<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

   For the quarter ended June 30, 2002           Commission File No. 0-16751

                                   NTELOS Inc.
             (Exact name of registrant as specified in its charter)

               VIRGINIA                                   54-1443350
   (State or other jurisdiction of                     (I R S employer
    incorporation or organization)                   identification no.)

P. O. Box 1990, Waynesboro, Virginia                        22980
(Address of principal executive offices)                 (Zip code)

Registrant's telephone number, including area code 540-946-3500

                                      None
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

                                  Yes [X] No[ ]

                     (APPLICABLE ONLY TO CORPORATE ISSUERS)

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

Class COMMON STOCK, NO PAR VALUE                Outstanding 8/12/02   17,318,052



<PAGE>

                                   NTELOS Inc.
                                   I N D E X

<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                 Number
                                                                                                 ------
<S>                                                                                               <C>
PART I. FINANCIAL INFORMATION

     Condensed Consolidated Balance Sheets, June 30, 2002 and December 31, 2001                    3-4

     Condensed Consolidated Statements of Operations, Three and Six Months Ended June 30, 2002
     and 2001                                                                                       5

     Condensed Consolidated Statements of Cash Flows, Six Months Ended June 30, 2002 and 2001       6

     Condensed Consolidated Statements of Shareholders' Equity, Three and Six Months Ended
     June 30, 2002 and 2001                                                                         7

     Notes to Condensed Consolidated Financial Statements                                          8-13

     Management's Discussion and Analysis of Financial Condition and Results of Operations        14-24

     Quantitative and Qualitative Disclosures about Market Risk                                    25

PART II. OTHER INFORMATION                                                                        26-29

SIGNATURES                                                                                        30-31
</TABLE>

                                        2

<PAGE>

                                   NTELOS Inc.

                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                        June 30, 2002   December 31,
(In thousands)                                                           (Unaudited)       2001
----------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>
Assets

Current Assets
   Cash and cash equivalents                                              $      736     $    7,293
   Restricted cash                                                            13,649         18,069
   Accounts receivable, net of allowance                                      30,922         30,328
   Inventories and supplies                                                    2,925          9,619
   Other receivables and deposits                                              3,430          4,669
   Prepaid expenses and other                                                  5,047          3,929
   Income taxes receivable                                                     1,822          1,945
---------------------------------------------------------------------------------------------------
                                                                              58,531         75,852
---------------------------------------------------------------------------------------------------

Investments
   Securities and investments                                                  9,456         13,963
   Restricted cash                                                             4,515         18,094
---------------------------------------------------------------------------------------------------
                                                                              13,971         32,057
---------------------------------------------------------------------------------------------------

Property, Plant and Equipment
   Land and building                                                          51,098         50,836
   Network plant and equipment                                               476,540        447,585
   Furniture, fixtures and other equipment                                    68,678         65,283
---------------------------------------------------------------------------------------------------
      Total in service                                                       596,316        563,704
   Under construction                                                         18,983         35,753
---------------------------------------------------------------------------------------------------

                                                                             615,299        599,457
   Less accumulated depreciation                                             146,337        133,513
---------------------------------------------------------------------------------------------------

                                                                             468,962        465,944
---------------------------------------------------------------------------------------------------

Other Assets
   Cost in excess of net assets of business acquired, less accumulated
      amortization                                                           135,373        135,635
   Other intangibles, less accumulated amortization                           16,738         23,677
   PCS radio spectrum licenses, less accumulated amortization                419,690        423,181
   Other radio spectrum licenses, less accumulated amortization               11,818         11,930
   Radio spectrum licenses not in service                                      9,544          9,935
   Deferred charges                                                           19,566         18,675
   Deferred tax asset                                                          2,441             --
---------------------------------------------------------------------------------------------------
                                                                             615,170        623,033
---------------------------------------------------------------------------------------------------

                                                                          $1,156,634     $1,196,886
===================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                        3

<PAGE>

                                   NTELOS Inc.

                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                          June 30, 2002   December 31,
(In thousands)                                                             (Unaudited)        2001
------------------------------------------------------------------------------------------------------
<S>                                                                       <C>             <C>
Liabilities and Shareholders' Equity

Current Liabilities
   Accounts payable                                                       $   29,196      $   39,917
   Advance billings and customer deposits                                     11,670           8,889
   Accrued payroll                                                             6,328           5,540
   Accrued interest                                                           18,608          18,332
   Deferred revenue                                                            5,143           5,092
   Other accrued liabilities                                                   6,283           4,927
------------------------------------------------------------------------------------------------------

                                                                              77,228          82,697
------------------------------------------------------------------------------------------------------

Long-term Debt                                                               628,861         612,416
------------------------------------------------------------------------------------------------------

Long-term Liabilities
   Deferred income taxes                                                          --           2,200
   Retirement benefits                                                        18,668          15,789
   Long-term deferred liabilities                                             45,970          43,624
------------------------------------------------------------------------------------------------------

                                                                              64,638          61,613
------------------------------------------------------------------------------------------------------

Minority Interests                                                               905             847
------------------------------------------------------------------------------------------------------

Redeemable, Convertible Preferred Stock                                      275,785         265,747
------------------------------------------------------------------------------------------------------

Commitments

Shareholders' Equity
   Preferred stock, no par value per share, authorized 1,000
      shares; none issued                                                         --              --
   Common stock, no par value per share, authorized 75,000 shares;
     issued 17,294 shares (17,209 in 2001)                                   182,189         182,093
   Stock warrants                                                             22,874          22,874
   Accumulated deficit                                                       (86,757)        (23,201)
   Accumulated other comprehensive loss                                       (9,089)         (8,200)
------------------------------------------------------------------------------------------------------

                                                                             109,217         173,566
------------------------------------------------------------------------------------------------------

                                                                          $1,156,634      $1,196,886
======================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       4

<PAGE>

                                   NTELOS Inc.

                 Condensed Consolidated Statements Of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                          Three Months Ended                Six Months Ended
--------------------------------------------------------------------------------------------------------------------
(In thousands except per share amounts)               June 30, 2002   June 30, 2001   June 30, 2002   June 30, 2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>             <C>
Operating Revenues
   Wireless PCS                                         $ 38,545        $ 30,331        $ 74,316        $ 55,596
   Wireline communications                                24,161          21,908          46,479          41,757
   Other communications services                           2,188           2,414           4,120           4,728
-------------------------------------------------------------------------------------------------------------------
                                                          64,894          54,653         124,915         102,081
-------------------------------------------------------------------------------------------------------------------

Operating Expenses
   Cost of wireless sales (exclusive of items shown       12,225          12,678          24,448          22,726
   separately below)
   Maintenance and support                                16,695          15,932          33,586          29,760
   Depreciation and amortization                          20,658          18,387          43,753          36,240
   Customer operations                                    15,461          15,961          31,232          30,752
   Corporate operations                                    4,804           4,865          10,658           9,742
   Restructuring charge                                    1,426              --           2,693              --
-------------------------------------------------------------------------------------------------------------------
                                                          71,269          67,823         146,370         129,220
-------------------------------------------------------------------------------------------------------------------
Operating Loss                                            (6,375)        (13,170)        (21,455)        (27,139)

Other Income (Expenses)
Equity loss from investee - WV PCS Alliance                   --              --              --          (1,286)
Gain on sale of assets                                     2,782              --           4,737              --
Interest expense                                         (19,884)        (19,250)        (38,888)        (37,447)
Other income (expense)                                    (1,599)            987          (1,732)          4,015
-------------------------------------------------------------------------------------------------------------------
                                                         (25,076)        (31,433)        (57,338)        (61,857)

Income Tax Benefit                                        (2,000)        (11,147)         (3,569)        (22,570)
-------------------------------------------------------------------------------------------------------------------

                                                         (23,076)        (20,286)        (53,769)        (39,287)

Minority Interests in Losses of Subsidiaries                 222           1,311             251           3,058
-------------------------------------------------------------------------------------------------------------------

Net Loss                                                 (22,854)        (18,975)        (53,518)        (36,229)
Dividend requirements on preferred stock                   5,019           4,690          10,038           9,377
-------------------------------------------------------------------------------------------------------------------
Loss Applicable to Common Shares                        $(27,873)       $(23,665)       $(63,556)       $(45,606)
===================================================================================================================

Net Loss per Common Share - Basic and Diluted           $  (1.61)       $  (1.40)       $  (3.69)          (2.86)

Average shares outstanding - basic and diluted            17,260          16,857          17,240          15,972
===================================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       5

<PAGE>

                                   NTELOS Inc.

                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                             Six Months Ended
-----------------------------------------------------------------------------------------------------
   (In thousands)                                                       June 30, 2002   June 30, 2001
-----------------------------------------------------------------------------------------------------
<S>                                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                  $(53,518)       $(36,229)
Adjustments to reconcile net income to net cash provided by operating
   activities:
   Gain on disposition of assets                                            (4,737)             --
   Depreciation                                                             41,987          25,506
   Amortization                                                              1,766          10,734
   Recognition of impairment loss on securities                              1,158              --
   Non-cash restructuring charge                                             1,620              --
   Deferred taxes                                                           (4,072)        (23,723)
   Retirement benefits and other                                               781           2,764
   Interest payable from restricted cash                                    13,650          13,649
   Accrued interest income on restricted cash                                 (201)         (2,452)
   Equity loss from PCS Alliance                                                --           1,286
   Accretion of loan discount and origination fees                           2,387           2,107
Changes in assets and liabilities from operations, net of effects of
   acquisitions and dispositions:
   (Increase) decrease in accounts receivable                                 (594)            403
   Decrease in inventories and supplies                                      6,694           2,330
   (Increase) decrease in other current assets                                 121            (249)
   Changes in income taxes                                                     123           2,463
   Decrease in accounts payable                                            (10,950)        (14,223)
   Increase in other accrued liabilities                                     6,970           2,431
   Increase (decrease) in other current liabilities                          2,240            (156)
-----------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                          5,425         (13,359)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment                                 (52,267)        (53,759)
Proceeds from sale of discontinued operation                                    --           3,500
Investments in PCS Alliances                                                    --            (634)
Cash on hand in merged entity                                                   --           4,096
Advances to PCS Alliances                                                       --          (2,960)
Deposit refunds on assets                                                       --           8,000
Proceeds from sale of assets                                                26,708           2,975
Other                                                                         (873)            (93)
-----------------------------------------------------------------------------------------------------
Net cash used in investing activities                                      (26,432)        (38,875)
-----------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt                                        --          55,000
Borrowings under line of credit, net                                        21,000              --
Additional payments on other debt instruments                               (5,720)         (1,665)
Net proceeds from issuance of stock                                            251             398
Other                                                                       (1,181)             --
-----------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                   14,450          53,733
-----------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                            (6,557)          1,499
Cash and cash equivalents:
Beginning                                                                    7,293           1,637
-----------------------------------------------------------------------------------------------------

Ending                                                                    $    736        $  3,136
=====================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       6

<PAGE>

                                   NTELOS Inc.

