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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
_______________

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, 2002
OR



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

For the transition period from  to

ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.(Exact name of registrant as specified in its charter)
____________________

|                                  |  |                    
|--------------------------------- |  | -------------------
|Delaware                          |  | 91-1921377         
|(State or Other Jurisdiction      |  | (I.R.S. Employer   
|of Incorporation or Organization) |  | Identification No.)

600 Telephone Avenue, Anchorage, Alaska 99503
(Address of Principal Executive Offices) (Zip Code)

Registrants Telephone Number, Including Area Code: (907) 297-3000



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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 ü No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 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  No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the last practicable date.

DOCUMENTS INCORPORATED BY REFERENCENone



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TABLE OF CONTENTS



|                  |                                                                                               |                                            |  |  |  |  |  | 
|----------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|                  |                                                                                               | Consolidated Balance Sheets               
|                  |                                                                                               | Consolidated Statements of Operations     
|                  |                                                                                               | Consolidated Statements of Cash Flows     
|                  |                                                                                               | Notes to Consolidated Financial Statements
|                  | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                  | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II          
|OTHER INFORMATION
|                  | ITEM 1. LEGAL PROCEEDINGS.                                                                   
|                  | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.                                           
|                  | ITEM 3. DEFAULTS UPON SENIOR SECURITIES.                                                     
|                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                 
|                  | ITEM 5. OTHER INFORMATION.                                                                   
|                  | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|SIGNATURE        
|Exhibit 10.5     
|Exhibit 10.6     



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TABLE OF CONTENTS

|          |                   |                                                                                                      |  |  |    |        |  | 
|--------- | ----------------- | ---------------------------------------------------------------------------------------------------- |  |  | -- | ------ |  | 
|          |                   |                                                                                                      |  |  |    | Page  
|          |                   |                                                                                                      |  |  |    | Number
|          |                   |                                                                                                      |  |  |    |       
|PART I    |                   | Financial Information                                                                                |  |  |    |       
|Item 1.   |                   | Financial Statements:                                                                                |  |  |    |       
|          |                   | Consolidated Balance Sheets (unaudited) As of March 31, 2002 and December 31, 2001                   |  |  | 3  |       
|          |                   | Consolidated Statements of Operations (unaudited) For the Three Months Ended March 31, 2002 and 2001 |  |  | 4  |       
|          |                   | Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31, 2002 and 2001 |  |  | 5  |       
|          |                   | Notes to Consolidated Financial Statements (unaudited)                                               |  |  | 6  |       
|Item 2.   |                   | Management's Discussion and Analysis of Financial Condition and Results of Operations                |  |  | 13 |       
|Item 3.   |                   | Quantitative and Qualitative Disclosures About Market Risk                                           |  |  | 22 |       
|PART II   | Other Information |                                                                                                      |  |  |   
|Item 1.   |                   | Legal Proceedings                                                                                    |  |  | 23 |       
|Item 2.   |                   | Changes in Securities and Use of Proceeds                                                            |  |  | 24 |       
|Item 3.   |                   | Defaults upon Senior Securities                                                                      |  |  | 24 |       
|Item 4.   |                   | Submission of Matters to a Vote of Security Holders                                                  |  |  | 24 |       
|Item 5.   |                   | Other Information                                                                                    |  |  | 24 |       
|Item 6.   |                   | Exhibits and Reports on Form 8-K                                                                     |  |  | 24 |       
|Signature |                   |                                                                                                      |  |  |    | 25     | 

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Consolidated Balance Sheets(Unaudited, In Thousands Except Per Share Amounts)

|                                                                |                                                                                           |                            |           |         |         |           |           |              |         |  |  | 
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------- | --------- | ------- | ------- | --------- | --------- | ------------ | ------- |  |  | 
|                                                                |                                                                                           |                            |           |         |         | March 31, |           | December 31,
|                                                                |                                                                                           |                            |           |         |         | 2002      |           | 2001        
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|Assets                                                          |                                                                                           |                            |           |         |         |           |           |             
|Current assets:                                                 |                                                                                           |                            |           |         |         |           |           |             
|                                                                | Cash and cash equivalents                                                                 |                            | $         | 54,034  |         |           | $         | 41,012       |        
|                                                                | Restricted cash                                                                           |                            |           | 6,963   |         |           |           | 6,932        |        
|                                                                | Accounts receivable-trade, net of allowance of $6,002 and $4,944                          |                            |           | 46,315  |         |           |           | 46,912       |        
|                                                                | Accounts receivable-affiliate                                                             |                            |           | 2,009   |         |           |           | 2,475        |        
|                                                                | Materials and supplies                                                                    |                            |           | 8,950   |         |           |           | 8,723        |        
|                                                                | Prepayments and other current assets                                                      |                            |           | 5,574   |         |           |           | 6,032        |        
|                                                                | Assets held for sale                                                                      |                            |           | 699     |         |           |           |             |        
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|                                                                |                                                                                           | Total current assets       |           |         | 124,544 |           |           |              | 112,086 | 
|Property, plant and equipment                                   |                                                                                           |                            | 1,038,166 |         |         |           | 1,036,829 |             
|Less: accumulated depreciation                                  |                                                                                           |                            | 566,493   |         |         |           | 557,849   |             
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|                                                                | Property, plant and equipment, net                                                        |                            |           | 471,673 |         |           |           | 478,980      |        
|Goodwill                                                        |                                                                                           |                            | 247,330   |         |         |           | 250,495   |             
|Intangible assets                                               |                                                                                           |                            | 23,501    |         |         |           | 26,785    |             
|Debt issuance costs, net of amortization of $12,726 and $11,693 |                                                                                           |                            | 24,288    |         |         |           | 25,321    |             
|Deferred charges and other assets                               |                                                                                           |                            | 10,617    |         |         |           | 9,875     |             
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|Total assets                                                    |                                                                                           | $                          | 901,953   |         |         | $         | 903,542   |             
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|Liabilities and Stockholders Equity                            |                                                                                           |                            |           |         |         |           |           |             
|Current liabilities:                                            |                                                                                           |                            |           |         |         |           |           |             
|                                                                | Current portion of long-term obligations                                                  |                            | $         | 6,674   |         |           | $         | 5,107        |        
|                                                                | Accounts payable-affiliates                                                               |                            |           | 1,648   |         |           |           | 1,303        |        
|                                                                | Accounts payable, accrued and other current liabilities                                   |                            |           | 64,402  |         |           |           | 62,765       |        
|                                                                | Advance billings and customer deposits                                                    |                            |           | 9,199   |         |           |           | 9,190        |        
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|                                                                |                                                                                           | Total current liabilities  |           |         | 81,923  |           |           |              | 78,365  | 
|Long-term obligations, net of current portion                   |                                                                                           |                            | 588,949   |         |         |           | 591,496   |             
|Other deferred credits and long-term liabilities                |                                                                                           |                            | 26,073    |         |         |           | 25,003    |             
|Commitments and contingencies                                   |                                                                                           |                            |          |         |         |           |          |             
|Stockholders equity:                                           |                                                                                           |                            |           |         |         |           |           |             
|                                                                | Common stock, $.01 par value; 1,000 shares authorized, and
1 share issued and outstanding |                            |           |        |         |           |           |             |        
|                                                                | Contributed capital                                                                       |                            |           | 287,242 |         |           |           | 287,242      |        
|                                                                | Accumulated deficit                                                                       |                            |           | (71,308 | )       |           |           | (64,735      | )      
|                                                                | Accumulated other comprehensive loss                                                      |                            |           | (10,926 | )       |           |           | (13,829      | )      
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|                                                                |                                                                                           | Total stockholders equity |           |         | 205,008 |           |           |              | 208,678 | 
|                                                                |                                                                                           |                            |           |         |         |           |           |             
|Total liabilities and stockholders equity                      |                                                                                           | $                          | 901,953   |         |         | $         | 903,542   |             
|                                                                |                                                                                           |                            |           |         |         |           |           |             

