UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K

(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                to


Commission File Numbers 000-51844



iPCS, INC.(Exact name of registrant as specified in its charter)

Delaware

36-4350876(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)


1901 North Roselle Road
Schaumburg, Illinois 60195(Address of principal executive offices)

Registrant's
telephone number, including area code: (847) 885-2833

Securities registered pursuant to Section 12(b) of the Act:

Title of each classCommon Stock, par value $0.01 per share

Name of each exchange on which registeredNASDAQ Global Select Market


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



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No ý

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No ý

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold (based on the closing price on the NASDAQ Stock Market) as of June 30, 2008 (the last business day of the registrant's most recently completed second fiscal
quarter) was approximately $463,799,000. For purposes of this computation, affiliates of the registrant include the registrant's executive officers and directors and their respective affiliates as of
June 30, 2008.

Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a court. Yes ý No o

As of February 27, 2009, there were 17,163,221 shares of common stock, $0.01 par value per share, outstanding.

Documents Incorporated by Reference

Part III incorporates information by reference to the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission within
120 days after the end of the fiscal year.



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TABLE OF CONTENTS

PART I


3ITEM 1. BUSINESS


3ITEM 1A. RISK FACTORS


25ITEM 1B. UNRESOLVED STAFF COMMENTS


39ITEM 2. PROPERTIES


40ITEM 3. LEGAL PROCEEDINGS


40ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


42PART II


43ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


43ITEM 6. SELECTED FINANCIAL DATA


46ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


49ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


78ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


78ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


78ITEM 9A. CONTROLS AND PROCEDURES


78ITEM 9B. OTHER INFORMATION


80PART III


81ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


81ITEM 11. EXECUTIVE COMPENSATION


81ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


81ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


81ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES


81PART IV


82ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES


82SIGNATURES


83


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As used in this Annual Report on Form 10-K, unless the context otherwise requires: (i) "Sprint PCS" refers to the affiliated entities of
Sprint Nextel Corporation that are covered by our affiliation agreements; (ii) "Sprint" refers to Sprint Nextel Corporation and its affiliates; (iii) a "PCS Affiliate of Sprint" is an
entity that operates (directly or through one or more subsidiaries) a personal communications services business pursuant to affiliation agreements with Sprint PCS and/or its affiliates or their
successors; (iv) "Sprint PCS products and services" refers to digital wireless personal communications services, including wireless voice and data services, and related retail products,
including handsets, in any case, offered under the Sprint brand name; and (v) "our subscribers" refers to Sprint PCS subscribers who reside in our territory, excluding reseller
subscribers.

Statements in this Annual Report on Form 10-K regarding Sprint or Sprint PCS are derived from information contained in
our affiliation agreements with Sprint PCS, periodic reports and other documents filed by Sprint with the SEC or press releases or other statements issued or made by Sprint or Sprint PCS.

Market data and other statistical information used throughout this Annual Report on Form 10-K are based on independent
industry publications, government publications, reports by market research firms and other published independent sources, as well as information provided to us by Sprint PCS. Some data is also based
on our good faith estimates, which estimates are derived from our review of internal surveys and independent sources, including information provided to us by Sprint and the U.S. Census Bureau.
Although we believe these sources are reliable, we have not independently verified the information.

This Annual Report on Form 10-K contains trademarks, service marks and trade names of companies and organizations other
than us. Other than with respect to Sprint PCS, our use or display of other parties' trade names, trademarks or products is not intended to and does not imply a relationship with, or
endorsement or sponsorship of us by, the trade name or trademark owners.

Our website address is www.ipcswirelessinc.com. Information contained on our website is not part of this Annual Report on
Form 10-K. We provide public access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and amendments to these reports filed with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934. These documents may be accessed free
of charge on our website at the following address: www.ipcswirelessinc.com. These documents are provided
promptly after filing with the SEC. These documents also may be found at the SEC's website at www.sec.gov.

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements about future events and expectations that are "forward-looking
statements." These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking
statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or the negative use of these terms or other comparable terminology. Any statement in this report that is not a statement of historical fact may be deemed to be a
forward-looking statement and subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include:



Although
we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important
factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from our expectations, include, but are not
limited to:



1

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2

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PART I

ITEM 1.    BUSINESS

General

We are a holding company that operates as a PCS Affiliate of Sprint through three wholly owned subsidiaries, iPCS
Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC, each having its own affiliation agreements with Sprint PCS. Pursuant to
these affiliation agreements with Sprint PCS, we offer digital wireless personal communications services, or PCS, using Sprint's spectrum under the Sprint brand name on a wireless network built
and operated to Sprint's specifications at our own expense. We own and are responsible for operating, managing and maintaining our wireless network. We have the exclusive right to provide PCS services
under the Sprint brand name in our territory.

Our
territory consists of 81 markets primarily located in Illinois, Michigan, Pennsylvania, New York, Indiana, Iowa, Ohio and Tennessee. As of December 31, 2008, our licensed
territory had a total population of approximately 15.1 million residents, of which our wireless network covered approximately 12.5 million residents, and we had approximately 691,100
subscribers.

Our
wireless network is designed to offer a seamless connection with the Sprint PCS network. Sprint PCS, together with third party PCS Affiliates of Sprint, like us, offers digital
wireless service in all 50 states, Puerto Rico and the U.S. Virgin Islands under the Sprint brand name utilizing wireless code division multiple access, or CDMA, technology. We provide
nationwide service to the subscribers in our territory through a combination of operating our own wireless network in our territory, affiliating with Sprint PCS and roaming on other providers'
wireless networks.

We
were formed in March 2000. We were acquired by AirGate PCS, Inc. on November 30, 2001 and, on October 17, 2003, AirGate transferred its ownership of us to a
trust, the beneficial owners of which were AirGate's stockholders as of such date. On February 23, 2003, we filed for bankruptcy under Chapter 11 of the Bankruptcy Code and we emerged
from bankruptcy on July 20, 2004. On July 1, 2005, iPCS, Inc. completed a merger with Horizon PCS, Inc. ("Horizon PCS"), another PCS Affiliate of Sprint and the parent of
Horizon Personal Communications, Inc. ("Horizon") and Bright Personal Communications Services, LLC ("Bright"), in which Horizon PCS merged with and into iPCS, Inc., with
iPCS, Inc. as the surviving corporation.

As
of December 31, 2008, we employed 535 employees. Our employees are not represented by any labor union and we believe that we have a good relationship with our employees.

Our Markets

The key markets in our territory include Grand Rapids (MI), Fort Wayne (IN), the Tri-Cities region of
Tennessee (Johnson City, Kingsport and Bristol), Scranton (PA), Saginaw-Bay City (MI), Central Illinois (Peoria, IL, Springfield, IL, Decatur, IL and Champaign, IL), and the
Quad Cities region of Illinois and Iowa (Bettendorf and Davenport, IA, and Moline and Rock Island, IL).

The
following tables list the location, basic trading area number, megahertz of spectrum licensed and estimated total population for each of the basic trading areas that comprise the
territory covered under our affiliation agreements with Sprint PCS as of December 31, 2008. The first table relates to the territory covered under our subsidiary iPCS Wireless's affiliation
agreements with Sprint PCS, while the second table relates to the territory covered under our subsidiaries, Horizons's and Bright's affiliation agreements with Sprint PCS.

3

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iPCS Wireless, Inc.

Location

Basic
Trading
Area No.(1)

MHz of
spectrum

Estimated
Total
Population(2)

Estimated
Covered
Population(3)ILLINOISBloomington


46


20


249,663Champaign-Urbana


71


20


238,788Clinton-Sterling(4)


86


30


146,375Danville(4)


103


20


108,915Davenport-Moline(4)


105


30


432,496Decatur-Effingham


109


20


243,107Galesburg


161


20


70,976Jacksonville


213


20


69,241Kankakee


225


20


140,855La Salle-Peru-Ottawa-Streator


243


20


155,366Mattoon


286


20


62,694Mount Vernon-Centralia


308


30


121,239Peoria


344


20


467,659Springfield


426


20


273,907St. Louis (Partial)(4)


394


30


48,338Total








2,829,619


2,706,312INDIANATerre Haute (Partial)(4)


442


30


609Total








609


609IOWABurlington(4)


61


30


131,314Cedar Rapids


70


30


304,367Des Moines (Partial)


111


30


182,579Dubuque(4)


118


30


184,546Fort Dodge


150


30


123,156Iowa City


205


30


140,893Marshalltown


283


30


57,168Mason City


285


30


114,103Ottumwa


337


30


122,183Waterloo-Cedar Falls


462


20


264,562Total








1,624,871


1,150,027MICHIGANBattle Creek (Partial)


33


30


60,511Grand Rapids (Partial)


169


20


168,792Grand Rapids (Partial)


169


30


982,611Lansing (Partial)


241


30


64,701Mount Pleasant


307


30


141,167Muskegon


310


20


232,370Petoskey


345


30


112,503Saginaw-Bay City


390


30


635,828Sault Ste. Marie


409


30


55,822


4

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Location

Basic
Trading
Area No.(1)

MHz of
spectrum

Estimated
Total
Population(2)

Estimated
Covered
Population(3)Traverse City


446


30


263,855Total








2,718,160


2,445,017NEBRASKAGrand Island-Kearney


167


30


152,788Hastings


185


30


70,810Lincoln (Partial)


256


30


98,457Norfolk


323


30


107,741Omaha (Partial)(4)


332


30


254,631Total








684,427


343,311TOTAL








7,857,686


6,645,276


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Footnotes follow the following table.

Horizon Personal Communications, Inc.
Bright Personal Communications Services, LLC

Location

Basic
Trading
Area No.(1)

MHz of
Spectrum

Estimated
Total
Population(2)

Estimated
Covered
Population(3)INDIANAElkhart(4)


126


10


285,705Fort Wayne(4)


155


10


741,124Kokomo-Logansport


233


30


190,124Marion


280


30


103,907Michigan City-La Porte (Partial)


294


15


63,852South Bend-Mishawaka


424


10


360,557Total








1,745,269


1,681,861MARYLANDCumberland(4)


100


20


165,318Total








165,318


73,386MICHIGANBenton Harbor (Partial)


39


15


54,994Total








54,994


42,697NEW JERSEYNew York (Partial)(4)


321


30


210,745Total








210,745


157,921NEW YORKBinghamton (Partial)


43


30


444Jamestown-Warren-Dunkirk(4)


215


30


178,002Olean-Bradford(4)


330


30


231,850Total








410,296


249,380


5

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Location

Basic
Trading
Area No.(1)

MHz of
Spectrum

Estimated
Total
Population(2)

Estimated
Covered
Population(3)OHIOAshtabula


21


10


102,439Athens


23


20


132,094Canton-New Philadelphia (Partial)


65


15


36,167Chillicothe


80


20


103,377Cincinnati (Partial)(4)


81


10


133,267Dayton-Springfield (Partial)


106


10


41,254Findlay-Tiffin


143


30


155,398Huntington-Ashland (Partial)


197


20


92,728Lima


255


30


250,061Portsmouth(4)


359


20


90,740Toledo (Partial)


444


30


54,071Youngstown-Warren (Partial)


484


10


5,652Zanesville-Cambridge (Partial)


487


20


190,428Total








1,387,676


949,237PENNSYLVANIAAllentown-Bethlehem-Easton (Partial)


10


30


62,298Du Bois-Clearfield


117


30


129,397Erie


131


17.5


277,405Meadville


287


10


88,710Oil City-Franklin


328


30


102,227Pittsburgh (Partial)


350


30


681Pottsville


360


30


148,790Scranton-Wilkes-Barre-Hazleton


412


30


672,216Sharon


416


10


117,075State College


429


20


142,451Stroudsburg


435


30


165,615Sunbury-Shamokin


437


30


192,363Williamsport


475


30


162,577Total








2,261,805


1,911,612TENNESSEEKingsport-Johnson City-Bristol(4)


229


20


733,812Knoxville (Partial)


232


15


84,703Total








818,515


623,788WEST VIRGINIAParkersburg-Marietta(4)


342


20


181,577Total








181,577


118,173TOTAL








7,236,195


5,808,055


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6

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Our Wireless Network

As of December 31, 2008, our wireless network included approximately 1,875 base stations, or sites, and five switching centers.
Our wireless network connects to the public switched telephone network to facilitate the origination and termination of traffic between our wireless network and both local exchange and long distance
carriers. Through our arrangements with Sprint PCS and Sprint PCS's arrangements with other wireless service providers, our subscribers have roaming capabilities on certain other wireless networks
utilizing similar technology.

Sprint
PCS's network, including our entire wireless network, uses CDMA technology, which is a digital spread-spectrum wireless technology that allows a large number of users to access a
single frequency band by assigning a code to all speech bits, sending a scrambled transmission of the encoded speech over the air and reassembling the speech into its original format.

Prior
to 2007, our entire wireless network was upgraded to 1xRTT, which is the name for the first phase of CDMA's evolution to third generation, or 3G. We believe that 1xRTT technology
provides for high capacity and outstanding voice service. In addition, 1xRTT enables subscribers to access data services, which allow subscribers to use their 1xRTT enabled devices to check
e-mail, send and receive pictures, play games with full-color graphics and polyphonic sounds and browse the Internet wirelessly with speeds of up to 144 kilobytes per second
with average throughput speeds in the range of 50-70 kilobytes per second.

7

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To remain competitive in the wireless industry, we have selectively deployed a further evolution of 3G CDMA high-speed data technologycalled Evolution Data
Optimized, or EV-DO. We have deployed EV-DO Rev. A, a recent version of EV-DO, across a portion of our PCS network covering approximately 7.2 million residents as of
December 31, 2008. This technology delivers applications and services available only on EV-DO capable handsets and laptops equipped with EV-DO capable Sprint PCS
Connection Cards, such as mobile desktop, data messaging, imaging, entertainment and location-based applications. As of December 31, 2008, Sprint's PCS Network has been upgraded to
EV-DO Rev. A technology to cover over 230 million residents (with roaming-included areas).

Pursuant
to our affiliations agreement with Sprint PCS, we expect to continue to utilize Qualcomm's Q-Chat® technology, which is designed to provide high
performance push-to-talk services on wireless networks where EV-DO Rev. A has been deployed. On portions of our wireless network where we meet coverage requirements, as defined in our affiliation
agreements, we have the right to use the Nextel Direct Connect® brand or such other brand selected by Sprint in connection with the offering of Q-Chat.

Sales, Marketing and Distribution

We feature exclusively and prominently the nationally recognized Sprint brand name in our marketing and sales efforts. From the
subscribers' point of view we are Sprint in our markets and they use our wireless network and the rest of the Sprint PCS network as a unified network. Our marketing strategy is designed to complement
Sprint's national marketing strategies with techniques tailored to each of the specific markets in our territory. In addition to Sprint's national and regional advertising campaigns, we advertise and
promote Sprint PCS products and services on a local level in our markets at our expense.

Our
sales and distribution plan is designed to mirror Sprint's multiple channel sales and distribution plan and to enhance it through the development of local distribution channels. Key
elements of our sales and distribution plan consist of the following:



8

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The
approximate percentage of our gross subscriber additions that originated from each of our distribution channels for the years ended December 31, 2008 and 2007 is as follows:

Year Ended
December 31,
2008

Year Ended
December 31,
2007Company-owned Sprint PCS retail stores


30
%

35
%Local third party distributors (including Sprint co-branded dealers)


35


30National third party distributors


12


16Sprint controlled and other


23


19100
%

100
%


Competition

Competition in the wireless telecommunications industry is intense. We principally compete with existing wireless service providers and
providers of traditional communications services (such as conventional landline telephone companies). We believe that in our territory our primary competition is with national and regional wireless
service providers, such as Alltel, Centennial, AT&T, U.S. Cellular, Nextel, T-Mobile and Verizon. Although Sprint and Nextel merged in August 2005, we continue to compete with Nextel in
our markets. See "Part I, Item 3. Legal ProceedingsSprint/Nextel Merger Litigation," of this Annual Report on Form 10-K.

Additionally,
as potential subscribers find that their communications needs may be satisfied by other technologies, we are increasingly competing for subscribers with providers of other
services, such as cable television, internet companies, satellite-based communications and wireless cable networks. In addition, Sprint has entered into a transaction with Clearwire Corporation and
other entities to develop and market, in competition with us, Worldwide Inter-Operability for Microwave Access technology, ("Wi-Max"), which is a next generation of wireless technology
(commonly referred to as
"4G") designed to enable pervasive, high-speed mobile broadband internet access to a wide variety of wireless devices (see "Part I, Item 3. Legal
ProceedingsSprint/Clearwire Transaction Litigation" of this Annual Report on Form 10-K). At this time, we do not offer 4G technology. As these new technologies develop,
the level of competition that we face becomes more difficult to anticipate and, therefore, compete against.

We
also face competition from resellers who provide wireless services to customers but do not hold Federal Communications Commission ("FCC") licenses or own facilities. Instead, the
resellers buy blocks of wireless telephone numbers and capacity from a licensed carrier and resell services through their own distribution network to the public.

Additionally,
as the FCC continues to auction additional spectrum, we may face additional competition in our markets. In 2006, the FCC completed a spectrum auction for licenses in the
Advance Wireless Services ("AWS") spectrum band. In 2008, wireless services providers began to launch new markets around the country utilizing frequencies in the AWS band. In addition, in 2008, the
FCC completed an auction for a significant number of licenses in the 700 MHz spectrum band. It can be expected that at lease some of the winners of licenses in the 700 MHz band may wish to compete
with us for customers seeking advance wireless service and features. It is difficult to currently assess how such competition may impact our operations in the future.

We
compete to attract and retain subscribers principally on the basis of:



9

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Our
ability to compete successfully will also depend, in part, on our ability to anticipate and respond to various competitive factors affecting the industry,
including:



Although
we are involved in various disputes with Sprint, we continue to believe that, overall, our strategic relationship with Sprint provides us with significant competitive
advantages. In particular, we believe our affiliation agreements with Sprint PCS allow us to offer nationwide, high-quality, nationally-branded wireless voice and data services for a lower
cost and lower capital requirements than would otherwise be possible, and provide us roaming revenue from Sprint wireless resellers and other wireless carriers that contract with Sprint for roaming
services in our territory.

Affiliation Agreements with Sprint PCS

Each Sprint PCS Affiliate enters into the following four major affiliation agreements with
Sprint PCS:



Our
affiliation agreements with Sprint PCS consist of three sets of the foregoing agreements, one set between Sprint PCS and each of our wholly owned subsidiaries, iPCS
Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC. Except as described herein, the material terms of each set of affiliation
agreements with Sprint PCS are substantially the same.

Under
our affiliation agreements with Sprint PCS, we have the exclusive right to provide wireless mobility communications services under the Sprint brand name in our territory.
Sprint PCS holds the spectrum licenses. The affiliation agreements with Sprint PCS require us to interface with the Sprint PCS network by building our network to operate on the
frequencies licensed to Sprint in the 1900 MHz range.

The
following is a description of the material terms and provisions of our commercial arrangements with Sprint PCS. You are referred to the copies of our material agreements with Sprint
PCS, filed as exhibits to this Annual Report on Form 10-K, for a more complete description of their terms and conditions.

The management agreements.Under our management agreements with Sprint PCS, through our three operating subsidiaries, we have
agreed
to:



10

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Sprint
PCS has the right to monitor our wireless personal communications services network operations and the right to access our PCS network, including the right to test and monitor any
of our facilities and equipment.



11

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12

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13

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14

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The
termination or non-renewal of the management agreement triggers some of our rights and some rights of Sprint PCS. The right of either party to require the other party to
purchase or sell the operating assets is discussed below.

If
we have the right to terminate a management agreement because of an event of termination caused by Sprint PCS, generally we may:



15

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If
Sprint PCS has the right to terminate a management agreement because of an event of termination caused by us, generally Sprint PCS may:





16

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The services agreements.The services agreements outline the terms and conditions upon which Sprint performs various back office
services for us for
an additional fee.

The
"Sprint CCPU services" are support services provided by Sprint relating to billing, customer care, collections, network operations control center monitoring, national platform,
information technology, interconnectivity, voice mail, directory assistance, operator services and roaming clearinghouse services. Subject to our right to discontinue receiving such service upon
180 days prior written notice, we agreed to continue to purchase the Sprint CCPU services from Sprint PCS through December 31, 2010 at a monthly rate per subscriber ("CCPU rate") of
$6.50 for 2008, $6.15 for 2009 and $5.85 for 2010. The monthly rate per subscriber for the Sprint CCPU Services in 2008 through 2010 will be further reduced by $0.15 each time we achieve certain
milestones with respect to our

17

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EV-DO
Rev. A deployment. Specifically, the CCPU rates set forth above are reduced by $0.15 from the then current rate when our EV-DO Rev. A deployment covers at least
6.0 million in population ("POPs"), by another $0.15 from the then current rate when we cover at least
7.0 million POPs, and by another $0.15 from the then current rate when we cover at least 9.0 million POPs. Our EV-DO Rev. A deployment exceeded 6.0 million POPs during
June 2008 and exceeded 7.0 million POPs during July 2008. As a result, the CCPU rate was reduced to $6.35 starting July 1, 2008, was further reduced to $6.20 starting August 1,
2008 for the remainder of 2008, and will be further reduced to $5.85 and $5.55 for 2009 and 2010, respectively, subject to any further downward adjustments related to incremental EV-DO
Rev. A coverage. As of December 31, 2008, our EV-DO Rev. A deployment covered approximately 7.2 million POPs. We also agreed that the monthly rate for 2011-2013
for Sprint CCPU service would be reset to a mutually acceptable amount based on the amount necessary to recover Sprint PCS's reasonable costs for providing Sprint CCPU services.

We
may elect to discontinue receiving customer care services or billing services or both upon 180 days prior written notice to Sprint. Upon receipt of such a notice, we and Sprint
will exercise commercially reasonable efforts to transition the services that we elected to discontinue to us or a third party vendor during the 180 day period. Upon the parties' completion of
the transition, the parties will agree to an adjustment to the Sprint CCPU service fee being charged by Sprint to us. We will reimburse Sprint for transition and continuing operation costs.

The
"Sprint CPGA services" are services provided by Sprint relating to subscriber activation, credit verification, handset logistics and handset carrying, obsolescence and other costs.
The cost for Sprint CPGA services is included as a part of the total costs that we use to calculate the non-GAAP financial measure that we call "CPGA." Subject to our right to discontinue
receiving such service upon 180 days prior written notice, we have agreed to continue to purchase the Sprint CPGA services from Sprint PCS through December 31, 2010 at a monthly rate of
$19.00 per gross customer addition in all of our service areas for 2008 through 2010. We have also agreed that the monthly rate for 2011-2013 for Sprint CPGA services would be reset to a
mutually acceptable amount based on the amount necessary to recover Sprint PCS's reasonable costs for providing Sprint CPGA services.

Sprint
PCS may contract with third parties to provide expertise and services identical or similar to those to be made available or provided to us. We have agreed not to use the services
performed by Sprint PCS in connection with any other business or outside our markets. Sprint PCS must give us nine months' notice if it discontinues a significant service, including customer service,
billing or collections. If we wish to continue to receive that service, Sprint PCS will use commercially reasonable efforts to help us provide the service ourselves or find another vendor to provide
the service and to facilitate any transition.

We,
on the one hand, and Sprint PCS, on the other hand, have agreed to indemnify each other as well as affiliates, officers, directors and employees of the other against any and all
claims arising from violations by the indemnifying party of law or the services agreement except for any liabilities resulting from the negligence or willful misconduct of the person seeking to be
indemnified or its representatives. Our services agreements also provide that no party will be liable to the other party for special, indirect, incidental, exemplary, consequential or punitive
damages, or loss of profits arising from the relationship of the parties or the conduct of business under, or breach of, such services agreement except as may otherwise be required by the
indemnification provisions. Our services agreements automatically terminate upon termination of the associated management agreement, and
neither party may terminate the services agreement for any reason other than the termination of the associated management agreement.

The trademark and service mark license agreements.We have a non-transferable license to use, at no additional cost to us, the
Sprint and
Sprint PCS brand names and several other U.S. trademarks and service marks on Sprint PCS products and services. We believe that the Sprint and Sprint PCS brand names and symbols enjoy a high degree of
recognition, providing such companies an immediate benefit in the marketplace. The use of the licensed marks by us is subject to adherence to quality standards

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determined
by Sprint and use of the licensed marks in a manner that would not reflect adversely on the image of quality symbolized by the licensed marks. We have agreed to promptly notify Sprint and
Sprint PCS of any infringement of any of the licensed marks within our territory of which we become aware and to provide assistance to Sprint and Sprint PCS in connection with Sprint's enforcement of
its rights. We have agreed with Sprint and Sprint PCS that we and Sprint will each indemnify the other for losses incurred in connection with a material breach of the trademark license agreements. In
addition, we have agreed to indemnify Sprint and Sprint PCS from any loss suffered by reason of a third party claim arising from our use of the licensed marks or marketing, promotion, advertisement,
distribution, lease or sale of any Sprint PCS products and services other than losses arising solely out of our use of the licensed marks in compliance with the contractual guidelines.

Sprint
and Sprint PCS can terminate our trademark and service mark license agreements if we file for bankruptcy or materially breach such agreements or if the associated management
agreement is terminated. We can terminate our trademark and service mark license agreements upon Sprint's or Sprint PCS's abandonment of the licensed marks or if Sprint or Sprint PCS files for
bankruptcy or the associated management agreement is terminated. Sprint can assign its interests in the licensed marks to a third party if that third party agrees to be bound by the terms of the
company's trademark and service mark license agreements.

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REGULATORY ENVIRONMENT

Regulation of the Wireless Telecommunications Industry

The FCC can have a substantial impact upon entities that manage wireless personal communications services networks and/or provide
wireless personal communications services because the FCC regulates the licensing, construction, operation, acquisition and interconnection arrangements of wireless telecommunications networks in the
United States. Except as discussed below, Sprint, not us, holds the FCC licenses for the wireless services that we provide in our service territory. Therefore, most FCC regulations affecting the
combined business apply directly to Sprint, but are binding on us indirectly through contractual obligations.

Conditions of Wireless Personal Communications Services Licenses

Wireless personal communications services licenses are generally granted for ten-year terms conditioned upon timely
compliance with the FCC's build-out requirements. Pursuant to the FCC's build-out requirements, broadband wireless personal communications services licensees must construct
facilities that offer coverage to a certain percentage of the population in their licensed areas within particular
"benchmark" deadlines, or in certain cases can instead make a showing of "substantial service" within that benchmark period. If the build-out requirements are not met, wireless personal
communications services licenses could be forfeited. Sprint has made all of the required build-out showings and filed renewal applications for the personal communications services licenses
that we use for our PCS network.

Although
we use Sprint PCS's licenses to provide wireless service as a PCS Affiliate of Sprint, we own one FCC license for personal communications services for the Chillicothe, Ohio
market (the "Chillicothe license"), and a related FCC license for microwave radio backhaul/control facilities. On October 25, 2006, the FCC granted our application for renewal of the
Chillicothe license. The Chillicothe license does not currently play a role in our provision of personal communications services as a PCS Affiliate of Sprint and is for sale.

The
FCC also requires licensees to maintain control over their licenses, which means that Sprint must maintain a sufficient degree of supervisory power over our activities involving
Sprint's spectrum. Our affiliation agreements with Sprint PCS reflect an arrangement that the parties believe meet the FCC requirements for licensee control of licensed spectrum.

If
the FCC were to determine that any of our respective affiliation agreements with Sprint PCS need to be modified to increase the level of licensee control, the respective agreements
may be modified to cure any purported deficiency regarding licensee control of the licensed spectrum. However, the business arrangement between the respective parties may have to be restructured. The
FCC could also impose monetary penalties on Sprint, and possibly revoke one or more of the Sprint licenses. The FCC has been aware of the Sprint affiliation program since its inception in 1998 and has
not taken issue with its compliance thus far.

Wireless Personal Communications Services License Renewal

Wireless personal communications services licensees can renew their licenses for additional ten-year terms. Wireless
personal communications services renewal applications are not subject to auctions. However, under the FCC's rules, third parties may oppose renewal applications and/or file competing applications. If
one or more competing applications are filed, a renewal application will be subject to a comparative renewal hearing. The FCC's rules afford wireless personal communications services renewal
applicants involved in comparative renewal hearings with a "renewal expectancy." The

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renewal
expectancy is the most important comparative factor in a comparative renewal hearing and is applicable if the wireless personal communications services renewal applicant
has:



The
FCC's rules define "substantial service" in this context as service that is sound, favorable and substantially above the level of mediocre service that might minimally warrant
renewal. The FCC's renewal expectancy and procedures make it likely that Sprint will retain the wireless personal communications services licenses that we manage for the foreseeable future. It will
also help us to retain the Chillicothe personal communications services license we hold, if our business plan calls for retention of this license.

Federal Tower/Antenna Regulations

Sprint and the PCS Affiliates of Sprint must bear the expense of compliance with FCC and Federal Aviation Administration (FAA)
regulations regarding the siting,
painting, lighting and construction of transmitter towers and the mounting of antennae on new or existing structures. In addition, FCC environmental regulations may cause some of our base station
locations to become subject to the additional expense of regulation under the National Environmental Policy Act ("NEPA") and the National Historic Preservation Act ("NHPA"). The FCC is required to
implement these acts by requiring service providers to meet land use and radio emissions standards. In particular, the construction of a new tower, building or other structure to be used as an antenna
structure requires the owner of such structure to (1) perform an environmental assessment to ensure that the structure will not have a substantial effect on the environment, and will comply
with NEPA protections concerning wildlife preserves, Indian religious sites, endangered species habitats, flood plains, historic districts, etc.; (2) obtain State Historic Preservation Officer
("SHPO") approval of the structure, or verify that it qualifies for an exemption from this requirement under the National Programmatic Agreement governing antenna siting; (3) perform an
analysis to ensure that facilities using the structure will not violate the FCC's restrictions concerning the health effects of radio frequency radiation; and (4) determine if the structure
will affect the radiation pattern of nearby AM broadcast stations. Moreover, the mounting of an antenna on a new or existing structure requires the licensee to make the above determinations, with
respect to its antenna. Finally, if the construction of an antenna structure or mounting of an antenna involves the acquisition of land or construction of a fuel storage tank at the antenna site
(e.g., for use by a back up power generator), then the owner/licensee may have to take certain steps to ensure its compliance with the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"). The FCC and relevant authorities have entered into a second Programmatic Agreement in 2005, which will allow the construction of antenna towers in certain industrial and
other settings without SHPO approval.

Wireless Facilities Siting

States and localities are not permitted to regulate the placement of wireless facilities so as to "prohibit" the provision of wireless
services or to "discriminate" among providers of those services. In addition, so long as a wireless network complies with the FCC's rules, states and localities are prohibited from using radio
frequency health effects as a basis to regulate the placement, construction or operation of wireless facilities. These rules are designed to make it possible for Sprint and the PCS Affiliates of
Sprint and other wireless entities to acquire necessary tower sites in the face of local zoning opposition and delays. However, states may require wireless providers to demonstrate that they comply
with FCC regulations concerning the health effects of radio frequency radiation. In addition, state and local safety and aesthetic regulations/zoning ordinances apply to wireless providers, to the
extent that such regulations are not found by a court to prohibit the provision of wireless services or

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discriminate
among wireless providers. Moreover, wireless providers must seek State Historic Preservation Office approval of tower or antenna siting actions as described above; and wireless providers
must also make filings necessary to register to do business in each state in which they intend to operate.

Equal Access

Wireless providers are not required to provide long-distance carriers with equal access to wireless subscribers for the
provision of toll services. This enables us and Sprint to generate additional revenue by reselling the toll services of Sprint and other interexchange carriers from whom we can obtain favorable volume
discounts. However, the FCC is authorized to require unblocked access to toll service providers subject to certain conditions.

Hearing Aid Compatibility (HAC) Compliance

The FCC has adopted policies and rules that require providers of commercial mobile services to offer a minimum number or percentage of
wireless handsets models that have hearing aid compatibly ("HAC") features, and to engage in related public outreach and annual compliance reporting. The FCC's HAC policies and rules apply to us as a
result of our ownership of the Chillicothe license. These policies and rules also apply to Sprint, and Sprint now offers a wide variety of digital wireless handsets with HAC features. We generally
offer the same selection of handset models as Sprint, which is significantly greater than the minimum required by the FCC Rules. In July 2008, the FCC modified its HAC rules to require that all
Commercial Mobile Radio Service ("CMRS") providers must file compliance reports detailing the number and type of handsets they make available to the public and the HAC compliance rating of the
handsets annually. Our obligation to file annual HAC reports separate from Sprint will cease if we sell or otherwise dispose of the Chillicothe license. We filed the first report required by the
modified HAC rules in a timely fashion. Failure to do so in the future could subject us to administrative sanctions, and/or potential threat of civil suits by disgruntled customers seeking
HAC-compliant handsets.

Other State Regulation of Wireless Service

With the rapid growth and penetration of wireless services has come a commensurate surge of interest on the part of some state
legislatures and state public utility commissions in regulating our industry. State regulation has imposed limitations on customer billing, termination of service arrangements, advertising, filing of
"informational" tariffs, certification of operation, service coverage and quality, drivers' use of handsets, provision of emergency 911 service and many other areas. We anticipate that this trend will
continue. It will require us to devote resources to working with the states to respond to their concerns while minimizing any new regulation that could increase our costs of doing business.

