Fixed income securities include securities issued by the U.S. Government                and other governmental agencies, asset-backed securities and debt                securities issued by domestic and international companies. Investments                in                money market and other short-term interest bearing securities are                maintained to provide liquidity for benefit payments with protection                of                principal being the primary objective. |
|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   |   | Information regarding the healthcare cost trend rate was as follows                for the years ended December 31:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                                                                             |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                             |
|                                                                                             |   | 2005   |   | 2004   |
| Healthcare cost                  trend                  rate assumed for next year               |   |   | 10.00  | %      |   |   | 10.00  | %      |
| Rate that the                  cost                  trend rate ultimately declines to           |   |   | 5.00   | %      |   |   | 5.00   | %      |
| Year that the                  rate                  reaches the rate it is assumed to remain at |   |   | 2011   |   |   | 2010   |
|                                                                                             |

|   |   |   | For the year ended December 31, 2005, a one percent increase                in                the assumed healthcare cost trend rate would increase the postretirement                benefit cost by approximately $1.3 million, while a one percent                decrease in the rate would reduce the postretirement benefit cost                by                approximately $1.1 million. As of December 31, 2005, a one                percent                increase in the assumed healthcare cost trend rate would increase                the                postretirement benefit obligation by approximately $24.6 million,                while a one percent decrease in the rate would reduce the postretirement                benefit obligation by approximately $20.7 million. |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   |   | Estimated future employer contributions, benefit payments and                Medicare                prescription drug subsidies expected to offset the future postretirement                benefit payments were as follows as of December 31,                2005:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|                                                            |   |          |   |           |   |          |   |   |
|-----------------------------------------------------------------|--------|---------------|--------|----------------|--------|---------------|--------|--------|
|                                                            |
|                                                            |   | Pension       |   | Postretirement |
| (Millions)                                                      |   | Benefits      |   | Benefits       |
| Expected employer                  contributions for 2006       |   |   $ | 20.5   |           |   | $   | 13.7   |   |
|                                                            |
| Expected benefit                  payments:                     |   |          |   |           |   |          |   |   |
| 2006                                                            |   | $             | 67.7   |           |   | $   | 14.9   |   |
| 2007                                                            |   |          | 51.9   |           |   |          | 16.1   |   |
| 2008                                                            |   |          | 53.4   |           |   |          | 17.2   |   |
| 2009                                                            |   |          | 55.3   |           |   |          | 18.1   |   |
| 2010                                                            |   |          | 57.7   |           |   |          | 18.7   |   |
| 2011 – 2015                                               |   |          | 336.8  |           |   |          | 96.1   |   |
|                                                            |
| Expected Medicare                  prescription drug subsidies: |   |          |   |           |   |          |   |   |
| 2006                                                            |   |          |   |           |   | $   | 1.2    |   |
| 2007                                                            |   |          |   |           |   |          | 1.4    |   |
| 2008                                                            |   |          |   |           |   |          | 1.6    |   |
| 2009                                                            |   |          |   |           |   |          | 1.8    |   |
| 2010                                                            |   |          |   |           |   |          | 2.0    |   |
| 2011 – 2015                                               |   |          |   |           |   |          | 9.7    |   |
|                                                            |

F-73 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **9.**  |   | **Employee Benefit Plans and Postretirement Benefits Other                Than                Pensions, Continued:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   | The expected employer contribution for pension benefits consists                solely of amounts necessary to fund the expected benefit payments                related                to the unfunded supplemental retirement pension plans. Alltel does                not                expect that any contribution to the qualified defined pension plan                calculated in accordance with the minimum funding requirements of                the                Employee Retirement Income Security Act of 1974 will be required                in 2006.                Future discretionary contributions to the plan will depend on various                factors, including future investment performance, changes in future                discount rates and changes in the demographics of the population                participating in the Company’s qualified pension plan. Expected benefit                payments include amounts to be paid from the plans or directly from                Company assets, and exclude amounts that will be funded by participant                contributions to the plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |
|   |    |   | Under the Medicare Prescription Drug, Improvement and Modernization                Act of 2003, (the “Act”) beginning in 2006, the Act will provide a                prescription drug benefit under Medicare Part D, as well as                a federal                subsidy to plan sponsors of retiree healthcare plans that provide                a                prescription drug benefit to their participants that is at least                actuarially equivalent to the benefit that will be available under                Medicare. The amount of the federal subsidy will be based on                28 percent of an individual beneficiary’s annual eligible                prescription drug costs ranging between $250 and $5,000. On May 19,                2004, the FASB issued Staff Position No. 106-2, “Accounting and                Disclosure Requirements Related to the Medicare Prescription Drug,                Improvement and Modernization Act of 2003” (“FSP No. 106-2”). FSP                No. 106-2 clarified that the federal subsidy provided under                the Act                should be accounted for as an actuarial gain in calculating the                accumulated postretirement benefit obligation and annual postretirement                expense. As of December 31, 2004, the Department of Health                and Human                Services had yet to issue final regulations on the determination                of                actuarial equivalence and the federal subsidy. Based on its understanding                of the Act, Alltel determined that a substantial portion of the                prescription drug benefits provided under its postretirement benefit                plan                would be deemed actuarially equivalent to the benefits provided under                Medicare Part D. Effective July 1, 2004, Alltel prospectively                adopted FSP No. 106-2 and remeasured its accumulated postretirement                benefit obligation as of that date to account for the federal subsidy,                the                effects of which resulted in an $18.3 million reduction in                the                Company’s accumulated postretirement benefit obligation and a                $2.9 million reduction in the Company’s 2004 postretirement expense.                On January 21, 2005, the Department of Health and Human Services                issued                final federal regulations related to the federal subsidy. These final                rules did not have a material effect on Alltel’s benefit costs or                accumulated postretirement benefit obligation. |
|   |
|   |    |   | Alltel has a non-contributory defined contribution plan in the                form of                profit-sharing arrangements for eligible employees. The amount of                profit-sharing contributions to the plan is determined annually by                Alltel’s Board of Directors. Profit-sharing expense amounted to                $23.1 million in 2005, $21.3 million in 2004 and                $21.9 million in 2003. The Company also sponsors employee                savings                plans under section 401(k) of the Internal Revenue Code, which cover                substantially all full-time employees, except bargaining unit employees.                Employees may elect to contribute to the plans a portion of their                eligible                pretax compensation up to certain limits as specified by the plans.                Alltel                also makes annual contributions to the plans. Expense recorded by                Alltel                related to these plans amounted to $7.0 million in 2005,                $7.1 million in 2004 and $7.3 million in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |
|   | **10.** |   | **Restructuring and Other Charges:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |    |   | A summary of the restructuring and other charges recorded in 2005                was                as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|                                                                                                       |   |     |    |   |     |   |    |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|---------|--------|--------|--------|--------|--------|
|                                                                                                       |
| (Millions)                                                                                                 |   | Wireless |    |   | Wireline |   |    | Total  |   |
|                                                                                                       |
| Severance and                  employee                  benefit costs                                     |   | $        | – |   |     | $      | 4.4     |   |   | $      | 4.4    |   |
| Relocation                  costs                                                                          |   |     | 0.7     |   |     |   | – |   |   |   | 0.7    |   |
| Computer system                  conversion and other integration expenses                                 |   |     | 22.3    |   |     |   | – |   |   |   | 22.3   |   |
| Costs associated                  with                  pending spin off and merger of wireline operations |   |     | – |   |     |   | 31.3    |   |   |   | 31.3   |   |
|                                                                                                       |   |     |    |   |     |   |    |   |   |
| Total restructuring                  and                  other charges                                    |   | $        | 23.0    |   |     | $      | 35.7    |   |   | $      | 58.7   |   |
|                                                                                                       |

|   |   |   | In connection with the exchange of wireless assets with Cingular                and                purchase of wireless properties from PS Cellular, the Company incurred                $18.5 million of integration expenses, primarily consisting                of                handset subsidies incurred to migrate the acquired customer base                to CDMA                handsets. Alltel also incurred $4.5 million of integration                expenses                related to its acquisition of Western Wireless, primarily consisting                of                computer system conversion and other integration costs. These expenses                included internal payroll and employee benefit costs, contracted                services,                relocation expenses and other programming costs incurred in converting                Western Wireless’ customer billing and operational support systems to                Alltel’s internal systems, a process which is expected to be completed                during the first quarter of 2006. Of the total integration expenses                recorded, $14.3 million were incurred in the third quarter of 2005                and                $8.7 million were incurred in the fourth quarter of 2005.                During the                third quarter of 2005, the Company incurred $4.6 million of                severance                and employee benefit costs related to a planned workforce reduction                in its                wireline operations. In the fourth quarter of 2005, Alltel reduced                the                liabilities associated with the wireline                restructuring |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-74 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **10.** |   | **Restructuring and Other Charges, Continued:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   | activities by $0.2 million to reflect differences between                estimated and actual costs paid in completing the employee terminations.                As of December 31, 2005, the Company had paid $4.4 million                in                severance and employee-related expenses, and all of the employee                reductions had been completed.                                                                                                                                                                                                                                                                                                                                |
|   |
|   |    |   | As further discussed in Note 20, on December 9, 2005, Alltel                announced that it would spin off its wireline telecommunications                business                to its stockholders and merge it with Valor Communications Group,                Inc.                (“Valor”). In connection with the spin-off and merger, Alltel incurred                $31.3 million of incremental costs during the fourth quarter                of 2005,                principally consisting of investment banker, audit and legal fees.                A                summary of the restructuring and other charges recorded in 2004 was                as                follows: |