            Condensed Consolidated Statements of Shareholders' Equity
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Accumulated   Accumulated
                                                                                              Deficit/       Other         Total
                                                                  Common Stock                Retained   Comprehensive Shareholders'
         (In thousands)                                        Shares    Amount   Warrants    Earnings       Income        Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>      <C>        <C>       <C>           <C>           <C>
Balance, December 31, 2000                                     13,132   $ 45,272   $22,874   $ 59,355      $  8,458      $135,959
Comprehensive loss:
   Net loss                                                                                   (17,254)
   Cash flow hedge:
      Cumulative effect of the adoption of SFAS No. 133, net
         of $2,489 deferred tax benefit                                                                      (3,900)
      Derivative losses, net of $1,523 deferred tax benefit                                                  (2,402)
      Unrealized loss on securities available for sale, net
         of $979 of deferred tax benefit                                                                     (1,531)
         Comprehensive loss                                                                                               (25,087)
Dividends on preferred shares                                                                  (4,687)                     (4,687)
Common stock issuance pursuant to R&B Merger                    3,716    131,807                                          131,807
Shares issued through employee stock purchase plan                  7        145                                              145
------------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2001                                        16,855   $177,224   $22,874   $ 37,414      $    625      $238,137
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive loss:
   Net loss                                                                                   (18,975)
   Cash flow hedge:
      Unrealized gain on securities available for sale, net
         of $3,626 deferred tax obligation                                                                    5,695
      Derivative gain, net of $866 deferred tax obligation                                                    1,361
         Comprehensive loss                                                                                               (11,919)
Dividends on preferred shares                                                                  (4,690)                     (4,690)
Common stock exercised, net                                        12        106                                              106
Shares issued through employee stock purchase plan                  7        146                                              146
------------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2001                                         16,874   $177,476   $22,874   $ 13,749      $  7,681      $221,780
====================================================================================================================================

------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001                                     17,209   $182,093   $22,874   $(23,201)     $ (8,200)     $173,566
Comprehensive loss:
   Net loss                                                                                   (30,664)
   Cash flow hedge:
      Derivative gain, net of $735 deferred tax benefit                                                       1,156
      Unrealized loss on securities available for sale, net
         of $212 deferred tax benefit                                                                          (333)
         Comprehensive loss                                                                                               (29,841)
Dividends on preferred shares                                                                  (5,019)                     (5,019)
Common stock issuance                                               4         58                                               58
Shares issued through employee stock purchase plan                 29        146                                              146
------------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2002                                        17,242   $182,297   $22,874   $(58,884)     $ (7,377)     $138,910
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive loss:
   Net loss                                                                                   (22,854)
   Cash flow hedge:
      Derivative loss, net of $1,380 deferred tax benefit                                                    (2,168)
      Reclassification of unrealized loss to realized loss,
         included in net income                                                                                 444
      Unrealized loss on securities available for sale, net
         of $8 deferred tax benefit                                                                              12
         Comprehensive loss                                                                                               (24,566)
Dividends on preferred shares                                                                  (5,019)                     (5,019)
Other, net                                                         (6)      (213)                                            (213)
Shares issued through employee stock purchase plan                 58        105                                              105
------------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2002                                         17,294   $182,189   $22,874   $(86,757)     $ (9,089)     $109,217
====================================================================================================================================
</TABLE>



See Notes to Condensed Consolidated Financial Statements.

                                       7

<PAGE>

                                   NTELOS Inc.
              Notes to Condensed Consolidated Financial Statements

1.   SIGNIFICANT ACCOUNTING POLICIES

     In the opinion of NTELOS Inc. ("NTELOS" or the "Company"), the accompanying
     condensed consolidated financial statements which are unaudited, except for
     the condensed consolidated balance sheet dated December 31, 2001, which is
     derived from audited financial statements, contain all adjustments
     (consisting of only normal recurring accruals) necessary to present fairly
     the financial position as of June 30, 2002 and December 31, 2001, the
     results of operations for the three and six months ended June 30, 2002 and
     2001 and cash flows for the six months ended June 30, 2002 and 2001. The
     results of operations for the six months ended June 30, 2002 and 2001 are
     not necessarily indicative of the results to be expected for the full year.

     ACCOUNTING FOR INTANGIBLE ASSETS
     The Company adopted Statement of Financial Accounting Standard ("SFAS") No.
     142, Goodwill and Other Intangible Assets, on January 1, 2002. Under these
     new rules, goodwill, assembled workforce intangible asset and other
     intangible assets deemed to have indefinite lives will no longer be
     amortized but will be subject to annual impairment tests in accordance with
     this Statement. Other intangible assets will continue to be amortized over
     their useful lives. Accordingly, the Company ceased amortization of
     goodwill, an assembled workforce intangible asset, and PCS radio spectrum
     licenses on January 1, 2002. The cost and net book value of these assets at
     June 30, 2002 followed by the totals by reportable unit as determined under
     in SFAS No. 142 guidelines is indicated in the following table:

     (In thousands)                                Cost     Net Book Value
     ---------------------------------------------------------------------
     Goodwill                                    $146,854      $135,373
     PCS Radio Spectrum Licenses In Service       436,457       419,690
     Assembled Workforce                            1,800           940
     ---------------------------------------------------------------------
        Total Indefinite Lived Assets            $585,111      $556,003
     =====================================================================
     Indefinite Lived Assets by Reporting Unit
     ---------------------------------------------------------------------
     Wireless PCS                                $464,003      $444,526
     Telephone                                     68,472        65,463
     Network                                       26,769        25,582
     Internet                                      12,621         9,789
     Other
        Wireless Cable                              4,260         3,654
        Wireline Cable                              7,721         6,037
        Alarm Monitoring                            1,265           951
     ---------------------------------------------------------------------
        Total Indefinite Lived Assets            $585,111      $556,003
     =====================================================================

     Amortization of indefinite lived intangible assets was $6.0 million ($3.8
     million after tax) and $10.3 million ($6.3 million after tax) for the three
     and six months ended June 30, 2001. Therefore, the pro forma loss
     applicable to common shares for the three and six months ended June 30,
     2001 adjusted for the impact of SFAS No. 142 was $19.9 million ($1.18 per
     common share) and $39.3 million ($2.46 per common share). Amortization of
     intangibles assets over the next five years is as follows: $4.3 million in
     2003, $4.2 million in 2004, $4.2 million in 2005, $.7 million in 2006, $.4
     million in 2007 and $2.9 million thereafter.

     The Company has completed the required impairment tests of goodwill and
     intangible assets with indefinite lives as of January 1, 2002. The Company
     performed testing of wireless goodwill and the wireless assembled workforce
     intangible asset utilizing a combination of a discounted cash flow method
     and other market valuation methods. The Company's testing of PCS radio
     spectrum licenses and goodwill in the other reporting units utilized a
     discounted cash flow method. The discounted cash flow method involved long
     term cash flow projections using numerous assumptions and estimates related
     to these projections. The Company engaged an independent appraisal firm to
     perform valuation work related to the PCS radio spectrum licenses and
     goodwill and assembled workforce on the wireless segment. Based on the fair
     value testing of the licenses, the Company determined that there was no
     impairment to the PCS radio spectrum licenses as of January 1, 2002 and
     through June 30, 2002. Additionally, the Company completed the transitional
     impairment testing as of January 1, 2002 for goodwill and the assembled
     workforce during the second quarter of 2002. Based on this testing, no
     impairment exists on goodwill or the assembled workforce intangible assets
     as of January 1, 2002. The Company will perform the annual SFAS No. 142
     testing of all goodwill and indefinite lived intangible assets as of
     October 1, 2002 for the year ended December 31, 2002.

     FINANCIAL STATEMENT CLASSIFICATIONS
     Certain amounts on the prior year financial statements have been
     reclassified, with no effect on net income, to conform to classifications
     adopted in 2002. At June 30, 2002, accounts receivable is shown net of
     $18.4 million allowance for doubtful accounts ($14.0 million at December
     31, 2001). Costs in excess of net assets of business acquired and other
     intangibles are

                                       8

<PAGE>

                                   NTELOS Inc.
              Notes to Condensed Consolidated Financial Statements
                                    Continued

     shown net of accumulated amortization of $21.5 million at June 30, 2002
     ($18.5 million at December 31, 2001). Additionally, PCS radio spectrum
     licenses and other radio spectrum licenses are shown net of accumulated
     amortization of $16.8 million and $4.0 million, respectively, at June 30,
     2002 ($17.2 million and $3.8 million, respectively, at December 31, 2001).

     Radio spectrum licenses for areas where the licenses are being used in
     operations had historically been classified in the property, plant and
     equipment section of the balance sheet. In order to better conform with
     industry practice, these assets, along with their related accumulated
     amortization, have been reclassified to the other assets section of the
     balance sheet for all periods presented.