See Notes to Consolidated Financial Statements

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Consolidated Statements of Operations
(Unaudited, In Thousands Except Per Share Amounts)

|                                         |                               |                          |        |                    |         |      |        |         |         |  
|---------------------------------------- | ----------------------------- | ------------------------ | ------ | ------------------ | ------- | ---- | ------ | ------- | ------- | -
|                                         |                               |                          |        | Three Months Ended
|                                         |                               |                          |        | March 31,         
|                                         |                               |                          |        |                   
|                                         |                               |                          |        | 2002               |         | 2001
|                                         |                               |                          |        |                    |         |     
|Operating revenues:                      |                               |                          |        |                    |         |      |        |        
|                                         | Local telephone               |                          | $      | 55,322             |         |      | $      | 54,697  |        
|                                         | Cellular                      |                          |        | 8,978              |         |      |        | 9,282   |        
|                                         | Directory                     |                          |        | 8,641              |         |      |        | 7,939   |        
|                                         | Internet                      |                          |        | 3,842              |         |      |        | 3,111   |        
|                                         | Interexchange                 |                          |        | 4,850              |         |      |        | 5,950   |        
|                                         |                               |                          |        |                    |         |      |        |        
|                                         |                               | Total operating revenues |        |                    | 81,633  |      |        |         | 80,979  |  
|Operating expenses:                      |                               |                          |        |                    |         |      |        |        
|                                         | Local telephone               |                          |        | 28,998             |         |      |        | 28,895  |        
|                                         | Cellular                      |                          |        | 5,665              |         |      |        | 5,578   |        
|                                         | Directory                     |                          |        | 3,426              |         |      |        | 3,499   |        
|                                         | Internet                      |                          |        | 5,128              |         |      |        | 3,743   |        
|                                         | Interexchange                 |                          |        | 6,615              |         |      |        | 9,544   |        
|                                         | Depreciation and amortization |                          |        | 19,259             |         |      |        | 19,410  |        
|                                         |                               |                          |        |                    |         |      |        |        
|                                         |                               | Total operating expenses |        |                    | 69,091  |      |        |         | 70,669  |  
|                                         |                               |                          |        |                    |         |      |        |        
|Operating income                         |                               |                          | 12,542 |                    |         |      | 10,310 |        
|Other income (expense):                  |                               |                          |        |                    |         |      |        |        
|                                         | Interest expense              |                          |        | (12,743            | )       |      |        | (15,358 | )      
|                                         | Interest income and other     |                          |        | 500                |         |      |        | 1,086   |        
|                                         |                               |                          |        |                    |         |      |        |        
|                                         |                               | Total other expense      |        |                    | (12,243 | )    |        |         | (14,272 | )
|                                         |                               |                          |        |                    |         |      |        |        
|Income (loss) before income taxes        |                               |                          | 299    |                    |         |      | (3,962 | )      
|Income tax benefit                       |                               |                          |       |                    |         |      | 50     |        
|                                         |                               |                          |        |                    |         |      |        |        
|Income (loss) from continuing operations |                               |                          | 299    |                    |         |      | (3,912 | )      
|Loss from discontinued operations        |                               |                          | (6,872 | )                  |         |      | (310   | )      
|                                         |                               |                          |        |                    |         |      |        |        
|Net loss                                 |                               | $                        | (6,573 | )                  |         | $    | (4,222 | )      
|                                         |                               |                          |        |                    |         |      |        |        

See Notes to Consolidated Financial Statements

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Consolidated Statements of Cash Flows
(Unaudited, In Thousands)

|                                                                                |                                           |                                                |         |                    |       |      |         |        |       |  
|------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------------------------- | ------- | ------------------ | ----- | ---- | ------- | ------ | ----- | -
|                                                                                |                                           |                                                |         | Three Months Ended
|                                                                                |                                           |                                                |         | March 31,         
|                                                                                |                                           |                                                |         |                   
|                                                                                |                                           |                                                |         | 2002               |       | 2001
|                                                                                |                                           |                                                |         |                    |       |     
|Cash Flows from Operating Activities:                                           |                                           |                                                |         |                    |       |      |         |       
|Net loss                                                                        |                                           | $                                              | (6,573  | )                  |       | $    | (4,222  | )     
|Adjustments to reconcile net loss to net cash provided by operating activities: |                                           |                                                |         |                    |       |      |         |       
|                                                                                | Loss on discontinued operations           |                                                |         | 6,872              |       |      |         | 310    |      
|                                                                                | Depreciation and amortization             |                                                |         | 19,259             |       |      |         | 19,410 |      
|                                                                                | Amortization of debt issuance costs       |                                                |         | 1,033              |       |      |         | 1,114  |      
|                                                                                | Investment tax credits                    |                                                |         |                   |       |      |         | (50    | )    
|                                                                                | Capitalized interest                      |                                                |         | (349               | )     |      |         | (396   | )    
|                                                                                | Other deferred credits                    |                                                |         | 3,973              |       |      |         | 1,261  |      
|                                                                                | Changes in components of working capital: |                                                |         |                    |       |      |         |        |      
|                                                                                |                                           | Accounts receivable and other current assets   |         |                    | 1,154 |      |         |        | 1,087 |  
|                                                                                |                                           | Accounts payable and other current liabilities |         |                    | 2,356 |      |         |        | (170  | )
|                                                                                |                                           | Other                                          |         |                    | (742  | )    |         |        | (65   | )
|                                                                                | Net cash used in discontinued operations  |                                                |         | (384               | )     |      |         | (173   | )    
|                                                                                |                                           |                                                |         |                    |       |      |         |       
|Net cash provided by operating activities                                       |                                           |                                                | 26,599  |                    |       |      | 18,106  |       
|Cash Flows From Investing Activities:                                           |                                           |                                                |         |                    |       |      |         |       
|Construction and capital expenditures, net of capitalized interest              |                                           |                                                | (13,246 | )                  |       |      | (43,915 | )     
|Proceeds from liquidation of minority interest investment                       |                                           |                                                |        |                    |       |      | 1,370   |       
|                                                                                |                                           |                                                |         |                    |       |      |         |       
|Net cash used by investing activities                                           |                                           |                                                | (13,246 | )                  |       |      | (42,545 | )     
|Cash Flows From Financing Activities:                                           |                                           |                                                |         |                    |       |      |         |       
|Payments on long-term debt                                                      |                                           |                                                | (331    | )                  |       |      | (1,670  | )     
|                                                                                |                                           |                                                |         |                    |       |      |         |       
|Net cash used by financing activities                                           |                                           |                                                | (331    | )                  |       |      | (1,670  | )     
|Increase (decrease) in cash                                                     |                                           |                                                | 13,022  |                    |       |      | (26,109 | )     
|Cash and cash equivalents at beginning of the period                            |                                           |                                                | 41,012  |                    |       |      | 61,896  |       
|                                                                                |                                           |                                                |         |                    |       |      |         |       
|Cash and cash equivalents at the end of the period                              |                                           | $                                              | 54,034  |                    |       | $    | 35,787  |       
|                                                                                |                                           |                                                |         |                    |       |      |         |       
|Supplemental Cash Flow Data:                                                    |                                           |                                                |         |                    |       |      |         |       
|Interest paid                                                                   |                                           | $                                              | 9,805   |                    |       | $    | 10,999  |       
|Income taxes paid                                                               |                                           |                                                |        |                    |       |      |        |       
|Supplemental Noncash Transactions:                                              |                                           |                                                |         |                    |       |      |         |       
|Interest rate swap marked to market                                             |                                           | $                                              | (2,903  | )                  |       | $    | 2,909   |       

See Notes to Consolidated Financial Statements

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|1. |  | DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- |  | ---------------------------------------------------------------------

Alaska Communications Systems Holdings, Inc. and Subsidiaries (the
Company or ACS Holdings), a Delaware corporation, is an integrated
communications provider engaged principally in providing local telephone,
directory, cellular, Internet, and interexchange services to its customers in
the state of Alaska through its telecommunications subsidiaries. The Company
was formed in October of 1998 for the purpose of acquiring and operating
telecommunications properties. The principal activities in 1998 and through May
14, 1999 were the preparation of systems and obtaining financing for pending
acquisitions. On May 14, 1999, the Company was acquired and became a wholly
owned subsidiary of Alaska Communications Systems Group, Inc. (the Parent or
ACS Group).

The financial statements for the Company represent the consolidated
financial position, results of operations and cash flows principally of the
following entities:



| |  |  | Alaska Communications Systems Holdings, Inc.
| | - |  | --------------------------------------------
|
| |  |  | ACS of Alaska, Inc. (ACSAK)               
|
| |  |  | ACS of the Northland, Inc. (ACSN)         
|
| |  |  | ACS of Fairbanks, Inc. (ACSF)             
|
| |  |  | ACS of Anchorage, Inc. (ACSA)             
|
| |  |  | ACS Wireless, Inc. (ACSW)                 
|
| |  |  | ACS Long Distance, Inc. (ACSLD)           
|
| |  |  | ACS Internet, Inc. (ACSI)                 
|
| |  |  | ACS InfoSource, Inc. (ACSIS)               

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted pursuant to rules and regulations of the Securities and Exchange
Commission. However, the Company believes the disclosures which are made are
adequate to make the information presented not misleading. The consolidated
financial statements and footnotes included in this Form 10-Q should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2001. Certain reclassifications have been made to the 2001
financial statements to make them conform to the current presentation.

In the opinion of management, the financial statements contain all
adjustments (consisting of normal recurring adjustments) necessary to present
fairly the consolidated financial position, results of operations and cash
flows for all periods presented. The results of operations for the three months
ended March 31, 2002 and 2001 are not necessarily indicative of the results of
operations which might be expected for the entire year or any other interim
periods.



|2. |  | NEW ACCOUNTING STANDARDS
|-- |  | ------------------------

On August 15, 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 143,Accounting
for Asset Retirement Obligations, which is effective for the Companys fiscal
year beginning January 1, 2003. This statement requires, among other things,
the accounting and reporting of legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development or normal operation of a long-lived asset. The Company has not yet
determined the impact of the adoption of this standard on its financial
position, results of operations and cash flows.