Section 332
of the Communications Act preempts states from regulating the rates and entry of CMRS providers. However, states may petition the FCC to regulate the rates and entry
of those providers and the FCC may grant that petition if the state demonstrates that:



To
date, the FCC has granted no such petition.

Section 332
of the Communications Act does not prohibit a state from regulating the other "terms and conditions" of commercial mobile services, including consumer billing
information and practices,

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billing
disputes and other consumer protection matters. Several states have invoked this language to impose, or propose, various consumer-related regulations on the wireless industry such as rules
governing customer contracts and advertising. In some instances, state public service commissions still require CMRS providers to register, and to notify the commissions in the event of a change in
ownership or discontinuance of service. Prior notification to customers may also be required. States also may impose their own universal service support regimes on wireless and other
telecommunications carriers, similar to the requirements that have been established by the FCC.

To
the extent Sprint and the PCS Affiliates of Sprint provide fixed wireless loop service, we may be subject to additional state regulation. These standards and rulings have prevented
states from delaying the entry of wireless personal communications services and other wireless carriers into their jurisdictions via certification and similar requirements, and from delaying or
inhibiting aggressive or flexible wireless price competition after entry.

Protection of Customer Proprietary Network Information and Prevention of Identity Theft

The FCC regulates the handling and disclosure of a personal communications services customer's personal and usage information, known as
"Customer Proprietary Network Information" or "CPNI." The FCC now requires all wireless and wireline service providers, including resellers, to file annually with the FCC a certification of compliance
with the CPNI rules, and a statement describing in detail how compliance is achieved. The FCC and Congress have recently strengthened the requirements for safeguarding CPNI, in response to reports of
abuses of this information by persons engaging in identity theft and other improper practices. The new statutory and regulatory requirements (which can apply to us contractually and through our resale
of Sprint services) may create new costs and procedures for our operation. Steeper FCC fines and other sanctions can be expected for violations.

In
a similar vein, The Federal Trade Commission (FTC) has established "Red Flag" rules which are designed to prevent identity theft. Under the new rules, all businesses that maintain a
creditor-debtor relationship with customers, including virtually all telecommunications carriers, must adopt written procedures designed to detect the relevant warning signs of identify theft, and
implement an appropriate response. The new requirements apply to any "creditor" (which includes entities that defer payment for goods or services) that has "covered accounts" (accounts used mostly for
personal, family or household purposes). The FTC required the Red Flag compliance program to be in place by November 1, 2008, but later suspended enforcement of this requirement until
May 1, 2009. We have taken steps to implement a program to be in compliance with the Red Flag requirements. If an employee fails to comply with the new identity theft protection procedures, it
could expose us to regulatory sanctions and other liabilities. The existence of the new rules may tempt any customer that suffers identity theft to seek to bring us into any resulting litigation, even
if we followed the identity theft requirements.

Studies Concerning Health Effects of Personal Wireless Device Use

Certain research studies have suggested a link between the use of personal wireless devices and adverse health effects, including
cancer. There have been numerous studies on this subject before, and the results have been conflicting. Other studies have indicated that any potential for concern can be addressed by modifications to
the wireless devices. The wireless industry, including Sprint, is monitoring this issue. We will adjust our operations and sale of customer devices as advised by Sprint. In the event that a direct
linkage is demonstrated between personal wireless devices already sold by us and certain health conditions, we will have to address any resulting liability claims.

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Impact of Additional FCC Rule Makings on Competitive Environment

The FCC is in the process of finalizing rules for the auction of additional commercial wireless service spectrum, including Advanced
Wireless Service ("AWS") spectrum (the "AWS II" and "AWS III" bands), and the 700 MHz D Block spectrum. The auction of this spectrum may result in the introduction of additional wireless competitors
and/or the strengthening of existing competitors. One proposal under consideration by the FCC would require certain auction winners to provide wireless broadband access service to the public without
charge, which could force us to change our pricing for similar services.

The
FCC is also considering a Petition for Rulemaking filed by the Rural Cellular Association ("RCA") asking that the FCC restrict or prohibit exclusive handset arrangements entered into
between national carriers and manufacturers. Sprint has such an arrangement with Samsung for production of the Ace handset. If the FCC adopts restrictions on exclusive handset arrangements, it could
affect any competitive advantage enjoyed by Sprint (and by us as a Sprint affiliate) with regard to certain handsets such as the Ace. However, such restrictions would also negate the competitive
advantage enjoyed by our competitors through exclusive handset arrangements.

The
FCC adopted a November 14, 2008 order allowing unlicensed radio transmitters to operate in the TV Channels 2-51 at locations where that spectrum is not being used
by licensed services (TV "white spaces"). Theoretically, this action could allow off the shelf sales of unlicensed devices providing some of the same capabilities as we provide to our subscribers
using Sprint's licensed spectrum. However, the TV white space devices must operate at very low power levels and with other restrictions that will limit direct substitution of such devices for PCS
devices.

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ITEM 1A.    RISK FACTORS

Risks Related to Our Business, Strategy and Operations

We have a history of net losses and of being highly leveraged. We may incur additional losses in the future and our operating results have fluctuated and could continue to
fluctuate significantly on a quarterly and annual basis. Also, we may need to obtain further financing or refinance current debt, which may or may not be available to us on acceptable terms.

We sustained net losses of $9.8 million and $69.3 million for the years ended December 31, 2008 and 2007,
respectively. We may incur additional losses in the future while we continue to expend funds to enhance our wireless network, grow our customer base and defend our rights under our affiliation
agreements.

In
addition, our future operating results and cash flows will be subject to quarterly and annual fluctuations due to many factors, some of which are outside our control. These factors
include increased costs we may incur in connection with the further development, expansion and upgrade of our PCS network, additional growth to our subscriber base and fluctuations in the demands for
our services. We may not achieve or sustain profitability or positive cash flows. To the extent our quarterly or annual results of operations fluctuate significantly, we may be unable to satisfy our
debt obligations. Our inability to satisfy our obligations may result in our restructuring or bankruptcy.

We
are highly leveraged. Our substantial indebtedness could adversely affect our financial health by, among other things:



Additionally,
we may need additional borrowings to operate our business or we may have to refinance our current indebtedness at its final maturity. We cannot assure you that we will be
able to obtain needed financing or refinance current debt.

The restrictive covenants in our indentures may limit our operating flexibility. Our failure to comply with these covenants could result in defaults under our indentures
even though we may be able to meet our debt service obligations.

The indentures governing our senior secured notes impose significant operating and financial restrictions on us. These restrictions
significantly limit, among other things, our ability to incur additional indebtedness, pay dividends, repay junior indebtedness, sell assets, make investments, engage in transactions with affiliates,
engage in sale and leaseback transactions, create liens and engage in certain types of mergers or acquisitions. Any future debt instruments may have similar or more

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restrictive
covenants. These restrictions could limit our ability to obtain future financings, make capital expenditures, withstand a future downturn in our business or a continued or prolonged
downturn in the economy in general, or otherwise take advantage of business opportunities that may arise. If we fail to comply with these restrictions, holders of our senior secured notes could
declare a default under the terms of the relevant indenture even though we are able to meet debt service obligations and, because our indentures have cross-default and cross-acceleration provisions,
could cause all of our debt to become immediately due and payable.

We
cannot assure you that we would have sufficient funds available, or that we would have access to sufficient capital from other sources, to repay any accelerated debt. Even if we could
obtain additional financing, we cannot assure you that the terms would be favorable to us.

If we seek to accelerate our subscriber growth, we will incur significant up-front subscriber acquisition expense, which initially will result in reduced levels
of cash flows from operating activities as compared to our most recent prior periods.

Increasingly we must attract a greater proportion of our new subscribers from our competitors' existing subscriber bases rather than
first time purchaserswhich often necessitates higher up-front subscriber acquisition expense. In addition, to the extent our subscriber growth includes a higher percentage of
sub-prime credit
subscribers, our churn and bad debt expense may increase, and also may impair our ability to maintain and increase our revenue and cause a deterioration in our operating margin. Moreover, despite
incurring increased sales and marketing expense, we may not succeed in growing our subscriber base.

We rely on independent third parties for a sizable percentage of our distribution.

For the year ended December 31, 2008, approximately 70% of our gross subscriber additions originated from distribution channels
operated by third parties (Sprint co-branded, non-exclusive local third parties, national third party distributors, such as Wal-Mart, Best Buy and RadioShack, and
Sprint controlled and other). For the year ended December 31, 2008, approximately 8% of our gross subscriber additions were generated by RadioShack, while another approximately 19% were
generated by three Sprint co-branded dealers, including approximately 14% from one co-branded dealer. Although we believe that utilizing these independent third parties is
beneficial to us, it also presents a number of drawbacks, such as limited control. These independent third parties have a significant amount of flexibility in running their operations. Although we can
exercise limited control over Sprint co-branded and non-exclusive local third parties through our distribution agreements, we have much less control over national retailers as
their agreements are with Sprint. To the extent that these third parties do not perform well, experience financial difficulty, reduce their distribution points or emphasize our competitors' products
and services over Sprint PCS products and services, our results of operations may be adversely affected.

If we receive lower revenue or incur more fees than we anticipate for roaming with Sprint PCS and Sprint roaming partners, our results of operations may be negatively
affected.

Roaming revenue and expense accounted for a substantial portion of our overall revenue stream and operating expense, respectively, for
the year ended December 31, 2008. Although we do not receive data roaming revenue from Sprint PCS or pay data roaming expense to Sprint PCS effective January 1, 2008, the majority of our
roaming revenue is received when Sprint PCS subscribers based outside our territory use voice and 2G service on our network and the majority of our roaming expense is incurred when Sprint PCS
subscribers based in our territories use voice and 2G services on the Sprint network. We also receive roaming revenue when subscribers of Sprint roaming partners (such as Alltel) use voice and data
services on our wireless network and incur expense when Sprint subscribers within our territory use voice and data services on the networks of Sprint roaming partners. Since the

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ratio
of inbound to outbound voice roaming with Sprint PCS and Sprint roaming partners fluctuates from period to period and year to year, the margin we earn from the difference between roaming revenue
and roaming expense is difficult to predict. As our subscriber base grows, we expect to incur
more fees for roaming. Similarly, if Sprint's CDMA subscriber base fails to grow or declines, or if other carriers enhance their network coverage within our territory, merge (as have Alltel and
Verizon Wireless), or change their roaming arrangements in favor of another carrier, we would expect to receive lower roaming revenue. Additionally, Sprint PCS subscribers based in our territory may
spend more time outside our territoryresulting in us incurring more fees for voice roamingand wireless subscribers from outside our territory may spend less time in our
territory or may use our services lessresulting in us receiving lower revenue for voice roaming.

We have experienced and may continue to experience a high rate of subscriber turnover, which may continue to adversely affect our financial performance.

While our customer turnover rate, or "churn", was lower in 2008 relative to recent years, it has been and may continue to be higher
than the national industry average rate or our projections due to significant competition in the industry and weakened economic conditions, or other factors. A high rate of customer turnover adversely
affects our competitive position, liquidity and results of operations, especially because we subsidize a significant portion of the costs of initial purchases of handsets by new customers. Factors
that have contributed, and may contribute in the future, to higher churn include inability or unwillingness of customers to pay, resulting in involuntary deactivations, customer mix and credit class,
and, in particular, sub-prime credit class customers, customer credit terms, deposit requirements for sub-prime customers, number of customers receiving services under
contracts with terms of a year or greater, attractiveness of competitors' products, services and pricing, network coverage, call quality and related performance relative to competitors, customer
service, and other competitive factors.

We have experienced, and may continue to experience, a high level of bad debt expense that may continue to have an adverse effect on our results of operations and liquidity.

Due to weakened economic conditions, among other things, our bad debt expense has been and may continue to be higher than our
historical rate or projections. If we, together with Sprint, are unable to successfully manage the credit risk mix of our gross additions or manage our existing subscriber base accounts receivable
collections, our bad debt expense, results of operations and liquidity will be adversely affected.

If we lose the right to install our equipment on wireless towers or are unable to acquire new leases or renew expiring leases for wireless towers on favorable terms or at
all, our business and results of operations could be adversely impacted.

All of our base stations are installed on facilities that we lease from third parties pursuant to master agreements. The majority of
our leased tower sites are leased from a few tower companies; and as of December 31, 2008, approximately 66% of our tower sites were leased from three tower companies. If a master agreement
with one of these tower companies were to terminate, or if one of these tower companies were unable to support the use of its tower sites by us, we would have to find new sites or may be required to
rebuild the affected portion of our wireless network. In addition, the concentration of our tower leases with a limited number of tower companies could adversely affect our results of operations and
financial condition if we are unable to acquire new leases or renew our expiring leases with these tower companies either on favorable terms or at all. If any of the tower leasing companies with whom
we do business should experience severe financial difficulties, or file for bankruptcy protection, our ability to use our towers could be adversely affected. That, in turn, would

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adversely
affect our business, revenue and financial condition if a material number of towers were involved.

We depend on other telecommunications companies for some services that, if delayed or interrupted, could delay our expected increases in subscribers and revenue.

We depend on other telecommunications companies to provide facilities and transport to interconnect our wireless network and to connect
our wireless network with the landline telephone systems. Without these services, we could not offer Sprint PCS services to our subscribers in some areas. From time to time, we have experienced delays
in obtaining facilities and transport from some of these companies, and in obtaining local telephone numbers for use by our subscribers, which are sometimes in short supply, and we may continue to
experience delays and interruptions in our network operations and our business may suffer. Delays or interruptions could also result in a breach of our affiliation agreements with Sprint PCS,
subjecting these agreements to potential termination by Sprint PCS.

We rely exclusively on Nortel Networks for our network equipment. This equipment is generally not interchangeable or interoperable with network equipment from other
providers and we would be materially adversely affected if we could not obtain additional network equipment or support from Nortel Networks timely or at all and, in any event, cost effectively.

Our wireless network equipment is supplied solely by Nortel Networks. If additional equipment or support is needed for expansion or
repair of our network, it generally must come from Nortel Networks in order to be compatible with our existing network equipment. Nortel Networks filed for Chapter 11 bankruptcy protection in
January 2009. If Nortel Networks were to cease or delay supplying equipment or suspend warranty coverage, we could be prevented or delayed in expanding, repairing or supporting our network. Any
inability to expand or repair our network could have a material adverse effect on us. In addition, Nortel Networks, or any potential successor, potentially could exert significant bargaining power
over price, quality, warranty claims or other terms relating to its equipment, which could increase our operating or equipment acquisition costs. Additionally, if Nortel Networks has a significant
disruption in its business or liquidates, our business and results of operations would likely be negatively impacted.

Alternative or advanced technologies, including WiMax and LTE, and current uncertainties in the wireless and overall communications market may render the technology we use
obsolete or reduce demand for our products and services.

The wireless telecommunications industry continues to experience significant and rapid technological change, as evidenced by the pace
of upgrades in existing digital wireless systems, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products,
deployment of unlicensed spectrum devices and enhancements and changes in end-user requirements and preferences. We rely on Sprint to keep pace with these technological changes. If Sprint
is unable to keep pace with these technological changes or other changes in the wireless communications market, or fails to make those changes available to us, the CDMA technology used in our wireless
network or our business strategy may become obsolete. If we fail to implement significant technological changes or keep pace with Sprint's network technology, we may lose subscribers and/or roaming
revenue and our ability to maintain and increase revenue will be impaired.

The
convergence of wireless, landline telephone service, cable television and Internet access is also creating uncertainties in the overall communications market. The proliferation of
Wi-Fi, and the potential application of Worldwide Inter-Operability for Microwave Access ("WiMax") and/or Long Term Evolution ("LTE") technology, create additional uncertainty about how
customers will

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communicate
wirelessly in the future. Future wireless applications on current or future portions of the wireless spectrum may also reduce demand for the wireless products and services we offer for
Sprint.
In addition, Sprint continues to develop advanced technologies and delivery channels, such as its WiMax initiative with Clearwire and others, and its failure to share these technologies with us, as we
believe is required under our affiliation agreements, may have a material adverse effect on our business.

We anticipate we will require ongoing capital expenditures, and we may not have adequate capital resources to fund all of our desired capital expenditures.

We incur capital expenditures on an ongoing basis to maintain and upgrade our wireless network to remain technologically current and
competitive and to enhance the efficiency of our sales operations. We anticipate total capital expenditures for 2009 will be between $35.0 million and $45.0 million. Although we believe
that our cash and cash equivalents and operating cash flow will be sufficient to operate our business and fund our capital needs for at least the next twelve months, if it is not sufficient to fund
our capital expenditures for any reason, we may not be able to obtain additional funds and we may be forced to reduce our level of capital spending. The terms of the indentures governing our senior
secured notes limit our ability to incur additional indebtedness. Even if we are able to obtain additional funds, we may not be able to do so on favorable terms. If we do not have sufficient funds to
fund our capital expenditures, we may experience a material adverse effect on our business, financial condition and results of operations.

If we do not retain our key employees, our business may suffer.

Our future success depends in large part on the continued employment of our key employees. There is competition for qualified personnel
in our industry, and the limited availability of qualified individuals could become an issue of increasing concern in the future. Moreover, the uncertainty surrounding our relationship with Sprint,
including Sprint's acquisition of all but three PCS Affiliates of Sprint (including us), makes retention more difficult and makes it more expensive to fill vacancies. Our financial condition depends
upon qualified personnel successfully implementing our business plan. If we lose any of our key employees, our business could be materially adversely affected.

If the Employee Free Choice Act is adopted, it would be easier for our employees to obtain union representation and our businesses could be impacted.

Currently, none of our employees are represented by unions. However, our employees have the right at any time under the National Labor
Relations Act to form or affiliate with a union. Additionally, it is expected that the Employee Free Choice Act will be reintroduced in the new Congress. If reintroduced and enacted in its most recent
form, the Employee Free Choice Act would: (1) allow unions to become the representative of previously unrepresented employees by getting so-called "authorization cards" signed by a
majority of the employees involved, without requiring the union to go through a secret ballot election; (2) require binding arbitration upon an employer and the union if they were unable to
negotiate a first contract within specified timelines; and (3) impose new penalties on employers who violate provisions of the Act. If we experience any labor disruptions or if some or all of
our workforce were to become unionized and the terms of the collective bargaining agreement were significantly different from our current compensation arrangements, it could have a material adverse
effect on our business, financial condition and results of operation.

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Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could result in a loss of investor confidence regarding our
financial reports or may have a material adverse effect on our business.

We are required to comply with the reporting requirements of Section 404 of the Sarbanes-Oxley Act of 2002. In doing so, we may
identify significant deficiencies or errors that are not currently known to us. As a public company, we are required to report, among other things, control deficiencies that constitute a "material
weakness" or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting. A "material weakness" is a significant deficiency or
combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Testing
and maintaining internal controls can divert our management's attention from other matters that are important to our business. We may not be able to conclude on an ongoing basis
that we have effective internal controls over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not be able or willing to issue a
favorable assessment if we conclude that our internal controls over financial reporting are ineffective. If we are unable to conclude that we have effective internal controls over financial reporting
or our independent registered public accounting firm is unable to provide us with an unqualified report as required by Section 404, investors could lose confidence in our reported financial
information and our company, which could negatively impact the value of our securities and could impact our ability to raise additional financing if needed in the future.

Our business could be negatively impacted by security threats and other disruptions.

Major equipment failures, natural disasters, including severe weather, terrorist acts, cyber attacks or other breaches of network or
information technology security that affect our wireless network, including communication switches, cell sites or other equipment, or that affect Sprint's networks or third-party owned local and
long-distance networks on which we rely, could have a material adverse effect on our operations. These events could disrupt our operations, require significant resources, result in a loss
of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

Failure to maintain the integrity of customer data could damage our reputation and/or subject us to costs, fines or lawsuits.

We collect or have access to personally identifiable information relating to our customers when we are activating or servicing these
customers. Similarly, Sprint maintains this information on an ongoing basis and also has access to it when similarly activating or servicing these customers. The integrity and privacy of our
customers' information is important to us and our customers have a high expectation that we, and Sprint, will adequately protect their personal information. The regulatory environment governing
privacy laws is increasingly demanding and privacy laws continue to evolve and on occasion may be inconsistent from one jurisdiction to another. Non-compliance with applicable privacy
regulations by us or Sprint (or in some circumstances non-compliance by third parties engaged by us or Sprint), breach of security on systems storing our customer data, a loss of customer
data or fraudulent use of customer data could aversely impact Sprint's, and our, reputation, and/or result in fines or other damages and litigation.

We depend on roaming revenue from resellers of Sprint PCS services for a portion of our revenue.

Resellers of Sprint PCS services, such as Virgin Mobile, are subject to a number of risks, including high churn, high bad debt expense,
increased competition, dependence on fourth quarter gross additions and reliance, in many cases, on specific segments of the market, for example, the youth

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segment.
In the past few years, a number of resellers, including Disney Mobile and ESPN Mobile, ceased providing service, reflecting the increasingly competitive environment for resellers. We are not
party to any underlying agreements that these resellers have with Sprint and therefore, subject to certain exceptions, are generally unable to set prices or otherwise monitor the performance of the
resellers. Additionally, the resellers using the Sprint network change from time to time and such changes are outside of our control. If a reseller, particularly Virgin Mobile, has a disruption in its
business plan, experiences financial difficulties, ceases to grow or service its customer base or contracts with another wireless provider for its service, we may lose the related revenue and it may
make it more difficult for us to obtain sufficient revenue to achieve and sustain profitability.

Anti-takeover and other provisions affecting us could prevent or delay a change of control that is beneficial to our shareholders.

Certain provisions of our debt instruments and other agreements and provisions of applicable Delaware law and applicable Federal and
state regulations may discourage, delay or prevent a merger or other change of control that holders of our securities may consider favorable. These provisions could:



Our stock price is highly volatile.

The market price of our stock is highly volatile and subject to wide fluctuations in response to factors such as the following, some of
which are beyond our control:



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Stock
markets in the United States often experience extreme price and volume fluctuations. Market fluctuations, as well as general economic or political conditions such as recession,
interest rate fluctuations or acts of terrorism, could adversely affect the market price of our stock.

Risks Related to Our Relationship with Sprint PCS

If Sprint does not succeed, our business may not succeed.

As a PCS Affiliate of Sprint, we are dependent upon Sprint for many aspects of our business, including the brand name under which we
operate, the spectrum that we use and the nationwide wireless network outside of our territory. From the subscribers' point of view, we are "Sprint" in our markets and they use our wireless network
and the rest of the Sprint PCS network as a unified network. Sprint's performance and brand reputation nationwideover which we have no controlimpacts our performance. If
Sprint has a significant disruption to its business plan or wireless network, fails to attract and retain subscribers or otherwise operate its business in an efficient manner or suffers a continued
weakening of its brand name, our business and results of operations would likely be negatively impacted. If Sprint should have significant financial problems, including bankruptcy, our business would
suffer material adverse consequences, which could include termination or revision of our affiliation agreements with Sprint PCS.

We depend on Sprint to offer competitive products and services.

We are required to offer Sprint products and services designated for regional or national offerings. We are reliant upon Sprint to
determine what products and services to offer to remain competitive in the wireless marketplace. We are also dependent upon Sprint to remain technologically competitive. We are required to offer PCS
subscriber pricing plans from Sprint PCS designated for regional or national offerings, such as Sprint's "Everything" plans. Sprint PCS prices subscriber pricing plans based on its own objectives and
could set price levels or change other characteristics of its plans in a way that may not be economically advantageous for our business, which would result in decreased revenue and/or increased
expense. Sprint may attempt to gain or maintain market share in the wireless business by competing on the basis of price, which could decrease our revenue.

Our
dependence on Sprint PCS to develop competitive products and services and the requirement that we obtain Sprint PCS' consent to sell non-Sprint approved equipment limits
our ability to keep pace with our competitors on the introduction of new products, services and equipment. All suppliers of handsets used in our business license intellectual property from Qualcomm,
some of which has been found to infringe on certain patents owned by Broadcom Corporation. If Qualcomm does not resolve this issue, we may be unable to use handsets that are subject to these claims,
including handsets that utilize Qualcomm's Q-Chat® technology. Some of our competitors are larger than us, possess greater resources and more extensive coverage areas, and may
market other services, such as landline telephone service, cable television and Internet access, along with their wireless communications services. If Sprint does not develop new technology to compete
with technology developed by our competitors, or fails to make available, whether or not permitted by our affiliation agreements, technology it has developed or is developing, our ability to compete
will suffer. Additionally, if Sprint is unable to remain competitive in the negotiation of exclusivity agreements with vendors surrounding the introduction of popular new handsets, our ability to
attract and retain subscribers will suffer.

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We may have difficulty in obtaining an adequate supply of handsets from Sprint.

We are dependent on Sprint for our supply of handsets. Sprint orders handsets from various manufacturers. We could have difficulty
obtaining specific types of handsets in a timely manner if:



The
occurrence of any of the foregoing could hinder our ability to attract or retain subscribers.

We rely on Sprint to remit cash due to us.

Whether or not permitted by our affiliation agreements, Sprint may withhold or delay cash due to us, and in the past we have had
disputes with Sprint relating to the amount of cash Sprint is required to pay us. If Sprint's financial condition deteriorates, or if for other reasons it withholds or extends the timing of
contractual payments due to us, our working capital requirements could increase, which could have a negative impact on our results of operations and liquidity.

The wireless spectrum that we use is licensed to Sprint, not us.

Sprint PCS, not us, holds the licenses necessary to provide wireless services in our territory. We do not have any spectrum licenses
that are used in our business. The FCC requires that licensees like Sprint PCS maintain control of their licensed systems and not delegate control to third-party operators or managers without the
FCC's consent. If Sprint PCS does not maintain control over its licensed spectrum, our affiliation agreements with Sprint PCS may be terminated which will negatively affect our operating results. Our
affiliation agreements with Sprint PCS reflect an arrangement that the parties believe meets the FCC requirements for licensee control of licensed spectrum. However, if the FCC were to determine that
any of our affiliation agreements with Sprint PCS need to be modified to increase the level of licensee control, we have agreed with Sprint PCS to use our best efforts to modify the agreements to
comply with applicable law. If we cannot agree with Sprint PCS to modify the agreements, those agreements may be terminated. If the agreements are
terminated, we would no longer be a part of the Sprint PCS network and we would not be able to conduct our business. If Sprint PCS loses its licenses in our territory, we would not be able to provide
wireless services without obtaining rights to other licenses.

We rely on Sprint to provide wireless service outside of our territory.

We rely on Sprint to provide nationwide service to the subscribers based in our territory through its own PCS network and through
roaming arrangements with third parties that it controls. If Sprint loses its roaming arrangements with third parties, subscribers based in our territory would not have coverage outside of the Sprint
PCS network. If Sprint PCS loses its wireless licenses outside our territory, Sprint PCS or the applicable PCS Affiliate of Sprint would not be able to provide wireless

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services
without obtaining rights to other licenses and our ability to offer nationwide calling plans would be diminished and potentially more costly.

We rely on Sprint's internal support systems.

We rely on Sprint PCS's internal support systems, including customer care, billing and back office support. In addition, we rely on
Sprint for the proper application of credit policies, the processing and collection of receivables and bad debt collection, as well as the communication of certain subscriber, financial, marketing and
operational information to us. Pursuant to our affiliation agreements with Sprint PCS, the fees we pay for these services are set through 2010. Accordingly, we will not benefit if Sprint is able to
reduce its cost of providing these services.

Problems
with Sprint PCS' internal support systems could cause, among other things:



Sprint
PCS has the right to terminate any service provided under our affiliation agreements upon nine months' prior written notice; provided, however, that if we desire to continue
receiving such service, Sprint PCS has agreed that it will assist us in developing that function internally or locating a third-party vendor that will provide that service. Although Sprint PCS has
agreed that if it terminates the services, it will reimburse us for expenses we incur in transitioning to any service internally or to a third party, if Sprint PCS terminates a service for which we
have not developed or are unable to develop a cost-effective alternative, our operating costs may increase beyond our expectations and our operations may be interrupted or restricted. We
do not currently have a contingency plan if Sprint PCS terminates a service we currently receive from it or if we cannot reach agreement with Sprint on new rates.

Following
the merger between Sprint and Nextel, the internal support systems of Sprint and Nextel were integrated, which included the 2008 migration of subscribers, including subscribers
in our territory, onto a common platform for billing and customer care, called Ensemble. We believe that the conversion to Ensemble and its related reporting systems during 2008 resulted in issues
that have had an adverse impact on our subscriber activity and financial results, some of which we formally disputed in 2008 as they relate to 2008 and subsequently resolved in late 2008 and early
2009. If the same or other issues with Ensemble continue to arise and are not resolved in a timely manner, our business would continue to be negatively impacted.

We rely upon the accuracy of Sprint's financial reporting.

The data provided to us by Sprint related to the back-office functions it performs for us is the primary source for our
service, roaming and reseller revenues, and for a significant portion of our cost of service and roaming, and selling and marketing expense included in our statement of operations. We use this data to
record our financial results and prepare our financial statements. If Sprint fails to deliver timely and accurate information, this may lead us to make adverse decisions and inaccurate assumptions for
future business plans and could also negatively affect our cash flows as Sprint collects our receivables and remits a net amount to us that is based on the financial information it provides. At times
we have experienced delays and inaccuracies in certain data provided by Sprint. Resolution of these delays and inaccuracies under the dispute provisions of our affiliation agreements can span

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months
or longer. Delays and inaccuracies which are material could adversely affect the effectiveness of our disclosure controls and procedures and if we later identify material errors in that data
provided to us, or material variances from estimated amounts in delayed data provided to us, we may be required to restate our financial statements. If that occurs to us or any other PCS Affiliate of
Sprint, investors and securities analysts may lose confidence in us and Sprint.

The Sprint PCS affiliate program has been reduced to a few affiliates and Sprint's ongoing commitment to the program is unknown.

Sprint's 2005 merger with Nextel and the litigation involving Sprint and the PCS Affiliates that followed resulted, directly or
indirectly, in Sprint's acquisition of nearly all of the PCS Affiliates of Sprint. One remaining PCS Affiliate of Sprint, Shenandoah Telecommunications Company ("Shentel"), amended its affiliation
agreements with Sprint in March 2007 to, among other things, simplify the methods used to settle revenue and expense between it and Sprint. As a result of Sprint's acquisitions of PCS Affiliates and
Shentel's revised affiliate relationship, Sprint's ongoing commitment to the affiliate program as historically structured is unknown. As Sprint implements newer systems, such as Ensemble, they may
design these systems with limited regard as to the separate and distinct needs of the Sprint affiliate program that will rely on them. Similarly, as the size of the Sprint Affiliate program has
diminished, so may awareness of Affiliate marketing, operational and other informational needs within the Sprint organization. In addition, Sprint may not devote as much, or the same quality, of its
personnel and resources to us and the other two remaining PCS Affiliates of Sprint as it has historically provided. Individually or together, these issues could make it more difficult for the
resources Sprint continues to commit to the Affiliate program, to provide to us its obligated services under our affiliation agreements. Any failure by Sprint to fully satisfy its obligations as to
services provided under our affiliation agreements would have an adverse effect on our business and results of operations. We and Sprint may agree to further modify our affiliate relationship in ways
that could further alter our current business plan and projections.

Our business depends on the continued effectiveness of our affiliation agreements with Sprint PCS.

The terms of our relationship with Sprint PCS are set forth in our affiliation agreements with Sprint PCS. Our affiliation agreements
require that we meet and maintain various requirements with respect to network coverage and technical and customer service requirements. Failure to meet and maintain these requirements could
constitute a material breach of our affiliation agreements. If these agreements were to be terminated or otherwise rendered ineffective, or if Sprint PCS fails to perform its obligations under these
agreements, our ability to conduct business or to compete in an effective manner would be severely impacted. Our affiliation agreements provide that, upon the occurrence of an event of termination
caused by our breach of such agreements, Sprint PCS has the right to, among other things, purchase our operating assets without stockholder approval and for a price equal to 72% of our "entire
business value," which is our appraised value determined using certain principles set forth in our affiliation agreements with Sprint PCS and based on the price a willing buyer would pay a willing
seller for our entire business as a going concern. See "Part I, Item 1. BusinessAffiliation Agreements with Sprint PCS" for a description of how we calculate our entire
business value.

Sprint may alter the requirements in our affiliation agreements in a manner that requires us to incur increased capital expenditures and other expenses.

Pursuant to our affiliation agreements with Sprint, we are required to meet and maintain various requirements with respect to network
coverage and technical and customer service requirements. Subject to certain limitations set forth in our affiliation agreements, Sprint may alter its network and technical requirements or request
that we build out additional areas within our territory, which could result in us incurring substantial additional costs to remain in compliance with such requirements. If we

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do
not have the necessary funds for this purpose, we may seek to incur additional indebtedness. Our existing substantial indebtedness could limit our ability to obtain any additional financing that we
may seek. Moreover, if Sprint determines that we are not in compliance with applicable requirements, our ability to obtain additional financing could be negatively impacted. If we cannot obtain any
necessary additional financing, we may be unable to remedy such noncompliance, thereby resulting in a material breach of our affiliation agreements which could lead to their termination by Sprint PCS.
If Sprint PCS terminates our affiliation agreements, our ability to conduct business would be severely impacted.