2.   DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

     The Company manages its business segments with separable management focus
     and infrastructures. The "Other" segment is comprised of the paging
     operation, all cable operations, and the alarm and other communications
     services operations. Additionally, certain unallocated corporate related
     items that, in management's opinion, don't provide direct benefit to the
     operating segments, are included in Other. Total unallocated corporate
     operating expenses excluding depreciation and amortization were $2.6
     million and $.6 million for the three month period ended June 30, 2002 and
     2001, respectively, and were $4.7 million and $1.3 million for the six
     month period ended June 30, 2002 and 2001, respectively. Within the current
     year amounts noted above, the Company reported $1.4 million and $2.7
     million of restructuring charges (Note 8) for the three and six months
     ended June 30, 2002, respectively. Additionally, the voicemail assets and
     operations were transferred from the Other segment to the Wireless segment
     on January 1, 2002 as the Wireless segment is the primary user of these
     assets.

     Depreciation and amortization of corporate assets is included in the
     "Other" column in the tables below. This amounted to $36,000 and $.3
     million for the quarters ended June 30, 2002 and 2001, respectively, of the
     total "Other" depreciation and amortization. For the six months ended June
     30, 2002 and 2001, depreciation and amortization of corporate assets
     totaled $.2 million and $.5 million, respectively.

     In the table that follows, segment revenues are shown net of intersegment
     revenues.

                                       9

<PAGE>

                                   NTELOS Inc.
              Notes to Condensed Consolidated Financial Statements
                                   Continued

     Summarized financial information concerning the Company's reportable
     segments is shown in the following table. These segments are described in
     more detail in Note 2 of the Company's 2001 Annual Report to Shareholders.

<TABLE>
<CAPTION>
     (in thousands)                       Telephone   Network     CLEC    Internet   Wireless PCS    Other        Total
     --------------------------------------------------------------------------------------------------------------------
     <S>                                   <C>        <C>       <C>        <C>         <C>          <C>        <C>
     For the three months ended
        June 30, 2002

     Revenues                              $ 11,729   $ 2,126   $ 5,649    $ 4,657     $ 38,545     $  2,188   $   64,894
     EBITDA*                                  8,108     1,742     1,054      1,108        3,666       (1,395)      14,283
     Depreciation &
        Amortization                          1,812       783       807        487       16,206         563        20,658

     For the three months ended
        June 30, 2001
     Revenues                              $ 10,831   $ 2,205   $ 4,509    $ 4,363     $ 30,331     $  2,414   $   54,653
     EBITDA*                                  6,717     1,769       675        229       (4,993)         820        5,217
     Depreciation &
        Amortization                          3,079     1,093       672        950       12,013          580       18,387

     As of and for the six months ended
        June 30, 2002
     Revenues                              $ 22,238   $ 4,370   $10,592    $ 9,279     $ 74,316     $  4,120   $  124,915
     EBITDA*                                 14,371     3,413     1,596      1,827        3,911       (2,820)      22,298
     Depreciation &
        Amortization                          3,619     1,483     1,517      1,469       34,400        1,265       43,753

     Total Segment Assets                   134,644    56,717    29,222     17,333      734,721       26,798      999,435
     Corporate Assets                                                                                             157,199
                                                                                                               ----------
     Total Assets                                                                                              $1,156,634
                                                                                                               ==========

     As of and for the six months ended
        June 30, 2001
     Revenues                              $ 20,543   $ 3,915   $ 8,641    $ 8,658     $ 55,596     $  4,728   $  102,081
     EBITDA*                                 13,166     3,136     1,487        314      (10,737)       1,735        9,101
     Depreciation
        &Amortization                         5,023     1,661     1,174      1,937       25,525          920       36,240
     Total Segment Assets                   133,768    55,789    31,921     18,734      802,814       33,677    1,076,703
     Corporate Assets                                                                                             159,397
                                                                                                               ----------
     Total Assets                                                                                              $1,236,100
                                                                                                               ==========
</TABLE>

     *  Operating Income before depreciation and amortization.

3.   INVESTMENTS IN WIRELESS AFFILIATES

     On February 13, 2001, pursuant to the Company's merger with R&B (Note 4),
     the Company's common ownership interest increased in the Virginia PCS
     Alliance, L.C. ("VA Alliance") from 65% to 91% and increased in the West
     Virginia PCS Alliance, L.C. ("WV Alliance") from 45% to 79%. The Company
     began consolidating the results of the VA Alliance in 2000 and began
     consolidating the results of the WV Alliance on February 13, 2001. From
     this date to June 30, 2002, the Company has purchased additional minority
     interest in the VA Alliance and the WV Alliance and, at June 30, 2002, held
     common interests of 97% and 98%, respectively.

     The VA Alliance is a PCS provider serving a 1.7 million populated area in
     central and western Virginia. The WV Alliance is a PCS provider serving a
     2.0 million populated area in West Virginia and parts of eastern Kentucky,
     southwestern Virginia and eastern Ohio.

4.   MERGER AND ACQUISITIONS

     Effective February 13, 2001, the Company closed on its merger with R&B.
     Under the terms of the merger, the Company issued approximately 3.7 million
     shares of its common stock in exchange for 100% of R&B's outstanding common
     stock. The merger is being accounted for using the purchase method of
     accounting and was valued at $131.8 million, or $35.47 per share based on
     the average share price for the two days preceding May 18, 2000, the date
     the merger terms were agreed to and announced. The purchase

                                       10

<PAGE>

                                   NTELOS Inc.
              Notes to Condensed Consolidated Financial Statements
                                   Continued

     price in excess of the net assets acquired was $95.3 million, $68.5 million
     of which was allocated to goodwill in the telephone segment and the
     remaining $26.8 million was allocated to goodwill in the network segment.
     Additionally, fair value adjustments of $14.4 million were made to certain
     PCS licenses in which R&B held an ownership interest. As of February 13,
     2001, the Company assumed debt of $7.3 million from R&B payable in the
     years 2001 through 2026.

     R&B is an Integrated Communications Provider ("ICP") providing local and
     long distance telephone service, and dial-up and high-speed Internet
     service to business and residential customers in Roanoke, Virginia and the
     surrounding area, as well as in the New River Valley of Virginia.

5.   LONG-TERM DEBT

     Regarding our Senior Credit Facility covenants, the 2002 annual EBITDA
     minimum level is $49.6 million and includes quarterly rolling twelve month
     thresholds. This is a significant increase over our 2001 EBITDA levels of
     $20.5 million. At June 30, 2002, our rolling twelve month EBITDA, as
     adjusted per the covenant definition, was $35.0 million, inclusive of $15.6
     million for the second quarter of 2002. EBITDA of $26.0 million for the
     remaining six months of 2002 is needed in order to comply with the EBITDA
     covenant at December 31, 2002. At June 30, 2002, we were in compliance with
     all of our financial covenant requirements and we anticipate compliance
     through the remainder of 2002.

     Beginning in the quarter ending March 31, 2003, our Senior Credit Facility
     requires compliance with leverage and senior leverage ratios and interest
     and fixed charge coverage ratios. In 2003, we anticipate increasing levels
     of PCS subscribers and ARPU growth, and continued lowering of PCS churn in
     order to create significant growth in cash flow from our wireless segment.
     We also anticipate continued revenue growth from our wireline segments and
     continuing cost containment measures. Achievement of these results,
     together with generation of cash flow from non-core asset divestitures,
     reduction in future capital expenditures, or implementation of further cost
     containment measures will be necessary to ensure covenant compliance,
     liquidity and access to borrowings under our Senior Credit Facility during
     2003 and beyond. If we are unable to achieve these results and are unable
     to implement any of these additional steps, we may have to delay or abandon
     some of our anticipated capital expenditures, substantially modify our
     operating plans, expedite the sale of non-strategic assets, reduce or
     refinance our indebtedness or otherwise alter our existing capital
     structure, raise additional capital through the issuance of additional
     shares of common stock or securities convertible into or exercisable for
     shares of common stock, or seek additional capital resources. In this
     event, we may not have sufficient financial resources and our ability to
     make interest and principal payments on our senior and subordinated notes
     could be significantly impaired.

6.   SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION

     The Company made scheduled semi-annual payments of interest for $18.2
     million on the $280 million senior notes out of restricted cash during the
     quarters ending March 31, 2001 and 2002, in accordance with the terms and
     conditions set forth in the senior note indenture. The semi-annual interest
     payment due in August 2002 will be the final payment made from restricted
     cash. Additionally, see Note 4 above for the non-cash merger transaction
     with R&B.

     During the quarter ended March 31, 2002, the Company sold communication
     towers for total proceeds of $8.2 million, deferring a $1.3 million gain
     which is being amortized over the twelve year leaseback period.
     Additionally, the Company sold certain excess PCS licenses for proceeds of
     $2.4 million, recognizing a $2.0 million gain.

     On March 6, 2002, the Company entered into an amendment to its $325 million
     Senior Secured Term Loan (also referred to as the "Senior Credit Facility")
     which amended certain covenants and terms of the agreement (discussed more
     fully in Note 6 of the Company's 2001 Annual Report to Shareholders) for a
     fee of $1.2 million. This fee was deferred and is being amortized to
     interest expense over the life of this loan.

     In April 2002, the Company sold certain excess PCS radio spectrum licenses
     for proceeds of $12.0 million, recognizing a $2.8 million gain.

     In May 2002, the Company sold its 3% minority partnership interest in
     America's Fiber Network LLC ("AFN") for proceeds of $2.6 million,
     recognizing a $.2 million loss on the transaction. Concurrently, the
     Company purchased the use of approximately 700 new route miles of fiber
     contiguous to, or an extension of, our existing fiber for $2.6 million.

     Over the course of the six month period ended June 30, 2002, the Company
     sold various investments for $1.6 million, which approximated the related
     investment carrying values. Additionally, during the quarter ended June 30,
     2002, the Company

                                       11

<PAGE>

                                   NTELOS Inc.
              Notes to Condensed Consolidated Financial Statements
                                   Continued

     recognized a $1.1 million permanent impairment loss associated with its
     investment in Worldcom Inc.

