-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pa7bLH9S5WiZ5XhifzXUrn83AzqgzjnlRfeBKu3eIomIg4kyfGehZggeiRbJohk8 L46zzYMu/qeMwUmWUU9+qg== 0000950123-95-000144.txt : 19950608 0000950123-95-000144.hdr.sgml : 19950608 ACCESSION NUMBER: 0000950123-95-000144 CONFORMED SUBMISSION TYPE: PRE13E3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19950130 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONTEL CELLULAR INC CENTRAL INDEX KEY: 0000822419 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 581413513 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE13E3 SEC ACT: 1934 Act SEC FILE NUMBER: 005-40226 FILM NUMBER: 95503987 BUSINESS ADDRESS: STREET 1: 245 PERIMETER CENTER PKWY CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4048043400 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GTE CORP CENTRAL INDEX KEY: 0000040858 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 131678633 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE13E3 BUSINESS ADDRESS: STREET 1: ONE STAMFORD FORUM CITY: STAMFORD STATE: CT ZIP: 06904 BUSINESS PHONE: 2039652000 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL TELEPHONE & ELECTRONICS CORP DATE OF NAME CHANGE: 19820816 FORMER COMPANY: FORMER CONFORMED NAME: FRANKLIN INVESTMENT PROGRAMS COMMON STOC DATE OF NAME CHANGE: 19700209 PRE13E3 1 RULE 13E-3 TRANSACTION STATEMENT 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ RULE 13E-3 TRANSACTION STATEMENT (Pursuant to Section 13(e) of the Securities Exchange Act of 1934) CONTEL CELLULAR INC. (Name of Issuer) GTE CORPORATION CONTEL CORPORATION CONTEL CELLULAR ACQUISITION CORPORATION CONTEL CELLULAR INC. (Name of Person(s) Filing Statement) CLASS A COMMON STOCK, $1.00 PAR VALUE (Title of Class of Securities) ------------------------ 210904108 (CUSIP Number of Class of Securities) MARIANNE DROST, ESQ. LAURA E. BINION, ESQ. GTE CORPORATION CONTEL CELLULAR INC. ONE STAMFORD FORUM 245 PERIMETER CENTER PARKWAY STAMFORD, CONNECTICUT 06904 ATLANTA, GEORGIA 30346 (203) 965-2000 (404) 804-3400
(Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) Copies to: JEFFREY J. ROSEN, ESQ. O'MELVENY & MYERS 555 13TH STREET, N.W., SUITE 500 WEST WASHINGTON, D.C. 20004-1109 (202) 383-5300 This statement is filed in connection with a. /X/ The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. / / The filing of a registration statement under the Securities Act of 1933. c. / / A tender offer. d. / / None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: /X/ CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Transaction Valuation: $254,259,301.50* Amount of Filing Fee: $50,851.86 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * For purposes of calculating fee only. This amount is based upon (a) 9,970,953 shares of Class A Common Stock of Contel Cellular Inc., par value $1.00 per share, (the "Class A Shares"), outstanding as of February , 1995 and (b) the price offered per Class A Share. The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of one per centrum of the value of the Class A Shares offered to be purchased. /X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and date of its filing. Amount Previously Paid: $50,851.86 Filing Party: Contel Cellular Inc. Form of Registration Number: Schedule 14C Date Filed: January 30, 1995
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INTRODUCTION This Schedule 13E-3 is being filed jointly by GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware corporation that has adopted a plan of liquidation and is a wholly owned subsidiary of GTE ("Contel"), Contel Cellular Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Contel ("CCI Acquisition"), and Contel Cellular Inc., a Delaware corporation (the "Company"). This Schedule 13E-3 relates to the proposed merger (the "Merger") of CCI Acquisition with and into the Company (with the Company being the surviving corporation (the "Surviving Corporation")). Contel owns all of the outstanding shares of the Class B Common Stock, par value $1.00 per share, of the Company (each a "Class B Share"). The Class B Shares constitute 90% of the outstanding common stock of the Company and represent approximately 98% of the combined voting power of the outstanding common stock of the Company. The public owns all of the outstanding shares of Class A Common Stock, par value $1.00 per share, of the Company (each a "Class A Share"). The Class A Shares constitute the remaining 10% of the outstanding common stock of the Company and represent approximately 2% of the combined voting power of the outstanding common stock of the Company. In the Merger, (i) each outstanding Class A Share (other than Class A Shares as to which appraisal rights have been properly exercised under the General Corporation Law of the State of Delaware) will be converted into the right to receive $25.50 in cash, without interest, subject to applicable back-up withholding taxes, (ii) each Class A Share held by the Company and each outstanding share of the common stock of CCI Acquisition will be cancelled, and no payment will be made with respect thereto and (iii) each outstanding Class B Share will be converted into one newly issued share of the Class B common stock of the Surviving Corporation. As a result of the Merger, the Company, as the Surviving Corporation, will become a privately held, wholly owned subsidiary of Contel. Contel, CCI Acquisition and the Company have entered into an Agreement and Plan of Merger dated as of December 27, 1994, as amended (the "Merger Agreement"), which is attached as Exhibit A to the Information Statement on Schedule 14C (the "Information Statement") filed by the Company with the Securities and Exchange Commission on the date hereof. 3 The following Cross Reference Sheet shows the location in the Information Statement of items required by Schedule 13E-3. Information contained in such Information Statement is incorporated herein by this reference, as indicated in the Cross Reference Sheet. CROSS REFERENCE SHEET Item 1. Issuer and Class of Security Subject to the Transaction. (a) Cover Page. (b) Cover Page; "MARKET PRICES OF AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY". (c) "MARKET PRICES OF AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY". (d) "MARKET PRICES OF AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY". (e) Not applicable. (f) Not applicable. Item 2. Identity and Background. This Schedule 13E-3 is being filed jointly by the Company, as the issuer of the class of equity securities which is the subject of the Rule 13e-3 transaction, and GTE, Contel and CCI Acquisition, as affiliates of the Company as defined in Rule 13e-3(a)(1). (a) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC." (b) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC." (c) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC." (d) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC." (e) Not applicable. (f) Not applicable. (g) "EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC." Item 3. Past Contacts, Transactions or Negotiations. (a)(1) "RELATED PARTY TRANSACTIONS -- Arrangements and Transactions with Contel and GTE". (a)(2) "SPECIAL FACTORS -- Background of the Merger". (b) Not applicable. 3 4 Item 4. Terms of the Transaction. (a) Cover Page, "SPECIAL FACTORS -- Introduction; The Merger"; "THE MERGER AGREE-MENT". (b) "RELATED PARTY TRANSACTIONS -- Payments to Optionholders". Item 5. Plans or Proposals of the Issuer or Affiliate. (a) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company". (b) Not applicable. (c) "RELATED PARTY TRANSACTIONS -- Transition Arrangements". (d) None. (e) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company". (f) "SPECIAL FACTORS -- Certain Effects of the Merger". (g) "SPECIAL FACTORS -- Certain Effects of the Merger". Item 6. Source and Amount of Funds or Other Consideration. (a) "SPECIAL FACTORS -- Merger Consideration". (b) It is estimated that the expenses incurred in connection with the Merger through the closing of the Merger will be approximately as set forth below (all of which are payable by GTE or the Company): Investment banking fees and expenses.......................... $1,850,000.00 Legal fees and expenses....................................... Depositary fees and expenses.................................. $ 12,000.00 Filing fees................................................... $ 50,851.86 Printing and mailing fees..................................... $ 101,000 Miscellaneous................................................. $ 115,000.00 ------------- ============
(c) "SPECIAL FACTORS -- Merger Consideration". (d) Not applicable. Item 7. Purpose(s), Alternatives, Reasons and Effects. (a) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company". (b) Not applicable. (c) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company". (d) "SPECIAL FACTORS -- Introduction; The Merger"; "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company"; "SPECIAL FACTORS -- Merger Consideration"; "SPECIAL FACTORS -- Certain Federal Income Tax Consequences of the Merger"; "SPECIAL FACTORS -- Certain Effects of the Merger"; "SPECIAL FACTORS -- Accounting Treatment of the Merger". Item 8. Fairness of the Transaction. (a) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger". (b) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger". 4 5 (c) Cover Page, "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company". (d) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger". (e) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger". (f) Not applicable. Item 9. Reports, Opinions, Appraisals and Certain Negotiations. (a) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger"; "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special Committee"; SPECIAL FACTORS -- Opinions of Financial Advisors to GTE". (b) "SPECIAL FACTORS -- Background of the Merger"; "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special Committee"; "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE". (c) "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special Committee"; "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE". Item 10. Interest in Securities of the Issuer. (a) "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Directors and Executive Officers of the Company"; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Directors and Executive Officers of GTE, Contel and CCI Acquisition". (b) Not applicable. Item 11. Contracts, Arrangements or Understandings With Respect to the Issuer's Securities. "THE MERGER AGREEMENT"; "RELATED PARTY TRANSACTIONS -- Payments to Optionholders". Item 12. Present Intention and Recommendation of Certain Persons With Regard to the Transaction. (a) "SPECIAL FACTORS -- Written Consent; Purpose of the Merger; Plans for the Company"; "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Directors and Executive Officers of the Company". (b) "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger". Item 13. Other Provisions of the Transaction. (a) "DISSENTERS' RIGHTS OF APPRAISAL". (b) Not applicable. (c) Not applicable. Item 14. Financial Information. (a) "SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY"; "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE". (b) Not applicable. 5 6 Item 15. Persons and Assets Employed, Retained or Utilized. (a) Not applicable. (b) Not applicable. Item 16. Additional Information. (a) "PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY". Item 17. Material To Be Filed As Exhibits. (a) Not applicable. (b)(1) Opinion of Lazard Freres & Co. dated December 30, 1994 included as Exhibit B to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. (b)(2) Contel Cellular Inc. Valuation Analysis prepared by Lazard Freres & Co. dated December 22, 1994. (b)(3) Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated dated December 27, 1994 included as Exhibit C-1 to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. (b)(4) Opinion of PaineWebber Incorporated dated December 27, 1994 included as Exhibit C-2 to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. (c)(1) Agreement and Plan of Merger dated as of December 27, 1994, as amended, included as Exhibit A to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. (c)(2) Letter Agreement dated , 1995 issued by the Company to the holders of Options to acquire Class A Shares. (d)(1) Preliminary Information Statement on Schedule 14C relating to the merger of Contel Cellular Acquisition Corporation with and into Contel Cellular Inc. (d)(2) Letter of Transmittal. (d)(3) Form of Notice of Class Action to be sent to Class A Stockholders. (e) Delaware General Corporation Law Section 262 included as Exhibit D to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. (f) Not applicable. 6 7 SIGNATURE After due inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certify that the information set forth in this statement is true, complete and correct. Date: , 1995 GTE CORPORATION By: /s/ MARIANNE DROST ----------------------------------------- Title: Secretary -------------------------------------- CONTEL CORPORATION By: /s/ MARIANNE DROST ----------------------------------------- Title: Secretary -------------------------------------- CONTEL CELLULAR ACQUISITION CORPORATION By: /s/ MARIANNE DROST ----------------------------------------- Title: Secretary -------------------------------------- CONTEL CELLULAR INC. By: /s/ THEODORE J. CARRIER ----------------------------------------- Title: Treasurer and Chief Financial Officer -------------------------------------- 7 8 INDEX TO EXHIBITS
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBIT PAGE - ---------- ------------------------------------------------------------------------ ------------ (a) -- Not applicable. (b)(1) -- Opinion of Lazard Freres & Co. dated December 30, 1994 included as Exhibit B to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. ......................................................... (b)(2) -- Contel Cellular Inc. Valuation Analysis prepared by Lazard Freres & Co. dated December 22, 1994. ............................................... (b)(3) -- Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated dated December 27, 1994 included as Exhibit C-1 to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. .............................. (b)(4) -- Opinion of PaineWebber Incorporated dated December 27, 1994 included as Exhibit C-2 to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. ......................................................... (c)(1) -- Agreement and Plan of Merger dated as of December 27, 1994, as amended, included as Exhibit A to the Preliminary Information Statement filed as Exhibit (d)(1) hereto. ................................................. (c)(2) -- Letter Agreement dated , 1995 issued by the Company to the holders of Options to acquire Class A Shares. .......................... (d)(1) -- Preliminary Information Statement on Schedule 14C relating to the merger of Contel Cellular Acquisition Corporation with and into Contel Cellular Inc. ................................................................... (d)(2) -- Letter of Transmittal................................................... (d)(3) -- Form of Notice of Class Action to be sent to Class A Stockholders....... (e) -- Delaware General Corporation Law Section 262 included as Exhibit D to the Preliminary Information Statement filed as Exhibit (d)(1) hereto.... (f) -- Not applicable.
EX-99.B2 2 CONTEL CELLULAR INC. VALUATION ANALYSIS 1 CONTEL CELLULAR INC. VALUATION ANALYSIS LAZARD FRERES & CO. DECEMBER 22,1994 2 CONTEL CELLULAR INC. TABLE OF CONTENTS I. INTRODUCTION II. BACKGROUND AND DESCRIPTION OF CURRENT OFFER III. EXECUTIVE SUMMARY A. Public Market vs. Private Market Valuations B. GTE's Possible Rationale for the Current Offer C. Justification for a Valuation in Excess of GTE's Offer D. Comments on Merrill Lynch/PaineWebber Valuation E. Alternatives Available to CCI Independent Board at Time of GTE's Initial Offer IV. PRELIMINARY VALUATION SUMMARY A. Analysis at Various Prices B. Summary of CCI Valuation Analyses -i- 3 CONTEL CELLULAR INC. TABLE OF CONTENTS V. CCI VALUATION ANALYSES A. Business Overview 1. Overview of CCI Strategic Plan 2. Overview of Management's Clustering Strategy 3. Demographic Overview of Tennessee, Virginia and Alabama 4. Management's Record in Meeting Budget B. Relationships with GTE Mobilnet C. Public Market Valuation 1. Summary Comparable Public Company Analysis 2. Trading Comparison of Selected Cellular Companies D. Private Market Transaction and Discounted Cash Flow Analysis 1. Lazard Estimates of CCI Private Market Valuation 2. Summary of Valuations by MSA 3. Cash Flow Valuation of Minority Interest MSAs 4. Key Assumptions of Discounted Cash Flow Analyses 5. Summary Discounted Cash Flow Analyses 6. Summary International Asset Valuation 7. Summary Wireless Data Valuation 8. Summary of Research Analysts' Estimates of Private Market Value -ii- 4 CONTEL CELLULAR INC. INTRODUCTION - - Lazard Freres & Co. ("Lazard") has been retained by the Special Committee of the Board of Directors of Contel Cellular Inc. (the "Special Committee") to render its opinion as to the fairness, from a financial point of view, of the consideration offered to the holders of the publicly traded shares of Contel Cellular Inc. ("CCI" or the "Company") pursuant to the transaction proposed by its majority shareholder, GTE Corporation ("GTE"). - - We understand that CCI and an affiliate of GTE propose to exchange certain cellular assets owned by each of them for certain cellular assets owned by a publicly-held company (the "Cellular Exchange"). We have received a copy of a letter dated December 19, 1994 from GTE's Senior Vice President-Finance addressed to GTE's financial advisors, Merrill Lynch & Co. and PaineWebber, Inc. regarding the Cellular Exchange to the effect that it is an exchange of equivalent assets and, accordingly, is value neutral to CCI. We have neither received nor reviewed any other information regarding the Cellular Exchange, including any financial projections or any other non-public financial information prepared by GTE or CCI. We have assumed that the Cellular Exchange involves the exchange of assets with substantially equivalent value and, accordingly, will have an immaterial effect, if any, on CCI. Because the recent asset swap was deemed by GTE to be "value neutral," all of the following CCI financial and operating information is not pro forma for the swap. - - In analyzing the fairness of the proposed transaction to the minority shareholders of CCI, Lazard has performed a number of financial analyses in order to value the common shares of the Company and value the consideration offered to the minority shareholders, including: (i) Comparable Public Company Analysis: reviewing certain financial, operating, and stock market trading information of selected publicly traded companies comparable to CCI to estimate the implied public market values (including market capitalization, cellular asset value and cellular license value multiples) for the CCI segments; (ii) Private Market Transaction Analysis: reviewing publicly available information on private market sale transactions of selected companies and cellular markets comparable to the CCI systems to determine the implied private market values for the CCI POP segments using an adjusted regression analysis; and (iii) Discounted Cash Flow Analysis: estimating the present value of the future cash flows that the management of the Company expects the CCI cellular markets to generate cover varying future periods. -1- 5 CONTEL CELLULAR INC. BACKGROUND AND DESCRIPTION OF INITIAL AND CURRENT OFFER - - On September 8, 1994, GTE Corporation ("GTE"), the majority shareholder of CCI, proposed a transaction through which it would acquire the 10% ownership of the Company currently held by the public for $224 million. - - The initial offer price of $22.50 per share for each Class A common share implies a value of approximately $194 of market capitalization per net POP for CCI's 23.9 million net POPs, $181 per net POP adjusting for the value of other assets (excluding PCS) and $156 per net POP after further adjusting for the value of net PP&E. - - The "unaffected" market price one day prior to the announcement was $17.75 per share and $161 of cellular license value per net POP, before PP&E adjustment; thus, the initial offer represented a 27% premium over the unaffected price. - - The closing price on December 21 of $24.50 represents a further 8.9% premium over GTE's offer. - - Given CCI's position as a controlled subsidiary of GTE, the independent Special Committee has been established to represent the interest of the minority shareholders. - - Lazard has held various discussions with GTE's bankers over the last several weeks to negotiate the price upwards from $22.50 to $25.50 (a 13.3% additional premium and a 43.7% premium over the unaffected market price). Total price for the public's shares would equal $254 million. - - The offer price of $25.50 per share for each Class A common share implies a value of approximately $207 of market capitalization per net POP for CCI's 23.9 million net POPs, $193 per net POP adjusting for the value of other assets (excluding PCS) and $169 per net POP after further adjusting for the value of net PP&E. -2- 6 CONTEL CELLULAR INC. PUBLIC MARKET VS. PRIVATE MARKET VALUATIONS - - Public market and private market valuations are the two primary methods of valuing properties. - - Public market value represents the economic benefit and voting rights from holding the shares representing ownership of assets but does not assume control of the enterprise. - - Private market value includes all the benefits of public market value and, in addition, includes a premium for control of the company. The essence of this control includes operational decision-making, access to cash flows of the business and the ability to dispose of assets. - - Because consummation of the proposed transaction will provide GTE with absolute control over CCI without the limitations inherent in the existence of a minority interest, a hybrid valuation which is at a premium to public market value of CCI, but at a discount to full private market value of CCI is one appropriate manner of approaching valuation. -3- 7 CONTEL CELLULAR INC. GTE'S POSSIBLE RATIONALE FOR THE CURRENT OFFER - - GTE already owns 90% of the economic value and voting control of CCI. Therefore, the minority shareholders are not giving up a controlling interest in the proposed transaction. - - The minority shareholders never had control of the enterprise, nor could they have reasonably expected to eventually gain control of the Company in the future. (However, their rights are similar to those of minority shareholders in other public companies that paid those shareholders a premium for their outstanding shares.) - - A "squeeze-out" transaction may represent the public shareholders' only chance to receive a premium for their shares over public market values because other sophisticated investors will likely be unwilling to pay a premium for a minority position with a large controlling shareholder. - - Any theoretical third party offer for the minority shares of CCI would require GTE cooperation, which we believe Merrill Lynch & Co. ("Merrill Lynch") and PaineWebber Incorporated ("PaineWebber") would maintain would be difficult to obtain. - - The initial offer as made on September 8 represented a 27% premium to the market price of the CCI Class A common shares one day prior to the announcement. - - Class A common shares have less than proportionate voting power (1 vote versus 5 votes for Class B) and thus should be worth less than GTE's holdings on a share-to-share basis. (Of late, however, low-vote dual-class shareholders have often received the same payment as their high-vote counterparts in takeover situations.) - - The current GTE offer's premium of 44% to the public trading price is higher than other minority buyouts for comparable stakes of around 10% (10-15% average premium). - - Important closing prices include:
CAGR TO GTE OFFER DATE EVENT CLOSING PRICE(1) GTE OFFER PREMIUM ------- ------------------------------------ ---------------- --------- --------- 4/21/88 IPO of CCI $8.31 18.7% 206.7% 8/07/90 GTE and Contel Corp. agree to merge $16.00 11.6% 59.4% 3/14/91 Contel/GTE transaction completed $23.25 2.6% 9.7% 9/08/94 GTE offers $22.50 cash for each Class A common share $23.50 75.5% 8.5% 12/21/94 Most recent close $24.50 NM 4.1%
__________________________________ (1) Split adjusted. Source: FactSet Database. -4- 8 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER VALUATION METHODOLOGY - - Public market value of approximately $23.50 to $26.00 depending upon publicly traded comparables. Based on comparable private market transactions and discounted cash flow analysis, the intrinsic value of the CCI operating assets is greater than the $22.50 per share offer. - - Lazard has reviewed publicly available information on private market sale transactions of selected companies and cellular markets comparable to the CCI properties. Through this analysis, Lazard has derived a full private market valuation for the controlled CCI MSAs of approximately $2.7 billion as well as between approximately $1.6 billion and $2.0 billion for the CCI non-controlled MSAs. Applying similar techniques to the CCI RSAs results in a value of $500+ million. The values are summarized below:
PRIVATE MARKET VALUE TOTAL EQUITY VALUE PROPERTIES ($MM) PER TOTAL NET POP PER SHARE - ------------------------------- -------------------- ----------------- ------------------ MSAs (Controlled) $2,725 MM $211 $27.25 MSAs (Non-Controlled) $1,664 - $2,028 $280 - $341 $16.64 - $20.28 RSAs (Controlled/Clustered) $431 $130 $4.31 RSAs (Controlled/Non-Clustered) $52 $105 $0.52 RSAs (Non-Controlled) $89 $77 $0.89 Net Debt and Other Assets $(1,730) - $(17.30) --------------- ----------- --------------- Total Company (w/o PCS) $3,235 - $3,599 - $32.36 - $36.00
- - Lazard has also performed a discounted cash flow analysis for CCI based upon Management's forecasts and Alternative Cases with upside and downside assumptions. The cases produce values as follows:
DCF VALUE TOTAL CELLULAR ASSET VALUE TOTAL EQUITY VALUE FOR PMV ($MM) PER NET POP PER SHARE ------------------ -------------------------- ------------------ Upside Case $4,524 - $5,496 MM $176 - $216 $24.65 - $34.38 Management Case $4,059 - $4,919 $156 - $192 $19.99 - $28.60 Downside Case $3,657 - $4,422 $139 - $171 $15.97 - $23.62
- - These valuations are before any value is assigned to elements of the Competition Agreement. -5- 9 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) VALUE TO GTE - - GTE would realize substantial benefits from the proposed consolidation including elimination of: (i) the limitations inherent in the existence of a minority interest, including the restrictions on trading cellular assets with others quickly and efficiently; (ii) restrictive intercompany agreements including the Competition Agreement; (iii) potential conflicts of interest regarding connections to local access companies (those belonging to GTE), international joint ventures, PCS bidding and wireless data technology development; and (iv) procedural steps relating to the PCS division's ability to approach the market with one brand (or fewer than the four used today), which will be critical in the near future when marketing skills will be an important factor in successfully competing against numerous other wireless competitors and in penetrating larger segments of the population. As a result, GTE should be willing to pay a premium for absolute control. -6- 10 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) TIMING ISSUES - - Measuring the premium to public market value just prior to the "squeeze-out" proposal is not definitive because of the depressed level of the CCI share price prior to the transaction. - The transaction currently proposed by GTE represents a 15.9% premium to the highest public market trading value for the CCI Class A Common Shares over the 52 weeks prior to announcement of the initial offer. (See page 8). - - The Company's assets, due to trading and acquisitions, are worth more per POP than when the Company went public. CCI has also sold off various non-strategic properties, such as those in the Northeast, and acquired various POPs, especially RSAs, that buttressed the Company's clustering strategy and broadened its reach. Page 22 shows the evolution and developing focus of the Company's domestic geographic strategy. - - The proposed transaction denies the minority shareholders a significant potential upside on their CCI common shares after the minority shareholders have borne the equity risk during the early and highest risk phase of the Company's life cycle. By consolidating CCI in its financials, GTE has enjoyed 100% of the benefit of the tax shield generated by CCI's historical operating losses. GTE's offer to purchase absolute control of CCI comes at the time when CCI is becoming profitable (See Appendix I. G.) and is entering the growth phase of its life cycle. CCI has among the highest growth prospects in the cellular industry. -7- 11 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) STOCK PRICE PERFORMANCE: CCI VS. S&P 400 (Indexed Daily Close Price Comparison: 12/21/93 to 12/21/94) [FIGURE 1] -8- 12 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) STOCK PRICE PERFORMANCE: CCI VS. CELLULAR INDEX(1) (Indexed Weekly Close Price Comparison: 12/20/91 to 12/21/94) [FIGURE 2] __________________________________ (1) Cellular Index includes BCE Mobile, Commnet, Rogers Cantel, U.S. Cellular and Vanguard. -9- 13 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) COMPARISON WITH PEERS - - CCI management has continually demonstrated excellent performance relative to that of its principal competitor, BellSouth. CCI compares well to GTE Mobilnet and various other cellular providers and, adjusting for differences in market dynamics, CCI's performance has been superior in many respects.