Sprint has limited approval rights with respect to certain corporate transactions.

Sprint PCS has the right to withhold its consent to any transaction in which the "ultimate parent" of any of our operating subsidiaries
that is the party to the affiliation agreements with Sprint PCS, changes. We must obtain the consent of Sprint PCS prior to any assignment by us of our affiliation agreements with it. Sprint PCS also
has a right of first refusal if we decide to sell our operating assets to a third party. We are also subject to a number of restrictions on the transfer of our business, including a prohibition on the
sale of our operating assets to competitors of Sprint PCS. These restrictions and the other restrictions contained in our affiliation agreements with Sprint PCS restrict our ability to sell our
business, may reduce the value a buyer would be willing to pay for our business, and may reduce our "entire business value," which is our appraised value determined using principles set forth in our
affiliation agreements with Sprint PCS and based on the price a willing buyer would pay a willing seller for our entire business as a going concern.

Parts of our territory have limited licensed spectrum, which may adversely affect the quality of our service.

In the majority of our markets, Sprint PCS has licenses covering 20 MHz or 30 MHz of spectrum. However, Sprint PCS has licenses
covering only 10 MHz in approximately 13% of our territory, which represents approximately 1.9 million out of a total population of approximately 15.1 million residents in our territory.
In the future, as our subscriber base increases in those areas, or as usage increases, this limited licensed spectrum may not be able to accommodate increases in call volume or changes or upgrades in
technology, including our current third generation EV-DO Rev. A technology or any future fourth generation technology, and may lead to increased dropped calls and may limit our ability to
offer enhanced services. We may also have to increase our capital expenditures and/or operating expense in an attempt to compensate for this lack of licensed spectrum. It is more difficult and
expensive to deploy EV-DO Rev. A in these markets, and, as a result, we may not be able to remain technologically competitive in these markets.

Sprint's compliance with the ruling of the Delaware Court of Chancery and the final judgment and orders of the Circuit Court of Cook County, Illinois may have an adverse
effect on us in ways beyond our control.

We engaged in litigation with Sprint regarding its 2005 merger with Nextel. Sprint's operation of the legacy Nextel business in our
territory is subject to the Delaware Court of Chancery's August 2006 ruling and the protections for our benefit in the September 2006 order of the Circuit Court of Cook County, Illinois (the
"Circuit Court"). Both the Delaware and Illinois rulings are final.

The
Delaware ruling does not protect us from all of the ways in which Sprint may operate the legacy Nextel business in a manner that would have a material adverse effect on us. This
ruling applies to our Horizon and Bright operating subsidiaries and the service areas in which they operate. To the extent that Sprint desires to exploit limitations of the Delaware ruling, our
business may be adversely affected. For example, the ruling provides that Sprint may engage in limited re-branding of the legacy Nextel stores in our Horizon and Bright service areas. We
do not know how or if Sprint will attempt to re-brand the legacy Nextel stores in our service area. Additionally, in light of certain representations that Sprint made to the Delaware
court, the ruling does not impose additional restrictions on Sprint's use of our confidential information. It is difficult for us to monitor Sprint's compliance with its

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representations
as to confidentiality. If we believe that Sprint is violating the Delaware ruling, we may need to enforce the ruling through legal proceedings in Delaware.

The
Illinois ruling provides that Sprint and those acting in concert with it must cease owning, operating and managing the Nextel wireless network in our subsidiary iPCS
Wireless, Inc.'s service area on or before January 25, 2010. Sprint must also continue to abide by the terms of the Forbearance Agreement between iPCS Wireless, Inc. and Sprint
which sets forth certain limitations on Sprint's operations following its merger with Nextel. While we are committed to defending our rights and aggressively seeking to ensure Sprint's compliance with
the Circuit Court's order, attempts by Sprint to evade or further delay complying with the requirements of the Circuit Court's order could result in further delays and an adverse effect on our
business and operations.

We
believe that our stock price has been, and continues to be, affected by market speculation involving potential changes in our relationship with Sprint as a result of, among other
things, the Sprint-Nextel merger and the final outcome of our disputes with Sprint, including the Circuit Court's ruling in the Nextel merger litigation. Accordingly, the price of our common stock has
been, and may continue to be, volatile.

The final outcome of our litigation relating to the Sprint-Clearwire transaction may have an adverse effect on us in ways that would be beyond our control.

We have been, and continue to be, engaged in litigation with Sprint regarding its 2008 Sprint-Clearwire transaction, through which
Sprint is developing a nationwide mobile WiMax network. We intend to continue to vigorously protect and enforce our rights, but there is no assurance that we will prevail. We do not know Sprint's
intentions for complying with any future ruling related to the Sprint-Clearwire transaction, and the impact of Sprint's actions or inactions in either case on our business.

Risks Related to the Wireless Telecommunications Industry

The FCC may fail to renew the wireless licenses that we use, which would prevent us from providing wireless services.

Wireless licenses, including the ones issued to Sprint that we use, are subject to renewal and revocation by the FCC. The FCC has
adopted specific standards that apply to wireless personal communications services license renewals. Any failure to comply with these standards could result in the non-renewal of the
licenses.

Regulation by government agencies and taxing authorities may increase our costs of providing service or require us to change our services.

Our operations and those of Sprint PCS are subject to varying degrees of regulation by the FCC, the Federal Trade Commission, the
Federal Aviation Administration, the Environmental Protection Agency, the Occupational Safety and Health Administration, and state and local regulatory agencies and legislative bodies. Adverse
decisions or regulations of these regulatory bodies could negatively impact our operations and those of Sprint PCS, thereby hindering or increasing the costs of doing business. For example, changes in
tax laws or the interpretation of existing tax laws by state and local authorities could subject us to increased income, sales, gross receipts or other tax costs or require us to alter the structure
of our current relationship with Sprint PCS.

Concerns over health risks and safety posed by the use of wireless handsets may reduce consumer demand for our services.

Media reports have suggested that radio frequency emissions from wireless handsets may:



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Widespread
concerns over radio frequency emissions may expose us to potential litigation. To the extent we are named in any such litigation, we will be forced to defend ourselves. If we
do not prevail in such litigation, or are forced to pay damages, we could experience a material adverse effect on our business, financial condition or results of operations. Such concerns may also
discourage the use of wireless handsets or result in additional regulation imposing restrictions or increasing requirements on the location and operation of cell sites or the use or design of wireless
handsets. Any resulting decrease in demand for these services or increase in the cost of complying with additional regulations could impair our ability to profitably operate our business. Such
concerns may result in the loss of subscribers, which may impair our ability to maintain and increase revenue and lower our operating margin. In addition, we may need to dedicate a larger portion of
any cash flow from our operating activities to comply with such additional regulations.

Due
to safety concerns, some state and local legislatures have passed or are considering legislation restricting the use of wireless telephones while driving automobiles. Concerns over
safety risks and the effect of future legislation, if adopted in the areas we serve, could limit our ability to market and sell our wireless services. In addition, it may discourage use of our
wireless devices and decrease our revenue from subscribers who now use their wireless telephones while driving. Further, litigation relating to accidents, deaths or serious bodily injuries allegedly
incurred as a result of wireless telephone use while driving could result in damage awards, adverse publicity and further governmental regulation.

Market saturation could limit or decrease our rate of new subscriber additions and increase costs to keep our current subscribers.

Intense competition in the wireless telecommunications industry could cause prices for wireless products and services to continue to
decline. If prices drop, our rate of net subscriber additions will take on greater significance in improving our financial condition and results of operations. However, as our and our competitors'
penetration rates in our markets increase over time, our rate of adding net subscribers could decrease or we could lose net subscribers. If a decrease in net subscriber additions or our subscriber
base were to happen, it could materially adversely affect our liquidity, financial condition and results of operations. In addition, we may incur additional costs through equipment upgrades and other
retention costs to keep our current subscribers from switching to our competitors.

Significant competition in the wireless telecommunications industry may result in our competitors offering new services or lower prices, which could prevent us from
operating profitably and may cause prices for our services to continue to decline in the future.

Competition in the wireless telecommunications industry is intense. Competition has caused, and we anticipate that competition will
continue to cause, the market prices for two-way wireless products and services to decline. Our ability to compete will depend, in part, on our ability to anticipate and respond to various
competitive factors affecting the wireless telecommunications industry. If prices for our services continue to decline, it could adversely affect our ability to increase revenue, which would have a
material adverse effect on our financial condition and our results of operations. In addition, the viability of our business depends upon, among other things, our ability to compete with other
wireless providers on reliability, quality and speed of service, availability of voice and data features and customer care, as well as on costs to implement and service respective technology
platforms. Prepaid and unlimited minute plans, including those offered by Sprint and several other national wireless carriers, also continue to increase in popularity, offering consumers more
alternatives and potentially putting more downward pressure on wireless service pricing as well as potentially increasing our

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expense
of providing service. In addition, the pricing of our services may be affected by competition, including the entry of new service providers into our markets. Furthermore, there has been a
trend in the wireless telecommunications industry toward consolidation of wireless service providers, which we expect to lead to larger competitors over time, who would benefit from increasing
economies of scale. The recent merger of Verizon Wireless and Alltel, the two largest CDMA-format wireless service providers besides Sprint, could make it more difficult to obtain fair
roaming terms for our customers in those areas not served by the Sprint network. Proposals by the FCC to sell more wireless mobility spectrum and perhaps require certain licensees to provide wireless
broadband service free of charge could further increase competitive pressures on our business, as could the FCC's decision to allow sale of unlicensed devices that may provide some of the same
capabilities as the wireless handsets we provide to our customers.

We are a consumer business and a prolonged economic downturn in the United States involving significantly lowered consumer spending could negatively affect our results of
operations.

Our primary subscriber base is composed of individual consumers, and in the event of a prolonged economic downturn in the United States
or in our markets in which spending by individual consumers drops significantly, our current and potential subscribers may be unable or unwilling to purchase wireless services or pay their wireless
service bills and our business may be negatively affected.

We
are also exposed to risks associated with the potential financial instability of Sprint and other Affiliates of Sprint, our resellers, including Virgin Mobile, our third party
distributors and our suppliers, most notably Nortel Networks, many of whom may be adversely affected by a prolonged economic downturn in the United States. The financial difficulty or failure of any
of these entities would negatively affect our results of operations and, in the case of Sprint, disrupt our business operations. If Sprint was having difficulties as a result of such an economic
downturn, handset manufacturers may be more cautious in committing to exclusive handset agreements with Sprint or generally in supplying handsets to Sprint, which could negatively affect our ability
to attract and retain subscribers. Similarly, potentially in response to economic conditions, Sprint, whether permitted under our affiliation agreements or not, may reduce the level of support it
provides to us or may make business decisions that negatively affect our results from operations.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.    PROPERTIES

As of December 31, 2008, we own land and a building in Erie, PA that houses one of our switching centers. We lease office space
in various locations, including our corporate headquarters in Schaumburg, Illinois. We also lease locations for our retail stores, our other switching centers and space on wireless towers for our base
stations. As of December 31, 2008, we leased 40 retail stores, four switching centers and space on approximately 1,875 wireless structures, primarily towers. Our four leased switching centers
are located in: Davenport, IA; Kentwood, MI; Fort Wayne, IN; and Johnson City, TN. We believe that our facilities are adequate for our current operations and that additional leased space can be
obtained if needed on commercially reasonable terms.

The
following table provides certain information concerning our switch locations:

Location

Lease/
Own

Lease Expiration
Date

Renewal OptionsErie, PA

Owned



Davenport, IA

Leased

9/30/2015

NoneKentwood, MI

Leased

4/30/2011

Two additional five years termsFort Wayne, IN

Leased

11/30/2009

Three additional five year termsJohnson City, TN

Leased

1/10/2010

Four additional five year terms


As
of December 31, 2008, substantially all of our assets are pledged as collateral to secure our obligation to repay our senior secured notes (see Note 6,
Long-Term Debt and Capital Lease Obligations, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K).

ITEM 3.    LEGAL PROCEEDINGS

Sprint/Nextel Merger Litigation.On July 15, 2005, our wholly owned subsidiary, iPCS Wireless, Inc., filed a complaint against
Sprint
and Sprint PCS in the Circuit Court of Cook County, Illinois (the "Circuit Court"). The complaint alleged, among other things, that Sprint's conduct following the consummation of the merger between
Sprint and Nextel would breach Sprint's exclusivity obligations to iPCS Wireless under its affiliation agreements with Sprint PCS. On August 14, 2006, the Circuit Court issued its decision and
on September 20, 2006, the Circuit Court issued a final order effecting its decision. The final order provided that:



On
September 28, 2006, Sprint appealed the ruling to the Appellate Court of Illinois, First Judicial District (the "Appellate Court"), and, at Sprint's request, the Circuit
Court's ruling was stayed by the Appellate Court pending the appeal. On March 31, 2008, the Appellate Court unanimously affirmed the 2006 Circuit Court decision. On May 5, 2008, Sprint
filed a petition for leave to appeal with the Supreme Court of Illinois. On September 24, 2008, the Supreme Court of Illinois (the "Supreme Court") denied Sprint's petition for leave to appeal
the Appellate Court's decision.

On
Sprint's motion for reconsideration, the Supreme Court again denied Sprint's petition for leave to appeal on November 12, 2008. The Supreme Court directed the Circuit Court to
modify its order of September 20, 2006, in the following manner:



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On
January 30, 2009, the Circuit Court entered its final order, as directed by the Supreme Court, providing that:



On
September 22, 2008, Sprint also filed a petition with the Circuit Court seeking to vacate that Court's original order. On January 20, 2009, the Circuit Court denied
Sprint's petition with prejudice. On February 18, 2009, Sprint appealed the decision of the Circuit Court relating to its denial of Sprint's petition to vacate to the Appellate Court. The
appeal process is ongoing.

Sprint/Clearwire Transaction Litigation.On May 7, 2008, Sprint announced a transaction among itself, Clearwire Corporation, and
certain other
parties (the "Sprint-Clearwire Transaction") to form a new competing network ("New Clearwire"), pursuant to which transaction Sprint transferred its 4G technology to the New Clearwire. The same
day, Sprint filed a complaint for declaratory judgment against iPCS and certain of its subsidiaries, iPCS Wireless, Horizon Personal Communications, Inc. and Bright Personal Communications
Services, LLC (collectively, the "iPCS Subsidiaries") in the Court of Chancery of the State of Delaware (the "Delaware Chancery Court"). In that lawsuit, Sprint sought a declaration that the
Sprint-Clearwire Transaction would not constitute a breach of the Sprint affiliation agreements it has with the iPCS Subsidiaries.

On
May 12, 2008, the iPCS Subsidiaries filed a lawsuit against Sprint and certain of its affiliates in the Circuit Court, seeking declaratory and injunctive relief with respect to
the Sprint-Clearwire Transaction. In that case, the iPCS Subsidiaries sought a declaration that the Sprint-Clearwire Transaction constitutes a breach of Sprint's affiliation agreements it has with
those subsidiaries, and also sought an
injunction barring Sprint from closing on the Sprint-Clearwire Transaction until it complied with the affiliation agreements.

On
July 14, 2008, the Delaware Chancery Court granted the motion to dismiss filed by our Bright and Horizon subsidiaries and dismissed them from the Delaware litigation. Pursuant
to a motion filed by iPCS and iPCS Wireless, on October 8, 2008, the Delaware Chancery Court stayed all remaining Delaware litigation in favor of the lawsuit brought in Illinois by the iPCS
Subsidiaries.

On
November 3, 2008, the iPCS Subsidiaries filed a motion for preliminary injunction in the Circuit Court seeking to prevent Sprint from consummating the Sprint-Clearwire
Transaction until such time that the Circuit Court could rule on the merits of the underlying litigation brought by the iPCS Subsidiaries against Sprint. On November 17, 2008, the iPCS
Subsidiaries, Sprint, and New Clearwire, reached a stipulation pursuant to which the iPCS Subsidiaries withdrew their motion for preliminary injunction without prejudice, and the Sprint-Clearwire
Transaction closed on November 28, 2008. In connection with the withdrawal of the motion by the iPCS Subsidiaries: (i) New Clearwire stipulated that it did not presently intend to
commercially launch its 4G network, sell products or services, or promote products or services that are available for sale in any part of the iPCS Subsidiaries' territories prior to July 1,
2009, (ii) New Clearwire stipulated that it would give the iPCS Subsidiaries at least

41

---



60 days
advance written notice before any commercial launch of its 4G network, sale of products or services or promotion of products or services that are offered for sale in any part of the
iPCS Subsidiaries service areas if it plans to do so before entry of a final and appealable judgment by the Circuit Court in the underlying action by the iPCS Subsidiaries against Sprint, and
(iii) New Clearwire and Sprint stipulated that neither of them nor any of their controlled affiliates would raise the fact that the Sprint-Clearwire Transaction had closed as a basis for
opposing any remedy proposed by the iPCS Subsidiaries or granted by the Circuit Court.

On
December 30, 2008, the Circuit Court issued a decision on a motion for partial summary judgment filed by iPCS Wireless that sought partial summary judgment based on the 2006
decision in the Illinois Sprint/Nextel Merger Litigation. The Circuit Court specifically recognized that pursuant to the 2006 decision, Sprint and those acting in concert with it cannot compete
against iPCS Wireless in its exclusive service areas, regardless of the radio frequency that they use to compete. The Circuit Court held that Sprint cannot relitigate the issue of whether Sprint and
those acting in concert with it may compete with iPCS Wireless in its service area by using a frequency other than 1900 MHz. The Circuit Court granted in part iPCS Wireless's motion for partial
summary judgment with respect to these two issues and entered judgment thereon but stayed enforcement of the judgment pending a ruling on Sprint's petition to vacate the original judgment in the
Illinois Sprint/Nextel Merger Litigation, which petition to vacate was then dismissed with prejudice on January 20, 2009. The Circuit Court also found in its December 30, 2008 ruling
that material issues of fact remained and would be decided at trial including, but not limited to, whether New Clearwire is a "related party," whether Sprint controls New Clearwire, whether the
protections of exclusivity extend beyond the situation in which Sprint acts through a related party, and the question of who constitutes "those acting in concert" with Sprint.

On
January 9, 2009, the Circuit Court denied Sprint's motion for partial summary judgment against Bright and Horizon. In that motion, Sprint sought to bar Bright and Horizon from
litigating the issue of whether Sprint could compete with Horizon and Bright outside the 1900 MHz spectrum range, based on a 2006 decision by the Delaware Chancery Court. The Circuit Court denied
Sprint's motion for partial summary judgment against Bright and Horizon and found that the Delaware Chancery Court did not actually decide that issue.

On
January 30, 2009, the iPCS Subsidiaries amended their original complaint against Sprint. Under the amended complaint, the iPCS Subsidiaries included, among other things, a
claim that Sprint is improperly withholding advanced technologies from the iPCS Subsidiaries and diverting those technologies to their competitor in violation of the affiliation agreements. The
amended complaint also seeks monetary relief. On February 27, 2009, Sprint, in its response to the amended complaint, asserted several counterclaims that essentially seek declaratory relief
that the Clearwire transaction does not violate the affiliation agreements. Discovery is ongoing.

We
presently cannot determine the ultimate resolution of the matters described above. The results of litigation are inherently uncertain and, while we believe that we have meritorious
claims in the matters described above, material adverse outcomes are possible.

In
addition to the foregoing, from time to time, we are involved in various legal proceedings relating to claims arising in the ordinary course of business. We are not currently a party
to any such legal proceedings, the adverse outcome to which, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition or results of
operations.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

42

---





PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information.Our common stock trades on the Nasdaq Global Select Market under the symbol "IPCS."

The
table below sets forth the high and low closing prices of our common stock as reported by Nasdaq for each quarter during the last two years:

Quarter1st

2nd

3rd

4thYear Ended December 31, 2008High

$
34.91

$
32.04

$
29.73

$
21.89Low

$
16.77

$
24.65

$
17.10

$
3.73Year Ended December 31, 2007High

$
54.81

$
50.65

$
34.83

$
37.49Low

$
48.53

$
32.90

$
29.92

$
32.32


As
of February 27, 2009, there were approximately 60 record holders of our common stock. The number of record holders does not include beneficial owners whose shares are held in
the names of banks, brokers, nominees or other fiduciaries.

Dividend Policy.On May 16, 2007, we paid a special cash dividend of $11.00 per share to all holders of our common stock. No
expectation of
future dividends should be derived from this special dividend. Our future decisions concerning the payment of dividends will depend on our results of operations, financial condition and capital
expenditure plans and will be subject to limitations under the indentures governing our senior secured notes, as well as such other factors that our board of directors, in its sole discretion, may
consider relevant.

Securities Authorized for Issuance Under Equity Compensation Plans.See our disclosure below in "Part III, Item 12. Security
Ownership of
Certain Beneficial Owners and Management related stockholder matters" incorporated by reference to our proxy statement relating to our 2009 annual meeting of stockholders.

Stock Repurchase Plan.In January, 2009, our Board of Directors authorized us to repurchase up to $15.0 million of our common
stock in a share
repurchase program during the 12-month period beginning on the date of authorization. We may purchase shares from time to time in open market or privately negotiated transactions at prices
deemed appropriate by management, depending on market conditions, applicable laws and other factors. The share repurchase program does not require us to repurchase any specific number of shares and
may be discontinued at any time.

43

---



Unregistered Sales of Equity Securities and Use of Proceeds.The following table provides information about shares of common stock the
Company
acquired during the fourth quarter of 2008:

Issuer Purchases of Equity Securities

Total number
of shares
purchased(a)

Average price paid
per share

Total number of shares
purchased as part of
publicly announced
plans or programs(a)

Maximum number (or
approximate dollar value) of
shares that may yet be
purchased under the plans
or programsOctober 1, 2008 to
October 31, 2008











November 1, 2008 to
November 30, 2008











December 1, 2008 to
December 31, 2008


446

$
6.86





Total


446

$
6.86








---

44

---



Performance Graph.The performance graph below compares the cumulative total stockholder return on our common stock from March 17,
2006 (the
effective date of our registration under the Securities Exchange Act of 1934) through December 31, 2008 against the cumulative total return of The Nasdaq Stock Market Composite Index and The
Nasdaq Stock Market Telecommunications Index. The Nasdaq Telecommunications Index includes 164 companies that represent a wide mix of telecommunications service and equipment providers,
including wireless carriers that serve markets similar to ours.

The
graph assumes that $100.00 was invested in our common stock and in each index on March 17, 2006. The total return for the common stock and the indices used assumes the
reinvestment of dividends. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG iPCS, INC.,
NASDAQ COMPOSITE INDEX AND NASDAQ TELECOMMUNICATIONS

GRAPHIC

03/17/06

06/30/06

12/31/06

6/30/07

12/31/07

6/30/08

12/31/08iPCS


100.00


100.84


115.57


90.64


96.32


79.01


18.29Nasdaq Telecommunications Index


100.00


107.02


128.44


140.29


106.75


104.60


65.85Nasdaq Composite Index


100.00


93.35


104.05


112.26


114.40


99.41


68.37


45

---





ITEM 6.    SELECTED FINANCIAL DATA

We derived the following balance sheet data as of December 31, 2008 and 2007 and statement of operations data for the years
ended December 31, 2008, 2007 and 2006 from our audited consolidated financial statements, included elsewhere in this report. We derived the following balance sheet data as of
December 31, 2006 and 2005, September 30, 2005 and 2004 and the statement of operations for the periods ended December 31, 2005, September 30, 2005 and 2004 and
July 1, 2004 from our audited consolidated financial statements, which are not included in this report.

In
accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy
Code," we adopted fresh-start accounting as of July 1, 2004, and our emergence from Chapter 11 resulted in a new reporting entity. Results for the periods as of and prior to
July 1, 2004 have been designated as results of the "Predecessor Company" and results for the periods subsequent to July 1, 2004 have been designated as results of the "Successor
Company." Under fresh-start accounting, our reorganization equity value was allocated to the assets and liabilities based on their respective fair values and was in conformity with SFAS No. 141
"Business Combinations." As a result of the implementation of fresh-start accounting, our financial statements after July 1, 2004 are not comparable to our financial statements for prior
periods. Results as of and for the year ended September 30, 2005 include results for Horizon and Bright from the date of acquisition (July 1, 2005) and, accordingly, are not comparable
to prior periods.

The
financial information presented in the tables below are from our audited financial statements and should be read in conjunction with "Part II, Item 7. Management's Discussion
and Analysis of

46

---



Financial
Condition and Results of Operations" and our audited consolidated financial statements and, in each case, any related notes thereto included elsewhere in this report.

Successor Company

Predecessor
CompanyPeriod from
July 2, 2004
through
September 30,
2004Year Ended
December 31,
2008

Year Ended
December 31,
2007

Year Ended
December 31,
2006

Three Months
Ended
December 31,
2005

Year Ended
September 30,
2005

Period from
October 1,
2003 through
July 1, 2004Statement of Operations Data:Revenue:Service revenue

$
383,962

$
358,154

$
316,513

$
70,996

$
189,177

$
37,909

$
107,097Roaming revenue


127,234


166,349


161,848


36,071


82,959


15,829


34,525Equipment and other


14,321


13,583


14,061


2,485


7,911


1,644


4,240Total revenue


525,517


538,086


492,422


109,552


280,047


55,382


145,862Operating expense:Cost of service and roaming


286,382


313,629


285,979


62,766


153,058


29,090


83,230Cost of equipment


55,968


51,358


41,707


9,150


27,260


5,584


12,801Selling and marketing


71,080


75,626


74,293


18,216


44,424


8,001


20,976General and administrative


35,954


26,915


20,944


7,907


13,189


1,714


3,550Reorganization income(a)




















(60,797
)Depreciation(b)


43,581


46,097


50,522


12,039


53,700


8,790


28,596Amortization of intangible assets(c)


9,176


31,576


37,958


9,489


18,126


3,051


Gain (loss) on disposal of property and equipment


450


151


574


182


141


(4
)

13Total operating expense


502,591


545,352


511,977


119,749


309,898


56,226


88,369Operating income (loss)


22,926


(7,266
)

(19,555
)

(10,197
)

(29,851
)

(844
)

57,493Interest income


1,722


4,930


5,490


1,104


1,782


289


263Interest expense


(33,959
)

(36,640
)

(32,086
)

(8,108
)

(22,926
)

(5,425
)

(10,142
)Debt extinguishment costs(d)





(30,501
)













Cancellation of debt(e)




















131,956Other income, net


101


146


112


15


57


4


7Income (loss) before income taxes


(9,210
)

(69,331
)

(46,039
)

(17,186
)

(50,938
)

(5,976
)

179,577Provision for income tax


600

















Net income (loss)

$
(9,810
)
$
(69,331
)
$
(46,039
)
$
(17,186
)
$
(50,938
)
$
(5,976
)
$
179,577Other Data:Basic and diluted loss per share of common stock(f)

$
(0.57
)
$
(4.08
)
$
(2.76
)
$
(1.03
)
$
(4.60
)
$
(0.65
)

n/aCash dividend declared per common share




$
11.00



















Successor CompanyAs of
December 31,
2008

As of
December 31,
2007

As of
December 31,
2006

As of
December 31,
2005

As of
September 30,
2005

As of
September 30,
2004Balance Sheet Data:Cash and cash equivalents

$
55,940

$
77,599

$
120,499

$
110,837

$
98,107

$
57,760Property and equipment, net


162,014


128,677


139,641


147,254


153,504


134,931Total assets


537,612


546,824


627,071


673,213


673,990


312,308Total current liabilities


83,421


87,554


100,770


103,632


89,235


53,797Total liabilities


585,810


586,658


412,886


418,208


403,908


223,262Total stockholders' equity (deficiency)


(48,198
)

(39,834
)

214,185


255,005


270,082


89,046


---

47

---





48

---





ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is an analysis of our results of operations, liquidity and capital resources and should be read in conjunction with the
Consolidated Financial Statements and notes related thereto included in this Annual Report on Form 10-K. To the extent that the following Management's Discussion and Analysis
contains statements which are not of a historical nature, such statements are forward-looking statements which involve risks and uncertainties. These risks include, but are not limited to the risks
and uncertainties discussed in "Part I, Item 1A. Risk Factors" in this Annual Report on Form 10-K. The following discussion and analysis should be read in conjunction with
the Forward Looking Statements and "Part I, Item 1A. Risk Factors" each included in this Annual Report on Form 10-K.

In
this "Management's Discussion and Analysis of Financial Condition and Results of Operations" section, we provide certain financial measures that are calculated in accordance with
accounting principles generally accepted in the United States ("GAAP") and as adjusted to GAAP ("non-GAAP") to assess our financial performance. In addition, we use certain
non-financial terms that are not measures of financial performance under GAAP. Terms such as "gross subscriber additions", "net subscriber additions" and "churn" are terms used in the
wireless telecommunications industry. The non-GAAP financial measures of average revenue per user ("ARPU") and cost per gross addition ("CPGA") reflect standard measures of performance
commonly used in the wireless telecommunications industry. The non-financial terms and the non-GAAP measures reflect wireless telecommunications industry conventions and are
commonly used by the investment community for comparability purposes. The non-GAAP financial measures included in this "Management's Discussion and Analysis of Financial Condition and
Results of Operations" are
reconciled below in "Reconciliation of Non-GAAP Financial Measures" and, together with the non-financial terms, are summarized as follows:



49

---





In
this "Management's Discussion and Analysis of Financial Condition and Results of Operations," unless the context indicates otherwise, all references to "subscribers" or "customers"
and other operating metrics mean subscribers or customers excluding subscribers of resellers known as Mobile Virtual Network Operators, or MVNOs, that use our network and resell wireless service under
private brands.

Business Overview

As a PCS Affiliate of Sprint, we have the exclusive right to provide digital wireless personal communications services, or PCS, under
the Sprint brand name in 81 markets including markets in Illinois, Michigan, Pennsylvania, New York, Indiana, Iowa, Ohio and Tennessee. The territory includes key markets such as Grand Rapids (MI),
Fort Wayne (IN), the Tri-Cities region of Tennessee (Johnson City, Kingsport and Bristol), Scranton (PA), Saginaw-Bay City (MI), Central Illinois (Peoria, IL,
Springfield, IL, Decatur, IL and Champaign, IL), and the Quad Cities region of Illinois and Iowa (Bettendorf and Davenport, IA, and Moline and Rock Island, IL). We own and are responsible for
building, operating and managing the portion of the 100% digital, 100% PCS wireless network of Sprint PCS located in our territory. We offer national calling plans designed by Sprint PCS as well as
local plans tailored to our markets. Our PCS network is designed to offer a seamless connection with the wireless network of Sprint PCS. We market Sprint PCS products and services through a number of
distribution outlets located in our territory, including our company-owned retail stores, co-branded dealers, major national
retailers and local third party distributors. As of December 31, 2008, our licensed territory had a total population of approximately 15.1 million residents, of which our wireless
network covered approximately 12.5 million residents, and we had approximately 691,100 subscribers.

Relationship with Sprint

Our relationship with Sprint is the most significant relationship we have and is essential to the operation of our business. The terms
of our relationship are set forth in our affiliation agreements with Sprint. Pursuant to these affiliation agreements, we agreed to offer CDMA services using Sprint's spectrum under the Sprint brand
name on a wireless network built and operated at our own expense. We believe that our strategic relationship with Sprint PCS provides significant competitive advantages. In particular, we believe that
our affiliation agreements with Sprint PCS allow us to offer high quality, nationally branded wireless voice and data services for lower cost and lower capital requirements than would otherwise be
possible.

We
have been, and continue to be, engaged in litigation with Sprint regarding its 2005 merger with Nextel and, more recently, its Sprint-Clearwire transaction through which Sprint is
developing a nationwide mobile 4G WiMax network. Sprint's operation of the legacy Nextel business in our Horizon and Bright territories must comply with the August 2006 ruling of the Delaware Court of
Chancery. The Circuit Court of Cook County, Illinois has required Sprint to cease owning, operating and managing the Nextel wireless network in iPCS Wireless's territory on or before
January 25, 2010, subject to Sprint being able to request an extension under certain circumstances. We do not know Sprint's intentions for complying with the Circuit Court's order, or any
future ruling related to the Sprint-Clearwire transaction, and the impact of Sprint's actions or inactions in either case on our

50

---



business.
We intend to continue to vigorously protect and enforce our rights, but there is no assurance that we will prevail. For a detailed discussion of our litigation with Sprint, see "Part I,
Item 3. Legal Proceedings," of this Annual Report on Form 10-K.

Under
our affiliation agreements with Sprint PCS, the costs we incur for the support services provided by Sprint are determined on a per average monthly cash cost per user ("CCPU") rate
and on a monthly cost per gross addition ("CPGA") rate. Pursuant to our affiliation agreements with Sprint PCS, the rates through 2010, adjusted for achieved milestone reductions as described below,
are as follows:

Year

CCPU

CPGA2007

$
7.50

$
20.002008 January  June

$
6.50

$
19.00July

$
6.35

$
19.00August  December

$
6.20

$
19.002009

$
5.85
*
$
19.002010

$
5.55
*
$
19.00


---

Beginning
on January 1, 2011, the rates will be reset each year based on the amount necessary to recover Sprint PCS's reasonable costs for providing these services to us and the other PCS
Affiliates of Sprint.