7.   INCOME TAXES

     The effective tax rate in the three and six months ended 2002 was 8.0% and
     6.3% as compared to an effective income tax rate at December 31, 2001 of
     35.1%. For the three and six months ended June 30, 2002, the Company
     reported an income tax benefit of $2.0 million and $3.6 million,
     respectively. This benefit is net of a valuation allowance recorded at June
     30, 2002 of $16.5 million. This valuation allowance takes into
     consideration the Company's projected tax losses for the year, the
     existence of an unrealized loss associated with the interest rate swap
     agreement and the deferred tax financial position. The allowance was
     required based on lack of certainty that the net operating loss tax assets
     will be recoverable within the statutory carryforward period. The current
     year rate, absent the valuation allowance, was 35.1%. In the prior year,
     the effective income tax rate was below the statutory rate primarily due to
     non-deductible goodwill. These permanent differences are absent in the
     current year (Note 1). However, the current year rate, before the valuation
     allowance, is reduced from the statutory rate primarily by non-deductible
     basis differences in licenses sold.

8.   EARNINGS PER SHARE

     The weighted average number of common shares outstanding, which was used to
     compute diluted net income per share in accordance with FASB Statement No.
     128, Earnings Per Share, was not increased by assumed conversion of
     dilutive stock options in the three and six months ended June 30, 2002 and
     2001 due to the fact that the Company recorded a net loss for the
     respective periods. For the three months ended June 30, 2002 and 2001, the
     Company had common stock equivalents from options totaling 1,000 shares and
     102,000 shares, respectively, and 300,000 stock warrants which would be
     dilutive. For the six months ended June 30, 2002 and 2001, the Company had
     common stock equivalents from options totaling 179,000 shares and 76,000
     shares, respectively, and 300,000 stock warrants which would be dilutive.
     However, these common stock equivalents are antidilutive as additional
     shares would decrease the computed loss per share information and
     therefore, basic and diluted earnings per share are the same. The Company
     currently has a total of 1.6 million options outstanding and 1.3 million
     warrants outstanding to acquire shares of common stock. Of these, .6
     million options and all of the warrants are currently exercisable.

9.   RESTRUCTURING CHARGE

     In March 2002, the Company approved a plan that would reduce its workforce
     by approximately 15% through the offering of early retirement incentives,
     the elimination of certain vacant and budgeted positions and the
     elimination of some jobs. A total of 96 current employees left the Company
     as a result of these actions. The employees impacted were primarily in
     management, operations, engineering and a number of other support
     functions. The plan also involved exiting certain facilities in connection
     with the workforce reduction and centralizing certain functions.

     A restructuring charge was reported in the first quarter of 2002 for $1.3
     million relating to severance costs for employees notified in the first
     quarter 2002 and estimated lease obligations associated with the exit of
     certain facilities. During the second quarter of 2002, $1.4 million of
     additional charges were recorded representing severance and pension
     curtailment costs for employees notified in the second quarter of 2002, as
     well as refinements to facilities costs recorded in the first quarter of
     2002. Of the $2.7 million total, $.4 million was paid prior to June 30,
     2002 and $2.3 million remained in the accrual at June 30, 2002.

                                       12

<PAGE>

                                   NTELOS Inc.
              Notes to Condensed Consolidated Financial Statements
                                   Continued

10.  PRO FORMA RESULTS

     The pro forma unaudited results of operations for the six months ended June
     30, 2001, assuming consummation, as of January 1, 2001, of the transactions
     more fully described in the Note 4 above and in the Notes to the
     Consolidated Financial Statements in the Company's 2001 Annual Report are
     as follows:

<TABLE>
<CAPTION>
                                                                   Six Months Ended
     (In thousands, except per share data)                           June 30, 2001
     ------------------------------------------------------------------------------
     <S>                                                               <C>
     Operating revenues                                                $107,248
     Operating expenses other than depreciation and amortization         98,250
     Depreciation and amortization                                       37,828
     Operating loss                                                     (28,830)
     Net loss                                                           (38,485)
     Dividend requirements on preferred stock                            (9,377)
     Loss applicable to common shares                                   (47,862)
     Loss per common share - basic and diluted                         $  (2.99)
</TABLE>

                                       13

<PAGE>

                                   NTELOS Inc.
Item 2.                  Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations

Overview

We are a leading regional integrated communications provider offering a broad
range of wireless and wireline products and services to business and residential
customers primarily in Virginia and West Virginia and in portions of certain
other adjoining states. We own our own digital PCS licenses, fiber optic
network, switches and routers, which enables us to offer our customers
end-to-end connectivity in the regions that we serve. This facilities-based
approach allows us to control product quality and generate operating
efficiencies. Additionally, through our 60 retail stores located across the
regions we serve and a direct business sales approach, our sales strategy is
focused largely on a direct relationship with our customers. As of June 30,
2002, we had approximately 238,000 digital PCS subscribers (up from 198,700 at
June 30, 2001) and approximately 90,900 combined incumbent local exchange
carrier ("ILEC") and competitive local exchange carrier ("CLEC") access lines
installed (up from 78,400 installed lines at June 30, 2001).

Historically, we have derived much of our revenues and EBITDA (earnings before
interest, taxes, depreciation and amortization) from our ILEC services. As a
result of our increasing focus on and growth in digital PCS, Internet access and
CLEC services, a significant portion of our operating revenues and EBITDA are
generated by businesses other than our ILEC. These newer businesses have
generated lower operating margins due to start-up costs associated with
expansion into new markets, introduction of new service offerings throughout the
regions we serve and significant competitive pricing pressures. As we continue
to grow these businesses, we expect these operating margins to improve but to
continue to be lower than those realized before these other businesses were
significant to the Company's consolidated operations.

We completed a majority of our geographic expansion in 2001 and are continuing
to focus our growth efforts on our core communications services, primarily
digital PCS services, Internet access, including dedicated, high-speed DSL and
dial-up services, high-speed data transmission and local telephone services
within our existing markets. In February 2001, the Company completed closing of
the merger agreement with R&B, an integrated communications provider in a
geographic market contiguous to ours, and commensurate therewith, began
consolidating the results of the WV Alliance (Note 4).

As mentioned above, the Company references EBITDA (or operating cash flows) as
one measure of operating performance. Management believes EBITDA is a meaningful
indicator of the Company's performance. EBITDA is commonly used in the wireless
communications industry and by financial analysts and others who follow the
industry to measure operating performance. EBITDA should not be construed as an
alternative to operating income or cash flows from operating activities (both of
which are determined in accordance with generally accepted accounting
principles) or as a measure of liquidity.

Discussions throughout the results of operations section refer to comparisons on
a pro forma basis. The actual results in the first quarter of 2001 exclude R&B
and WV Alliance for the period January 1, 2001 to February 13, 2001, the date of
the R&B merger and concurrent consolidation of WV Alliance. Therefore, pro forma
comparisons add R&B and WV Alliance results for this 43 day period to the actual
results for the three and six months ended June 30, 2001.

Our critical accounting policies are discussed in detail in the Management's
Discussion and Analysis section of our 2001 Annual Report to Shareholders. We
have not made any significant changes in these policies with the exception of
our accounting for intangible assets. As discussed in Note 1, we adopted
Statement of Financial Accounting Standard ("SFAS") No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002. Under these new rules, goodwill and
intangible assets deemed to have indefinite lives will no longer be amortized
but will be subject to annual impairment tests in accordance with this
Statement. Other intangible assets will continue to be amortized over their
useful lives. Accordingly, we ceased amortization of goodwill, an assembled
workforce intangible asset, and PCS radio spectrum licenses on January 1, 2002.

We performed the required impairment tests of goodwill and intangible assets
with indefinite lives as of January 1, 2002. Additionally, we performed this
impairment testing as of June 30, 2002 for the PCS radio spectrum licenses and
for the goodwill and assembled workforce intangible asset on the wireless
segment and the goodwill on the network segment due to the presence of certain
changes in market conditions. We engaged an independent appraisal

                                       14

<PAGE>

                                   NTELOS Inc.
Item 2.                  Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

firm to perform valuation work related to the PCS radio spectrum licenses and
goodwill and assembled workforce on the wireless segment.

Our testing of wireless goodwill and our wireless assembled workforce intangible
asset utilized a combination of a discounted cash flow method and other market
valuation methods. In testing our PCS radio spectrum licenses, as well as the
goodwill testing for our reporting units (as defined under the guidance of SFAS
No. 142) other than the wireless reporting unit, we relied on discounted cash
flow valuation models. Market valuation testing was not used in these areas due
to the limited transaction activity in the recent timeframe. Based on current
economic conditions and the volatility of market pricing of the
telecommunications sector, we believe that discounted cash flows more
appropriately measures these long term values. The discounted cash flow method
involved long term cash flow projections using numerous assumptions and
estimates related to these projections. Cash flows were projected over a 10 year
time frame and, at the conclusion of this period, we assessed a terminal value
of the PCS radio spectrum licenses and our reporting units. Terminal values were
determined by multiples of cash flow utilizing the Gordon model formula (i.e. 1
divided by discount rate less growth rate). The discount rates used in each of
the discounted cash flow models were specific to the segment assets being
measured. The discount rate used in the testing of the PCS licenses and the
wireless reporting unit goodwill and assembled workforce intangible asset was
determined with the assistance of the independent appraisal firm. In addition,
the value of the PCS radio spectrum licenses was measured in the aggregate given
the contiguous region we serve and the centralized management, engineering and
sales and marketing functions and centralized reporting. Had fair value testing
been performed separately for each individual PCS radio spectrum license, there
would likely have been some licenses with fair value less than book value and
other licenses with book value less than fair value. Collectively, the
projections and assumptions used in this fair value testing involve risks and
uncertainties including but not limited to those discussed below.

Based on this fair value testing, we determined that there was no impairment to
the PCS radio spectrum licenses or the goodwill and assembled workforce
intangible asset on the wireless and network segments as of January 1, 2002 and
through June 30, 2002. Additionally, goodwill on the other reporting units was
not impaired as of January 1, 2002.