GTE SBC DLJ STATISTIC CCI(1) MOBILNET(1) BELLSOUTH(1) COMM.(1) COMPOSITE(2) - --------- ------ ----------- ------------ -------- ------------ - Avg. Cellular Service Rev. Per Ave. Sub. Per Month $71 $69 $68 (3) NA $74 - Cellular Service Revenue Growth 53.1% 37.8% 29.8%(3) NA 24.2% - OCF Margin 34.2% 41.2% 44.6% NA 47.1% - Penetration 3.5% 4.1% 4.6%(4) 7.0%(5) 4.3% - Subscriber Growth 59.6% 45.3% 39.0% 47.6% 29.3%
- - That CCI's cellular service revenue growth and subscriber growth are high relative to its peers while its OCF margin and penetration are low underscores the fact that the Company's cellular markets are in an earlier stage of their growth cycle than those of its peers. Thus, CCI's total current private market value has a relatively high component of present value of growth opportunities. __________________________________ (1) Source: GTE Personal Communications Services. Data as of June 30, 1994. (2) Source: Donaldson, Lufkin & Jenrette Wireless Communications Industry report, dated Winter 1994. Data as of end of year-end 1994. (3) Based on proportionate financial results. (4) Subscribers used are proportionate. (5) POPs from 1990 to 1993 restated to conform to Donaldson, Lufkin & Jenrette Wireless Communications reports. -10- 14 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) POTENTIAL "HIDDEN VALUE" - - COMPETITION AND SERVICE AGREEMENTS - CCI and GTE are parties to the Third Restated Competition Agreement and a Service Agreement. - Under the Service Agreement, CCI has funded approximately 40% of the costs of GTE Mobilcom's international department--over $9 million in contributions since 1991. Since that date, CCI has not separately pursued any international wireless opportunities. - In addition, CCI has funded approximately 40% of the costs of GTE Mobilcom's PCS group, which is developing a bidding strategy for GTE and its affiliates for the PCS auctions. CCI has not separately pursued its own PCS strategy. - Under the Third Restated Competition Agreement, CCI has a right to acquire from GTE at GTE's cost any domestic or international assets or operations acquired by GTE from any person or entity which relate to the "Cellular Business". The right of first refusal is valuable because, depending upon the business acquired, CCI can acquire all or any portion of any Cellular Business acquired by GTE either for CCI's own business or for possible resale to third parties. - It is CCI's position that the right of first refusal applies to GTE Mobilcom's pending international acquisitions, including those in Argentina and Mexico, and to the PCS auctions, which would permit CCI to "cherry pick" licenses won by GTE. - For the purpose of this analysis, Lazard has ascribed no value to the Company's rights under these contracts. -11- 15 CONTEL CELLULAR INC. JUSTIFICATION FOR A VALUATION IN EXCESS OF GTE'S OFFER (CONT'D) POTENTIAL "HIDDEN VALUE" (CONT'D) - - The minority interests, well managed and spread throughout the country, have been stellar performers for CCI and will continue to produce very high levels of cash flow. For 1994, CCI's total minority interests should produce at least $85 million(1) in cash flow. This value to CCI to date has gone virtually unnoticed by the analyst community but will become apparent shortly. - - CCI has built a retail outlet distribution network that uniquely positions the Company for market success in the coming years. It has established 220 (by year-end 1994) outlet points in malls, kiosks, etc. that directly interface with the customer, and which have provided CCI with among the lowest average customer acquisition cost in the industry ($334 per "gross add" without promotions and $381 per "gross add" with promotions versus $425 for the cellular industry(2) ). CCI has, when possible, not committed itself to long-term contracts with independent agent/dealers who normally would collect significant residual commissions (based on a percentage of future revenues) from cellular users. - - The physical plant and network built by CCI is of very high quality and will provide exceptional service for many years. Management initially emphasized broad coverage and later added capacity as it was projected to be needed. There will be a requirement, as all wireless carriers have, to move to a fully digital system, but the basic network requires little reconfiguration and represents an important competitive advantage. Additionally, because the majority of its markets are still in their high-growth stage and have sufficient capacity, Management believes it is well positioned to wait out the industry-wide choice between the two rival digital systems. - - Management is of extremely high quality and has proven itself in the marketplace, both domestically and, selectively, abroad. GTE, or any other acquirer of CCI, will be the beneficiary of seasoned talent that will be a critical factor in future wireless competition. __________________________________ (1) This figure is an annualized nine-month number that does not take into account the seasonal benefit of the fourth quarter. (2) Management believes that estimates for the cellular industry range from $350 to $500. Management reports that an industry-wide average is difficult to measure due to industry-wide inconsistencies in accounting method and disclosure. -12- 16 CONTEL CELLULAR INC. COMMENTS ON MERRILL LYNCH/PAINEWEBBER VALUATION MERRILL LYNCH/PAINEWEBBER ASSERTION - - Summary Valuation (mid-point)
$ MM POP ---- --- Total MSA Value $3,567 $188 Total RSA Value 382 90 ------ ---- Total Value $3,950 $168 ====== ====
- - Transaction precedents date back two years. - - CCI has relatively weak demographics (based on population density, household income and traffic density). - - High percentage of RSAs that will not realize MSA penetration. COMMENTS - - Reflects $250-350/POP value for best MSA markets versus $75-$125 for poorest markets. Categorizes MSAs into seven groupings based on market rank. 30% discount for lack of control. - - Initial offer price of $22.50 is below high range of ML/PW analysis of $24.38. - - Does not differentiate by market for MSAs or by control/non-control for RSAs. - - No value for Competition Agreement rights. - - Does not include GTE/Alltel Dallas transaction of $282 per POP for true minority share holding - - Does not take into account any demographic data predicting future growth. - - Over 60% of CCI POPs are in Tennessee, Virginia and Alabama, all three of which are expected to exhibit rapid economic growth. - - Does not take into account the fact that many of CCI's RSAs were purchased for the purpose of "connecting" MSAs for synergistic purposes. -13- 17 CONTEL CELLULAR INC. COMMENTS ON MERRILL LYNCH/PAINEWEBBER VALUATION (CONT'D) MERRILL LYNCH/PAINEWEBBER ASSERTION - - Non-controlled MSA interests carry a 25-33% discount, and CCI has high percentage of such interests relative to total CCI proportionate POPs. - - CCI's current penetration is low. - - CCI's POPs, as a whole "clearly have weaker standing than those of GTE." They are "concentrated in areas with relatively weak demographics," "have a relatively high percentage of RSAs" and non-control interests, and have "relatively low" penetration. - - CCI's operating results will slow significantly beyond 1999. COMMENTS - - Does not fully take into account the size, number and quality of CCI's non-controlled MSA POPs. - - SBC/CGE minority transaction valued 10% of Washington, D.C. and Baltimore, MD at $323 per POP. - - Alltel/GTE proposed transaction valued 10% of Dallas,TX at $282 per POP. - - Does not give CCI's management well-deserved credit for front-loading capital expenditures on many properties that were only recently built out (sometimes 1-2 years later than most major MSAs). Many of CCI's properties are still relatively early in their growth cycle. - - GTE will not release detailed data to analyze. - - Compared to other peers, CCI's controlled MSA interests are "valuable" after taking into account the highly favorable growth-related demographic statistics for stated markets. - - Does not take into account CCI's "portfolio" of high-value, non-controlled MSA interests. - - Given the constant changes occurring in wireless communications (i.e., national consolidation/branding, telco alliances, PCS, wireless data, etc.), how can one accurately predict the fate of a domestic cellular provider more than five years into the future? -14- 18 CONTEL CELLULAR INC. ALTERNATIVES AVAILABLE TO CCI INDEPENDENT BOARD AT TIME OF GTE'S INITIAL OFFER - - ACCEPT OFFER. Issue: Initial offer is lower than figures indicated by initial valuation methodologies and current stock price. - - NEGOTIATE FOR HIGHER OFFER. Issue: Must convince GTE and its bankers of appropriate valuation parameters and of "hidden value." - - PURSUE OTHER AVENUES SUCH AS SALE OF CCI OR CCI PURCHASE OF GTE MOBILNET. Issue: Will involve cooperation of GTE, which may be difficult to obtain, given strategic value of wireless and CCI to GTE. At the same time, GTE's chief financial officer has indicated a willingness to consider selling its Class B common shares if GTE were to receive an offer that warranted consideration. - - DO NOT ACCEPT OFFER. Issue: When in the future will shareholders realize higher value and what would happen to the share price in the interim? -15- 19 CONTEL CELLULAR INC. ANALYSIS AT VARIOUS PRICES(1)
PRICE @ GTE OFFER 12/21/94 --------- -------- PRICE $22.50 $23.00 $24.50 $25.00 $25.50 -------- -------- -------- -------- -------- Number of Class A Common 10.0 10.0 10.0 10.0 10.0 Market Value of Class A Equity $223.9 $228.9 $243.8 $248.8 $253.7 Number of Class B Common 90.0 90.0 90.0 90.0 90.0 Market Value of Class B Equity $2,025.0 $2.070.0 $2,205.0 $2,250.0 $2,295.0 -------- -------- -------- -------- -------- Total Market Value Implied to Market $2,248.9 $2,298.9 $2,448.8 $2,498.8 $2,548.7 Actual Market Value (including Other Assets) $2,578.9 $2,628.9 $2,778.8 $2,828.8 $2,878.7 Notes Payable - Affiliates $2,011.6 $2,011.6 $2,011.6 $2,011.6 $2,011.6 Other 30.8 30.8 30.8 30.8 30.8 Minority Interests 18.2 18.2 18.2 18.2 18.2 Cash and Equivalents (0.1) (0.1) (0.1) (0.1) (0.1) -------- -------- -------- -------- -------- Net Debt $2,060 $2,060 $2,060 $2,060 $2,060 International Assets $30.0 $30.0 $30.0 $30.0 $30.0 Wireless Data 300.0 300.0 300.0 300.0 300.0 -------- -------- -------- -------- -------- Other Assets (without PCS) $330.0 $330.0 $330.0 $330.0 $330.0 Market Capitalization $4,639.4 $4,689.3 $4,839.3 $4,889.2 $4,939.2 Other Assets (without PCS) ($330.0) ($330.0) ($330.0) ($330.0) ($330.0) -------- -------- -------- -------- -------- Cellular Assets Value $4,309.4 $4,359.3 $4,509.3 $4,559.2 $4,609.2 Net PP&E (580.7) (580.7) (580.7) (580.7) (580.7) -------- -------- -------- -------- -------- Cellular License Value $3,728.7 $3,778.6 $3,928.6 $3,978.5 $4,028.5 PCS [] [] [] [] [] MARKET CAPITALIZATION/ LTM Revenue of $513.8 9.0x 9.1x 9.4x 9.5x 9.6x 1994 Revenue of $374.0 12.4x 12.5x 12.9x 13.1x 13.2x 1995 Revenue of $603.3 (2) 7.7x 7.8x 8.0x 8.1x 8.2x 1996 Revenue $734.8 (2) 6.3x 6.4x 6.6x 6.7x 6.7x LTM EBITDA of $133.5 34.7x 35.1x 36.2x 36.6x 37.0x 1994 EBITDA of $79.9 58.1x 58.7x 60.6x 61.2x 61.8x 1995 EBITDA of $221.1 (2) 21.0x 21.2x 21.9x 22.1x 22.3x 1996 EBITDA of $291.5 (2) 15.9x 16.1x 16.6x 16.8x 16.9x LTM EBIT of $19.5 NM NM NM NM NM LTM EBIT of $(28.3) NM NM NM NM NM 1995 EBIT of $68.6 (2) 67.6x 68.4x 70.5x 71.3x 72.0x 1996 EBIT of $122.4 (2) 37.9x 38.3x 39.5x 39.9x 40.4x PRICE (EXCLUDING OTHER ASSETS)/ LTM EPS of $0.01 NM NM NM NM NM 1995 EPS of $0.04 (2) NM NM NM NM NM 1996 EPS of $0.41 (2) 54.9x 56.1x 59.8x 61.0x 62.2x MARKET CAPITALIZATION/PROPORTIONATE POPS OF 23.9 $194 $196 $203 $205 $207 CELLULAR ASSET VALUE/PROPORTIONATE POPS OF 23.9 $181 $183 $189 $191 $193 CELLULAR LICENSE VALUE/PROPORTIONATE POPS OF 23.9 $156 $158 $165 $167 $169 PRICE $26.00 $26.50 $27.00 $27.50 -------- -------- -------- -------- Number of Class A Common 10.0 10.0 10.0 10.0 Market Value of Class A Equity $258.7 $263.7 $268.7 $273.6 Number of Class B Common 90.0 90.0 90.0 90.0 Market Value of Class B Equity $2,340.0 $2,385.0 $2,430.0 $2,475.0 -------- -------- -------- -------- Total Market Value Implied to Market $2,598.7 $2,648.7 $2,698.7 $2,748.6 Actual Market Value (including Other Assets) $2,928.7 $2,978.7 $3,028.7 $3,078.6 Notes Payable - Affiliates $2,011.6 $2,011.6 $2,011.6 $2,011.6 Other 30.8 30.8 30.8 30.8 Minority Interests 18.2 18.2 18.2 18.2 Cash and Equivalents (0.1) (0.1) (0.1) (0.1) -------- -------- -------- -------- Net Debt $2,060 $2,060 $2,060 $2,060 International Assets $30.0 $30.0 $30.0 $30.0 Wireless Data 300.0 300.0 300.0 300.0 -------- -------- -------- -------- Other Assets (without PCS) $330.0 $330.0 $330.0 $330.0 Market Capitalization $4,989.2 $5,039.2 $5,089.1 $5,139.1 Other Assets (without PCS) ($330.0) ($330.0) ($330.0) ($330.0) -------- -------- -------- -------- Cellular Assets Value $4,659.2 $4,709.2 $4,759.1 $4,809.1 Net PP&E (580.7) (580.7) (580.7) (580.7) -------- -------- -------- -------- Cellular License Value $4,078.5 $4,128.5 $4,178.4 $4,228.4 PCS [] [] [] [] MARKET CAPITALIZATION/ LTM Revenue of $513.8 9.7x 9.8x 9.9x 10.0x 1994 Revenue of $374.0 13.3x 13.5x 13.6x 13.7x 1995 Revenue of $603.3 (2) 8.3x 8.4x 8.4x 8.5x 1996 Revenue $734.8 (2) 6.8x 6.9x 6.9x 7.0x LTM EBITDA of $133.5 37.4x 37.7x 38.1x 38.5x 1994 EBITDA of $79.9 62.5x 63.1x 63.7x 64.3x 1995 EBITDA of $221.1 (2) 22.6x 22.8x 23.0x 23.2x 1996 EBITDA of $291.5 (2) 17.1x 17.3x 17.5x 17.6x LTM EBIT of $19.5 NM NM NM NM LTM EBIT of $(28.3) NM NM NM NM 1995 EBIT of $68.6 (2) 72.7x 73.5x 74.2x 74.9x 1996 EBIT of $122.4 (2) 40.8x 41.2x 41.6x 42.0x PRICE (EXCLUDING OTHER ASSETS)/ LTM EPS of $0.01 NM NM NM NM 1995 EPS of $0.04 (2) NM NM NM NM 1996 EPS of $0.41 (2) 63.4x 64.6x 65.9x 67.1x MARKET CAPITALIZATION/PROPORTIONATE POPS OF 23.9 $209 $211 $213 $215 CELLULAR ASSET VALUE/PROPORTIONATE POPS OF 23.9 $195 $197 $199 $201 CELLULAR LICENSE VALUE/PROPORTIONATE POPS OF 23.9 $171 $173 $175 $177
- --------------- (1) Excludes any value for PCS. Market value and market capitalization not adjusted for options calculations. (2) Source for projections: Bear Stearns research report, dated January 19, 1994. Revenue numbers include immaterial amount of cellular equipment revenue. -16- 20 CONTEL CELLULAR INC. SUMMARY OF CCI VALUATION ANALYSES(1)
TOTAL MARKET CAP VALUE TOTAL EQUITY VALUE(2) TOTAL EQUITY VALUE PER NET POP ($MM) PER SHARE(3) ---------------------- --------------------- ------------------ - Comparable Public Company Analysis $184 - $194 $2,328 - $2,567 $23.29 - $25.68 - Comparable Acquisition Transaction Analysis(4) - Full Private Market Value $222 - $237 $3,235 - $3,600 $32.36 - $36.00 ILLUSTRATIVE HYPOTHETICAL DISCOUNTS TO PRIVATE MARKET VALUE - 10% Discount to Private Market $200 - $213 $2,705 - $3,033 $27.07 - $30.34 Discount -10.0% - -10.0% -16.4% - -15.7% -16.4% - -15.7% - 20% Discount to Private Market $177 - $190 $2,176 - $2,467 $21.77 - $24.68 Discount -20.0% - -20.0% -32.7% - -31.5% -32.7% - -31.5% - 30% Discount to Private Market $155 - $166 $1,646 - $1,901 $16.47 - $19.02 Discount -30.0% - -30.0% -49.1% - -47.2% -49.1% - -47.2% - Discounted Cash Flow Analysis - Upside Case(5) $189 - $230 $2,463 - $3,436 $24.65 - $34.38 - Management Case $170 - $206 $1,998 - $2,859 $19.99 - $28.60 - Downside Case(6) $153 - $185 $1,596 - $2,361 $15.97 - $23.62
- ---------------------------------- (1) Excludes any value for PCS. (2) Based on 23.9 million pro forma 1994 MSA POPs. (3) Based on 99,950,733 million shares. (4) Per POP values are for MSA POPs. Excludes any premium for company-wide clustering. Each Controlled/Clustered market RSA POP assumed to be worth $130, each Controlled/Non Clustered RSA POP assumed to be worth $105 and each Non-Controlled RSA POP assumed to be worth $77. (5) Assumes 1.0% addition to Management Case in subscriber penetration, 1995 monthly cellular service per subscriber of $65 with a 0.1% annual addition to Management Case and 0.5% addition to Management Case for operating cash flow margin. (6) Assumes 1.0% subtraction from Management Case in subscriber penetration, 1995 monthly cellular service per subscriber of $63 with a 0.1% subtraction from Management Case and 0.5% substraction from Management Case for operating cash flow margin. -17- 21 CONTEL CELLULAR INC. SUMMARY OF CCI VALUATION ANALYSES (CONT'D)(1) (Minority interest MSA s excluded from PMV discount)
TOTAL MARKET CAP. VALUE TOTAL EQUITY VALUE(2) TOTAL EQUITY VALUE PER NET POP ($MM) PER SHARE(3) ----------------------- --------------------- ------------------ - Comparable Acquisition Transaction Analysis(4) - Full Private Market Value $222 - $237 $3,235 - $3,600 $32.36 - $36.00 ILLUSTRATIVE HYPOTHETICAL DISCOUNTS TO PRIVATE MARKET VALUE - 10% Discount to Private Market $207 - $222 $2,872 - $3,235 $28.73 - $32.37 Discount -6.9% - -6.4% -11.2% - -10.1% -11.2% - -10.1% - 20% Discount to Private Market $191 - $207 $2,509 - $2,872 $25.10 - $28.74 Discount -13.7% - -12.8% -22.4% - -20.2% -22.4% - -20.2% - 30% Discount to Private Market $176 - $191 $2,145 - $2,509 $21.47 - $25.11 Discount -20.6% - -19.2% -33.7% - -30.3% -33.7% - -30.3%
__________________________________ (1) Excludes any value for PCS. (2) Based on 23.9 million pro forma 1994 MSA POPs. (3) Based on 99,950,733 million shares. (4) Per POP values are for MSA POPs. Excludes any premium for company-wide clustering. Each Controlled/Clustered market RSA POP assumed to be worth $130, each Controlled/Non Clustered RSA POP assumed to be worth $105 and each Non-Controlled RSA POP assumed to be worth $77. -18- 22 CONTEL CELLULAR INC. OVERVIEW OF CCI STRATEGIC PLAN The following points summarize a hypothetical stand-alone strategic plan for CCI prepared by Management: - - NETWORK - Continue to invest in CCI's cellular network and new technologies as they become commercially available and cost-effective to implement. - Remain a "fast-follower" in the adoption of new technologies as it is not economical to fund independent research or beta testing and most of the markets that CCI manages are not of a size or characteristic that leading-edge technology adoption would be a critical success factor. - Current networks are essentially 95+% digital ready and could economically be brought to 100% if needed. - Our networks will be at or above parity with competing cellular carriers for the foreseeable future. - - DISTRIBUTION - Attract new subscribers through programs such as Residential Sales (door-to-door contact and appointment setting), kiosks, retail stores and customer direct sales support. Traditional agents and national and regional power retailers are all channels that are and will be used to sell new subscribers cellular service. - As penetration rates increase and more subscribers are casual or security users, reduce the costs associated with acquiring and supporting those customers to increase operating margins. This requirement is being carried out through the Company's volume- sensitive retail distribution strategy which leverages its fixed costs. -19- 23 CONTEL CELLULAR INC. OVERVIEW OF CCI STRATEGIC PLAN (CONT'D) - - CUSTOMER SERVICE - The Company currently has a tremendous investment in the customer service side of its business; continue to support and advance the capabilities, quality, timeliness and efficiency of this function at a declining cost per average subscriber. - Currently creating a centralized call center to maximize efficiencies, increase customer service representative ("CSR") productivity, reduce costs and enhance the quality of customer service. - Investment in interactive voice services to minimize personal handling of routine questions and allow CSRs to handle more complicated and involved questions on an individual basis. - - BRANDING - As a stand alone entity, would consider joining an alliance, e.g. BAMS/NYNEX or AirTouch/US West, purchasing at a franchise fee the AT&T logo for the "A side" markets, or some other configuration (to include remaining as is) to be effective. - With the probability of many new entrants in CCI's markets, the current "goodwill" associated with the Contel Cellular and Cellular One logos could well be sufficient to maintain market/name recognition. -20- 24 CONTEL CELLULAR INC. OVERVIEW OF CCI STRATEGIC PLAN (CONT'D) - - INTERNATIONAL - The Company has paid for approximately 40% of the cost of the GTE International Department since the date of the merger to maintain what CCI management believes is the right to participate in the awarding of international cellular licenses. - Pre-GTE international department was successful in obtaining a 10% interest in a partnership in Mexico, was awarded the license (later rescinded) in Hungary, was negotiating for licenses in Yugoslavia (prior to the outbreak of internal conflict in that country), and was looking at possible consortiums in other markets that would utilize the CCI expertise in building and operating successful cellular operations. - On a stand alone basis, CCI would continue to pursue these efforts and would continue to negotiate for small capital funding but large ownership interests in exchange for technical and administrative expertise. - - PCS DEVELOPMENT - The Company has paid for approximately 40% of the cost of the GTE PCS development department since the date of the merger to maintain what CCI management believes is the right to participate in the awarding of PCS licenses. - On a stand alone basis, the Company would fund its own PCS development department and bid on those properties that would improve its wireless footprint as either a stand-alone entity or as a partner in a larger alliance. - - WIRELESS DATA - CCI has paid for approximately 40% of the cost of the GTE Wireless Data Development Department since that department s inception. - On a stand alone basis, the Company would form its own wireless data development department and develop services to meet the needs of its current and future business and individual customers. -21- 25 CONTEL CELLULAR INC. OVERVIEW OF MANAGEMENT'S CLUSTERING STRATEGY(1) - - CCI has long had a strategy of acquiring adjacent markets to form "SuperSystems" to improve operating efficiencies, provide competitive advantages in pricing, coverage and marketing programs, and enhance networking capabilities. CCI currently operates various "SuperSystems" including Virginia, California, Tennessee, El Paso, Louisville, Midwest and Mobile. - - The Company continues to acquire markets which enhance its contiguous service capabilities and to dispose of markets that do not fit into contiguous market clusters. - - Prior to 1994 the Company was organized along the lines of two Regions, with six Area locations. The South Region was located in Nashville and was responsible for the Tennessee Area, Kentucky Area and Alabama Area. The National Region was headquartered in Atlanta and was responsible for the Virginia Area, the California Area and the National Area (which included all other markets). - - In 1993 the Company completed an organization re-engineering analysis with the recommendation that the Company be organized along the lines of eight Areas, with separate Area Vice Presidents and staffs. The primary objectives of the new organizational structure were to move operational and support resources closer to the customers, position the organization for future growth and enhance the focus of respective area management teams on their roles, responsibilities and accountability to the customers within the markets they served. __________________________________ (1) Source: Management. -22- 26 CONTEL CELLULAR INC. OVERVIEW OF MANAGEMENT'S CLUSTERING STRATEGY(1) (CONT'D) (Total Controlled POPs)
1989 1990 1991 1992 ------------------- ------------------- ------------------- ------------------- NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT AREA (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL - ---- -------- -------- -------- -------- -------- -------- -------- -------- Alabama 0 0.0% 1,400 8.3% 1,362 7.7% 1,373 8.0% Kentucky 87 0.9% 1,632 9.7% 1,655 9.4% 1,669 9.7% Tennessee 0 0.0% 3,554 21.1% 4,494 25.5% 4,576 26.5% Gulf Coast 740 7.7% 856 5.1% 828 4.7% 846 4.9% Southwest 845 8.8% 936 5.6% 874 5.0% 892 5.2% Virginia 2,577 26.7% 2,765 16.4% 2,764 15.7% 2,837 16.4% California 1,814 18.8% 2,091 12.4% 2,171 12.3% 2,246 13.0% Midwest 2,110 21.9% 2,096 12.4% 1,960 11.1% 1,774 10.3% Arkansas 473 4.9% 505 3.0% 493 2.8% 0 0.0% Northeast 990 10.3% 1,007 6.0% 1,052 6.0% 1,053 6.1% ----- ----- ------ ----- ------ ----- ------ ----- Subtotal -- Southeast Cluster 3,790 39.3% 9,080 53.9% 9,940 56.3% 9,630 55.8% Total ----- ----- ------ ----- ------ ----- ------ ----- 9,636 100.0% 16,842 100.0% 17,652 100.0% 17,265 100.0% ===== ===== ====== ===== ====== ===== ====== ===== 1993 PF 1994 ------------------ ------------------- NET POP PERCENT NET POPS PERCENT AREA (000s) OF TOTAL (000s) OF TOTAL - ---- ------- -------- -------- -------- Alabama 1,349 7.7% 1,860 11.1% Kentucky 1,701 9.7% 1,445 8.7% Tennessee 4,844 27.7% 5,030 30.1% Gulf Coast 868 5.0% 868 5.2% Southwest 912 5.2% 912 5.5% Virginia 2,850 16.3% 2,850 17.1% California 2,155 12.3% 1,866 11.2% Midwest 1,688 9.6% 1,688 10.1% Arkansas 0 0.0% 0 0.0% Northeast 1,136 6.5% 168(2) 1.0% ------ ----- ------ ----- Subtotal --Southeast Cluster 9,911 56.6% 10,608 63.6% Total ------ ----- ------ ----- 17,503 100.0% 16,687 100.0% ====== ===== ====== =====
- --------------- (1) Source: Management. (2) Pro forma for the sale of the Binghamton, Elmira, Burlington and Manchester MSAs. -23- 27 CONTEL CELLULAR INC. OVERVIEW OF MANAGEMENT'S CLUSTERING STRATEGY(1) (CONT'D) (Total Controlled POPs)
1989 1990 1991 1992 ------------------- ------------------- ------------------- ------------------- NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT NET POPS PERCENT AREA (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL (000s) OF TOTAL - ---- -------- -------- -------- -------- -------- -------- -------- -------- Alabama 0 0.0% 1,346 10.2% 1,307 9.9% 1,329 10.1% Kentucky 0 0.0% 1,262 9.6% 1,249 9.5% 1,260 9.6% Tennessee 0 0.0% 3,508 26.6% 3,497 26.5% 3,569 27.2% Gulf Coast 740 10.8% 856 6.5% 828 6.3% 846 6.4% Southwest 727 10.6% 739 5.6% 739 5.6% 766 5.8% Virginia 2,233 32.6% 2,276 17.2% 2,278 17.3% 2,345 17.8% California 1,325 19.4% 1,365 10.3% 1,427 10.8% 1,479 11.3% Midwest 974 14.2% 961 7.3% 975 7.4% 983 7.5% Arkansas 297 4.3% 327 2.5% 322 2.4% 0 0.0% Northeast 548 8.0% 563 4.3% 562 4.3% 562 4.3% Subtotal -- Southeast Cluster 3,270 47.8% 8,313 63.0% 8,232 62.4% 8,089 61.6% ----- ----- ------ ----- ------ ----- ------ ----- Total 6,844 100.0% 13,202 100.0% 13,183 100.0% 13,138 100.0% ===== ===== ====== ===== ====== ===== ====== ===== 1993 PF 1994 ------------------- ------------------- NET POPS PERCENT NET POPS PERCENT AREA (000s) OF TOTAL (000s) OF TOTAL - ---- -------- -------- -------- -------- Alabama 1,349 10.2% 1,734 13.3% Kentucky 1,282 9.7% 1,282 9.8% Tennessee 3,603 27.3% 3,603 27.6% Gulf Coast 868 6.6% 868 6.7% Southwest 786 5.9% 786 6.0% Virginia 2,346 17.7% 2,346 18.0% California 1,530 11.6% 1,530 11.7% Midwest 895 6.8% 895 6.9% Arkansas 0 0.0% 0 0.0% Northeast 563 4.3% 0(2) 0.0% ------ ------ ------ ----- Subtotal -- Southeast Cluster 8,166 61.8% 8,551 65.6% ------ ----- ------ ----- Total 13,221 100.0% 13,043 100.0% ====== ===== ====== =====
- --------------- (1) Source: Management. (2) Pro forma for the sale of the Binghamton, Elmira, Burlington and Manchester MSAs. -24- 28 CONTEL CELLULAR INC. DEMOGRAPHIC OVERVIEW OF TENNESSEE, VIRGINIA AND ALABAMA(1) - - 66% of CCI's Controlled MSA POPs are in the Southeast, including Tennessee (28%), Virginia (18%) and Alabama (13%)(2). Given material reliance of CCI's performance on the future prospects of these three states, a demographic overview is helpful.
STATISTIC U.S. TENNESSEE VIRGINIA ALABAMA - ---------------------------------------- ------- --------- -------- ------- Expected CAGR of Population Growth: 1.1% 1.2% 1.1% 0.7% 1990-1995 Median Household Income $31,241 $34,882 $45,090 $34,930 % of Population Between 25 and 44 32.5% 31.8% 34.5% 30.5% CAGR of Civilian Labor Force: 1990-1993 0.9% 0.9% 1.9% 1.6% CAGR of Wholesale and Retail Trade: 3.17% 3.28% 3.10% 2.83% 1990-1995 1993 Unemployment Rate 6.8% 7.3% 6.5% 8.1%
- - The above statistics support the fact that the majority of CCI's POPs are in geographic locations that are ideal for the cellular business in that, relative to the country as a whole (which will rely mostly on increases in penetration), there is still tremendous growth to be expected in number of total POPs as well as subscribers. - -------------------- (1) Source: American Business Climate and Economic Profiles (1994). (2) Source: Management. -25- 29 CONTEL CELLULAR INC. MANAGEMENT'S RECORD IN MEETING BUDGET(1) MANAGEMENT HAS LARGELY ACHIEVED OR SURPASSED PREDICTED RESULTS. - - As shown below, Management has a clear understanding of CCI's business and is able to skillfully and conservatively project the Company's operating performance into the future. Unfavorable variances only occur as a result of the trade-off between penetration growth and operating cash flow margins typical of a cellular company in an earlier stage of its growth cycle relative to many of its MSA peers.
NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPT 30, --------------------------------------------------- ------------------------ 1992 1993 1994 ----------------------- ------------------------ ------------------------ STATISTIC BUD. ACT. VAR.(2) BUD. ACT. VAR.(2) Bud. Act. Var.(2) - ------------------------------ ----- ----- ------- ----- ----- ------- ----- ----- ------- - - Annualized Subscriber Growth 39% 43% 10% 32% 59% 84% 44% 44% -1%(3) - - Average Monthly Churn Rate 2.25% 2.28% -1% 2.17% 2.02% 7% 2.03% 2.17% -7% - - Ending Penetration 1.74% 2.07% 19% 2.55% 3.18% 25% 3.74% 4.17% 11% - - Service Rev. Per. Avg. Sub. (Excl. Equip. & Promos.) $92 $79 -14% $79 $72 -9% $78 $74 -5% - - MOU Per Avg. Subscriber 165 138 -16% 130 141 9% 124 142 14% - - Operating Cash Flow Margin 37.0% 17.4% -53% 33.1% 25.2% -24% 34.0% 33.8% -1% - - Cost Per Gross Add. (Excl. Promos.) $381 $431 -13% $394 $363 8% $319 $345 -8% - - Equity from L.P.'s ($MM) $19.8 $29.0 47% $32.3 $37.4 16% $32.2 $48.5 51%
- -------------------- (1) Source of financial information: Management. (2) Favorable variances from budget are positive while unfavorable variances from budget are negative. For example, both a growth in subscribers and a reduction in churn relative to budget will yield positive variances. (3) Actual is 1% unfavorable relative to budget when additional decimal places are shown. -26- 30 CONTEL CELLULAR INC. RELATIONSHIPS WITH GTE MOBILNET - - COMPETITION AGREEMENT - Management maintains that CCI has a right of first refusal with respect to future GTE acquisitions in the "Cellular Business" except for (i) acquisitions of minority interests in cellular properties held by GTE Mobilnet, and (ii) acquisitions contemplated at the time of the merger which were specifically listed in the Competition Agreement. This Agreement is not limited by geography. - Management believes, for a variety of reasons, that the term "Cellular Business" includes PCS. - - SERVICES AGREEMENT - In exchange for services including, or that have included, accounting, finance, marketing, human resources, international business development, engineering, network design and maintenance services, CCI has reimbursed GTE for its expenses in accordance with a cost allocation formula which allocates pools of costs to operating units based on various factors. - Under the Service Agreement, CCI's consolidated and unconsolidated business units paid GTE approximately $45 million in fiscal year 1993, representing approximately 41% of GTE's total expenses during that period. -27- 31 CONTEL CELLULAR INC. RELATIONSHIPS WITH GTE MOBILNET (CONT'D) - - INTER-COMPANY BORROWING - The long-term borrowings by CCI from GTE are set forth in the table in Appendix I.A. The weighted average annual interest rate (based on note principal amount) of the notes equals 9.31%. - As disclosed in CCI's proxy statement for the annual meeting of stockholders held on June 1, 1994, CCI has borrowed approximately $1.55 billion (as set forth above) from GTE in long-term debt as of April 15, 1994. - The fair market value of CCI shares is dependent upon these interest rates being no worse than that which could be obtained from third party sources. - - SHARED OPERATIONS - As mentioned above, CCI (which pays approximately 40% of costs) and GTE Mobilnet share certain services for efficiency purposes as governed by the Services Agreement. Among other functions, these include a common International Department and PCS Development Department. - Management believes that a potential GTE acquisition of CCI would allow GTE greater operating flexibility by allowing strategy in these areas to be focused solely on potential benefits to GTE Mobilnet and by removing CCI's right of first refusal for acquisitions in these businesses. -28- 32 CONTEL CELLULAR INC. SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (amounts in millions, except per POP data)
AIRTOUCH BCE MOBILE CENTENNIAL COMPANY COMMUNICATIONS COMMUNICATIONS(b1) CELLULAR - ------- -------------- ------------------ ---------- Price @ 12/21/94 $ 28.38 $ 31.19 $ 15.50 Date of Financials 9/30/94 12/31/93 8/31/94 Date of Last Fiscal Year 12/31/93 12/31/93 5/31/94 MV of Equity (Fully Diluted) $ 14,007.2 $ 2,161.1 $ 386.4 Market Capitalization 13,598.0 2,429.9 743.4 Cellular Asset Value 6,517.8 2,296.7 740.6 Cellular License Value(1) 5,688.6 1,821.8 704.7 Market Capitalization per Total Net POP $ 142 (a1) $ 155 $ 124 Cellular Asset Value per Total Net POP 186 146 124 Cellular License Value per Total Net POP (1) 163 116 118 Cellular Asset Value/Cellular Cons. EBITDA (LQA) 13.0 (a2) 18.4 25.3 Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 12.6 (a2) 15.7 23.6 Cellular Cons. EBITDA Margin (LQ) 43.0%(a2) 41.8% 44.9% Market Capitalization/Company Cons. EBITDA (LQA) 50.0 18.0 24.5 Net Debt/Company Cons. EBITDA (LQA) (1.5) 2.0 11.7 Total # of Net POPs 35.0 15.7 6.0 Total Net MSA POPs 34.4 NA 2.5 Total Net RSA POPs 0.6 NA 3.5 COMMNET CONTEL COMPANY CELLULAR CELLULAR(e1) - ------- -------- ------------ Price @ 12/21/94 $ 28.13 $ 24.50 Date of Financials 6/30/94 9/30/94 Date of Last Fiscal Year 9/30/93 12/31/93 MV of Equity (Fully Diluted) $ 415.2 $ 2,779.1 Market Capitalization 556.5 4,845.6 Cellular Asset Value 534.0 4,515.6 Cellular License Value(1) 467.2 3,975.8 Market Capitalization per Total Net POP $ 176 $ 203 Cellular Asset Value per Total Net POP 169 189 Cellular License Value per Total Net POP(1) 148 167 Cellular Asset Value/Cellular Cons. EBITDA (LQA) 44.2 20.9 Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 53.9 NA Cellular Cons. EBITDA Margin (LQ) 19.7% 36.2% Market Capitalization/Company Cons. EBITDA (LQA) 46.1 22.4 Net Debt/Company Cons. EBITDA (LQA) 11.7 9.6 Total # of Net POPs 3.2 23.9 (e2) Total Net MSA POPs 0.6 18.9 Total Net RSA POPs 2.5 5.0 PRICELLULAR ROGERS UNITED STATES COMPANY CORPORATION(f1) CANTEL(g1) CELLULAR - ------- --------------- ---------- ------------- Price @ 12/21/94 $ 9.38 $ 28.75 $ 33.13 Date of Financials 6/30/94 12/31/93 9/30/94 Date of Last Fiscal Year 12/31/93 12/31/93 12/31/93 MV of Equity (Fully Diluted) $ 149.8 $ 2,699.5 $ 2,602.2 Market Capitalization 200.0 3,446.9 2,921.2 Cellular Asset Value 200.0 3,354.0 2,900.4 Cellular License Value(1) 186.5 2,652.2 2,585.7 Market Capitalization per Total Net POP $ 117 146 $ 124 Cellular Asset Value per Total Net POP 117 142 123 Cellular License Value per Total Net POP(1) 109 112 109 Cellular Asset Value/Cellular Cons. EBITDA (LQA) 40.6 (f2) 19.3 26.0 Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) NA 16.0 36.1 Cellular Cons. EBITDA Margin (LQ) 27.3%(f2) 38.9% 31.0% Market Capitalization/Company Cons. EBITDA (LQA) 40.6 (f2) 19.8 26.2 Net Debt/Company Cons. EBITDA (LQA) 10.2 (f2) 4.3 2.9 Total # of Net POPs 1.7 23.7 23.6 Total Net MSA POPs 0.8 NA 9.0 Total Net RSA POPs 0.9 NA 14.6 VANGUARD COMPANY CELLULAR AVERAGE - ------- --------- ------------- Price @ 12/21/94 $ 25.13 Date of Financials 9/30/94 Date of Last Fiscal Year 12/31/93 MV of Equity (Fully Diluted) $ 979.3 Market Capitalization 1,279.0 Cellular Asset Value 1,256.5 Cellular License Value(1) 1,160.9 Market Capitalization per Total Net POP $ 198 $ 155(2) Cellular Asset Value per Total Net POP 194 154 Cellular License Value per Total Net POP(1) 180 136 Cellular Asset Value/Cellular Cons. EBITDA (LQA) 25.4 Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 29.9 Cellular Cons. EBITDA Margin (LQ) 27.7% Market Capitalization/Company Cons. EBITDA (LQA) 25.8 Net Debt/Company Cons. EBITDA (LQA) 6.1 Total # of Net POPs 6.5 Total Net MSA POPs 5.8 Total Net RSA POPs 0.7
- ------------------ (1) Excludes working capital. (2) Excludes AirTouch because of noncomparability of international POPs. (a1) Includes 60.9M international POPs in per POP calculation for total company because international holdings are not backed out of Market Capitalization. (a2) Financial breakdown for domestic cellular operations available only on a proportionate basis. -29- 33 CONTEL CELLULAR INC. CCI and GTE vs. S&P 400 (Indexed Daily Close Price Comparison: 8/1/94 to 12/21/94) [FIGURE 3] -30- 34 CONTEL CELLULAR INC. CONTEL CELLULAR VS. S&P 400 (Indexed Weekly Close Price Comparison: 4/22/88 to 12/21/94) [FIGURE 4] -31- 35 CONTEL CELLULAR INC. CONTEL CELLULAR VS. CELLULAR INDEX(1) (Indexed Daily Close Price Comparison: 12/21/93 to 12/21/94) [FIGURE 5] - -------------------- (1) Cellular Index includes BCE Mobile, Centennial, Commnet, Rogers Cantel, U.S. Cellular and Vanguard. -32- 36 CONTEL CELLULAR INC. CONTEL CELLULAR VS. CELLULAR INDEX(1) (Indexed Daily Close Price Comparison: 5/31/94 to 12/21/94) [FIGURE 6] - -------------------- (1) Cellular Index includes AirTouch, BCE Mobile, Centennial, Commnet, Rogers Cantel, U.S. Cellular and Vanguard. -33- 37 CONTEL CELLULAR INC. CONTEL CELLULAR VS. CELLULAR INDEX(1) (Indexed Daily Close Price Comparison: 9/7/94 to 12/21/94) [FIGURE 7] - -------------------- (1) Cellular Index includes AirTouch, BCE Mobile, Centennial, Commnet, Rogers Cantel, U.S. Cellular and Vanguard. -34- 38 CONTEL CELLULAR INC. CONTEL CELLULAR AND GTE VS. CELLULAR INDEX(1) (Indexed Daily Close Price Comparison: 1/1/94 to 12/21/94) [FIGURE 8] - -------------------- (1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers Cantel, U.S. Cellular and Vanguard. -35- 39 CONTEL CELLULAR INC. AIRTOUCH COMMUNICATIONS AND BCE MOBILE COMMUNICATIONS VS. CELLULAR INDEX(1) (Indexed Daily Close Price Comparison: 1/1/94 to 12/21/94) [FIGURE 9] - -------------------- (1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers Cantel, U.S. Cellular and Vanguard. -36- 40 CONTEL CELLULAR INC. COMMNET CELLULAR AND CENTENNIAL CELLULAR VS. CELLULAR INDEX(1) (Indexed Daily Close Price Comparison: 1/1/94 to 12/21/94) [FIGURE 10] - -------------------- (1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers Cantel, U.S. Cellular and Vanguard. -37- 41 CONTEL CELLULAR INC. ROGERS CANTEL, U.S. CELLULAR AND VANGUARD CELLULAR VS. CELLULAR INDEX(1) (Index Daily Close Price Comparison: 1/1/94 to 12/21/94) [FIGURE 11] - -------------------- (1) Cellular Index includes AirTouch, BCE Mobile, Commnet, Centennial, Rogers Cantel, U.S. Cellular and Vanguard. -38- 42 CONTEL CELLULAR INC. HYPOTHETICAL PRE-TAX PRIVATE MARKET VALUATION
PMV PER NET POP --------------- ESTIMATED PM VALUATION CCI ($000S,EXCEPT, (MM) $ POP $ POP PER SHARE) ----- ----- ----- ----------------- CELLULAR OPERATIONS 1994 Net MSA POPs (Controlled) (1) 12.9 $211 $211 $2,725 $2,725 1994 Net MSA POPs (Non-Controlled)(1)(2) 5.9 $280 $341 1,664 2,028 1994 Net RSA POPs (Controlled/Clustered)(3) 3.3 $130 $130 431 431 1994 Net RSA POPs (Controlled/Non-Clustered)(4) 0.5 $105 $105 52 52 1994 Net RSA POPs (Non-Controlled)(5) 1.2 $77 $77 93 93 ------ ------ TOTAL CELLULAR ASSET VALUE $4,965 $5,329 ------ ------ International Assets 30 30 Wireless Data 300 300 ------ ------ TOTAL ASSET VALUE $5,295 $5,659 Less Net Debt (2,060) (2,060) ------ ------ TOTAL EQUITY VALUE 3,235 3,599 ------ ------ Fully Diluted Shares (MM) 100 100 ------ ------ EQUITY VALUE PER SHARE $32.36 $36.00 ====== ====== PCS Rights (Competition Agreement) ? ?
- -------------------------------------- (1) Per POP valuation range based on adjusted regression of comparable private market transactions. (2) Top 100 non-controlled MSAs include no discount for lack of control. (3) Controlled/Clustered market RSA POPs assumed to be worth $130 each. (4) Controlled/Non-Clustered RSA POPs assumed to be worth $105 each. (5) Non-Controlled RSA POPs assumed to be worth $77 each. -39- 43 CONTEL CELLULAR INC. REGRESSION/DEMOGRAPHIC ANALYSIS OF CCI PRIVATE MARKET VALUE - - The comparison of CCI demographics in Appendix I.C. illustrates the attractiveness of the CCI cellular markets vis-a-vis a "U.S." composite of all MSA cellular markets. - Lazard has categorized CCI's market based on its view of how each market rates according to these four binary criteria: CRITERION BINARY TOGGLE (1/0) --------------------------------- ---------------------------------- Expected Population Growth Greater or less than U.S. average Median Household Income Greater or less than U.S. average Average Number of Minutes to Work Greater or less than U.S. average of 30+ minutes as percent of total commuters Contiguous to Other (CCI MSAs Contiguous or not(1) or RSAs) - For each of CCI's MSA markets, Lazard arrived at a total "valuation adjustment score" for each market by applying a 5% premium for each criterion for which each market achieved a "1" and applying a 5% discount for each criterion for which said market achieved a "0". - After performing a regression analysis (for which MSA rank was the endogenous variable and private market value of MSA was the exogenous variable) on all statistically relevant MSA transactions since July 1993, Lazard assigned each CCI MSA market a base value and, after taking into account CCI's ownership percentage, adjusted that value for the particular market valuation adjustment percentage. - Each market was adjusted by its respective adjustment percentage and then totaled. To this total was added the value of all CCI RSAs (assuming $130 per Controlled/Clustered RSA POP, $105 per Controlled/Non-Clustered RSA POP and $77 per Non-Controlled RSA POP) and the value of all other assets, including CCI's international holdings and its expected wireless data business. No value has been attributed to PCS. - Lazard arrived at the market value of equity by subtracting net debt from this total and then calculated the accompanying equity value per share. - ------------------------------- (1) Always "1" for Non-controlled MSAs due to ownership value to majority holder. -40- 44 CONTEL CELLULAR INC. SUMMARY OF VALUATION BY METROPOLITAN STATISTICAL AREA(1) (millions, except per POP)
UNADJ. REG. ADJ. REG. TOT. POPS NET POPS PER POP PER POP MARKET MSAs NUM. RANK (000s) % OWNED (000s) VALUE ADJ. % VALUE MINORITY? - ---------------- ---- ---- --------- ------- -------- ----------- ------ --------- --------- Controlled Memphis, TN 1 36 1,030 100.0% 1,030 $243 -10.0% $219 N Louisville, KY 2 37 931 100.0% 931 $242 -10.0% $218 N Birmingham, AL 3 41 904 100.0% 904 $240 0.0% $240 N Norfolk, VA 4 43 1,021 95.0% 970 $239 20.0% $286 N Nashville, TN 5 46 1,052 100.0% 1,052 $237 10.0% $261 N Richmond, VA 6 59 798 95.0% 758 $229 10.0% $252 N Fresno, CA 7 74 735 92.0% 677 $220 0.0% $220 N Knoxville, TN 8 79 544 94.1% 512 $217 0.0% $217 N El Paso, TX 9 81 653 100.0% 653 $215 -10.0% $194 N Mobile, AL 10 83 511 100.0% 511 $214 -10.0% $193 N Johnson City, TN 11 85 457 100.0% 457 $213 -10.0% $192 N Chattanooga, TN 12 88 451 100.0% 451 $211 -10.0% $190 N Bakersfield, CA 13 97 618 92.0% 569 $206 0.0% $206 N Davenport, IA 14 98 362 100.0% 362 $205 -10.0% $185 N Newport News, VA 15 104 475 95.0% 451 $201 10.0% $221 N Lexington, KY 16 116 368 100.0% 368 $194 -10.0% $175 N Evansville, IN 17 119 318 88.9% 283 $192 -10.0% $173 N Pensacola, FL 18 127 375 100.0% 375 $187 0.0% $187 N Rockford, IL 19 131 301 59.0% 178 $185 10.0% $203 N Visalia, CA 20 150 348 92.0% 320 $173 0.0% $173 N Roanoke, VA 21 157 240 40.0% 96 $169 -10.0% $152 N Clarksville, TN 22 209 172 100.0% 172 $137 -10.0% $123 N Tuscaloosa, AL 23 222 161 80.4% 130 $129 0.0% $129 N Florence, AL 24 226 138 91.1% 126 $127 -10.0% $114 N Petersburg, VA 25 235 131 95.0% 124 $121 -10.0% $109 N Anniston, AL 26 249 116 100.0% 116 $113 -10.0% $101 N Gladsen, AL 27 272 101 90.0% 91 $99 -10.0% $89 N Las Cruces, NM 28 285 154 100.0% 154 $91 0.0% $91 N Owensboro, KY 29 293 90 88.9% 80 $86 -10.0% $77 N Total (Controlled) 13,556 12,899 ADJUSTMENT FOR OVERALL CLUSTERING STRATEGY OF 0.0% MIN. ADJ. REG. PMV OF PER POP MARKET MARKET MSAs % DISCOUNT VALUE ($MM) - ----------- ---------- -------------- ------ Controlled Memphis, TN 0.0% $219 $225 Louisville, KY 0.0% $218 $203 Birmingham, AL 0.0% $240 $217 Norfolk, VA 0.0% $286 $278 Nashville, TN 0.0% $261 $274 Richmond, VA 0.0% $252 $191 Fresno, CA 0.0% $220 $149 Knoxville, TN 0.0% $217 $111 El Paso, TX 0.0% $194 $127 Mobile, AL 0.0% $193 $98 Johnson City, TN 0.0% $192 $88 Chattanooga, TN 0.0% $190 $86 Bakersfield, CA 0.0% $206 $117 Davenport, IA 0.0% $185 $67 Newport News, VA 0.0% $221 $100 Lexington, KY 0.0% $175 $64 Evansville, IN 0.0% $173 $49 Pensacola, FL 0.0% $187 $70 Rockford, IL 0.0% $203 $36 Visalia, CA 0.0% $173 $55 Roanoke, VA 0.0% $152 $15 Clarksville, TN 0.0% $123 $21 Tuscaloosa, AL 0.0% $129 $17 Florence, AL 0.0% $114 $14 Petersburg, VA 0.0% $109 $14 Anniston, AL 0.0% $101 $12 Gladsen, AL 0.0% $89 $8 Las Cruces, NM 0.0% $91 $14 Owensboro, KY 0.0% $77 $6 Total (Controlled) $211 $2,725 ==== ====== ADJUSTMENT FOR OVERALL CLUSTERING STRATEGY OF 0.0% $211 $2,725 ==== ======
- --------------- (1) Source: 1993 Donnelly Marketing Information Services. -41- 45 CONTEL CELLULAR INC. SUMMARY OF VALUATION BY METROPOLITAN STATISICAL AREA(1) -- (CONT'D) (MILLIONS, EXCEPT PER POP)
UNADJ. REG. ADJ. REG. TOT. POPS NET POPS PER POP PER POP NON-CONTROLLED NUM. RANK (000s) % OWNED (000s) VALUE ADJ. % VALUE - -------------- ---- ---- --------- ------- -------- ----------- ------- --------- Los Angeles, CA 1 2 14,719 11.2% 1,648 $264 20.0% $316 San Francisco, CA 2 7 3,832 11.3% 431 $261 10.0% $287 Washington, DC 3 8 3,804 35.3% 1,342 $260 10.0% $286 Houston, TX 4 10 3,900 4.4% 172 $259 20.0% $311 Minneapolis, MN 5 15 2,569 30.0% 771 $256 10.0% $281 San Jose, CA 6 27 1,542 11.3% 173 $248 10.0% $273 San Antonio, TX 7 33 1,383 30.0% 415 $245 0.0% $245 Sacramento, CA 8 35 1,480 1.0% 15 $244 10.0% $268 Jacksonville, FL 9 51 1,004 14.2% 143 $234 10.0% $257 Greenville, SC 10 67 667 10.8% 72 $224 -10.0% $202 Oxnard, CA 11 73 697 11.2% 78 $220 10.0% $242 Austin, TX 12 75 874 3.0% 26 $219 0.0% $219 Albuquerque, NM 13 86 590 49.0% 289 $212 0.0% $212 Beaumont, TX 14 101 384 4.4% 17 $203 0.0% $203 Stockton, CA 15 107 517 1.0% 5 $200 10.0% $219 Vallejo, CA 16 111 489 11.3% 55 $197 20.0% $236 Santa Rosa, CA 17 123 411 11.3% 46 $190 20.0% $228 Santa Barbara, CA 18 124 378 39.0% 148 $189 0.0% $189 Salinas, CA 19 126 372 11.3% 42 $188 10.0% $207 Modesto, CA 20 142 415 1.0% 4 $178 0.0% $178 Galveston, TX 21 170 237 4.4% 10 $161 10.0% $177 Reno, NV 22 171 280 1.0% 3 $160 10.0% $176 Santa Cruz, CA 23 174 230 11.3% 26 $159 10.0% $174 Chico, CA 24 215 198 1.0% 2 $133 0.0% $133 Anderson, SC 25 227 147 10.8% 16 $126 -10.0% $113 Redding, CA 26 254 167 1.0% 2 $110 0.0% $110 Yuba City, CA 27 274 136 1.0% 1 $97 0.0% $97 Total (Non-Controlled) 41,423 5,952 Total (Non-Controlled)-Cash Flow Valuation MIN. ADJ. REG. PMV OF PER POP MARKET NON-CONTROLLED MINORITY? % DISCOUNT VALUE ($MM) - -------------- --------- ---------- -------------- ------- Los Angeles, CA Y 0.0% $316 $522 San Francisco, CA Y 0.0% $287 $124 Washington, DC Y 0.0% $286 $384 Houston, TX Y 0.0% $311 $53 Minneapolis, MN Y 0.0% $281 $217 San Jose, CA Y 0.0% $273 $47 San Antonio, TX Y 0.0% $245 $102 Sacramento, CA Y 0.0% $268 $4 Jacksonville, FL Y 0.0% $257 $37 Greenville, SC Y 0.0% $202 $15 Oxnard, CA Y 0.0% $242 $19 Austin, TX Y 0.0% $219 $6 Albuquerque, NM Y 0.0% $212 $61 Beaumont, TX Y 0.0% $203 $3 Stockton, CA Y 0.0% $219 $1 Vallejo, CA Y 0.0% $236 $13 Santa Rosa, CA Y 0.0% $228 $11 Santa Barbara, CA Y 0.0% $189 $28 Salinas, CA Y 0.0% $207 $9 Modesto, CA Y 0.0% $178 $1 Galveston, TX Y 0.0% $177 $2 Reno, NV Y 0.0% $176 $0 Santa Cruz, CA Y 0.0% $174 $5 Chico, CA Y 0.0% $133 $0 Anderson, SC Y 0.0% $113 $2 Redding, CA Y 0.0% $110 $0 Yuba City, CA Y 0.0% $97 $0 Total (Non-Controlled) $280 $1,664 Total (Non-Controlled)-Cash Flow Valuation $341 $2,028
- --------------- (1) Source: 1993 Donnelly Marketing Information Services. -42- 46 CONTEL CELLULAR INC. CASH FLOW VALUATION OF MINORITY INTEREST MSAs MULTIPLE CALCULATIONS
PROJECTED DOMESTIC CELLULAR SERVICE REVENUE ($MM) --------------------------------- STOCK CELLULAR COMPANY 1994 1995 1996 PRICE ASSET VALUE - ------- ------- ------- ------- ------- ------------ AirTouch(1) $524.6 $673.6 $818.8 $28.38 $6,518 Growth -- 28.4% 21.6% BCE Mobile Comm.(2) $151.7 $202.3 $255.1 $31.19 $2,297 Growth -- 33.4% 26.1% Centennial Cellular(3) $23.1 $28.8 $37.0 $15.50 $741 Growth -- 24.7% 28.5% Rogers Cantel(4) $191.7 $235.6 $291.7 $28.75 $3,354 Growth -- 22.9% 23.8% U.S. Cellular(5) $80.0 $150.8 $237.0 $33.13 $2,900 Growth -- 88.5% 57.2% Vanguard Cellular(6) $41.5 $70.6 $101.7 $25.13 $1,256 Growth -- 70.1% 44.1% Mean of Comparables $168.8 $227.0 $290.2 Growth -- 34.5% 27.9% CCI Projected OCF of Significant Minority Interests(7) Growth -- 34.5% 27.9% Cellular Asset Value of Significant Minority Interests Net POPs Cellular Asset Value per net POP
MARKET CAP/PROJECTED OCF --------------------------------- COMPANY 1994 1995 1996 - ------- ------ ------ ------ AirTouch(1) 12.4x 9.7x 8.0x Growth BCE Mobile Comm.(2) 15.1x 11.4x 9.0x Growth Centennial Cellular(3) 32.1x 25.7x 20.0x Growth Rogers Cantel(4) 17.5x 14.2x 11.5x Growth U.S. Cellular(5) 36.3x 19.2x 12.2x Growth Vanguard Cellular(6) 30.3x 17.8x 12.4x ------ ------ ------ Growth Mean of Comparables 23.9x 16.3x 12.2x Growth CCI Projected OCF of Significant Minority Interests(7) $84.7 $113.9 $145.7 ------ ------ ------ Growth -- 34.5% 27.9% Cellular Asset Value of Significant Minority Interests $2,028 $1,861 $1,774 Net POPs 5,549 5,549 5,549 Cellular Asset Value per net POP $365 $335 $320
- --------------- (1) Source: Prudential Securities research report, dated May 16, 1994. (2) Source: Salomon Brothers research report, dated August 31, 1994. Assumes C$ - $0.74 $US. There were immaterial differences in stock price quote between Bloomberg and FactSet due to extremely slight (.0005) difference in $US/C$ exchange rate. (3) Source: Merrill Lynch Capital Markets research report, dated December 17, 1993. (4) Source: Salomon Brothers research report, dated May 19, 1994. Assumes C$ - $0.74 $US. (5) Source: Salomon Brothers research report, dated August 31, 1994. (6) Source: Salomon Brothers research report, dated August 31, 1994. (7) For CCI, annualized 9 mos. ended 9/94 OCF is used. That number is grown using the mean projected growth rates of the comparable companies. -43- 47 CONTEL CELLULAR, INC. CASH FLOW VALUATION OF MINORITY INTEREST MSAs (CONT'D)
DECEMBER 1992 PROJ. POP ------------------------ MSA RANK POPs GROW: 94-99 CCI% NET POPs OCF - 1992 CCI SHARE --- ---- ---- ----------- ---- -------- ---------- --------- Los Angeles, CA 2 14,719 7.1% 11.20% 1,648 $153.2 $17.2 Oxnard, CA 73 697 4.8% 11.20% 78 San Francisco, CA 7 3,832 4.3% 11.25% 431 66.0 7.4 San Jose, CA 27 1,542 3.4% 11.25% Vallejo, CA 111 489 10.6% 11.25% Santa Rosa, CA 123 411 6.7% 11.25% Salinas, CA 126 372 5.7% 11.25% Santa Cruz, CA 174 230 0.7% 11.25% Washington, DC 8 3,804 4.3% 35.27% 1,342 25.3 8.9 Houston, TX 10 3,900 11.6% 4.40% 172 0.0 0.0 Beaumont, TX 101 384 6.1% 4.40% Galveston, TX 170 237 8.7% 4.40% Minneapolis, MN 15 2,569 5.4% 30.00% 771 17.9 5.4 San Antonio, TX 33 1,383 7.0% 30.00% 415 9.6 2.9 Sacramento, CA 35 1,480 10.5% 0.98% 15 10.7 0.1 Stockton, CA 107 517 8.5% 0.98% Modesto, CA 142 415 12.7% 0.98% Reno, NV 171 280 9.5% 0.98% Chico, CA 215 198 9.1% 0.98% Redding, CA 254 167 14.2% 0.98% Yuba City, CA 274 136 11.8% 0.98% Jacksonville, FL 51 1,004 9.1% 14.24% 143 0.0 0.0 Greenville, SC 67 667 4.7% 10.83% 72 2.7 0.3 Anderson, SC 227 147 1.8% 10.83% Austin, TX 75 874 12.6% 3.00% 26 0.0 0.0 Albuquerque, NM 86 590 7.0% 49.00% 289 27.6 13.5 Santa Barbara, CA 124 378 3.0% 39.00% 148 2.9 1.1 ------ --- ----- ------ ----- 41,423 5,549 $315.9 $56.8 DECEMBER 1993 SEPTEMBER 1994 ------------------------ ------------------------------------- MSA OCF - 1993 CCI SHARE OCF - 9/94 OCF ANN. CCI SHARE --- ---------- --------- ---------- -------- --------- Los Angeles, CA $199.2 $22.3 $209.2 $278.9 $31.2 Oxnard, CA San Francisco, CA 63.7 7.2 60.8 81.1 9.1 San Jose, CA Vallejo, CA Santa Rosa, CA Salinas, CA Santa Cruz, CA Washington, DC 37.7 13.3 46.1 61.5 21.7 Houston, TX 79.4 3.5 31.2 41.6 1.8 Beaumont, TX Galveston, TX Minneapolis, MN 2.1 0.6 14.6 19.5 5.8 San Antonio, TX 15.0 4.5 17.3 23.0 6.9 Sacramento, CA 18.4 0.2 6.0 8.0 0.1 Stockton, CA Modesto, CA Reno, NV Chico, CA Redding, CA Yuba City, CA Jacksonville, FL 10.1 1.4 9.8 13.1 1.9 Greenville, SC 1.2 0.1 3.7 5.0 0.5 Anderson, SC Austin, TX 10.9 0.3 13.6 18.1 0.5 Albuquerque, NM 5.3 2.6 7.7 10.3 5.0 Santa Barbara, CA 3.2 1.3 0.0 0.0 0.0 ------ ----- ------ ------ ----- $446.2 $57.3 $420.0 $560.0 $84.7
-44- 48 CONTEL CELLULAR INC. KEY ASSUMPTIONS OF DISCOUNTED CASH FLOW ANALYSIS - VARIOUS CASES
CCI ALTERNATIVE ALTERNATIVE MANAGEMENT UPSIDE DOWNSIDE CASE CASE CASE --------------- ------------- ----------- Subscriber Penetration 1995 - 2004 11.3% - 35.1% +1.0%(1) -1.0%(1) CAGR to 2004 13.4% 14.4% 12.4% Monthly Cellular Rev./Avg. Subscriber 1995 - 2004 $64 - $49 $65 - $50 $63 - $48 1996 - 2004 Annual Growth -8.2% - +0.4% +0.1%(1) -0.1%(1) CAGR to 2004 -3.0% -2.9% -3.1% Operating Cash Flow Margin 1995 - 2004 38.3% - 53.4% +0.5%(1) -0.5%(1) CAGR to 2004 3.8% 3.7% 3.8% Terminal Value OCF Multiple 12.5x - 13.5x 12.5x - 13.5x 12.5x - 13.5x Discount Rates 11% - 13% 11% - 13% 11% - 13%
- -------------------- (1) Annual adjustment. -45- 49 CONTEL CELLULAR INC. SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- CCI MANAGEMENT CASE
1993 1994 1995 1996 1997 1998 1999 ------- ------- ----- ---- ---- ---- ---- Operating Cash Flow Total $251 $358 $453 $526 $644 Operating Cash Flow (Wireless Data) 1 (5) (18) (31) (42) - -- --- --- --- Operating Cash Flow (Cellular w/o PCS) $252 $353 $435 $495 $602 FCF Adj. for Int. (Total) $(58) $118 $240 $313 $365 Unlevered FCF (Wireless Data) 3 (2) (9) (15) (21) - -- --- --- --- FCF (Cellular w/o PCS) $(55) $116 $231 $298 $344 NPV of FCF (Cellular w/o PCS) $1,364 Terminal Value @ 13.0x OCF(1) NPV of Terminal Value of OCF $2,770 ------ Total NPV -- Cellular (w/o PCS) $4,135 International Assets $30 PCS Development $0 Wireless Data $300 Net Debt $(2,060) ------- Equity Value $2,404 Number of Common Shares 100.0 Total POPs 23.9 Equity Value/Share WACC 12.0% 2001 2002 2003 2004 ---- ---- ---- ---- Operating Cash Flow Total $673 $681 $702 $719 Operating Cash Flow (Wireless Data) (48) (51) (54) (57) --- --- --- --- Operating Cash Flow (Cellular w/o PCS) $625 $630 $648 $662 FCF Adj. for Int. (Total) $371 $412 $424 $467 Unlevered FCF (Wireless Data) (24) (25) (27) (28) --- --- --- --- FCF (Cellular w/o PCS) $347 $386 $397 $439 NPV of FCF (Cellular w/o PCS) Terminal Value @ 13.0x OCF(1) $8,605 NPV of Terminal Value of OCF Total NPV -- Cellular (w/o PCS) International Assets PCS Development Wireless Data Net Debt Equity Value Number of Common Shares Total POPs Equity Value/Share WACC