The
CCPU rate in effect from 2008 through 2010 is to be reduced from the then current rate by $0.15 if we hit certain milestones with respect to our voluntary deployment of
EV-DO Rev. A, a version of the further evolution of code division multiple access ("CDMA") high-speed data technology called Evolution Data Optimized ("EV-DO").
Specifically, the CCPU rates set forth above are reduced by $0.15 from the then-current rate when our EV-DO Rev. A deployment covers at least 6.0 million in population
("POPs"), by another $0.15 from the then-current rate when we cover at least 7.0 million POPs; and by another $0.15 from the then-current rate when we cover at least
9.0 million POPs. Our EV-DO Rev. A deployment coverage exceeded 6.0 million POPs during June 2008 and exceeded 7.0 million POPs during July 2008. As a result, our CCPU
rate was reduced to $6.35 starting July 1, 2008, was further reduced to $6.20 starting August 1, 2008 for the remainder of 2008 and will be further reduced to $5.85 and $5.55 in 2009 and
2010, respectively, subject to any further downward
adjustments related to incremental EV-DO Rev. A coverage. As of December 31, 2008, our EV-DO Rev. A deployment covered approximately 7.2 million POPs.

We
receive roaming revenue when subscribers of Sprint and other PCS Affiliates of Sprint incur minutes of use in our territories, and we incur expense to Sprint and to other PCS
Affiliates of Sprint when our subscribers incur minutes of use in the territories of Sprint and other PCS Affiliates of Sprint. Prior to January 1, 2008, we settled voice and 2G data roaming
and 3G data roaming separately with Sprint and the other PCS Affiliates of Sprint. Effective January 1, 2008 through December 31, 2010, subject to adjustment as described below, 3G data
roaming is not settled separately with Sprint,

51

---



however,
we do settle 3G data roaming separately with the other PCS Affiliates of Sprint. Pursuant to our affiliation agreements with Sprint PCS, the reciprocal roaming rates through 2010 are as
follows:

Year

Voice & 2G Data
Per Minute of Use

3G Data
Per Kilobyte of Use2007

$
0.0403
*
$
0.00102008

$
0.0400
*
$
0.00032009

$
0.0400
*
$
0.00012010

$
0.0380
*
$
0.0001


---

Beginning
on January 1, 2011, the rates will be reset each year to an amount equal to 90% of Sprint's average monthly retail yield for the first nine months of the immediately preceding
calendar year; provided, however, that such amount for any period will not be less than our network costs.

With
respect to certain of our markets in western and eastern Pennsylvania, we receive the benefit of a special reciprocal rate for voice and 2G data of $0.10 per minute. This special
rate will terminate, with respect to each of these two sets of markets, on the earlier of December 31, 2011 or the first day of the
calendar month which follows the first calendar quarter during which we achieve a subscriber penetration rate of at least 7% of our covered POPs in those markets. We do not anticipate reaching a 7%
subscriber penetration rate in these markets in the foreseeable future.

Commencing
on January 1, 2010, either Sprint or we may initiate a review to determine whether the 3G data roaming ratio between us has changed by more than 20% from the calendar
year that is two years prior. If the ratio has changed by more than 20%, then the parties will commence discussions as to whether an appropriate adjustment in other fees can be made to compensate for
such change. If the parties cannot agree, then the parties will revert to settling 3G data roaming separately effective January 1 of the year in which such review was initiated.

During
the fourth quarter of 2008, we formally disputed various 2008 amounts which were actually or proposed to be charged or credited to us by Sprint, including amounts for customer
credits, late fees and bad debt recoveries. Resolution with respect to certain of these matters totaling approximately $2.5 million is reflected in our 2008 operating results. The remaining
items, which were subject to a settlement reached on January 22, 2009, will result in a $4.3 million gain during the first quarter of 2009. The resolution of these disputes does not
address the potential for disputes related to these items going forward or to other items, some of which we formally disputed in February 2009, including amounts for late fees and bad debt recoveries.

Consolidated Results of Operations

Summary

For the years ended December 31, 2008, 2007 and 2006, our net loss was $9.8 million, $69.3 million and
$46.0 million, respectively.

The
net loss for the year ended December 31, 2007 included $30.5 million of costs related to the repurchase of our 111/2% and 113/8% senior
notes (see Note 6, Long-Term Debt, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K). Additionally, amortization expense for
the year ended December 31, 2008 was $22.4 million lower than the year ended December 31, 2007, primarily reflecting the December 31, 2007 completion of the amortization of
the intangible asset related to the customer base acquired in connection with our merger with Horizon PCS. Our results for the year ended December 31, 2008 reflected higher subscriber revenue
than for the year ended December 31, 2007, primarily attributable to our larger subscriber base. Offsetting the increased subscriber revenue for the year ended December 31, 2008 were
higher Sprint litigation

52

---



related
expenses and a deterioration of our roaming margin as compared to the year ended December 31, 2007.

As
discussed above, our net loss for the year ended December 31, 2007, as compared to the year ended December 31, 2006, included $30.5 million of costs related to
the repurchase of our 111/2% and 113/8% senior notes. Additionally, reflected in the year ended December 31, 2007 was $1.2 million intangible asset
impairment charge included in amortization of intangible assets (see Note 5, Intangible Assets and Goodwill, of the "Notes to Consolidated Financial Statements" in this Annual Report on
Form 10-K). Also, the year ended December 31, 2007 reflected higher revenue, primarily attributable to our larger subscriber base, lower Sprint litigation expense and lower
depreciation and amortization expenses, as well as improved reciprocal roaming margins, reflecting improvements in our inbound to outbound ratio due to substantial increases in inbound data kilobytes
usage on our network, offset by the impact of lower reciprocal roaming rates as compared to the year ended December 31, 2006. These increased revenues, decreased expenses and roaming margin
improvements were partially offset by increases in subscriber acquisition costs as a result of our growth in gross additions, and increases in operating expense, including higher bad debt expense,
back office service fees paid to Sprint and stock-based compensation expense.

Presented
below are more detailed comparative data and discussions regarding our consolidated results of operations for the year ended December 31, 2008 as compared to the year
ended December 31, 2007 and the year ended December 31, 2007 as compared to the year ended December 31, 2006.

For the Year Ended December 31, 2008 compared to the Year Ended December 31, 2007

Key Performance Metrics.Management uses several key performance metrics to analyze the operations of our business. Below is a
table setting forth
the metrics that we use for the relevant time periods:

As of and for the Year
Ended December 31,Increase/
(Decrease)

Percent
Change2008

2007Total Subscribers


691,100


629,900


61,200


9.7
%Gross Subscriber Additions


259,200


275,600


(16,400
)

(6.0
)Net Subscriber Additions


61,200


68,600


(7,400
)

(10.8
)Churn


2.3
%

2.5
%

(0.2
)pts

(8.0
)ARPU

$
48.71

$
49.37

$
(0.66
)

(1.3
)CPGA

$
383

$
367

$
16


4.4


Subscriber Additions.The lower gross and net additions in the year ended December 31, 2008 as
compared to the year ended December 31, 2007 can be attributed to tightened credit standards, an increasingly competitive landscape, increased overall wireless penetration in our markets,
issues related to the 2008 billing system conversion at Sprint and an overall weakening economic environment.

Churn.Churn for the year ended December 31, 2008 was lower than the year ended December 31, 2007 reflecting
improvements in churn from
credit-related deactivations. At December 31, 2008 approximately 83% of our subscribers were under contract compared to 91% at December 31, 2007.

Average Revenue Per User.ARPU was negatively impacted in the year ended December 31, 2008 by increased credits provided by
Sprint's customer
service operations to our customers in response to technical challenges related to Sprint's 2008 billing system conversion and for customer satisfaction purposes. Average monthly credits per
subscriber, including promotional credits, were $6.61 for the year ended December 31, 2008 as compared to $5.78 for the year ended December 31, 2007.

53

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Additionally,
ARPU was negatively impacted in 2008 by a reduction in revenue related to late fees Sprint charges to customers on delinquent accounts. Average monthly late fee revenue per subscriber
was $0.73 for the year ended December 31, 2008 as compared to $1.37 for the year ended December 31, 2007. Partially offsetting these downward pressures, ARPU was positively affected by
an increase in monthly recurring revenue per subscriber for the 2008 year as compared to 2007. This increase reflects the growing popularity of Sprint's "Simply Everything," "Everything" and
"Talk/Message" Plans.

Cost Per Gross Addition.Fixed costs per gross addition increased $6 in the year ended December 31, 2008 compared to the
year ended
December 31, 2007, due to a decrease in gross subscriber additions of 6% and a larger sales force in the year ended December 31, 2008 compared to the year ended December 31, 2007.
Additionally, variable costs per gross addition increased by $10 in the year ended December 31, 2008 compared to the year ended December 31, 2007, reflecting higher commission costs,
offset by lower subsidy costs in our indirect channels in 2008 as compared to 2007. At December 31, 2008, we owned and operated 40 retail stores and managed 120 exclusive Sprint
co-branded dealers compared to 41 retail stores and 98 exclusive Sprint co-branded dealers at December 31, 2007.



The following table sets forth a breakdown of revenue by type (dollars in thousands):

For the Year Ended
December 31,Increase/
(Decrease)

Percent
Change2008

2007Service revenue

$
383,962

$
358,154

$
25,808


7.2
%Roaming revenue from subscribers of Sprint PCS and other PCS affiliates of Sprint


95,154


137,444


(42,290
)

(30.8
)Roaming revenue from other wireless carriers


16,885


13,256


3,629


27.4Reseller revenue


15,195


15,649


(454
)

(2.9
)Equipment and other revenue


14,321


13,583


738


5.4Total revenue

$
525,517

$
538,086

$
(12,569
)

(2.3
)


Service revenue.Service revenue is comprised of the monthly recurring charges for voice and data usage and the monthly
non-recurring
charges for voice and data minutes and data kilobytes over plan, long distance, roaming usage charges, other feature revenue and late payment fee and early cancellation fee revenues. Deductions for
billing adjustments, promotional credits and certain customer care credits are recorded as a reduction to service revenue. Our service revenue growth over the prior year consists of
$31.0 million from a higher average subscriber base, offset by a decrease in ARPU resulting in a decrease of $5.2 million.

Roaming revenue from subscribers of Sprint PCS and other PCS Affiliates of Sprint.We receive revenue on a per minute basis for
voice traffic when
subscribers of Sprint PCS and other PCS Affiliates of Sprint use our network. Through December 31, 2007, we similarly received revenue on a per kilobyte basis for data traffic when subscribers
of Sprint PCS and other PCS Affiliates of Sprint used our network. In addition, we receive toll revenue for any long distance calls made by these subscribers while roaming on our network.

For
2007, the reciprocal roaming rate was $0.0403 per minute for voice traffic ($0.10 per minute in certain markets in eastern and western Pennsylvania). Effective January 1,
2008, these rates were reset to $0.0400 per minute for voice traffic (with certain markets in eastern and western Pennsylvania remaining at $0.10 per minute). For the year ended December 31,
2008 as compared to the year ended

54

---



December 31,
2007, voice roaming revenue from subscribers of Sprint PCS and other PCS Affiliates of Sprint, including toll revenue, increased by $3.0 million, reflecting an increase in
roaming minutes, particularly within certain Pennsylvania markets, offset by the decrease in the per minute rate.

For
2007, the reciprocal roaming rate was $0.0010 per kilobyte for data traffic. Effective January 1, 2008 through December 31, 2010, data roaming with Sprint is not
settled separately, however, we continue to settle separately 3G data roaming with the other PCS Affiliates of Sprint. Effective January 1, 2008, these rates were reset to $0.0003 per kilobyte
for data traffic with the other PCS Affiliates of Sprint. The decrease for the year ended December 31, 2008 reflects the cessation of settlement of data roaming with Sprint. Data roaming
revenue with Sprint totaled $44.9 million for the year ended December 31, 2007.

Roaming revenue from other wireless carriers.We receive roaming revenue from wireless carriers other than Sprint PCS and other
PCS Affiliates of
Sprint when subscribers of such other wireless carriers
roam in our territory. We do not have agreements with these other wireless carriers. Instead, we rely on the roaming arrangements Sprint PCS has negotiated with these carriers and are unable to set
terms and prices or otherwise monitor these relationships. We are paid on a per minute and per kilobyte basis for voice and 2G traffic and on a per kilobyte basis for 3G traffic pursuant to these
agreements. For the year ended December 31, 2008, roaming minutes were 350.1 million compared to 242.6 million for the year ended December 31, 2007, an increase of 44%. The
average per minute rate decreased from $0.055 per minute for the year ended December 31, 2007 to $0.048 per minute for the year ended December 31, 2008. The majority of our roaming
revenue from other wireless carriers is derived from customers of Alltel, which was recently acquired by Verizon Wireless. As a result, after the consummation of that transaction, we expect a decrease
in our roaming revenue from Alltel over time. During 2007, as 3G data demand increased, Sprint began to settle kilobyte usage with its roaming partners, as reciprocal agreements with these partners
were reached. Data roaming revenue from other wireless carriers totaled $2.9 million for the year ended December 31, 2008 compared with $0.5 million for the same period in 2007.

Reseller revenue.Through Sprint PCS we allow resellers, known as MVNOs, such as Virgin Mobile, to use our network. Pursuant to
these arrangements,
we are paid on a per minute and per kilobyte basis. The slight decrease in reseller revenue for the year ended December 31, 2008 compared to the year ended December 31, 2007 reflects
decreased ARPU, partially offset by an increase in the average reseller subscribers between the respective periods. For the year ended December 31, 2008, reseller ARPU was $4.99 compared to
$5.31 for the year ended December 31, 2007. Average reseller subscribers were approximately 253,900 for the year ended December 31, 2008 compared to approximately 245,500 for the year
ended December 31, 2007. At December 31, 2008, we had approximately 274,000 reseller subscribers based in our territory.

Equipment and other revenue.Equipment and other revenue is derived primarily from the sale of handsets and accessories to new
customers and from
current customers who upgrade their handsets through our retail and local distribution channels, in each case, net of sales incentives, rebates and an allowance for returns. The increase in the year
ended December 31, 2008, as compared to the year ended December 31, 2007, reflects higher revenue per new and upgraded handset and a higher number of upgrades. These increasing factors
are offset by lower accessories sales and lower activations.

55

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The following table sets forth a breakdown of operating expense by type (dollars in thousands):

For the Year Ended
December 31,Increase/
(Decrease)

Percent
Change2008

2007Cost of service and roaming

$
286,382

$
313,629

$
(27,247
)

(8.7
)%Cost of equipment


55,968


51,358


4,610


9.0Selling and marketing


71,080


75,626


(4,546
)

(6.0
)General and administrative


35,954


26,915


9,039


33.6Depreciation and amortization


52,757


77,673


(24,916
)

(32.1
)Loss on disposal of property and equipment, net


450


151


299


198.0Total operating expense

$
502,591

$
545,352

$
(42,761
)

(7.8
)


Cost of service and roaming.Cost of service and roaming includes network operations expense, roaming expense relating to when
our subscribers roam
either on other Sprint PCS networks or other wireless carriers' networks, back-office customer services provided by Sprint PCS, the provision for doubtful accounts, long distance expense,
the 8% affiliation fee due to Sprint PCS for collected revenue and stock-based compensation expense. Network operations expense includes salaries and benefits for network personnel, cell site rent,
utilities and maintenance expenses, fees relating to the connection of our cell sites to our switches and other transport and facility expenses. Roaming expense is our cost of our subscribers using
Sprint PCS and other wireless carriers' networks. Roaming expense on the Sprint PCS network is at the reciprocal rates as described above under "Roaming revenue from subscribers of Sprint
PCS and other PCS Affiliates of Sprint." Roaming expense when our subscribers use other wireless carriers networks is at rates as determined by the roaming agreements signed by Sprint PCS with these
other wireless carriers. Effective January 1, 2008 through December 31, 2010, data roaming with Sprint is not settled separately, however, we continue to settle separately 3G data
roaming with the other PCS Affiliates of Sprint.

The
decrease in cost of service and roaming for the year ended December 31, 2008 reflects the cessation of settlement of data roaming with Sprint. Data roaming expense with Sprint
totaled $37.0 million for the year ended December 31, 2007. Reflecting the decreases in our cash cost per user fee during 2008, our cost of service and roaming was lowered by
$9.0 million for the year ended December 31, 2008 as compared to the year ended December 31, 2007. Offsetting these decreases, roaming expense with wireless carriers other than
Sprint increased $7.9 million, from $6.0 million in the year ended December 31, 2007 to $13.9 million in the year ended December 31, 2008. In the year ended
December 31, 2008, bad debt decreased $1.0 million from $19.0 million in the year ended December 31, 2007 to $18.0 million in the year ended December 31,
2008. This decrease in bad debt expense reflects an improvement in uncollectable accounts, partially offset by reduced recoveries of written-off accounts in the year ended
December 31, 2008 as compared to the 2007 period. Recoveries of written-off accounts were $3.7 million for the year ended December 31, 2008 as compared to
$5.0 million for the year ended December 31, 2007. The remaining increases in the cost of service and roaming were due to the related costs of servicing a larger network and larger
subscriber base.

At
December 31, 2008, our network consisted of approximately 1,875 cell sites and five switches. At December 31, 2007, our network consisted of approximately 1,690 cell
sites and five switches.

Cost of equipment.Cost of equipment includes the cost of handsets and accessories sold or upgraded from our retail and local
distribution channels.
Cost of equipment related to upgrades increased $2.9 million, or 23%, in the year ended December 31, 2008 as compared to the year ended December 31, 2007, reflecting an increase
in handset upgrades from our retail and local distribution

56

---



channels
of 14% and an increase in the average cost per upgrade. Cost of equipment for new activations increased $1.7 million, or 4%, in the year ended December 31, 2008, as compared to
the year ended December 31, 2007, reflecting an increase in the average cost per activated phone, partially offset by a decrease in new activations from our retail and local distribution
channels of 6%.

Selling and marketing.Selling and marketing expense includes the costs to operate our owned retail stores, advertising and
promotional expenses,
commissions, equipment subsidies and rebate expenses relating to new subscriber additions from national third parties and other Sprint-controlled channels and stock-based compensation expense. The
decrease in the year ended December 31, 2008 was due to lower costs related to subsidies and advertising costs as well as lower fees paid to Sprint for new activations, offset by higher
commissions and the impact of a larger sales force. Stock-based compensation expense included in selling and marketing totaled approximately $0.7 million in the year ended December 31,
2008 compared to $1.3 million in the year ended December 31, 2007. Included in the stock-based compensation expense in 2008 and 2007 was $0.1 million and $0.6 million,
respectively, relating to stock option modifications in connection with the special cash dividend paid in May 2007 (see Note 11, Stock-Based Compensation, of the "Notes to Consolidated
Financial Statements" in this Annual Report on Form 10-K).

General and administrative.General and administrative expenses include administrative salaries and benefits, legal fees,
insurance expense, other
professional expenses and stock-based compensation expense. For the year ended December 31, 2008, general and administrative expense included approximately $13.1 million of Sprint
litigation related expenses. This compares to $1.9 million for the year ended December 31, 2007. Stock-based compensation expense included in general and administrative expense totaled
approximately $4.7 million for the year ended December 31, 2008 compared to $7.9 million for the year ended December 31, 2007. Included in the stock-based compensation
expense in 2008 and 2007 was $0.8 million and $3.9 million, respectively, relating to stock option modifications in connection with the special cash dividend paid in May 2007.
Additionally, the year ended December 31, 2007 included $0.6 million related to a modification to option award agreements held by our former chief operating officer in connection with
his separation in January 2007 (see Note 11, Stock-Based Compensation, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K). In the year
ended December 31, 2007, we also incurred $0.5 million of severance expense related to this separation. The remaining period over period increases reflect the costs of more employees to
service our larger subscriber base.

Depreciation and amortization.Amortization of intangible assets totaled $9.2 million for the year ended December 31,
2008 compared to
$31.6 million for the year ended December 31, 2007, a decrease of $22.4 million for the year. As of December 31, 2007, the intangible asset related to the customer base
acquired in connection with our merger with Horizon PCS was fully amortized which decreased the amortization in 2008. We recognized a $1.2 million impairment charge related to our FCC license
assets in the year ended December 31, 2007 and such amount is included in Amortization of intangible assets. The FCC license is for sale; however, we believe the sale of this asset is unlikely
within the next year.

Depreciation
expense totaled $43.6 million for the year ended December 31, 2008 compared to $46.1 million for the year ended December 31, 2007, a decrease of
$2.5 million for the year. During the years ended December 31, 2008 and 2007, we recognized impairment charges of $2.2 million and $0.4 million, respectively, included in
depreciation, related to our assets held for sale to reduce their carrying value in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
(see Note 4, Property and Equipment, Net, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K). The reduction in carrying value records
these assets at fair value less costs to sell in anticipation of their future sale.

57

---





The following table sets forth a breakdown of non-operating income and expense by type (dollars in thousands):

For the Year Ended
December 31,Increase/
(Decrease)

Percent
Change2008

2007Interest income

$
1,722

$
4,930

$
(3,208
)

(65.1
)%Interest expense


33,959


36,640


(2,681
)

(7.3
)Debt extinguishment costs





30,501


(30,501
)

(100.0
)Other income, net


101


146


(45
)

(30.8
)


Interest income.The decrease in interest income in the year ended December 31, 2008 as compared to the year ended
December 31, 2007
reflects lower average cash and cash equivalents during 2008 and lower average yields on these deposits and investments.

Interest Expense.Interest expense consists of interest on our outstanding long-term debt (see Note 6, Long-Term Debt,
of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K), including amortization of financing costs and net of capitalized interest. Prior to
April 23, 2007, interest expense also included amortization of the fair value adjustment for the 113/8% senior notes. Since August 1, 2007, interest expense also includes
the effect of our interest rate swap (see Note 7, Interest Rate Swap, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K). The decrease in
interest expense in the year ended December 31, 2008 reflects a lower weighted average interest rate, net of our interest rate swap, of 7.09% on our outstanding long-term debt
during the year ended December 31, 2008 as compared to the weighted average interest rate of 8.95% on our outstanding long-term debt during the year ended December 31, 2007.
The lower weighted average interest rate for the 2008 year was partially offset by higher average borrowings in 2008 than during the comparative 2007 period.

In
connection with our capital expenditures, we capitalized interest of approximately $1.7 million in the year ended December 31, 2008 as compared to approximately
$0.7 million in the year ended December 31, 2007.

Debt extinguishment costs.Debt extinguishment costs represent expense recognized during the year ended December 31, 2007
in connection with
the repurchase of our outstanding 111/2% and 113/8% notes (see Note 6, Long-Term Debt, of the "Notes to the Consolidated Financial Statement" in this
Annual Report on Form 10-K). In the year ended December 31, 2007, we recorded approximately $34.2 million of expense related to the tender offer premium and consent
payments on the tender offering, approximately $7.3 million of expense related to the write off of the remaining deferred financing fees for the repurchased notes and approximately
$11.0 million as a reduction to interest expense to reflect the write-off of the remaining unamortized balance of the purchase price fair value allocation to the
113/8% notes recorded in July 2005 related to the Horizon PCS merger.

Reconciliation of Non-GAAP Financial Measures (All Revenues and Expenses in Thousands)

We utilize certain financial measures that are not calculated in accordance with GAAP to assess our financial performance. A
non-GAAP financial measure is defined as a numerical measure of financial performance that (a) excludes amounts, or is subject to adjustments that have the effect of excluding
amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income or statement of cash flows; or (b) includes amounts, or is
subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented. The non-GAAP financial measures discussed in
"Consolidated Results of Operations" are ARPU and CPGA. A description of each of these non-GAAP financial measures is provided above.

58

---



The following tables reconcile the non-GAAP financial measures with our consolidated financial statements presented in accordance with GAAP, excluding subscriber data:

For the Year Ended
December 31,2008

2007ARPUService revenue

$
383,962

$
358,154Average subscribers


656,900


604,500ARPU

$
48.71

$
49.37


ARPU,
which is utilized by most wireless companies to determine recurring monthly revenue on a per subscriber basis, is used by analysts and investors to compare relative subscriber
revenue across the wireless industry. We use ARPU to assist in evaluating past selling performance and the success of specific rate plan promotions. We also use ARPU as a basis to forecast future
service revenue.

For the Year Ended
December 31,2008

2007CPGASelling and Marketing:

$
71,080

$
75,626plus: Equipment costs, net of cost of upgrades


40,220


38,524less: Equipment revenue, net of upgrade revenue


(11,244
)

(11,535
)less: Stock-based compensation expense


(671
)

(1,339
)CPGA costs

$
99,385

$
101,276Gross additions


259,200


275,600CPGA

$
383

$
367


CPGA
is utilized by most wireless companies to determine their cost to acquire a new subscriber. CPGA is used by analysts and investors to compare us to other wireless companies. We use
CPGA to evaluate past selling performance, the success of specific promotions and as a basis to determine the amount of time we must retain a new subscriber before we recover this cost. In addition,
we use CPGA as a basis for budgeting.

For the Year Ended December 31, 2007 compared to the Year Ended December 31, 2006

Key Performance Metrics.Management uses several key performance metrics to analyze the operations of our business. Below is a
table setting forth
the metrics that we use for the relevant time periods:

As of and
for the Year
Ended December 31,Increase/
(Decrease)

Percent
Change2007

2006Total Subscribers


629,900


561,300


68,600


12.2
%Gross Subscriber Additions


275,600


247,500


28,100


11.4Net Subscriber Additions


68,600


67,600


1,000


1.5Churn


2.5
%

2.5
%

pts


ARPU

$
49.37

$
50.53

$
(1.16
)

(2.3
)CPGA

$
367

$
376

$
(9
)

(2.4
)


Subscriber Additions.For the year ended December 31, 2007, strong handset promotions, an increased number of net ported-in
subscribers from other wireless carriers, and an average of 16 more

59

---



exclusive
co-branded dealer locations in the year ended 2007 than in the year ended 2006, helped to drive new subscriber growth. Offsetting this increase in gross subscriber additions, net
subscriber additions were negatively impacted by an equivalent overall churn percentage on our larger average subscriber base in the year ended December 31, 2007 as compared to the year ended
December 31, 2006. These offsetting factors resulted in the slight year over year increase in net subscriber additions reflected above.

Churn.Year 2007 churn remained flat with 2006. Voluntary (non-credit related) churn for the year ended December 31, 2007
improved
as compared to the year ended December 31, 2006. This improvement was offset by a sharp increase in involuntary (credit-related) deactivations during the second half of the year ended
December 31, 2007 as compared to the year ended December 31, 2006. We believe that the increase in involuntary (credit-related) deactivations was a result of a deteriorating economic
environment and an increase in sub-prime customer additions. Approximately 91% of our subscribers were under contract at both December 31, 2007 and 2006.

Average Revenue Per User.We continued to experience decreasing voice revenue offset by increasing data revenue as compared to
prior year periods.
Average monthly voice revenue per subscriber was $37.56 in the year ended December 31, 2007 compared to $40.52 in the year ended December 31, 2006, a decrease of 7%. This decrease can be
largely attributed to the continued growth of the family add-a-phone plans. While these customers are not as likely to switch to another wireless company, or churn, their ARPU
is lower due to the lower monthly recurring charge on add-a-phone rate plans. Average monthly data revenue was $10.86 for the year ended December 31, 2007 compared to
$9.62 in the year ended December 31, 2006, an increase of 13%. The year over year increase in average monthly data revenue reflects increased usage of data cards and the increased popularity of
our data products, including text messaging, downloading ringers, music and games, sending and receiving pictures, playing games and browsing the Internet.

Cost Per Gross Addition.Due to an increase in gross additions of 11% in the year ended December 31, 2007 compared to the
same period in 2006,
fixed costs per gross addition dropped $17 for the same periods. Offsetting this decrease in fixed costs per gross addition, the variable costs of commissions and handset subsidy and rebate costs
increased $8 per gross addition in the year ended December 31, 2007 compared to the same period in 2006. At December 31, 2007, we operated 41 retail stores and supported
98 exclusive co-branded dealers, compared to 38 retail stores and 93 exclusive co-branded dealers at December 31, 2006.



The following table sets forth a breakdown of revenue by type (dollars in thousands):

For the Year Ended
December 31,Increase/
(Decrease)

Percent
Change2007

2006Service revenue

$
358,154

$
316,513

$
41,641


13.2
%Roaming revenue from subscribers of Sprint PCS and other PCS affiliates of Sprint


137,444


141,174


(3,730
)

(2.6
)Roaming revenue from other wireless carriers


13,256


8,995


4,261


47.4Reseller revenue


15,649


11,679


3,970


34.0Equipment and other revenue


13,583


14,061


(478
)

(3.4
)Total revenue

$
538,086

$
492,422

$
45,664


9.3


Service revenue.Service revenue is comprised of the monthly recurring charges for voice and data usage and the monthly
non-recurring
charges for voice and data minutes over plan, long distance,

60

---



roaming
usage charges, other feature revenue and late payment fee and early cancellation fee revenues. Deductions for billing adjustments and promotional credits are recorded as a reduction to service
revenue. Our service revenue growth over the prior year consists of $50.0 million from additional subscribers, offset by a decrease in ARPU of $8.4 million.

Roaming revenue from subscribers of Sprint PCS and other PCS Affiliates of Sprint.We receive revenue on a per minute basis for
voice traffic and per
kilobyte basis for data traffic when subscribers of Sprint PCS and other PCS Affiliates of Sprint use our network. In addition, we receive toll revenue for any long distance calls made by these
subscribers while roaming on our network. For the year ended December 31, 2007, the reciprocal rate was $0.0403 per minute for voice traffic ($0.10 per minute in certain markets in eastern and
western Pennsylvania) and $0.001 per kilobyte for data traffic. For the year ended December 31, 2006, the reciprocal roaming rate was $0.0580 per minute for voice traffic ($0.10 per minute in
certain markets in eastern and western Pennsylvania) and $0.002 per kilobyte for data traffic. For the year ended December 31, 2007 compared to the year ended December 31, 2006, voice
roaming revenue from subscribers of Sprint PCS and other PCS Affiliates of Sprint, including related toll revenue, decreased by $17.1 million due mainly to the decrease in the rate. Data
roaming revenue increased by $13.4 million for the year, due mainly to increases in data usage of 206% offset by a decrease in the rate. Roaming minutes from subscribers of Sprint PCS and other
PCS Affiliates of Sprint increased slightly from 1.6 billion for the year ended December 31, 2006 to 1.7 billion for the year ended December 31, 2007. Roaming kilobytes
from subscribers of Sprint PCS and other PCS Affiliates of Sprint for the year ended December 31, 2007 were 45.4 billion compared to 14.8 billion for the year ended
December 31, 2006. Effective January 1, 2008, we do not receive data roaming revenue from Sprint PCS when Sprint PCS subscribers based outside our territory use our PCS network. Data
roaming revenue from Sprint PCS for the year ended December 31, 2007 was approximately $44.9 million, or 33%, of the $137.4 million in total roaming revenue we received from
Sprint PCS.

Roaming revenue from other wireless carriers.We receive roaming revenue from wireless carriers other than Sprint and other PCS
Affiliates of Sprint
when subscribers of such other wireless carriers roam in our territory. We do not have agreements with these other wireless carriers. Instead, we rely on roaming arrangements Sprint PCS has negotiated
with them. We are paid on a per minute and per kilobyte basis for voice traffic pursuant to these agreements. For the year ended December 31, 2007, roaming minutes were 242.6 million
compared to 103.2 million for the same period in 2006. The average per minute rate decreased from $0.09 per minute for the year ended December 31, 2006 to $0.05 per minute for the year
ended December 31, 2007. Roaming minutes increased while the average per minute rate decreased due mainly to a new roaming agreement Sprint signed with Alltel Corporation in
mid-2006. This agreement has increased the number of roaming minutes we receive from Alltel, but at a rate significantly lower than what we had received in the first half of 2006.

Reseller revenue.Through Sprint PCS we allow resellers, known as MVNOs, such as Virgin Mobile, to use our network. Pursuant to
these arrangements,
we are paid on a per minute and per kilobyte basis. The year over year increase reflects an increase in reseller subscribers and increased ARPU per reseller subscriber. At December 31, 2007, we
had approximately 252,900 reseller subscribers based in our territory compared to approximately 227,200 at December 31, 2006. For the year ended December 31, 2007 reseller ARPU was $5.31
compared to $5.17 for the 2006 year.

Equipment and other revenue.Equipment and other revenue is derived primarily from the sale of handsets and accessories to new
customers and from
current customers who upgrade their handsets through our retail and local distribution channels, in each case, net of sales incentives, rebates and an allowance for returns. The year ended
December 31, 2007 reflects higher promotional discounts for upgrades and new activations resulting in lower revenue per handset, offset by higher gross additions and upgrades from these
channels.