The discussion and analysis herein should be read in conjunction with the
financial statements and the notes thereto included herein. Much of the
discussion in this section involves forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
results anticipated in these forward-looking statements as a result of certain
risk factors, including those set forth in the Form 10-K for the year ended
December 31, 2001, under "Investment Considerations". We wish to caution readers
that these forward-looking statements and any other forward-looking statements
made by us are based on a number of assumptions, estimates and projections
including but not limited to: capital intensity of the wireless telephone
business and our debt structure; our substantial debt obligations and our
ability to service those obligations; restrictive covenants and consequences of
default contained in our financing arrangements; the cash flow and financial
performance of our subsidiaries; the competitive nature of the wireless
telephone and other communications services industries; the achievement of
build-out, operational, capital, financing and marketing plans relating to
deployment of PCS services; retention of our existing customer base, including
our wholesale customers; our ability to attract new customers, and maintain and
improve average revenue per subscriber; unfavorable economic conditions on a
national and local level; effects of acts of terrorism or war (whether or not
declared); changes in industry conditions created by federal and state
legislation and regulations; demand for wireless and wireline communications
services; rapid changes in technology; adverse changes in the roaming rates we
charge and pay; the level of demand for competitive local exchange services in
smaller markets; our ability to manage and monitor billing; and, possible health
effects of radio frequency transmission. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that any significant deviations from these
assumptions could cause actual results to differ materially from those in the
above and other forward-looking statements. Forward-looking statements included
herein are as of the date hereof. We are not obligated to update or revise any
forward-looking statements or to advise of any changes in the assumptions on
which they are based, whether as a result of new information, future events or
otherwise.

                                       15

<PAGE>

                                   NTELOS Inc.
Item 2.                  Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

     Revenues

     Our revenues, net of bad debt expense, are generated from the following
categories:

     .    wireless PCS, consisting of retail, service and wholesale digital PCS
          revenues;

     .    wireline communications, including telephone revenues, fiber optic
          network usage (or carrier's carrier services), Internet, CLEC service
          and long distance revenues; and,

     .    other communications services revenues, including revenues from
          paging, wireless and wireline cable television, our sale and lease of
          communications equipment and security alarm monitoring and rental of
          property and equipment.

     Operating Expenses

     Our operating expenses are generally incurred from the following
categories:

     .    cost of sales, exclusive of other operating expenses shown separately,
          including digital PCS handset equipment costs which we sell to our
          customers at a price below our cost, and usage-based access charges,
          including long distance, roaming charges, and other direct costs;

     .    maintenance and support expenses, including costs related to specific
          property, plant and equipment, as well as indirect costs such as
          engineering and general administration of property, plant and
          equipment;

     .    depreciation and amortization, including amortization of intangible
          assets where applicable (Note 1) and depreciable long lived property,
          plant and equipment;

     .    customer operations expenses, including marketing, product management,
          product advertising, sales, billing, publication of a regional
          telephone directory, customer care and directory services;

     .    corporate operations expenses, including taxes other than income,
          executive, accounting, legal, purchasing, information technology,
          human resources and other general and administrative expenses; and,

     .    restructuring charges associated with organizational initiatives,
          workforce reductions and exiting of certain facilities.

     Other Income (Expenses)

     Our other income (expenses) are generated (incurred) from interest income
and expense, equity loss from the WV Alliance (through February 13, 2001), and
gains or losses on sale of investments and assets.

     Income Taxes

     Our income tax liability or benefit and effective tax rate increases or
decreases based upon changes in a number of factors, including our pre-tax
income or loss, net operating losses and related carryforwards, valuation
allowances, alternative minimum tax credit carryforwards, state minimum tax
assessments, gain or loss on the sale of assets and investments, write-down of
assets and investments, non-deductible amortization, and other tax deductible
amounts.

                                       16

<PAGE>

                                   NTELOS Inc.
Item 2.                  Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

Results of Operations

Three and Six Months Ended June 30, 2002
Compared to Three and Six Months Ended June 30, 2001

OVERVIEW

EBITDA increased $9.1 million or 174%, from $5.2 million for the three months
ended June 30, 2001 to $14.3 million for the three months ended June 30, 2002
and EBITDA increased $13.2 million or 145%, from $9.1 million for the six months
ended June 30, 2001 to $22.3 million for the six months ended June 30, 2002.
Operating loss decreased $6.8 million or 52%, from a loss of $13.2 million to a
loss of $6.4 million for the three months ended June 30, 2001 and 2002,
respectively. Operating loss decreased $5.7 million or 21%, from $27.1 million
for the six months ended June 30, 2001 to $21.4 million for the six months ended
June 30, 2002. Included in the second quarter 2002 results were restructuring
charges of $1.4 million ($2.7 million for the six months ended June 30, 2002),
$5.3 million of accelerated depreciation on certain PCS assets due to early
replacement during the quarter or based on scheduled early replacement later in
2002 or 2003 ($12.4 million for the six months ended June 30, 2002), and a $6.0
million reduction in amortization of intangibles due to the adoption of SFAS No.
142 (Note 1) ($10.3 million for the six months ended June 30, 2002). Excluding
these items, EBITDA increased $10.5 million (201%) and operating loss decreased
$7.5 million (57%) in the second quarter 2002 compared to second quarter 2001.
Excluding these same unusual items for the six months ended June 30, 2002 as
compared to the comparable six month period in 2001, EBITDA increased $15.9
million (175%) and operating loss decreased $10.5 million (39%).

WIRELESS PCS OVERVIEW - A 20% growth in customers, an 8% increase in average
monthly revenue per subscriber ("ARPU"), a 19% decrease in cost of acquisition
per gross customer addition and a 43% increase in wholesale and roaming revenues
resulted in revenue growth of $8.2 million or 27% for the second quarter of 2002
compared to the second quarter of 2001. Similar trends were present for the six
months ended June 30, 2002 and compared to 2001, resulting in revenue growth of
$18.7 million or 34% over the respective periods. Operating expense before
depreciation and amortization over the three month comparative periods decreased
$.4 million or 1%. Operating expenses before depreciation and amortization
increased $4.1 million or 6%, from $66.3 million for the six months ended June
30, 2001 to $70.4 million for the six months ended June 30, 2002. The rate of
expense growth lagged revenue growth significantly due to reductions in costs of
acquisition per gross addition mentioned above, a reduction in incollect roaming
expenses, and focused cost containment measures, as well as the leveraging of
the fixed infrastructure. All of these factors resulted in an EBITDA improvement
of $8.7 million and $14.6 million for the three and six months ended June 30,
2002, respectively, from a 2001 EBITDA loss of $5.0 million and $10.7 million,
respectively, to positive EBITDA in 2002 of $3.7 million and $3.9 million,
respectively.

WIRELINE COMMUNICATIONS OVERVIEW - Wireline communications services realized
revenue improvement of $2.3 million and $4.7 million for the three and six
months ended June 30, 2002 over the comparative periods ended June 30, 2001,
which translated to EBITDA improvement of $2.6 million and $3.1 million,
respectively for the three and six month periods. EBITDA margin over the three
and six month periods increased from 42.9% and 43.4%, respectively, to 49.7% and
45.6%, respectively. These results are driven by growth in ILEC minutes, CLEC
and DSL customer growth (47% and 109%, respectively) and significant cost
reductions associated with the overall restructuring activity (Note 8) and in
the CLEC and Internet market restructuring where we have limited or discontinued
services in low volume, high cost areas. These results were achieved despite the
decrease in reciprocal compensation of $.7 million and $1.4 million in the three
and six month periods ended June 30, 2002 compared to 2001.

OTHER COMMUNICATION SERVICES OVERVIEW - Other communications services revenue
declined $.2 million or 9% for the three months ended June 30, 2002 as compared
to the three months ended June 30, 2001 and $.6 million or 13% for the six
months ended June 30, 2002 as compared to the six months ended June 30, 2001,
primarily from the movement of voicemail assets and operations out of other
communications services to the wireless PCS segment (which is the primary user
of this service). EBITDA was down $2.2 million for the second quarter of 2002
compared to second quarter 2001 and $4.6 million for the six months ended June
30, 2002 compared to the six months ended June 30, 2001. The restructuring
charge (Note 8 and as discussed below) accounts for $1.4 million of the second
quarter total and $2.7 million of the six month total. The exclusion of
voicemail and a decline in the

                                       17

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

paging businesses accounted for $.2 million and $.6 million of the three and six
month declines, respectively. The balance of the decline primarily pertains to
unallocated corporate expenses related to insurance and certain professional
fees.

OPERATING REVENUE

<TABLE>
<CAPTION>
                        Three Months Ended June 30,                Six Months Ended June 30,
----------------------------------------------------------------------------------------------------
                                                    %                                          %
($'s in 000's)     2002     2001     Variance   Variance     2002       2001     Variance   Variance
----------------------------------------------------------------------------------------------------
<S>              <C>       <C>       <C>           <C>     <C>        <C>        <C>         <C>
Wireless         $38,545   $30,331   $ 8,214       27%     $ 74,316   $ 55,596   $18,720      34%

   ILEC           11,729    10,831       898        8%       22,238     20,543     1,695       8%
   Network         2,126     2,205       (79)      -4%        4,370      3,915       455      12%
   CLEC            5,649     4,509     1,140       25%       10,592      8,641     1,951      23%
   Internet        4,657     4,363       294        7%        9,279      8,658       621       7%
----------------------------------------------------------------------------------------------------
Wireline          24,161    21,908     2,253       10%       46,479     41,757     4,722      11%

Other              2,188     2,414      (226)      -9%        4,120      4,728      (608)    -13%
----------------------------------------------------------------------------------------------------
Total            $64,894   $54,653   $10,241       19%     $124,915   $102,081   $22,834      22%
</TABLE>

WIRELESS PCS REVENUES - Digital PCS customers grew 39,300, or 20%, from the end
of the second quarter 2001 to the end of the second quarter 2002. Over this same
period, ARPU grew $3.45, from $42.60 for the second quarter of 2001 to $46.05
for the second quarter of 2002 due primarily to a shift in the customer mix to a
higher percentage of post-pay type plans versus pre-pay plans (from 73% at June
30, 2001 to 89% at June 30, 2002). Additionally, wholesale and roaming revenues,
primarily from our network services agreement with Horizon, were $8.0 million
for the second quarter of 2002 compared to $5.6 million for the second quarter
of 2001. These same factors were the keys to the growth in the six month period
ended June 30, 2002 as compared to the same six month period of 2001. In
addition to this, the WV Alliance was consolidated on February 13, 2001.
Therefore, the first quarter 2001 excluded $2.5 million of revenues from the WV
Alliance for the first 43 days of 2001 which inflated the six month growth
percentage 5% (i.e. on a pro forma basis, the six month growth was 28%). The
combination of these and other factors resulted in increased revenues of $8.2
million, from $30.3 million to $38.5 million for the quarters ended June 30,
2001 and 2002, respectively, and $18.7 million, from $55.6 million to $74.3
million for the six months ended June 30, 2001 and 2002, respectively.