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|3. |  | GOODWILL AND OTHER INTANGIBLE ASSETS
|-- |  | ------------------------------------

Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and
Other Intangible Assets. In accordance with the guidelines of this accounting
principle, goodwill and indefinite-lived intangible assets are no longer
amortized but will be assessed for impairment on at least an annual basis. SFAS
No. 142 also requires that intangible assets with estimable useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment.

Goodwill amortization, which was $7,741 for the year ended December 31,
2001, ceased effective January 1, 2002. The Company is currently in the process
of performing the goodwill impairment test as required by SFAS No. 142.
Additionally, pursuant to SFAS No. 142, the Company completed its reassessment
of previously recognized intangible assets, and ceased amortization of
indefinite-lived intangible assets.

Provided below is a reconciliation of previously reported financial
statement information to pro forma amounts that reflect the elimination of
goodwill and indefinite-lived intangible amortization for the comparable
quarter ended March 31, 2001 prior to adoption of SFAS No. 142:

|                                                   |  |                    |        |      |  |   |        |  
|-------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                                   |  | Three Months Ended
|                                                   |  | March 31,         
|                                                   |  |                   
|                                                   |  | 2002               |        | 2001
|                                                   |  |                    |        |     
|Reported net loss                                  |  | $                  | (6,573 | )    |  | $ | (4,222 | )
|Add back: Goodwill amortization                    |  |                    |       |      |  |   | 1,931  |  
|Add back: Indefinite-lived intangible amortization |  |                    |       |      |  |   | 132    |  
|                                                   |  |                    |        |      |  |   |        |  
|Adjusted net loss                                  |  | $                  | (6,573 | )    |  | $ | (2,159 | )
|                                                   |  |                    |        |      |  |   |        |  

The following table provides the gross carrying value and accumulated
amortization for each major class of intangible asset as of March 31, 2002
based on the Companys reassessment of previously recognized intangible assets
and their remaining amortization lives in accordance with the adoption of SFAS
No. 142:

|                                         |  |          |        |              |  |   |        |  
|---------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | -
|                                         |  | Gross    |        |              |  |  
|                                         |  | Carrying |        | Accumulated 
|                                         |  | Amount   |        | Amortization
|                                         |  |          |        |             
|Amortizable intangible assets:           |  |          |        |              |  |   |        |  
|Customer list                            |  | $        | 915    |              |  | $ | (137   | )
|Other intangible assets                  |  |          | 2,723  |              |  |   | (1,297 | )
|                                         |  |          |        |              |  |   |        |  
|Total amortizable intangible assets      |  | $        | 3,638  |              |  | $ | (1,434 | )
|                                         |  |          |        |              |  |   |        |  
|Indefinite-lived intangible assets:      |  |          |        |              |  |   |        |  
|Cellular licenses                        |  | $        | 18,194 |              |  |   |        |  
|PCS licenses                             |  |          | 3,023  |              |  |   |        |  
|Domain names and trade names             |  |          | 80     |              |  |   |        |  
|                                         |  |          |        |              |  |   |        |  
|Total indefinite-lived intangible assets |  | $        | 21,297 |              |  |   |        |  
|                                         |  |          |        |              |  |   |        |  

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|3. |  | GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
|-- |  | ------------------------------------------------

The total intangible amortization expense for the three months ended March
31, 2002 and 2001 was $177 and $283, respectively. The estimated amortization
expense for each of the next five years ending December 31, is as follows:

|     |  |   |     | 
|---- |  | - | --- | 
|2002 |  | $ | 708 | 
|2003 |  | $ | 708 | 
|2004 |  | $ | 690 | 
|2005 |  | $ | 183 | 
|2006 |  | $ | 92  | 

In connection with the Companys adoption of a plan to discontinue its
wireless cable television service segment, the goodwill of that segment was
considered impaired, and an impairment charge of $3,648 is included with the
results of discontinued operations.



|4. |  | DISCONTINUED OPERATIONS
|-- |  | -----------------------

On March 30, 2002, the Company approved a plan to sell its wireless cable
television service segment. Accordingly, the results of this business have been
reclassified and reported as discontinued operations for all periods presented
and the assets and liabilities of the disposal group have been written down as
of March 30, 2002 to their fair value, net of expected selling expenses. The
following discloses the results of the discontinued operations for the three
months ended March 31, 2002 and 2001:

|                                             |  |                    |        |      |  |   |      |  
|-------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ---- | -
|                                             |  | Three Months Ended
|                                             |  | March 31,         
|                                             |  |                   
|                                             |  | 2002               |        | 2001
|                                             |  |                    |        |     
|Operating revenue                            |  | $                  | 214    |      |  | $ | 255  |  
|Operating expenses                           |  |                    | 398    |      |  |   | 532  |  
|                                             |  |                    |        |      |  |   |      |  
|Operating loss                               |  |                    | (184   | )    |  |   | (277 | )
|Interest expense                             |  |                    | (28    | )    |  |   | (33  | )
|                                             |  |                    |        |      |  |   |      |  
|Loss from operations of discontinued segment |  |                    | (212   | )    |  |   | (310 | )
|Write down of net assets to fair value       |  |                    | (6,660 | )    |  |   |     |  
|                                             |  |                    |        |      |  |   |      |  
|Loss from discontinued operations            |  | $                  | (6,872 | )    |  | $ | (310 | )
|                                             |  |                    |        |      |  |   |      |  

Assets held for sale at March 31, 2002
consist of the following:

|                                             |  |   |      |   |  |  |  | 
|-------------------------------------------- |  | - | ---- | - |  |  |  | 
|Accounts receivable, net of allowance of $29 |  | $ | 95   |   |  |  |  | 
|Other current assets                         |  |   | 18   |   |  |  |  | 
|Property, plant and equipment                |  |   | 425  |   |  |  |  | 
|Intangible assets                            |  |   | 325  |   |  |  |  | 
|Current liabilities                          |  |   | (164 | ) |  |  |  | 
|                                             |  |   |      |   |  |  |  | 
|Assets held for sale                         |  | $ | 699  |   |  |  |  | 
|                                             |  |   |      |   |  |  |  | 

8



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##### Table of Contents



ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|5. |  | STOCK INCENTIVE PLANS
|-- |  | ---------------------

The Companys employees participate in various plans of ACS Group, which
through its Compensation Committee of the Board of Directors, may grant stock
options, stock appreciation rights and other awards to officers, employees and
non-employee directors. At March 31, 2002, ACS Group has reserved a total of
6,060 shares of authorized common stock for issuance under the various plans.
The plans terminate in approximately 10 years from the date of adoption and
allow forfeited options to be reissued. Unless otherwise determined by the
Compensation Committee, options will vest ratably on each of the first four
anniversaries after the grant date and will have an exercise price equal to the
fair market value of the common stock on the date of grant. The term of options
granted under the plan may not exceed 10 years. On April 3, 2002, ACS Group
merged the ALEC Holdings, Inc. 1999 Stock Incentive Plan into the Alaska
Communications Systems Group, Inc. 1999 Stock Incentive Plan.

Alaska Communications Systems Group, Inc. 1999 Stock Incentive Plan

ACS Group has reserved 4,910 shares under this plan, which was adopted in
November 1999 in connection with its initial public offering. At March 31,
2002, 5,585 options have been granted, 1,522 have been forfeited, 439 have been
exercised, and 848 shares are available for grant under the plan.

On February 11, 2002, the Parents Board of Directors approved the grant
of options to purchase 150 shares under the plan to an employee at an exercise
price equal to the fair market value of the common stock on the date of grant,
vesting over four years ratably.

Alaska Communications Systems Group, Inc. 1999 Non-Employee Director Stock
Compensation Plan

ACS Group adopted its non-employee director stock compensation plan in
November 1999 in connection with its initial public offering. ACS Group has
reserved 150 shares under this plan. At March 31, 2002, 58 shares have been
awarded and 92 shares are available for grant under the plan. ACS Groups
directors are required to receive not less than 25% of their annual retainer
and meeting fees in the form of ACS Groups stock, and may elect to receive up
to 100% of directors compensation in the form of stock.

On March 29, 2002, seven shares under the plan were awarded to ACS Groups
directors, of which five were elected to be deferred until termination of
service by the directors.

Alaska Communications Systems Group, Inc. 1999 Employee Stock Purchase Plan

This plan was also adopted in connection with ACS Groups initial public
offering in November 1999. At March 31, 2002, 218 shares have been issued under
the plan and 782 shares are available for issuance and sale. The plan will
terminate on December 31, 2009. All ACS Holdings employees and all of the
employees of designated subsidiaries generally will be eligible to participate
in the purchase plan, other than employees whose customary employment is 20
hours or less per week or is for not more than five months in a calendar year,
or who are ineligible to participate due to restrictions under the Internal
Revenue Code.