|                                                                                 |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |   |   |   |   |   |
|--------------------------------------------------------------------------------------|----------|--------|----------|----------|--------|------------|---------|----------------|--------|-----------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                                                                                 |
|                                                                                 |     |   |     |     |   |       |    | Communications |   |      |    |   |   |   |
|                                                                                 |     |   |     |     |   |       |    | Support        |   | Corporate |    |   |   |   |
| (Millions)                                                                           | Wireless |   | Wireline | Services |   | Operations |    | Total          |   |
|                                                                                 |
| Severance and                  employee                  benefit costs               |     | $      | 8.6      |     |   | $          | 11.2    |           |   | $         | 0.5     |   |   | $      | 2.1     |   |   | $      | 22.4   |   |
| Relocation                  costs                                                    |     |   | 2.7      |     |   |       | 1.2     |           |   |      | 0.1     |   |   |   | 0.1     |   |   |   | 4.1    |   |
| Lease and contract                  termination costs                                |     |   | 0.5      |     |   |       | (1.9    | )              |   |      | – |   |   |   | (0.1    | )      |   |   | (1.5   | )      |
| Write-down in                  carrying                  value of certain facilities |     |   | 0.7      |     |   |       | – |           |   |      | – |   |   |   | 24.1    |   |   |   | 24.8   |   |
| Other exit                  costs                                                    |     |   | 0.4      |     |   |       | 0.7     |           |   |      | – |   |   |   | – |   |   |   | 1.1    |   |
|                                                                                 |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |
| Total restructuring                  and                  other charges              |     | $      | 12.9     |     |   | $          | 11.2    |           |   | $         | 0.6     |   |   | $      | 26.2    |   |   | $      | 50.9   |   |
|                                                                                 |

|   |   |   | In January 2004, the Company announced its plans to reorganize                its operations and support teams. Also, during February 2004,                the                Company announced its plans to exit its Competitive Local Exchange                Carrier                (“CLEC”) operations in the Jacksonville, Florida market due to the                continued unprofitability of these operations. In connection with                these                activities, the Company recorded a restructuring charge of                $29.3 million consisting of $22.9 million in severance                and                employee benefit costs related to a planned workforce reduction,                $4.8 million of employee relocation expenses, $0.5 million                in lease                termination costs and $1.1 million of other exit costs. The                severance                and employee benefit costs included a $1.2 million payment                to a                former employee of the Company’s sold financial services division that                became payable in the first quarter of 2004 pursuant to the terms                of a                change in control agreement between the employee and Alltel. During                the                fourth quarter of 2004, the Company recorded a $0.9 million                reduction                in the liabilities associated with the restructuring efforts initiated                in                the first quarter of 2004, consisting of $0.7 million in employee                relocation expenses and $0.2 million in severance and employee                benefit costs. The reductions primarily reflected differences between                estimated and actual costs paid in completing the employee relocations                and                terminations. As of December 31, 2005, the Company had paid                $22.6                million in severance and employee-related expenses, and all of the                employee reductions and relocations had been completed. |
|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   |   |   | During the first quarter of 2004, Alltel also recorded a                $2.3 million reduction in the liabilities associated with                various                restructuring activities initiated prior to 2003, consisting of $2.0                million in lease and contract termination costs and $0.3 million                in                severance and employee benefit costs. The reductions primarily reflected                differences between estimated and actual costs paid in completing                the                previous planned workforce reductions and lease and contract terminations.                During the first quarter of 2004, the Company also recorded a write-down                in the carrying value of certain corporate and regional facilities                to fair                value in conjunction with the 2004 organizational changes and the                2003                sale of the Company’s financial services division to Fidelity National, as                further discussed in Note 14 to the consolidated financial                statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |
|   |   |   | A summary of the restructuring and other charges recorded in 2003                was                as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                                                       |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |   |   |   |   |   |
|----------------------------------------------------------------------------|----------|--------|----------|----------|--------|------------|---------|----------------|--------|-----------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|                                                                       |
|                                                                       |     |   |     |     |   |       |    | Communications |   |      |    |   |   |   |
|                                                                       |     |   |     |     |   |       |    | Support        |   | Corporate |    |   |   |   |
| (Millions)                                                                 | Wireless |   | Wireline | Services |   | Operations |    | Total          |   |
|                                                                       |
| Severance and                  employee                  benefit costs     |     | $      | 1.3      |     |   | $          | 7.0     |           |   | $         | – |   |   | $      | (2.0    | )      |   | $      | 6.3    |   |
| Lease and contract                  termination costs                      |     |   | –  |     |   |       | – |           |   |      | (0.5    | )      |   |   | – |   |   |   | (0.5   | )      |
| Write-down of                  software                  development costs |     |   | 7.6      |     |   |       | 1.8     |           |   |      | 3.8     |   |   |   | – |   |   |   | 13.2   |   |
|                                                                       |     |   |     |     |   |       |    |           |   |      |    |   |   |   |    |
| Total restructuring                  and                  other charges    |     | $      | 8.9      |     |   | $          | 8.8     |           |   | $         | 3.3     |   |   | $      | (2.0    | )      |   | $      | 19.0   |   |
|                                                                       |

|   |   |   | During the second quarter of 2003, the Company recorded a                restructuring charge of $8.5 million consisting of severance                and                employee benefit costs related to a planned workforce reduction,                primarily                resulting from the closing of certain call center locations. As of                December 31, 2004, the Company had paid $8.5 million                in                severance and employee-related expenses, and all of the employee                reductions had been completed. The Company also recorded a                $2.7 million reduction in the liabilities associated with                various                restructuring activities initiated prior to 2003, consisting of                $2.2 million in severance and employee |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-75 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

|   | **10.** |   | **Restructuring and Other Charges, Continued:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   | benefit costs and $0.5 million in lease termination costs.                The                reduction primarily reflected differences between estimated and actual                costs paid in completing the previous planned workforce reductions                and                lease terminations. During the second quarter of 2003, Alltel also                wrote                off certain capitalized software development costs that had no alternative                future use or functionality. |
|   |
|   |    |   | The following is a summary of activity related to the liabilities                associated with the Company’s restructuring and other charges at                December 31:                                                                                                                                                                                                                                                                                                                                   |

|                                                              |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                              |
| (Millions)                                                        |   | 2005   |   |   | 2004   |   |
|                                                              |
| Balance, beginning                  of                  year      |   | $      | 0.7    |   |   | $      | 3.8    |   |
| Restructuring                  and other                  charges |   |   | 58.9   |   |   |   | 54.1   |   |
| Reversal of accrued                  liabilities                  |   |   | (0.2   | )      |   |   | (3.2   | )      |
| Non-cash write-down                  of                  assets   |   |   | (15.0  | )      |   |   | (25.6  | )      |
| Cash outlays                                                      |   |   | (14.7  | )      |   |   | (28.4  | )      |
|                                                              |   |   |   |   |   |   |
| Balance, end                  of                  year            |   | $      | 29.7   |   |   | $      | 0.7    |   |
|                                                              |

|   |    |   | As of December 31, 2005, the remaining unpaid liability                related                to the Company’s restructuring activities consisted of investment banker,                audit and legal fees of $29.5 million and lease and contract                termination costs of $0.2 million which are included in accounts                payable and other current liabilities, respectively, in the accompanying                consolidated balance sheets. The restructuring and other charges                decreased                net income $48.1 million, $31.1 million and $11.5 million                for the years ended December 31, 2005, 2004 and 2003,                respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
|   | **11.** |   | **Investments – Special Cash Dividend:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |    |   | On March 28, 2005, Alltel received a special $10 per share                cash                dividend from Fidelity National totaling $111.0 million, related                to                the shares of Fidelity National common stock received as partial                consideration for the sale of Alltel’s financial services business to                Fidelity National on April 1, 2003. As further discussed in                Note 12,                on April 6, 2005, Alltel completed the sale of all of its                shares of                Fidelity National common stock. The effect of the special dividend                is                included in other income, net in the accompanying consolidated statement                of income for the year ended December 31, 2005 and increased net                income                $69.8 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |
|   | **12.** |   | **Gain on Disposal of Assets, Write-Down of Investments                and                Other:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |    |   | As previously discussed in Note 3, on April 15, 2005, Alltel                and                Cingular exchanged certain wireless assets. Primarily as a result                of                certain minority partners’ rights-of-first-refusal, three of the wireless                partnership interests to be exchanged between Alltel and Cingular                were not                completed until July 29, 2005. As a result of completing the                exchange                transaction, Alltel recorded pretax gains of $127.5 million                in the                second quarter of 2005 and $30.5 million in the third quarter                of                2005. On April 6, 2005, Alltel completed the sale of all of                its                shares of Fidelity National common stock to Goldman Sachs for                approximately $350.8 million and recognized a pretax gain                of                approximately $75.8 million. On April 8, 2005, Alltel                redeemed                all of the issued and outstanding 7.50 percent senior notes                due                March 1, 2006, representing an aggregate principal amount                of $450.0                million. Concurrent with the debt redemption, Alltel also terminated                the                related pay variable/receive fixed, interest rate swap agreement                that had                been designated as a fair value hedge against the $450.0 million                senior notes. In connection with the early termination of the debt                and                interest rate swap agreement, Alltel incurred net pretax termination                fees                of approximately $15.0 million. These transactions increased net                income                $136.7 million. |
|   |
|   |    |   | In December 2003, the Company sold to Convergys Information                Management Group, Inc. (“Convergys”) certain assets and related                liabilities, including selected customer contracts and capitalized                software development costs, associated with the Company’s                telecommunications information services operations. In connection                with                this sale, the Company recorded a pretax gain of $31.0 million.                In                the second quarter of 2003, Alltel recorded pretax write-downs totaling                $6.0 million to reflect other-than-temporary declines in the                fair                value of certain investments in unconsolidated limited partnerships.                In                addition, during the second quarter of 2003, the Company retired,                prior to                stated maturity dates, $249.1 million of long-term debt, representing                all of the long-term debt outstanding under the Rural Utilities Services,                Rural Telephone Bank and Federal Financing Bank programs. In connection                with the early retirement of the debt, the Company incurred pretax                termination fees of $7.1 million. These transactions increased                net                income $10.7 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