DISCOUNT RATE ---------------------------- TOTAL NPV OF EQUITY 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $2,509 $2,191 $1,901 12.5x 2,626 2,298 1,998 TVM 13.0x 2,742 2,404 2,096 13.5x 2,859 2,511 2,193 14.0x 2,975 2,617 2,291 DISCOUNT RATE ---------------------------- EQUITY VALUE SHARE 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $25.09 $21.91 $19.01 12.5x 26.26 22.98 19.98 TVM 13.0x 27.42 24.04 20.96 13.5x 28.59 25.11 21.93 14.0x 29.75 26.17 22.91 DISCOUNT RATE ---------------------------- NPV OF CELL. ASSETS 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $4,240 $3,921 $3,631 12.5x 4,356 4,028 3,729 TVM 13.0x 4,473 4,135 3,826 13.5x 4,589 4,241 3,924 14.0x 4,706 4,348 4,021 DISCOUNT RATE ---------------------------- CELL. PMV/NET POP 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $178 $164 $152 12.5x 182 169 156 TVM 13.0x 187 173 160 13.5x 192 178 164 14.0x 197 182 168
- --------------- (1) EOY 2004. -46- 50 CONTEL CELLULAR INC. SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- ALTERNATIVE UPSIDE CASE
1993 1994 1995 1996 1997 1998 1999 ------- ------- ---- ---- ---- ---- ---- Operating Cash Flow Total $260 $373 $476 $558 $689 Operating Cash Flow (Wireless Data) 1 (5) (18) (31) (42) - -- --- --- --- Operating Cash Flow (Cellular w/o PCS) $261 $369 $459 $527 $647 FCF Adj. for Int. (Total) $(56) $145 $257 $335 $393 Unlevered FCF (Wireless Data) 3 (2) (9) (15) (21) - -- --- --- --- FCF (Cellular w/o PCS) $(53) $143 $249 $320 $372 NPV of FCF (Cellular w/o PCS) $1,502 Terminal Value @ 13.0x OCF(1) NPV of Terminal Value of OCF $3,151 ------ Total NPV -- Cellular (w/o PCS) $4,652 International Assets $30 PCS Development $0 Wireless Data $300 Net Debt $(2,060) ------- Equity Value $2,922 Number of Common Shares 100.0 Total POPs 23.9 Equity Value/Share WACC 12.0% 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- Operating Cash Flow Total $719 $735 $751 $783 $810 Operating Cash Flow (Wireless Data) (45) (48) (51) (54) (57) --- --- --- --- --- Operating Cash Flow (Cellular w/o PCS) $674 $687 $701 $729 $753 FCF Adj. for Int. (Total) $397 $399 $444 $465 $514 Unlevered FCF (Wireless Data) (22) (24) (25) (27) (28) --- --- --- --- --- FCF (Cellular w/o PCS) $375 $375 $419 $438 $486 NPV of FCF (Cellular w/o PCS) Terminal Value @ 13.0x OCF(1) $9,786 NPV of Terminal Value of OCF Total NPV -- Cellular (w/o PCS) International Assets PCS Development Wireless Data Net Debt Equity Value Number of Common Shares Total POPs Equity Value/Share WACC
DISCOUNT RATE -------------------------------- TOTAL NPV OF EQUITY 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $3,038 $2,680 $2,353 12.5 3,171 2,801 2,463 TVM 13.0x 3,303 2,922 2,574 13.5x 3,436 3,043 2,685 14.0x 3,568 3,164 2,796 DISCOUNT RATE -------------------------------- EQUITY VALUE SHARE 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $30.38 $26.80 $23.53 12.5x 31.71 28.01 24.63 TVM 13.0x 33.03 29.22 25.74 13.5x 34.36 30.43 26.85 14.0x 35.68 31.64 27.96
DISCOUNT RATE -------------------------------- NPV OF CELL. ASSETS 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $4,769 $4,410 $4,083 12.5x 4,901 4,531 4,194 TVM 13.0x 5,034 4,652 4,305 13.5x 5,166 4,774 4,416 14.0x 5,299 4,895 4,527 DISCOUNT RATE -------------------------------- CELL. PMV/NET POP 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $ 200 $ 185 $ 171 12.5x 205 190 176 TVM 13.0x 211 195 180 13.5x 216 200 185 14.0x 222 205 190
- --------------- (1) EOY 2004. -47- 51 CONTEL CELLULAR INC. SUMMARY DISCOUNTED CASH FLOW ANALYSIS -- CCI MANAGEMENT CASE
1993 1994 1995 1996 1997 1998 1999 ------- ------- ---- ---- ---- ---- ---- Operating Cash Flow Total $243 $345 $433 $498 $604 Operating Cash Flow (Wireless Data) 1 (5) (18) (31) (42) - -- --- --- --- Operating Cash Flow (Cellular w/o PCS) $245 $340 $415 $467 $562 FCF Adj. for Int. (Total) $(60) $94 $225 $294 $340 Unlevered FCF (Wireless Data) 3 (2) (9) (15) (21) - -- --- --- --- FCF (Cellular w/o PCS) $(58) $92 $216 $279 $319 NPV of FCF (Cellular w/o PCS) $1,244 Terminal Value @ 13.0x OCF(1) NPV of Terminal Value of OCF $2,444 ------ Total NPV -- Cellular (w/o PCS) $3,688 International Assets $30 PCS Development $0 Wireless Data $300 Net Debt $(2,060) ------- Equity Value $1,957 Number of Common Shares 100.0 Total POPs 23.9 Equity Value/Share WACC 12.0% 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- Operating Cash Flow Total $618 $619 $620 $632 $641 Operating Cash Flow (Wireless Data) (45) (48) (51) (54) (57) --- --- --- --- --- Operating Cash Flow (Cellular w/o PCS) $573 $571 $569 $579 $584 FCF Adj. for Int. (Total) $339 $347 $383 $388 $426 Unlevered FCF (Wireless Data) (22) (24) (25) (27) (28) --- --- --- --- --- FCF (Cellular w/o PCS) $317 $323 $358 $362 $398 NPV of FCF (Cellular w/o PCS) Terminal Value @ 13.0x OCF(1) $7,590 NPV of Terminal Value of OCF Total NPV -- Cellular (w/o PCS) International Assets PCS Development Wireless Data Net Debt Equity Value Number of Common Shares Total POPs Equity Value/Share WACC
DISCOUNT RATE -------------------------------- TOTAL NPV OF EQUITY 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $2,053 $1,769 $1,510 12.5x 2,156 1,863 1,596 TVM 13.0x 2,258 1,957 1,682 13.5x 2,361 2,051 1,768 14.0x 2,464 2,145 1,854 DISCOUNT RATE -------------------------------- EQUITY VALUE SHARE 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $20.53 $17.69 $15.10 12.5x 21.56 18.63 15.96 TVM 13.0x 22.58 19.57 16.82 13.5x 23.61 20.51 17.68 14.0x 24.64 21.45 18.54
DISCOUNT RATE -------------------------------- NPV OF CELL. ASSETS 11.0% 12.0% 13.0% ------ ------ ------ 12.0x $3,783 $3,500 $3,241 12.5x 3,886 3,594 3,327 TVM 13.0x 3,989 3,688 3,413 13.5x 4,092 3,782 3,499 14.0x 4,194 3,876 3,585 DISCOUNT RATE -------------------------------- CELL. PMV/NET POP 11.0% 12.0% 13.0% ----- ----- ----- 12.0x $158 $147 $136 12.5x 163 151 139 TVM 13.0x 167 154 143 13.5x 171 158 147 14.0x 176 162 150
- --------------- (1) EOY 2004. -48- 52 CONTEL CELLULAR INC. SUMMARY INTERNATIONAL ASSET VALUATION - - MEXICO - Own 10% of Region 2, which has 4.2 million total POPs. - Other partners include Motorola, E.V.A. and McCaw. - License acquired from Mexican government at approximately $1 per POP. - Currently considering offer to participate in "ocean-to-ocean" (see next page) consortium led by Motorola. - - ARGENTINA - GTE Mobilnet owns largest equity position (23%) in cellular consortium named Compania de Telefonos del Interior S.A. - CCI currently considering its rights to the property under the Competition Agreement. - - Total estimated value of CCI's international operations is $30 million. -49- 53 CONTEL CELLULAR INC. SUMMARY INTERNATIONAL ASSET VALUATION (CONT'D) [Map displaying cellular districts in Mexico (including Region 2 - Sonora, 10% of which is owned by Contel Cellular Inc.)] -50- 54 CONTEL CELLULAR INC. SUMMARY WIRELESS DATA VALUATION
FISCAL YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------ VALUED AT EOY 1994 1994 1995 1996 1997 1998 1999 2000 - ------------------ ------ ------ ------ ------ ------ ------ ------ Wireless Data Revenue(1) $2 $12 $33 $55 $74 $79 Growth 524.09% 173.85% 64.94% 34.92% 6.25% OCF(2) ($1) $5 $18 $31 $42 $45 Margin NM 37.5% 53.1% 55.9% 56.8% 56.8% Systems Operatings (0.391) (0.455) (0.573) (0.598) (0.628) Facilities (0.457) (0.917) (1.438) (2.707) (3.435) Maintenance/Repair (0.379) (0.930) (2.308) (3.182) (3.970) ------ ------ ------ ------ ------ Total CAPEX(3) (1.227) (2.302) (4.319) (6.487) (8.033) (8.5) % of Revenue 62.9% 18.9% 13.0% 11.8% 10.8% 10.8% Taxes @ 38.0%(4) 0.0 (0.3) (4.8) (9.3) (13.2) (14.0) Unlevered Free Cash Flow ($3) $2 $9 $15 $21 $22 NPV of Stream of Unlevered PCFs $69 Terminal Value of OCF @ 14.5x(5) PV of Terminal Value $223 DISCOUNT RATE ------ ------------------- Total NPV of Wireless Data $293 12.0% 13.0% ------ ------ 13.5x $326 $300 Discount Rate(5) 14.0% OCF 14.0x 335 309 Margin 14.5x 344 317 15.0x 354 326 15.5x 363 334 TAX CALCULATION - --------------- OCF ($1) $5 $18 $31 $42 $45 Depreciation (1.511) (3.725) (5.042) (6.286) (7.564) (8.0) % of CAPEX 123.1% 161.8% 116.7% 96.9% 94.2% 94.2% EBIT ($3) $1 $13 $24 $35 $37 ------ ------ ------ ------ ------ ------ Taxes @ 38.0% 0.0 (0.3) (4.8) (9.3) (13.2) (14.0) VALUED AT EOY 1994 2001 2002 2003 2004 - ------------------ ------ ------ ------ ------ Wireless Data Revenue(1) $84 $89 $95 $100 Growth 6.25% 6.25% 6.25% 6.25% OCF(2) $48 $51 $54 $57 Margin 56.8% 56.8% 56.8% 56.8% Systems Operatings Facilities Maintenance/Repair Total CAPEX(3) (9.1) (9.6) (10.2) (10.9) % of Revenue 10.8% 10.8% 10.8% 10.8% Taxes @ 38.0%(4) (14.8) (15.8) (16.8) (17.8) Unlevered Free Cash Flow $24 $25 $27 $28 NPV of Stream of Unlevered PCFs Terminal Value of OCF @ 14.5x(5) $828.2 PV of Terminal Value DISCOUNT RATE -------------------------------- Total NPV of Wireless Data 14.0% 15.0% 16.0% ------ ------ ------ $277 $256 $236 Discount Rate(5) 285 263 243 293 270 249 300 277 256 308 284 262 TAX CALCULATION - --------------- OCF $48 $51 $54 $57 Depreciation (8.5) (9.1) (9.6) (10.2) % of CAPEX 94.2% 94.2% 94.2% 94.2% EBIT $39 $42 $44 $47 ------ ------ ------ ------ Taxes @ 38.0% (14.8) (15.8) (16.8) (17.8)
- --------------- (1) For 1994-1999, revenue from CCI Strategic Plan was used. Growth rate beyond 1999 was CAGR that would produce $100MM in revenue for 2004 (figure taken from GTE PCS Division model for CCI. (2) For 1994-1999, OCF from CCI Strategic Plan was used. OCF margin held constant through 2004. (3) For 1994-1999, assumed that CAPEX composed of systems operations, facilities and maintenance/repair costs from CCI Strategic Plan. Ratio of CAPEX to Revenue held constant through 2004. (4) Taxes assumed to be 38.0% of EBIT. Depreciation to subtract from OCF to arrive at EBIT taken from CCI Strategic Plan for 1994-1999. Ratio of Depreciation to CAPEX held constant through 2004. (5) Although Wireless Data is considered by Management to be an incremental wireless service, growth rates and TV multiples were chosen to reflect the slight growth cycle lag relative to wireless/cellular. -51- 55 CONTEL CELLULAR INC. WALL STREET RESEARCH ESTIMATES OF CCI PRIVATE MARKET VALUES
TIME RANGE OF PERIOD PMV PER PMV PER FOR DATE OF REPORT RESEARCH FIRM RESEARCH ANALYST SHARE NET POP ESTIMATE(S) RATING RATING EXPLANATION ------------------ ---------------- ---------------- ------- --------- ----------- ------- ------------------ September 21, 1994 Smith Barney Christy Phillips $39.00 $240-$250(1) 1995E 3M Neutral, Med. Risk September 8, 1994 Donaldson, Dennis $33.00 $220-$230(1) 1995E Neutral -- Lufkin Liebowitz & Jenrette September 8, 1994 Salomon Brothers Frederick Moran $32.00 $220-$230(1) 1995E Hold -- September 9, 1994 Smith Barney NA $34.00 $220-$230(1) 1994E 3M Neutral, Med. Risk June 17, 1994 Smith Barney Christy Phillips $34.00 $220-$230(2) 1994E 1H Buy, High Risk May 10, 1994 Cowen & Co. Susan Passoni -- -- -- 3 Neutral May 9, 1994 Smith Barney Christy Phillips $34.00 $220-$230(2) 1994E 1H Buy,High Risk Shearson January 19, 1994 Bear Stearns David Freedman $26.46 $190-$200(2) 1994E Buy -- August 12, 1993 Equitable Christy Phillips $27.00 $190-$200(2) 1993E Buy -- Securities Corp. February 25, 1993 Smith Barney Susan Passoni -- -- 1993E Hold -- Jannuary 6, 1993 Hanifen Imhoff Alf Humphries $31.78 $210-$220(2) 1993E 1-1 Outperform S&P 500 during immediate (6 mos.) and long-term (18 mos.)
- -------------------- (1) Assumes 23.9 million net POPs. (2) Assumes 24.2 million net POPs. -52- 56 CONTEL CELLULAR INC. APPENDICES LAZARD FRERES & CO. DECEMBER 22, 1994 57 CONTEL CELLULAR INC. TABLE OF CONTENTS I. CCI EXHIBITS A. Summary of CCI Cost of Debt B. CCI Market Share by MSA C. Demographic Profiles of CCI MSAs D. Ownership Profiles of CCI MSAs E. Shareholder Profile of CCI F. Summary of Investor Opinions of Private and Fair Market Value G. 1994 Management Letter H. Trading Volume Summary II. CELLULAR INDUSTRY EXHIBITS A. Premia Paid in Selected Minority Interest Purchases B. State of the Cellular Industry C. Selected Equity Comparables D. Summary of Selected MSA Cellular Transactions E. Summary of Selected RSA Cellular Transactions
-i- 58 CONTEL CELLULAR INC. SUMMARY OF CCI COST OF DEBT - - The long-term borrowings by CCI from GTE are set forth in the table below:
NOTE ANNUAL PRINCIPAL BORROWING MATURITY INTEREST AMOUNT DATE DATE RATE ------------ ------------------ ------------------ -------- $700 million April 5, 1991 March 1, 1998 10.47% $150 million September 25, 1992 September 25, 1997 8.38% $150 million September 25, 1992 September 27, 1999 8.97% $200 million December 31, 1992 December 31, 1996 8.56% $200 million December 31, 1992 December 31, 1995 8.08% $150 million February 25, 1993 February 25,1997 7.71%
- - The weighted average annual interest rate (based on note principal amount) of the above notes equals 9.31%. - - As disclosed in CCI'S proxy statement for the annual meeting of stockholders held on June 1, 1994, CCI has borrowed approximately $1.55 billion (as set forth above) from GTE in long-term debt as of APRIL 15, 1994. - - In addition, CCI'S 10-Q for the quarter ended June 30, 1994 disclosed that, at June 30, 1994, CCI had drawn approximately $422 million(1) under a line of credit arrangement with GTE. The interest rate at June 30, 1994 under this credit facility was not disclosed. - ----------------------------------------------- (1) Figure not explicitly updated for the CCI 10-Q, dated September 30, 1994. -1- 59 CONTEL CELLULAR INC.
CCI MARKET SHARE BY CONTROLLED MSA(1) NUMBER OF SPRING FALL SPRING SUBSCRIBERS 1993 1993 1994 ----------- ------ ---- ------ CONTROLLED Memphis, TN 93,807 37% 37% 36% Louisville, KY 67,234 53% 52% 51% Birmingham, AL 98,442 44% 43% 45% Norfolk, VA 63,603 53% NA 58% Nashville, TN 101,550 55% 56% 56% Richmond, VA 63,684 58% 58% 60% Fresno, CA 50,813 37% 36% 36% Knoxville, TN 41,634 64% 66% 67% El Paso, TX 22,875 67% 67% 66% Mobile, AL 38,632 36% 38% 42% Johnson city, TN 28,142 51% 51% 50% Chattanooga, TN 40,218 59% 60% 64% Bakersfield, CA 29,954 35% 40% 41% Davenport, IA 20,521 48% 55% 63% Newport News, VA 31,740 55% 55% 52% Lexington, KY 26,866 53% 51% 49% Evansville, IN(2) 21,507 47% 47% 51% Pensacola, FL 21,077 54% 52% 61% Rockford, IL 21,126 50% 48% 52% Visalia, CA 18,676 44% 42% 45% Roanoke, VA 13,715 55% 54% 58% Clarksville, TN 11,540 43% 46% 46% Tuscaloosa, AL 13,046 39% 44% 46% Florence, AL 7,205 67% 61% 66% Petersburg, VA 8,310 88% 89% 88% Anniston, AL 7,096 24% 31% 39% Gadsen, AL 6,140 56% 62% 66% Las Cruces, NM 4,568 72% 77% 75%
- ----------------------------------------------- (1) Source: Management (2) Includes Owensboro, KY market. -2- 60 CONTEL CELLULAR INC.
DEMOGRAPHIC PROFILES OF CCI MSAs(1) CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS ------------------------------------------------------------- UNITED MEMPHIS, LOUISVILLE, BIRMINGHAM, NORFOLK, STATES TN KY AL VA -------- -------- ----------- ------------ --------- 1994 MSA RANK - 36 37 41 43 Total population 1994E (000s) 260,738 1,030 931 904 1,021 Total population 1999E (000s) 273,774 1,074 959 936 1,077 Growth Since 1990 4.8% 5.0% 3.7% 4.1% 4.6% Projected Growth: 1994-1999 5.0% 4.3% 2.9% 3.5% 5.5% 1994E population Age 25-44 Yrs.(000s) 81,138 328 292 279 349 Total Households 1994E (000s) 96,977 378 365 349 357 Average Household Income 1994E $44,075 $40,724 $40,514 $40,266 $42,144 Median Household Income 1994E $33,930 $31,268 $31,771 $30,426 $34,763 % National Average 100% 92% 94% 90% 102% Total Time To Work 1994: 0-14 Minutes 32.4% 25.6% 26.6% 23.9% 25.4% 15-29 Minutes 37.1% 45.8% 48.1% 43.1% 42.8% 30-59 Minutes 24.4% 25.5% 22.2% 29.1% 28.2% 60+ Minutes 6.1% 3.1% 3.0% 3.9% 3.6% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. - 0 0 0 1 Median House. Inc. vs. U.S. - 0 0 0 1 30+ Minutes to Work vs. U.S. - 0 0 1 1 Contiguous - 1 1 1 1 Total Adjustment Score - 1 1 2 4 Total Adjustment Percentage - -10% -10% 0% +20% NASHVILLE, RICHMOND, FRESNO, KNOXVILLE, EL PASO, MOBILE, TN VA CA TN TX AL ----------- --------- ----------- ---------- --------- ---------- 1994 MSA RANK 46 59 74 79 81 83 Total population 1994E (000s) 1,052 798 735 544 653 511 Total population 1999E (000s) 1,117 860 812 583 715 545 Growth Since 1990 6.8% 7.9% 10.2% 8.0% 10.3% 7.1% Projected Growth: 1994-1999 6.2% 7.7% 10.4% 7.1% 9.5% 6.8% 1994E population Age 25-44 Yrs. (000s) 346 265 224 169 198 149 Total Households 1994E (000s) 405 312 242 218 197 189 Average Household Income 1994E $42,962 $47,216 $40,312 $38,909 $33,523 $35,995 Median Household Income 1994E $33,799 $38,286 $30,130 $29,488 $25,205 $27,572 % National Average 100% 113% 89% 87% 74% 81% Total Time To Work 1994: 0-14 Minutes 26.6% 24.1% 35.9% 28.4% 28.6% 27.5% 15-29 Minutes 41.5% 46.1% 44.2% 44.9% 48.6% 42.6% 30-59 Minutes 27.6% 27.0% 16.2% 23.5% 19.9% 25.7% 60+ Minutes 4.2% 2.7% 3.7% 3.2% 2.8% 4.2% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. 1 1 1 1 1 1 Median House. Inc. vs. U.S. 1 1 0 0 0 0 30+ Minutes to Work vs. U.S. 1 0 0 0 0 0 Contiguous 1 1 1 1 0 1 Total Adjustment Score 4 3 2 2 1 2 Total Adjustment Percentage +20% +10% 0% 0% -10% 0%
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DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS ------------------------------------------------------------- UNITED JOHNSON CHATTANOOGA, BAKERSFIELD, DAVENPORT, STATES CITY, TN TN CA IA --------- -------- ------------ ------------ ---------- 1994 MSA Rank - 85 88 97 98 Total Population 1994E (000s) 260,738 457 451 618 362 Total Population - 1999E (000s) 273,774 473 464 706 374 Growth Since 1990 4.8% 4.7% 4.1% 13.8% 3.2% Projected Growth: 1994-1999 5.0% 3.5% 2.9% 14.2% 3.3% 1994E Population Age 25-44 Yrs. (000S) 81,138 133 135 192 106 Total Households 1994E (000s) 96,977 182 175 206 142 Average Household Income - 1994E $44,075 $33,451 $37,049 $41,514 $38,763 Median Household Income - 1994E $33,930 $25,700 $28,743 $33,120 $31,497 % National Average 100% 76% 85% 98% 93% Total Time To Work 1994: 0-14 Minutes 32.4 35.6% 26.7% 41.7% 40.8% 15-29 Minutes 37.1 41.8% 43.2% 37.0% 44.1% 30-59 Minutes 24.4 19.4% 26.4% 15.2% 12.8% 60+ Minutes 6.1 3.2% 3.8% 6.1% 2.3% VALUATION CRITERIA: Proj. Growth: 1994-1999 VS. U.S. - 0 0 1 0 Median House. Inc. vs. U.S. - 0 0 0 0 30+ Minutes To Work vs. U.S. - 0 0 0 0 Contiguous - 1 1 1 1 Total Adjustment Score - 1 1 2 1 Total Adjustment Percentage - -10% -10% 0% -10% NEWP. NEWS, LEXINGTON, EVANSVILLE, PENSACOLA, ROCKFORD, VA KY IL FL IL ----------- ---------- ----------- ---------- --------- 1994 MSA Rank 104 116 119 127 131 Total Population 1994E (000s) 475 368 318 375 301 Total Population - 1999E (000s) 518 384 326 409 319 Growth Since 1990 9.4% 5.5% 2.4% 8.9% 6.1% Projected Growth: 1994-1999 9.2% 4.4% 2.3% 9.2% 6.1% 1994E Population Age 25-44 Yrs. (000S) 158 125 95 115 92 Total Households 1994E (000s) 177 143 125 142 115 Average Household Income - 1994E $41,156 $41,566 $38,223 $36,663 $42,515 Median Household Income - 1994E $34,104 $31,941 $30,808 $29,057 $34,967 % National Average 101% 94% 91% 86% 103% Total Time To Work 1994: 0-14 Minutes 32.0% 37.0% 38.3% 31.6% 40.1% 15-29 Minutes 43.5% 43.8% 43.0% 43.9% 43.6% 30-59 Minutes 21.0% 16.7% 16.1% 21.4% 13.1% 60+ Minutes 3.5% 2.5% 2.5% 3.0% 3.2% VALUATION CRITERIA: Proj. Growth: 1994-1999 VS. U.S. 1 0 0 1 1 Median House. Inc. vs. U.S. 1 0 0 0 1 30+ Minutes To Work vs. U.S. 0 0 0 0 0 Contiguous 1 1 1 1 1 Total Adjustment Score 3 1 1 2 3 Total Adjustment Percentage +10% -10% -10% 0% +10%
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DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS ------------------------------------------------------------------------ UNITED VISALIA, ROANOKE, CLARKSVILLE, TUSCALOOSA, FLORENCE, STATES CA VA TN AL AL -------- --------- --------- ------------ ----------- --------- 1994 MSA Rank - 150 157 209 222 226 Total Population 1994E (000s) 260,738 348 240 172 161 138 Total Population 1999E (000s) 273,774 389 248 175 172 144 Growth Since 1990 4.8% 11.5% 4.8% 1.8% 7.2% 5.1% Projected Growth: 1994-1999 5.0% 12.0% 3.5% 1.7% 6.6% 4.4% 1994E Population Age 25-44 Yrs. (000S) 81,138 99 73 57 49 39 Total Households 1994E (000S) 96,977 109 97 58 60 55 Average Household Income 1994E $44,075 $36,376 $39,493 $32,626 $36,700 $34,825 Median Household Income 1994E $33,930 $27,437 $32,062 $27,149 $27,448 $26,782 % National Average 100% 81% 94% 80% 81% 79% Total Time To Work 1994: 0-14 Minutes 32.4% 47.1% 33.9% 40.0% 37.5% 35.8% 15-29 Minutes 37.1% 32.2% 48.0% 39.2% 42.8% 37.0% 30-59 Minutes 24.4% 16.8% 15.6% 16.3% 16.9% 22.5% 60+ Minutes 6.1% 3.9% 2.5% 4.6% 3.3% 4.7% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. - 1 0 0 1 0 Median House. Inc. vs. U.S. - 0 0 0 0 0 30+ Minutes To Work vs. U.S. - 0 0 0 0 0 Contiguous - 1 1 1 1 1 Total Adjustment Score - 2 1 1 2 1 Total Adjustment Percentage - 0% -10% -10% 0% -10% PETERSBURG, ANNISTON, GADSDEN, LAS CRUCES, OWENSBORO, VA AL IL NM KY ----------- --------- --------- ----------- ------------ 1994 MSA Rank 235 249 272 285 293 Total Population 1994E (000s) 130 116 101 154 90 Total Population 1999E (000s) 135 115 102 173 92 Growth Since 1990 3.7% 0.0% 1.3% 13.5% 3.2% Projected Growth: 1994-1999 3.6% -0.9% 0.4% 12.2% 2.5% 1994E Population Age 25-44 Yrs. (000S) 41 34 28 47 26 Total Households 1994E (000S) 49 44 40 51 34 Average Household Income 1994E $36,813 $33,134 $32,154 $32,459 $34,248 Median Household Income 1994E $31,045 $27,641 $25,106 $25,293 $27,714 % National Average 91% 81% 74% 75% 82% Total Time To Work 1994: 0-14 Minutes 32.3% 37.7% 34.5% 42.4% 49.3% 15-29 Minutes 38.4% 41.8% 44.6% 33.7% 34.1% 30-59 Minutes 25.8% 17.2% 16.9% 19.8% 12.9% 60+ Minutes 3.4% 3.3% 4.0% 4.0% 3.6% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. 0 0 0 1 0 Median House. Inc. vs. U.S. 0 0 0 0 0 30+ Minutes To Work vs. U.S. 0 0 0 0 0 Contiguous 1 1 1 1 1 Total Adjustment Score 1 1 1 2 1 Total Adjustment Percentage -10% -10% -10% 0% -10%
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DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS ----------------------------------------------------------------------- UNITED LOS ANGELES, SAN FRANCISCO, WASHINGTON, HOUSTON, STATES CA CA D.C. TX --------- ------------ -------------- ----------- ---------- 1994 MSA Rank - 2 7 8 10 Total Population 1994E (000s) 260,738 14,719 3,832 3,804 3,900 Total Population 1999E (000s) 273,774 15,764 3,996 3,969 4,354 Growth Since 1990 4.8% 6.2% 3.9% 3.9% 11.6% Projected Growth: 1994-1999 5.0% 7.1% 4.3% 4.3% 11.6% 1994E Population Age 25-44 Yrs. (000s) 81,138 5,022 1,336 1,370 1,341 Total Households 1994E (000s) 96,977 4,925 1,473 1,430 1,398 Average Household Income 1994E $44,075 $54,120 $59,696 $64,832 $48,440 Median Household Income 1994E $33,930 $40,623 $46,134 $52,694 $36,661 % National Average 100% 120% 136% 155% 108% Total Time To Work 1994: 0-14 Minutes 32.4% 24.1% 23.5% 17.5% 22.1% 15-29 Minutes 37.1% 35.4% 34.5% 32.1% 35.6% 30-59 Minutes 24.4% 31.0% 33.2% 40.0% 34.9% 60+ Minutes 6.1% 9.5% 8.8% 10.5% 7.4% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. - 1 0 0 1 Median House. Inc. vs. U.S. - 1 1 1 1 30+ Minutes to Work vs. U.S. - 1 1 1 1 Contiguous - 1 1 1 1 Total Adjustment Score - 4 3 3 4 Total Adjustment Percentage - +20% +10% +10% +20% MINNEAPOLIS, SAN JOSE, SAN ANTONIO, SACRAMENTO, JACKSONVILLE, MN CA TX CA FL ------------ --------- ------------ ----------- ------------- 1994 MSA Rank 15 27 33 35 51 Total Population 1994E (000s) 2,569 1,542 1,383 1,480 1,004 Total Population 1999E (000s) 2,708 1,594 1,479 1,635 1,096 Growth Since 1990 5.4% 2.9% 6.2% 9.2% 8.5% Projected Growth: 1994-1999 5.4% 3.4% 7.0% 10.5% 9.1% 1994E Population Age 25-44 Yrs. (000s) 887 554 430 489 328 Total Households 1994E (000s) 979 533 484 553 383 Average Household Income 1994E $50,260 $67,674 $38,226 $47,047 $41,548 Median Household Income 1994E $41,303 $55,453 $29,488 $37,552 $32,904 % National Average 122% 163% 87% 111% 97% Total Time To Work 1994: 0-14 Minutes 29.2% 24.6% 26.0% 29.6% 25.2% 15-29 Minutes 44.3% 42.6% 45.3% 42.7% 41.6% 30-59 Minutes 23.9% 27.9% 24.9% 23.7% 29.5% 60+ Minutes 2.7% 5.0% 3.8% 3.9% 3.7% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. 1 0 1 1 1 Median House. Inc. vs. U.S. 1 1 0 1 0 30+ Minutes to Work vs. U.S. 0 1 0 0 1 Contiguous 1 1 1 1 1 Total Adjustment Score 3 3 2 3 3 Total Adjustment Percentage +10% +10% 0% +10% +10%
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DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS -------------------------------------------------------------- UNITED GREENVILLE, OXNARD, AUSTIN, ALBUQUERQUE, STATES SC CA TX NM --------- ----------- -------- -------- ------------ 1994 MSA RANK - 67 73 75 86 Total Population 1994E (000s) 260,738 667 697 874 590 Total Population 1999E (000s) 273,774 698 731 985 631 Growth since 1990 4.8% 4.1% 4.2% 11.9% 8.5% Projected Growth: 1994-1999 5.0% 4.7% 4.8% 12.6% 7.0% 1994E Population Age 25-44 Yrs. (000s) 81,138 202 226 313 194 Total Households 1994E (000s) 96,977 254 226 342 227 Average Household Income 1994E $44,075 $38,929 $60,784 $43,860 $39,891 Median Household Income 1994E $33,930 $31,624 $50,400 $33,803 $31,549 % National Average 100% 93% 149% 100% 93% Total Time to Work 1994: 0-14 Minutes 32.4% 35.2% 31.4% 29.2% 30.6% 15-29 Minutes 37.1% 45.0% 34.8% 43.3% 48.2% 30-59 Minutes 24.4% 18.0% 24.6% 23.9% 18.0% 60+ Minutes 6.1% 1.9% 9.3% 3.5% 3.2% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. - 0 0 1 1 Median House. Inc. vs. U.S. - 0 1 0 0 30+ Minutes to Work vs. U.S. - 0 1 0 0 Contiguous - 1 1 1 1 Total Adjustment Score - 1 3 2 2 Total Adjustment Percentage - -10% +10% 0% 0% BEAUMONT, STOCKTON, VALLEJO, SANTA ROSA, SANTA BARBARA, TX CA CA CA CA --------- --------- --------- ----------- -------------- 1994 MSA RANK 101 107 111 123 124 Total Population 1994E (000s) 384 517 489 411 378 Total Population 1999E (000s) 408 561 541 439 390 Growth since 1990 6.3% 7.6% 8.4% 5.9% 2.4% Projected Growth: 1994-1999 6.1% 8.5% 10.6% 6.7% 3.0% 1994E Population Age 25-44 Yrs. (000s) 111 158 160 131 122 Total Households 1994E (000s) 144 167 167 158 132 Average Household Income 1994E $37,571 $43,104 $51,499 $50,599 $54,811 Median Household Income 1994E $29,402 $34,611 $43,945 $40,674 $40,945 % National Average 87% 102% 130% 120% 121% Total Time to Work 1994: 0-14 Minutes 36.2% 37.3% 34.0% 34.7% 46.7% 15-29 Minutes 41.5% 37.1% 28.6% 34.4% 35.4% 30-59 Minutes 18.5% 17.7% 24.3% 20.8% 14.0% 60+ Minutes 3.8% 7.9% 13.1% 10.0% 4.0% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. 0 1 1 1 0 Median House. Inc. vs. U.S. 1 1 1 1 1 30+ Minutes to Work vs. U.S. 0 0 1 1 0 Contiguous 1 1 1 1 1 Total Adjustment Score 2 3 4 4 2 Total Adjustment Percentage 0% +10% +20% +20% 0%
- --------------------------------------------- (1) Source: Donnelly Marketing Information Services. -7- 65 CONTEL CELLULAR INC.