9



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##### Table of Contents



ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|6. |  | BUSINESS SEGMENTS
|-- |  | -----------------

The Company has five reportable segments: local telephone, cellular,
directory, Internet and interexchange. Local telephone provides landline
telecommunications services, and consists of local telephone service, network
access and deregulated and other revenues; cellular provides wireless
telecommunications service; directory provides yellow page advertising and
other related products; Internet provides Internet service; and interexchange
provides long distance and private network services. Each reportable segment is
a strategic business under separate management and offering different services
than those offered by the other segments. The Company also has a wireless cable
television service segment that did not meet the criteria for a reportable
segment and was previously included in All Other that is now reported as
discontinued operations.

The Company also incurs interest expense, interest income, equity in
earnings of investments, goodwill amortization on the original May 14, 1999
purchases in 2001, and other operating and non operating income and expense at
the corporate level which are not allocated to the business segments, nor are
they evaluated by the chief operating decision maker in analyzing the
performance of the business segments. These non operating income and expense
items are provided in the accompanying table under the caption All Other in
order to assist the users of these financial statements in reconciling the
operating results and total assets of the business segments to the consolidated
financial statements. Common use assets are held at either the Company and are
allocated to the business segments based on operating revenues. Included in the
caption All Other are also the net assets held for sale of $699 and other net
liabilities of the discontinued operation that would not be sold of $3,946. The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies.

The following table illustrates selected financial data for each segment
as of and for the three months ended March 31, 2002:

|                                         |  |           |         |          |  |           |         |          |  |               |        |           |  |              |        |       |  |   |        |   |  |   |         |   |  |   |        |   |  |   |         |  
|---------------------------------------- |  | --------- | ------- | -------- |  | --------- | ------- | -------- |  | ------------- | ------ | --------- |  | ------------ | ------ | ----- |  | - | ------ | - |  | - | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                         |  | Local     |         |          |  |           |         |          |  |               |        |           |  |              |        |       |  |   |        |   |  |   |         |   |  |   |        |   |  |  
|                                         |  | Telephone |         | Cellular |  | Directory |         | Internet |  | Interexchange |        | All Other |  | Eliminations |        | Total
|                                         |  |           |         |          |  |           |         |          |  |               |        |           |  |              |        |      
|Operating revenues                       |  | $         | 55,322  |          |  | $         | 8,987   |          |  | $             | 8,641  |           |  | $            | 3,842  |       |  | $ | 7,134  |   |  | $ | 4,841   |   |  | $ | (7,134 | ) |  | $ | 81,633  |  
|Depreciation and amortization            |  |           | 13,681  |          |  |           | 1,365   |          |  |               | 1      |           |  |              | 1,253  |       |  |   | 574    |   |  |   | 2,385   |   |  |   |       |   |  |   | 19,259  |  
|Operating income (loss)                  |  |           | 8,589   |          |  |           | 757     |          |  |               | 5,211  |           |  |              | (3,864 | )     |  |   | (279   | ) |  |   | 2,150   |   |  |   | (22    | ) |  |   | 12,542  |  
|Interest expense                         |  |           | (433    | )        |  |           | (1      | )        |  |               |       |           |  |              | (7     | )     |  |   | (75    | ) |  |   | (12,227 | ) |  |   |       |   |  |   | (12,743 | )
|Interest income                          |  |           | 1       |          |  |           |        |          |  |               |       |           |  |              |       |       |  |   |       |   |  |   | 563     |   |  |   |       |   |  |   | 564     |  
|Income tax provision (benefit)           |  |           | 2,689   |          |  |           | 294     |          |  |               | 2,142  |           |  |              |       |       |  |   |       |   |  |   | (5,125  | ) |  |   |       |   |  |   |        |  
|Income (loss) from
continuing operations |  |           | 5,468   |          |  |           | 465     |          |  |               | 3,069  |           |  |              | (3,871 | )     |  |   | (354   | ) |  |   | (4,456  | ) |  |   | (22    | ) |  |   | 299     |  
|Total assets                             |  |           | 687,390 |          |  |           | 107,147 |          |  |               | 55,336 |           |  |              | 5,122  |       |  |   | 28,961 |   |  |   | 17,997  |   |  |   |       |   |  |   | 901,953 |  
|Capital expenditures                     |  |           | 5,970   |          |  |           | 955     |          |  |               | 198    |           |  |              | 3,126  |       |  |   |       |   |  |   | 2,997   |   |  |   |       |   |  |   | 13,246  |  

Operating revenues disclosed above include intersegment operating revenues
of $5,376 for local telephone, $405 for cellular, $351 for directory and $3,198
for interexchange. In accordance with SFAS No. 71, intercompany revenues
between local telephone and all other segments are not eliminated above.

The following table illustrates selected financial data for each segment
as of and for the three months ended March 31, 2001:

|                                         |  |           |         |          |  |           |         |          |  |               |        |           |  |              |        |       |  |   |        |   |  |   |         |   |  |   |        |   |  |   |         |  
|---------------------------------------- |  | --------- | ------- | -------- |  | --------- | ------- | -------- |  | ------------- | ------ | --------- |  | ------------ | ------ | ----- |  | - | ------ | - |  | - | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                         |  | Local     |         |          |  |           |         |          |  |               |        |           |  |              |        |       |  |   |        |   |  |   |         |   |  |   |        |   |  |  
|                                         |  | Telephone |         | Cellular |  | Directory |         | Internet |  | Interexchange |        | All Other |  | Eliminations |        | Total
|                                         |  |           |         |          |  |           |         |          |  |               |        |           |  |              |        |      
|Operating revenues                       |  | $         | 54,697  |          |  | $         | 9,289   |          |  | $             | 7,939  |           |  | $            | 3,111  |       |  | $ | 8,072  |   |  | $ | 4,128   |   |  | $ | (6,257 | ) |  | $ | 80,979  |  
|Depreciation and amortization            |  |           | 13,047  |          |  |           | 1,399   |          |  |               |       |           |  |              | 620    |       |  |   | 584    |   |  |   | 3,760   |   |  |   |       |   |  |   | 19,410  |  
|Operating income (loss)                  |  |           | 9,509   |          |  |           | 1,045   |          |  |               | 4,423  |           |  |              | (2,366 | )     |  |   | (2,219 | ) |  |   | (52     | ) |  |   | (30    | ) |  |   | 10,310  |  
|Interest expense                         |  |           | (483    | )        |  |           | (3      | )        |  |               |       |           |  |              | (34    | )     |  |   | (75    | ) |  |   | (14,763 | ) |  |   |       |   |  |   | (15,358 | )
|Interest income                          |  |           | 4       |          |  |           | 12      |          |  |               |       |           |  |              |       |       |  |   |       |   |  |   | 1,036   |   |  |   |       |   |  |   | 1,052   |  
|Income tax provision (benefit)           |  |           | 3,675   |          |  |           | 439     |          |  |               | 1,818  |           |  |              |       |       |  |   |       |   |  |   | (5,982  | ) |  |   |       |   |  |   | (50     | )
|Income (loss) from
continuing operations |  |           | 5,323   |          |  |           | 619     |          |  |               | 2,605  |           |  |              | (2,396 | )     |  |   | (2,295 | ) |  |   | (7,738  | ) |  |   | (30    | ) |  |   | (3,912  | )
|Total assets                             |  |           | 629,544 |          |  |           | 102,161 |          |  |               | 37,124 |           |  |              | 36,635 |       |  |   | 73,700 |   |  |   | 25,293  |   |  |   |       |   |  |   | 904,457 |  
|Capital expenditures                     |  |           | 11,749  |          |  |           | 387     |          |  |               |       |           |  |              | 11,127 |       |  |   | 19,504 |   |  |   | 1,148   |   |  |   |       |   |  |   | 43,915  |  

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|6. |  | BUSINESS SEGMENTS (Continued)
|-- |  | -----------------------------

Operating revenues disclosed above include intersegment operating revenues
of $4,371 for local telephone, $228 for cellular, $250 for directory and $6,480
for interexchange. In accordance with SFAS No. 71, intercompany revenues
between local telephone and all other segments are not eliminated above.



|7. |  | RELATED PARTY TRANSACTIONS
|-- |  | --------------------------

On April 17, 2001, the Company issued an interest bearing note receivable
to an officer totaling $328. The note bears interest at the Mid-Term Applicable
Federal Rate, which was 4.43% as of March 31, 2002, and is due on April 15,
2005. The note is secured by a pledge of 100 shares of the Companys stock held
in the officers name. In accordance with an addendum to the officers
employment agreement dated May 3, 2001, the loan will be forgiven ratably over
a 3 year period ending April 16, 2004. The note balance, including accrued
interest, was $343 as of March 31, 2002.