61

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The following table sets forth a breakdown of operating expense by type (dollars in thousands):

For the Year Ended
December 31,Increase/
(Decrease)

Percent
Change2007

2006Cost of service and roaming

$
313,629

$
285,979

$
27,650


9.7
%Cost of equipment


51,358


41,707


9,651


23.1Selling and marketing


75,626


74,293


1,333


1.8General and administrative


26,915


20,944


5,971


28.5Depreciation and amortization


77,673


88,480


(10,807
)

(12.2
)Loss on disposal of property and equipment, net


151


574


(423
)

(73.7
)Total operating expense

$
545,352

$
511,977

$
33,375


6.5


Cost of Service and Roaming.Cost of service and roaming includes network operations expense, roaming expense, expense for
back-office
customer services provided by Sprint PCS, bad debt expense, long distance expense, the 8% affiliation fee due to Sprint PCS for collected revenue and stock-based compensation expense. Network
operations expense includes salaries and benefits for
network personnel, cell site rent, utilities and maintenance expenses, fees relating to the connection of our cell sites to our switches and other transport and facility expenses. Roaming expense is
our cost for our subscribers using Sprint PCS and other wireless carriers' networks. Roaming expense on the Sprint PCS network is at the reciprocal rates as described above under "Roaming
revenue from subscribers of Sprint PCS and other PCS Affiliates of Sprint." Roaming expense when our subscribers use other wireless carriers networks is at rates as determined by the roaming
agreements signed by Sprint PCS with these other wireless carriers. Of the increase for the year, $12.3 million, or 44%, of the total increase was due to higher per user fees charged by Sprint
for back-office customer service coupled with higher average subscribers on which we incur the charge. Effective January 1, 2007, this rate increased from $6.75 per subscriber per
month to $7.50 per subscriber per month. In the year ended December 31, 2007 compared to the 2006 year, bad debt expense increased $8.1 million from $10.9 million in the
year ended December 31, 2006 to $19.0 million in the year ended December 31, 2007. This increase is due to higher average write-offs per subscriber, lower recoveries
as a percentage of write-offs and an overall deterioration of our customer accounts receivable aging, reflecting a higher average number of sub-prime credit subscribers in 2007
compared to 2006. Roaming expense decreased $5.4 million for the year ended December 31, 2007. Voice roaming expense with Sprint decreased $16.1 million due principally to the
decrease in the reciprocal rate with Sprint, while data roaming expense paid to Sprint increased $9.5 million, reflecting increased kilobyte usage in the year ended December 31, 2007
compared to this same period in 2006. The remaining increase in cost of service and roaming was due to the related costs of servicing a larger network and larger subscriber base. Effective
January 1, 2008, we do not pay data roaming expense to Sprint PCS when our subscribers use Sprint PCS's network. Data roaming expense paid to Sprint PCS for the year ended December 31,
2007 was approximately $37.0 million, or 38%, of the $97.8 million in total roaming expense we paid to Sprint PCS.

At
December 31, 2007, our network consisted of approximately 1,690 cell sites and five switches. At December 31, 2006, our network consisted of 1,600 cell sites and five
switches.

Cost of equipment.Cost of equipment includes the cost of handsets and accessories sold or upgraded from our retail and local
distribution channels.
Cost of equipment for new activations increased $8.3 million, or 27%, in the year ended December 31, 2007 compared to the 2006 year, primarily reflecting an increase of 27% in new
activations from our retail and local distribution channels. Cost of equipment for upgrades increased $1.4 million, or 12% in the year ended

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December 31,
2007 compared to the 2006 year, primarily reflecting an increase of 16% in upgrades from these same channels.

Selling and marketing.Selling and marketing expense includes the costs to operate our retail stores, advertising and promotional
expenses,
commissions, equipment subsidies and rebate expenses relating to new subscriber additions from national third parties and other Sprint-controlled channels and stock-
based compensation expense. The increase in 2007 reflects higher commissions and an increase in salaries and benefits as compared to 2006. The higher commissions were the result of an increase in
gross subscriber additions in the year ended December 31, 2007 compared to the 2006 year. The increase in salaries and benefits is due to additional employees hired to support the growth
in our retail, commercial and exclusive branded dealer channels. These increases were offset by decreases in costs related to handset subsidies and rebates from our national third parties and other
Sprint-controlled channels and lower promotional expenses for 2007 as compared to 2006. Stock-based compensation expense included in selling and marketing totaled approximately $1.3 million for
the year ended December 31, 2007 compared to $0.5 million for the year ended December 31, 2006. Included in the stock-based compensation expense in 2007 was $0.6 million
relating to stock option modifications in connection with the special cash dividend paid in May 2007 (see Note 11, Stock-Based Compensation, of the "Notes to Consolidated Financial Statements"
in this Annual Report on Form 10-K).

General and administrative.General and administrative expense includes administrative salaries and benefits, legal fees,
insurance expense, other
professional expenses and stock-based compensation expense. For the year ended December 31, 2007, general and administrative expense included approximately $1.9 million in Sprint
litigation expense. This compares to $6.3 million for the year ended December 31, 2006. Stock-based compensation expense included in general and administrative expense totaled
approximately $7.9 million for the year ended December 31, 2007, compared to $1.8 million for the 2006 year, reflecting an increased number of grants as well as expense
related to option modifications during 2007. Included in the stock-based compensation expense for the year 2007 was $3.9 million relating to stock option modifications in connection with the
special cash dividend paid in May 2007. Additionally, the year ended December 31, 2007 included $0.6 million related to a modification to option award agreements held by our former chief
operating officer in connection with his separation in January 2007 (see Note 11, Stock-Based Compensation, of the "Notes to Consolidated Financial Statements" in this Annual Report on
Form 10-K). In the year ended December 31, 2007, we also incurred $0.5 million of severance expense related to this separation. The remaining year over year increase
reflects the costs of a larger administrative staff to service our larger subscriber base and increased expense related to Sarbanes-Oxley compliance.

Depreciation and amortization.Amortization of intangible assets totaled $31.6 million for the year ended December 31,
2007 compared to
$38.0 million for the year ended December 31, 2006, a decrease of $6.4 million for the year. At December 31, 2006, the intangible asset related to the iPCS Wireless
subscriber base was fully amortized which decreased the amortization in 2007. At December 31, 2007, the intangible asset related to the customer base acquired in connection with our merger with
Horizon PCS was fully amortized. We investigated business opportunities to use our FCC license in Ohio during 2007, but have been unable to build a viable business case for these opportunities.
Because of this, the license is for sale. Therefore, we tested the value assigned to this asset for impairment under SFAS No. 142, "Goodwill and Other Intangible Assets", using a market
analysis approach. As a result of this testing, we recognized a $1.2 million impairment charge included in amortization of intangible assets related to this intangible asset during the year
ended December 31, 2007.

Depreciation
expense totaled $46.1 million for the year ended December 31, 2007 compared to $50.5 million for the year ended December 31, 2006, a decrease of
$4.4 million for the year. During the year ended December 31, 2006, we recorded accelerated depreciation expense of $1.4 million due to a reduction in the remaining useful lives
of Motorola equipment replaced in the Pennsylvania, Maryland,

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New
York and New Jersey markets. We have engaged independent agents to sell remaining Motorola equipment which was replaced with Nortel equipment. We reclassified $3.9 million from Property and
equipment, net to Assets held for sale during the year ended December 31, 2007 and recognized a $0.4 million impairment charge included in depreciation related to these assets to reduce
the carrying value in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (see Note 4, Property and Equipment, of the "Notes to
Consolidated Financial Statements" in this Annual Report on Form 10-K). The reduction in carrying value records these assets at fair value less costs to sell in anticipation of
their future sale.



The following table sets forth a breakdown of non-operating income and expense by type (dollars in thousands):

For the Year Ended
December 31,Increase/
(Decrease)

Percent
Change2007

2006Interest income

$
4,930

$
5,490

$
(560
)

(10.2
)%Interest expense


36,640


32,086


4,554


14.2Debt extinguishment costs


30,501





30,501


Other income, net


146


112


34


30.4


Interest income.The decrease in interest income in the year ended December 31, 2007 as compared to the 2006 year
reflects lower
average cash and cash equivalents and investment balances during 2007, offset by higher average yields on these deposits and investments.

Interest expense.Interest expense consists of interest on our outstanding long-term debt (see Note 6, Long-Term Debt,
of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K), including amortization of financing costs and net of capitalized interest. Prior to
April 23, 2007, interest expense also included amortization of the fair value adjustment for the 113/8% senior notes. Since August 1, 2007, interest expense also includes
the effect of our interest rate swap (see Note 7, Interest Rate Swap, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K). The increase in
interest expense in the year ended December 31, 2007 primarily reflects higher borrowings as compared to the 2006 year. These higher borrowings were partially offset by a lower weighted
average interest rate, net of our interest rate swap, of 8.95% on our outstanding long-term debt during 2007 as compared to the weighted average interest rate of 11.45% on our outstanding
long-term debt during 2006.

Debt extinguishment costs.Debt extinguishment costs represent expense recognized during the year ended December 31, 2007 in
connection with
the repurchase of our outstanding 111/2% and 113/8% notes (see Note 6, Long-Term Debt, of the "Notes to the Consolidated Financial Statement" in this
Annual Report on Form 10-K). In the year ended December 31, 2007, we recorded approximately $34.2 million of expense related to the tender offer premium and consent
payments on the tender offering, approximately $7.3 million of expense related to the write off of the remaining deferred financing fees for the repurchased notes and approximately
$11.0 million as a reduction to interest expense to reflect the write-off of the remaining unamortized balance of the purchase price fair value allocation to the
113/8% notes recorded in July 2005 related to the Horizon PCS merger.

Reconciliation of Non-GAAP Financial Measures (All Revenues and Expenses in Thousands)

We utilize certain financial measures that are not calculated in accordance with GAAP to assess our financial performance. A
non-GAAP financial measure is defined as a numerical measure of financial performance that (a) excludes amounts, or is subject to adjustments that have the effect of

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excluding
amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income or statement of cash flows; or (b) includes amounts,
or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented. The non-GAAP financial measures discussed
in "Consolidated Results of Operations" are ARPU and CPGA. A description of each of these non-GAAP financial measures is provided above.

The
following tables reconcile the non-GAAP financial measures with our consolidated financial statements presented in accordance with GAAP, excluding subscriber data:

For the Year Ended
December 31,2007

2006ARPUService revenue

$
358,154

$
316,513Average subscribers


604,500


522,000ARPU

$
49.37

$
50.53


ARPU,
which is utilized by most wireless companies to determine recurring monthly revenue on a per subscriber basis, is used by analysts and investors to compare relative subscriber
revenue across the wireless industry. We use ARPU to assist in evaluating past selling performance and the success of specific rate plan promotions. We also use ARPU as a basis to forecast future
service revenue.

For the Year Ended
December 31,2007

2006CPGASelling and Marketing:

$
75,626

$
74,293plus: Equipment costs, net of cost of upgrades


38,524


30,269less: Equipment revenue, net of upgrade revenue


(11,535
)

(10,957
)less: Stock-based compensation expense


(1,339
)

(524
)CPGA costs

$
101,276

$
93,081Gross additions


275,600


247,500CPGA

$
367

$
376


CPGA
is utilized by most wireless companies to determine their cost to acquire a new subscriber. CPGA is used by analysts and investors to compare us to other wireless companies. We use
CPGA to evaluate past selling performance, the success of specific promotions and as a basis to determine the amount of time we must retain a new subscriber before we recover this cost. In addition,
we use CPGA as a basis for budgeting.

Inflation

We believe that inflation has not had a significant impact on our revenues or our results of operations in the years ended
December 31, 2008, 2007 and 2006, respectively.

Liquidity and Capital Resources

We believe our cash and cash equivalents and operating cash flow will be sufficient to operate our business and fund our capital needs
for at least the next twelve months. Although we have certain limited additional borrowings allowed under our current debt agreements, including but not limited to PIK Interest (see
"Contractual Obligations"), we are dependent on cash and cash equivalents and operating cash flow to operate our business and fund our capital needs. However, our future liquidity is

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dependent
on a number of factors influencing our expected earnings and operating cash flows, including those discussed below in "Recent Trends, Risks and Uncertainties That May Affect
Operating Results, Liquidity and Capital Resources."



We generated $52.3 million in net cash flows from operating activities for the year ended December 31, 2008, compared to
$36.3 million for the year ended December 31, 2007, an increase of $16.0 million. Excluding changes in working capital, operating activities provided $68.7 million of cash
for the year ended December 31, 2008, relatively flat compared to $68.6 million of cash for the year ended December 31, 2007, generally reflecting increased earnings from our
larger subscriber base coupled with lower subscriber acquisition costs, offset by deterioration in our roaming margin and increased Sprint litigation related expenses. Sprint related working capital,
which includes fees and charges payable and receivable between us and Sprint, was a source of cash of $7.7 million for the year ended December 31, 2008 compared to a use of cash of
$9.8 million for the year ended December 31, 2007, primarily due to the timing of cash payments both to and from Sprint. For the year ended December 31, 2008,
non-Sprint related working capital used cash of $24.1 million, reflecting increased accounts receivable related to a higher subscriber base during the period. For the year ended
December 31, 2007, non-Sprint related working capital used cash of $22.5 million reflecting increased accounts receivable due to increased sales, timing of interest payments
in connection with the repurchase of our then outstanding debt as well as a general deterioration in our subscriber accounts receivable aging.

We
received $475.0 million in gross proceeds from our Secured Notes offering during the year ended December 31, 2007.

We
received approximately $0.2 million and $0.9 million from the sale of used equipment during the years ended December 31, 2008 and 2007, respectively, which was
primarily replaced with equipment we purchased from Nortel Networks. We currently expect to sell approximately $0.4 million of equipment in 2009 which was replaced with equipment we purchased
from Nortel Networks. These assets are classified as Assets held for sale at December 31, 2008.

For
the year ended December 31, 2008, we received $0.6 million from the exercise of options representing approximately 37,800 shares. This is compared to
$4.0 million in proceeds from the exercise of options representing approximately 261,900 shares in the year ended December 31, 2007. As of December 31, 2008, there were 820,777
exercisable stock options outstanding with a weighted average exercise price of $19.85. We cannot predict at what level, if any, cash generated from stock option exercises will continue in the future.
At December 31, 2008, the intrinsic value of all of our outstanding stock options was zero.



Cash flows used for investing activities for the year ended December 31, 2008 included $74.5 million for capital
expenditures. Included in this total was $70.5 million for new cell site construction and other network-related capital expenditures, of which $19.7 million was for EV-DO
Rev. A equipment, and $4.0 million for new stores, store improvements, IT and other corporate-related capital expenditures.

Cash
flows used for investing activities for the year ended December 31, 2007 included $39.7 million for capital expenditures. Included in this total was $34.7 for new cell
site construction and other network-related capital expenditures, of which $12.5 million was for EV-DO Rev. A equipment, and $5.0 million for new stores, store improvements,
information technology and other corporate-related capital expenditures.

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During
the year ended December 31, 2007, we used $290.0 million from our Secured Notes offering to repurchase all of our outstanding 111/2% notes and
113/8% notes. In connection with the repurchase, we paid $34.2 million in tender premium payments during the year ended December 31, 2007. Similarly, we used
$8.7 million to pay the related fees and expenses of the Secured Notes offering and related exchange offer during the year ended December 31, 2007.

On
April 26, 2007, our Board of Directors declared a special cash dividend of $11.00 per common share, approximately $187.0 million in the aggregate, payable to all holders
of record of our common stock on May 8, 2007. Of this, approximately $186.5 million was paid on May 16, 2007. The remaining unpaid dividends relate to restricted stock awards and
are being paid out starting in July 2007 as these awards vest. During the year ended December 31, 2008, we used approximately $142,000 to pay dividends related to these restricted stock award
vestings.

Our
uses of cash typically include providing for operating expenditures, debt service requirements and capital expenditures. We anticipate that total capital expenditures for 2009 will
be between $35.0 million and $45.0 million. This includes cash uses for new cell sites, information technology, and other network-related expenditures, including EV-DO Rev. A. Because
our long-term debt does not begin to mature until 2013, we do not believe the current tightening of the credit markets, unless prolonged, should have a significant impact on our ability to
refinance our debt.

We
continually evaluate our capital and debt capacity and how to prioritize the use of any excess cash, including for any or a combination of the following strategic options: increase
capital expenditures, pursue strategic acquisitions, pay cash dividends or distributions, repurchase of our stock, or retire or repurchase of our debt. In January, 2009, our Board of Directors
authorized us to repurchase up to $15.0 million of our common stock in a share repurchase program during the 12-month period beginning on the date of authorization. We may purchase
shares from time to time in open market or privately negotiated transactions at prices deemed appropriate by management, depending on market conditions, applicable laws and other factors. The share
repurchase program does not require us to repurchase any specific number of shares and may be discontinued at any time. On March 2, 2009, we elected to pay our August 1, 2009 interest
payment in relation to our Second Lien Notes entirely by increasing the principal amount of the outstanding Second Lien Notes (see "Contractual Obligations"). We have made no other
decisions regarding the future use of PIK Interest.



We have identified the following important trends and factors (as well as risks and uncertainties associated with such items) that
could impact our future financial performance. This section should be read in conjunction with Item 1A Risk Factors of Part I of this Annual Report on Form 10-K.



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68

---







69

---





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Please see "Part I, Item 3. Legal Proceedings" for a discussion regarding our commitments and contingencies.

Contractual Obligations

We are obligated to make future payments under various contracts we have entered into, including amounts pursuant to the senior secured
notes, capital leases and non-cancelable operating lease agreements for office space, cell sites, vehicles and office equipment. Future minimum contractual cash

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obligations
for the next five years and in the aggregate at December 31, 2008, are as follows (dollars in thousands):

Payments Due By PeriodTotal

Less than
1 Year

2-3 Years

4-5 Years

More than
5 YearsLong-term debt

$
475,000

$


$


$
300,000

$
175,000Cash interest(1)


116,735


29,569


47,046


32,795


7,325Operating leases(2)


116,014


41,785


54,512


16,615


3,102Capital lease obligations


708


89


187


198


234Total

$
708,457

$
71,443

$
101,745

$
349,608

$
185,661


---

Secured Notes:Our Secured Notes are senior secured obligations and are unconditionally guaranteed on a senior secured basis by all our
existing and
future domestic restricted subsidiaries. The First Lien Notes are secured by a first priority security interest, subject to permitted liens, in substantially all of our and our subsidiary guarantor
assets, including, but not limited to: (1) all the capital stock of each restricted subsidiary owned by us, or any subsidiary guarantor; (2) all deposit accounts, security accounts,
accounts receivable, inventory, investment property, inter-company notes, general intangible assets, equipment, instruments, contract rights, chattel paper, promissory notes and leases; (3) all
fixtures; (4) patents, trademarks, copyrights and other intellectual property; and (5) all proceeds of, and all other amounts arising from, the collection, sale, lease, exchange,
assignment, licensing, or other disposition or realization of the foregoing assets (collectively the "Collateral"); provided that the security documents provide that a portion of the capital stock of
any subsidiary shall automatically be deemed released from, and not to have been a part of, the Collateral to the extent necessary so as not to require the preparation and filing with the SEC of
separate audited financial statements of such subsidiary pursuant to Rule 3-16 of the SEC's accounting rules and regulations. The Second Lien Notes are secured by a second priority
security interest, subject to permitted liens, in the Collateral.

Our
Secured Notes contain covenants which restrict our ability to incur or guarantee additional indebtedness, merge, pay dividends, dispose of our assets, and certain other matters as
defined in the indentures. At December 31, 2008, we were in compliance with these covenants.

Upon
a change of control as defined in the indentures, we will be required to make an offer to purchase the Secured Notes at a price equal to 101% of the aggregate principal amount of
Secured Notes repurchased plus accrued and unpaid interest and liquidated damages, if any, to the date of purchase.

First Lien Notes:Interest on the First Lien Notes accrues at an annual rate equal to three-month
LIBOR plus 2.125% and is payable quarterly in cash on February 1, May 1, August 1 and November 1 of each year.

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We
may redeem all or a part of the First Lien Notes issued under the indenture upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid interest and liquidated damages, if any, on the First Lien Notes redeemed, to the applicable redemption date, if redeemed
during the twelve-month period beginning on May 1 of the years indicated below, subject to the rights of holders of First Lien Notes on the relevant record date to receive interest on the
relevant interest payment date:

Year

Percentage2008


101.000
%2009 and thereafter


100.000
%


Second Lien Notes:Interest on the Second Lien Notes accrues at an annual rate equal to three-month LIBOR plus 3.25% and is payable
quarterly on
February 1, May 1, August 1 and November 1 of each year. We may elect to pay interest on the Second Lien Notes entirely in cash or entirely by increasing the principal
amount of the Second Lien Notes ("PIK Interest"). PIK Interest on the Second Lien Notes accrues at an annual rate equal to three-month LIBOR plus 4.0%. On March 2, 2009, we elected
PIK Interest in relation to our August 1, 2009 interest payment on the Second Lien Notes. We have made no other decisions regarding the future use of PIK Interest.

We
may redeem all or a part of the Second Lien Notes issued under the indenture upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid interest and liquidated damages, if any, on the Second Lien Notes redeemed, to the applicable redemption date, if redeemed
during the twelve-month period beginning on May 1 of the years indicated below, subject to the rights of holders of Second Lien Notes on the relevant record date to receive interest on the
relevant interest payment date:

Year

Percentage2008


102.000
%2009


101.000
%2010 and thereafter


100.000
%


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Off-Balance Sheet Arrangements

Other than the operating lease commitments included above, we have no off-balance sheet arrangements that would have a
current or future material effect on our financial condition, changes in financial condition, revenue, expense, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States and require us
to select appropriate accounting policies. The assumptions and judgments we use in applying our accounting policies have a significant impact on our reported amounts of assets, liabilities, revenue
and expense. While we believe that the assumptions and judgments used in our estimates are reasonable, actual results may differ from these estimates under different assumptions or conditions.

We
have identified the most critical accounting policies upon which our financial status depends. The critical policies were determined by considering accounting policies that involve
the most complex or subjective decisions or assessments. We also have other policies considered key accounting policies; however, these policies do not meet the definition of critical accounting
policies because they do not generally require us to make estimates or judgments that are complex or subjective.

Revenue recognition.We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered, the
price is fixed or
determinable, and collectability is reasonably assured. We recognize service revenue from subscribers as they use the service. Likewise, we recognize roaming revenue from customers of Sprint and other
PCS Affiliates of Sprint as well as from customers of other wireless carriers as they use their service on our network.

Due
to the numerous bill cycle cutoffs throughout the month, we are required to estimate the unbilled but earned revenue from the bill cutoff date to the end of the reporting period.
These estimates are based on the number of days in a month from each bill cycle cutoff date to the end of the reporting period assuming customers use their service equally each day throughout the
month.

A
change in usage that would have changed the unbilled revenue by 10% for the year ended December 31, 2008 would have changed service and roaming revenue by approximately
$0.2 million and $0.5 million, respectively.

Allowance for doubtful accounts.We establish an allowance for doubtful accounts to cover probable losses. This allowance is
based on a number of
factors, including historical write-off and collection experience, historical trends of the collectability of our accounts receivable, changes in the percentage of our customers based on
their credit classification of prime or subprime, as determined by various credit scoring matrices, along with general economic trends.

Write-offs
and collections can both be affected by changes in the general economic and business climate which can be difficult to predict. In addition, Sprint PCS handles all
of our collection activity for us and gives us little visibility into changes in the collection process or regular reporting from third-party collection activity.

At
December 31, 2008, if our estimation of future write-offs reflected in our reserve had changed by 10%, bad debt expense would have changed by approximately
$0.8 million.

Long-lived asset recovery.Long-lived assets, excluding intangibles, consist of property and equipment. We record
depreciation on a straight-line basis based on our estimates of the useful economic life of these assets. For property and equipment, changes in technology or in our intended use of these
assets could cause the estimated life or the value of these assets to be reduced. In

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addition,
changes in general industry conditions could cause the value of certain of these assets to be reduced. Under Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," whenever events or conditions change such that the carrying amount may not be recoverable, the asset values must be reviewed for
impairment. Because of our history of net operating losses since emerging from bankruptcy in 2004, we perform, at least annually, an impairment test of our long-lived assets to be held and
used. This impairment analysis is performed by comparing the carrying value of a group of assets to future net cash flows. This analysis requires a significant amount of judgment in determining growth
rates for the company, future economic conditions, and future requirements of technological upgrades and advances. During the years ended December 31, 2008 and 2007, we recognized impairment
charges of $2.2 million and $0.4 million, respectively, related to assets held for sale (see Note 4, Property and Equipment, of the "Notes to Consolidated Financial Statements" in
this Annual Report on Form 10-K).

Besides
impairment analysis, estimates of estimated useful life can change rapidly with changes in technology or changes in equipment vendors, as we experienced in 2006. Because of our
decision to change the network equipment in our Horizon and Bright markets from Motorola to Nortel, we accelerated the useful lives on these assets and, as a result, we recorded additional
depreciation of approximately $1.4 million for the year ended December 31, 2006.

Intangible assets.Intangible assets, including goodwill, for us are the result of fresh-start accounting where our assets and
liabilities were
revalued to their fair value and as a result of our merger with Horizon PCS. Our definite life intangible assets consist of our right to provide service under the Sprint PCS affiliation agreements and
our customer base. The value assigned to each of these assets was done with the help of an outside appraisal and was done utilizing appraisals, commonly used discounted cash flow valuation methods and
selected price earnings multiples of publicly-traded companies similar to ours.

A
significant amount of judgment is involved in the estimates used with some of these valuation methods, including projected revenue growth, market and industry growth rates,
competition, and working capital and capital expenditure requirements. In addition, intangibles are subject to certain judgments when completing impairment analysis under SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 142 requires annual tests for impairment of goodwill and intangible assets that have indefinite useful lives and interim tests when an event has
occurred that more likely than not has
reduced the fair value of the assets. During the year ended December 31, 2007, we recognized a $1.2 million impairment charge related to our FCC license in Ohio (see Note 5,
Goodwill and Intangible Assets, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K).

We
record amortization expense of our definite life assets on a straight-line basis over the estimated remaining economic useful life of these assets. If we were to increase
the estimated economic useful life of these assets by 10%, our amortization expense for the year ended December 31, 2008 would have decreased by approximately $0.8 million. If we were to
decrease the estimated economic useful life of these assets by 10%, our amortization expense for the year ended December 31, 2008 would have increased by approximately $1.0 million.

Interest rate swap.We use an interest rate swap to manage interest rate risks associated with a portion of our variable rate
debt (see
Note 7, Interest Rate Swap, of the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K). The interest rate swap agreement qualifies and is
designated as a cash flow hedge under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." As such, the swap is accounted for as an asset or liability in the
consolidated balance sheet at fair value, including adjustment for nonperformance risk in accordance with SFAS No. 157, "Fair Value Measurements." Changes in fair value of the effective portion
of the swap are recorded in other comprehensive income (loss), net of income tax, until earnings are affected

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by
the variability in cash flows of the designated hedged item. Any ineffective changes in the value of the swap are recognized currently in interest expense in the consolidated statement of
operations.

Accounting
for an interest rate swap as a hedge requires that, at inception and over the term of the arrangement, the hedged item and related swap meet the requirements for hedge
accounting. The rules and interpretations related to hedge accounting are complex. Failure to apply this complex guidance correctly will result in all changes in the fair value of the swap being
reported currently in the Statement of Operations, without regard to offsetting changes in the fair value of the hedged item. The fair value of the interest rate swap is derived from a discounted cash
flow analysis based on the terms of the contract and observable market assumptions, including adjustment for nonperformance risk.

Income taxes.As part of the process of preparing our consolidated financial statements we are required to estimate our taxes in
each of the
jurisdictions of our operations. This process involves management estimating the actual current tax expense together with assessing temporary differences resulting from differing treatment of items
for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. We must then assess
the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent recovery is not likely, we must establish a valuation allowance. Future taxable income
depends on the ability to generate income in excess of allowable deductions. To the extent we establish a valuation allowance or change this allowance in a period, an expense/benefit is recorded
within the tax provision in the consolidated statement of operations.

Significant
management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against net
deferred tax assets. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to change the valuation allowance that could materially
impact our financial condition and results of operations.

In
addition, we adopted the provisions of Financial Accounting Standards Board Interpretation 48 ("FIN 48") on January 1, 2007. FIN 48 requires significant
judgment and estimates in determining how to account for uncertain tax positions the Company has taken or expects to take. The Company believes its income tax filing positions and deductions will be
sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company's financial condition, results of operations or cash flow. Pursuant to
FIN 48, no liability has been recorded for uncertain tax positions.

Stock-based compensation.SFAS No. 123R (Revised 2004) "Share-Based Payment" requires significant judgment and the use of
estimates in the
assumptions for the model used to value the share-based payment awards, including stock price volatility, and expected option terms. In addition, expected forfeiture rates for the share-based awards
must be estimated. Because of our small number of option grants, the relatively short period of time that we have operated as a public company, and the limited trading of our stock, we are limited in
our historical experience to use as a basis for these assumptions. While we believe that the assumptions and judgments used in our estimates are reasonable, actual results may differ from these
estimates under different assumptions or conditions.

New Accounting Pronouncements

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines
fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB released
FASB Staff Position, (FSP) SFAS 157-2Effective Date of FASB Statement No. 157, which delays the effective date of SFAS 157 for all
non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least
annually) to fiscal years beginning after November 15, 2008.

76

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We
adopted SFAS 157 as it applies to financial assets and liabilities as of January 1, 2008. We do not anticipate that the implementation of SFAS 157, as it relates to
non-financial assets and liabilities will have a material impact on our financial position, results of operations and cash flows. See Note 8, Fair Value of Financial Instruments, of
the "Notes to Consolidated Financial Statements" in this Annual Report on Form 10-K.

In
December 2007, the FASB issued Statement No. 141 (revised 2007), "Business Combinations" ("SFAS 141R"). SFAS 141R significantly changes the way companies account
for business combinations and will generally require more assets acquired and liabilities assumed to be measured at their acquisition-date fair value. Under SFAS 141R, legal fees
and other transaction-related costs are expensed as incurred and are no longer included in goodwill as a cost of acquiring the business. SFAS 141R also requires, among other things, acquirers
to estimate the acquisition-date fair value of any contingent consideration and to recognize any subsequent changes in the fair value of contingent consideration in earnings. In addition,
SFAS 141R amends FASB SFAS No. 109, Accounting for Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of
a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. SFAS 141R is effective
for fiscal years beginning after December 15, 2008 with early adoption prohibited. SFAS 141R is effective for us for any business combinations with an acquisition date on or after
January 1, 2009. We will apply the provisions of SFAS 141R to any business combinations within the scope of SFAS 141R after its effective date.

In
March 2008 the FASB issued Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133"
("SFAS 161"). SFAS 161 amends and expands the disclosure requirements of FASB Statement No. 133, requiring enhanced disclosures about our hedging activities. We are required to
provide enhanced disclosures about (a) how and why we use derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement
No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect our financial position, results of operations, and cash flows. SFAS
No. 161 is effective for fiscal years and interim periods beginning after December 15, 2008, with comparative disclosures of earlier periods encouraged upon initial adoption. We do not
anticipate that
the adoption of this statement will have a material impact on our consolidated financial statement footnote disclosures.

77

---



ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not engage in commodity futures trading activities. Although we entered into a derivative financial instrument transaction for
hedging purposes as discussed below, we do not enter into derivative financial instrument transactions for trading or other speculative purposes. We also do not engage in transactions in foreign
currencies that could expose us to market risk. Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness.

In
July 2007, we entered into an interest rate swap agreement that effectively fixes the interest rate on $300.0 million of our variable rate indebtedness at 7.47% for three years
starting August 1, 2007. The fair value of our interest rate swap was a $16.6 million liability at December 31, 2008. A hypothetical increase of 100 basis points in average market
interest rates would increase the fair value of our interest rate swap by approximately $4.8 million. A decrease of 100 basis points in average market interest rates would decrease the fair
value of our interest rate swap by approximately $4.9 million. A prospective increase of 100 basis points in the interest rate applicable to the remaining $175.0 million of variable rate
indebtedness would result in an increase of approximately $1.8 million in our annual interest expense. At December 31, 2008, after consideration of the interest rate swap described
above, approximately 37% of our debt is subject to variable interest rates.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements required by this item are submitted as a separate section of this Annual Report on
Form 10-K (see "Index to Consolidated Financial Statements," commencing on page F-1 hereof).

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Each of our Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Based on such
evaluation, such officers have concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures are effective in alerting them on a timely basis to
material information relating to us (including our consolidated subsidiaries) required to be included in our reports filed or submitted under the Exchange Act.

We
place reliance on Sprint PCS to adequately design its internal controls with respect to the processes established to provide financial information and other information to us and the
other PCS Affiliates of Sprint. To address this issue, Sprint engages an independent registered public accounting firm to perform a periodic evaluation of these controls and to provide a "Report on
Controls Placed in Operation and Tests of Operating Effectiveness for Affiliates" under guidance provided in Statement of Auditing Standards No. 70. This report was provided to us in 2008.

There
have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

78

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Management Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.

Any
internal control system, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Accordingly, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our
management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008. This assessment was based on the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal ControlIntegrated Framework. Based on this assessment, management believes that, as of
December 31, 2008, our internal control over financial reporting was effective.

Deloitte &
Touche LLP, our independent registered public accounting firm, issued an attestation report on our internal control over financial reporting. Their report
appears below.