DEMOGRAPHIC PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS ----------------------------------------------------------- UNITED SALINAS, MODESTO, GALVESTON, RENO, STATES CA CA TX NV -------- -------- --------- ---------- -------- 1994 MSA RANK - 126 142 170 171 Total Population 1994E (000s) 260,738 372 415 237 280 Total Population 1999E (000s) 273,774 393 468 258 306 Growth Since 1990 4.8% 4.6% 12.1% 9.1% 9.8% Projected Growth: 1994-1999 5.0% 5.7% 12.7% 8.7% 9.5% 1994E Population Age 25-44 Yrs. (000s) 81,138 124 127 74 96 Total Households 1994E (000s) 96,977 117 140 89 112 Average Household Income 1994E $44,075 $50,593 $42,629 $42,932 $44,421 Median Household Income 1994E $33,930 $38,832 $33,610 $33,810 $35,007 % National Average 100% 114% 99% 100% 103% Total Time to Work 1994: 0-14 Minutes 32.4% 43.9% 39.1% 31.3% 41.5% 15-29 Minutes 37.1% 35.6% 36.4% 36.8% 45.1% 30-59 Minutes 24.4% 17.2% 15.6% 24.6% 10.4% 60+ Minutes 6.1% 3.3% 8.8% 7.3% 3.0% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. - 1 1 1 1 Median House. Inc. vs. U.S. - 1 0 0 1 30+ Minutes to Work vs. U.S. - 0 0 1 0 Contiguous - 1 1 1 1 Total Adjustment Score - 3 2 3 3 Total Adjustment Percentage - +10% 0% +10% +10% SANTA CRUZ, CHICO, ANDERSON, REDDING, YUBA CITY, CA CA SC CA CA ------------ ------- --------- -------- ---------- 1994 MSA RANK 174 215 227 254 274 Total Population 1994E (000s) 230 198 147 167 136 Total Population 1999E (000s) 232 216 149 191 152 Growth Since 1990 0.3% 8.5% 1.1% 13.8% 10.6% Projected Growth: 1994-1999 0.7% 9.1% 1.8% 14.2% 11.8% 1994E Population Age 25-44 Yrs. (000s) 79 54 43 46 39 Total Households 1994E (000s) 83 78 57 64 48 Average Household Income 1994E $55,380 $34,942 $35,273 $37,637 $37,859 Median Household Income 1994E $43,425 $26,081 $28,948 $29,393 $28,165 % National Average 128% 77% 85% 87% 83% Total Time to Work 1994: 0-14 Minutes 33.3% 52.6% 34.1% 44.9% 42.8% 15-29 Minutes 32.7% 28.4% 42.0% 40.2% 32.4% 30-59 Minutes 24.6% 15.0% 21.4% 11.3% 18.1% 60+ Minutes 9.4% 4.0% 2.5% 3.7% 6.7% VALUATION CRITERIA: Proj. Growth: 1994-1999 vs. U.S. 0 1 0 1 1 Median House. Inc. vs. U.S. 1 0 0 0 0 30+ Minutes to Work vs. U.S. 1 0 0 0 0 Contiguous 1 1 1 1 1 Total Adjustment Score 3 2 1 2 2 Total Adjustment Percentage +10% 0% -10% 0% 0%
- --------------------------------------------- (1) Source: Donnelly Marketing Information Services. -8- 66 CONTEL CELLULAR INC.
OWNERSHIP PROFILES OF CCI MSAs(1) CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS --------------------------------------------------------------------------------- UNITED MEMPHIS, LOUISVILLE, BIRMINGTON, NORFOLK, NASHVILLE, STATES TN KY AL VA TN, -------- ----------- ----------- ----------- ------------- ------------ 1994 MSA RANK - 36 37 41 43 46 Wireline (A)/Non-Wireline (B) - B B B A B % Owned by CCI - 100.0% 100.0% 100.0% 95.0% 100.0% Other Holder of CCI Market - -- -- -- Bell Atlantic - % Owned by Other Holder - 0.0% 0.0% 0.0% 5.0% 0.0% Other Holder 1 - BellSouth BellSouth BellSouth Sprint BellSouth % Owned - 75.0% 100.0% 100.0% 100.0% 51.0% Other Holder 2 - NA -- -- -- NA % Owned - 25.0% 0.0% 0.0% 0.0% 49.0% RICHMOND, FRESNO, KNOXVILLE, EL PASO, MOBILE, VA CA TN TX AL ------------- ------- ------------ ------------- --------- 1994 MSA RANK 59 74 79 81 83 Wireline (A)/Non-Wireline (B) A A B A A % Owned by CCI 95.0% 92.0% 94.1% 100.0% 100.0% Other Holder of CCI Market Bell Atlantic Group(2) McDonald -- -- % Owned by Other Holder 5.0% 8.0% 5.9% 0.0% 0.0% Other Holder 1 BellSouth McCaw U.S. Cellular Bell Atlantic BellSouth % Owned 72.7% 100.0% 96.0% 100.0% 98.6% Other Holder 2 NA -- NA -- NA % Owned 27.3% 0.0% 4.0% 0.0% 1.4%
- ----------------------------------------------- (1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management. (2) Group including U.S. Cellular, GTE Mobilnet and AirTouch. -9- 67 CONTEL CELLULAR INC.
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS ----------------------------------------------------------------------------- UNITED JOHNSON CHATTANOOGA, BAKERSFIELD, DAVENPORT, STATES CITY, TN TN CA IA ------- -------- ------------ ------------ ------------- 1994 MSA RANK - 85 88 97 98 Wireline (A)/Non-wireline (B) - B B A A % Owned by CCI - 100.0% 100.0% 92.0% 100.0% Other Holder of CCI Market - -- -- Group(2) -- % Owned by Other Holder - 0.0% 0.0% 8.0% 0.0% Other Holder 1 - Sprint BellSouth BellSouth U.S. Cellular % Owned - 100.0% 62.5% 100.0% 97.4% Other Holder 2 - -- NA -- NA % Owned - 0.0% 37.5% 0.0% 2.6% NEWP. NEWS, LEXINGTON, EVANSVILLE, PENSACOLA, ROCKFORD, VA KY IL FL IL ------------- ---------- ------------ ---------- ---------- 1994 MSA RANK 104 116 119 127 131 Wireline (A)/Non-wireline (B) A B A A A % Owned by CCI 95.0% 100.0% 88.9% 100.0% 59.0% Other Holder of CCI Market Bell Atlantic - Group(3) - Group(4) % Owned by Other Holder 5.0% 0.0% 11.1% 0.0% 41.0% Other Holder 1 Sprint BellSouth U.S. Cellular Vanguard BellSouth % Owned 100.0% 100.0% 78.1% 100.0% 99.0% Other Holder 2 - -- NA -- NA % Owned 0.0% 0.0% 21.9% 0.0% 1.0%
- ----------------------------------------------- (1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management. (2) Group including U.S. Cellular, GTE Mobilnet and AirTouch. (3) Group including Century Telephone and Smithville Telephone. (4) Group including Leaf River Cellular Telephone Company, Central Cellular Telephone and Ameritech. -10- 68 CONTEL CELLULAR INC. OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D)
CONTEL CELLULAR INC. - CONTROLLED MSA INTERESTS ------------------------------------------------------------------------------------- UNITED VISALIA, ROANOKE, CLARKSVILLE, TUSCALOOSA FLORENCE, STATES CA VA TN AL AL ------- -------- ---------- ------------ ---------- -------------------- 1994 MSA RANK - 150 157 209 222 226 Wireline (A)/Non-wireline (B) - A A B B B % Owned by CCI - 92.0% 40.0% 100.0% 80.4% 91.1% Other Holder of CCI Market - Group(2) Group(3) -- Other(4) Other(4) % Owned by Other Holder - 8.0% 60.0% 0.0% 19.6% 8.9% Other Holder 1 - McCaw Centennial BellSouth BellSouth Cell. Info. Sys. % Owned - 92.2% 100.0% 51.0% 100.0% 100.0% Other Holder 2 - NA -- NA -- -- % Owned - 7.8% 0.0% 49.0% 0.0% 0.0% PETERSBURG, ANNISTON, GADSDEN, LAS CRUCES, OWENSBORO, VA AL IL NM KY ------------- --------- --------- ------------- ----------------- 1994 MSA RANK 235 249 272 285 293 Wireline (A)/Non-wireline (B) A B B A A % Owned by CCI 95.0% 100.0% 90.0% 100.0% 88.9% Other Holder of CCI Market Bell Atlantic -- Other(4) -- Group(5) % Owned by Other Holder 5.0% 0.0% 10.0% 0.0% 11.1% Other Holder 1 Sprint BellSouth BellSouth Bell Atlantic U.S. Cellular % Owned 72.9% 100.0% 100.0% 71.5% 78.7% Other Holder 2 NA -- -- NA NA % Owned 27.1% 0.0% 0.0% 28.5% 21.3%
- ----------------------------------------------- (1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management. (2) Group including U.S. Cellular, GTE Mobilnet and AirTouch. (3) Group including CFW Communications Company and Roanoke & Botetourt Telephone Company. (4) Additional general partners. (5) Group including Century Telephone and Smithville Telephone Company. -11- 69 CONTEL CELLULAR INC.
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS -------------------------------------------------------------------- UNITED LOS ANGELES, SAN FRANCISCO, WASHINGTON, HOUSTON, STATES CA CA D.C. TX -------- ------------ -------------- ----------- ---------- 1994 MSA RANK - 2 7 8 10 Wireline (A)/Non-wireline (B) - B B B B % Owned by CCI - 11.20% 11.25% 35.27% 4.40% Other Holder of CCI Market 1 - AirTouch GTE M-net Bell Atlantic GTE M-net % Owned by Other Holder 1 - 84.00% 85.90% 64.73% 79.20% Other Holder of CCI Market 2 - Group(2) NA - Group(4) % Owned by Other Holder 2 - 4.80% 2.85% 0.00% 16.40% Other Holder 1 - BellSouth Group(3) SBC LIN % Owned - 60.00% 94.00% 100.0% 56.30% Other Holder 2 - NA NA - NA % Owned - 40.00% 6.00% 0.00% 43.70% MINNEAPOLIS, SAN JOSE, SAN ANTONIO, SACRAMENTO, JACKSONVILLE, MN CA TX CA FL ------------ ---------- ------------ ----------- ------------- 1994 MSA RANK 15 27 33 35 51 Wireline (A)/Non-wireline (B) B B B B B % Owned by CCI 30.00% 11.25% 30.00% 0.98% 14.24% Other Holder of CCI Market 1 US West GTE M-net SBC AirTouch BellSouth % Owned by Other Holder 1 69.00% 85.90% 70.00% 49.90% 85.76% Other Holder of CCI Market 2 Scott-Rice NA - Group(3) - % Owned by Other Holder 2 1.00% 2.85% 0.00% 49.12% 0.00% Other Holder 1 McCaw Group(3) McCaw McCaw McCaw % Owned 100.00% 94.00% 100.00% 100.00% 100.00% Other Holder 2 - NA - - - % Owned 0.00% 6.00% 0.00% 0.00% 0.00%
- ----------------------------------------------- (1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management. (2) Group including U.S. Cellular and GTE Mobilnet. (3) Group including AirTouch and McCaw. (4) Group including Contel Cellular, Lufkin-Conroe, SLT Communications, SBMS Cellular and Fort Bend Telephone. -12- 70 CONTEL CELLULAR INC.
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS ------------------------------------------------------------------------ UNITED GREENVILLE, OXNARD, AUSTIN, ALBUQUERQUE, STATES SC CA TX NM --------- ------------- ------- -------- -------------- 1994 MSA RANK - 67 73 75 86 Wireline (A)/Non-wireline (B) - B B B B % Owned by CCI - 10.83% 11.20% 3.00% 49.00% Other Holder of CCI Market 1 - Sprint AirTouch GTE M-net US West % Owned by Other Holder 1 - 89.17% 50.00% 58.70% 51.00% Other Holder of CCI Market 2 - - Group(2) Group(3) - % Owned by Other Holder 2 - 0.00% 38.80% 38.30% 0.00% Other Holder 1 - Bell Atlantic McCaw McCaw Bell Atlantic % Owned - 100.00% 100.00% 100.00% 100.00% Other Holder 2 - - - - - % Owned - 0.00% 0.00% 0.00% 0.00% BEAUMONT, STOCKTON, VALLEJO, SANTA ROSA, SANTA BARBARA, TX CA CA CA CA ---------- --------- ---------- ----------- -------------- 1994 MSA RANK 101 107 111 123 124 Wireline (A)/Non-wireline (B) B B B B B % Owned by CCI 4.40% 0.98% 11.25% 11.25% 39.00% Other Holder of CCI Market 1 GTE M-net AirTouch GTE M-net GTE M-net GTE M-net % Owned by Other Holder 1 79.10% 49.90% 85.90% 85.90% 51.00% Other Holder of CCI Market 2 Group(4) Group(5) Centennial Centennial AirTouch % Owned by Other Holder 2 16.50% 49.12% 2.85% 2.85% 10.00% Other Holder 1 Centennial McCaw ATI/McCaw ATI/McCaw McCaw % Owned 100.00% 100.00% 100.00% 80.40% 84.10% Other Holder 2 - - - NA NA % Owned 0.00% 0.00% 0.00% 19.60% 15.90%
- ----------------------------------------------- (1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management. (2) Group including U.S. Cellular and GTE Mobilnet. (3) Group including Telecar Cellular and Contel Cellular. (4) Group including Contel Cellular, Lufkin-Conroe, SLT Communications, SBMS Cellular and Fort Bend Telephone. (5) Group including Centennial Cellular, Roseville Telephone and Evans Cellular. -13- 71 CONTEL CELLULAR INC.
OWNERSHIP PROFILES OF CCI MSAs(1) (CONT'D) CONTEL CELLULAR INC. - NON-CONTROLLED MSA INTERESTS --------------------------------------------------------- UNITED SALINAS, MODESTO, GALVESTON, RENO, STATES CA CA TX NV ------- -------- --------- ---------- -------- 1994 MSA RANK - 126 142 170 171 Wireline (A)/Non-wireline (B) - B B B B % Owned by CCI - 11.25% 0.98% 4.40% 0.98% Other Holder of CCI Market - GTE GTE Mobilnet AirTouch Mobilnet AirTouch % Owned by Other Holder - 85.90% 49.90% 79.10% 49.90% Other HOlder of CCI Market 2 - NA NA NA NA % Owned by Other Holder 2 - 28.85% 49.12% 16.50% 49.12% Other Holder 1 - AirTouch/ Galveston McCaw McCaw Mobile McCaw % Owned - 85.90% 100.00% 78.60% 85.90% Other Holder 2 - NA - NA NA % Owned - 14.10% 0.00% 21.40% 11.40% SANTA CRUZ, CHICO, ANDERSON, REDDING, YUBA CITY, CA CA SC CA CA ----------- --------- ------------- -------- ---------- 1994 MSA RANK 174 215 227 254 274 Wireline (A)/Non-wireline (B) B B B B B % Owned by CCI 11.25% 0.98% 10.83% 0.98% 0.98% Other Holder of CCI Market GTE Mobilnet AirTouch Sprint AirTouch AirTouch % Owned by Other Holder 85.90% 49.90% 89.17% 48.40% 49.90% Other HOlder of CCI Market 2 NA NA NA NA NA % Owned by Other Holder 2 2.85% 49.12% 0.00% 50.62% 49.12% Other Holder 1 N. Patel McCaw Bell Atlantic McCaw McCaw % Owned 77.60% 100.00% 77.00% 88.20% 94.40% Other Holder 2 NA - NA NA NA % Owned 22.40% 0.00% 23.00% 11.80% 5.60%
- ----------------------------------------------- (1) Source: 1994 Paul Kagan Cellular Telephone Atlas and Management. -14- 72 CONTEL CELLULAR INC. SHAREHOLDER PROFILE OF CCI(1)
REPORTED LAST % OF CLASS A INSTITUTION 13F TYPE HOLDING COMMON HELD DATE OF REPORT -------------------------------------- ------------------ ------------- ------------ ----------------- Snyder Capital Management Inc. Investment Advisor 905,000 9.09% June 30, 1994 Capital Research & Management Investment Company 794,000 7.98% September 30,1994 Wells Fargo Inst. Trust, NA 13G 740,676 7.44% September 30,1994 College Retirement Equities 13G 519,200 5.22% September 30,1994 California Public Employees Retirement Other 496,900 4.99% June 30, 1994 Geocapital Corporation Investment Advisor 399,800 4.02% June 30, 1994 Mellon Bank Corporation Bank 349,846 3.52% June 30, 1994 Wilshire Associates Investment Advisor 233,000 2.34% June 30, 1994 Bankers Trust N.Y. Corp. Bank 225,188 2.26% June 30, 1994 Delphi Management Inc. Investment Advisor 215,000 2.16% June 30, 1994 California State Teachers Retirement Other 210,000 2.11% June 30, 1994 Eagle Asset Management Inc. Investment Advisor 200,000 2.01% June 30, 1994
__________________________________ (1) Includes only those institutions holding more that 2% of the outstanding 9,950,733 Class A Common Shares. Source: CDA/Spectrum report. -15- 73 CONTEL CELLULAR INC. SUMMARY OF INVESTOR OPINIONS(1)
PRIVATE PRIVATE "FAIR"/TARGET MARKET MARKET MARKET VALUE VALUE VALUE PER DATE OF REPORT INVESTMENT FIRM INVESTOR/ANALYST PER SHARE PER NET POP(2) SHARE - ------------------ ------------------- ---------------- -------------- -------------- ------------- September 22, 1994 Harvest Management, Inc. John Christ $31.00 215 $31.00 September 15, 1994 Snyder Capital Management Walter Niemasik, Jr. -- -- $30.00 September 13, 1994 Burnham Securities, Inc. I.W. Burnham II -- -- ($29.00 - $34.00) September 12, 1994 Private Investor Vernon E. Harmon -- -- ($28.50 - $32.50) September 9, 1994 Burhnam Securities, Inc. I.W. Burnham II -- -- >$30.00 September 9, 1994 Harvest Management, Inc. John Christ $32.00 (SB) $219 $22.40 (SB) September 8, 1994 Harvest Management, Inc. John Christ $29.00 (DLJ) $207 -- $33.00 (DLJ) $223 -- $34.00 (SB) $228 -- September 6, 1994 Private Investor Vinnie Madrid -- -- --
TIME "FAIR"/TARGET PERIOD MARKET VALUE FOR DATE OF REPORT PER NET POP(2) ESTIMATE(S) VALUATION EXPLANATION/OTHER - ------------------ -------------- --------------- -------------------------------- September 22, 1994 $215 1995E Sent Smith Barney research report, dated September 22, 1994. September 15, 1994 $211 Not specified "At GTE's proposed price of $22.50, Control Cellular remains substantially undervalued in relation to its asset value." September 13, 1994 $207 - $228 Not specified "I think it is time to reassess your offer..."; also, wants a stock-for-stock transaction. September 12, 1994 $205 - $221 Not specified GTE Federal Systems retiree with "larger portion of my funds invested in Contel Cellular stock." September 9, 1994 >$211 Not Specified Wants a stock-for-stock transaction. September 9, 1994 $179 1995E Sent Salomon Brothers research report, dated September 8, 1994 and Wheat, First, Butcher & Singer research report, dated September 8, 1994. September 8, 1994 -- 1994E Sent Donaldson, Lufkin & -- 1995E Jenrette research report, dated -- 1994E September 8, 1994 and Smith Barney research report, dated September 8, 1994. September 6, 1994 -- -- "Please reconsider the terms of the acquisition and the price of the shares." - ------------------------------------------
(1) Sent or copied to one or more of the following: Leonard Jaffe, Robert La Blanc, Charles Lee, Terry Parker, Irwin Schneiderman and Dennis Whipple. (2) Based on 23.9 million net POPs. (Cellular Asset Value per net POP). -16- 74 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER CCI has had another excellent year, with key milestones achieved in financial performance, subscriber growth, operational efficiencies, distribution strategy and organization configuration. While undertaking the most significant organization restructuring in the history of the Company, we have managed to maintain our focus on subscriber growth, network construction, customer service, financial performance and enhancing total quality of our service. KEY MILESTONES - - During the second quarter of 1994, the Company achieved "positive" operating income for the first time in its history. Operating income is expected to be $46 million, $15 million or 150% over Budget, and $74 million over 1993. - - Cash flow from operations, operating income before depreciation and amortization, is expected to be $166 million, an increase of $86 million or 108% over 1993, and $2 million favorable to Budget. - - Annual growth rate in 1994 is expected to be 53%, as compared to a Budget growth rate of 41%, and follows 1993's growth rate of 59%. - - Gross adds are projected to be 447 thousand, which is 37 thousand, or 9% favorable to Budget and 157 thousand, or 54% greater than 1993. - - Cost per gross add declined from 1993 by $29, or 8%, while being only $11, or 3% unfavorable to Budget. - - Total service revenues increased $201 million, or 58% over 1993, and $65 million or 113% over Budget. - - Service revenue per subscriber was $69, a decrease of $3, or 4%, and $1 unfavorable to Budget. -17- 75 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY MILESTONES (CONT'D) - Completed capital projects totaling $222 million, the highest single year level in the Company's history. Capital was used to expand networks, provide capacity to maintain call quality standards while exceeding year end Budget subscribers by 62 thousand, support the TeleGo program, expand Company owned retail distribution and position computer and internal communications networks for the introduction of the Virtuoso customer billing system in early 1995. The Company expects to add 148 new cells in service by the end of 1994, bringing our total to 659. Additionally, all of our five year fill-in requirements were met. - Gross property plant and equipment per year end subscriber was $1,129, a decrease of $227 or 17% from 1993, and $128 or 10% favorable to Budget. - Expanded Residential Sales into 15 markets, TeleGo into two markets, PayGo is now being offered in 46 MSA and RSA markets, initiated sales in over 70 WalMart locations in Tennessee, Alabama, Kentucky and Virginia and launched the Sales Support program in all Area locations. - Centralized routine customer service functions into a single, consolidated Call Center in Atlanta to capitalize on technologies (interactive voice response) and economies of scale. - Implemented the Customer Connection recommendations with respect to the organization revitalization plan by dissolving the two regions (National and South) and creating eight separate Areas. -18- 76 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) SIGNIFICANT EVENTS - In January, the Company initiated the implementation of the Customer Connection organization revitalization plan. The National and South Regions were dissolved and eight new Area organizations were created. Each Area has an Area Vice President with local resources to support marketing, distribution, network construction and support, finance, human resources and IM. The reorganization has been carried out within the 1994 Budget which did not reflect the costs associated with relocations and staffing the new requirements. The 1994 reorganization was much more significant than the 1993 reorganization, and encompassed every employee in the field and headquarters organizations. The adverse impacts of such a large reorganization have been essentially transparent to our customers, while the benefits associated with moving critical operational and support resources closer to the customer will be positively reflected in our current, and prospective performance. Evidence of one of the reorganization's successes is reflected in our Spring 1994 Market Share study, which showed an overall Company share of 52%, up 3% points from the Fall of 1993. - The Northeast Properties, which were intended to be sold to NYNEX at the end of 1993, have closed in stages throughout 1994. These properties were not in the operating Budget and have had an adverse impact on operating results for the year due to many of the reasons associated with our intentions to sell the properties. Support, operations, and coordination with NYNEX in addition to the legal and administrative efforts involved in consummating the partial sales has adversely consumed the resources of PCS and Company Headquarters staff throughout the year. -19- 77 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) SIGNIFICANT EVENTS (CONT'D) - The 1994 Budget assumed that the Company complete the purchase of the outstanding 79% interest in California RSA 4 early in the year, thus consolidating the $3.2 million September year-to-date operating income, versus the corresponding $400 thousand Budget. Partnership issues and rights of first refusal have delayed the purchase of this market to 1995, and it appears (based on one partner's exercise of its rights of first refusal) that the Company will only be able to purchase 29%, and still not be in a position to consolidate the results of this RSA in 1995. - In August, Company management obtained approval to acquire the strategically significant non-wireline cellular license for the Huntsville MSA. This market will significantly enhance our competitive position in the Alabama Area and contribute positive operating results immediately. This transaction is intended to be closed in December. Support and coordination efforts of Company Headquarters and Alabama Area resources will be required to complete this transaction on time and in a smooth and orderly fashion as to not adversely impact the existing 20 thousand Huntsville subscribers. - On September 8, 1994, the GTE Board of Directors made an offer to purchase the remaining 10%, Class A common shares of publicly traded Company stock. On September 9, the Company's Board elected a Special Committee to assess the fairness of the offer and negotiate a definitive merger agreement on behalf of the Company's shareholders. Since this announcement, there has been a great deal of time and resources committed to assisting the Special Committee by the Company's President, its Chief Financial Officer and its General Counsel. All of the requested information and analysis requested by GTE's and the Special Committee's investment bankers was provided on schedule and in a thorough and complete manner. -20- 78 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY ACCOMPLISHMENTS - In 1994, the Company added significantly more subscribers, at a lower cost per gross add, than ever before. Acquisition costs would have been $10 million higher using the 1994 volume at the 1993 cost per add. At the same time, the Company recorded the smallest decline in service revenue per subscriber, per month, both in absolute dollars ($3) and percentage (4%). It is apparent that the Company's strategy to expand company controlled distribution channels has been successful in reducing overall costs and allowing volume increases to drive costs to the lowest incremental cost possible. - Throughout the year, the Company has opened new retail stores and kiosks staffed by "Sales Associates" to take advantage of volume sensitive savings in subscriber acquisition costs. Additionally, in the 4th quarter of 1994, the Company successfully negotiated agreements with WalMart in Tennessee, Alabama, Kentucky and Virginia to open Company staffed kiosks within the WalMart stores for a low monthly fee. By the end of 1994, the Company expects to have over 70 locations within these four Area markets. Results from the initial locations have been outstanding both in volume and cost per add. - The Company has expanded its controlled distribution by adding Residential Sales programs in 15 markets. The program has undergone numerous changes and adjustments as we learn more about the complexities and characteristics of this type of distribution. Successes in this program include the addition of approximately 12 thousand net subscribers at an average cost per gross add of $280. Revenue per subscriber is at $44, due to the fact that almost no roaming revenue is attributed to this subscriber channel. Subscriber churn continues to remain high in this channel due to the fact that subscribers are not required to sign annual contracts. In summary, we continue to be encouraged by the prospects and opportunities associated with this channel. -21- 79 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY ACCOMPLISHMENTS (CONT'D) - The expansion of PayGo into almost all company controlled markets (46) has had a very positive impact on the Company's overall performance. Through September, there were over 10 thousand subscribers on the PayGo program, generating average revenues of over $83 per month (with no roaming), and a net contribution of $2.3 million. This program also has high subscriber churn, which is offset by lower acquisition costs and higher subscriber revenues. This program is being adopted by GTE Mobilnet for many of its markets in 1994-1995. - With the expansion of Company-owned retail distribution we implemented an automated, real-time, point of sale system to enhance our retail image, improve the efficiency and productivity of our sales associates, improve internal accounting controls and accountability for phone inventory, accessories and cash, and provide management reports on retail productivity, costs and performance. The point of sale management team has developed training material, conducted training classes in the markets, developed and implemented policies and procedures, an on call support function [sic] and facilitated the implementation and set-up of all point of sale retail locations. - Sales Support is a program introduced in conjunction with the creation of a centralized Call Center for Customer Service. The Sales Support program is located and managed in each of the eight Area locations. The objective of Sales Support is to maximize opportunities to convert contacts with existing and prospective customers into revenue generation. Primary functions of the Sales Support group will include the sale of new or enhanced service and products, support of the "Customer Direct" sales program, enhancement of sales representative productivity through improved lead generation, customer retention and resolution of market-specific customer issues that cannot be handled by the centralized Call Center. -22- 80 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY ACCOMPLISHMENTS (CONT'D) - The Company has continued to place a great deal of emphasis on enhanced service revenues (e.g., voice mail, Mr. Rescue, etc.), develop new services (e.g., voice activated dialing and extension service plus) and introduce new rate plans to increase revenue per minute of use. Roaming revenue has continued to be a bright spot with a $39 million or 65% increase over 1993, and $36 million or 58% favorable variance to Budget. Roaming revenue has increased as a result of the strong growth in subscribers throughout the cellular industry, within the Company's markets (home roaming within the "SuperSystems" account for almost 14% of total roaming revenue), the continuation of favorable roaming rates and the addition of new cells which have increased our coverage and capacity for both home and roaming customers. - The Company has been developing a centralized Call Center designed to take advantage of economies of scale and to capitalize on capabilities through our technologies. The primary responsibilities of the Call Center will be customer contact, billing inquiries and financial services (e.g. collections) involving activities that are routine and standardized within the scope of our customer care functional activities. Market-related customer inquiries will be routed back to the Sales Support groups in each applicable Area. - Customer satisfaction and delivery of quality services remains a priority throughout our markets. The creation of the eight Areas allows the Company to move critical operational and support resources away from the headquarters and region locations closer to the customer. The development of personnel in leadership positions and the staffing of key planning and operational resources better positions the Company for future growth and enhances our ability to stay abreast of new technologies. Key management personnel are now better focused on their roles, responsibilities and accountabilities to ensure that the Company's assets are safeguarded and that our return on investments are maximized. -23- 81 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY ACCOMPLISHMENTS (CONT'D) - A key element of customer service is network quality and coverage. In 1994, the Company increased the number of subscribers per cell site to 1,206, an increase of 18% over 1993, and a 53% increase over this measure for 1992. The rapid increase in this measure has put additional strain on our network quality measures particularly in markets which have higher than budgeted growth rates. The accelerated growth rates have been accommodated by the Network organization through the necessary provisioning of switch, cell and radio additions to prevent significant degradation of service levels. However, ending subscribers are expected to exceed Budget by approximately 62 thousand, and capital which might have otherwise been directed to meet capacity was deployed to meet five year fill-in deadlines and provide improved coverage and quality to recently acquired RSA markets. - During the first quarter of 1994, we completed the conversion of the remaining Series I cell sites to Series II (digital ready) sites in MSA markets. These change-outs improve the performance and maintenance requirements of these markets as well as positions the Company for deployment of Digital Radio and Cellular Digital Packet Data (CDPD) technology. Additionally, the Company implemented network technologies which facilitate seamless roaming and automatic call delivery. - The new Area configuration has allowed Network personnel to improve their ability to plan and adjust network construction and support requirements through close coordination with market managers and marketing management. The long term planning process has been improved with regular monitoring and control measures to stay abreast of changing market conditions. The implementation of a site acquisition and planning function has allowed the Company to better plan and prepare for future growth and capacity requirements by accelerating the acquisition and zoning process to ensure that site locations are ready for construction when required. -24- 82 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY ACCOMPLISHMENTS (CONT'D) - Our higher growth rate and rapid changes have continued to place a great deal of pressure on our ability to maintain quality networks, customer service, operational infrastructure and internal accounting controls throughout our markets. Our subscriber churn rate has increased from 2.0% per month in 1993 to 2.2% in 1994. The increase is primarily attributed to the expansion of PayGo Residential Sales and the TeleGo programs which have no contractual obligation, and therefore no real commitment is required by the customer. Without these programs the churn rate would have been at 2.0% in 1994. - In 1994 the Company received "Good" reports from Internal Audit on their follow-up audit of the Kentucky Area, initial audit of the Alabama Area and initial audit of the internal and external financial reporting and budget and planning processes. We continue to improve our partnership relations and issued essentially all of the 1993 partnership audit reports on time in 1994. Total fraud expense (clone, tumbling and subscription) is expected to be below $1.5 million, as compared to $1.6 million in 1993. As a percentage of service revenue the 1994 fraud expense represents a 41% decline as compared to the corresponding 1993 rate. In August, the Company issued a three page financial and operational highlights report in Research Magazine, with over 30 thousand copies of the reprint requested by retail stock brokers throughout the country. -25- 83 CONTEL CELLULAR INC. 1994 MANAGEMENT LETTER (CONT'D) KEY ACCOMPLISHMENTS (CONT'D) - In summary, 1994 has been a year of outstanding achievements and financial performance which exceeds Budget for the current period and better positions the Company's markets for the future. The Company substantially exceeded subscriber growth, while reducing acquisition costs per subscriber which has significantly improved operating income. The additional subscribers and improved market share better positions the Company for future growth and emerging competition. The successful reorganization into eight Areas better position the Company's markets for future growth, improved financial performance and enhances our ability to proactively or reactively respond to competition in a timely manner. Management believes that it positively influenced the favorable performances of the Company, successfully carried out the reorganization within budgeted costs (the costs of the reorganization and the resulting Area configuration were not in the 1994 Budget), and made the necessary investments in infrastructure and customers to position the Company for greater success in the future. -26- 84 CONTEL CELLULAR INC.