Fox Paine & Company, the majority stockholder of the Parent, receives an
annual management fee in the amount of one percent of the Companys net income
before interest expense, interest income, income taxes, depreciation and
amortization and equity in earnings (losses) of investments, calculated without
regard to the fee. The management fee expense for the three months ended March
31, 2002 and 2001 was $345 and $282, respectively.



|8. |  | SEVERANCE AND RESTRUCTURING CHARGES
|-- |  | -----------------------------------

The Company recorded $3,019 related to severance and restructuring charges
under several plans adopted during 2000. Employee force reductions resulting
from these restructuring plans are expected to total approximately 200 by their
completion and include employee groups located in Alaska within the local
telephone, cellular and Internet operations. The Company expects these plans to
be completed by September 30, 2002. The plans also called for the closure of a
branch operation in Vancouver, Washington, which was completed during the
second quarter of 2001. As of March 31, 2002, $2,278 has been paid under the
plans and approximately 150 employees have been terminated.



|9. |  | COMMITMENTS AND CONTINGENCIES
|-- |  | -----------------------------

The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes
that the disposition of these matters will not have a material adverse effect
on the Companys consolidated financial position, results of operations or cash
flows.

A class action lawsuit was filed against the Company on March 14, 2001.
The litigation alleges various contract and tort claims concerning the
Companys decision to terminate its Infinite Minutes long distance plan.
Although the Company believes this suit is without merit and intends to
vigorously defend its position, it is impossible to determine at this time the
actual number of plaintiffs or the claims that will actually continue to be in
dispute.

In December 2001, the Company entered into a material contract with the
State of Alaska to provide it with comprehensive telecommunications services
for a period of five years. This contract obligates the Company to, among other
things, provide on the states behalf customer premise equipment and other
capital assets which the Company believes will range between $25,000 and
$30,000 over the term of the agreement, including $20,000 to $25,000 during
2002. The Company intends to fund this commitment with cash on hand and cash
flow from operations.

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ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Three Months Ended March 31, 2002
(Unaudited, In Thousands Except Per Share Amounts)



|9. |  | COMMITMENTS AND CONTINGENCIES (Continued)
|-- |  | -----------------------------------------

The Company has entered into an agreement with a third party to provide to
that party a financing commitment for an amount ranging from $10,000 to
$15,000, contingent upon the third party achieving certain objectives. Such
financing would be provided in the form of an unsecured loan. The Company
believes such financing may occur during 2002 and it intends to fund it with
cash on hand and cash flow from operations.

12



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##### Table of Contents






Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS AND ANALYSTS REPORTS

This Form 10-Q and future filings by the Company on Forms 10-K, 10-Q and
8-K and future oral and written statements by the Company and its management
may include, certain forward-looking statements as defined under the Private
Securities Litigation Reform Act of 1995, including (without limitation)
statements with respect to anticipated future operating and financial
performance, financial position and liquidity, growth opportunities and growth
rates, pricing plans, acquisition and divestitive opportunities, business
prospects, strategic alternatives, business strategies, regulatory and
competitive outlook, investment and expenditure plans, financing needs and
availability, and other similar forecasts and statements of expectation. Words
such as aims, anticipates, believes, could, estimates, expects,
hopes, intends, may, plans, projects, seeks, should, and will,
and variations of these words and similar expressions, are intended to identify
these forward-looking statements. These forward looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from our Companys historical experience and our present
expectations or projections.Forward-looking statements by the Company and its
management are based on estimates, projections, beliefs and assumptions of
management and are not guarantees of future performance. The Company disclaims
any obligation to update or revise any forward-looking statement based on the
occurrence of future events, the receipt of new information, or otherwise.

Actual future performance, outcomes and results may differ materially from
those expressed in forward-looking statements made by the Company and its
management as a result of a number of important factors. Examples of these
factors include (without limitation)rapid technological developments and
changes in the telecommunications industries; ongoing deregulation (and the
resulting likelihood of significantly increased price and product/service
competition) in the telecommunications industry as a result of the
Telecommunications Act of 1996 (the 1996 Act) and other similar federal and
state legislation and the federal and state rules and regulations enacted
pursuant to that legislation; regulatory limitations on the Companys ability
to change its pricing for communications services; the possible future
unavailability of SFAS No. 71 to the Companys wireline subsidiaries; and
possible changes in the demand for the Companys products and services. In
addition to these factors, actual future performance, outcomes and results may
differ materially because of other, more general, factors including (without
limitation) changes in general industry and market conditions and growth rates;
changes in interest rates or other general national, regional or local economic
conditions; governmental and public policy changes; changes in accounting
policies or practices adopted voluntarily or as required by accounting
principles generally accepted in the United States of America; and the
continued availability of financing in the amounts, at the terms and on the
conditions necessary to support the Companys future business.

Investors should also be aware that while the Company does, at various
times, communicate with securities analysts, it is against the Companys policy
to disclose to them any material non-public information or other confidential
information.Accordingly, investors should not assume that the Company agrees
with any statement or report issued by an analyst irrespective of the content
of the statement or report. To the extent that reports issued by securities
analysts contain any projections, forecasts or opinions, such reports are not
the responsibility of the Company.

INTRODUCTION

On May 14, 1999, the Company acquired the incumbent providers of local
telephone services in Anchorage, Juneau, Fairbanks and approximately 70 rural
communities in Alaska, making it the largest provider of local telephone
service in the state and the fourteenth largest provider of local exchange
services in the United States. The Company also acquired on May 14, 1999
interexchange operations primarily serving the Anchorage market and cellular
and Internet services providing statewide coverage. The Company has unified its
statewide branding under the ACS name.

13



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##### Table of Contents



Today, the Company generates revenue primarily through the provision of:



| |  | local telephone services, including:
|- |  | ------------------------------------



| |  |  | basic local service to retail customers within the Companys service areas,                                                              
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | wholesale service to competitive local exchange carriers (CLECs),                                                                      
|
| |  |  | network access services to interexchange
carriers for origination and termination of interstate and
intrastate long distance phone calls,
|
| |  |  | enhanced services,                                                                                                                       
|
| |  |  | ancillary services, such as billing
& collections (B&C), and                                                                           
|
| |  |  | universal service payments;                                                                                                              



| |  | cellular services;                           
|- |  | ---------------------------------------------
| 
| |  | directory advertising;                       
| 
| |  | Internet services; and                       
| 
| |  | interexchange network long-distance services.

Local Telephone Within the telecommunications industry, local exchange
carriers (LECs) have historically enjoyed stable revenue and cash flow from
local exchange operations resulting from the need for basic telecommunications
services, the highly regulated nature of the telecommunications industry and,
in the case of rural LECs, the underlying cost recovery settlement and support
mechanisms applicable to local exchange operations. Basic local service is
generally provided at a flat monthly rate and allows the user to place
unlimited calls within a defined local calling area. Access revenues are
generated by providing interexchange carriers access to the LECs local network
and its customers. Universal service revenues are a subsidy paid to rural LECs
to support the high cost of providing service in rural markets. Revenue is also
generated from ancillary and enhanced services.

Changes in revenue are largely attributable to changes in the number of
access lines, local service rates and minutes of use. Other factors can also
impact revenue, including:



| |  | intrastate and interstate revenue pricing and settlement methodologies,                                                  
|- |  | -------------------------------------------------------------------------------------------------------------------------
| 
| |  | authorized rates of return for regulated services,                                                                       
| 
| |  | whether an access line is used by a business or residential subscriber,                                                  
| 
| |  | whether an access line is used by a retail or wholesale subscriber,                                                      
| 
| |  | intrastate and interstate calling patterns,                                                                              
| 
| |  | customers selection of various local rate plan options,                                                                 
| 
| |  | selection of enhanced calling services, such as voice
mail, or other packaged products, such as cellular and Internet
and
| 
| |  | other subscriber usage characteristics.                                                                                  

LECs have three basic tiers of customers:



| |  | business and residential customers located in their
local service areas that pay for local phone service,                                                                                                     
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | interexchange carriers that pay for access to long
distance calling customers located within its local service
areas and                                                                                      
| 
| |  | CLECs that pay for wholesale access to the Companys
network in order to provide competitive local service on either
a wholesale or unbundled network element (UNE) basis as
prescribed under the 1996 Act.

LECs provide access service to numerous interexchange carriers and may
also bill and collect long distance charges from interexchange carrier
customers on behalf of the interexchange carriers. The amount of access charge
revenue associated with a particular interexchange carrier varies depending
upon long distance calling patterns and the relative market share of each long
distance carrier.

The Companys local service rates for end users are authorized by the
Regulatory Commission of Alaska (RCA). Authorized rates are set by the
Federal Communications Commission (FCC) and the RCA for interstate and
intrastate access charges, respectively, and may change from time to time.

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Cellular- The Company is the largest and only statewide provider of
cellular services in Alaska, currently serving approximately 80,000
subscribers. Its cellular network covers over 470,000 residents, including all
major population centers and highway corridors. The Company operates a TDMA
digital network in substantially all of its service areas, and is in the
process of upgrading this network to a new generation of digital network known
as CDMA.