WIRELINE COMMUNICATIONS REVENUES - Wireline communications revenues increased
$2.3 million or 10%, from $21.9 million to $24.2 million for the three months
ended June 30, 2001 and 2002, respectively. Wireline revenues increased $4.7
million or 11%, from $41.8 million for the six months ended June 30, 2001 to
$46.5 million for the six months ended June 30, 2002.

.. Telephone Revenues. Telephone (Incumbent Local Exchange or "ILEC") revenues,
which include local service, access and toll service, directory advertising and
calling feature revenues from our ILEC business increased $.9 million, or 8%,
from $10.8 million for the three months ended June 30, 2001 to $11.7 million for
the three months ended June 30, 2002. Telephone revenues also increased $1.7
million, or 8%, during the six month comparative periods. In the first quarter
2001, revenues from the R&B ILEC prior to consolidation were $1.3 million.
Therefore, pro forma ILEC revenues increased $.6 million or 2%. During the first
quarter of 2002, we recorded $.3 million in additional regulatory and receivable
reserves, much of which were reversed in the second quarter due to favorable
resolutions concluded in the second quarter. However, bad debts expense did
increase $.4 million in six months ended June 30, 2002 versus 2001 due to
increases to carrier access receivable reserves from carriers with financial
difficulties (uncollected receivables from Worldcom Inc. are fully reserved at
June 30, 2002 in this and the other relevant segments). Adjusting for these
factors, growth was approximately 5% during the six month comparative periods.

                                       18

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

.. Fiber Optic Network Usage Revenues. Revenues from fiber optic network usage
operations decreased $.1 million or 4%, in the three month comparative periods
but increased 12% in the six month comparative periods. In the first quarter of
2001, revenues from R&B Network prior to consolidation were $.6 million.
Therefore, on a pro forma basis revenues decreased $.1 million. This was
primarily due to reductions in network rates and the loss of certain traffic in
the second half of 2001, offset by growth in usage.

.. CLEC Revenues. CLEC revenues increased $1.1 million or 25% and $2.0 million or
23% for the three and six months ended June 30, 2002 compared to 2001. Of this
increase, $.5 million is attributable to excluded revenues from R&B CLEC prior
to the first quarter 2001 consolidation. Additionally, $2.7 million of the six
month increase ($1.5 million for the three month comparative period increase) is
from primarily local calling and broadband revenues driven by customer growth,
with total CLEC customers increasing 12,400, from 26,500 at June 30, 2001 to
38,900 at June 30, 2002. These factors were partially offset by a decline in
reciprocal compensation of $.7 million and $1.4 million, from $1.3 million and
$2.6 million for the three and six months ended June 30, 2001 to $.6 million and
$1.2 million for the three and six months ended June 30 2002, due to a decline
in rates in mid-year 2001.

.. Internet Revenues. Revenues from Internet services increased $.3 million, or
7% for the three month comparative period and increased $.6 million or 7% for
the six months ended June 30, 2002 compared to 2001. Internet subscribers
increased 10,100 or 15%, in second quarter 2002 over second quarter 2001, with
DSL customer additions accounting for 2,500 of this total, from 2,300 customers
at June 30, 2001 to 4,800 customers at June 30, 2002.

OTHER COMMUNICATION SERVICES REVENUES - Other communications services revenues,
including other R&B operations, decreased $.2 million, or 9% for the three month
comparative period and decreased $.6 million or 13% for the six months ended
June 30, 2002 compared to 2001. This decrease is due to the factors noted in
"Other Communication Services Overview" section above.

OPERATING EXPENSES, excluding Depreciation & Amortization

<TABLE>
<CAPTION>
                        Three Months Ended June 30,               Six Months Ended June 30,
---------------------------------------------------------------------------------------------------
                                                    %                                          %
($'s in 000's)     2002      2001    Variance   Variance     2002      2001     Variance   Variance
---------------------------------------------------------------------------------------------------
<S>              <C>       <C>        <C>         <C>      <C>        <C>        <C>         <C>
Wireless         $34,879   $35,324      (445)      -1%     $ 70,405   $66,333    $4,072        6%

   ILEC            3,621     4,114      (493)     -12%        7,867     7,377       490        7%
   Network           384       436       (52)     -12%          957       779       178       23%
   CLEC            4,595     3,834       761       20%        8,996     7,154     1,842       26%
   Internet        3,549     4,134      (585)     -14%        7,452     8,344      (892)     -11%
---------------------------------------------------------------------------------------------------
Wireline          12,149    12,518      (369)      -3%       25,272    23,654     1,618        7%

Other              3,584     1,594     1,989      125%        6,940     2,993     3,947      132%
---------------------------------------------------------------------------------------------------
Total            $50,611   $49,436    $1,175        2%     $102,617   $92,980    $9,637       10%
</TABLE>

TOTAL OPERATING EXPENSES - Total operating expenses increased $3.4 million or
5%, from $67.8 million in the second quarter of 2001 to $71.2 million for the
second quarter 2002. Of this total increase, $2.3 million pertained to an
increase in depreciation and amortization expense, including a $.7 million
decrease relating to the net effect of accelerated depreciation and the effects
of SFAS No. 142 on amortization of intangible assets (see further discussion
below in the "Depreciation and Amortization" section). The remaining increase is
primarily attributable to the $1.4 million second quarter 2002 restructuring
charges. Total operating expenses increased $17.2 million or 13%, from $129.2
million for the six months ended June 30, 2001 to $146.4 million for the six
months ended June 30, 2002. Of this increase, $6.1 million is from the exclusion
of R&B and the WV Alliance from the operating expenses in the first 43 days of
2001. Additionally, $7.5 million pertained to an increase in depreciation and
amortization expense, $2.1 million of which relates to the net effect of
accelerated depreciation and the effects of SFAS No. 142 on

                                       19

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

amortization of intangible assets. Finally, $2.7 million is attributable to 2002
restructuring costs. Operating expenses, excluding depreciation and
amortization, from the other communication service businesses for the three and
six months ended June 30, 2002 as compared to the three and six months ended
June 30, 2001 increased primarily due to restructuring charges of $1.4 million
and $2.7 million, respectively, and increases in corporate related professional
fees and insurance costs.

COST OF SALES - Cost of sales decreased $.5 million or 4%, from $12.7 million
for the three months ended June 30, 2001 to $12.2 million for the three months
ended June 30, 2002, and increased $1.7 million or 8%, from $22.7 million for
the six months ended June 30, 2001 to $24.4 million for the six months ended
June 30, 2002. The exclusion of the WV Alliance for the first 43 days of 2001
accounted for $1.4 million of the six-month increase. Additionally, higher phone
sales were offset by improved network efficiency, lower handset prices and
improved inventory control.

MAINTENANCE AND SUPPORT EXPENSES - Maintenance and support expenses increased
$.8 million or 5%, and $3.8 million or 13%, from $15.9 million and $29.8 million
for the three and six months ended June 30, 2001, respectively, to $16.7 million
and $33.6 million for the six months ended June 30, 2002, respectively. Of the
six month increase, $1.7 million relates to the exclusion of R&B and the WV
Alliance for the first 43 day of 2001 prior to consolidation. Excluding this,
maintenance and support expenses increased 7% for the six month comparative
periods. This increase was primarily attributable to the increased costs
(primarily maintenance and repair costs) associated with the increased network
asset base, which increased $62 million (15%). Also, CLEC unbundled network
elements ("UNE's") and transport costs increased due to the CLEC customer growth
which was offset by staff reductions in engineering and operations functions
across all segments.

DEPRECIATION AND AMORTIZATION EXPENSES - Depreciation and amortization expenses
increased $2.3 million or 12%, from $18.4 million for the three months ended
June 30, 2001 to $20.7 million for the three months ended June 30, 2002.
Depreciation and amortization increased $7.5 million or 21%, from $36.2 million
to $43.7 million for the six months ended June 30, 2001 and 2002, respectively.
As mentioned above, we reported accelerated depreciation of $5.3 million and
$12.4 million for the three and six months ended June 30, 2002 on wireless
digital PCS equipment replaced during the first six months of 2002 or which are
scheduled to be replaced over the remainder of 2002 and into the first half of
2003. The 2002 replacement schedule was accelerated within the year resulting in
this significant increase in depreciation during these three and six month
periods. Accelerated depreciation will continue on the assets scheduled to be
retired later this year and next. The effect of this is expected to be under $2
million during the balance of 2002 and a total of less than $4 million over the
entire replacement period. In addition to this, we adopted SFAS No. 142,
Goodwill and Other Intangible Assets, on January 1, 2002. In accordance with the
provisions of SFAS 142, we discontinued amortization of goodwill, wireless PCS
spectrum licenses and the assembled workforce intangible asset as of that date
as these assets are considered indefinite lived intangible assets not subject to
amortization. These assets are subject to periodic impairment testing (Note 1).
Amortization of indefinite lived intangible assets was $6.0 million for the
second quarter of 2001 and $10.3 million for the six months ended June 30, 2001
($11.9 million on a pro forma basis). The remaining increase in depreciation is
due to an increase in depreciable assets from June 30, 2001 to June 30, 2002 of
$93 million or 18%.