TRADING VOLUME SUMMARY DATE DAILY HIGH DAILY LOW DAILY CLOSE VOLUME(MM) - -------- ---------- --------- ----------- ---------- 8/1/94 $18.00 $17.50 $17.75 6.6 8/2/94 18.00 17.50 18.00 23.7 8/3/94 18.50 18.00 18.25 51.5 8/4/94 19.00 18.25 19.00 36.2 8/5/94 19.00 18.25 18.75 24.3 8/8/94 19.00 18.25 18.25 4.6 8/9/94 19.25 18.25 19.25 38.1 8/10/94 19.38 18.75 19.25 52.3 8/11/94 19.25 18.75 18.75 7.2 8/12/94 19.25 18.50 18.50 9.5 8/15/94 19.25 18.50 18.50 8.8 8/16/94 19.25 18.50 18.50 11.4 8/17/94 18.75 18.00 18.25 23.1 8/18/94 18.75 18.00 18.00 11.6 8/19/94 18.75 18.00 18.75 2.3 8/22/94 18.72 17.75 18.25 24.2 8/23/94 18.25 17.50 18.25 97.7 8/24/94 18.75 18.00 18.50 63.1 8/25/94 18.75 18.00 18.00 13.3 8/26/94 18.50 18.00 18.00 17.2 8/29/94 18.50 17.75 17.75 1.4 8/30/94 18.50 17.75 18.13 6.0 8/31/94 18.50 17.75 17.75 1.6 9/1/94 18.50 17.75 18.50 5.5 9/2/94 18.50 18.00 18.00 12.2 9/6/94 18.50 18.00 18.00 12.9 9/7/94 18.25 17.75 17.75 9.4 ----------------------------------------------------------------- 9/8/94 23.50 22.75 23.50 3,324.1 ----------------------------------------------------------------- 9/9/94 23.63 23.13 23.13 1,452.4 9/12/94 23.50 23.13 23.25 225.4 9/13/94 23.50 23.25 23.25 132.8 9/14/94 23.63 23.25 23.50 70.6 9/15/94 23.75 23.38 23.50 28.8 9/16/94 24.00 23.50 23.88 147.5 9/19/94 23.88 23.75 23.88 22.6 9/20/94 23.88 23.50 23.50 160.0 9/21/94 23.63 23.50 23.50 35.4 9/22/94 23.75 23.50 23.50 118.2 9/23/94 23.75 23.50 23.75 154.1 9/26/94 23.88 23.50 23.63 18.0 9/27/94 23.75 23.50 23.75 27.7 9/28/94 23.75 23.50 23.75 11.1 9/29/94 23.75 23.50 23.50 28.0 9/30/94 23.75 23.50 23.63 74.8 10/3/94 23.75 23.50 23.75 128.0 10/4/94 23.75 23.50 23.75 15.8 10/5/94 23.88 23.50 23.63 43.5 10/6/94 23.88 23.50 23.88 14.8 10/7/94 23.88 23.50 23.50 7.4 10/10/94 23.69 23.50 23.63 2.5 10/11/94 23.88 23.63 23.63 5.4 DATE DAILY HIGH DAILY LOW DAILY CLOSE VOLUME(MM) - -------- ---------- --------- ----------- ---------- 10/12/94 23.88 23.63 23.75 21.8 10/13/94 24.00 23.75 23.75 6.8 10/14/94 24.00 23.75 23.75 22.4 10/17/94 24.00 23.75 23.75 38.7 10/18/94 24.00 23.75 23.75 52.5 10/19/94 24.13 23.75 24.00 204.6 10/20/94 24.13 23.88 24.00 15.2 10/21/94 24.13 23.88 24.00 8.0 10/24/94 24.25 23.88 23.88 12.6 10/25/94 24.13 24.00 24.06 120.4 10/26/94 24.13 24.00 24.06 253.7 10/27/94 24.25 24.00 24.25 255.2 10/28/94 24.38 24.00 24.13 32.1 10/31/94 24.25 24.13 24.13 13.5 11/1/94 24.38 24.13 24.13 10.3 11/2/94 24.25 24.13 24.13 7.2 11/3/94 24.38 24.13 24.13 7.7 11/4/94 24.25 24.00 24.25 45.0 11/7/94 24.25 24.00 24.13 35.3 11/8/94 24.75 24.25 24.38 99.5 11/9/94 24.75 24.38 24.38 31.5 11/10/94 24.75 24.38 24.75 22.8 11/11/94 24.75 24.50 24.63 19.1 11/14/94 24.88 24.63 24.88 16.5 11/15/94 24.88 24.63 24.75 26.0 11/16/94 24.88 24.63 24.63 18.3 11/17/94 24.88 24.25 24.63 42.0 11/18/94 24.38 24.25 24.38 41.8 11/21/94 24.38 24.19 24.38 44.2 11/22/94 24.50 24.25 24.50 23.6 11/23/94 24.38 24.00 24.38 235.5 11/25/94 24.38 24.25 24.38 37.4 11/28/94 24.50 24.13 24.50 24.3 11/29/94 24.50 24.13 24.38 30.0 11/30/94 24.50 24.13 24.31 62.4 12/1/94 24.50 24.13 24.50 16.0 12/2/94 24.50 24.13 24.25 250.0 12/5/94 24.50 24.13 24.25 3.1 12/6/94 24.50 24.13 24.38 52.1 12/7/94 24.50 24.13 24.13 112.4 12/8/94 24.50 24.13 24.38 22.8 12/9/94 24.38 24.13 24.38 4.6 12/12/94 24.38 24.13 24.38 17.1 12/13/94 24.50 24.13 24.31 55.1 12/14/94 24.38 24.13 24.38 10.4 12/15/94 24.50 24.25 24.50 2.7 12/16/94 24.50 24.13 24.13 11.5 12/19/94 24.13 24.13 24.13 0.3 12/20/94 24.38 24.13 24.38 1.5 12/21/94 24.50 24.13 24.50 6.9
- ----------------------- (1) Source: FactSet database. -27- 85 CONTEL CELLULAR INC. PREMIA PAID IN SELECTED MINORITY INTEREST PURCHASES(1) (All Numbers Reflect Averages) CELLULAR/TELECOMMUNICATIONS MINORITY BUYOUTS (Transactions Greater Than $100 million)
Premium ---------------------------------- Stake Purchased One Week One Month --------------- -------- --------- Less than 5% 0.6% 14.6% 5.0% to 9.9% 20.0% 42.9% 10.0% to 14.9% 11.7% 62.1% 15.0% to 19.9% 60.0% 100.0% 20.0% to 49.9% 59.8% 58.3%
ALL MINORITY BUYOUTS (Transactions Greater Than $25 million)
Premium ---------------------------------- Stake Purchased One Week One Month --------------- -------- --------- Less than 5% 8.2% 10.2% 5.0% to 9.9% 11.8% 10.6% 10.0% to 14.9% 4.8% 4.5% 15.0% to 19.9% 10.9% 11.2% 20.0% to 49.9% 29.6% 31.7%
__________________________________ (1) Source: Securities Data Corporation. Data covers all relevant purchases of stakes less than 50% since January 1, 1989. -28- 86 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS IN THE CELLULAR INDUSTRY(1)
PREMIUM 1 WEEK PRIOR VALUE OF % OF TO PREMIUM 4 DATE DEAL SHARES ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME ($MIL) ACQ. MENT DATE ANN. DATE - ----------- ------------------------------ ----------------------------- -------- ------ --------- ----------- 10/07/94 Monor Communications Group Inc. United International Holdings NA 47.62 NA NA 08/09/94 Wiltek Inc. Investor Group NA 20.00 NA NA 06/24/94 WorldPartners (KDD/AT&T Corp) Unisource Satellite Services NA 20.00 NA NA 09/23/94 International Comm. Corp. NYNEX Corp. NA NA NA NA 06/13/94 Nationwide Cellular Services Investor Group 0.8 0.83 1.9 8.2 03/11/94 CommNet Cellular Inc. Investor Group 12.6 6.00 4.0 NA 01/24/94 Cellular Inc. Investor Group 11.6 4.80 0.6 20.9 12/03/93 Cellular Communications Intl. Kingdom Capital Management 5.9 3.45 11.2 28.6 11/09/93 Nextel Communications Inc. Nippon Telegraph & Telephone 75.0 1.84 -6.8 6.9 10/04/93 Metricom Inc. Vulcan Ventures 17.5 12.40 20.0 42.9 09/09/93 Internet Communications Corp. Investor 1.6 9.40 -0.8 101.4 06/14/93 OCOM Corp. Investor Group 9.6 9.63 29.8 64.9 01/12/93 LDDS Communications Inc. Investor 6.3 0.45 -2.9 2.4 09/29/92 Centel Corp. Eagle Asset Management Inc. 1.6 0.06 -11.9 -1.6 10/14/91 International Telecharge Inc. Investor 4.0 33.0 60 100.0 09/06/91 OCOM Corp. Goldman Sachs & Co. 0.6 2.01 8.0 54.3 04/05/91 US WEST New Vector Group Inc. Goldman Sachs & Co. 6.3 1.60 0.3 11.7 07/25/90 Cellular Communications Inc. PacTel Corp (Pacific Telesis) 87.0 5.00 13.9 20.0 03/08/90 McCaw Cellular Commun Inc. British Telecom USA Holdings 110.0 2.70 4.9 -0.1 01/19/89 McCaw Cellular Commun Inc. British Telecom USA Holdings 1,370.0 19.70 59.8 58.3
__________________________________ (1) Source: Securities Data Corporation. -29- 87 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS(1) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - ----------- ------------------------------ ------------------------ ----------- ----------- ---------- ------------ 10/25/94 Castle & Cooke Homes Inc. Dole Food Company 81.0 17.2 9.57 10.53 10/17/94 Chemical Waste Management WMX Technologies 369.1 21.4 13.84 12.38 10/18/94 National Gypsum Investor Group 35.1 5.0 1.10 -11.90 09/28/94 Ogden Projects Inc. Ogden Corp. 106.0 16.0 7.30 2.50 09/22/94 Santa Fe Pacific Corp. Alleghany Corp. 177.8 4.3 - 14.70 09/16/94 Salomon Inc. Investor Group 54.3 1.5 2.40 2.10 08/29/94 Columbia Gas System Inc. Investor Group 500.0 - 0.20 -3.80 08/09/94 Terra Industries Inc. Minorca SA 99.8 - 25.0 -4.80 07/25/94 Viacom Inc. (National Amusements) Tracinda Corp. 310.0 5.0 -15.10 -7.50 07/18/94 National Gypsum Investor Group 33.3 4.8 0.40 - 06/16/94 Baxter International Inc. Investor Group 122.2 1.7 0.50 2.00 06/16/94 Loral Corp. Loral Pension Plan 108.0 - -4.00 - 06/14/94 Sprint Corp. Investor Group 2,026.0 - 24.70 26.40 05/11/94 General Motors Corp. General Motors Pension 6,239.3 - -36.20 -33.20 Fund 05/06/94 Dreyer's Grand Ice Cream Inc. Nestle USA Inc. 96.0 - 26.70 32.00 (Nestle SA) 04/27/94 Policy Management Systems Corp. General Atlantic Partners 37.6 7.5 -8.70 -2.90 NY 04/22/94 Genentech Inc. Roche Holdings AG 139.7 16.1 12.40 9.90 04/12/94 Actava Group Inc. Renaissance Partners 28.7 - 14.80 12.70 04/05/94 Lehman Brothers Holdings Inc. Nippon Life Insurance Co. 89.2 3.2 -23.80 -18.00 04/01/94 TakeCare Inc. Investor Group 47.5 5.3 1.000 0.30 03/16/94 Kemper Corp. Southeastern Asset 108.9 8.1 0.80 -0.10 Management 02/18/94 Applebee's International Inc. Investor 27.5 5.3 13.3 -26.6 01/24/94 Geon Co. Investor Group 42.2 6.4 -0.3 4.4 01/24/94 Lehman Brothers Holdings Inc. Employee Stock Ownership 181.7 10.0 -44.8 -40.6 Plan 01/21/94 Video Lottery Technologies Inc. Electronic Data Systems 67.6 20.0 50.7 64.2 Corp. 01/13/94 Wells Fargo & Co. Investor 86.5 1.1 4.3 6.9 01/04/94 National Health Laboratories Investor Group 25.0 1.9 12.7 23.9 12/23/93 Dreyfus Corp. Investor Group 63.3 3.8 2.2 4.0
__________________________________ (1) Source: Securities Data Corporation. -30- 88 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - ----------- ------------------------------ ------------------------ ----------- ----------- ---------- ------------ 12/16/93 Time Warner Seagram Co. Ltd. 982.7 6.1 - -0.3 12/13/93 Salomon Inc. National Indemnity Co. 301.8 5.4 10.9 17.3 12/10/93 Wilcox & Gibbs Inc. Rextel (Pinault- 31.4 10.0 14.3 26.3 Printemps) 12/06/93 CellPro Inc. Corange Ltd. 50.0 8.0 55.3 58.1 12/06/93 CellPro Inc. Corange Ltd. 60.0 - 116.2 120.2 12/02/93 Jones Intercable Inc. BCE Telecom 55.0 13.0 20.5 25.7 International 11/10/93 Valley Fashions Corp. Investor 36.9 - 2.7 - 11/10/93 Wells Fargo & Co Investor Group 33.0 0.6 0.9 -16.9 11/09/93 Nextel Communications Inc. Nippon Telegraph & 75.0 1.8 -6.8 6.9 Telephone 10/29/93 Protein Design Labs Inc. Corange Ltd. 30.0 8.1 53.8 77.0 10/22/93 Rivervood Manville Corp. 50.0 1.0 12.0 8.9 International Corp. 10/21/93 MagneTek Inc. Singapore 25.6 6.7 19.6 13.3 10/18/93 Navistar International Investor Group 75.6 6.2 16.7 30.4 Corp. 08/20/93 Dr. Pepper/Seven-Up Cadbury Schweppes PLC 231.3 20.2 9.4 2.7 Cos. lnc. 08//19/93 Maxtor Corp. Hyundai Electronics 150.0 40.0 50.8 37.4 Industries 08/12/93 Permian Basin Royalty Burlington Resources 74.7 33.0 25.2 29.3 Trust Inc. 07/27/93 Legent Corp. Investor Group 59.4 8.5 107.9 2.5 07/22/93 North American Mortgage Co. Investor Group 34.7 7.5 24.7 48.8 06/18/93 C-TEC Corp. RCN Corp. (Peter 196.5 34.0 86.3 91.5 Kiewit Sons) 06/03/93 Applied Immune Science Inc. Rhone-Poulenc Rorer 113.0 37.0 48.1 59.3 Inc. 06/02/93 MCI Communications Corp. British 3,465.2 16.8 -28.1 -19.4 Telecommunications PLC 06/01/93 International Totalizator Sys. Berjaya Lottery 25.6 28.4 15.8 22.2 Management (HK) 05/26/93 Time Warner Seagram Co. Ltd. 1,189.0 8.1 27.9 38.4 05/25/93 Amax Gold Inc. (AMAX Inc.) Shareholders 160.6 28.0 -16.9 -6.3 05/07/93 Pet Inc. Investor Group 28.6 1.6 15.7 14.8 04/23/93 Newmont Mining Corp. Investor Group 268.6 10.0 -5.4 -8.7 04/23/93 Newmont Mining Corp. Investor Group 126.4 - -5.4 -8.7 04/20/93 Humana Inc. Investor 55.6 3.9 101.9 75.9 04/19/93 Home Shopping Network Inc. Liberty Media Corp. 114.0 16.4 40.0 19.1
__________________________________ (1) Source: Securities Data Corporation. -31- 89 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS (1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- -------------------------------- ----------- ----------- ---------- ------------ 03/22/93 Marvel Entertainment Group Inc. New Marvel Holdings Inc. 300.0 20.3 42.9 58.9 02/17/93 Doskocil Cos. Inc. Joseph Littlejohn & Levy 30.0 25.0 -2.4 - 02/11/93 American Express Co. Fund American Enterprise Hldgs. 125.0 1.0 0.5 -0.5 02/02/93 Wells Fargo & Co. Investor 49.5 0.9 -0.3 30.5 01/25/93 International Family Ent. Inc. Investor Group 38.7 11.9 4.1 13.4 01/22/93 Republic Pictures Corp. Blockbuster Entertainment Corp. 25.0 34.2 33.3 35.6 01/12/93 Squibb Howard Broadcasting Co. EW Scripps Co. 28.3 5.6 - - 01/08/93 Santa Fe Energy Resources Investor Group 91.6 11.4 -1.4 3.0 12/24/92 Santa Fe Energy Resources Sarlos Trading 82.7 10.9 3.0 4.6 12/23/92 Jefferson-Pilot Corp. Investor Group 109.1 1.7 2.8 12.2 12/10/92 QVC Network Inc. Arrow Investments Inc. 25.0 - - 29.0 12/08/92 Pittston Co. Employee Benefits Trust 54.5 9.8 -4.4 4.8 12/01/92 Chicago and North Western Hldg. Union Pacific Corp. 39.0 4.8 -0.6 -2.9 11/13/92 Tennecco Inc. Employee Stock Ownership Plan 432.0 8.6 4.3 2.1 11/02/92 Eastern Enterprises Investor Group 31.6 6.1 7.4 8.5 10/19/92 MNC Financial Inc. Fidelity Investments (FMR Corp.) 42.5 5.6 -29.2 -19.0 10/08/92 Wells Fargo & Co. National Indemnity Co. 37.8 1.0 2.7 1.7 10/07/92 DPL Inc. Employee Stock Ownership Plan 87.9 - -1.3 -32.6 10/06/92 MidSouth Corp. Kansas City Southern Inds. Inc. 67.8 33.8 85.1 83.0 09/21/92 Hartmarx Corp. Traco International NV 30.0 17.0 10.5 5.0 09/11/92 Berlitz International Inc. Investor Group 34.7 7.6 39.1 26.3 09/04/92 Carriage Industries Inc. Dixie Yarns Inc. 26.7 44.1 37.7 32.5 09/03/92 DWG Corp. Trian Group LP 71.8 23.1 14.3 33.3 08/14/92 Champion International Corp. Loews Corp. 67.6 3.0 -1.5 -3.9 07/23/92 General Dynamics Corp. Berkshire Hathaway Inc. 321.4 14.9 -0.7 3.5 07/22/92 Enron Corp. Electronic Data Systems Corp. 149.5 3.1 -2.7 0.8 07/22/92 Grow Group. Corimon CA SACA 56.3 26.0 28.8 32.7 07/17/92 MNC Financial Inc. NationsBank Corp. 200.0 16.0 -2.1 11.9 07/16/92 Centocor Inc. Eli Lilly & Co. 50.0 5.0 86.9 -9.5
- ---------------------------------- (1) Source: Securities Data Corporation. -32- 90 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS (1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMIUM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- -------------------------------- ----------- ----------- ---------- ------------ 06/29/92 Fleet Call Inc. Comcast Corp. 100.0 - 43.6 13.1 06/25/92 TW Holdings Inc. Kohlberg Kravis Roberts & Co. 450.0 47.2 - -15.8 06/17/92 Southland Corp. C. Itoh & Co. Ltd. 30.6 - 6.7 4.3 05/12/92 Pilgrim's Pride Corp. Archer-Daniels-Midland Co. 30.0 18.0 14.3 2.1 04/07/92 Borden Inc. Merrill Lynch & Co. Inc. 224.0 4.7 -1.2 -1.5 03/16/92 Tektronix Inc. Investor Group 68.8 11.4 27.2 10.4 02/21/92 Blockbuster Entertainment Corp. Electris Finance SA 27.0 1.2 -1.8 -0.9 12/23/91 Roberts Pharmaceutical Corp. Yamanouchi Pharmaceutical Co. 95.4 28.7 -7.4 7.1 11/18/91 Blockbuster Entertainment Corp. Philips Electronics NV 66.0 3.8 -5.4 -7.4 10/31/91 American Television & Commun. Investor Group 39.8 3.7 6.1 11.2 10/25/91 Vons Cos. Inc. Investor Group 41.5 3.6 2.9 0.5 10/18/91 Salomon Inc. Investor Group 213.5 6.6 22.3 31.1 10/11/91 Kansas Gas & Electric Co. Alpine Associates LP 44.0 4.3 6.7 11.5 09/18/91 NL Industries Inc. Tremont Corp. 91.7 12.4 -29.3 -25.4 09/13/91 Enterra Corp. Undisclosed Acquiror 38.6 11.8 -21.9 -20.8 09/09/91 Carpenter Technology Corp. Employee Stock Ownership Plan 30.0 5.4 31.3 37.9 08/29/91 NCR Corp. Capital Group Inc. 647.0 9.3 87.7 112.4 08/22/91 American Medical Holdings Inc. Investor Group 90.1 - - -7.2 08/13/91 Emerson Radio Corp. Fidenas Investment Ltd. 32.5 - 24.4 6.7 08/13/91 Penn Central Corp. Investor Group 27.5 2.2 5.7 11.8 06/26/91 Triton Energy Corp. Investor Group 70.7 11.9 69.9 68.7 06/13/91 ARCO Chemical Co. (ARCO) Archer-Daniels-Midland Co. 211.9 5.0 6.3 4.8 06/12/91 Champion International Corp. Loews Corp. 87.3 3.4 -2.6 7.2 06/07/91 Stanley Works Employee Stock Ownership Plan 185.6 12.0 -0.7 4.6 06/04/91 Carolco Pictures Inc. RCS Video 25.0 1.1 100.0 100.0 05/24/91 Gulf Resources & Chemical Corp. Nycal Corp. 33.5 35.1 39.6 29.8 05/23/91 Square D Co. Investor Group 101.0 4.9 - 8.9 04/23/91 Office Depot Inc. Carrefour SA 40.0 9.3 -6.7 -0.9 04/05/91 Spelling Entertainment Inc. Charter Co. (American Financial) 65.3 31.6 19.0 22.0
- --------------------------------- (1) Source: Securities Data Corporation. -33- 91 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------ 04/04/91 Univar Corp. Dow Chemical Co. 30.1 9.7 7.4 15.2 03/28/91 ITEL Corp. TIG Partners L.P. 37.9 8.0 -2.9 -1.0 03/20/91 First Empire State Corp. National Indemnity Co. 40.0 7.6 20.5 25.8 03/18/91 First Fidelety Bancorporation Banco de Santander SA 242.4 11.6 10.3 15.9 03/18/91 First Fidelety Bancorporation Banco de Santander SA 221.1 11.8 0.5 5.7 03/14/91 California Energy Co. Peter Kiewit Sons Inc. 92.0 30.0 2.1 12.9 03/13/91 HJ Heinz Co. Investor 68.5 0.7 -1.4 4.3 02/21/91 Citicorp Investor 590.0 9.9 -4.5 18.5 02/08/91 Seagate Technology Inc. Salomon Brothers Inc. (Salomon) 143.0 16.8 0.8 14.9 02/06/91 Amgen Inc. Undisclosed Investor 207.5 6.2 12.4 42.2 01/09/91 CBS Inc. Undisclosed Acquiror 45.0 1.0 4.5 2.6 01/03/91 Travelers Corp. American General Corp. 61.2 3.6 - 9.9 12/31/90 Media General Inc. Investor Group 61.4 12.0 11.0 22.9 12/21/90 MCA Inc. Investor Group 272.7 5.3 2.4 4.9 12/18/90 New Plan REalty Trust Algemeen Burgerlijk Pensionen 67.0 13.0 -0.7 4.7 12/14/90 Ashland Oil Inc. JP Morgan & Co. Inc. 100.0 5.1 5.1 7.0 12/14/90 Chrysler Corp. Tracinda Corp. 270.0 9.8 4.3 8.9 12/05/90 UAL Corp. Reliance Group Holdings Inc. 73.5 2.0 71.8 67.8 11/23/90 NCNB Corp., Charlotte, NC Investor Group 110.5 7.8 2.0 39.8 11/08/90 Perkin-Elmer Corp. Investor Group 32.9 4.5 8.6 17.3 10/31/90 Unilab Corp. (Unilabs Holdings) MetPath Inc. (Corning Inc.) 49.2 23.0 120.1 111.4 10/29/90 Trinity Industries Inc. Investor Group 33.5 9.3 -1.4 -18.3 10/24/90 Wells Fargo & Co. Berkshire Hathaway Inc. 247.0 9.8 11.6 5.9 10/17/90 Echlin Inc. Investor Group 33.8 5.4 16.9 8.4 10/16/90 Newmont Mining Corp. Investor Group 1,300.0 49.0 0.3 -11.6 10/10/90 Houston Industries Inc. Employee Stock Ownership Plan 330.0 - 2.3 3.1 10/05/90 Whitman Corp. Investor Group 127.1 5.1 25.8 21.9 09/19/90 Ohio Edison Co. Employee Stock Ownership Plan 192.0 7.9 -2.3 -5.9 09/19/90 Time Warner Investor 39.3 0.3 11.1 17.1
- -------------------------------- (1) Source: Securities Data Corporation. -34- 92 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS (1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- --------------------------------- ------------------------------- ----------- ----------- ---------- ------------ 09/17/90 Phillips Petroleum Co. Inc. Employee Stock Ownership Plan 400.0 4.0 -0.4 -4.6 09/11/90 ASK Computer Systems Inc. Electronic Data Systems Corp. 40.0 19.7 34.8 16.5 08/29/90 Ferro Corp. Investor Group 39.4 9.6 -4.3 -12.6 08/27/90 Champion International Corp. Loews Corp. 341.0 12.1 14.6 8.5 08/20/90 Holnam Inc. (Holdernam Inc.) Holdernam Inc. (Holderbank) 99.9 19.7 2.9 -7.7 08/15/90 Baker Hughes Inc. Investor Group 105.3 - 63.3 84.7 08/15/90 Fruit of the Loom Inc. Farley Inc. 57.9 6.1 38.8 18.8 08/15/90 Fruit of the Loom Inc. Land Free Investments 43.1 6.1 3.4 -11.5 08/09/90 Argonaut Group Inc. Investor Group 48.2 6.6 0.7 - 08/09/90 Paramount Communications Investor Group 269.6 6.0 -0.3 -7.0 08/08/90 Continental Airlines Hldgs. Inc. SAS 31.5 5.2 180.0 143.5 07/25/90 Cellular Communications Inc. PacTel Corp. (Pacific Telesis) 87.0 5.0 13.9 20.0 07/24/90 BellSouth Corp. Employee Stock Ownership Plan 195.0 - -2.1 -3.1 07/18/90 Great American Mgmt. & Invt. Inc. Investor Group 50.0 18.0 4.2 4.2 07/17/90 FPL Group Inc. Employee Stock Ownership Plan 360.0 9.4 -2.1 -6.8 07/16/90 Chevron Corp. Pennzoil Co. 89.6 0.5 0.9 -1.1 07/13/90 Cummins Engine Co. Inc. Tenneco Inc. 100.0 10.8 24.1 14.4 07/13/90 Cummins Engine Co. Inc. Ford Motor Co. 100.0 10.8 24.1 14.4 07/13/90 Cummins Engine Co. Inc. Kubota Ltd. 50.0 5.4 24.1 14.4 07/05/90 Avon Products Inc. Chartwell Associates L.P. 149.0 7.0 3.4 4.2 06/25/90 Rochester Telephone Corp. Investor Group 28.4 3.1 5.7 7.3 06/19/90 United Asset Management Corp. Investor Group 28.0 9.7 0.9 0.9 06/15/90 Gannett Co. Inc. Employee Stock Ownership Plan 50.0 0.7 -1.2 7.0 06/14/90 The Neiman-Marcus Group Inc. Investor Group 38.9 7.6 -3.0 3.0 06/12/90 American Express Co. Nippon Life Insurance Co. 300.0 2.4 -3.4 -1.1 06/01/90 Telephone and Data Systems Inc. Investor Group 145.8 16.2 1.2 14.9 05/31/90 Corning Inc. Market Street Trust Co. 270.8 5.8 -2.0 5.9 05/31/90 First Bank System Inc. Investor Group 175.0 16.7 -2.6 6.7 05/30/90 Armstrong World Industries Inc. Various Buyers 171.5 11.7 -3.4 7.5
- ---------------------------------- (1) Source: Securities Data Corporation. -35- 93 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------ 05/30/90 Global Marine Inc. Howard Weill Labouisse 53.5 12.8 -7.9 -7.9 05/24/90 UJB Financial Corp. Chilmark Management Corp. 54.4 6.7 18.2 39.3 05/07/90 Norton Co. Investor Group 166.5 10.1 0.6 20.6 04/12/90 Marion Merrell Dow Inc. Dow Chemicals Co. 112.7 1.5 41.5 52.9 04/09/90 C-TEC Corp. Investor Group 28.3 9.1 23.5 10.5 04/04/90 Northrop Corp. Delaware Management Co. 43.5 6.3 - -11.8 04/04/90 Northrop Corp. Sanford C. Bernstein and Co. Inc. 57.0 8.1 - -11.8 03/28/90 United Artists Entertainment Investor Group 70.2 7.5 1.8 -7.4 03/21/90 The Black & Decker Corp. Employee Stock Ownership Plan 47.0 4.2 2.8 13.3 03/16/90 Coca-Cola Enterprises Inc. Investor Group 115.0 6.1 8.4 9.3 03/08/90 McCaw Cellular Commun. Inc. British Telecom USA Holdings 110.0 2.7 4.9 -0.1 03/07/90 Great Northern Nekoosa Corp. Investor Group 257.0 7.1 0.2 13.1 02/23/90 Media General Inc. Investor Group 131.5 17.8 -2.9 0.4 02/14/90 First Interstate Bancorp, CA Kohlberg Kravis Roberts & Co. 111.5 5.9 -8.3 -20.5 02/08/90 Cyprus Minerals Co. Employee Stock Ownership Plan 96.0 10.0 -6.3 -18.3 02/05/90 Aristech Chemical Corp. Investor Group 43.7 5.3 4.9 32.3 01/16/90 Southwest Airlines Co. Investor Group 35.3 - 12.2 12.2 12/28/89 Pacific Telesis Group Employee Stock Ownership Plan 691.3 - 1.5 7.6 12/26/28 Bank of Boston Corp. Investor Group 99.7 6.2 38.5 9.8 12/20/89 Blockbuster Entertainment Corp. Undisclosed Acquiror 115.0 12.0 -11.1 -20.9 12/13/89 Pacific Enterprises Inc. Employee Stock Ownership Plan 175.0 5.2 1.8 -2.5 12/11/89 AVX Corp. Goldman Sachs & Co. 31.6 8.0 -0.4 1.7 12/07/89 Chevron Corp. Pennzoil Co. 2,137.0 8.8 4.9 17.1 12/06/89 MBIA Inc. Credit Local de France SA 49.0 4.9 -12.2 -10.0 11/27/89 Chevron Corp. Employee Stock Ownership Plan 1,000.0 4.1 12.7 5.2 11/27/89 Standard Shares Inc. Investor Group 38.5 1.3 2.3 2.8 11/24/89 Vista Chemical Co. Harris Associates L.P. 68.2 17.0 4.5 4.9 11/21/89 Avon Products Inc. Investor Group 93.9 4.5 4.0 28.0 11/21/89 Lockheed Corp. Investor Group 199.0 7.4 -4.5 -9.3