F-76 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **13.** |   | **Income Taxes:**Income tax expense                (benefit) was as follows for the years ended                December 31: |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|                             |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                             |
| (Millions)                       |   | 2005   |   |   | 2004   |   |   | 2003   |   |
|                             |
| Current:                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                          |   | $      | 630.4  |   |   | $      | 257.5  |   |   | $      | 251.2  |   |
| State and                  other |   |   | 83.1   |   |   |   | 40.2   |   |   |   | 37.1   |   |
|                             |   |   |   |   |   |   |   |   |   |
|                             |   |   | 713.5  |   |   |   | 297.7  |   |   |   | 288.3  |   |
|                             |   |   |   |   |   |   |   |   |   |
| Deferred:                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                          |   |   | 89.7   |   |   |   | 230.6  |   |   |   | 244.3  |   |
| State and                  other |   |   | (1.3   | )      |   |   | 37.0   |   |   |   | 48.0   |   |
|                             |   |   |   |   |   |   |   |   |   |
|                             |   |   | 88.4   |   |   |   | 267.6  |   |   |   | 292.3  |   |
|                             |   |   |   |   |   |   |   |   |   |
|                             |   | $      | 801.9  |   |   | $      | 565.3  |   |   | $      | 580.6  |   |
|                             |

|                                                                                                       |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                                       |
|                                                                                                       |   | 2005   |    |   | 2004   |   |    | 2003   |   |
| Statutory federal                  income tax rates                                                        |   |   | 35.0    | %      |   |   | 35.0    | %      |   |   | 35.0    | %      |
| Increase                  (decrease):                                                                      |   |   |    |   |   |   |    |   |   |   |    |   |
| State income                  taxes, net                  of federal benefit                               |   |   | 2.5     |   |   |   | 3.1     |   |   |   | 3.6     |   |
| Reversal of income                  tax                  contingency reserves due to IRS audits            |   |   | – |   |   |   | (1.2    | )      |   |   | – |   |
| Allowance of                  prior year                  loss on disposal of a subsidiary                 |   |   | – |   |   |   | (1.1    | )      |   |   | – |   |
| Costs associated                  with                  pending spin off and merger of wireline operations |   |   | 0.5     |   |   |   | – |   |   |   | – |   |
| Other items,                  net                                                                          |   |   | – |   |   |   | (0.3    | )      |   |   | (0.8    | )      |
|                                                                                                       |   |   |    |   |   |   |    |   |   |
| Effective income                  tax                  rates                                               |   |   | 38.0    | %      |   |   | 35.5    | %      |   |   | 37.8    | %      |
|                                                                                                       |

|                                                                     |   |   |    |   |   |   |    |   |
|--------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                     |
| (Millions)                                                               |   | 2005   |    |   | 2004   |   |
|                                                                     |
| Property, plant                  and                  equipment          |   | $      | 969.6   |   |   | $      | 958.3   |   |
| Goodwill and                  other                  intangibles         |   |   | 820.4   |   |   |   | 635.5   |   |
| International                  assets                  held for sale     |   |   | 484.4   |   |   |   | — |   |
| Capitalized software                  development costs                  |   |   | 28.1    |   |   |   | 32.4    |   |
| Pension and other                  employee benefits                     |   |   | 61.1    |   |   |   | 82.7    |   |
| Unrealized holding                  gain                  on investments |   |   | 24.0    |   |   |   | 82.9    |   |
| Partnership                  investments                                 |   |   | (29.1   | )      |   |   | (66.0   | )      |
| Deferred                  compensation                                   |   |   | (32.9   | )      |   |   | (37.1   | )      |
| Operating loss                  carryforwards                            |   |   | (122.2  | )      |   |   | (22.2   | )      |
| Other, net                                                               |   |   | (17.7   | )      |   |   | 32.4    |   |
|                                                                     |   |   |    |   |   |   |
|                                                                     |   |   | 2,185.7 |   |   |   | 1,698.9 |   |
| Valuation                  allowance                                     |   |   | 14.2    |   |   |   | 16.2    |   |
|                                                                     |   |   |    |   |   |   |
| Deferred income                  taxes                                   |   | $      | 2,199.9 |   |   | $      | 1,715.1 |   |
|                                                                     |

F-77 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **13.** |   | **Income Taxes, Continued:**At December 31, 2005                and 2004, total deferred tax assets were $485.5 million and                $202.7 million, respectively, and total deferred tax liabilities                were                $2,685.4 million and $1,917.8 million, respectively.                At                December 31, 2005, the Company had available federal net operating                loss carryforwards of approximately $276.0 million, which                were                acquired in connection with Alltel’s merger with Western Wireless and                expire in varying amounts from 2019 through 2023. Alltel may be limited                in                its ability to use the federal net operating loss carryforwards in                any one                year as a result of the ownership change due to the merger; however,                Alltel expects to fully utilize the federal net operating loss                carryforwards before their expiration. As of December 31,                2005 and                2004, the Company also had available tax benefits associated with                state                operating loss carryforwards of $22.4 million and $22.2 million,                respectively, which expire annually in varying amounts to 2025. The                Company establishes valuation allowances when necessary to reduce                deferred                tax assets to amounts expected to be realized. The valuation allowance                relates to certain state operating loss carryforwards, which may                expire                and not be utilized. The valuation allowance decreased by                $2.0 million in 2005 and was reflected in income tax from                continuing                operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |
| **14.** |   | **Discontinued Operations:**As previously discussed                in Note 3, as a condition of receiving approval for the merger with                Western Wireless from the DOJ and the FCC, Alltel agreed to divest                certain                wireless operations of Western Wireless in 16 markets in Arkansas,                Kansas                and Nebraska, as well as the Cellular One brand. On December 19,                2005, Alltel completed an exchange of wireless properties with U.S.                Cellular that included a substantial portion of the divestiture                requirements related to the merger. In December 2005, Alltel also                sold the                Cellular One brand to Dobson Cellular Systems, Inc. and announced                an                agreement to sell the remaining market in Arkansas to Cingular. The                transaction with Cingular, which includes licenses, network assets                and                customers, is subject to federal regulatory approval and is expected                to                close in the first half of 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |
|    |   | On September 15, 2005, Alltel completed the sale of Western                Wireless’ international operations in Georgia and Ghana for                $51.7 million in cash. On November 23, 2005, Alltel                also                completed the sale of Western Wireless’ international operations in                Ireland to a subsidiary of eircom Group plc, the Irish fixed-line                telecommunications operator, for 420 million euros or approximately                $518.6 million. On August 10, 2005, Alltel announced a definitive                agreement to sell the Western Wireless international operations in                Austria                to T-Mobile Austria GmbH, a subsidiary of Deutsche Telekom for                1.3 billion euros or approximately $1.6 billion at                current                exchange rates. The price is subject to downward adjustment if, among                other things, certain operating performance targets are not met.                Completion of the sale of the Austrian business is conditioned, among                other things, on approval by the European Commission and Austrian                regulatory authorities. Alltel has pending definitive agreements                to sell                the Western Wireless international operations in Bolivia and Haiti                for                $110.0 million in cash and Alltel is also actively pursuing the                disposition of the remaining international operations acquired from                Western Wireless. The sales of the Austrian, Bolivian and Haitian                operations are expected to close during the first half of 2006. The                acquired international operations and interests of Western Wireless                and                the domestic markets required to be divested by Alltel have been                classified as assets held for sale and discontinued operations in                the                Company’s consolidated financial statements as of and for the period ended                December 31, 2005. Depreciation of long-lived assets related                to the                international operations and the domestic markets to be divested                was not                recorded subsequent to the completion of the merger. The fair value                of the                net assets held for sale was based upon the expected proceeds to                be                received by Alltel from the disposition of these operations. |
|    |
|    |   | Pursuant to a definitive agreement dated January 28, 2003,                on                April 1, 2003, Alltel sold the financial services division                of its                information services subsidiary, ALLTEL Information Services, Inc.,                to                Fidelity National for $1.05 billion, received as $775.0 million                in cash and $275.0 million in Fidelity National common stock.                Approximately 5,500 employees of the Company transitioned to Fidelity                National as part of the transaction. As a result of this transaction,                Alltel recorded an after tax gain of $323.9 million. The after-tax                proceeds from the sale were used primarily to reduce borrowings                outstanding under the Company’s commercial paper program and to retire all                long-term debt outstanding under the Rural Utilities Services, Rural                Telephone Bank and Federal Financing Bank programs. As previously                discussed in Note 12, the Fidelity National common stock acquired                in this                transaction was sold on April 6, 2005. The depreciation of                long-lived                assets related to the financial services division ceased as of                January 28, 2003, the date of the agreement to sell such operations.                In January 2003, Alltel also completed the termination of                its                business venture with Bradford & Bingley Group. The business venture,                ALLTEL Mortgage Solutions, Ltd., a majority-owned consolidated subsidiary                of Alltel, was created in 2000 to provide mortgage administration                and                information technology products in the United Kingdom. Unfortunately,                the                business climate in the United Kingdom limited the venture’s ability to                leverage the business across a broad base of customers. As a result                of                these transactions, the operations of the financial services division                and                ALLTEL Mortgage Solutions, Ltd. have been reflected as discontinued                operations in the Company’s consolidated financial statements for all                periods presented.                                                                                                                                                                                     |