Directory- The Company, through its subsidiary ACSIS, is the largest
provider of published directory advertising in Alaska. The Company serves
approximately 12,000 advertisers through eight regional directories tailored to
serve the needs of each of its local exchange markets. The Company also
provides an online directory product and other specialized advertising vehicles
to its customers.

Internet- The Company is the second largest provider of Internet access
services in Alaska with over 47,000 customers. The Company offers dial-up and
dedicated digital subscriber line, (DSL) Internet access to its customers.

Interexchange-The Company provides long distance and other interexchange
services to over 66,000 customers in Alaska. The traffic from these customers
are carried over the Companys own or leased facilities.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31,
2001

All amounts are discussed at the consolidated level after the elimination
of intercompany revenue and expense.

Operating Revenues

Operating revenues increased $0.7 million, or 0.8%, for the three months
ended March 31, 2002 compared to the three months ended March 31, 2001. Local
telephone, Internet, and directory advertising, all increased compared to the
corresponding period of 2001, while cellular and interexchange revenues
decreased compared to the corresponding period of 2001.

Local Telephone

Local telephone revenues, which consist of local network service, network
access revenue and deregulated and other revenues, increased $0.6 million, or
1.1%, for the three months ended March 31, 2002 compared to the same period in
2001. The following table summarizes the Companys consolidated local telephone
revenues by category.

|                              |                               |   |                    |        |      |   |        |        | 
|----------------------------- | ----------------------------- | - | ------------------ | ------ | ---- | - | ------ | ------ | 
|                              |                               |   | Three Months Ended
|                              |                               |   | March 31,         
|                              |                               |   |                   
|                              |                               |   | 2002               |        | 2001
|                              |                               |   |                    |        |     
|                              |                               |   | (In Thousands)    
|Local telephone revenue:      |                               |   |                    |        |      |   |        |       
|                              | Local network service         |   | $                  | 25,644 |      |   | $      | 23,263 | 
|                              | Network access revenue        |   |                    | 25,036 |      |   |        | 26,236 | 
|                              | Deregulated and other revenue |   |                    | 4,642  |      |   |        | 5,198  | 
|                              |                               |   |                    |        |      |   |        |       
|Total local telephone revenue |                               | $ | 55,322             |        |      | $ | 54,697 |       
|                              |                               |   |                    |        |      |   |        |       

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##### Table of Contents



The following table summarizes the Companys local telephone access
lines.

|                                   |  |                 |         |      |  |  |         | 
|---------------------------------- |  | --------------- | ------- | ---- |  |  | ------- | 
|                                   |  | As of March 31,
|                                   |  |                
|                                   |  | 2002            |         | 2001
|                                   |  |                 |         |     
|Retail access lines                |  |                 | 252,417 |      |  |  | 273,911 | 
|Wholesale access lines             |  |                 | 24,537  |      |  |  | 16,844  | 
|Unbundled network elements         |  |                 | 53,704  |      |  |  | 41,520  | 
|                                   |  |                 |         |      |  |  |         | 
|Total local telephone access lines |  |                 | 330,658 |      |  |  | 332,275 | 
|                                   |  |                 |         |      |  |  |         | 

The local network service component of local telephone revenues was $25.6
million for the three months ended March 31, 2002 compared with $23.3 million
for the three months ended March 31, 2001.Revenue increased $2.4 million or
10.2% from the prior year. Approximately $1.2 million of this increase was due
to rate increases for both retail and UNE local service rates implemented
during the fourth quarter of 2001 at ACSA, as discussed below. The Company also
experienced increased cellular local access revenue and service order revenue
compared to the prior year, which together accounted for approximately $0.6
million of the increase. Additionally, the Company has improved its collection
practices over those in place during the first quarter of 2001, thereby
reducing its recorded bad debt expense by $0.5 million.

The Company believes it is earning less than its required rate of return
for local network service in several of its markets and filed local service
rate cases for all of its LEC businesses with the RCA on July 2, 2001 aimed at
making up this deficiency. Subsequently, in October 2001, the Company filed for
interim and refundable local service rates in its Anchorage market in order to
expedite a partial recovery of the total revenue deficiency. On November 15,
2001 the RCA approved an interim and refundable rate increase for ACSA of 24%
for certain services.This interim and refundable rate increase was implemented
in November 2001 and is expected to generate approximately $4.0 to $5.0 million
in annual revenue.

The Company continued to experience loss of retail market share for local
network service in its Anchorage and Fairbanks service areas during the
quarter. Additionally, the Company saw competition commence in its Juneau
market during the quarter. Generally, when the Company loses a retail local
network service line to a competitor, it continues to provide the line to the
competitor on a wholesale basis at reduced revenue per line. Management
believes that the continuing loss of market share it has experienced in certain
of its markets is partially attributable to below cost interconnection rates
for UNEs currently in place. During the second quarter of 2001, the Company
reopened interconnection proceedings for its Anchorage market and filed for an
interim and refundable UNE rate increase of approximately $10 per month per
loop. On October 25, 2001, the RCA granted ACSA an interim and refundable UNE
rate increase of $1.07, increasing the UNE rates from $13.85 to $14.92. The
interim and refundable rate increase was implemented in November 2001 and is
expected to generate approximately $0.6 million to $0.7 million in annual
revenue. The Company expects the RCA to hold hearings and adjudicate final
Anchorage UNE rates during 2002.

Network access revenues decreased by $1.2 million, or 4.6%, from $26.2
million in 2001 to $25.0 million in 2002. Network access revenues are based on
a regulated return on rate base and recovery of allowable expenses associated
with the origination and termination of toll calls for the Companys retail and
resale customers. The decrease in network access revenues from the
corresponding period in 2001 is due primarily to a shift from retail and resale
lines to UNEs.Management expects that network access revenues will decline as
a component of local telephone revenues for the foreseeable future.

Deregulated and other revenues, which declined $0.6 million, or 10.7% from
2001, consists principally of B&C services, space and power rents, deregulated
equipment sales, paystation revenues, regulated directory listing revenue, and
other miscellaneous telephone revenues. The decline in deregulated and other
revenue was due primarily to a decline in customer premise equipment (CPE)
sales of approximately $0.6 million. CPE sales tend to fluctuate significantly
from quarter to quarter.

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Cellular

Cellular revenues decreased $0.3 million, or 3.3%, to $9.0 million for the
three months ended March 31, 2002 compared to $9.3 million for the three months
ended March 31, 2001.This decline is due to a decrease in average revenue per
unit, or ARPU, from $40.51 in 2001 to $37.47 in 2002, despite a growth in
average subscribers of 4.6% from 76,368 in 2001 to 79,860 in 2002. The decrease
in ARPU is the result of pricing programs implemented during 2001 that offer
more minutes for a lower price than was offered in the previous year, lower
equipment sales revenue due to fewer customers being activated for the three
months ended March 31, 2002 as compared to the prior period, and lower roaming
revenue.

Directory

Directory revenues increased by $0.7 million, or 8.8%, from $7.9 million
in 2001 to $8.6 million in 2002. This growth reflects improved penetration and
revenue per advertiser for the current directory phone book cycles compared
with 2001. Management expects the growth in directory revenues to slow as
other advertising vehicles, such as the Internet, television and radio, compete
for this business and the market matures.

Internet

Internet revenues increased from $3.1 million in 2001 to $3.8 million in
2002  an increase of $0.7 million, or 23.5%.This increase is primarily due
to a growth in DSL subscribers of 96.1% from 4,329 in 2001 to 8,488 in 2002,
and the revenues of MosquitoNet, an Internet Service Provider which was
acquired on July 6, 2001.

On December 10, 2001, the Company entered into a five year contract with
the State of Alaska to provide a broad range of telecommunications services,
many of which will be provided over an IP network or supported by a service
center owned and operated by ACSI. Services under this contract will be
implemented beginning in the early summer of 2002. Accordingly, the Company
anticipates revenues for this segment will increase in future periods. The
Company anticipates substantial capital investments will be made over the life
of the contract to support the telecommunications needs of this customer.

Interexchange

Interexchange revenues decreased from $5.9 million in 2001 to $4.8 million
in 2002  a decrease of $1.1 million, or 18.5%. The decrease was due to a
decline in long distance minutes of use from 68.8 million in 2001 to 37.9
million in 2002, despite 1.8% growth in long distance subscribers from 65,372
in 2001 to 66,521 in 2002. The decline in minutes of use was due to the
Companys decision to terminate an unlimited $20 per month interstate calling
plan, which was marketed as Infinite Minutes, in May of 2001.

Operating Expenses

Operating expenses decreased $1.6 million, or 2.2%, from $70.7 million for
the three months ended March 31, 2001 to $69.1 million for the three months
ended March 31, 2002. Operating expenses decreased as a percentage of operating
revenues from 87.3% in 2001 to 84.6% in 2002.