__________________________________ (1) Source: Securities Data Corporation. -36- 94 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------ 11/13/89 Barnett Banks Inc. Employee Stock Ownership Plan 190.0 - 3.0 -3.1 11/10/89 Avon Products Inc. Chartwell Associates L.P. 310.8 16.0 21.7 30.3 11/08/89 US Trust Corp. Central Capital Corp. 35.3 - - -3.9 11/03/89 UAL Corp. Condor Partners L.P. 410.0 11.4 -7.0 -43.8 10/26/89 Delta Air Lines Inc. Singapore Airlines Ltd. 181.4 5.0 3.7 1.7 10/26/89 Media General Inc. Investor Group 34.1 4.2 12.3 2.6 10/05/89 AMR Corp. Investor 250.0 4.7 -0.9 0.5 09/22/89 Merrill Lynch & Co. Inc. Employee Sock Ownership Plan 384.9 12.0 - -7.3 09/18/89 Manufacturers Hanover Corp. Dai-Ichi Kangyo Bank Ltd. 148.5 4.9 5.9 10.1 09/11/89 Chubb Corp. Employee Stock Ownership Plan 150.0 5.0 -10.6 -7.5 08/15/89 American Television & Commun. Investor Group 87.1 9.1 -9.5 -10.2 08/11/89 USAir Group Inc. Employee Stock Ownership Plan 113.6 5.0 -0.7 10.8 08/09/89 Texas Air Corp. Loomis Sayles & Co. 87.0 12.6 7.3 7.3 08/03/89 Computer Associates Int'l Inc. Investor 76.7 1.0 -0.7 -5.3 08/02/89 Chris-Craft Industries Inc. Investor Group 56.0 9.8 4.0 5.6 07/31/89 Century Telephone Enterprises Investor Group 87.0 10.3 6.2 - 07/26/89 Cummins Engine Co. Inc. Industrial Equity (Pacific) Ltd. 51.8 8.3 5.7 -4.3 07/19/89 Beverly Enterprises Inc. Undisclosed Acquiror 29.1 6.5 -5.7 3.1 07/18/89 Arctic Alaska Fisheries Corp. Nippon Suisan USA Inc. 27.0 12.0 33.3 35.0 07/17/89 Cummins Engine Co. Inc. Investor Group 72.0 8.3 8.7 -1.1 07/17/89 Longview Fibre Co. Investor Group 34.3 4.2 9.1 11.8 07/14/89 GTE Corp. Employee Stock Ownership Plan 700.0 3.8 4.9 10.6 07/11/89 Cummins Engine Co. Inc. Employee Stock Ownership Plan 75.0 11.0 -0.4 -11.2 07/10/89 Delta Air Lines Inc. Swissair 193.4 6.0 13.1 13.8 07/07/89 General Re Corp. Employee Stock Ownership Plan 150.0 1.9 31.0 26.7 07/05/89 Armstrong World Industries Inc. First City Financial Corp. Ltd. 191.5 10.6 3.9 8.4 07/03/89 Georgia Gulf Corp. NL Industries Inc. 88.2 9.9 2.0 3.1 06/29/89 Salomon Inc. Instituto Bancario San Paolo 155.0 - 2.6 -2.0 06/28/89 Lukens Inc. Employee Stock Ownership Plan 33.0 - 13.2 17.6
__________________________________ (1) Source: Securities Data Corporation. -37- 95 SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------ 06/27/89 Western Publishing Group Inc. Investor Group 25.2 5.8 10.7 4.5 06/21/89 Travelers Corp. Employee Stock Ownership Plan 200.0 3.7 25.7 31.5 06/13/89 Maytag Corp. Employee Stock Ownership Plan 65.0 3.0 -3.1 8.7 06/12/89 Questar Corp. Employee Stock Ownership Plan 35.6 5.2 2.5 5.2 06/07/89 MA Hanna Co. Brascade Resources (Brascan) 178.0 28.0 20.6 18.8 06/06/89 Stanley Works Employee Stock Ownership Plan 101.6 6.8 -0.7 3.4 05/03/89 Avon Products Inc. A/J Partnership 150.8 10.3 20.1 31.8 05/03/89 Federal-Mogul Corp. Investor Group 55.4 9.3 -48.1 -50.1 04/25/89 Graphic Scanning Corp. Investor Group 56.6 15.1 28.4 31.9 04/21/89 Diamond Shamrock R&M Inc. Employee Stock Ownership Plan 30.0 5.2 -12.2 9.0 04/20/89 Dunkin' Donuts Inc. Employee Stock Ownership Plan 38.8 15.5 2.2 9.3 04/20/89 Dunkin' Donuts Inc. Kingsbridge Capital Group 63.8 23.0 30.4 39.5 04/19/89 USAir Group Inc. Investor Group 162.0 8.4 3.1 10.8 04/06/89 Vons Cos. Inc. Investor Group 76.9 14.0 36.1 30.6 04/05/89 Centel Cable Television Co. Investor Group 34.1 16.5 4.6 -2.2 04/05/89 National Data Corp. Salomon Brothers Inc. (Salomon) 28.3 9.0 3.3 8.4 04/04/89 Lockheed Corp. Employee Stock Ownership Plan 500.0 17.0 16.5 21.3 04/04/89 Trubune Co. Employee Stock Ownership Plan 350.0 8.5 33.3 44.7 03/31/89 Barris Industries Inc. Monile Ltd. 34.5 24.4 73.3 62.5 03/30/89 NWA Inc. NWA Co. 57.0 2.8 13.3 - 03/28/89 NWA Inc. Investor Group 91.3 4.9 -3.4 -12.0 03/24/89 Citizens Utilities Co. Century Communications Corp. 48.0 - 28.5 32.5 03/24/89 Lyondell Petrochemica Co. ARCO 29.0 1.2 2.5 0.4 03/20/89 Time Inc. Robert M Bass Group 129.0 2.0 9.3 3.6 03/15/89 Coca-Cola Co. Berkshire Hathaway Inc. 1,173.0 6.8 1.0 5.5 03/09/89 Westmoreland Coal Co. Penn Virginia Corp. 25.5 20.0 1.3 -3.4 03/06/89 SPX Corp. Employee Stock Ownership Plan 50.0 11.4 -22.3 -26.3 02/27/89 Polaroid Corp. Investor 118.7 4.0 -5.1 2.2 02/24/89 Heritage Media Corp. Hallmark Cards Inc. 30.0 37.8 4.8 15.8 01/30/89 Fairchild Industries Inc. Employee Stock Ownership Plan 25.7 11.2 -1.2 1.9 01/26/89 UAL Corp. Reliance Insurance Co. 165.7 6.9 9.7 14.7 01/19/89 McCaw Cellular Commun. Inc. British Telecom USA Holdings 1,370.0 19.7 59.8 58.3
__________________________________ (1) Source: Securities Data Corporation. -38- 96 CONTEL CELLULAR INC. SELECTED MINORITY STAKE TRANSACTIONS(1) (CONT'D) (Transactions greater than $25 million)
PREMIUM 1 WEEK PRIOR TO PREMUIM 4 DATE VALUE OF % OF ANNOUNCE- WEEKS PRIOR ANNOUNCED TARGET NAME ACQUIRER NAME DEAL ($MIL) SHARES ACQ. MENT DATE TO ANN. DATE - --------- ------------------------------- ------------------------------- ----------- ----------- ---------- ------------ 01/19/89 PPG Industries Inc. Employee Stock Ownership Plan 252.0 6.0 - 5.7 01/16/89 Illinois Central Trans Co. Archer-Daniels-Midland Co. 42.6 9.8 6.7 12.1 01/06/89 Gulf Resources & Chemical Corp. Inoco PLC 39.5 33.9 1.0 9.5 01/05/89 ISS International Service Sys. ISS International Service A/S 25.0 - 15.4 13.2
__________________________________ (1) Source: Securities Data Corporation. -39- 97 CONTEL CELLULAR INC. STATE OF THE CELLULAR INDUSTRY - COMPANY DIFFERENTIATION - In the current environment, cellular stocks are differentiated by investors; however, instead of differentiating primarily on the basis of a company's likelihood of being sold at private market value, the differentiation now is driven by the perceived overall attractiveness/"foot print" of the markets served by the cellular operator and actual operating performance. Special emphasis is being placed on gross and net additions, penetration rates, revenue per subscriber, and cash flow margins. - NEW ENTRANTS - During the last year, a number of factors have either caused or been a part of a great expansion in both the number of participants in, as well as the number of forms of, wireless communications systems. - The following industries have included new or expanded participants in the wireless business: - RBOCs - all into wireless, with mergers and alliances occurring - Long distance phone companies - AT&T (McCaw), MCI (Various discussions), Sprint (Centel/Cable) - Regional long distance phone companies - All becoming resellers or own wireless - Cable companies - Comcast, Century, US West/Wometco - Local exchange carriers - packaging cellular with products or preparing to bid for PCS - The following modes of wireless communication have emerged as real or possible threats to cellular/PCS: - SMR/ESMR - Nextel - Various satellite systems - Globalstar, Iridium - Other wireless, such as FHMA technology by Geotek -40- 98 CONTEL CELLULAR INC. STATE OF THE CELLULAR INDUSTRY (CONT'D) - - EMERGING EMPHASIS ON NATIONAL BRANDING - There has been a lack of name recognition regarding wireless communication providers by the general public. This will cause strategic/operating changes including: - Attempts to create national/regional geographic communications networks (i.e., Bell Atlantic/NYNEX/AirTouch/US West, etc.). - Revitalization/upgrade of marketing strategies. - Through both of the above, many firms are attempting to create nationally known cellular/wireless brand names. - - AT&T / MCCAW MERGER - Acceleration of $1 billion conversion of network to digital over next 18 months. - After McCaw's network is converted to allow equal access to all long distances carriers for its subscribers, the Company's service will be sold as AT&T CellularOne, a quasi-national branded cellular network. Eventually, AT&T will bundle wireless and long distance service for the purpose of meeting the total telecommunications needs of its customers. - Currently in discussions with other wireless providers. -41- 99 CONTEL CELLULAR INC. STATE OF THE CELLULAR INDUSTRY (CONT'D) - - FCC DEFINES 1.8 GHZ MARKET STRUCTURE - The licensed spectrum will be awarded according to MTAS (major trading areas) and BTAs (basic trading areas), both of which are significantly larger than MSA/RSA service areas. - First to go will be the 30-MHz licenses (Blocks A and B) in each of the 51 MTAs, followed by the two entrepreneurs' bands of one 30-MHz license (Block C) and one 10-MHz license (Block F) in each of 492 BTAs. Last will be bidding for the two remaining 10-MHz BTA licenses (Blocks D and E). - Will alter the competitive structure (protected duopoly) enjoyed to date by cellular, but will give Cellular providers opportunity to grow/fill in systems. - - THE DEBATE OVER WIRELESS DIGITAL TRANSMISSION - Time-division multiple-access technology (TDMA) - works now but less capacity than CDMA. - Code-division multiple-access technology (CDMA) - not technologically proven but potentially more capacity than TDMA. - Bellsouth announced June 15 it will employ TDMA beginning in the fourth quarter. It is expected to take two years to implement. - GTE Mobilnet has announced support of, but not commitment to, CDMA. - 42 - 100 CONTEL CELLULAR INC. STATE OF THE CELLULAR INDUSTRY (CONT'D) - - WIRELESS CONSOLIDATION; RBOCS PLANNED OR POTENTIAL JOINT VENTURES INCLUDE: - Bell Atlantic/NYNEX/AirTouch/USWEST (agreement) - AT&T and SBC Communications are expected to form a marketing alliance. - - BREAKUP OF TELCO/CABLE TELEVISION TRANSACTIONS - Bell Atlantic/TCI - SBC Communications/Cox - SBC Communications/Hauser (rumored) - But Sprint/Cable MSO deal should be successful - - THE ROLE FOR WIRELESS DATA - High growth segment - Little success to date by industry specialists (RAM, Ardis) - CDPD standard being established - Success requires understanding needs of business customers and securing appropriate hardware for individuals. - New providers (Geotek, eg.) - 43 - 101 CONTEL CELLULAR INC.
SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (amounts in millions, except per POP data) AIR TOUCH BCE MOBILE CENTENNIAL COMMNET CONTEL COMPANY COMMUNICATIONS COMMUNICATIONS(b1) CELLULAR CELLULAR CELLULAR(e1) - ------- -------------- ------------------ --------- -------- ------------ Price @ 12/21/94 $ 28.38 $ 31.19 $ 15.50 $ 28.13 $ 24.50 Date of Financials 9/30/94 12/31/93 8/31/94 6/30/94 9/30/94 Date of Last Fiscal Year 12/31/93 12/31/93 5/31/94 9/30/93 12/31/93 MV of Equity (Fully Diluted) $ 14,007.2 $ 2,161.1 $ 386.4 $ 415.2 $ 2,779.1 Market Capitalization 13,598.0 2,429.9 743.4 556.5 4,845.6 Cellular Asset Value 6,517.8 2,296.7 740.6 534.0 4,515.6 Cellular License Value (1) 5,688.6 1,821.8 704.7 467.2 3,975.8 Market Capitalization per Total Net POP $ 142(a1) $ 155 $ 124 $ 176 $ 203 Cellular Asset Value per Total Net POP 186 146 124 169 189 Cellular License Value per Total Net POP (1) 163 116 118 148 167 Cellular Asset Value/Cellular Cons. EBITDA (LQA) 13.0(a2) 18.4 25.3 44.2 20.9 Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) 12.6(a2) 15.7 23.6 53.9 NA Cellular Cons. EBITDA Margin (LQ) 43.0%(a2) 41.8% 44.9% 19.7 % 36.2% Market Capitalization/Company Cons. EBITDA (LQA) 50.0 18.0 24.5 46.1 22.4 Net Debt/Company Cons. EBITDA (LQA) (1.5) 2.0 11.7 11.7 9.6 Total # of Net Pops 35.0 15.7 6.0 3.2 23.9(e2) Total Net MSA POPs 34.4 NA 2.5 0.6 18.9 Total Net RSA POPs 0.6 NA 3.5 2.5 5.0
UNITED PRICELLULAR ROGERS STATES VANGUARD COMPANY CORPORATION(F1) CANTEL (G1) CELLULAR CELLULAR AVERAGE - ------- --------------- ------------ ---------- -------- ---------- Price @ 12/21/94 $ 9.38 $ 28.75 $ 33.13 $ 25.13 Date of Financials 6/30/94 12/31/93 9/30/94 9/30/94 Date of Last Fiscal Year 12/31/93 12/31/93 12/31/93 12/31/93 MV of Equity (Fully Diluted) $ 149.8 $ 2,699.5 $ 2,602.2 $ 979.3 Market Capitalization 200.0 3,446.9 2,921.2 1,279.0 Cellular Asset Value 200.0 3,354.0 2,900.4 1,256.5 Cellular License Value (1) 186.5 2,652.2 2,585.7 1,160.9 Market Capitalization per Total Net POP $ 117 $ 146 $ 124 $ 198 $ 155(2) Cellular Asset Value per Total Net POP 117 142 123 194 154 Cellular Licence Value per Total Net POP (1) 109 112 109 180 136 Cellular Asset Value/Cellular Cons. EBITDA (LQA) 40.6(f2) 19.3 26.0 25.4 Cellular Asset Value/Cellular Cons. EBITDA (LFY+1) NA 16.0 36.1 29.9 Cellular Cons. EBITDA Margin (LQ) 27.3%(f2) 38.9% 31.0% 27.7 % Market Capitalization/Company Cons. EBITDA (LQA) 40.6(f2) 19.8 26.2 25.8 Net Debt/Company Cons. EBITDA (LQA) 10.2(f2) 4.3 2.9 6.1 Total # of Net Pops 1.7 23.7 23.6 6.5 Total Net MSA POPs 0.8 NA 9.0 5.8 Total Net RSA POPs 0.9 NA 14.6 0.7
- --------------- (1) Excludes working capital. (2) Excludes AirTouch because on noncomparability of international POPs. (a1) Includes 60.9M international POPs in per POP calculation for total company because international holdings are not backed out of Market Capitalization. (a2) Financial breakdown for domestic cellular operations available only on a proportionate basis. -44- 102 SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D) (amounts in millions, except per POP data)
AIR TOUCH BCE MOBILE CENTENNIAL COMPANY COMMUNICATIONS COMMUNICATIONS CELLULAR -------------- -------------- ---------- IN CANADIAN $ TICKER ATI BCX CYCL DATE OF FINANCIALS 9/30/94 12/31/93 8/31/94 DATE OF LAST FISCAL YEAR 12/31/93 12/31/93 5/31/94 PRICE @ 12/21/94 $ 28.38 $ 43.50 $ 15.50 UNADJUSTED SHARES OUTSTANDING 493.6 69.2 24.3 SHARES OUTSTANDING (FULLY DILUTED) 493.9 69.4 25.1 MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 14,005.0 $ 3,012.3 $ 375.9 MARKET VALUE (FULLY DILUTED) $ 14,007.2 $ 3,013.6 $ 386.4 ADJUSTMENT FOR CCI OTHER ASSETS ---------- ---------- -------- ADJUSTED MARKET VALUE $ 14,007.2 $ 3,013.6 $ 386.4 PLUS: Debt and Preferred 103.5 373.5 443.5 Minority Interest 137.9 2.3 0.0 LESS: Cash & Equivalents 650.6 0.9 86.5 ---------- ---------- -------- MARKET CAPITALIZATION $ 13,598.0 $ 3,388.5 $ 743.4 ========== ========== ======== LESS: Market Investments 613.9 0.0 0.0 Other Assets 6,466.3 185.7 2.8 ---------- ---------- -------- CELLULAR ASSET VALUE (INC. PP&E & WC) $ 6,517.8 $ 3,202.8 $ 740.6 ========== ========== ======== LESS: PP&E 871.0 647.4 47.6 Working Capital (41.8) 14.8 (11.7) ---------- ---------- -------- CELLULAR LICENSE VALUE(1) $ 5,688.6 $ 2,540.5 $ 704.7 ========== ========== ======== TOTAL ADJ POPS: 35.0 15.7 6.0 Net Debt per Total POP $ (11.7) $ 23.9 $ 59.6 Cellular License Value per Total Net POP(1) 162.5 161.8 117.7 Cellular Asset Value per Total Net POP 186.2 204.0 123.7 RATIOS: Cellular Asset Value $ 6,517.8 $ 3,202.8 $ 740.6 Market Capitalization 13,598.0 3,388.5 743.4 Net Debt (409.2) 374.9 357.1 Cellular Asset Value/LQA Cellular EBITDA 13.0(a2) 18.4 25.3 Cellular Asset Value/LFY+1 Cellular EBITDA 12.6(a2) 15.7 23.6 Market Capitalization/LQA Company EBITDA 50.0 18.0 24.5 Net Debt/LQA Company EBITDA (1.5) 2.0 11.7 Cellular EBITDA Margin (LQ) 43.0%(a2) 41.8% 44.9% OWNERSHIP STATISTICS: MSA POPs in Majority-Owned Markets (mm) 27.4 NA 2.6 MSA POPs in 100%-Owned Markets (mm) 6.2 NA 2.1 MSA POPs in Top 100 Markets (mm) 32.0 NA 0.6 COMMNET CONTEL COMPANY CELLULAR CELLULAR(e1) -------- ------------ TICKER CELS CCXLA DATE OF FINANCIALS 6/30/94 9/30/94 DATE OF LAST FISCAL YEAR 9/30/93 12/31/93 PRICE @ 12/21/94 $ 28.13 $ 24.50 UNADJUSTED SHARES OUTSTANDING 11.7 100.0 SHARES OUTSTANDING (FULLY DILUTED) 14.8 100.0 MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 329.5 $ 2,448.8 MARKET VALUE (FULLY DILUTED) $ 415.2 $ 2,449.1 ADJUSTMENT FOR CCI OTHER ASSETS 330.0 -------- ---------- ADJUSTED MARKET VALUE $ 415.2 $ 2,779.1(e1) PLUS: Debt and Preferred 152.1 2,048.4 Minority Interest 3.5 18.2 LESS: Cash & Equivalents 14.3 0.1 -------- ---------- MARKET CAPITALIZATION $ 556.5 $ 4,845.6 ======== ========== LESS: Market Investments 22.5 0.0 Other Assets 0.0 330.0 -------- ---------- CELLULAR ASSET VALUE (INC. PP&E & WC) $ 534.0 $ 4,515.6 ======== ========== LESS: PP&E 68.0 580.7 Working Capital (1.2) (40.9) -------- ---------- CELLULAR LICENSE VALUE(1) $ 467.2 $ 3,975.8 ======== ========== TOTAL ADJ POPS: 3.2 23.9 Net Debt per Total POP $ 44.8 $ 86.6 Cellular License Value per Total Net POP(1) 148.1 166.5 Cellular Asset Value per Total Net POP 169.2 189.1 RATIOS: Cellular Asset Value $ 534.0 $ 4,515.6 Market Capitalization 556.5 4,845.6 Net Debt 141.3 2,066.5 Cellular Asset Value/LQA Cellular EBITDA 44.2 20.9 Cellular Asset Value/LFY+1 Cellular EBITDA 53.9 NA Market Capitalization/LQA Company EBITDA 46.1 22.4 Net Debt/LQA Company EBITDA 11.7 9.6 Cellular EBITDA Margin (LQ) 19.7% 36.2% OWNERSHIP STATISTICS: MSA POPs in Majority-Owned Markets (mm) 0.0 12.9 MSA POPs in 100%-Owned Markets (mm) 0.0 7.5 MSA POPs in Top 100 Markets (mm) 0.0 15.4
-45- 103 CONTEL CELLULAR INC. SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D) (amounts in millions, except per POP data)
PRICELLULAR ROGERS UNITED STATES VANGUARD COMPANY CORPORATION(f1) CANTEL(g1) CELLULAR CELLULAR - ------- --------------- --------- -------------- --------- TICKER PC RCMIF USM VCELA DATE OF FINANCIALS 6/30/94 12/31/93 9/30/94 9/30/94 DATE OF LAST FISCAL YEAR 12/31/93 12/31/93 12/31/93 12/31/93 PRICE @ 12/21/94 $ 9.38 $ 28.75 $ 33.13 $ 25.13 UNADJUSTED SHARES OUTSTANDING 15.7 93.9 78.6 38.8 SHARES OUTSTANDING (FULLY DILUTED) 17.8 93.9 78.6 39.8 MARKET VALUE (UNADJUSTED FOR OPTIONS) $ 146.7 $ 2,699.4 $ 2,602.1 $ 973.8 MARKET VALUE (FULLY DILUTED) $ 149.8 $ 2,699.5 $ 2,602.2 $ 979.3 ADJUSTMENT FOR CCI OTHER ASSETS --------- --------- ---------- --------- ADJUSTED MARKET VALUE $ 149.8 $ 2,699.5 $ 2,602.2 $ 979.3 PLUS: Debt and Preferred 114.2 747.4 307.8 302.7 Minority Interest 0.0 0.0 28.2 2.5 LESS: Cash & Equivalents 64.0 0.0 16.9 5.5 --------- --------- ---------- --------- MARKET CAPITALIZATION $ 200.0 $ 3,446.9 $ 2,921.2 $ 1,279.0 ========= ========== ========== ========= LESS: Market Investments 0.0 0.0 20.9 22.5 Other Assets 0.0 92.9 0.0 0.0 --------- --------- ---------- --------- CELLULAR ASSET VALUE (INC. PP&E & WC) $ 200.0 $ 3,354.0 $ 2,900.4 $ 1,256.5 ========= ========== =========== ========= LESS: PP&E 25.8 695.5 326.1 96.4 Working Capital (12.3) 6.3 (11.4) (0.8) --------- --------- ---------- --------- CELLULAR LICENSE VALUE(1) $ 186.5 $ 2,652.2 $ 2,585.7 $ 1,160.9 ========= ========= ========== ========= TOTAL ADJ POPS: 1.7 23.7 23.6 6.5 Net Debt per Total POP $ 29.4 $ 31.6 $ 13.5 $ 46.4 Cellular License Value per Total POP(1) 109.2 112.0 109.4 179.7 Cellular Asset Value per Total POP 117.1 141.6 122.7 194.5 RATIOS: Cellular Asset Value $ 200.0 $ 3,354.0 $ 2,900.4 $ 1,256.5 Market Capitalization 200.0 3,446.9 2,921.2 1,279.0 Net Debt 50.2 747.4 319.0 299.7 Cellular Asset Value/LQA Cellular EBITDA 40.6(f2) 19.3 26.0 25.4 Cellular Asset Value/LFY + 1 Cellular EBITDA NA 16.0 36.1 29.9 Market Capitalization/LQA Company EBITDA 40.6(f2) 19.8 26.2 25.8 Net Debt/LQA Company EBITDA 10.2(f2) 4.3 2.9 6.1 Cellular EBITDA Margin(LQ) 27.3%(f2) 38.9% 31.0% 27.7% OWNERSHIP STATISTICS: MSA POPs in Majority-Owned Markets(mm) 0.8 NA 6.1 5.3 MSA POPs in 100%-Owned Markets(mm) 0.5 NA 2.4 4.5 MSA POPs in Top 100 Markets(mm) 0.0 NA 2.9 2.7
-46- 104 CONTEL CELLULAR INC. SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D) (Amounts in millions, except per POP data) FOOTNOTES GENERAL: (1) Excludes working capital. (2) Excludes AirTouch because of noncomparability of international POPs. (3) Source: Donaldson, Lufkin & Jenrette Wireless Communications Industry research report, Winter 1994. (4) Source: I\B\E\S research estimates dated October 20, 1994. AIRTOUCH COMMUNICATIONS (a1) Includes 60.9M international POPs in per POP calculation for total company because international holdings are not backed out of Market Capitalization. (a2) Financial breakdown for domestic cellular operations available only on a proportionate basis. (a3) Projections taken from Wheat First Butcher Singer research report dated November 2, 1994. (a4) Excludes gain on sale of telecommunications interests. Marginal tax rate of 38% assumed. (a5) Portfolio consists principally of highly liquid debt instruments with contractual maturities in excess of three months but less than one year. Carried at amortized cost, which approximates fair market value. (a6) Includes foreign paging subscribers. (a7) Per POP valuation taken from Prudential Securities research report dated May 16, 1994. (a8) Estimated value taken from Prudential Securities research report dated May 16, 1994, less South Korean investment which is broken out separately. (a9) May 1994 investment (11.3%) in consortium for digital cellular system in South Korea valued at initial (June 1994) $20M contribution to consortium. (a10) Values 21.6M German POPs at $175 per POP, 2.0M Portuguese POPs at $50 per POP, 10.4M Japanese POPs at $100 per POP, 4.6M Swedish POPs at $50 per POP, 2.5M Belgian POPs at $0 per POP, and 19.8M Italian POPs at $0 per POP. Per POP valuations taken from Prudential Securities research report dated May 16, 1994. Report values Belgian and Italian POPs at $50 and $30 per POP, respectively. However, total here excludes Belgian and Italian investments because awards have not yet been finalized nor transactions effected according to the Company's September 30, 1994 10-Q. There is insufficient information to effectively "pro forma" these transactions. BCE MOBILE COMMUNICATIONS (b1) Market price, balance sheet items and operating statistics (listed in C$) are translated here into US$ at 12/21/94 exchange rate of 0.72 US$/C$. (b2) Assumes operating cash flow margin for LFQ is same as for LFY. (b3) Calculated from cellular operating cash flow margin as presented in Annual Report. (b4) Projection from Sanwa McCarthy Securities research report dated November 11, 1993. (b5) Assumes cellular margin is same as global company margin. (b6) Excludes loss on sale of paging business in western Canada as well as gain on sale of Mexican cellular investment. Marginal tax rate of 38% assumed. (b7) Priced to give typical value per subscriber translated into Canadian dollars. (b8) Valued at 1.2x revenues of non-cellular operations of $124.2M (excluding paging operations). (69) Book value of investment as of year-end 1993. (610) Prepayment on 50 million minutes of airtime on the MSAT satelite. Valued at cost of converted $30M investment. CENTENNIAL CELLULAR (c1) Projections from Donaldson, Lufkin & Jenrette research report dated October 31, 1994. Figure assumes fraction of company EBITDA derived from cellular operations is same as for LTM. (c2) Excludes interest income. (c3) Includes Clinton, IA market acquired on September 21, 1994 and Huntington, IN market acquired on September 30, 1994. COMMNET (d1) Excludes write down of cellular system equipment. Marginal tax rate of 38% assumed. (d2) Projection taken from Smith Barney research report dated November 9, 1994. (d3) Excludes extraordinary charge related to early extinguishment of secured bank financing. (d4) Convertible subordinated debentures. (d5) Reduction in debt from conversion of debentures. (d6) Includes U.S. Treasury Bills, commercial paper and debt instruments issued by U.S. government agencies having a maturity of more than three months. Carried at cost plus accrued interest, which approximates fair market value.