/s/ Timothy M. Yager

/s/ Stebbins B. Chandor, Jr.Timothy M. Yager
President and Chief Executive Officer
March 3, 2009

Stebbins B. Chandor, Jr.
Executive Vice President and Chief Financial Officer
March 3, 2009


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
iPCS, Inc. and subsidiaries
Schaumburg, Illinois

We
have audited the internal control over financial reporting of iPCS, Inc. and subsidiaries (the Company) as of December 31, 2008, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing
similar functions, and effected by the company's board of directors, management, and other personnel 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. A company's internal control over financial reporting includes those policies and
procedures that

79

---



(1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are
subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended
December 31, 2008 of the Company and our report dated March 3, 2009 expressed an unqualified opinion on those financial statements.

/s/
DELOITTE & TOUCHE LLP

Chicago,
Illinois
March 3, 2009

ITEM 9B.    OTHER INFORMATION

None.

80

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is incorporated by reference to our proxy statement relating to our 2009 annual meeting of
stockholders.

ITEM 11.    EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference to our proxy statement relating to our 2009 annual meeting of
stockholders.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is incorporated by reference to our proxy statement relating to our 2009 annual meeting of
stockholders.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated by reference to our proxy statement relating to our 2009 annual meeting of
stockholders.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is incorporated by reference to our proxy statement relating to our 2009 annual meeting of
stockholders.

81

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES



82

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

iPCS, Inc.By:

/s/ TIMOTHY M. YAGER Timothy M. Yager President and Chief Executive OfficerDate: March 3, 2009


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Name

Title

Date/s/ TIMOTHY M. YAGER Timothy M. Yager

Director, President and
    Chief Executive Officer
(Principal Executive Officer)

March 3, 2009/s/ TIMOTHY G. BILTZ Timothy G. Biltz

Director

March 3, 2009/s/ JEFFREY W. JONES Jeffrey W. Jones

Director

March 3, 2009/s/ RYAN L. LANGDON Ryan L. Langdon

Director

March 3, 2009/s/ KEVIN M. ROE Kevin M. Roe

Director

March 3, 2009/s/ MIKAL J. THOMSEN Mikal J. Thomsen

Director

March 3, 2009/s/ NICHOLAS J. VANTZELFDE Nicholas J. Vantzelfde

Director

March 3, 2009/s/ ERIC L. ZINTERHOFER Eric L. Zinterhofer

Director

March 3, 2009/s/ STEBBINS B. CHANDOR, JR. Stebbins B. Chandor, Jr.

Executive Vice President and
    Chief Financial Officer
(Principal Financial Officer)

March 3, 2009/s/ JAMES F. INGOLD James F. Ingold

Vice President and Controller
(Principal Accounting Officer)

March 3, 2009


83

---





iPCS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PageReport of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets as of December 31, 2008 and 2007


F-3Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006


F-5Consolidated Statements of Stockholders' Equity (Deficiency) for the years ended December 31, 2008, 2007 and 2006


F-6Notes to Consolidated Financial Statements


F-7


F-1

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
iPCS, Inc. and subsidiaries
Schaumburg, Illinois

We
have audited the accompanying consolidated balance sheets of iPCS, Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of iPCS, Inc. and subsidiaries at December 31, 2008
and 2007, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2008, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 3, 2009, expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
DELOITTE & TOUCHE LLP

Chicago,
Illinois
March 3, 2009

F-2

---



iPCS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

December 31,
2008

December 31,
2007AssetsCurrent Assets:Cash and cash equivalents

$
55,940

$
77,599Accounts receivable, net of allowance for doubtful accounts of $8,125 and $9,635, respectively


37,859


29,774Receivable from Sprint (Note 3)


25,623


41,509Inventories, net of reserve for obsolescence of $769 and $249, respectively


5,465


5,277Assets held for sale (Note 4)


389


2,680Prepaid expenses


7,223


6,792Other current assets


63


81Total current assets


132,562


163,712Property and equipment, net (Note 4)


162,014


128,677Financing costs, net (Note 2)


6,419


7,794Deferred customer activation costs


3,816


4,728Intangible assets, net (Note 5)


90,602


99,777Goodwill (Note 5)


141,783


141,783Other assets


416


353Total assets

$
537,612

$
546,824Liabilities and Stockholders' DeficiencyCurrent Liabilities:Accounts payable

$
5,051

$
6,136Accrued expenses


18,337


14,791Payable to Sprint (Note 3)


41,067


49,205Deferred revenue


13,410


11,176Accrued interest


5,519


6,216Current maturities of long-term debt and capital lease obligations (Note 6)


37


30Total current liabilities


83,421


87,554Deferred customer activation fee revenue


3,816


4,728Interest rate swap (Note 7)


16,621


11,607Other long-term liabilities


6,551


7,331Long-term debt and capital lease obligations, excluding current maturities (Note 6)


475,401


475,438Total liabilities


585,810


586,658Commitments and contingencies (Note 14)Stockholders' Deficiency:Preferred stock, par value $.01 per share; 25,000,000 shares authorized; none issued





Common stock, par value $.01 per share; 75,000,000 shares authorized,
17,163,221 and 17,112,244 shares issued and outstanding, respectively


172


171Additional paid-in-capital


167,531


161,072Accumulated deficiency


(199,280
)

(189,470
)Accumulated other comprehensive loss (Note 13)


(16,621
)

(11,607
)Total stockholders' deficiency


(48,198
)

(39,834
)Total liabilities and stockholders' deficiency

$
537,612

$
546,824


See Notes to consolidated financial statements.

F-3

---



iPCS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share data)

For the Year
Ended
December 31,
2008

For the Year
Ended
December 31,
2007

For the Year
Ended
December 31,
2006Revenue:Service revenue

$
383,962

$
358,154

$
316,513Roaming revenue


127,234


166,349


161,848Equipment and other


14,321


13,583


14,061Total revenue


525,517


538,086


492,422Operating Expense:Cost of service and roaming


286,382


313,629


285,979Cost of equipment


55,968


51,358


41,707Selling and marketing


71,080


75,626


74,293General and administrative


35,954


26,915


20,944Depreciation (Note 4)


43,581


46,097


50,522Amortization of intangible assets (Note 5)


9,176


31,576


37,958Loss on disposal of property and equipment, net


450


151


574Total operating expense


502,591


545,352


511,977Operating income (loss)


22,926


(7,266
)

(19,555
)Interest income


1,722


4,930


5,490Interest expense


(33,959
)

(36,640
)

(32,086
)Debt extinguishment costs (Note 6)





(30,501
)

Other income, net


101


146


112Loss before provision for income tax


(9,210
)

(69,331
)

(46,039
)Provision for income tax (Note 9)


600





Net loss

$
(9,810
)
$
(69,331
)
$
(46,039
)Basic and diluted loss per share of common stock:Loss available to common stockholders

$
(0.57
)
$
(4.08
)
$
(2.76
)Weighted average basic and diluted common shares outstanding


17,153,838


16,999,617


16,703,142


See
Notes to consolidated financial statements.

F-4

---



iPCS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Year
Ended
December 31,
2008

For the Year
Ended
December 31,
2007

For the Year
Ended
December 31,
2006Cash Flows from Operating Activities:Net loss

$
(9,810
)
$
(69,331
)
$
(46,039
)Adjustments to reconcile net loss to net cash flows provided by operating activities:Loss on disposal of property and equipment, net


450


151


574Depreciation and amortization


52,757


77,673


88,480Non-cash interest expense, net of amortization of debt fair value adjustment


1,375


717


(650
)Debt extinguishment costs





30,501


Stock-based compensation expense


5,836


9,914


2,496Provision for doubtful accounts


18,040


18,994


10,893Purchases of investments








(22,447
)Sales of investments








22,447Changes in assets and liabilities:Accounts receivable


(26,125
)

(19,068
)

(9,565
)Receivable from Sprint


15,886


(785
)

3,469Inventories, net


(188
)

(986
)

(708
)Prepaid expenses, other current and long term assets


431


(593
)

(2,667
)Accounts payable, accrued expenses and other long term liabilities


429


(3,455
)

681Payable to Sprint


(8,138
)

(8,990
)

(2,008
)Deferred revenue


1,321


1,587


2,325Net cash flows provided by operating activities


52,264


36,329


47,281Cash Flows from Investing Activities:Purchases of property and equipment


(74,467
)

(39,693
)

(44,458
)Proceeds from disposition of property and equipment


156


878


4,127Net cash flows used in investing activities


(74,311
)

(38,815
)

(40,331
)Cash Flows from Financing Activities:Proceeds from senior secured notes





475,000


Repayments of senior notes





(290,000
)

Tender premium of senior notes





(34,155
)

Payments on capital lease obligations


(30
)

(24
)

(11
)Debt financing costs





(8,711
)

Proceeds from the exercise of stock options


582


4,020


2,723Payment of special cash dividend


(142
)

(186,544
)

Repurchase of common stock


(22
)




Net cash flows provided by (used in) financing activities


388


(40,414
)

2,712Net increase (decrease) in cash and cash equivalents


(21,659
)

(42,900
)

9,662Cash and cash equivalents at beginning of year


77,599


120,499


110,837Cash and cash equivalents at end of year

$
55,940

$
77,599

$
120,499Supplemental disclosure of cash flow informationcash paid for interest (net of amount capitalized)

$
33,186

$
39,352

$
32,616Supplemental disclosure for non-cash investing activities:Accounts payable and accrued expenses incurred for the acquisition of property, equipment and construction in progress


1,796


1,254


1,976Capital lease obligations incurred for the acquisition of property and equipment








106Adjustment to goodwill (Note 5)








4,608Supplemental disclosure for non-cash financing activities:special cash Dividends declared, but not paid

$


$
471

$



See Notes to consolidated financial statements.

F-5

---



iPCS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

(Dollars in thousands, except share data)

Common Stock





Accumulated
Other
Comprehensive
Loss

Total
Stockholders'
Equity
(Deficiency)Additional
Paid-in-Capital

Accumulated
DeficiencyShares

AmountBalance at December 31, 2005


16,656,352


167


328,938


(74,100
)




255,005Net loss











(46,039
)




(46,039
)Forfeitures of restricted stock


(1,042
)













Exercise of stock options


118,750


1


2,722








2,723Stock-based compensation expense








2,496








2,496Balance at December 31, 2006


16,774,060


168


334,156


(120,139
)




214,185Comprehensive loss:Net loss











(69,331
)




(69,331
)Unrealized loss on interest rate swap














(11,607
)

(11,607
)Comprehensive loss











(69,331
)

(11,607
)

(80,938
)Issuance of restricted stock


76,284


1


(1
)







Exercise of stock options


261,900


2


4,018








4,020Declaration of special cash
dividend








(187,015
)







(187,015
)Stock-based compensation expense








9,914








9,914Balance at December 31, 2007


17,112,244


171


161,072


(189,470
)

(11,607
)

(39,834
)Comprehensive loss:Net loss











(9,810
)




(9,810
)Unrealized loss on interest rate swap














(5,014
)

(5,014
)Comprehensive loss











(9,810
)

(5,014
)

(14,824
)Issuance of restricted stock


21,705














Forfeitures of restricted stock


(7,367
)













Repurchase of common stock


(1,184
)




(22
)







(22
)Exercise of stock options


37,823


1


581








582Forfeitures of special cash
dividend








64








64Stock-based compensation expense








5,836








5,836Balance at December 31, 2008


17,163,221

$
172

$
167,531

$
(199,280
)
$
(16,621
)
$
(48,198
)


See Notes to consolidated financial statements.

F-6

---



iPCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)   Business and Basis of Presentation

iPCS, Inc. (the "Company" or "iPCS") is a holding company that operates as a PCS Affiliate of Sprint through three wholly owned subsidiaries: iPCS
Wireless, Inc., Horizon Personal Communications, Inc., and Bright Personal Communications Services, LLC. Each of these subsidiaries is a party to separate affiliation agreements
with Sprint PCS, the operator of a 100% digital wireless personal communications services ("PCS") network with licenses to provide voice and data service to the entire United States population. These
affiliation agreements, as amended, grant iPCS the exclusive right to sell wireless mobility communications network products and services under the Sprint brand in 81 markets, including markets in
Illinois, Indiana, Iowa, Michigan, Pennsylvania, Ohio, Maryland, Nebraska, New York, New Jersey, Tennessee and West Virginia.

(2)   Summary of Significant Accounting Policies



The accompanying financial statements include the accounts of the Company and its subsidiaries, iPCS Wireless, Inc., iPCS
Equipment, Inc., Horizon Personal Communications, Inc., Bright PCS Holdings, Inc. and Bright Personal Communications Services, LLC. All intercompany balances and
transactions have been eliminated in consolidation.



Cash and cash equivalents include cash on hand, demand deposits and investment grade commercial paper and money market funds with
original maturities of three months or less. Cash equivalents are stated at fair value which approximates cost. Included in cash equivalents is approximately $41.3 million and
$59.9 million of commercial paper and money market funds at December 31, 2008 and 2007, respectively (see Note 8).



Estimates are used in determining the allowance for doubtful accounts to cover probable losses. The Company's estimate of the allowance
for doubtful accounts is based on a number of factors including historical write-off and collection experience, historical trends of the uncollectibility of the Company's accounts
receivable and general economic trends. Using this information, the Company estimates allowances for uncollectibility to represent the best estimate of future outcomes. Bad debt expense as a
percentage of service revenue for the years ended December 31, 2008, 2007 and 2006 was 4.7%, 5.3% and 3.4%, respectively.



Inventory consists of wireless handsets and related accessories held for resale. Inventories are carried at the lower of cost or market
using the first-in, first-out method. Cost is based on prices paid to Sprint. Market is determined using replacement cost which is consistent with industry practices. The
Company maintains a reserve for
obsolete or excess handset inventory for models that remain in inventory after 90 days of being discontinued by Sprint PCS.

F-7

---





Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided
using the straight-line method over the estimated useful lives of the assets or related lease term. Useful lives for assets used by the Company are as follows:

Useful LifeBuilding

35 yearsNetwork assets

5-15 yearsComputer equipment

3 yearsFurniture, fixtures and office equipment

3-5 yearsVehicles

3-5 years


Leasehold
improvements are amortized over the shorter of the remaining term of the lease or the estimated useful life of the improvement. Construction in progress includes expenditures
for the purchase of capital equipment, design services, and construction services related to the Company's network. The Company capitalizes interest on its construction in progress activities.
Interest capitalized for the years ended December 31, 2008, 2007 and 2006 totaled $1.7 million, $0.7 million and $0.6 million, respectively. When the network assets are
placed in service, the Company transfers the assets from construction in progress to network assets and depreciates those assets over their estimated useful life.



Costs incurred in connection with the first and second lien senior secured floating rate notes due 2013 and 2014, respectively, were
deferred and are amortized to interest expense over the term of each senior secured note issuance using the straight-line method (see Note 6). Costs incurred in connection with the
111/2% senior notes and the 113/8% senior notes were deferred and were amortized to interest expense over the eight year term of each senior note issuance using the
straight-line method. In conjunction with issuance of the senior secured notes, the Company repurchased all of its outstanding 111/2% senior notes and 113/8%
senior notes and wrote-off the unamortized amount of the deferred financing costs related to these
senior notes to debt extinguishment costs (see Note 6). Accumulated amortization expense at December 31, 2008 and 2007 was $2.3 million and $0.9 million, respectively.



Goodwill and intangible assets have been recorded in accordance with fresh-start accounting as a result of the Company's reorganization
in 2004 and also as a result of purchase accounting in connection with its merger with Horizon PCS, Inc. ("Horizon PCS") in 2005. Identifiable intangibles consist of the Sprint
affiliation agreements, the subscriber base at the time of the reorganization and merger with Horizon PCS and a Federal Communications Commission ("FCC") license for a small market in Ohio owned by
Horizon Personal Communications, Inc. The intangible assets relating to the Sprint affiliation agreements are being amortized straight-line over the remaining life of the
agreements. The subscriber base intangible assets are being amortized straight-line over the estimated life of the subscribers or approximately 30 months. The FCC license has an
indefinite life and is not being amortized.

In
conformity with SFAS No. 142, "Goodwill and Other Intangibles," the Company does not amortize its indefinite life intangibles, which include goodwill and the FCC license in
Ohio. Under SFAS No. 142, the Company is required to test these assets for impairment at least annually or more frequently if indicators of impairment exist. The impairment test for goodwill
uses a two-step approach, which is performed at the reporting unit level. Step one compares the fair value of the net assets of the reporting unit to its carrying value. Fair value is
determined using a discounted cash flow model. If the

F-8

---



carrying
value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit's goodwill to its implied fair value.
If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment loss. The Company performed its annual goodwill impairment test in the third
quarter of 2008 and determined no impairment was necessary. Due to changes in market and economic conditions during the fourth quarter of 2008, the Company also performed an impairment test as of
December 31, 2008 and determined no impairment was necessary. The impairment test for other indefinite life intangible assets consists of a comparison of the fair value of the intangible asset
with its carrying value. If the carrying amount exceeds its fair value, the excess is required to be recorded as an impairment loss. The Company tested the value assigned to the FCC license in the
third and fourth quarters of 2008 and determined no impairment was necessary. The Company recognized a $1.2 million impairment charge for the year ended December 31, 2007 (see
Note 5).



The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 144 requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset group to future net cash flows expected to be generated by the asset group. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. The Company performed its annual impairment test of
long-lived assets in the third quarter of 2008, due to operating loss, and determined no impairment was necessary. Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell. The Company currently has for sale its remaining Motorola equipment which was replaced with Nortel equipment. The Company classifies these assets as Assets held for
sale. During the years ended December 31, 2008 and 2007, the Company recognized impairment charges of $2.2 million and $0.4 million, respectively, related to these assets to
reduce the carrying value in accordance with SFAS 144. The impairment charges are included in depreciation and the reduction in carrying value records these assets at fair value less costs to
sell in anticipation of their future sale (see Note 4).



The Company entered into an interest rate swap to manage interest rate risks associated with a portion of its variable rate debt (see
Note 7). The interest rate swap agreement qualifies and is designated as a cash flow hedge under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." As such,
the swap is accounted for as an asset or liability in the consolidated balance sheets at fair value, including adjustment for nonperformance risk in accordance with SFAS No. 157, "Fair Value
Measurements." Changes in fair value of the effective portion of the swap are recorded in other comprehensive income (loss), net of income taxes, until earnings are affected by the variability in cash
flows of the designated hedged item. Any ineffective changes in the value of the swap are recognized currently as interest expense in the consolidated statements of operations.

If,
in the future, the swap is determined to no longer be effective as a hedge, is sold or terminated, or is de-designated from the hedge relationship, any net gain or loss
remaining in Accumulated other comprehensive loss would be reclassified into earnings in the same periods during which the hedged debt payments affect earnings. If the cash flow hedge is discontinued
in the future because it becomes probable that the hedged debt payments will not occur, the net gain or loss would be reclassified into earnings in that period.

F-9

---





The Company is required to estimate its taxes in each of the jurisdictions of operation which involves management estimating the actual
current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and
liabilities. The Company must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent realization is not more likely than not, the
Company must establish a valuation allowance. Future taxable income depends on the ability to generate income in excess of allowable deductions. To the extent the Company establishes a valuation
allowance or increases this allowance in a period, an expense is recorded within the tax provision in the consolidated statements of operations. Significant management judgment is required in
determining the Company's provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The current year tax provision
relates to state income taxes based upon gross receipts in applicable states.



The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or
determinable, and collectability is reasonably assured. Emerging Issues Task Force ("EITF") Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables"
addresses accounting for arrangements that involve multiple revenue-generating activities. In applying this guidance, separate contracts with the same party, entered into at or near the same time, are
presumed to be a bundled transaction and the Company is not required to consider whether customers can use their handsets without the wireless service provided to them. EITF 00-21
requires the Company to account for the sales of handsets from the Company's retail stores and warehouse as separate units of accounting from the subsequent service to the customers. The Company
recognizes activation fee revenue generated from its retail stores and warehouse as equipment revenue. In addition, the Company recognizes the portion of the activation fee costs related to the
handsets sold from its retail stores at the time of sale. The Company applies the provisions of Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition" and defers and amortizes
activation fee revenue and costs generated by subscribers outside its retail stores.

The
Company recognizes service revenue, net of taxes, from its customers as they use the service. The Company recognizes a reduction of recorded revenue for billing adjustments,
estimated uncollectible late payment fees and estimated uncollectible early cancellation fees.

Roaming
revenue includes roaming revenue when Sprint PCS customers and customers of other PCS Affiliates of Sprint use the Company's network, roaming revenue when non-Sprint
PCS customers use the Company's network, and reseller revenue. Roaming revenue is recorded based on a per minute charge for voice and 2G data services and a per kilobyte charge for 3G data services.

Equipment
revenue, net of any rebates or discounts, includes the proceeds from sales of handsets and accessories sold through the Company's retail channel and to the Company's local
third party distribution channel. Handset sales are recorded net of an allowance for sales returns. The allowance is estimated based on Sprint PCS's handset return policy that allows customers to
return handsets for a full refund within 30 days of purchase. When handsets are returned, the Company may be able to resell the handsets to other customers at little additional cost. When
handsets are returned to Sprint PCS for refurbishing, the Company is entitled to purchase replacement refurbished phones which it can purchase at a reduced price. As mentioned above, in accordance
with EITF 00-21, equipment revenue also includes an allocation of the activation fee revenue as part of revenue arrangements with multiple deliverables.

The
Company participates in the Sprint PCS national and regional distribution programs in which national retailers, such as Radio Shack and Best Buy, sell Sprint PCS products and
services. In order to

F-10

---



facilitate
the sale of Sprint PCS products and services, national retailers purchase wireless handsets from Sprint PCS for resale and receive compensation from Sprint PCS for products and services
sold. For industry competitive reasons, Sprint PCS may subsidize the price of these handsets by selling the handsets at a price below cost or by offering equipment rebates. In many cases, the handset
is sold to the customer above cost, but the cost to the customer is offset by rebates. Under the Sprint PCS agreements, when a national retailer sells a handset purchased from Sprint PCS to a
subscriber in the Company's territory, the Company is to reimburse or receive from Sprint PCS the handset subsidy, net of rebates, which Sprint PCS originally incurred. The national retailers sell
Sprint PCS wireless services under the Sprint PCS brands and trademarks. The Company does not receive any revenue from the sale of wireless handsets by national retailers. The Company classifies these
Sprint PCS wireless handset subsidies and rebates as a selling and marketing expense when related to a new customer and as a cost of service when related to an existing customer.

Sprint
PCS retains 8% of billed service revenue from Sprint PCS customers based in the Company's markets and from non-Sprint PCS customers who roam onto the Company's
network. The amount retained by Sprint PCS is recorded as cost of service and roaming. Revenue generated from the sale of handsets and accessories and from roaming services provided to Sprint PCS's
customers and customers of other PCS Affiliates of Sprint who are not based in the Company's markets are not subject to the 8% affiliation fee for Sprint PCS.



The Company expenses advertising costs when the advertisement occurs. For the years ended December 31, 2008, 2007 and 2006,
advertising expense was $14.7 million, $16.2 million and $17.8 million, respectively. Prepaid advertising expenses were not significant at December 31, 2008 and 2007.



The Company measures the cost of employee and director services received in exchange for an award of equity-based securities using the
fair value of the award on the date of the grant. The Company recognizes that cost over the period that the award recipient is required to provide service to the Company in exchange for the award (see
Note 11).



Comprehensive loss includes net loss and the effective unrealized portion of the changes in the fair value of the Company's interest
rate swap.



Basic and diluted loss per share for the Company are calculated by dividing the net loss by the weighted average number of shares of
common stock of the Company. The calculations are made in accordance with SFAS No. 128, "Earnings Per Share." The basic and diluted loss per share are the same because the inclusion of the
incremental potential common shares of common stock from any assumed exercise of stock options is antidilutive. Potential shares of common
stock excluded from the loss per share computations for the years ended December 31, 2008, 2007 and 2006 were 1,397,947, 851,431 and 650,603, respectively.



Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities at the dates of the consolidated balance sheets and revenue and expense during the reporting periods to prepare these

F-11

---



consolidated
financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.



The Company operates its business in one operating segment, the operation and management of its PCS network. The Company's chief
operating decision maker evaluates financial information results based upon total Company results when making strategic decisions.



The Company relies on Sprint PCS to provide certain back-office functions such as billing and customer care, activation of
new subscribers, handset logistics and technology development. Should Sprint PCS be unable to provide these services, the Company could be negatively impacted (see Note 3).

The
Company maintains cash and cash equivalents in accounts with a financial institution in excess of the amount insured by the Federal Deposit Insurance Corporation.

The
Company's PCS network equipment is supplied solely by Nortel Networks. If Nortel Networks were to cease or delay supplying, repairing or supporting equipment or exert bargaining
power over price, quality, warranty claims or other terms relating to its equipment, the Company could be negatively impacted. Nortel Networks filed for Chapter 11 bankruptcy protection in
January 2009.

Concentrations
of credit risk with respect to accounts receivable are limited due to a large customer base. Initial credit evaluations of customers' financial condition are performed and
security deposits are obtained for customers with a higher credit risk. The Company maintains an allowance for doubtful accounts for potential credit losses.

No
single customer amounted to 10% or more of total revenue for the years ended December 31, 2008, 2007 and 2006.



In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines
fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB released
FASB Staff Position, (FSP) SFAS 157-2Effective Date of FASB Statement No. 157, which delays the effective date of SFAS 157 for all
non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least
annually) to fiscal years beginning after November 15, 2008. The Company adopted SFAS 157 as it applies to financial assets and liabilities as of January 1, 2008. The Company does
not anticipate that the implementation of SFAS 157, as it relates to non-financial assets and liabilities will have a material impact on its financial position, results of
operations and cash flows. See Note 8 for further discussion of fair value measurements of financial instruments.

In
December 2007, the FASB issued Statement No. 141 (revised 2007), "Business Combinations" ("SFAS 141R"). SFAS 141R significantly changes the way companies account
for business combinations and will generally require more assets acquired and liabilities assumed to be measured at their acquisition-date fair value. Under SFAS 141R, legal fees
and other transaction-related costs are expensed as incurred and are no longer included in goodwill as a cost of acquiring the business. SFAS 141R also requires, among other things, acquirers
to estimate the acquisition-date fair value of any contingent consideration and to recognize any subsequent changes in the fair value of contingent consideration in earnings. In addition,
SFAS 141R amends FASB SFAS No. 109, Accounting for Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are

F-12

---



recognizable
because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances.
SFAS 141R is effective for fiscal years beginning after December 15, 2008 with early adoption prohibited. SFAS 141R is effective for the Company for any business combinations with
an acquisition date on or after January 1, 2009. The Company will apply the provisions of SFAS 141R to any business combinations within the scope of SFAS 141R after its effective
date.

In
March 2008, the FASB issued Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133"
("SFAS 161"). SFAS 161 amends and expands the disclosure requirements of FASB Statement No. 133, requiring enhanced disclosures about the Company's hedging activities. The Company
is required to provide enhanced disclosures about (a) how and why it uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB
Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect the Company's financial position, results of operations, and cash
flows. SFAS No. 161 is effective for fiscal years and interim periods beginning after December 15, 2008, with comparative disclosures of earlier periods encouraged upon initial adoption.
The Company does not anticipate that the adoption of this statement will have a material impact on its consolidated financial statement footnote disclosures.

(3)   Sprint Agreements

Each of iPCS Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC has entered into
affiliation agreements with Sprint. Under these agreements, which have been amended from time to time, most recently on March 3, 2008, Sprint provides the Company significant support services
such as customer service, billing, long distance transport services, national network operations support, national pricing plans, inventory logistics support, use of the Sprint and Sprint PCS brand
names, national advertising, national distribution, product development and supply of financial and operational data.

The
costs incurred by the Company for the support services provided by Sprint are determined on a per average monthly cash cost per user ("CCPU") rate and on a monthly cost per gross
addition ("CPGA") rate. For 2006, the CCPU rate was $6.75 and the CPGA rate was $23.00 in iPCS Wireless's territory and $22.00 in the Horizon/Bright territories. For 2007, the CCPU rate was $7.50 and
the CPGA rate was $20.00. For 2008, the CCPU rate is $6.50, subject to adjustment as described below, and the CPGA rate is $19.00.

The
CCPU rate in effect from 2008 through 2010 is to be reduced from the then current rate by $0.15 if the Company hits certain milestones with respect to its voluntary deployment of
EV-DO Rev. A, a recent version of the further evolution of code division multiple access ("CDMA") high-speed data technology called Evolution Data Optimized
("EV-DO"). Specifically, the CCPU rates set forth above are reduced by $0.15 from the then current rate when the Company's EV-DO Rev. A deployment covers at least
6.0 million in population ("POPs"); by another $0.15 from the then current rate when the Company covers at least 7.0 million POPs; and by another $0.15 from the then current rate when
the Company covers at least 9.0 million POPs. The Company's EV-DO Rev. A deployment exceeded 6.0 million POPs during June 2008 and exceeded 7.0 million POPs
during July 2008. As a result, the CCPU rate was reduced to $6.35 starting July 1, 2008, was further reduced to $6.20 starting August 1, 2008 for the remainder of 2008, and will be
further reduced to $5.85 and $5.55 for 2009 and 2010, respectively, subject to any further downward adjustments related to incremental EV-DO Rev. A coverage.

The
Company receives roaming revenue when subscribers of Sprint and other PCS Affiliates of Sprint incur minutes of use in the Company's territories, and the Company incurs expense
payable to Sprint and to other PCS Affiliates of Sprint when Sprint PCS subscribers based in the Company's

F-13

---



territory
incur minutes of use in the territories of Sprint and other PCS Affiliates of Sprint. Prior to January 1, 2008, the Company settled voice and 2G data roaming as well as 3G data
roaming separately with Sprint and the other PCS Affiliates of Sprint. Effective January 1, 2008, 3G data roaming is not settled separately with Sprint; however, the Company continues to settle
3G data roaming separately with the other PCS Affiliates of Sprint. For 2006, reciprocal roaming rates were $0.0580 per minute for voice and 2g data, excluding certain markets as described below, and
$0.0020 per kilobyte for 3G data. For 2007, reciprocal roaming rates were $0.0403 per minute for voice and 2G data, excluding certain markets as described below, and $0.0010 per kilobyte for 3G data.
For 2008, reciprocal roaming rates are $0.0400 per minute for voice and 2G data, excluding certain markets as described below, and $0.0003 per kilobyte for 3G data.

With
respect to certain of the Company's markets in western and eastern Pennsylvania, the Company receives the benefit of a special reciprocal rate for voice and 2G data of $0.10 per
minute. This special rate will terminate, with respect to each of these two sets of markets, on the earlier of December 31, 2011 or the first day of the calendar month which follows the first
calendar quarter during which the Company achieves a subscriber penetration rate of at least 7% of the Company's covered populations in those markets. The Company does not anticipate reaching a 7%
subscriber penetration rate in these markets in the foreseeable future.

The
Company's affiliation agreements with Sprint also provide the Company with protective rights to decline to implement certain future program requirement changes that Sprint proposes
that would adversely affect the Company's business. The Company also has a right of first refusal to build out new coverage within the Company's territory. If the Company does not exercise this right,
then Sprint may build out the new coverage, or may allow another PCS affiliate of Sprint to do so, in which case Sprint has the right to manage the new coverage.

Roaming
expense is recorded in cost of service and roaming within the statements of operations. Cost of service and roaming transactions with Sprint include the 8% affiliation fee, long
distance, roaming expense and Sprint's CCPU charges for support services. Cost of equipment relates to inventory sold by the Company that was purchased from Sprint under the Company's affiliation
agreements with Sprint. Selling and marketing transactions relate to subsidized costs on wireless handsets and commissions under Sprint's national distribution program.

For
the years ended December 31, 2008, 2007 and 2006, approximately 97% of the Company's revenue was derived from data provided by Sprint. Of the Company's cost of service and
roaming, 59%, 66% and 68% for the years ended December 31, 2008, 2007 and 2006, respectively, was derived from data provided by Sprint. The Company reviews all charges from Sprint and can
dispute certain of these charges in cases where the Company does not receive enough supporting detail to validate the charges or it does not believe Sprint can charge the Company for certain expenses
under the terms of the Sprint affiliation agreements. During the fourth quarter of 2008, the Company formally disputed various 2008 amounts which were actually or proposed to be charged or credited to
the Company by Sprint, including amounts for customer credits, late fees and bad debt recoveries. Resolution with respect to certain of these matters totaling approximately $2.5 million is
reflected in the Company's 2008 operating results. The remaining items, which were subject to a settlement reached on January 22, 2009, will result in a $4.3 million gain during the
first quarter of 2009. The resolution of these disputes does not address the potential for disputes related to these items going forward or to other items, some of which the Company formally disputed
in February 2009, including amounts for late fees and bad debt recoveries.