F-78 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **14.** |   | **Discontinued Operations, Continued:**The following                table includes certain summary income statement information related                to the                international operations and the domestic markets to be divested                acquired                from Western Wireless and the financial services operations reflected                as                discontinued operations for the years ended                December 31: |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                          |   |   |    |   |   |   |    |   |   |   |    |   |
|-------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                          |
| (Millions)                                                                    |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                          |
| Revenues and                  sales                                           |   | $      | 455.4   |   |   | $      | – |   |   | $      | 210.3   |   |
| Operating                  expenses                                           |   |   | 368.1   |   |   |   | – |   |   |   | 148.1   |   |
|                                                                          |   |   |    |   |   |   |    |   |   |
| Operating                  income                                             |   |   | 87.3    |   |   |   | – |   |   |   | 62.2    |   |
| Minority interest                  expense in unconsolidated entities         |   |   | (5.9    | )      |   |   | – |   |   |   | – |   |
| Other expense,                  net                  (a)                      |   |   | (1.1    | )      |   |   | – |   |   |   | (0.1    | )      |
| Gain on sale                  of                  discontinued operations (b) |   |   | – |   |   |   | – |   |   |   | 555.1   |   |
|                                                                          |   |   |    |   |   |   |    |   |   |
| Pretax income                  from                  discontinued operations  |   |   | 80.3    |   |   |   | – |   |   |   | 617.2   |   |
| Income tax expense                  (benefit) (c)                             |   |   | 50.0    |   |   |   | (19.5   | )      |   |   | 256.2   |   |
|                                                                          |   |   |    |   |   |   |    |   |   |
| Income from                  discontinued operations                          |   | $      | 30.3    |   |   | $      | 19.5    |   |   | $      | 361.0   |   |
|                                                                          |

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Notes: |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (a)    |   | Except for the Bolivian                  credit facility discussed below, Alltel had no outstanding indebtedness                  directly related to the international operations and domestic markets                  to                  be divested that were acquired from Western Wireless or the financial                  services operations sold to Fidelity National, and accordingly,                  no                  additional interest expense was allocated to discontinued operations                  for                  the periods presented.                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (b)    |   | There was no gain                  or loss                  realized upon the sale of the international operations in Georgia,                  Ghana,                  Ireland and the domestic markets in Kansas and Nebraska. Goodwill                  and                  other intangibles associated with the sold international and domestic                  operations acquired from Western Wireless amounted to $447.4 million.                  Goodwill of $25.8 million associated with the sold financial                  services                  division was included in the computation of the gain on the sale                  of those                  operations. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (c)    |   | The income tax benefit                  recorded in the third quarter of 2004 included the reversal of                  $15.1 million of federal income tax contingency reserves                  attributable                  to the sold financial services division, as previously discussed                  in Note                  2. In connection with the IRS audits of the Company’s consolidated federal                  income tax returns for the fiscal years 1997 through 2001, the                  Company                  also recorded a foreign tax credit carryback benefit of                  $4.4 million.                                                  |

|                                                                          |   |   |    |   |
|-------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                          |
| (Millions)                                                                    |   |   |    |   |
|                                                                          |
| Current assets                                                                |   | $      | 182.7   |   |
| Property, plant                  and                  equipment               |   |   | 315.3   |   |
| Goodwill and                  other                  intangible assets (a)    |   |   | 1,419.0 |   |
| Other assets                                                                  |   |   | 34.2    |   |
|                                                                          |   |   |    |
| Assets held for                  sale                                         |   | $      | 1,951.2 |   |
|                                                                          |   |   |    |
| Current                  liabilities                                          |   | $      | 179.4   |   |
| Long-term debt                  (b)                                           |   |   | 48.4    |   |
| Other                  liabilities                                            |   |   | 66.6    |   |
|                                                                          |   |   |    |
| Liabilities related                  to                  assets held for sale |   | $      | 294.4   |   |
|                                                                          |

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Notes: |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (a)    |   | Includes the fair                  value of                  licenses and customer lists. Because substantially all of the assets                  classified as held for sale will be disposed of by June 30,                  2006, the                  Company did not complete third party valuations to assign specific                  fair                  values to the identifiable intangible assets of the international                  operations and domestic markets to be divested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (b)    |   | Represents amounts                  outstanding under a credit facility agreement between Alltel’s Bolivian                  subsidiary and the Overseas Private Investment Corporation. Under                  the                  terms of the credit facility, all outstanding principal is required                  to be                  repaid in predetermined quarterly installments beginning on July 15,                  2006 and ending on April 15, 2014. Interest accrues at a                  rate of                  8.74 percent and is payable on a quarterly basis. The credit                  facility                  contains certain restrictive covenants, including a debt service                  coverage                  ratio which does not become effective until the third quarter of                  2006,                  limitations on the Bolivian subsidiary’s ability to incur additional                  indebtedness, make certain asset dispositions or restricted payments.                  Substantially all of the Bolivian subsidiary’s assets have been pledged as                  collateral for the credit                  facility. |

F-79 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **15.** |   | **Other Comprehensive Income (Loss):**Other                comprehensive income (loss) consists of unrealized holding                gains                (losses) on investments in equity securities and foreign currency                translation adjustments. Other comprehensive income (loss) was as                follows                for the years ended December 31: |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                          |   |   |   |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                                                                          |
| (Millions)                                                                                                                                    |   | 2005   |   |   | 2004   |   |    | 2003   |   |
|                                                                                                                                          |
| Unrealized holding                  gains (losses) on investments:                                                                       |   |   |   |   |   |   |    |   |   |   |    |   |
| Unrealized holding                  gains (losses) arising in the period                                                                 |   | $      | (126.7 | )      |   | $      | 116.9   |   |   | $      | 120.5   |   |
| Income tax expense                  (benefit)                                                                                                 |   |   | (44.4  | )      |   |   | 36.2    |   |   |   | 46.9    |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
|                                                                                                                                          |   |   | (82.3  | )      |   |   | 80.7    |   |   |   | 73.6    |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
| Reclassification                  adjustments for (gains) losses included in net income for                  the                  period |   |   | (75.8  | )      |   |   | (0.7    | )      |   |   | – |   |
| Income tax expense                  (benefit)                                                                                                 |   |   | 26.5   |   |   |   | 0.3     |   |   |   | – |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
|                                                                                                                                          |   |   | (49.3  | )      |   |   | (0.4    | )      |   |   | – |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
| Net unrealized                  gains                  (losses) in the period                                                            |   |   | (202.5 | )      |   |   | 116.2   |   |   |   | 120.5   |   |
| Income tax expense                  (benefit)                                                                                                 |   |   | (70.9  | )      |   |   | 35.9    |   |   |   | 46.9    |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
|                                                                                                                                          |   |   | (131.6 | )      |   |   | 80.3    |   |   |   | 73.6    |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
| Foreign currency                  translation adjustment:                                                                                     |   |   |   |   |   |   |    |   |   |   |    |   |
| Translation adjustment                  for the period                                                                                        |   |   | (4.1   | )      |   |   | (0.1    | )      |   |   | 0.8     |   |
| Reclassification                  adjustments for losses included in net income for the period                                                |   |   | 0.8    |   |   |   | – |   |   |   | 6.7     |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
|                                                                                                                                          |   |   | (3.3   | )      |   |   | (0.1    | )      |   |   | 7.5     |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
| Other comprehensive                  income (loss) before tax                                                                            |   |   | (205.8 | )      |   |   | 116.1   |   |   |   | 128.0   |   |
| Income tax expense                  (benefit)                                                                                                 |   |   | (70.9  | )      |   |   | 35.9    |   |   |   | 46.9    |   |
|                                                                                                                                          |   |   |   |   |   |   |    |   |   |
| Other comprehensive                  income (loss)                                                                                            |   | $      | (134.9 | )      |   | $      | 80.2    |   |   | $      | 81.1    |   |
|                                                                                                                                          |