CUSTOMER OPERATIONS EXPENSES - Customer operations expenses decreased $.5
million or 3%, and increased $.5 million or 2%, from $16.0 million and $30.7
million for the three and six months ended June 30, 2001 to $15.5 million and
$31.2 million for the three and six months ended June 30, 2002. On a pro forma
basis, customer operations expenses decreased from the prior year by $.9
million or 3% for the six month comparative periods. This decrease is
attributable to lower commissions paid per gross PCS subscriber addition,
primarily due to a decrease in the percent of sales sold through the higher cost
indirect channel. Additionally, we incurred outsource billing costs for the VA
East PCS market through July 2001. After conversion of these customers onto our
billing system and insourcing these billing functions, these costs decreased
significantly.

CORPORATE OPERATIONS EXPENSES - Corporate operations expenses decreased $.1
million, or 1%, from $4.9 million to $4.8 million for the three months ended
June 30, 2001 and 2002, respectively. Corporate operations expense increased $.9
million or 9%, from $9.7 million for the six months ended June 30, 2001 to $10.6
million for

                                       20

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

the six months ended June 30, 2002. On a pro forma basis, this increase was $.2
million or 2%. As mentioned above, most of this relates to increases in legal,
other professional services fees (primarily in the ILEC and Other segments) and
insurance expenses, offset by personnel reductions in corporate related back
office functions.

RESTRUCTURING CHARGE - Restructuring charges were recorded in the first and
second quarters of 2002 based on an approved plan to reduce our workforce by
approximately 15% through the offering of early retirement incentives, the
elimination of certain vacant and budgeted positions and the elimination of some
jobs. The plan also involved exiting certain facilities in connection with the
workforce reduction and centralizing certain functions. The first quarter charge
was $1.3 million, which related to severance costs for employees notified in the
first quarter 2002 and estimated lease obligations associated with the exit of
certain facilities. The charges for the second quarter totaled $1.4 million,
which related primarily to severance for employees notified in the second
quarter of 2002 and pension curtailment costs. This restructuring is expected to
generate net savings and reduce future expenses by approximately $3.0 million
for the year 2002 and $8.5 million for 2003.

OTHER INCOME (EXPENSES)

Other income (expenses) was comprised of equity loss from WV Alliance (2001
only), a gain on sale of assets (2002 only), interest expense and other income
(expense). Our share of losses from the WV Alliance reported under the equity
method of accounting, which commenced being consolidated on February 13, 2001
concurrent with our merger with R&B, were $1.3 million during the 43 day period
prior to the merger date. Also, we recognized a $2.0 million gain in the first
quarter of 2002 and a $2.8 million gain in the second quarter of 2002 on the
sale of certain excess PCS licenses. Additionally, interest expense increased
$.6 million or 3%, from $19.3 million for the three months ended June 30, 2001
to $19.9 million for the three months ended June 30, 2002. Interest expense
increased $1.5 million or 4%, from $37.4 million for the six months ended June
30, 2001 to $38.9 million for the six months ended June 30, 2002. This increase
is due to the increase in the average debt over the respective periods primarily
from capital expenditures needed to support future growth in excess of cash flow
generated from current operations.

Other income (expense) decreased $2.6 million, from income of $1.0 million in
the second quarter of 2001 to expense of $1.6 million in the second quarter of
2002. For the six month comparative periods, other income (expense) decreased
$5.7 million, from $4.0 million of income as of June 30, 2001 to $1.7 million of
expense as of June 30, 2002. The prior year income was comprised primarily of
interest income earned on an average restricted cash balance of approximately
$59 million, interest from advances to WV Alliance, which averaged approximately
$68 million during the first 43 days of 2001, and other miscellaneous asset
retirement gains. During the six months ended June 30, 2002, interest income for
restricted cash was down significantly due to the reduced average restricted
cash balance of approximately $22 million. This income was offset by a $1.1
million permanent impairment recorded for our investment in Worldcom Inc., other
corporate financing costs and miscellaneous non-operating expenses.

INCOME TAXES
Income tax benefits decreased $9.1 million, from a tax benefit of $11.1 million
for the three months ended June 30, 2001 to a tax benefit of $2.0 million for
the three months ended June 30, 2002. Income tax benefits decreased $19.0
million, from a tax benefit of $22.6 million for the six months ended June 30,
2001 to a tax benefit of $3.6 million for the six months ended June 30, 2002.
The 2002 benefit is net of a valuation allowance recorded during the six months
ended June 30, 2002 of $16.5 million. Additionally, with the adoption of SFAS
No. 142, we no longer have the permanent differences associated with
non-deductible goodwill. Also, we are subject to state minimum taxes in 2002.
Offsetting these factors in the current year is the non-deductible basis
differences in licenses sold which reduced the rate from the statutory rate. As
a result, the effective tax rate was 35.1% in 2002, excluding the impact of the
$16.5 million valuation reserve (Note 6), compared to 35.1% in 2001.

                                       21

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

LIQUIDITY AND CAPITAL RESOURCES
We have funded our working capital requirements and capital expenditures from
net cash provided by operating activities and borrowings under credit
facilities. At June 30, 2002, we had $79 million in unused borrowings available
under our Senior Secured Term Loan (also referred to as the "Senior Credit
Facility"). We borrowed $21 million against our $100 million lines of credit
under the Senior Credit Facility in the six months ended June 30, 2002.

OPERATING CASH FLOWS
During the six month period ended June 30, 2002, net cash provided by operating
activities was $5.4 million, with $.8 million provided by operations plus net
positive changes in operating assets and liabilities totaling $4.6 million.
Within the $.8 million provided by operations, one of the reconciling items
adjusting net income to net cash is an adjustment for $13.4 million which
represents interest expense paid from restricted cash, net of interest income
earned from this restricted cash. This is reflected as an adjustment to
reconcile net income to net cash since the payment of interest on the Senior
Notes is paid out of restricted cash through August 15, 2002. Therefore, as
these interest payments will be paid from operating cash for periods after
August 15, 2002, this will not be an adjustment to reconcile net income to net
cash in periods after August 15, 2002. The principal changes in operating assets
and liabilities were as follows: accounts receivable increased by $.6 million or
2% due primarily to a 14% increase in revenues in the second quarter of 2002
over the fourth quarter 2001 offset by improved receivable turnover; inventories
and supplies decreased $6.7 million due to efforts to reduce handset inventory
levels in recognition of improvement in handset availability and off peak sales
volumes; and, current liabilities decreased a total of $1.7 million due to the
timing of payments.

During the six month period ended June 30, 2001, net cash used in operating
activities was $13.4 million, with $6.4 million used by operations and a net
increase in net operating assets totaling $7.0 million. Principal changes in
operating assets and liabilities were as follows: inventories and supplies
decreased $2.3 million due to the reduction in inventory levels from the
quantities on hand at year-end in support of seasonal sales activity through
February; income taxes went from a receivable at the 2000 year-end of $2.9
million to a $.1 million payable position at June 30, 2001 due to the receipt of
the year end receivable and the state minimum tax payable at June 30, 2001; and,
accounts payable and other liabilities (excluding additional payables from R&B
and the WV Alliance) decreased by $11.9 million due to the timing of payments at
and around the respective period ends.

Our cash flows used in investing activities for the six months ended June 30,
2002 aggregated $26.4 million and primarily included $52.2 million for capital
expenditures, $21.7 million of which is for the wireless upgrade to 3G-1XRTT
technology in the western markets in support of the Horizon wholesale network
services agreement, offset by $26.7 million in proceeds from the sale of
communications towers and excess PCS licenses.

Our cash flows used in investing activities for the six months ended June 30,
2001 aggregated $38.9 million and include the following:

.. $53.8 million for the purchase of property, plant and equipment;

.. $3.5 million of proceeds received in 2001 from the final payment from the sale
of the directory assistance operation in 2000;

.. $4.1 million of cash and cash equivalents on hand at R&B at the time of the
merger;

.. $3.0 million of net additional advances to and investment in the WV Alliance
from January 1, 2001 to the February 13, 2001 transaction date (Note 4), after
which the entire amounts of the advances and the investment were included in the
WV Alliance acquisition and were eliminated in consolidation;

.. $8.0 million of deposits refunded at the conclusion of an FCC license auction
as no additional licenses were purchased from this auction; and,

                                       22

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

.. $3.0 million received from the sale of towers and investments.

Net cash provided by financing activities for the first six months of 2002
aggregated $14.5 million, which included $21.1 million of additional borrowings
against the Senior Credit Facility, a $5.7 million use of cash for scheduled
principal payments on other long-term debt, and $1.2 million used to pay loan
amendment fees.

Net cash provided by financing activities for the first six months of 2001
aggregated $53.7 million, which included $55.0 million in additional draws
against the Senior Credit Facility and a $1.7 million use of cash for other debt
payments, primarily on capital leases.

Our liquidity needs will be impacted by:

..    capital expenditures required to deploy 3G-1XRTT technology in certain of
     the VA Alliance and WV Alliance markets;
..    capital expenditures required to support customer growth and wholesale
     usage to provide sufficient PCS capacity;
..    capital expenditures required to support access line growth in existing
     markets; and,
..    significant interest expense associated with current and increasing debt
     levels.

Our liquidity sources include:

..    cash flow from operations;
..    approximately $18.1 million held in the escrow account to fund the August
     15, 2002 interest payment on our Senior Notes;
..    $79 million available under our Senior Credit Facility as of June 30, 2002,
     subject to compliance with amended covenant requirements;
..    disposition of additional non-strategic businesses and assets, such as
     additional sales of excess PCS spectrum and other types of spectrum, such
     as WCS, LMDS and MMDS. The Company holds PCS licenses in 17 markets where
     service is currently being provided and 20 markets where service is not
     currently being provided. In many cases we own licenses covering spectrum
     in excess of what will be needed to execute our business plan for the
     foreseeable future. In 2001, the Company sold $11.6 million of excess
     spectrum for a gain of $8.6 million and has sold additional inactive or
     excess PCS spectrum for proceeds of $18.1 million in 2002 to date ($2.5
     million of which closed in the first quarter 2002, $12.0 million of which
     closed in April 2002 and $3.6 million which closed in July 2002); and,
..    public and private debt and equity markets.