Local Telephone

The components of local telephone expense are plant specific operations,
plant non-specific operations, customer operations, corporate operations and
property and other operating tax expense.Depreciation and amortization
associated with the operation of the local telephone segment is included in
total depreciation and amortization. Local telephone expense increased from
$28.9 million for the three months ended March 31, 2001 to $29.0 million for
the three months ended March 31, 2002.As a percentage of local telephone
revenue, local telephone expense decreased from 52.8% for 2001 to 52.4% for
2002.

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Cellular

Cellular expense increased $0.1 million, or 1.6%, for the three months
ended March 31, 2002 compared to the three months ended March 31, 2001.
Cellular expense increased from 60.1% of cellular revenues for 2001 to 63.1% of
cellular revenues for 2002. Although expenses increased nominally, the lower
revenue for the three months ended March 31, 2002 as compared to the prior
period resulted in the increase of expense as a percentage of revenue.

Directory

Directory expenses decreased $0.1 million from $3.5 million in 2001 to
$3.4 million in 2002. As a percent of directory revenue, expenses were 44.1%
for 2001 compared to 39.6% for 2002. This margin improvement is due to stable
fixed costs combined with increasing directory revenue.

Internet

Internet expenses increased by $1.4 million, or 37.0% from $3.7 million in
2001 to $5.1 million in 2002. The increase in Internet expenses was due
principally to start-up expenses associated with commencing services under the
State of Alaska telecommunications contract. The acquisition in July 2001 of
MosquitoNet also contributed to the increase in Internet expense. On December
10, 2001, the Company entered into a five year contract with the State of
Alaska to provide a broad range of telecommunications services, many of which
will be provided over an IP network or supported by a service center owned and
operated by ACSI. Accordingly, the Company anticipates expenses for this
segment will increase in future periods.

Interexchange

Interexchange expenses decreased by $2.9 million, or 30.7%, and decreased
as a percentage of revenue from 160.4% in 2001 to 136.4% in 2002. The majority
of this decrease was the result of the decline in long distance minutes of use
as discussed under interexchange service revenues.

Depreciation and Amortization

Depreciation and amortization expense decreased $0.1 million, or 0.8%, due
principally to ceasing goodwill amortization with the adoption of SFAS No. 142,
Goodwill and Intangible Assetson January 1, 2002 offset by increases in plant
in service for the three months ended March 31, 2002 over the corresponding
period of 2001. Depreciation and amortization expense in 2001 included $1.9
million of goodwill amortization. Under SFAS No. 142, goodwill is no longer
amortized is instead subjected to an annual impairment test, the effect of
which the Company is currently evaluating.

Interest Expense and Interest Income and Other

Interest expense decreased $2.6 million, or 17.0%, for the three months
ended March 31, 2002 compared to the three months ended March 31, 2001,
principally as a result of market effects on the Companys variable interest
rate debt.Interest income and other also declined by $0.6 million, or 54.0%,
as a result of a lower average invested cash balance and lower market interest
rates during 2002 compared to 2001.

Income Taxes

The Company has fully reserved the income tax benefit of $25.2 million
resulting from the consolidated losses it has incurred since May 14, 1999  the
date of the acquisition of substantially all of its operations.

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Discontinued Operations

On March 30, 2002, the Companys management approved a plan to offer for
sale its wireless cable television service segment. As a result of this
decision, the operating revenue and expense of this segment has been classified
as discontinued operations under SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets,for both periods presented and the assets and
liabilities of the disposal group have been written down as of March 30, 2002
to their fair value, net of expected selling expenses, resulting in a charge to
discontinued operations of $6.9 million and $0.3 million for the periods ended
March 31, 2002 and 2001, respectively. The Company has fully reserved in the
form of a valuation allowance the $2.7 million income tax benefit of this
discontinuance.

Net Loss

The increase in net loss is primarily a result of the factors discussed
above.

LIQUIDITY AND CAPITAL RESOURCES

The Company has satisfied its operational and capital cash requirements
primarily through internally generated funds, the sale of stock and debt
financing. For the three months ended March 31, 2002 the Companys cash flows
from operating activities were $26.6 million. At March 31, 2002, the Company
had approximately $42.6 million in net working capital, with approximately
$54.0 million in unrestricted cash and cash equivalents and $7.0 million of
restricted cash. As of March 31, 2002 the Company had $75.0 million of
remaining capacity under its revolving credit facility, representing 100% of
available capacity.

The Company has a $435.0 million bank credit agreement (Senior Credit
Facility), and $150.0 million in 9.375% senior subordinated notes due 2009,
representing substantially all of the Companys long-term debt of $595.6
million as of March 31, 2002.In addition, $17.3 million in senior discount
debentures are recorded at ACS Group and are collateralized by substantially
all assets of the Company. Interest on ACS Groups senior discount debentures
and ACS Holdings senior subordinated notes are payable semiannually. Interest
on borrowings under the Senior Credit Facility is payable monthly, quarterly or
semi-annually at the Companys option. The Senior Credit Facility requires 1%
annual principal payments commencing on May 14, 2002, with balloon payments in
each of 2006, 2007, and 2008. The Senior Credit Facility contains a number of
restrictive covenants and events of default, including covenants limiting
capital expenditures, incurrence of debt, and the payment of dividends, and
requires the Company to achieve certain financial ratios.

The Company employs an interest rate hedge transaction, which fixes at
5.99% the underlying variable rate on one-half of the borrowings under the
Senior Credit Facility, or $217.5 million, expiring in June 2002. The buyer has
the right at their option to extend the agreement for an additional two years,
and, based on current market interest rates, management expects this option to
be exercised, extending the contract to June 2004. The underlying variable rate
for the Senior Credit Facility is based on the London Interbank Offer Rate
(LIBOR), which is adjusted at each monthly, quarterly or semi-annual rollover
date.

The local telephone network requires the timely maintenance of plant and
infrastructure The Companys historical capital expenditures have been
significant. The construction and geographic expansion of the Companys
cellular network has required significant capital. The implementation of the
Companys interexchange network and data services strategy is also capital
intensive. In 1999, the Company purchased fiber capacity for $19.5 million,
which was funded with monies borrowed to finance the 1999 acquisitions. Capital
expenditures for 2000 were $72.3 million, including $3.2 million in capital
leases. Capital expenditures for 2001 were $87.6 million, including $19.5
million for additional fiber capacity and $15 million for an IP based network
and service center. The Company anticipates capital spending for 2002 of
approximately $85 million, including approximately $20 to $25 million necessary
to meet its obligations under a material contract with the State of Alaska and
approximately $7 million for the first phase of its buildout of PCS licenses.
The Company intends to fund its future capital expenditures with cash on hand,
through internally generated cash flows, and if necessary, through borrowings
under the revolving credit facility.

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The Companys capital requirements may change, however, due to, among
other things: the Companys decision to pursue specific acquisition
opportunities, changes in technology, the effects of competition or changes in
the Companys business strategy.The Companys ability to satisfy its capital
requirements will be dependent upon its future financial performance, which is,
in turn, subject to future economic conditions and to financial, business and
other factors, many of which are beyond the Companys control.

The Company has entered into an agreement with a third party to provide to
that party a financing commitment for an amount ranging from $10 million to $15
million contingent upon the third party achieving certain objectives. Such
financing would be provided in the form of an unsecured loan. The Company
believes such financing may occur during 2002 and it intends to fund it with
cash on hand and cash flow from operations.

The Company believes that it will have sufficient working capital provided
by operations and available borrowing capacity under the existing revolving
credit facility to service its debt and fund its operations, capital
expenditures and other obligations over the next 12 months.The Companys
ability to satisfy its capital requirements will be dependent upon its future
financial performance, which is, in turn, subject to future economic conditions
and to financial, business, regulatory and other factors, many of which are
beyond the Companys control.

CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

Management is responsible for the financial statements presented elsewhere
in this 10-Q and has evaluated the accounting policies used in their
preparation. Management believes these policies to be reasonable and
appropriate. The Companys significant accounting policies are described in
Note 1 in the Notes to the Consolidated Financial Statements included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2001. The
following discussion identifies those accounting policies that management
believes are critical in the preparation of the Companys financial statements,
the judgements and uncertainties affecting the application of those policies,
and the possibility that materially different amounts would be reported under
different conditions or using different assumptions.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of commitments and contingencies at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Among the significant estimates affecting
the financial statements are those related to the realizable value of accounts
receivable, long-lived assets, income taxes and network access revenue
reserves. Actual results may differ from those estimates.

Access revenues are recognized when earned. The Company participates in
toll revenue pools with other telephone companies. Such pools are funded by
toll revenue and/or access charges regulated by the RCA within the intrastate
jurisdiction and the FCC within the interstate jurisdiction. Much of the
interstate access service revenue is initially recorded based on estimates.
These estimates are derived from interim financial statements, available
separations studies and the most recent information available about achieved
rates of return. These estimates are subject to adjustment in future accounting
periods as refined operational information becomes available. To the extent
that disputes arise over revenue settlements, the Companys policy is to defer
revenue collected until settlement methodologies are resolved and finalized. At
March 31, 2002, the Company had recorded liabilities of $35.4 million related
to potentially refundable access revenue, of which $18.7 million relates to a
pending complaint of alleged over-earnings.