| **16.** |   | **Commitments and Contingencies:**Litigation–                The Company is party to various legal proceedings arising from the                ordinary course of business. Although the ultimate resolution of                these                various proceedings cannot be determined at this time, management                of the                Company does not believe that such proceedings, individually or in                the                aggregate, will have a material adverse effect on the future consolidated                results of operations, cash flows or financial condition of the                Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |
|    |   | Guarantees– The Company currently has outstanding various                indemnifications related either to the sale of the financial services                division to Fidelity National or the sale of certain assets and related                liabilities of the telecommunications information services operations                to                Convergys. (See Notes 12 and 14.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |
|    |   | In conjunction with the sale of the financial services division,                Alltel agreed to indemnify Fidelity National for any damages resulting                from Alltel’s breach of warranty or non-fulfillment of certain covenants                under the sales agreement, that exceed 1.5 percent of the                purchase                price, or $15.75 million, up to a maximum of 15 percent                of the                purchase price, or $157.5 million. The Company believes, because                of                the low probability of being required to pay any amount under this                indemnification, the fair value of this obligation is immaterial                to the                consolidated results of operations, cash flows and financial condition                of                the Company. Accordingly, the Company has not recorded a liability                related                to it. Alltel also agreed to indemnify Fidelity National from any                future                tax liability imposed on the financial services division related                to                periods prior to the date of sale. Alltel’s obligation to Fidelity                National under this indemnification is not subject to a maximum amount.                At                December 31, 2005, the Company has recorded a liability for                tax                contingencies of approximately $8.0 million related to the                operations                of the financial services division for periods prior to the date                of sale                that management has assessed as probable and estimable, which should                adequately cover any obligation under this indemnification. |
|    |
|    |   | In connection with the sale of assets to Convergys, Alltel agreed                to                indemnify Convergys for any damages resulting from Alltel’s breach of                warranty under the sales agreement that exceed $500,000, up to a                maximum                of $10.0 million. In addition, the Company agreed to indemnify                Convergys for any damages resulting from non-fulfillment of certain                covenants or liabilities arising from the ownership, operation or                use of                the assets included in the sale. This indemnification is not subject                to a                maximum obligation. The Company believes because of the low probability                of                being required to pay any amount under these indemnifications, the                fair                value of these obligations is immaterial to the consolidated results                of                operations, cash flows and financial condition of the Company.                Accordingly, the Company has not recorded a liability related to                these                indemnifications.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

F-80 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **16.** |   | **Commitments and Contingencies, Continued:**Lease                Commitments– Minimum rental commitments for all non-cancelable                operating leases, consisting principally of leases for cell site                tower                space, network facilities, real estate, office space, and office                equipment                were as follows as of December 31, 2005: |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       |   |       |   |   |
|------------|--------|------------|--------|--------|
|       |
| Year       |   | (Millions) |   |
|       |
| 2006       |   | $          | 237.8  |   |
| 2007       |   |       | 187.4  |   |
| 2008       |   |       | 151.5  |   |
| 2009       |   |       | 107.9  |   |
| 2010       |   |       | 54.9   |   |
| Thereafter |   |       | 151.7  |   |
|       |   |       |   |
| Total      |   | $          | 891.2  |   |
|       |

| **17.** |   | **Agreement to Lease Cell Site Towers:**In 2000,                Alltel signed a definitive agreement with American Tower Corporation                (“American Tower”) to lease to American Tower certain of the Company’s                cell site towers in exchange for cash paid in advance. Under terms                of the                fifteen-year lease agreement, American Tower assumed responsibility                to                manage, maintain and remarket the remaining space on the towers,                while                Alltel maintained ownership of the cell site facilities. Alltel is                obligated to pay American Tower a monthly fee for management and                maintenance services for the duration of the agreement amounting                to $1,200                per tower per month, subject to escalation not to exceed five percent                annually. American Tower has the option to purchase the towers for                additional consideration totaling $42,844 per tower in cash or, at                Alltel’s election, 769 shares of American Tower Class A common stock                per tower at the end of the lease term. Upon completion of this                transaction, the Company had leased 1,773 cell site towers to American                Tower and received proceeds of $531.9 million. Proceeds from                this                leasing transaction were recorded by Alltel as deferred rental income                and                are recognized as service revenues on a straight-line basis over                the                fifteen-year lease term. Deferred rental income was as follows at                December 31: |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                             |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                             |
| (Millions)                                                                                                       |   | 2005   |   |   | 2004   |   |
|                                                                                                             |
| Deferred rental                  income                  – current (included in other current liabilities) |   | $      | 35.5   |   |   | $      | 35.6   |   |
| Deferred rental                  income                  – long-term (included in other liabilities)       |   |   | 337.2  |   |   |   | 375.3  |   |
|                                                                                                             |   |   |   |   |   |   |
| Total deferred                  rental                  income                                                   |   | $      | 372.7  |   |   | $      | 410.9  |   |
|                                                                                                             |

| **18.** |   | **Business Segments:**Alltel disaggregates its                business operations based upon differences in products and services.                Wireless operations include cellular and PCS services and are provided                in                34 states. Alltel manages its wireline-based services as a single                operating segment and assesses operating performance and allocates                resources at a level that consolidates the results of the ILEC, CLEC                and                Internet operations. Local service and network access services are                provided by the Company’s ILEC subsidiaries in 15 states. Local                competitive access services are provided on both a facilities-based                and                resale basis in six markets. Internet access services are an additional                product offering provided to ILEC and CLEC customers and are currently                marketed in 17 states. Communications support services consist of                the                Alltel’s product distribution, directory publishing, long-distance, and                telecommunications information services operations. The Company’s product                distribution subsidiary is a distributor of telecommunications equipment                and materials and operates four warehouses and four counter-sales                showrooms across the United States. The Company’s publishing subsidiary                coordinates advertising, sales, printing, and distribution for 386                telephone directory contracts in 36 states. Long-distance services                are                currently marketed in 25 states. Telecommunications information services                operations provide application software, data processing and outsourcing                services to telecommunications companies in the United States. Corporate                items include general corporate expenses, headquarters facilities                and                equipment, investments, and other items not allocated to the                segments. |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |
|    |   | The accounting policies used in measuring segment assets and operating                results are the same as those described in Note 1. The Company accounts                for intercompany sales at current market prices or in accordance                with                regulatory requirements. The Company evaluates performance of the                segments                based on segment income, which is computed as revenues and sales                less                operating expenses, excluding the effects of the restructuring and                other                charges discussed in Note 10. These items are not allocated to the                segments and are included in corporate operations. In addition, none                of                the non-operating items such as equity earnings in unconsolidated                partnerships, minority interest expense, other income, net, gain                on                disposal of assets, write-down of investments, debt prepayment penalties,                interest expense and income taxes have been allocated to the                segments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

F-81 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **18.** |   | **Business Segments,                Continued:** |
|---------|--------|--------------------------------------------------|

|                                                                              |   |                                                               |     |   |     |   |    |           |   |    |     |   |   |   |     |   |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|----------|--------|----------|--------|---------|----------------|--------|---------|----------|--------|--------|--------|----------|--------|
|                                                                              |
| (Millions)                                                                        |   | For                the                year ended December 31, 2005 |     |
|                                                                              |   |                                                               |     |   |     |   |    | Communications |   |    |
|                                                                              |   |                                                               |     |   |     |   |    |           |   | Support |     |   | Total  |   |
|                                                                              |   | Wireless                                                           |     |   | Wireline |   |    | Services       |   |    | Segments |   |
|                                                                              |
| Revenues and                  sales from                  unaffiliated customers: |   |                                                               |     |   |     |   |    |           |   |    |     |   |   |   |     |   |
| Domestic                                                                          |   | $                                                                  | 6,269.7  |   |     | $      | 2,215.8 |           |   | $       | 758.9    |   |   | $      | 9,244.4  |   |
| International                                                                     |   |                                                               | –  |   |     |   | – |           |   |    | –  |   |   |   | –  |   |
|                                                                              |   |                                                               |     |   |     |   |    |           |   |    |     |   |
|                                                                              |   |                                                               | 6,269.7  |   |     |   | 2,215.8 |           |   |    | 758.9    |   |   |   | 9,244.4  |   |
| Intercompany                  revenues                  and sales                 |   |                                                               | 6.2      |   |     |   | 163.3   |           |   |    | 266.7    |   |   |   | 436.2    |   |
|                                                                              |   |                                                               |     |   |     |   |    |           |   |    |     |   |
| Total revenues                  and                  sales                        |   |                                                               | 6,275.9  |   |     |   | 2,379.1 |           |   |    | 1,025.6  |   |   |   | 9,680.6  |   |
|                                                                              |   |                                                               |     |   |     |   |    |           |   |    |     |   |
| Operating                  expenses                                               |   |                                                               | 4,060.5  |   |     |   | 994.7   |           |   |    | 923.5    |   |   |   | 5,978.7  |   |
| Depreciation                  and                  amortization                   |   |                                                               | 960.7    |   |     |   | 480.7   |           |   |    | 33.9     |   |   |   | 1,475.3  |   |
|                                                                              |   |                                                               |     |   |     |   |    |           |   |    |     |   |
| Total costs and                  expenses                                         |   |                                                               | 5,021.2  |   |     |   | 1,475.4 |           |   |    | 957.4    |   |   |   | 7,454.0  |   |
|                                                                              |   |                                                               |     |   |     |   |    |           |   |    |     |   |
| Segment income                                                                    |   | $                                                                  | 1,254.7  |   |     | $      | 903.7   |           |   | $       | 68.2     |   |   | $      | 2,226.6  |   |
|                                                                              |
| Assets                                                                            |   | $                                                                  | 15,416.3 |   |     | $      | 4,878.6 |           |   | $       | 533.5    |   |   | $      | 20,828.4 |   |
| Investments in                  unconsolidated partnerships                       |   | $                                                                  | 157.2    |   |     | $      | – |           |   | $       | –  |   |   | $      | 157.2    |   |
| Capital                  expenditures                                             |   | $                                                                  | 935.8    |   |     | $      | 351.9   |           |   | $       | 13.6     |   |   | $      | 1,301.3  |   |
|                                                                              |