We expect capital expenditures for the remainder of 2002 to be between $30
million and $40 million. We expect these capital expenditures to be used to:

..    deploy 3G-1XRTT technology in certain of the VA Alliance and WV Alliance
     markets;
..    support network capacity and coverage demands of VA East, VA Alliance and
     WV Alliance operations;
..    support customer growth in CLEC and Internet access services; and,
..    support back office tools in order to improve customer satisfaction and
     improve our internal controls and efficiencies.

Approximately $30 million to $35 million of these incurred-to-date and
anticipated 2002 capital expenditures are based on an obligation within our
wholesale agreement with Sprint/Horizon to build out a 3G-1XRTT network in
certain markets. The estimated total cost of this build-out is approximately $40
million to $45 million which will be completed by 2003.

VA East and the Alliances have substantially satisfied their FCC build-out
requirements. Accordingly, aside from the 3G-1XRTT network upgrade commitment,
the expenditures forecast noted above is primarily driven by the expected need
to support customer growth and wholesale usage. To the extent that this customer
growth and wholesale usage is less than expected, our capital expenditures will
be reduced. Since these are generally capacity

                                       23

<PAGE>

                                   NTELOS Inc.
Item 2.                Management's Discussion And Analysis
                Of Financial Condition And Results Of Operations
                                    Continued

related expenditures to support customer growth, it is uncertain when these
proposed uses will be initiated or completed.

Regarding our Senior Credit Facility covenants, the 2002 annual EBITDA minimum
level is $49.6 million and includes quarterly rolling twelve month thresholds.
This is a significant increase over our 2001 EBITDA levels of $20.5 million. At
June 30, 2002, our rolling twelve month EBITDA, as adjusted per the covenant
definition, was $35.0 million, inclusive of $15.6 million for the second quarter
of 2002. EBITDA of $26.0 million for the remaining six months of 2002 is needed
in order to comply with the EBITDA covenant at December 31, 2002. At June 30,
2002, we were in compliance with all of our financial covenant requirements and
we anticipate compliance through the remainder of 2002.

Beginning in the quarter ending March 31, 2003, our Senior Credit Facility
requires compliance with leverage and senior leverage ratios and interest and
fixed charge coverage ratios. In 2003, we anticipate increasing levels of PCS
subscribers and ARPU growth, and continued lowering of PCS churn in order to
create significant growth in cash flow from our wireless segment. We also
anticipate continued revenue growth from our wireline segments and continuing
cost containment measures. Achievement of these results, together with
generation of cash flow from non-core asset divestitures, reduction in future
capital expenditures, or implementation of further cost containment measures
will be necessary to ensure covenant compliance, liquidity and access to
borrowings under our Senior Credit Facility during 2003 and beyond. If we are
unable to achieve these results and are unable to implement any of these
additional steps, we may have to delay or abandon some of our anticipated
capital expenditures, substantially modify our operating plans, expedite the
sale of non-strategic assets, reduce or refinance our indebtedness or otherwise
alter our existing capital structure, raise additional capital through the
issuance of additional shares of common stock or securities convertible into or
exercisable for shares of common stock, or seek additional capital resources. In
this event, we may not have sufficient financial resources and our ability to
make interest and principal payments on our senior and subordinated notes could
be significantly impaired.

                                       24

<PAGE>

                                   NTELOS Inc.

Item 3.        Quantitative and Qualitative Disclosures about Market Risk

The Company's Senior Credit Facility of $325 million, $246 million of which was
outstanding at June 30, 2002, bears interest at rates 3% to 4% above the
Eurodollar rate or 2.5% to 3% above the federal funds rates. The Company's
unsecured senior notes and unsecured subordinated notes, with a book and face
value of $356.1 million and $375 million, respectively, are at fixed interest
rates of 13% and 13.5%, respectively. The Company has other fixed rate,
long-term debt totaling $26.7 million at June 30, 2002.

The Company is exposed to market risks primarily related to interest rates. To
manage its exposure to interest rate risks and in accordance with conditions of
the senior note indenture, the Company entered into two, five year interest rate
swap agreements with notional amounts of $162.5 million in September 2000. These
swap agreements manage the Company's exposure to interest rate movements by
effectively converting a portion of the long-term debt from variable to fixed
rates. The net face amount of interest rate swaps subject to variable rates as
of June 30, 2002 and December 31, 2001 was $162.5 million. These agreements
involve the exchange of fixed rate payments for variable rate payments without
the effect of leverage and without the exchange of the underlying face amount.
Fixed interest rate payments are at a per annum rate of 6.76%. Variable rate
payments are based on one month US dollar LIBOR. The weighted average LIBOR rate
applicable to these agreements was 1.84% as of June 30, 2002. The notional
amounts do not represent amounts exchanged by the parties, and thus are not a
measure of exposure of the Company. The amounts exchanged are normally based on
the notional amounts and other terms of the swaps. Interest rate differentials
paid or received under these agreements are recognized over the one-month
maturity periods as adjustments to interest expense. The fair values of our
interest rate swap agreements are based on dealer quotes. Neither the Company
nor the counterparties, which are prominent bank institutions, are required to
collateralize their respective obligations under these swaps. The Company is
exposed to loss if one or more of the counterparties default. At June 30, 2002,
the Company had no exposure to credit loss on interest rate swaps. At June 30,
2002 and December 31, 2001, the swap agreements had a fair value $14.8 million
and $13.1 million, respectively, below their face value. These amounts are
recorded as long-term liabilities at the respective period ends. The effects of
a one percentage point change in LIBOR rates would change the fair value of the
swap agreements by $5.3 million for a one percentage point increase in the rate
(to $9.5 million below face value) and $5.5 million for a one percentage point
decrease in the rate (to $20.3 million below face value).

The Company has interest rate risk on the amount above the $162.5 million of
senior bank debt covered by the swap noted above. At June 30, 2002, the
Company's senior bank debt totaled $246 million, or $83.5 million over the swap
agreements.

The Company's senior notes are trading at rates well below their book values.
The Company's management believes that the risk of the fair value exceeding the
carrying value of this debt in the foreseeable future is remote due to the
current trading level, as well as market and industry conditions.

At June 30, 2002, the Company's financial assets included cash and cash
equivalents of $.7 million, restricted cash of $18.1 million and securities and
investments of $9.5 million. With respect to the cash and cash equivalents and
the restricted cash, as well as $9.3 million of the investments, there are no
material market risks as these are fixed rate, fixed maturity instruments. Also,
we believe there are minimal credit risks as the counterparties are prominent
financial institutions. The remaining $.2 million of investments are in equity
securities treated as available for sale. The Company is exposed to market and
credit risks with these investments. However, we do not believe that this risk
is material to our financial position or will be material to the results of
future operations.

                                       25

<PAGE>

                                   NTELOS Inc.

                           Part II. OTHER INFORMATION

Item 1. Legal Proceedings

     Not applicable

Item 2. Changes In Securities

     Not applicable

Item 3. Defaults Upon Senior Securities

     Not applicable

Item 4. Submission Of Matters To A Vote Of Security Holders

     At the regular Annual Meeting of the Shareholders held May 21, 2002, Class
     II Directors J.B. Mitchell, Sr., J.S. Quarforth, J.B. Williamson, III, and
     L.B. Sorrel, being the same as the nominees in the proxy solicitation, were
     elected.

     In addition to the election of board members mentioned above, the
     shareholders voted and approved one other proposal.

     The following votes were cast for each of the following nominees for
     Director or were withheld with respect to such nominees:

================================================================================
                                                                    ABSTENTIONS
                                                                    /BROKER NON-
                  NOMINEE                     FOR        AGAINST       VOTES
--------------------------------------------------------------------------------
J.B. Mitchell, Sr. (Class II)              19,626,256     849,841           0
--------------------------------------------------------------------------------
J.S. Quarforth (Class II)                  19,354,695   1,121,403           0
--------------------------------------------------------------------------------
J.B. Williamson, III (Class II)            19,601,212     874,886           0
--------------------------------------------------------------------------------
L.B. Sorrel (Class II) (1)                  6,382,613           0           0
--------------------------------------------------------------------------------
              OTHER PROPOSALS
--------------------------------------------------------------------------------
To ratify the selection of Ernst & Young   20,221,631     130,593     123,873
LLP as independent accountants
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

     (1)  Reflects the vote of holders of preferred stock only.

     The following continued in their capacity as directors: P.H. Arnold, A.J.
     de Nicola, W.W. Gibbs, A.W. Hamill, J.A. Layman, J.N. Neff, and C.A.
     Rosberg.

Item 5. Other Information

     Not applicable

Item 6. Exhibits and Reports on Form 8-K

     (A)  Exhibits

     Exhibit No.   Description
     -----------   -----------
      10.1.4*      Letter agreement amendment dated April 11, 2002 to the Credit
                   Agreement, dated July, 6 2000, between NTELOS Inc., Morgan
                   Stanley & Co. Incorporated, as Administrative

                                       26

<PAGE>

                                   NTELOS Inc.

                           Part II. OTHER INFORMATION

                   Agent, the Subsidiary Guarantors and the other Agents and
                   Lenders party thereto.

----------
* Filed herewith.

     (B)  Reports on Form 8-K

          Form 8-K dated April 29, 2002, pertaining to presentations to be made
          by Mr. James S. Quarforth, Chief Executive Officer, and Mr. Michael B.
          Moneymaker, Chief Financial Officer, at investor meetings, providing
          an overview of NTELOS' strategy, transactions and certain performance
          through 2001 and guidance for 2002.

                                        27

<PAGE>

                                   SIGNATURES

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

                    NTELOS Inc.


August 14, 2002     /s/ J. S. Quarforth
                    ----------------------------------------
                    J. S. Quarforth, Chief Executive Officer


August 14, 2002     /s/ M. B. Moneymaker
                    ------------------------------------------------
                    M. B. Moneymaker, Senior Vice President and
                    Chief Financial Officer, Treasurer and Secretary

                                       28