The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred taxes reflect the temporary differences
between the financial and tax bases of assets and liabilities using the enacted
tax rates in effect in the years in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent
that it is more likely than not that such deferred tax assets will not be
realized. The cumulative valuation allowance against deferred tax assets was
$25.2 million as of March 31, 2002.

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The local telephone exchange operations of the Company account for costs
in accordance with the accounting principles for regulated enterprises
prescribed by SFAS No. 71, Accounting for the Effects of Certain Types of
Regulation. This accounting recognizes the economic effects of rate regulation
by recording cost and a return on investment as such amounts are recovered
through rates authorized by regulatory authorities. Accordingly, under SFAS No.
71, plant and equipment is depreciated over lives approved by regulators and
certain costs and obligations are deferred based upon approvals received from
regulators to permit recovery of such amounts in future years. Depreciable
lives of plant and equipment approximate their estimated economic lives.
Unregulated revenues and costs incurred by the local telephone exchange
operations and non-regulated operations of the Company are not accounted for
under SFAS No. 71 principles. Management believes that the effect of adopting
SFAS No. 101 , Regulated Enterprises  Accounting for the Discontinuation of
Application of FASB Statement No. 71, would not be material to the Companys
financial position, results of operations or cash flows.

OUTLOOK

The Company expects the demand for telecommunications services in Alaska
to grow, particularly as a result of:



| |  |  | continuing growth in demand for core telephone services and
enhanced service offerings,                                                  
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | increased line demand from expected growth in the Alaskan
economy and population growth in the Companys service areas,                  
|
| |  |  | increasing demand for private network services by government
and business on a statewide basis on either a circuit switched or IP
basis, 
|
| |  |  | increasing demand for wireless voice and data services, and                                                                              
|
| |  |  | growth in demand for DSL and Internet access services due to
higher business and consumer bandwidth needs for Internet and data
services.

The Company believes that it will be able to capitalize on this demand
through its diverse service offerings on its owned circuit switched and IP
facilities and new sales and marketing initiatives directed toward basic voice,
enhanced and data services.

There are currently a number of regulatory proceedings underway at the
state and federal levels that could have a significant impact on the Companys
operations.The Company cannot predict with certainty the impact of current or
future regulatory developments on any of its businesses.

The telecommunications industry is extremely competitive, and the Company
expects competition to intensify in the future. As an ILEC, the Company faces
competition mainly from resellers, local providers who lease its UNEs and, to a
lesser degree, from facilities-based providers of local telephone services. In
addition, as a result of the RCAs recent affirmation of the APUCs termination
of the Companys rural exemptions, the Company may be required to provide
interconnection elements and/or wholesale discounted services to competitors in
all or some of its rural service areas. Moreover, while cellular telephone
services have historically complemented traditional LEC services, the Company
anticipates that existing and emerging wireless technologies may increasingly
compete with LEC services. In cellular services, the Company currently competes
with at least one other cellular provider in each of its cellular service
areas. In long distance, the Company currently has less than 10% of total long
distance revenues in Alaska and faces competition from the two major long
distance providers in Alaska. In the highly competitive business for Internet
access services, the Company currently competes with a number of established
online service companies, interexchange carriers and cable companies.

The telecommunications industry is subject to continuous technological
change. The Company expects that new technological developments in the future
will generally serve to enhance its ability to provide service to its
customers.However, these developments may also increase competition or require
the Company to make significant capital investments to maintain its leadership
position in Alaska.

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On December 10, 2001, the Company entered into a material contract with
the State of Alaska to provide it with comprehensive telecommunications
services. The Company expects that this contract will generate approximately
$92 million in revenues over its term, including an estimated $10 million in
2002. The contract also obligates the Company to provide customer premise and
other capital assets to the state estimated to require an investment of $25 to
$30 million over the term of the agreement, including $20 to $25 million during
2002.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has issued senior discount debentures, senior subordinated
notes and has entered into a bank credit facility. These on-balance sheet
financial instruments, to the extent they provide for variable rates of
interest, expose the Company to interest rate risk, with the primary interest
rate risk exposure resulting from changes in LIBOR or the prime rate, which are
used to determine the interest rates that are applicable to borrowings under
the Companys bank credit facilities. The Company uses derivative financial
instruments, in particular an interest rate swap agreement, to partially hedge
variable interest transactions. The Companys derivative financial instrument
transaction has been entered into for hedging purposes. The terms and
characteristics of the derivative financial instruments are matched with the
underlying on-balance sheet instrument or anticipated transactions and do not
constitute speculative or leveraged positions independent of these exposures.
There have been no material changes to the Companys outstanding debt
instruments since December 31, 2001.

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PART II




OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS.

As previously reported, the Company filed a formal appeal of the RCAs
order terminating the rural exemption for Fairbanks, Juneau and the rural
communities in the Glacier State study area on November 10, 1999. This matter
is currently pending in the Alaska Supreme Court. The Company filed its
initial Alaska Supreme Court brief on April 18, 2002 and intends to vigorously
pursue the matter.

General Communication, Inc. (GCI), requested a new interconnection
agreement for the rural communities in ACSNs Glacier State study area on
November 29, 2001. GCI sought RCA mediation of the matter on March 1, 2002,
and, by letter dated March 21, 2002, the Company responded that it already had
an interconnection agreement with GCI for this area and, therefore, had
satisfied its obligations for the term of its existing agreement. GCI filed a
motion for declaratory and injunctive relief with the RCA on April 3, 2002
seeking to force the Company to arbitrate the matter, and subsequently filed a
petition for arbitration with the RCA on April 19, 2002. On April 5, 2002, the
Company filed a complaint seeking a declaratory ruling from the federal
district court in Alaska that it had satisfied its statutory obligation to
arbitrate an interconnection agreement for this area for the remainder of the
term of the existing agreement. The Company intends to pursue its legal rights
but cannot, at this time, predict the outcome of this dispute.

The Company did complete Phase I (revenue requirements) of its rate cases
for all its local exchange companies with a hearing in March 2002 and is
awaiting an order from the state commission establishing its revenue
requirements before commencing Phase II (cost of service and rate design)
proceedings. The Company intends to vigorously pursue these matters in the
coming months.

The Company also previously reported that on February 7, 2001, it filed an
appeal in the United States Court of Appeals for the District of Columbia
Circuit of a January 24, 2001 FCC Order to pay $2.7 million plus interest to
GCI for excess interstate access charges. On April 4, 2001, the FCC released
an order granting the Companys request for a stay of the payment and allowed
the Company to place the funds in question, already fully reserved, in escrow
pending the outcome of the appeal. On March 4, 2002, the District of Columbia
Circuit Court of Appeals heard oral argument in the matter and the parties are
waiting for a decision.

The Company petitioned to intervene in a District of Columbia Circuit
Court of Appeals case brought by AT&T Corporation against the FCC. AT&T
challenged the FCCs Streamlined Tariff Order which provides for tariff filings
to be deemed lawful. The Company supports the FCCs order. Intervention was
granted by the court on April 1, 2002.

On May 14, 2001, the Company was served with a class action lawsuit
concerning its interstate Infinite Minutes long distance plan. The court
certified the class on March 19, 2002 and denied reconsideration of that
decision on April 22, 2002. It is impossible to determine at this time the
actual number of plaintiffs or the claims that will actually continue to be in
dispute. The Company believes this suit is without merit and intends to
vigorously defend its position.

The Company is involved in various other claims, legal actions and
regulatory proceedings arising in the ordinary course of business. The Company
believes that the disposition of these matters will not have a material adverse
effect on the Companys consolidated financial position, results of operations
or cash flows.

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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

None.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.




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

None.




ITEM 5. OTHER INFORMATION.

None.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits:

|     |  |                                                                                                                             
|---- |  | ----------------------------------------------------------------------------------------------------------------------------
|10.5 |  | Employment Agreement, dated as of May 3, 2001 by and among Alaska
Communications Systems Group, Inc. and Charles E. Robinson
|10.6 |  | Employment Agreement, dated as of May 3, 2001 by and among Alaska
Communications Systems Group, Inc. and Wesley E. Carson   

(b)  Reports on Form 8-K:

No reports on Form 8-K were filed during the quarter ended March 31, 2002.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report on Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized.

|                     |                                                                                                                                                                                                              
|-------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date: April 30, 2002 | ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC                                                                                                                                                                  
|                    
|                     | /s/ Kevin P. Hemenway                                                                                                                                                                                        
|                     |                                                                                                                                                                                                              
|                     | Kevin P. Hemenway
Senior Vice President and Chief Financial Officer
(Signing both in his capacity as Senior Vice President on behalf of
the Registrant and as Principal Accounting Officer of the Registrant)

25