|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |              |   |   |   |     |   |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|--------|----------|--------|---------|----------------|--------|---------|-------------------|--------|--------|--------|----------|--------|
|                                                                              |
| (Millions)                                                                        |   | For                the                year ended December 31, 2004 |    |
|                                                                              |   |                                                               |    |   |     |   |    | Communications |   |    |
|                                                                              |   |                                                               |    |   |     |   |    |           |   | Support |              |   | Total  |   |
|                                                                              |   | Wireless                                                           |    |   | Wireline |   |    | Services       |   |    | Segments          |   |
|                                                                              |
| Revenues and                  sales from                  unaffiliated customers: |   |                                                               |    |   |     |   |    |           |   |    |              |   |   |   |     |   |
| Domestic                                                                          |   | $                                                                  | 5,078.1 |   |     | $      | 2,256.0 |           |   | $       |   680.9 |   |   | $      | 8,015.0  |   |
| International                                                                     |   |                                                               | – |   |     |   | – |           |   |    | 1.9               |   |   |   | 1.9      |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |              |   |
|                                                                              |   |                                                               | 5,078.1 |   |     |   | 2,256.0 |           |   |    | 682.8             |   |   |   | 8,016.9  |   |
| Intercompany                  revenues                  and sales                 |   |                                                               | – |   |     |   | 163.8   |           |   |    | 241.0             |   |   |   | 404.8    |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |              |   |
| Total revenues                  and                  sales                        |   |                                                               | 5,078.1 |   |     |   | 2,419.8 |           |   |    | 923.8             |   |   |   | 8,421.7  |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |              |   |
| Operating                  expenses                                               |   |                                                               | 3,319.1 |   |     |   | 977.3   |           |   |    | 826.8             |   |   |   | 5,123.2  |   |
| Depreciation                  and                  amortization                   |   |                                                               | 738.8   |   |     |   | 516.5   |           |   |    | 34.3              |   |   |   | 1,289.6  |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |              |   |
| Total costs and                  expenses                                         |   |                                                               | 4,057.9 |   |     |   | 1,493.8 |           |   |    | 861.1             |   |   |   | 6,412.8  |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |              |   |
| Segment income                                                                    |   | $                                                                  | 1,020.2 |   |     | $      | 926.0   |           |   | $       | 62.7              |   |   | $      | 2,008.9  |   |
|                                                                              |
| Assets                                                                            |   | $                                                                  | 9,881.5 |   |     | $      | 5,042.8 |           |   | $       | 495.8             |   |   | $      | 15,420.1 |   |
| Investments in                  unconsolidated partnerships                       |   | $                                                                  | 257.8   |   |     | $      | – |           |   | $       | –           |   |   | $      | 257.8    |   |
| Capital                  expenditures                                             |   | $                                                                  | 769.3   |   |     | $      | 332.0   |           |   | $       | 15.1              |   |   | $      | 1,116.4  |   |
|                                                                              |

|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |     |   |   |   |     |   |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|--------|----------|--------|---------|----------------|--------|---------|----------|--------|--------|--------|----------|--------|
|                                                                              |
|                                                                              |   | For                the                year ended December 31, 2003 |    |
|                                                                              |   |                                                               |    |   |     |   |    | Communications |   |    |
|                                                                              |   |                                                               |    |   |     |   |    |           |   | Support |     |   | Total  |   |
|                                                                              |   | Wireless                                                           |    |   | Wireline |   |    | Services       |   |    | Segments |   |
|                                                                              |
| Revenues and                  sales from                  unaffiliated customers: |
| Domestic                                                                          |   | $                                                                  | 4,728.4 |   |     | $      | 2,286.9 |           |   | $       | 693.6    |   |   | $      | 7,708.9  |   |
| International                                                                     |   |                                                               | – |   |     |   | – |           |   |    | 4.4      |   |   |   | 4.4      |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |     |   |
|                                                                              |   |                                                               | 4,728.4 |   |     |   | 2,286.9 |           |   |    | 698.0    |   |   |   | 7,713.3  |   |
| Intercompany                  revenues                  and sales                 |   |                                                               | – |   |     |   | 149.2   |           |   |    | 261.0    |   |   |   | 410.2    |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |     |   |
| Total revenues                  and                  sales                        |   |                                                               | 4,728.4 |   |     |   | 2,436.1 |           |   |    | 959.0    |   |   |   | 8,123.5  |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |     |   |
| Operating                  expenses                                               |   |                                                               | 3,059.4 |   |     |   | 1,025.7 |           |   |    | 846.4    |   |   |   | 4,931.5  |   |
| Depreciation                  and                  amortization                   |   |                                                               | 671.0   |   |     |   | 526.5   |           |   |    | 36.2     |   |   |   | 1,233.7  |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |     |   |
| Total costs and                  expenses                                         |   |                                                               | 3,730.4 |   |     |   | 1,552.2 |           |   |    | 882.6    |   |   |   | 6,165.2  |   |
|                                                                              |   |                                                               |    |   |     |   |    |           |   |    |     |   |
| Segment income                                                                    |   | $                                                                  | 998.0   |   |     | $      | 883.9   |           |   | $       | 76.4     |   |   | $      | 1,958.3  |   |
|                                                                              |
| Assets                                                                            |   | $                                                                  | 9,673.9 |   |     | $      | 5,212.9 |           |   | $       | 518.6    |   |   | $      | 15,405.4 |   |
| Investments in                  unconsolidated partnerships                       |   | $                                                                  | 281.9   |   |     | $      | – |           |   | $       | –  |   |   | $      | 281.9    |   |
| Capital                  expenditures                                             |   | $                                                                  | 739.4   |   |     | $      | 378.6   |           |   | $       | 19.0     |   |   | $      | 1,137.0  |   |
|                                                                              |

F-82 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **18.** |   | **Business Segments, Continued:**                                                                                                                                                                                               |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   | A reconciliation of the total business segments to the applicable                amounts in the Company’s consolidated financial statements was as follows                as of and for the years ended December 31: |