F-14

---



Amounts
relating to the Sprint affiliation agreements for the years ended December 31, 2008, 2007 and 2006 and as of December 31, 2008 and 2007 are as follows (in
thousands):

For the Year Ended
December 31, 2008

For the Year Ended
December 31, 2007

For the Year Ended
December 31, 2006Amounts included in the Consolidated Statements of Operations:Service revenue

$
383,962

$
358,154

$
316,513Roaming revenue

$
127,234

$
166,349

$
161,848Cost of service and roaming:Roaming

$
75,319

$
103,781

$
109,182Customer service


54,651


59,012


45,031Affiliation fees


30,096


28,106


24,788Long distance and other


8,804


15,653


14,902Total cost of service and roaming

$
168,870

$
206,552

$
193,903Cost of equipment

$
55,968

$
51,358

$
41,707Selling and marketing

$
10,871

$
15,769

$
19,860




December 31,
2008

December 31,
2007Amounts included in the Consolidated Balance Sheets:Receivable from Sprint

$
25,623

$
41,509Payable to Sprint


41,067


49,205


F-15

---



(4)   Property and Equipment, Net

Property and equipment, net consists of the following at December 31, 2008 and 2007 (in thousands):

December 31,
2008

December 31,
2007Network assets

$
295,550

$
232,874Land


114


114Building


1,566


1,566Computer equipment


6,773


5,043Furniture, fixtures and office equipment


9,744


8,086Vehicles


2,540


2,167Construction in progress


23,980


16,983Total property and equipment


340,267


266,833Less accumulated depreciation and amortization


(178,253
)

(138,156
)Total property and equipment, net

$
162,014

$
128,677


The
following is a summary of property and equipment under capital leases included in the accompanying consolidated balance sheets as follows (in thousands):

December 31,
2008

December 31,
2007Network assets

$
446

$
446Furniture, fixtures and office equipment


73


73Vehicles


1,916


1,940Less accumulated depreciation


(1,281
)

(622
)Net

$
1,154

$
1,837


The
Company's decision to replace Motorola equipment in its Horizon markets with Nortel equipment resulted in accelerated depreciation due to the retirement of assets before the end of
their estimated useful life. For the year ended December 31, 2006, the Company recorded $1.4 million of accelerated depreciation related to this replacement project.

The
Company currently has for sale its remaining Motorola equipment which was replaced with Nortel equipment. The Company classifies these assets as Assets held for sale. During the
years ended December 31, 2008 and 2007, the Company recognized impairment charges of $2.2 million and $0.4 million, respectively, related to these assets to reduce the carrying
value in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The impairment charges are included in depreciation and the reduction in
carrying value records these assets at fair value less costs to sell in anticipation of their future sale.

(5)   Goodwill and Intangible Assets

Goodwill, totaling $141.8 million, represents the excess of purchase price over the fair value of the net assets acquired, including identifiable
intangible assets. In connection with the merger with Horizon PCS in 2005, the Company adjusted goodwill for final purchase accounting in 2006. Goodwill is not deductible for income taxes.

F-16

---



Changes
in the carrying value of goodwill are as follows (in thousands):

December 31, 2008

December 31, 2007

December 31, 2006Goodwill, beginning of period

$
141,783

$
141,783

$
146,391Adjustment to goodwill








(4,608
)Goodwill, end of period

$
141,783

$
141,783

$
141,783


Intangible
assets represent the values assigned to the Company's customer base, the right to provide service under the Sprint affiliation agreements and an FCC license for a small market
in Ohio.

The
intangible assets relating to the customer base were amortized over the estimated average life of a customer of 30 months. The intangible assets related to customer bases were
fully amortized as of December 31, 2007. The intangible assets relating to the right to provide service under the Sprint affiliation agreements are being amortized over the remaining term of
the respective agreements. The FCC license was determined to have an indefinite life as it is expected to be renewed with minimal effort and cost.

The
Company recognized a $1.2 million impairment charge related to its FCC license in the year ended December 31, 2007 and such amount is included in Amortization of
intangible assets. This FCC license is for sale, however, the Company believes the sale of this asset is unlikely within the next year.

The
weighted average amortization period, gross carrying amount, accumulated amortization and net carrying amount of intangible assets at December 31, 2008 and 2007 are as follows
(in thousands):

December 31, 2008Weighted Average
Amortization
Period

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
ValueNon-amortized intangible asset:FCC license



$
300

$


$
300Amortized intangible assets:Right to provide service under the Sprint affiliation agreements

167 months


126,521


(36,219
)

90,302Customer base

30 months


71,956


(71,956
)

117 months

$
198,777

$
(108,175
)
$
90,602




December 31, 2007Weighted Average
Amortization
Period

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
ValueNon-amortized intangible asset:FCC license



$
300

$


$
300Amortized intangible assets:Right to provide service under the Sprint affiliation agreements

167 months


126,521


(27,044
)

99,477Customer base

30 months


71,956


(71,956
)

117 months

$
198,777

$
(99,000
)
$
99,777


F-17

---



The
amortization expense for the years ended December 31, 2008, 2007 and 2006 was $9.2 million, $30.4 million and $38.0 million, respectively. Aggregate
amortization expense relative to intangible assets for the periods shown below will be as follows:

Year ended December 31,2009

$
9,1762010


9,1762011


9,1762012


9,1762013


9,176Thereafter


44,422Total

$
90,302


(6)   Long-Term Debt and Capital Lease Obligations

Long-term debt and capital lease obligations consist of the following at December 31, 2008 and 2007 (in thousands):

December 31,
2008

December 31,
2007First lien senior secured floating rate notes

$
300,000

$
300,000Second lien senior secured floating rate notes


175,000


175,000Capital lease obligations


438


468Total long-term debt and capital lease obligations


475,438


475,468Less: current maturities


(37
)

(30
)Long-term debt and capital lease obligations, excluding current maturities

$
475,401

$
475,438


At
December 31, 2008, future minimum capital lease payments are as follows (in thousands):

Year

Capital Lease
Obligations2009

$
892010


922011


952012


972013


101Thereafter


234Total minimum payments


708Less: amount representing interest


(270
)Present value of minimum payments


438Less: current maturities


(37
)Capital lease obligations, excluding current maturities

$
401


First Lien and Second Lien Senior Secured Floating Rate Notes

The Company has outstanding $475.0 million in aggregate principal amount of senior secured notes, consisting of
$300.0 million in aggregate principal amount of First Lien Senior Secured Floating Rate Notes due 2013 ("First Lien Notes") and $175.0 million in aggregate principal amount of Second

F-18

---



Lien
Senior Secured Floating Rate Notes due 2014 ("Second Lien Notes" and together with the First Lien Notes, the "Secured Notes"). The offering of the Secured Notes closed April 23, 2007.

The
Secured Notes are senior secured obligations of the Company and are unconditionally guaranteed on a senior secured basis by all the Company's existing and future domestic restricted
subsidiaries. The First Lien Notes are secured by a first priority security interest, subject to permitted liens, in substantially all of the Company and its subsidiary guarantor assets, including,
but not limited to: (1) all the capital stock of each restricted subsidiary owned by the Company, or any subsidiary guarantor;
(2) all deposit accounts, security accounts, accounts receivable, inventory, investment property, inter-company notes, general intangible assets, equipment, instruments, contract rights,
chattel paper, promissory notes and leases; (3) all fixtures; (4) patents, trademarks, copyrights and other intellectual property; and (5) all proceeds of, and all other amounts
arising from, the collection, sale, lease, exchange, assignment, licensing, or other disposition or realization of the foregoing assets (collectively the "Collateral"); provided that the security
documents provide that a portion of the capital stock of any subsidiary shall automatically be deemed released from, and not to have been a part of, the Collateral to the extent necessary so as not to
require the preparation and filing with the SEC of separate audited financial statements of such subsidiary pursuant to Rule 3-16 of the SEC's accounting rules and regulations. The
Second Lien Notes are secured by a second priority security interest, subject to permitted liens, in the Collateral.

The
indentures governing the Secured Notes contain covenants which restrict the Company's and its restricted subsidiaries' ability to incur additional indebtedness, merge, pay dividends,
dispose of its assets, and certain other matters as defined in the indentures. At December 31, 2008, the Company was in compliance with these covenants.

Interest
on the First Lien Notes accrues at an annual rate equal to three-month LIBOR plus 2.125% and is payable quarterly in cash on February 1, May 1, August 1 and
November 1 of each year. Interest on the Second Lien Notes accrues at an annual rate equal to three-month LIBOR plus 3.25% and is payable quarterly on February 1, May 1,
August 1 and November 1 of each year. The Company may elect to pay interest on the Second Lien Notes entirely in cash or entirely by increasing the principal amount of the Second Lien
Notes ("PIK Interest"). PIK Interest on the Second Lien Notes accrues at an annual rate equal to three-month LIBOR plus 4.0%. Since issuance, the Company has paid all of its interest relating to the
Second Lien Notes in cash. On March 2, 2009, the Company elected PIK Interest in relation to its August 1, 2009 interest payment on the Second Lien Notes. The Company has made no other
decisions regarding the future use of PIK Interest. Three-month LIBOR for the Secured Notes resets on February 1, May 1, August 1 and November 1 of each year and was 3.19%
on December 31, 2008. On February 2, 2009, three-month LIBOR for the Secured Notes was 1.17%.

The
Company used a portion of the proceeds of the Secured Notes offering to repurchase all of its outstanding 111/2% notes and 113/8% notes (see below), as
well as to pay the related fees and expenses of the offering. The Company also used the remaining net proceeds from the Secured Notes offering, together with approximately $58.0 million of its
available cash, to pay a special cash dividend to common stockholders (see Note 12). In connection with the Secured Notes offering, for the year ended December 31, 2007, the Company
recorded debt extinguishment costs as follows (dollars in thousands):

Tender offer premium and consent costs

$
34,155Write off of remaining deferred financing costs of 111/2% and 113/8% senior notes


7,284Acceleration of the unamortized balance of the purchase price fair value adjustment to the 113/8% senior notes


(10,938
)Total debt extinguishment costs

$
30,501


F-19

---





The offering of 111/2% senior notes closed on April 30, 2004 in connection with the Company's reorganization in
that same year. As discussed above, the Company repurchased all of its outstanding 111/2% senior notes with the proceeds of its Secured Notes offering in April 2007.



In connection with the merger with Horizon PCS in 2005, iPCS, Inc. assumed the obligations for the $125.0 million of
113/8% senior notes previously issued by Horizon PCS. The allocation of the purchase price resulted in an increase of the value of the 113/8% senior notes of
approximately $14.7 million, which was recorded as long-term debt in the Consolidated Balance Sheet. This amount was to be amortized over the remaining life of the senior notes as a
reduction to interest expense. For the years ended December 31, 2007 and 2006, the reduction to interest expense was approximately $0.6 million and $2.1 million, respectively.
This amortization did not increase the principal amount due to the senior note holders or reduce the amount of interest owed to the senior note holders.

With
the proceeds of its Secured Notes offering in April 2007, the Company repurchased all of its outstanding 113/8% senior notes and reduced the unamortized balance of
the fair value adjustment for the 113/8% senior notes to zero.



Interest on capital lease obligations are all at fixed rates, which, on a weighted average basis, approximated 12.4% per annum at
December 31, 2008.

(7)   Interest Rate Swap

On July 20, 2007, the Company entered into an interest rate swap agreement for a notional amount of $300.0 million associated with the interest on
the Company's First Lien Notes effective August 1, 2007
for a period of three years. Under this agreement, the Company receives interest at a floating rate of three-month LIBOR and pays interest at a fixed rate of 5.34%, resulting in an effective rate of
7.47% throughout the term of the swap. The interest rate swap has been designated as a cash flow hedge. The fair value of the interest rate swap is recorded in Stockholders' Deficiency under
Accumulated other comprehensive loss, adjusted for nonperformance risk in accordance with SFAS 157 and net of applicable income taxes.

As
of December 31, 2008 and 2007, the fair value of the swap was approximately $16.6 million and $11.6 million, respectively, and is recorded on the Consolidated
Balance Sheets as a long-term liability and in Accumulated other comprehensive loss. The change in fair value of the swap for the year ended December 31, 2008 was an increase to the
liability of $5.0 million. The change in fair value of the swap for the year ended December 31, 2007 was $11.6 million. No component of the interest rate swap is excluded from the
assessment of effectiveness and no ineffectiveness has been recognized on the swap since inception.

The
amount of loss recorded in Accumulated other comprehensive loss at December 31, 2008 that is expected to be reclassified to interest expense in the next twelve months if
interest rates underlying the Company's fair value calculations remain unchanged is approximately $11.9 million.

(8)   Fair Value Measurements

Fair value estimates and assumptions and methods used to estimate the fair value of the Company's financial instruments are made in accordance with the
requirements of SFAS No. 107, "Disclosure about Fair Value of Financial Instruments" and SFAS No. 157, "Fair Value Measurements."

F-20

---



SFAS 157
clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a
basis for considering such assumptions, SFAS 157 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 are
observable inputs such as quoted prices in active markets; Level 2 are inputs other than the quoted prices in active markets that are observable either directly or indirectly; and
Level 3 are unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable
market data, when available, and to minimize the use of unobservable inputs when determining fair
value. On a recurring basis, the Company measures certain assets and liabilities at fair value, including certain of the Company's money market funds, commercial paper and interest rate swap.

The
following table presents the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2008 (in thousands):

December 31, 2008

December 31,
2007Fair Value

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

Fair ValueAssets:Money market funds(a)

$
27,194

$


$
27,194

$


$
11,029Commercial paper(a)


14,117





14,117





48,864Total assets measured at fair value

$
41,311

$


$
41,311

$


$
59,893Liabilities:Interest rate swap(b)

$
16,621

$


$
16,621

$


$
11,607Total liabilities measured at fair value

$
16,621

$


$
16,621

$


$
11,607


---

The
following table presents the Company's assets measured at fair value on a non-recurring basis as of December 31, 2008 (in thousands):

Fair Value

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

Impairment
RecognizedAssets held for sale(a)

$
389

$


$
389

$


$
2,161


---

F-21

---



The
following table presents carrying value and estimated fair value of the Company's financial instruments that are carried at historical cost (in thousands):

December 31, 2008

December 31, 2007Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair valueFirst lien senior secured floating rate notes(a)

$
300,000

$
211,500

$
300,000

$
282,750Second lien senior secured floating rate notes(a)


175,000


105,875


175,000


163,625


---

(9)   Income Taxes

The income tax (expense) benefit for the period differed from the amounts computed by applying the statutory U.S. Federal income tax rate of 35% as set forth
below:

For the Year
Ended December 31, 2008

For the Year
Ended December 31, 2007

For the Three
Months Ended
December 31, 2006U.S. Federal statutory rate


35.00
%

35.00
%

35.00
%State income taxes, net of federal tax benefit


5.00


5.00


5.00State income taxes, based on gross receipts


(6.51
)




Other permanent nondeductible items


(0.61
)

(0.10
)

(0.12
)Change in valuation allowance for deferred tax assets


(39.39
)

(39.90
)

(39.88
)Effective tax rate


(6.51
)%

0.00
%

0.00
%


The
tax effects of significant temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):

December 31,
2008

December 31,
2007Deferred tax assets:Accrued liabilities

$
151

$
3,541Deferred transaction costs





357Compensation expense


9,212


7,148Net operating loss carryforwards


211,150


208,176Allowance for bad debts


2,228


2,976Accumulated other comprehensive loss


6,648


4,643Other


6,471


9,639Total gross deferred tax assets


235,860


236,480Less valuation allowance


(206,348
)

(205,540
)Deferred tax assets


29,512


30,940Deferred tax liabilitiesproperty, equipment and intangible assets


29,512


30,940Net deferred tax assets

$


$



In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No benefit for
federal income taxes

F-22

---



has
been recorded for the years ended December 31, 2008, 2007 and 2006, as the net deferred tax asset generated, primarily from temporary differences related to the net operating loss, was
offset by a full valuation allowance because it is considered more likely than not that these benefits will not be realized due to the Company's losses since inception.

An
"ownership change" (as defined in Internal Revenue Code Section 382 ("Section 382")) occurred with respect to the Company's stock issued under a plan of reorganization
in 2004. An ownership change generally occurs if certain persons or groups increase their aggregate ownership percentage in a corporation's stock by more than 50 percentage points in the
shorter of any three-year period or the period beginning the day after the day of the last ownership change. Section 382 will limit the Company's future ability to utilize any
remaining net operating losses generated before the ownership change and certain subsequently recognized "built-in" losses and deductions, if any, existing as of the date of the ownership
change. The Company's ability to utilize new net operating losses arising after the ownership change will not be affected.

At
December 31, 2008, the Company has net operating loss carryforwards for federal income tax purposes of approximately $527.9 million that will expire between 2021 and
2028. There are three components of the net operating losses: approximately $231.3 million related to the ownership change in connection with the Company's reorganization in July of 2004;
approximately $197.3 million related to Horizon PCS net operating losses as of the date of merger; and approximately $99.3 million that have been generated since the Company's
reorganization. The utilization of the $231.3 million net operating loss existing as of the Company's reorganization has an annual limitation of approximately $4.5 million. The
utilization of the $197.3 million net operating loss carryforward of Horizon PCS is subject to two separate IRC Section 382 limitations, one as a result of Horizon PCS's ownership change
on October 1, 2004 (emergence from bankruptcy) and the second based on Horizon PCS's merger with the Company in July of 2005. Net operating loss carryovers of approximately
$189.3 million related to the first ownership change are limited to approximately $7.0 million per year. The remaining $8.0 million of pre-acquisition net operating
losses increase the annual limitation to $10.0 million per year until such losses are utilized, after which the annual limitation decreases back to $7.0 million per year. The utilization
of the $99.3 million net operating loss generated after the plan of reorganization is unrestricted.

As
a result of the built-in gain provisions of Section 382, the Company has the ability to realize net operating loss benefits beyond the annual limitation described
above to the extent that built-in gains that existed at the date of ownership change are realized during the five year period subsequent to the ownership change date. To the extent that
the built-in gains existing as of the ownership change dates are not realized by such five year periods, the Company will only be able to utilize the restricted net operating loss
carryforwards based on the annual limitation provisions discussed above. The Company's change of ownership that occurred in July of 2004 will have
its five year period under these built-in gain provisions expire in July of 2009. Horizon PCS's change of ownership that occurred in October of 2004 will have its five year period expire in October of
2009. The total built-in gain amounts related to the 2004 ownership change dates are approximately $83 million for July 2004 and approximately $83 million for October 2004. Additionally,
Horizon PCS's change of ownership that occurred in July of 2005 will have its five year period expire in July of 2010. The incremental built-in gain related to this ownership change date is
approximately $114 million. The Company expects to realize a majority of these built-in gains through the application of foregone amortization tax rules.

On
January 1, 2009, the Company will adopt FASB No. 141R (see Note 2). After adoption, benefits realized from net operating losses relating to both the Company's
reorganization and the Company's merger with Horizon PCS, will be utilized to reduce income tax expense.

The
Company adopted the provisions of Financial Accounting Standards Board Interpretation 48 ("FIN 48") on January 1, 2007. FIN 48 clarifies the accounting for
uncertainty in income taxes

F-23

---



recognized
in the financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes." FIN 48 prescribes a comprehensive model for how a company should recognize,
measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. The Company has analyzed filing positions with the
Internal Revenue Service and all state tax jurisdictions where it files income tax returns. The Company is subject to routine audits by these jurisdictions; however, the Company is currently not under
any audits for any tax periods. Tax years for the year ended September 30, 2005, the period ended December 31, 2005, and the year ended December 31, 2006, and the year ended
December 31, 2007 remain open and subject to examination for both federal and state returns.

The
Company believes its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on
the Company's financial condition, results of operations or cash flow. Pursuant to FIN 48, no liability has been recorded for uncertain tax positions. As allowed under FIN 48, the
Company would accrue, if applicable, income tax related interest and penalties in income tax expense in the Company's statement of operations.

(10) Employee Benefits

The Company has established a 401(k) plan (the "Plan") in which substantially all employees may participate. The Plan allows eligible employees to contribute up
to 50% of their eligible compensation up to the maximum amount allowed by law and provides that the Company will make matching contributions of 100% up to 4% of an employee's eligible compensation. In
addition, the Company may
make discretionary contributions to the Plan. Company contributions to the Plan were approximately $792,000, $722,000 and $568,000 for the years ended December 31, 2008, 2007 and 2006,
respectively.

(11) Stock-Based Compensation

The Company has two long-term incentive plans. The iPCS 2004 long-term incentive plan, as amended (the "iPCS Plan"), was approved by the
Company's board of directors as provided by the Company's plan of reorganization. The Horizon PCS 2004 stock incentive plan, as amended (the "Horizon Plan"), was assumed by the Company in its merger
with Horizon PCS, Inc. in 2005. Both plans have been approved by the Company's stockholders.

iPCS Plan.Under the iPCS Plan, the Company may grant to employees, directors and consultants of the Company or its subsidiaries
incentive and
non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards and cash incentive awards. The stock options awarded to date under the iPCS Plan have a
ten-year term with vesting on a quarterly basis over four years for employees and quarterly over one year for directors. Restricted stock awards granted to date under the iPCS Plan vest on
a quarterly basis over four years for employees, vest quarterly over one year for directors, and, with respect to the 2008 award of restricted stock to certain employees, vest entirely at the end of
three years. The iPCS Plan provides for the accelerated vesting of awards in the event of a change in control (as defined in the iPCS Plan). On May 22, 2008, the Company's stockholders approved
the Second Amended and Restated iPCS Plan, which included an increase of 600,000 in the number of shares available for issuance. Giving effect to this amendment, the total number of shares that may be
awarded under the iPCS Plan is 2,692,630 shares of common stock, of which amount, 649,253 shares remain available for awards as of December 31, 2008.

Horizon Plan.Under the Horizon Plan, the Company may grant to employees, directors and consultants of the Company or its subsidiaries
incentive or
non-qualified stock options or stock appreciation rights. All of the stock options issued to date under the Horizon Plan have a ten-year life and vest equally in
six-month increments over three years from the respective date of grant. The Horizon Plan provides for the accelerated vesting of awards in the event of a change in control (as defined in
the Horizon Plan). The total number of shares that may be granted under the Horizon Plan

F-24

---



is
558,602 shares of the Company's common stock, which equals the number of shares underlying awards previously made under the Horizon Plan.

On
May 2, 2007, in connection with the Company's special cash dividend (see Note 12), the Compensation Committee of the Board of Directors of the Company resolved that each
stock option that is outstanding under the iPCS Plan and the Horizon Plan, on the trading day immediately preceding the trading day designated by the NASDAQ Stock Market as the ex-dividend
date (the "Adjustment Date") shall be adjusted as follows effective as of the opening of business on the Adjustment Date:



The
"Adjustment Factor" was 0.78282 which was equal to one minus the percentage reduction in the closing sale price of a share of stock on the Adjustment Date reported by the NASDAQ
Stock Market at the regular hours closing price ("Closing Price") as compared to the Closing Price of a share of stock on the Adjustment Date minus $11.00. In addition, on the Adjustment Date, the
number of shares under the iPCS Plan and the Horizon Plan was adjusted by dividing the number of shares of stock reserved for issuance by the Adjustment Factor; thereby increasing the number of shares
reserved for issuance. The modification resulted in an additional 184,537 shares to 72 employees and directors who had options outstanding on the modification date. With this modification, the Company
will record additional stock-based compensation expense of approximately $6.5 million, of which approximately $3.2 million was recorded as of the date of modification and the remainder
is being recognized over the remaining vesting period for the options, subject to reduction for forfeitures. An additional $1.1 million and $1.5 million of compensation expense related
to the modification was recorded in the years ended December 31, 2008 and 2007, respectively, with the quarterly vesting of stock options. As of December 31, 2008, approximately
$0.5 million of additional stock-based compensation expense related to this modification remains to be recognized over the remaining vesting period of the options.

Effective
January 24, 2007, the Company's former Chief Operating Officer ceased his employment with the Company. As a result of his separation, the Company's former chief
operating officer received an accelerated additional year of vesting of his options. With this agreement, the modification of his option awards resulted in a new measurement date. The fair value of
the options prior to the modification was zero. The fair value of the options subsequent to the modification resulted in an additional $0.6 million of stock-based compensation expense recorded
in the year ended December 31, 2007.

The
table below outlines the assumptions used for the option modifications:

For the Year Ended
December 31, 2007Range

Weighted
AverageRisk free interest rate

4.32%-5.13%


4.47
%Volatility




38.00
%Dividend yield




0.00
%Expected life in years




4.21Fair value price



$
10.31


During
the years ended December 31, 2008 and 2007, the Company awarded 708,500 stock options and 312,550 stock options, respectively, to employees and the Board of Directors with
exercise prices equal to the fair market value on the date of grants. The fair value of each grant is estimated at the

F-25

---



grant
date using the Black Scholes option pricing method. The table below outlines the assumptions used for the options granted during the years ended December 31, 2008 and 2007:

For the Year Ended
December 31, 2008

For the Year Ended
December 31, 2007Range

Weighted
Average

Range

Weighted
AverageRisk free interest rate

2.62%-4.17%


3.30
%
3.63%-5.06%


4.54
%Volatility




38.00
%



39.93
%Dividend yield




0.00
%



0.00
%Expected life in years




5.96




5.93Fair value price



$
10.28



$
19.89


The
risk-free interest rate was determined using the then implied yield currently available for zero-coupon U.S. government issues with a remaining term equal to
the expected life of the stock options. The expected volatility assumption used in the Black-Scholes option pricing models was based on the historical volatility of peer companies as adjusted for the
Company's volatility since its existence as a publicly traded company in 2004. With the exception of the $11.00 special cash dividend paid in 2007 which was considered a return of capital, the Company
does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield. The Company uses the simplified method for calculating the expected life for stock options in place of using
historical exercise data. The Company's stock has been publicly traded since August 2004 and the Company cannot provide a reasonable basis upon which to estimate the expected term of options granted.
Additionally, the types of employees that received stock option grants have varied during this same period and also cannot provide a reasonable basis upon which to estimate the expected term of
options granted.

The
Company did not award any stock options during the year ended December 31, 2006.

The
following is a summary of activity for the year ended December 31, 2008 related to the Company's stock options granted under its long-term incentive plans:

Number of
Options

Weighted-Average
Exercise PriceOptions outstanding as of December 31, 2007


851,431

$
22.01Granted


708,500


24.50Exercised


(37,823
)

15.38Forfeited


(120,133
)

28.98Expired


(4,028
)

40.15Options outstanding as of December 31, 2008


1,397,947

$
22.80Exercisable December 31, 2008


820,777

$
19.85


F-26

---



The
following table shows stock-based compensation expense by type of share-based award for the years ended December 31, 2008, 2007 and 2006 included in the consolidated
statements of operations (in thousands):

For the Year
ended
December 31, 2008

For the Year
ended
December 31, 2007

For the Year
ended
December 31, 2006Restricted stock

$
1,037

$
883

$
99Amortization of deferred compensation of stock option awards





265


359Fair value expense of stock option awards


3,742


3,406


2,038Fair value expense of stock option modifications





643


Fair value expense of stock option modifications related to special cash dividend


1,057


4,717


Total stock-based compensation

$
5,836

$
9,914

$
2,496


The
following table shows the total remaining unrecognized compensation cost related to restricted stock grants and the fair value expense of stock option awards, as well as the weighted
average remaining required service period over which such costs will be recognized as of December 31, 2008:

Total Remaining
Unrecognized Compensation Cost
(in millions)

Weighted Average Remaining
Required Service Period
(in years)Restricted stock

$
1.9


2.14Fair value expense of stock option awards


7.3


2.77


Stock-based
compensation expense is included in the consolidated statements of operations as follows (in thousands):

For the Year
ended
December 31, 2008

For the Year
ended
December 31, 2007

For the Year
ended
December 31, 2006Cost of service and roaming

$
512

$
640

$
123Sales and marketing


671


1,339


524General and administrative


4,653


7,935


1,849Total stock-based compensation

$
5,836

$
9,914

$
2,496


The
following is a summary of options outstanding and exercisable at December 31, 2008:

Options Outstanding

Options ExercisableRange of Exercise Prices

Number
Outstanding

Weighted
Average
Remaining
Contractual
Life
(in years)

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value (in
thousands)

Number
Exercisable

Weighted
Average
Remaining
Contractual
Life (in
years)

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value (in
thousands)$8.04


348,671


5.55

$
8.04





348,671


5.55

$
8.04$14.80-$20.15


158,140


7.94


17.51





78,452


6.20


16.12$25.29-$33.49


669,446


8.86


26.19





255,821


8.63


26.49$38.19-$41.18


221,690


8.18


39.54





137,833


8.18


39.531,397,947


7.82

$
22.80

$



820,777


7.01

$
19.85

$



F-27

---



At
December 31, 2008, the number of stock options vested or expected to vest was 1,388,915. For these stock options, the weighted average remaining contractual life in years, the
weighted average exercise price and the aggregate intrinsic value was 7.82 years, $22.77 and $0.0 million, respectively.

The
total fair value of stock options vested in the years ended December 31, 2008, 2007 and 2006 was $4.8 million, $6.5 million and $2.1 million,
respectively. The intrinsic value of stock options exercised in the years ended December 31, 2008, 2007 and 2006 was $0.5 million, $7.9 million and $3.3 million,
respectively.

The
following is a summary of activity for the year-ended December 31, 2008 related to the Company's restricted shares granted under its long-term
incentive plans:

Shares

Weighted Average
Grant Date
Fair ValueRestricted shares at December 31, 2007


62,836

$
43.47Granted


21,705


24.82Vested


(20,640
)

41.94Forfeited


(7,367
)

47.61Restricted shares at December 31, 2008


56,534

$
36.32


The
iPCS Plan permits, at the employee's option, the surrendering of common shares to satisfy certain tax withholding obligations in connection with vesting of restricted stock. The
surrendered shares are not available for future grant under the iPCS Plan.

(12) Special Cash Dividend

On April 26, 2007, the Board of Directors declared a special cash dividend of $11.00 per share, approximately $187.0 million in the aggregate,
payable to all holders of record of the Company's common stock on May 8, 2007. Of this amount, approximately $186.5 million was paid on May 16, 2007. The remaining unpaid
dividends relate to restricted stock awards and are being paid out starting in July 2007 as these awards vest. During the year ended December 31, 2008, approximately $0.1 million of
these unpaid dividends were forfeited in connection with the forfeiture of restricted stock. As of December 31, 2008, approximately $0.3 million of this dividend remains to be paid.

(13) Comprehensive Loss

Comprehensive loss, which includes all changes in the Company's equity during the period except transactions with stockholders, consisted of the following for the
years ended December 31, 2008, 2007 and 2006 (in thousands):

December 31, 2008

December 31, 2007

December 31, 2006Net loss

$
(9,810
)
$
(69,331
)
$
(46,039
)Unrealized loss on interest rate swapHedge loss(a)


(11,644
)

(11,816
)

Reclassification of realized loss into net loss(a)


6,630


209


Net unrealized loss


(5,014
)

(11,607
)

Comprehensive loss

$
(14,824
)
$
(80,938
)
$
(46,039
)


---

F-28

---



(14) Commitments and Contingencies



The Company is obligated under non-cancelable operating lease agreements for offices, stores, network operating space and cell sites. These leases
typically provide for automatic renewal options and escalation terms that are either fixed or tied to the Consumer Price Index. At December 31, 2008, the future minimum annual lease payments
under these agreements are as follows (in thousands):

December 31,2009

$
41,7852010


33,9452011


20,5672012


10,9082013


5,707Thereafter


3,102Total

$
116,014


Rent
expense was approximately $40.5 million, $37.9 million and $35.2 million, respectively, for the years ended December 31, 2008, 2007 and 2006.



Sprint PCS holds the licenses necessary to provide wireless services in the Company's territory. The FCC requires that licensees like Sprint PCS maintain control
of their licensed spectrums and not delegate control to third-party operators or managers without FCC consent and are subject to renewal and revocation by the FCC. The FCC has adopted specific
standards that apply to wireless personal communications services license renewals. Any failure by Sprint PCS or the Company to comply with these standards could result in the non-renewal
of the Sprint PCS licenses for the Company's territory. Additionally, if Sprint PCS does not demonstrate to the FCC that Sprint PCS has met the construction requirements for each of its wireless
personal communications services licenses, it can lose those licenses. If Sprint PCS loses its licenses in the Company's territory for any of these reasons, the Company would not be able to provide
wireless services without obtaining rights to other licenses.

If
Sprint PCS loses its licenses in another territory, Sprint PCS or the applicable PCS Affiliate or Sprint would not be able to provide wireless services without obtaining rights to
other licenses and the Company's ability to offer nationwide calling plans would be diminished and potentially more costly.



Sprint/Nextel Merger Litigation.On July 15, 2005, the Company's wholly owned subsidiary, iPCS Wireless, Inc., filed a
complaint
against Sprint and Sprint PCS in the Circuit Court of Cook County, Illinois (the "Circuit Court"). The complaint alleged, among other things, that Sprint's conduct following the consummation of the
merger between Sprint and Nextel would breach Sprint's exclusivity obligations to iPCS Wireless under its affiliation agreements with Sprint PCS. On August 14, 2006, the Circuit Court issued
its decision and on September 20, 2006, the Circuit Court issued a final order effecting its decision. The final order provided that:



F-29

---





On
September 28, 2006, Sprint appealed the ruling to the Appellate Court of Illinois, First Judicial District (the "Appellate Court"), and, at Sprint's request, the Circuit
Court's ruling was stayed by the Appellate Court pending the appeal. On March 31, 2008, the Appellate Court unanimously affirmed the 2006 Circuit Court decision. On May 5, 2008, Sprint
filed a petition for leave to appeal with the Supreme Court of Illinois. On September 24, 2008, the Supreme Court of Illinois (the "Supreme Court") denied Sprint's petition for leave to appeal
the Appellate Court's decision.