|                                                                                              |   |   |     |   |   |   |     |   |   |   |     |   |
|---------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
|                                                                                              |
| (Millions)                                                                                        |   | 2005   |     |   | 2004   |   |     | 2003   |   |
|                                                                                              |
| Revenues and                  sales:                                                              |   |   |     |   |   |   |     |   |   |   |     |   |
| Total business                  segments                                                          |   | $      | 9,680.6  |   |   | $      | 8,421.7  |   |   | $      | 8,123.5  |   |
| Less: intercompany                  eliminations (1)                                              |   |   | (193.6   | )      |   |   | (175.6   | )      |   |   | (143.6   | )      |
|                                                                                              |   |   |     |   |   |   |     |   |   |
| Total revenues                  and                  sales                                        |   | $      | 9,487.0  |   |   | $      | 8,246.1  |   |   | $      | 7,979.9  |   |
|                                                                                              |
| Income from continuing                  operations before income taxes:                           |   |   |     |   |   |   |     |   |   |   |     |   |
| Total business                  segment                  income                                   |   | $      | 2,226.6  |   |   | $      | 2,008.9  |   |   | $      | 1,958.3  |   |
| Corporate                  operations                                                             |   |   | (76.8    | )      |   |   | (36.4    | )      |   |   | (41.3    | )      |
| Restructuring                  and other                  charges                                 |   |   | (58.7    | )      |   |   | (50.9    | )      |   |   | (19.0    | )      |
| Equity earnings                  in                  unconsolidated partnerships                  |   |   | 43.4     |   |   |   | 68.5     |   |   |   | 64.4     |   |
| Minority interest                  expense in consolidated partnerships                           |   |   | (69.1    | )      |   |   | (80.1    | )      |   |   | (78.6    | )      |
| Other income,                  net                                                                |   |   | 158.8    |   |   |   | 34.5     |   |   |   | 11.0     |   |
| Interest                  expense                                                                 |   |   | (332.6   | )      |   |   | (352.5   | )      |   |   | (378.6   | )      |
| Gain on disposal                  of                  assets, write-down of investments and other |   |   | 218.8    |   |   |   | –  |   |   |   | 17.9     |   |
|                                                                                              |   |   |     |   |   |   |     |   |   |
| Total income                  from                  continuing operations before income taxes     |   | $      | 2,110.4  |   |   | $      | 1,592.0  |   |   | $      | 1,534.1  |   |
|                                                                                              |
| Depreciation                  and                  amortization expense:                          |   |   |     |   |   |   |     |   |   |   |     |   |
| Total business                  segments                                                          |   | $      | 1,475.3  |   |   | $      | 1,289.6  |   |   | $      | 1,233.7  |   |
| Corporate                  operations                                                             |   |   | 7.3      |   |   |   | 10.1     |   |   |   | 14.0     |   |
|                                                                                              |   |   |     |   |   |   |     |   |   |
| Total depreciation                  and                  amortization expense                     |   | $      | 1,482.6  |   |   | $      | 1,299.7  |   |   | $      | 1,247.7  |   |
|                                                                                              |
| Assets:                                                                                           |   |   |     |   |   |   |     |   |   |   |     |   |
| Total business                  segments                                                          |   | $      | 20,828.4 |   |   | $      | 15,420.1 |   |   | $      | 15,405.4 |   |
| Corporate assets                  (2)                                                             |   |   | 1,270.1  |   |   |   | 1,201.2  |   |   |   | 1,319.3  |   |
| Assets held for                  sale                                                             |   |   | 1,951.2  |   |   |   | –  |   |   |   | –  |   |
| Less: elimination                  of                  intercompany receivables                   |   |   | (36.6    | )      |   |   | (17.6    | )      |   |   | (63.6    | )      |
|                                                                                              |   |   |     |   |   |   |     |   |   |
| Total assets                                                                                      |   | $      | 24,013.1 |   |   | $      | 16,603.7 |   |   | $      | 16,661.1 |   |
|                                                                                              |
| Capital                  expenditures:                                                            |   |   |     |   |   |   |     |   |   |   |     |   |
| Total business                  segments                                                          |   | $      | 1,301.3  |   |   | $      | 1,116.4  |   |   | $      | 1,137.0  |   |
| Corporate                  operations                                                             |   |   | 1.1      |   |   |   | 9.0      |   |   |   | 0.7      |   |
|                                                                                              |   |   |     |   |   |   |     |   |   |
| Total capital                  expenditures                                                       |   | $      | 1,302.4  |   |   | $      | 1,125.4  |   |   | $      | 1,137.7  |   |
|                                                                                              |

|   |   |   |   |                                                                                                                                                                                                                                       |
|--------|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Notes: |   |   |
|   | (1     | )      |   | See “Transactions with                  Certain Affiliates” in Note 1 for a discussion of intercompany revenues                  and sales not eliminated in preparing the consolidated financial                  statements. |
|   |   |   |   |                                                                                                                                                                                                                                       |
|   | (2     | )      |   | Corporate assets                  consist                  of cash and short-term investments, fixed assets, investments in                  equity                  securities and other assets not allocated to the segments.            |

F-83 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **18.** |   | **Business Segments, Continued:**                                                                                                                                     |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   | Supplemental information pertaining to the Communications Support                Services segment was as follows for the years ended                December 31: |

|                                                                              |   |   |    |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                              |
| (Millions)                                                                        |   | 2005   |    |   | 2004   |   |    | 2003   |   |
|                                                                              |
| Revenues and                  sales from                  unaffiliated customers: |   |   |    |   |   |   |    |   |   |   |    |   |
| Product                  distribution                                             |   | $      | 396.7   |   |   | $      | 306.5   |   |   | $      | 275.1   |   |
| Long-distance                  and                  network management services   |   |   | 200.4   |   |   |   | 188.0   |   |   |   | 198.7   |   |
| Directory                  publishing                                             |   |   | 144.6   |   |   |   | 146.5   |   |   |   | 115.3   |   |
| Telecommunications                  information services                          |   |   | 17.2    |   |   |   | 41.8    |   |   |   | 108.9   |   |
|                                                                              |   |   |    |   |   |   |    |   |   |
|                                                                              |   | $      | 758.9   |   |   | $      | 682.8   |   |   | $      | 698.0   |   |
|                                                                              |
| Intercompany                  revenues                  and sales:                |   |   |    |   |   |   |    |   |   |   |    |   |
| Product                  distribution                                             |   | $      | 151.5   |   |   | $      | 114.7   |   |   | $      | 132.3   |   |
| Long-distance                  and                  network management services   |   |   | 105.1   |   |   |   | 116.9   |   |   |   | 121.4   |   |
| Directory                  publishing                                             |   |   | 10.1    |   |   |   | 9.4     |   |   |   | 7.3     |   |
| Telecommunications                  information services                          |   |   | – |   |   |   | – |   |   |   | – |   |
|                                                                              |   |   |    |   |   |   |    |   |   |
|                                                                              |   | $      | 266.7   |   |   | $      | 241.0   |   |   | $      | 261.0   |   |
|                                                                              |
| Total revenues                  and                  sales:                       |   |   |    |   |   |   |    |   |   |   |    |   |
| Product                  distribution                                             |   | $      | 548.2   |   |   | $      | 421.2   |   |   | $      | 407.4   |   |
| Long-distance                  and                  network management services   |   |   | 305.5   |   |   |   | 304.9   |   |   |   | 320.1   |   |
| Directory                  publishing                                             |   |   | 154.7   |   |   |   | 155.9   |   |   |   | 122.6   |   |
| Telecommunications                  information services                          |   |   | 17.2    |   |   |   | 41.8    |   |   |   | 108.9   |   |
|                                                                              |   |   |    |   |   |   |    |   |   |
| Total communications                  support services revenues and sales         |   | $      | 1,025.6 |   |   | $      | 923.8   |   |   | $      | 959.0   |   |
|                                                                              |

| **19.** |   | **Quarterly Financial Information –                (Unaudited):** |
|---------|--------|-------------------------------------------------------------------------|

|                                                                     |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |   |   |                |    |   |
|--------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|--------|------------|---------------------|------------|---------|--------|----------------------|---------|--------|--------|---------------------|---------|--------|--------|---------------------|---------|--------|
|                                                                     |
|                                                                     |   | For                the                year ended December 31, 2005 |   |
| (Millions, except per share amounts)                                     |   | Total                                                              |   |   | 4th        |                |       | 3rd     |   |                 | 2nd     |   |   | 1st                 |    |
|                                                                     |
| Revenues and                  sales                                      |   | $9,                                                                | 487.0  |   |       | $2,                 | 581.8      |    |   | $2,5                 | 19.1    |   |   | $2,                 | 260.1   |   |   | $2,                 | 126.0   |   |
| Operating                  income                                        |   | $2,                                                                | 091.1  |   |       | $    | 522.7      |    |   | $   5 | 76.9    |   |   | $    | 522.2   |   |   | $    | 469.3   |   |
| Income from continuing                  operations                       |   | $1,                                                                | 308.5  |   |       | $    | 258.3      |    |   | $   3 | 35.1    |   |   | $    | 402.1   |   |   | $    | 313.0   |   |
| Discontinued                  operations                                 |   |                                                               | 30.3   |   |       |                | 4.3        |    |   |                 | 26.0    |   |   |                | – |   |   |                | – |   |
|                                                                     |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |
| Income before                  cumulative effect of accounting change    |   | $1,                                                                | 338.8  |   |       | $    | 262.6      |    |   | $   3 | 61.1    |   |   | $    | 402.1   |   |   | $    | 313.0   |   |
| Cumulative effect                  of                  accounting change |   |                                                               | (7.4   | )      |       |                | (7.4       | )       |   |                 | – |   |   |                | – |   |   |                | – |   |
|                                                                     |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |
| Net income                                                               |   | $1,                                                                | 331.4  |   |       | $    | 255.2      |    |   | $   3 | 61.1    |   |   | $    | 402.1   |   |   | $    | 313.0   |   |
| Preferred                  dividends                                     |   |                                                               | 0.1    |   |       |                | –    |    |   |                 | – |   |   |                | 0.1     |   |   |                | – |   |
|                                                                     |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |
| Net income applicable                  to common shares                  |   | $1,                                                                | 331.3  |   |       | $    | 255.2      |    |   | $   3 | 61.1    |   |   | $    | 402.0   |   |   | $    | 313.0   |   |
|                                                                     |
| Basic earnings                  per                  share:              |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |   |   |                |    |   |
| Income from continuing                  operations                       |   |                                                                    | $3.84  |   |       |                     | $ .67 |    |   |                      | $.92    |   |   |                     | $1.28   |   |   |                     | $1.04   |   |
| Income from                  discontinued operations                     |   | .09                                                                |   |   | .01        |                |       | .07     |   |                 | – |   |   | –             |    |
| Cumulative effect                  of                  accounting change |   | (.02                                                               | )      |   | (.02       | )                   |       | – |   |                 | – |   |   | –             |    |
|                                                                     |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |   |   |                |    |   |
| Net income                                                               |   | $3.91                                                              |   |   | $ .66 |                |       | $.99    |   |                 | $1.28   |   |   | $1.04               |    |
|                                                                     |
| Diluted earnings                  per                  share:            |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |   |   |                |    |   |
| Income from continuing                  operations                       |   | $3.80                                                              |   |   | $ .67 |                |       | $.91    |   |                 | $1.27   |   |   | $1.03               |    |
| Income from                  discontinued operations                     |   | .09                                                                |   |   | .01        |                |       | .07     |   |                 | – |   |   | –             |    |
| Cumulative effect                  of                  accounting change |   | (.02                                                               | )      |   | (.02       | )                   |       | – |   |                 | – |   |   | –             |    |
|                                                                     |   |                                                               |   |   |       |                |       |    |   |                 |    |   |   |                |    |   |   |                |    |   |
| Net income                                                               |   | $3.87                                                              |   |   | $ .66 |                |       | $.98    |   |                 | $1.27   |   |   | $1.03               |    |
|                                                                     |