On
Sprint's motion for reconsideration, the Supreme Court again denied Sprint's petition for leave to appeal on November 12, 2008. The Supreme Court directed the Circuit Court to
modify its order of September 20, 2006, in the following manner:



On
January 30, 2009, the Circuit Court entered its final order, as directed by the Supreme Court, providing that:



On
September 22, 2008, Sprint also filed a petition with the Circuit Court seeking to vacate that Court's original order. On January 20, 2009, the Circuit Court denied
Sprint's petition with prejudice. On February 18, 2009, Sprint appealed the decision of the Circuit Court relating to its denial of Sprint's petition to vacate to the Appellate Court. The
appeal process is ongoing.

Sprint/Clearwire Transaction Litigation.On May 7, 2008, Sprint announced a transaction among itself, Clearwire Corporation, and
certain other
parties (the "Sprint-Clearwire Transaction") to form a new competing network ("New Clearwire"), pursuant to which transaction Sprint transferred its next generation of wireless technology
("4G") to the New Clearwire. The same day, Sprint filed a complaint for declaratory judgment against iPCS and certain of its subsidiaries, iPCS Wireless, Horizon Personal Communications, Inc.
and Bright Personal Communications Services, LLC (collectively, the "iPCS Subsidiaries") in the Court of Chancery of the State of Delaware (the "Delaware Chancery Court"). In that lawsuit,
Sprint sought a declaration that the Sprint-Clearwire Transaction would not constitute a breach of the Sprint affiliation agreements it has with the iPCS Subsidiaries.

On
May 12, 2008, the iPCS Subsidiaries filed a lawsuit against Sprint and certain of its affiliates in the Circuit Court, seeking declaratory and injunctive relief with respect to
the Sprint-Clearwire Transaction. In that case, the iPCS Subsidiaries are seeking a declaration that the Sprint-Clearwire Transaction constitutes a breach of Sprint's affiliation agreements it has
with those subsidiaries, and also sought an injunction barring Sprint from closing on the Sprint-Clearwire Transaction until it complied with the affiliation agreements.

F-30

---





On July 14, 2008, the Delaware Chancery Court granted the motion to dismiss filed by our Bright and Horizon subsidiaries and dismissed them from the Delaware litigation. Pursuant
to a motion filed by iPCS and iPCS Wireless, on October 8, 2008, the Delaware Chancery Court stayed all remaining Delaware litigation in favor of the lawsuit brought in Illinois by the iPCS
Subsidiaries.

On
November 3, 2008, the iPCS Subsidiaries filed a motion for preliminary injunction in the Circuit Court seeking to prevent Sprint from consummating the Sprint-Clearwire
Transaction until such time that the Circuit Court could rule on the merits of the underlying litigation brought by the iPCS Subsidiaries against Sprint. On November 17, 2008, the iPCS
Subsidiaries, Sprint, and New Clearwire, reached a stipulation pursuant to which the iPCS Subsidiaries withdrew their motion for preliminary injunction without prejudice, and the Sprint-Clearwire
Transaction closed on November 28, 2008. In connection with the withdrawal of the motion by the iPCS Subsidiaries: (i) New Clearwire stipulated that it did not presently intend to
commercially launch its 4G network, sell products or services, or promote products or services that are available for sale in any part of the iPCS Subsidiaries' territories prior to July 1,
2009, (ii) New Clearwire stipulated that it would give the iPCS Subsidiaries at least 60 days advance written notice before any commercial launch of its 4G network, sale of products or
services or promotion of products or services that are offered for sale in any part of the iPCS Subsidiaries service areas if it plans to do so before entry of a final and appealable judgment by the
Circuit Court in the underlying action by the iPCS Subsidiaries against Sprint, and (iii) New Clearwire and Sprint stipulated that neither of them nor any of their controlled affiliates would
raise the fact that the Sprint-Clearwire Transaction had closed as a basis for opposing any remedy proposed by the iPCS Subsidiaries or granted by the Circuit Court.

On
December 30, 2008, the Circuit Court issued a decision on a motion for partial summary judgment filed by iPCS Wireless based on the 2006 decision in the Illinois Sprint/Nextel
Merger Litigation. The Circuit Court specifically recognized that pursuant to the 2006 decision, Sprint and those acting in concert with it cannot compete against iPCS Wireless in its exclusive
service area, regardless of the radio frequency that they use to compete. The Circuit Court held that Sprint cannot relitigate the issue of whether Sprint and those acting in concert with it may
compete with iPCS Wireless in its service area by using a frequency other than 1900 MHz. The Circuit Court granted in part iPCS Wireless's motion for partial summary judgment with respect to these two
issues and entered judgment thereon but stayed enforcement of the judgment pending a ruling on Sprint's petition to vacate the original
judgment in the Illinois Sprint/Nextel Merger Litigation, which petition to vacate was then dismissed with prejudice on January 20, 2009. The Circuit Court also found in its December 30,
2008 ruling that material issues of fact remained and would be decided at trial including, but not limited to, whether New Clearwire is a "related party," whether Sprint controls New Clearwire,
whether the protections of exclusivity extend beyond the situation in which Sprint acts through a related party, and the question of who constitutes "those acting in concert" with Sprint.

On
January 9, 2009, the Circuit Court denied Sprint's motion for partial summary judgment against Bright and Horizon. In that motion, Sprint sought to bar Bright and Horizon from
litigating the issue of whether Sprint could compete with Horizon and Bright outside the 1900 MHz spectrum range, based on a 2006 decision by the Delaware Chancery Court. The Circuit Court denied
Sprint's motion for partial summary judgment against Bright and Horizon and found that the Delaware Chancery Court did not actually decide that issue.

On
January 30, 2009, the iPCS Subsidiaries amended their original complaint against Sprint. Under the amended complaint, the iPCS Subsidiaries included, among other things, a
claim that Sprint is improperly withholding advanced technologies from the iPCS Subsidiaries and diverting those technologies to their competitor in violation of the affiliation agreements. The
amended complaint also seeks monetary relief. On February 27, 2009, Sprint, in its response to the amended complaint, asserted several counterclaims that essentially seek declaratory relief
that the Clearwire transaction does not violate the affiliation agreements. Discovery is ongoing.

F-31

---



The
Company presently cannot determine the ultimate resolution of the matters described above. The results of litigation are inherently uncertain and, while the Company believes that it
has meritorious claims in the matters described above, material adverse outcomes are possible.

In
addition to the foregoing, from time to time, the Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. The Company is not
currently a party to any such legal proceedings, the adverse outcome to which, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition or
results of operations.

(15) Consolidating Financial Information

The Secured Notes are fully, unconditionally and joint and severally guaranteed by the Company's domestic restricted subsidiaries, including iPCS
Wireless, Inc., iPCS Equipment, Inc., Horizon Personal Communications, Inc., Bright PCS Holdings, Inc. and Bright Personal Communications Services, LLC, which are
100% owned subsidiaries of iPCS, Inc (see Note 6). The following consolidating financial information for iPCS, Inc. as of December 31, 2008 and 2007 and for the years ended
December 31, 2008, 2007 and 2006 is presented for iPCS, Inc. and the Company's guarantor subsidiaries (in thousands):

Condensed Consolidating Balance Sheet    As of December 31, 2008

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedCash and cash equivalents

$


$
55,940

$


$
55,940Other current assets


527,109


339,009


(789,496
)

76,622Total current assets


527,109


394,949


(789,496
)

132,562Property and equipment, net





162,014





162,014Intangible assets, net





232,385





232,385Other noncurrent assets


6,419


4,232





10,651Investment in subsidiaries


178,803





(178,803
)

Total assets

$
712,331

$
793,580

$
(968,299
)
$
537,612Current liabilities

$
268,791

$
604,126

$
(789,496
)
$
83,421Long-term debt


475,000


401





475,401Other long-term liabilities


16,738


10,250





26,988Total liabilities


760,529


614,777


(789,496
)

585,810Stockholders' equity (deficiency)


(48,198
)

178,803


(178,803
)

(48,198
)Total liabilities and stockholders' equity (deficiency)

$
712,331

$
793,580

$
(968,299
)
$
537,612


F-32

---



Condensed Consolidating Statement of Operations    For the Year Ended December 31, 2008

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedTotal revenue

$


$
525,517

$


$
525,517Cost of revenue





342,350





342,350Selling and marketing





71,080





71,080General and administrative


2,565


33,389





35,954Depreciation and amortization





52,757





52,757Loss on disposal of property and equipment, net





450





450Total operating expenses


2,565


500,026





502,591Other, net





(32,136
)




(32,136
)Loss in subsidiaries


(7,245
)




7,245


Loss before provision for income tax


(9,810
)

(6,645
)

7,245


(9,210
)Provision for income tax





600





600Net loss

$
(9,810
)
$
(7,245
)
$
7,245

$
(9,810
)


Condensed Consolidating Statement of Cash Flows    For the Year Ended December 31, 2008

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedOperating activities

$
(418
)
$
52,682

$


$
52,264Investing activities





(74,311
)




(74,311
)Financing activities


418


(30
)




388Net decrease in cash and cash equivalents





(21,659
)




(21,659
)Cash and cash equivalents at beginning of year





77,599





77,599Cash and cash equivalents at end of year

$


$
55,940

$


$
55,940


F-33

---



Condensed Consolidating Balance Sheet    As of December 31, 2007

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedCash and cash equivalents

$


$
77,599

$


$
77,599Other current assets


484,914


310,653


(709,454
)

86,113Total current assets


484,914


388,252


(709,454
)

163,712Property and equipment, net





128,677





128,677Intangible assets, net





241,560





241,560Other noncurrent assets


7,794


5,081





12,875Investment in subsidiaries


186,048





(186,048
)

Total assets

$
678,756

$
763,570

$
(895,502
)
$
546,824Current liabilities

$
231,657

$
565,351

$
(709,454
)
$
87,554Long-term debt


475,000


438





475,438Other long-term liabilities


11,933


11,733





23,666Total liabilities


718,590


577,522


(709,454
)

586,658Stockholders' equity (deficiency)


(39,834
)

186,048


(186,048
)

(39,834
)Total liabilities and stockholders' equity (deficiency)

$
678,756

$
763,570

$
(895,502
)
$
546,824


Condensed Consolidating Statement of Operations    For the Year Ended December 31, 2007

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedTotal revenue

$


$
538,086

$


$
538,086Cost of revenue





364,987





364,987Selling and marketing





75,626





75,626General and administrative


2,443


24,472





26,915Depreciation and amortization





77,673





77,673Loss on disposal of property and equipment, net





151





151Total operating expenses


2,443


542,909





545,352Other, net





(62,065
)




(62,065
)Loss in subsidiaries


(66,888
)




66,888


Loss before provision for income tax


(69,331
)

(66,888
)

66,888


(69,331
)Provision for income tax











Net loss

$
(69,331
)
$
(66,888
)
$
66,888

$
(69,331
)


F-34

---



Condensed Consolidating Statement of Cash Flows    For the Year Ended December 31, 2007

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedOperating activities

$
(100,028
)
$
136,357

$


$
36,329Investing activities





(38,815
)




(38,815
)Financing activities


100,028


(140,442
)




(40,414
)Net decrease in cash and cash equivalents





(42,900
)




(42,900
)Cash and cash equivalents at beginning of year





120,499





120,499Cash and cash equivalents at end of year

$


$
77,599

$


$
77,599


Condensed Consolidating Statement of Operations    For the Year Ended December 31, 2006

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedTotal revenue

$


$
492,422

$


$
492,422Cost of revenue





327,686





327,686Selling and marketing





74,293





74,293General and administrative


2,219


18,725





20,944Depreciation and amortization





88,480





88,480Loss on disposal of property and equipment, net





574





574Total operating expenses


2,219


509,758





511,977Other, net


(19,873
)

(6,611
)




(26,484
)Loss in subsidiaries


(23,947
)




23,947


Loss before provision for income tax


(46,039
)

(23,947
)

23,947


(46,039
)Provision for income tax











Net loss

$
(46,039
)
$
(23,947
)
$
23,947

$
(46,039
)


Condensed Consolidating Statement of Cash Flows    For the Year Ended December 31, 2006

iPCS, Inc.

Guarantor
Subsidiaries

Eliminations

iPCS
ConsolidatedOperating activities

$


$
47,281

$


$
47,281Investing activities





(40,331
)




(40,331
)Financing activities





2,712





2,712Net increase in cash and cash equivalents





9,662





9,662Cash and cash equivalents at beginning of year





110,837





110,837Cash and cash equivalents at end of year

$


$
120,499

$


$
120,499


F-35

---



(16) Valuation and Qualifying Accounts (in thousands):

Balance at
Beginning of
Period

Costs and
Expenses

Other(a)

Write-Offs

Balance at
End of PeriodFor the Year ended December 31, 2008 Allowance for doubtful accounts

$
9,635

$
18,040

$
14,011

$
(33,561
)
$
8,125For the Year ended December 31, 2007 Allowance for doubtful accounts

$
6,663

$
18,994

$
17,446

$
(33,468
)
$
9,635For the Year ended December 31, 2006 Allowance for doubtful accounts

$
3,650

$
10,893

$
12,290

$
(20,170
)
$
6,663


---

(17) Quarterly Results of Operations (Unaudited) (In thousands, except per share data):

Quarter1st

2nd

3rd

4thYear Ended December 31, 2008Total revenue

$
125,658

$
129,371

$
132,057

$
138,431Operating income


6,899


7,501


555


7,971Net loss


(1,606
)

(646
)

(7,494
)

(64
)Basic and diluted net loss per share


(0.09
)

(0.04
)

(0.44
)

(0.00
)Year Ended December 31, 2007Total revenue

$
120,853

$
133,233

$
142,077

$
141,923Operating income (loss)


(12,733
)

(5,685
)

6,566


4,586Net loss


(19,143
)

(43,644
)

(2,404
)

(4,140
)Basic and diluted net loss per share


(1.13
)

(2.58
)

(0.14
)

(0.24
)


(18) Subsequent Events

In
January, 2009, the Company's Board of Directors authorized it to repurchase up to $15.0 million of its common stock in a share repurchase program during the
12-month period beginning on the date of authorization. The Company may purchase shares from time to time in open market or privately negotiated transactions at prices deemed appropriate
by management, depending on market conditions, applicable laws and other factors. The share repurchase program does not require the Company to repurchase any specific number of shares and may be
discontinued at any time.

On
March 2, 2009, the Company elected to pay its August 1, 2009 interest payment in relation to its Second Lien Notes entirely by increasing the principal amount of the
outstanding Second Lien Notes (see Note 6). The Company has made no other decisions regarding future use of PIK Interest.

F-36

---



INDEX TO EXHIBITS

| |  |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 3.1  |  | Second Restated Certificate of Incorporation of iPCS, Inc. (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed by iPCS,
Inc. on July 1, 2005)                                                                                                                                                                                                                                                 
| |  |  | 3.2  |  | Amended and Restated Bylaws of iPCS, Inc. (Incorporated by reference to Exhibit 3.2 to the Form 10-QT filed by iPCS,
 Inc. on February 14, 2006)                                                                                                                                                                                                                                                          
| |  |  | 3.3  |  | Amendment to the Amended and Restated Bylaws of iPCS, Inc. (Incorporated by reference to Exhibit 99.1 to the
Form 8- K filed by iPCS, Inc. on January 4, 2008)                                                                                                                                                                                                                                            
| |  |  | 3.4  |  | Certificate of Incorporation of iPCS Wireless, Inc. (Incorporated by reference to Exhibit 3.4 to the Form S-4 filed
by iPCS, Inc. on January 8, 2001)                                                                                                                                                                                                                                                     
| |  |  | 3.5  |  | Bylaws of iPCS Wireless, Inc. (Incorporated by reference to Exhibit 3.5 to the Form S-4 filed by iPCS, Inc. on
January 8, 2001)                                                                                                                                                                                                                                                                           
| |  |  | 3.6  |  | Certificate of Incorporation of iPCS Equipment, Inc. (Incorporated by reference to Exhibit 3.6 to the Form S-4
filed by iPCS, Inc. on January 8, 2001)                                                                                                                                                                                                                                                    
| |  |  | 3.7  |  | Bylaws of iPCS Equipment, Inc. (Incorporated by reference to Exhibit 3.7 to the Form S-4 filed by iPCS, Inc. on
January 8, 2001)                                                                                                                                                                                                                                                                          
| |  |  | 3.8  |  | Articles of Organization of Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 3.7
to the Form S-1 filed by iPCS, Inc. on August 11, 2005)                                                                                                                                                                                                                                
| |  |  | 3.9  |  | Operating Agreement of Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 3.8 to the
Form S-1 filed by iPCS, Inc. on August 11, 2005)                                                                                                                                                                                                                                     
| |  |  | 3.10 |  | Articles of Incorporation of Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 3.9 to the
Form S-1 filed by iPCS, Inc. on August 11, 2005)                                                                                                                                                                                                                                      
| |  |  | 3.11 |  | Regulations of Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 3.10 to the Form S-1
filed by iPCS, Inc. on August 11, 2005)                                                                                                                                                                                                                                                   
| |  |  | 4.1  |  | Amended and Restated Common Stock Registration Rights Agreement, dated as of June 30, 2005, by and among iPCS, Inc.,
affiliates of Silver Point Capital, affiliates of AIG Global Investment Corp., the Timothy M. Yager 2001 Trust, Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. (Incorporated by reference to Exhibit 99.1
to the Form 8-K filed by iPCS, Inc. on July 1, 2005)
| |  |  | 4.2  |  | First Lien Indenture, dated as of April 23, 2007, by and among iPCS, Inc., the Guarantors and U.S. Bank National
Association, as trustee (Incorporated by reference to Exhibit 99.3 to the Form 8-K filed by iPCS, Inc. on April 25, 2007)                                                                                                                                                                
| |  |  | 4.3  |  | Second Lien Indenture, dated as of April 23, 2007, by and among iPCS, Inc., the Guarantors and U.S. Bank National
Association, as trustee (Incorporated by reference to Exhibit 99.4 to the Form 8-K filed by iPCS, Inc. on April 25, 2007)                                                                                                                                                               
| |  |  | 4.4  |  | First Lien Security Agreement, dated as of April 23, 2007, made by iPCS, Inc. and the Guarantors in favor of U.S. Bank
National Association, as collateral agent (Incorporated by reference to Exhibit 99.7 to the Form 8-K filed by iPCS, Inc. on April 25, 2007)                                                                                                                                        
| |  |  | 4.5  |  | Second Lien Security Agreement, dated as of April 23, 2007, made by iPCS, Inc. and the Guarantors in favor of U.S. Bank
National Association, as collateral agent (Incorporated by reference to Exhibit 99.8 to the Form 8-K filed by iPCS, Inc. on April 25, 2007)                                                                                                                                       

---



| |  |  |        |  |                                                                                                                                                                                                                                                                                                                                                                      
| |  |  | ------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 4.6    |  | Intercreditor Agreement, dated as of April 23, 2007, between U.S. Bank National Association, as first lien collateral agent and U.S.
Bank National Association, as second lien collateral agent. (Incorporated by reference to Exhibit 99.9 to the Form 8-K filed by iPCS, Inc. on April 25, 2007)                                                                   
| |  |  | 4.7    |  | First Amendment to the First Lien Security Agreement, dated as of October 10, 2007, made by iPCS, Inc. and the
Guarantors in favor of U.S. Bank National Association, as collateral agent (Incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by iPCS, Inc. on November 8, 2007)                                                                       
| |  |  | 4.8    |  | First Amendment to the Second Lien Security Agreement, dated as of October 10, 2007, made by iPCS, Inc. and the
Guarantors in favor of U.S. Bank National Association, as collateral agent (Incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by iPCS, Inc. on November 8, 2007)                                                                      
| |  |  | 10.1** |  | Sprint PCS Management Agreement, dated as of January 22, 1999, among WirelessCo, L.P., Sprint Spectrum, L.P.,
SprintCom, Inc., and Illinois PCS, L.L.C. (predecessor of iPCS Wireless, Inc.) as amended by Addendum I through Addendum V thereto (Incorporated by reference to Exhibit 10.1 to the Form S-4 filed by iPCS, Inc. on January 9,
2001)                  
| |  |  | 10.2   |  | Addendum VI to Sprint PCS Management Agreement, dated as of February 28, 2001, among Sprint Spectrum, L.P.,
SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P. and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.40 to the Annual Report on Form 10-K filed by iPCS, Inc. on March 29, 2001)                                       
| |  |  | 10.3   |  | Addendum VII to Sprint PCS Management Agreement, dated as of August 26, 2002, among Sprint Spectrum, L.P.,
SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P. and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.3 to the Form S-4 filed by iPCS, Inc. on August 5, 2004)                                                           
| |  |  | 10.4   |  | Addendum VIII to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as March 26,
2004, among Sprint Spectrum, L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P. and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.4 to the Form S-4 filed by iPCS, Inc. on August 5,
2004)                            
| |  |  | 10.5   |  | Amended and Restated Addendum VIII to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated
as of November 1, 2004, among Sprint Spectrum, L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P. and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed by iPCS, Inc. on
November 4, 2004)
| |  |  | 10.6   |  | Addendum IX to Sprint PCS Management Agreement, dated as of July 28, 2004, among Sprint Spectrum, L.P.,
SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P. and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.5 to the Form S-4 filed by iPCS, Inc. on August 5, 2004)                                                              
| |  |  | 10.7** |  | Sprint PCS Services Agreement dated as of January 22, 1999 by and between Sprint Spectrum, L.P. and Illinois PCS,
L.L.C. (predecessor of iPCS Wireless, Inc.) (Incorporated by reference to Exhibits 10.2 to the Form S-4 filed by iPCS, Inc. on January 8, 2001)                                                                                                    
| |  |  | 10.8** |  | Sprint Trademark and Service Mark License Agreement dated as of January 22, 1999 between Sprint Communications Company,
L.L.C. and Illinois PCS, L.L.C. (predecessor of iPCS Wireless, Inc.) (Incorporated by reference to Exhibit 10.3 to the Form S-4 filed by iPCS, Inc. on January 8, 2001)                                                                      

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| |  |  |         |  |                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 10.9**  |  | Sprint Spectrum Trademark and Service Mark License Agreement dated as of January 22, 1999 between Sprint Spectrum L.P. and Illinois PCS,
L.L.C. (predecessor of iPCS Wireless, Inc.) (Incorporated by reference to Exhibit 10.4 to the Form S-4 filed by iPCS, Inc. on December 1, 2000)                                                                                                              
| |  |  | 10.10** |  | Sprint PCS Management Agreement, dated June 8, 1998, by and between Sprint Spectrum, L.P., SprintCom, Inc. and
Horizon Personal Communications, Inc. (includes Addenda I, II and III) (Incorporated by reference to Exhibit 10.3 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                                                     
| |  |  | 10.11** |  | Addendum IV to Sprint PCS Management Agreement, dated as of March 16, 2005, by and between Sprint Spectrum
L.P., Sprint Communications Company, L.P. and Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 10.7.1 to the registrations statement on Form S-4 filed by Horizon PCS, Inc. on March 17, 2005)                                                           
| |  |  | 10.12** |  | Addendum V to Sprint PCS Management Agreement, dated as of June 1, 2001, by and between Sprint Spectrum, L.P.,
SprintCom, Inc. and Horizon Personal Communications, Inc. (Incorporated herein by reference to Exhibit 10.3.1 to the Form 10-12G/A filed by Horizon Telcom, Inc. on June 25, 2001)                                                                                                     
| |  |  | 10.13   |  | Addendum VI to Sprint PCS Management Agreement, dated as of August 20, 2001, by and between Sprint Spectrum,
L.P., SprintCom, Inc. and Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 10.3.2 to the Form 8-K filed by Horizon PCS, Inc. on August 24, 2001)                                                                                                              
| |  |  | 10.14   |  | Addendum VII to Sprint PCS Management Agreement, dated as of June 16, 2004, by and between Sprint Spectrum,
L.P., SprintCom, Inc. and Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 10.3.4 to the Annual Report on Form 10-K filed by Horizon PCS, Inc. on March 31, 2005)                                                                                              
| |  |  | 10.15   |  | Addendum VIII to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of March 16,
2005, among Horizon Personal Communications, Inc., SprintCom, Inc., Sprint Spectrum L.P., WirelessCo, L.P., PhillieCo, L.P., APC PCS, LLC and Sprint Communications Company, L.P. (Incorporated by reference to Exhibit 10.3.5 to the
Form S-4 filed by Horizon PCS, Inc. on March 17, 2005)
| |  |  | 10.16** |  | Sprint PCS Services Agreement, dated as of June 8, 1998, by and between Sprint Spectrum, L.P. and Horizon Personal
Communications, Inc. (Incorporated by reference to Exhibit 10.4 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                                                                                                   
| |  |  | 10.17   |  | Sprint Trademark and Service Mark License Agreement, dated as of June 8, 1998, by and between Sprint Communications
Company, L.P. and Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 10.5 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                                                               
| |  |  | 10.18   |  | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of June 8, 1998, by and between Sprint Spectrum
L.P. and Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 10.6 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                                                                     
| |  |  | 10.19** |  | Sprint PCS Management Agreement, dated as of October 13, 1999, by and between Sprint Spectrum, L.P., SprintCom,
Inc., Wirelessco, L.P. and Bright Personal Communications Services, LLC (includes Addenda I, II and III) (Incorporated by reference to Exhibit 10.7 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                  

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| |  |  |         |  |                                                                                                                                                                                                                                                                                                                                                    
| |  |  | ------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 10.20   |  | Addendum IV to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of March 16, 2005, by and
between Sprint Spectrum L.P., Sprint Communications Company, L.P. and Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 10.7.1 to the Form S-4 filed by Horizon PCS, Inc. on March 17, 2005) 
| |  |  | 10.21** |  | Sprint PCS Services Agreement, dated as of October 13, 1999, by and between Sprint Spectrum, L.P. and Bright
Personal Communications Services, LLC (Incorporated by reference to Exhibit 10.8 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                                     
| |  |  | 10.22   |  | Sprint Trademark and Service Mark License Agreement, dated as of October 13, 1999, by and between Sprint Communications
Company, L.P. and Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 10.9 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                 
| |  |  | 10.23   |  | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of October 13, 1999, between Sprint Spectrum,
L.P. and Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 10.10 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                            
| |  |  | 10.24   |  | Master Lease Agreement, dated as of August 31, 2000, between iPCS Wireless, Inc. and Trinity Wireless Towers, Inc.
(Incorporated by reference to Exhibit 10.43 to the Annual Report on Form 10-K filed by iPCS, Inc. on March 29, 2001)                                                                                                            
| |  |  | 10.25   |  | Master Tower Space Reservation and License Agreement, dated as of July 20, 2002, by and between American Towers, L.P.,
American Towers, Inc. and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.10 to the Form S-4 filed by iPCS, Inc. on August 5, 2004)                                                                            
| |  |  | 10.26   |  | First Amendment to Master Tower Space Reservation and License Agreement, dated as of March 20, 2007, by and between
American Towers, L.P., American Towers, Inc., iPCS Wireless, Inc. and Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K filed by iPCS, Inc. on March 7,
2008)
| |  |  | 10.27** |  | Master Site Agreement, dated as of July 1999, by and between SBA Towers, Inc. and Horizon Personal Communications, Inc.
(Incorporated by reference to Exhibit 10.27 to the Form S-4 filed by Horizon PCS on December 15, 2000)                                                                                                                     
| |  |  | 10.28** |  | Master Site Agreement, dated as of October 1, 1999, by and between SBA Towers, Inc. and Bright Personal Communications
Services, LLC (Incorporated by reference to Exhibit 10.29 to the Form S-4 filed by Horizon PCS, Inc. on December 15, 2000)                                                                                                  
| |  |  | 10.29  |  | iPCS, Inc. Second Amended and Restated 2004 Long-Term Incentive Plan, (Incorporated by reference to Exhibit 99.1 to the
Form 8-K filed by iPCS, Inc. on May 23, 2008)                                                                                                                                                                              
| |  |  | 10.30  |  | Horizon PCS, Inc. Amended and Restated 2004 Stock Incentive Plan (Incorporated by reference to Exhibit 99.2 to the
Form 8-K filed by iPCS, Inc. on September 28, 2006)                                                                                                                                                                             
| |  |  | 10.31  |  | Form of Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.17 to the Form S-4 filed by iPCS,
Inc. on August 5, 2004)                                                                                                                                                                                                        
| |  |  | 10.32  |  | Form of Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.18 to the Form S-4 filed by
iPCS, Inc. on August 5, 2004)                                                                                                                                                                                                    
| |  |  | 10.33  |  | Form of Director Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.19 to the Form S-4
filed by iPCS, Inc. on August 5, 2004)                                                                                                                                                                                           

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| |  |  |        |  |                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |  | ------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 10.34 |  | Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (Employing Stockholder version) (Incorporated by reference to
Exhibit 99.2 to the Form 8-K filed by iPCS, Inc. on February 2, 2005)                                                                                                                                                                                          
| |  |  | 10.35 |  | Form of Nonqualified Stock Option Agreement for Non-Employee Directors under the Horizon PCS, Inc. 2004 Stock Incentive Plan
(Incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed by Horizon PCS, Inc. on March 31, 2005)                                                                                                                                             
| |  |  | 10.36 |  | Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.21 to the Form S-1 filed by iPCS, Inc.
on October 5, 2004)                                                                                                                                                                                                                                                               
| |  |  | 10.37 |  | Form of Restricted Stock Award (Three-year vesting schedule)                                                                                                                                                                                                                                                                                                                                         
| |  |  | 10.38 |  | Timothy M. Yager's Amended and Restated Stock Unit Agreement, dated as of January 27, 2005 (Incorporated by
reference to Exhibit 99.3 to the Form 8-K filed by iPCS, Inc. on February 2, 2005)                                                                                                                                                                                                       
| |  |  | 10.39 |  | Amended and Restated Employment Agreement between Timothy M. Yager and iPCS Wireless, Inc., dated as of December 26,
 2008 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed by iPCS, Inc. on December 30, 2008)                                                                                                                                                                      
| |  |  | 10.40 |  | Amended and Restated Employment Agreement between Stebbins B. Chandor, Jr. and iPCS Wireless, Inc., dated as of
December 26, 2008 (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed by iPCS, Inc. on December 30, 2008)                                                                                                                                                               
| |  |  | 10.41 |  | Amended and Restated Employment Agreement between Conrad J. Hunter and iPCS Wireless, Inc., dated as of December 26,
 2008 (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed by iPCS, Inc. on December 30, 2008)                                                                                                                                                                      
| |  |  | 10.42 |  | Amended and Restated Employment Agreement between John J. Peterman and iPCS Wireless, Inc., dated as of December 26,
 2008 (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed by iPCS, Inc. on December 30, 2008)                                                                                                                                                                      
| |  |  | 10.43 |  | Summary of iPCS, Inc. Board Compensation (Incorporated by reference to Exhibit 10.52 to the Annual Report on
Form 10-K filed by iPCS, Inc. on March 7, 2008)                                                                                                                                                                                                                                         
| |  |  | 10.44  |  | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 3, 2008,
among Sprint Spectrum L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P and iPCS Wireless, Inc. (Incorporated by reference to Exhibit 10.53 to the Annual Report on Form 10-K filed by iPCS, Inc. on March 7,
2008)                                                   
| |  |  | 10.45  |  | Addendum IX to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 3, 2008,
among Sprint Spectrum L.P., SprintCom, Inc., WirelessCo, L.P., PhillieCo, L.P., APC PCS, LLC, Sprint Communications Company L.P. and Horizon Personal Communications, Inc. (Incorporated by reference to Exhibit 10.54 to the Annual Report
on Form 10-K filed by iPCS, Inc. on March 7, 2008)
| |  |  | 10.46  |  | Addendum V to Sprint PCS Management Agreement and Services Agreement, dated March 3, 2008, among Sprint
Spectrum L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P. and Bright Personal Communications Services, LLC (Incorporated by reference to Exhibit 10.55 to the Annual Report on Form 10-K filed by iPCS, Inc. on
March 7, 2008)                                    

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| |  |  |       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 10.47 |  | Limited Waiver and Consent Agreement, dated March 3, 2008, by and between Sprint Nextel Corporation, Sprint Spectrum L.P., WirelessCo
L.P., Sprint Communications Company L.P., Sprint Telephony PCS, L.P., Sprint PCS License, L.L.C., iPCS Wireless, Inc., Horizon Personal Communications, Inc., and Bright Personal Communications Services, L.L.C. (Incorporated by reference to
Exhibit 10.56 to the Annual Report on Form 10-K filed by iPCS, Inc. on March 7, 2008)
| |  |  | 21.1* |  | Subsidiaries of iPCS, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |  | 23.1* |  | Consent of Deloitte & Touche LLP                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |  | 31.1* |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                         
| |  |  | 31.2* |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                         
| |  |  | 32.1* |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002                                                                                                                                                                                                                                                                                                                                                     

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