F-84 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **19.** |   | **Quarterly Financial Information – (Unaudited),                Continued:** |
|---------|--------|------------------------------------------------------------------------------------|

|                                                    |   |                                                               |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                    |
|                                                    |   | For                the                year ended December 31, 2004 |    |
| (Millions, except per share amounts)                    |   | Total                                                              |    |   | 4th    |   |    | 3rd    |   |   | 2nd     |   |   | 1st    |    |
|                                                    |
| Revenues and                  sales                     |   | $                                                                  | 8,246.1 |   |   | $      | 2,139.7 |   |   | $      | 2,103.1 |   |   | $      | 2,042.1 |   |   | $      | 1,961.2 |   |
| Operating                  income                       |   | $                                                                  | 1,921.6 |   |   | $      | 501.2   |   |   | $      | 517.8   |   |   | $      | 507.8   |   |   | $      | 394.8   |   |
| Income from continuing                  operations      |   | $                                                                  | 1,026.7 |   |   | $      | 270.6   |   |   | $      | 303.7   |   |   | $      | 262.6   |   |   | $      | 189.8   |   |
| Discontinued                  operations                |   |                                                               | 19.5    |   |   |   | – |   |   |   | 19.5    |   |   |   | – |   |   |   | – |   |
|                                                    |   |                                                               |    |   |   |   |    |   |   |   |    |   |   |   |    |
| Net income                                              |   | $                                                                  | 1,046.2 |   |   | $      | 270.6   |   |   | $      | 323.2   |   |   | $      | 262.6   |   |   | $      | 189.8   |   |
| Preferred                  dividends                    |   |                                                               | 0.1     |   |   |   | – |   |   |   | – |   |   |   | 0.1     |   |   |   | – |   |
|                                                    |   |                                                               |    |   |   |   |    |   |   |   |    |   |   |   |    |
| Net income applicable                  to common shares |   | $                                                                  | 1,046.1 |   |   | $      | 270.6   |   |   | $      | 323.2   |   |   | $      | 262.5   |   |   | $      | 189.8   |   |
|                                                    |

| Basic earnings                  per                  share:   |   |                     |   |   |   |                     |    |   |   |                     |             |   |   |                     |    |   |   |                     |    |   |
|---------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------------------------|---------|--------|--------|--------------------------|------------------|--------|--------|--------------------------|---------|--------|--------|--------------------------|---------|--------|
| Income from continuing                  operations            |   |      | $3.34  |   |   |      | $.89    |   |   |      | $  .99 |   |   |      | $.85    |   |   |      | $.61    |   |
| Income from                  discontinued operations          |   |      | .06    |   |   |      | – |   |   |      | .06              |   |   |      | – |   |   |      | – |   |
|                                                          |   |                     |   |   |   |                     |    |   |   |                     |             |   |   |                     |    |   |   |                     |    |   |
| Net income                                                    |   |      | $3.40  |   |   |      | $.89    |   |   |      | $1.05            |   |   |      | $.85    |   |   |      | $.61    |   |
|                                                          |
| Diluted earnings                  per                  share: |   |                     |   |   |   |                     |    |   |   |                     |             |   |   |                     |    |   |   |                     |    |   |
| Income from continuing                  operations            |   |                          | $3.33  |   |   |                          | $.89    |   |   |                          | $  .99 |   |   |                          | $.85    |   |   |                          | $.61    |   |
| Income from                  discontinued operations          |   |                     | .06    |   |   |                     | – |   |   |                     | .06              |   |   |                     | – |   |   |                     | – |   |
|                                                          |   |                     |   |   |   |                     |    |   |   |                     |             |   |   |                     |    |   |   |                     |    |   |
| Net income                                                    |   |                          | $3.39  |   |   |                          | $.89    |   |   |                          | $1.05            |   |   |                          | $.85    |   |   |                          | $.61    |   |
|                                                          |

|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Notes to Quarterly Financial                Information: |
| A.                                                       |   | During the fourth                  quarter                  of 2005, Alltel recorded $8.7 million of integration expenses                  related                  to its acquisitions of Western Wireless and PS Cellular and the                  exchange                  of wireless properties with Cingular. The Company also incurred                  $31.3 million of incremental costs, principally consisting                  of                  investment banker, audit and legal fees, related to the pending                  spin off                  its wireline business to Alltel stockholders and merger with Valor.                  These                  transactions decreased net income $36.5 million or $.09                  per share.                  (See Note 10). In the fourth quarter of 2005, Alltel adopted the                  measurement and recognition provisions of FIN 47 in accounting                  for                  conditional asset retirement obligations. The cumulative effect                  of this                  accounting change resulted in a one-time non-cash charge of                  $7.4 million, net of income tax benefit of $4.6 million,                  or $.02                  per share. (See Note 2.) |
|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| B.                                                       |   | During the third                  quarter                  of 2005, the Company recorded an additional pretax gain of                  $30.5 million related to the exchange of three wireless                  partnership                  interests with Cingular. Alltel also incurred $14.3 million                  of                  integration expenses related to its acquisition of Western Wireless                  and                  exchange of wireless properties with Cingular. In addition, the                  Company                  also recorded a restructuring charge of $4.6 million related                  to a                  planned workforce reduction in its wireline operations. These transactions                  increased net income $11.6 million or $.03 per share. (See                  Notes 10                  and 12).                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| C.                                                       |   | During the second                  quarter                  of 2005, in connection with the Company’s exchange of certain wireless                  assets with Cingular, Alltel recorded a pretax gain of                  $127.5 million. The Company also recorded a pretax gain                  of                  $75.8 million from the sale of all of its shares of Fidelity                  National                  common stock. In addition, the Company incurred net pretax termination                  fees of approximately $15.0 million in connection with the                  early                  termination of $450.0 million of long-term debt and a related                  interest rate swap agreement. These transactions increased net                  income                  $118.0 million or $.37 per share (See Note 12).                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| D.                                                       |   | During the first                  quarter                  of 2005, the Company received a special cash dividend of                  $111.0 million on its investment in Fidelity National common                  stock*.*This transaction increased net income $69.8 million                  or                  $.20 per share. (See Note 11).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| E.                                                       |   | During the fourth                  quarter                  of 2004, the Company recorded a $0.9 million reduction in                  the                  liabilities associated with the restructuring efforts initiated                  in the                  first quarter of 2004 (see Note G below), consisting of $0.7 million                  in employee relocation expenses and $0.2 million in severance                  and                  employee benefit costs*.*(See Note 10).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| F.                                                       |   | In the third quarter                  of                  2004, the IRS completed its fieldwork related to the audits of                  Alltel’s                  consolidated federal income tax returns for the years 1997 through                  2001                  and issued its proposed audit adjustments related to the periods                  under                  examination. As a result, Alltel adjusted its income tax contingency                  reserves to reflect the IRS findings, the effects of which resulted                  in a                  reduction in income tax expense associated with continuing operations                  of                  $19.7 million or $.06 per share. (See Note 2).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| G.                                                       |   | In the first quarter                  of                  2004, Alltel recorded a restructuring charge of $29.3 million related                  to a                  planned workforce reduction and the exit of its CLEC operations                  in the                  Jacksonville, Florida market. In addition, Alltel recorded a                  $2.3 million reduction in the liabilities associated with                  various                  restructuring activities initiated prior to 2003. Alltel also recorded                  a                  write-down in the carrying value of certain corporate and regional                  facilities to fair value in conjunction with the proposed leasing                  or sale                  of those facilities. These transactions decreased net income                  $31.6 million or $.10 per share. (See Note 10).                                                                                                                                                                                                                                                                                                                                                                                                                |

F-85 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

| **20.** |   | **Pending Transactions:** |
|---------|--------|---------------------------|

F-86 

**NOTES        TO        CONSOLIDATED FINANCIAL        STATEMENTS**

**21. Subsequent        Events:**

F-87