-47- 105 CONTEL CELLULAR INC. SUMMARY OF SELECTED CELLULAR EQUITY COMPARABLES (CONT'D) (Amounts in millions, except per POP data) FOOTNOTES CONTEL CELLULAR (e1) It is assumed that the market is not aware of the "Other Asset" value found in wireless data (for which Lazard was provided confidential information) and PCS (for which Lazard is still awaiting information). It is further assumed that the market is aware of CCI's Mexican POPs; however, because the status of the talks relating to the Motorola-led Mexican cellular consortium are not necessarily disseminated and it is unclear that the market is fully aware of the Company's rights to GTE's Argentinian properties, the Company's International Assets are treated in the same manner. (e2) Data as of September 30, 1994. (e3) Excludes gains on sales of cellular interests. Marginal tax rate of 38% assumed. (e4) Options exercisable at previous year end includes a number of 2/3 Tandem Stock Appreciation rights (SARs) -- i.e., SARs with a provision requiring that for every two shares of stock surrendered for the appreciation right attached, one share of stock must be purchased at the option price. These 2/3 tandem SARs broken out separately here. However, due to lack of documentation in the Company's December 31, 1993 10-K report, the percentage of 2/3 tandem stock appreciation rights (SARs) included in total options exercisable is assumed to be the same as among the options outstanding at year end. (e5) The Company's 10-K does not indicate a price range for options or SARs exercisable at year end. Therefore, the range was assumed to encompass the price range for options granted in the last fiscal year as well as the range for options outstanding at the previous year end. (e6) Assumes 2/3 of SARs exercised are surrendered for cash payment from the Company, while the remaining 1/3 are converted (as required by the 2/3 tandem provision) as options for shares. (e7) Valuation detailed in other sections of CCI analysis. (e8) Excludes value of PCS. PRICELLULAR CORPORATION (f1) Company data taken from October 27, 1994 Registration Statement for 4 million share public stock offering. Pro forma for the public offering, the sale of the Company's Aviliene market, and the acquisition of Cellular Information Systems, Inc. (CIS). (f2) Due to lack of information, figure represents an annualized result from the last half-year. (f3) Due to lack of information, figure represents an annualized result from the last half-year. ROGERS CANTEL (g1) Balance sheet items and operating statistics taken from Annual Report (listed in C$) and translated into US$ at 12/21/94 exchange rate of 0.72 US$/C$. (g2) Source: Scotia McLeod Inc. research report dated August 17, 1994. Assumes fraction of company totals derived from cellular operations is same as for LFY. (g3) Assumes D&A for noncellular operations is negligible. (g4) Assumes fraction of company revenues derived from cellular operations is same as for LFY. (g5) Excludes provision for restructuring costs. Marginal tax rate of 38% assumed. (g6) Includes revenues from equipment sales. Equipment sales not included in other cellular earnings figures because of insufficient information. (g7) Includes 62,000 new subscribers assumed in acquisition of MacLean Hunter's paging subsidiary. U.S.CELLULAR (h1) Excludes amortization of license and deferred costs related to investments (broken out after EBIT on the financial statements). (h2) Excludes gain on sale of cellular interests. Marginal tax rate of 38% assumed. (h3) Stock Appreciation Rights. (h4) No further information or breakdown given on public documents. VANGUARD CELLULAR (i1) Projection taken from Bear Stearns research report dated August 25, 1994. (i2) Figure taken from Prudential Securities research report dated April 12, 1994. Goetek options out of the money and therefore valued at nil.
-48- 106 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 11/94 ALLTEL/ 6 Ft. Smith, AR (165) 47 20% $135 US Cellular 11/94 Independent Cellular/ 16 Williamsport, PA (251) 122 100% $130 US Cellular 11/94 US Cellular/ 12 Iowa City, IA (296) 89 87% $140 Independent Cellular 11/94 SNET/ 420 Hartford, CT (37) 180 16% $170 Bell Atlantic/NYNEX Providence, RI (47) 915 100% 235 Bridgeport, CT (54) 133 16% 175 New Haven, CT (56) 129 16% 160 Springfield, MA (77) 97 16% 130 New Bedford, MA (86) 507 100% 202 New London, CT (161) 41 16% 130 Pittsfield, MA (245) 108 80% 150 ----- ---- 2,109 $202 10/94 CGE/ 158 Washington, DC (8) 289 10% $310 SBC Communications Baltimore, MD (14) 245 10% 310 --- ---- Weighted Average Market Rank 534 $310 ("WAMR"): 12.34 $323(2) 09/94 Century Telephone/ 9 Pine Bluff, AR (291) 86 100% $100 Cellular Information Systems 09/94 Contel Cellular/ 72 Huntsville, AL (120) 402 100% $180 Crowley Cellular 09/94 US Cellular/ N/A Portland, OR (30) 5 0.33% N/A Metroplex Communications Olympia, WA (242) 8 4% N/A -- 13
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -49- 107 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 09/94 Western Wireless/ N/A Pueblo, CO (241) 111 88% SWAP McCaw Communications 08/94 Airtouch/ 2,400 WAMR: 64.15 7,900 100% $304 Cellular Communications, Inc. $315(2) 08/94 McCaw Communications/ 9,700 WAMR: 2.95 28,100 100% $345 LIN Broadcasting Group $348(2) 08/94 Vanguard Cellular/ 10 Elimira, NY (284) 95 100% $110 Crowley Cellular 07/94 Airtouch/ 13,531 Joint Venture 79 MSA's 56 RSA's 54,122 100% $250 US West 07/94 Vanguard Cellular/ 39 Binghamton, NY (122) 291 95% $135 Crowley Cellular 06/94 LIN/ 135 New York, NY (1) 785 5% $172 CSI et al 05/94 McCaw Communications/ 111 Springfield, MO (163) 257 100% $145 Crowley Cellular Jopin, MO (239) 139 100% 135 --- ---- 396 $141 04/94 General Cellular/ 14 Sioux City, IA (253) 119 95% $120 Sprint Cellular
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -50- 108 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 04/94 Independent Cellular/ 97 Northeast, PA (56) 498 76% $190 C-TEC Allentown, PA-NJ (58) 29 4% 130 Reading, PA (118) 35 10% 105 State College, PA (259) 128 100% 120 Iowa City, IA (296) 89 87% 120 --- ---- WAMR: 117.02 779 $164 $167(2) 02/94 Southwestern Bell/ 680 San Francisco, CA (7) 117 100% $244 Associated Communications Pittsburgh, PA (13) 734 100% 215 Buffalo, NY (25) 885 100% 188 San Jose (27) 47 100% 244 Rochester, NY (24) 867 100% 175 Albany (44) 850 100% 175 Glen Falls, NY (266) 123 100% 128 ----- ---- WAMR: 43.39 3,623 $188 $189(2) 02/94 US Cellular/ N/A Hagerstown, MD (257) 124 100% N/A Hagerstown Cell. 01/94 McCaw Comm/ N/A Lawton, OK (260) 199 100% $160 General Cellular 12/93 General Cellular/ 17 Abilene, TX (220) 150 100% $110 McCaw Comm. 12/93 McCaw Comm./ 32 Chico, CA (215) 199 100% $160 General Cellular
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -51- 109 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 12/93 McCaw Comm./ 17 Abilene, TX (220) 150 100% $110 PriCellular 12/93 Vanguard/ 5 Altoona, PA (225) 94 72% $50 Horizon 12/93 Horizon/ 8 Altoona, PA (225) 94 72% $50 Cell. Info. Sys. Cumberland, MD (269) 81 80% 40 --- ---- 175 $45 11/93 SW Bell/ 170 Syracuse, NY (53) 665 100% $185 Syracuse Tele. Utica-Rome, NY (115) 313 100% 150 --- ---- 978 $174 11/93 ALLTEL/ 120 Dallas, TX (9) 431 10% $272 GTE Mobilnet Sherman-Denison, TX (292) 10 10% 272 --- ---- WAMR: 9.00 441 $272 $285(2) 10/93 McCaw Comm/ 15 Steubenville, OH (199) 140 100% $110 McLang Cellular 10/93 PriCellular/ N/A Duluth, MN (141) 234 100% N/A CIS Op-2 10/93 PriCellular/ N/A Eau Claire, WI (232) 100 70% N/A CIS Debtor in Poss 10/93 US Cellular/ N/A Rochester, MN (288) 34 30% N/A Pine Island
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -52- 110 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 09/93 Cellular Inc./ 11 Rapid City, SD (289) 111 100% $100 Contel 08/93 Century Telephone/ 145 Jackson, MS (106) 348 86% $140 Celutel McAllen, TX (128) 269 66% 135 Brownsvillle, TX (162) 206 76% 135 Biloxi-Gulfport, MS (173) 162 81% 135 Pascagoula, MS (252) 95 83% 111 ----- ---- WAMR: 141.82 1,080 $135 $132(2) 08/93 LIN/ 8 Wichita Falls, TX (233) 65 49% $125 PriCellular 08/93 AT&T 16,668 McCaw 100% buyout 59,200 100% $280 McCaw Comm. WAMR: 46.31 $330(2) 07/93 General Cell./ 7 Odessa, TX (255) 75 65% $95 Cell. Info. Sys. 06/93 Intercel/ N/A Bangor, ME (224) 150 100% N/A Unity Telephone 06/93 PriCellular/ N/A Abilene, TX (220) 150 100% N/A Radiofone 06/93 US Cellular/ 5 Victoria, TX (300) 41 55% $130 Bawab, Richard
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -53- 111 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 05/93 Texahoma Cell LP/ N/A Wichita Falls, TX (233) 133 100% N/A Wichita Falls Cell. 05/93 Texahoma Cell LP/ N/A Lawton, OK (260) 113 100% N/A US Cellular 03/93 US Cellular/ N/A Manchester-Nashua, NH (133) 87 25% N/A Pelissier/Hashtroudi 02/93 Century Telephone/ 36 Biloxi/Gulfport, MS (173) 169 81% $136 Celutel Pascagoula, MS (252) 95 83% 136 --- ---- 264 $136 01/93 WSW Fund/ 8 Amarillo, TX (188) 6 3% $32 PriCellular Wichita Falls, TX (233) 96 73% 77 --- ---- 102 $74 01/93 GTE Corp./ 10 Burlington, NC (280) 87 79% $118 General Cellular 12/92 General Cellular/ 19 Lincoln, NE (172) 186 85% $100 Centennial Cellular 12/92 General Cellular/ 9 Sioux Falls, SD (267) 93 73% $95 Scott Reardon 12/92 Centennial Cellular/ 11 Alexandria, LA (205) 134 90% $84 General Cellular
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -54- 112 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 12/92 Centennial Cellular/ 1 Lake Charles, LA (197) 21 12% $54 General Cellular 11/92 Cellular Inc./ 9 Sioux Falls, SD (267) 65 51% $73 US West NewVector Bismarck, ND (298) 59 70% 73 --- --- 124 $73 11/92 AT&T/ 3,800 Nationwide 42,500 33% $271 McCaw (33%) 11/92 U.S. Cellular/ 5 Cumberland, MD (269) 80 79% $62 General Cellular 10/92 ALLTEL-GTE/C/ 97 AR and OH 842 20% $115 GTE/C-ALLTEL 09/92 Century Telephone/ 41 Austin, TX (75) 280 35% $145 San Marcos Telephone 06/92 Centennial Cellular/ N/A Jackson, MI (207) 151 80% N/A Jackson Cellular Partners 05/92 Rochester Telephone/ 30 Utica-Rome, NY (115) 221 70% $135 Oneida Cty Telephone 04/92 John Stanton/ 10 Billings, MT (268) 72 64% $35 Cellular Information Systems Rapid City, SD (289) 102 96 35 Great Falls, MT (297) 42 55 35 Bismark, ND (298) 75 84 35 --- --- 291 $35
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -55- 113 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 03/92 John Stanton/ 3 Casper, WY (299) 60 100% $55 U.S. Cellular L.P. 03/92 US West NewVector/ 7 Colorado Springs, CO (117) 63 16% $104 Big Sandy Tele. 02/92 Cellular Comm. PR/ 23 San Juan, PR (91) 367 18% $64 Various Owners 02/92 Stanton, John/ 3 Grand Forks, ND (276) 104 100% $27 Crostel Cellular 01/92 LIN/BellSouth/ 14 Galveston, TX (170) 119 54% $115 Stewart, Jonathan 11/91 Lincoln Telecomm./ 28 Omaha, NE (65) 166 28% $144 Centel Corp. 10/91 Bellsouth 35 Honolulu, HI (50) 219 26% $160 RAM Broadcasting 09/91 Bell Atlantic/ 2,250 Various Markets 10,969 -- $205 Metro Mobile 08/91 PacTel/ 100 Wichita, KS (89) 463 100.0% $161 McCaw Cellular Comm. Topeka, KS (179) 157 78.0% --- 620
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -56- 114 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 07/91 McCaw Cellular Comm./ 107 Daytona Beach, FL (146) 379 100.0% $209 Crowley Cellular Waco, TX (194) 207 100.0% 135 --- ---- 586 $183 05/91 Ameritech/ 351 St. Louis, MO (11) 1,926 85.0% $204 Cybertel 05/91 Comcast Corp./ 1,000 Philadelphia, PA (4) 4,900 100.0% $193 Metromedia Co. New Brunswick, NJ (62) 243 37.0% Long Branch, NJ (70) 47 8.0% ----- 5,190 05/91 US Cellular/ 21 Tyler, TX (237) 158 100.0% $135 Cellular Information Systems 04/91 BellSouth/ 393 Milwaukee, WI (21) 701 50.0% $200 McCaw Comm. Madison, WI (113) 318 93.0 160 Green Bay, WI (186) 180 93.0 160 Rockford, IL (131) 283 99.0 160 Appleton, WI (125) 306 100.0 160 Janesville, WI (216) 116 80.0 160 Kenosha, WI (244) 106 83.0 160 Sheboygan, WI (277) 90 86.0 160 Wausau, WI (263) 25 21.0 160 La Crosse, WI (290) 17 18.0 160 ----- ---- 2,142 $173 04/91 McCaw Comm./ 46 Rochester, NY (34) 286 29.0% $160 Bell South
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -57- 115 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 03/91 ALLTEL/ 16 Springfield, MO (163) 114 48.0% $115 Missouri Tel. St. Joseph, MO (275) 30 29.0 80 --- ---- 144 $108 03/91 BellSouth/ 99 Atlanta, GA (17) 560 21.0% $155 GTE Corp. Lexington, KY (116) 160 42.0 65 Athens, GA (234) 32 21.0 40 ---- 752 $131 02/91 Celutel/ 8 Pascagoula, MS (252) 66 50.0% $115 McCaw Comm. 01/91 Centel/ 13 23 mkt. minorities 230 -- $57 Rochester Telephone 12/90 BellSouth/ 131 Indianapolis (28) 621 100.0% $140 Graphic Scanning Corp. Terre Haute (185) 122 72.3 60 Anderson (217) 94 71.0 60 Elkhart-Goshen (223) 23 15.0 60 Muncie (236) 95 79.5 60 Lafayette (247) 125 100.0 60 Kokomo (271) 9 9.0 60 Bloomington (282) 83 79.4 60 Wisconsin Partnership 215 8.0 60 ----- --- 1,387 $96 12/90 US WEST NewVector/ 11 Colorado Springs, CO (117) 62 74.4% $185 Cellular Inc.
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -58- 116 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 12/90 Cellular Inc./ 6 Great Falls, MT (297) 77 100.0% $75 US West NewVector 11/90 Cont. IL Venture/ 88 58% Celutel recap 1,100 100.0% $80 Celutel 10/90 SW Bell/ 90 Springfield, IL (176) 170 89.0% $165 Crowley Cellular Champaign-Rantoul-Urbana (196) 160 92.5% Decatur (230) 121 97.5% Bloomington-Normal (250) 113 90.7% 564 07/90 Pacific Telesis/ 86(a) Ohio 7,200 -- $225 Cellular Communications Puerto Rico 85 ---- $185 07/90 GTE/ 3,700(b) Southeast 12,125 -- $171 Contel Pacific 4,695 -- Midwest 3,065 -- Southwest 1,679 -- Northeast 1,367 -- Mountain 928 -- ------ 23,859 05/90 LIN Broadcasting/ 60 New York (1) 257 91.8% $234 Minority Holders 05/90 Metromedia/ 15 Philadelphia (4) 49 91.0% $313 LIN Broadcasting
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -59- 117 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 05/90 US Cellular Corp/ N/A Lawton, OK (260) 24 20.0% N/A Undisclosed 04/90 GTE/ 710 Greensboro/Winston-Salem (47) 900(c) 100.0% $230(d) Providence Journal Cellular Raleigh/Durham (71) 662(c) 100.0 245(d) Charleston/North CharlesTON (90) 519(c) 100.0 210(d) Fayetteville (149) 260(c) 100.0 170(d) Savannah (155) 158(c) 100.0 190(d) Lynchburg (203) 80(c) 100.0 150(d) Danville (262) 100(c) 100.0 130(d) Florence (264) 119(c) 100.0 145(d) Augusta (108) 402(c) 100.0 155(d) Wilmington (218) 70(c) 100.0 180(d) Jacksonville (258) 55(c) 100.0 130(d) ----- ---- 3,407 $208(e) $213(f) 04/90 McCaw Communications/ N/A Richland, WA (214) 151 100.0% N/A Mahaffey Patricia 03/90 PriCellular/ 35 Utica-Rome (120) 291 70.0% $160 Consortium 03/90 Cellular, Inc./ N/A Colorado Springs (117) 66 16.0% N/A Big Sandy Telecom 03/90 Celutel/ 28 Jackson (106) 85 84.0% $125(g) McCaw Cellular Communications Pascagoula (252) 29 72.0 200(g) --- ---- 114 $144
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -60- 118 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 03/90 Celutel/ 13 Pascagoula (252) 131 50.1% $201 McCaw Cellular Communications 02/90 Time Warner/ 13 25% of PriCellular 430 25.0% $93(h) PriCellular 01/90 McCaw Cellular Communications/ 61(i) Dallas (9) 218 66.0% $278 Cellular Communications, Inc. 11/89 ALLTEL/ 42 Augusta (108) 223 100.0% $190(j) Pond Beach Telephone Co. 11/89 Radiophone/ 26 Houma (184) 163 86.2% $160(j) McCaw Cellular Communications 11/89 General Cellular/ 6 Cumberland (269) 52 43.3% $123(j) Alan Smuckler 11/89 C-TEC/ 8 Iowa City (296) 76 88.3% $99(j) United Cellular L.P. 11/89 McCaw Cellular Communications/ 8,088(j) New York (1) 13,680 90.0% $321 LIN Broadcasting Los ANgeles (2) 4,499 40.0 Philadelphia (4) 2,475 51.0 Dallas (9) 2,349 60.4 Houston (10) 1,943 56.3 ------ 24,946 10/89 LIN Broadcasting/ 1,908 New York (1) 6,940 90.05 $275 Metromedia
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -61- 119 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 10/89 Contel Cellular/ 1,250 Nashville (46) 975 100.0% $250 McCaw Cellular Communications Birmingham (41) 933 100.0 245 Louisville (37) 911 100.0 235 Memphis (36) 974 100.0 230 Knoxville (79) 474 94.0 215 Lexington (116) 338 100.0 185 Chattanooga (88) 435 100.0 180 Johnson City (85) 453 100.0 175 Tuscaloosa (222) 96 63.0 165 Clarksville (209) 159 100.0 155 Gadsden (272) 90 87.0 140 Florence (226) 111 79.0 130 Anniston (249) 125 100.0 130 ----- ---- 6,074 $217(k) 04/89 Century Communications & 74 Beaumont (101) 616 100.0% $120 Cellular Technology/ Cumberland (294) 55.0 Bauce Communications Altoona (225) 70.0 Rapid City (311) 85.0 04/89 McCaw Cellular Communications/ -- Santa Barbara (124) -- 67.2% $275 Partnership ("Squeeze Out") 02/89 Cellular Communications Inc./ 31 San Juan (91) 89 75.0% $75(v) McCaw Cellular Communications Ponce (147) 272 100.0 40 Mayaguez (169) 217 100.0 40 Aguadilla (204) 131 85.0 40 --- --- 709 $44
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -62- 120 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 02/89 Price Communications/ 16 Wichita Falls (233) 138 100.0% $119 Wichita Falls Cellular 01/89 British Telecommunications/ 1,542 20% Stake in McCaw Cellular 50,300 20.0% $140(o) McCaw Cellular Communications 142(q) 11/88 Cellular Communications/ 15 Dayton (40) 138 82.7% $88 TA Associates Canton (87) 31 81.8 09/88 Vanguard Cellular Systems/ 35(r) Portsmouth (156) 174 67.2% $143 Palmer Communications Wilmington (218) 111 66.0 51 Jacksonville (258) 98 76.0 51 ----- ---- 383 93 05/88 Centel Corp./ 670(t) Toledo (48) 7,212 78.0% $93 United Telespectrum Youngstown (56) 72.0 Greenville-Spartanburg (67) 72.5 Harrisburg (84) 79.4 Johnson City-Kingsport (85) 100.0 Charleston (90) 51.7 York (99) 79.0 and 31 other markets
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -63- 121 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 02/88 BellSouth Corp./ 529(n) Los Angeles (2) 5,568 60.0% $95(o) Mobile Communications Houston (10) 43.7 Corporation of America Milwaukee (21) 50.0 Indianapolis (28) 50.0 Rochester (34) 28.6 Honolulu (50) 25.0 Gary/E. Chicago (54) 18.2 Richmond (58) 72.7 Mobile (83) 98.7 Bakersfield (57) 100.0 Jackson (106) 50.0 02/88 Comcast Corporation/ 201(u) New Brunswick (62) 1,709 57.9% $125 American Cellular Network Corp. Wilmington (69) 100.0 Asbury Park (78) 86.1 Harrisburg (64) 13.2 Trenton (321) 54.8 Atlantic City (134) 36.0 01/88 McCaw Cellular Communications/ -- Miami (12) -- 100.0% $82 Investors West Palm Beach (72) 100.0
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Per MSA POP. Conforms to Merrill Lynch numbers. -64- 122 CONTEL CELLULAR INC. SUMMARY OF SELECTED MSA CELLULAR TRANSACTIONS(1) (CONT'D) - ---------------------------------- (a) Based on PacTel paying $39.00 a share for 2.2 million shares or a 5% stake. In addition, PacTel and CCI will create a 15 million - POP regional presence in Ohio and Michigan. It is envisioned that PacTel will buy-out CCI over the next 5 to 8 years. (b) Total value of GTE/Contel deal, includes telephone information and federal systems. (c) 1989 POP'S. (d) Source: Paul Kagan & Associates, Inc. (e) Price paid per POP without PP&E. (f) Price paid per POP with PP&E. (g) Celutel purchased 50.01% of Pascagoula from McCaw for $13.1 million. Three days later, the company also agreed to SWAP its 98% owned Parkersburg, WV area for 29% of Jackson and an additional 22% of Pascagoula. (h) Does not include the purchase of 217,000 POPS in Utica/Rome. (i) McCaw SWAPped 1.6 million shares of CCI valued at $38 per share for that company's Dallas interest. (j) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, November 30, 1989. (k) Implied value of entire company. Based on a $130 per share blended value. (l) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, October 31, 1989. (m) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, July 31, 1989. (m) Adjusted for purchase of 1,245,000 RSA's at $38.50 per RSA POP. (o) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, November 30, 1988. (p) Adjusted for purchase of 433,000 pagers at $600 per pager. (q) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, March 21, 1988. (r) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, January 20, 1989. (s) Value of individual markets as estimated by Charles Schelke, "Telecommunications Industry: Revised Stock Valuations", February 13, 1989. (t) Purchase Price of Equity. (u) Based on a total Macon market valuation of $42 million per Vanguard's September 30, 1988 10-Q. (v) Purchase Price of Equity ($733 million) minus Capital Investment ($90 million) minus Value of 21,000 paging customers ($13 million). (w) Value of individual markets as estimated by Paul Kagan Associates, Inc. Cellular Investor, April 28, 1989. -65- 123 CONTEL CELLULAR INC. SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 11/94 ALLTEL/ 21 Early, GA (383) 142 100% $80 US Cellular Henderson, NC (568) 88 76% 110 --- --- 230 $91 11/94 Independent Cellular/ 70 Williamsport, PA (251) 122 100% $130 US Cellular Union, PA (619) 404 100% 135 --- ---- 526 $134 11/94 SNET/ 22 Litchfield, CT (357) 29 16% $120 Bell Atlantic/NYNEX Windham, CT (358) 17 16% 111 Franklin, MA (470) 11 16% 85 Newport, RI (624) 89 100% 180 --- ---- 146 $153 11/94 US Cellular/ 28 Nowata, OK (599) 103 100% $90 ALLTEL Raleigh, WV (707) 250 100% 75 --- --- 353 $79 11/94 US Cellular/ 58 Monroe, IA (414) 89 100% $95 Independent Cellular Muscatine, IA (415) 156 100% 95 Iowa, IA (417) 155 100% 150 Hardin, IA (422) 108 100% 105 --- ---- 508 $114 10/94 BellSouth/ 13 Decatur, IN (411) 142 100% $95 SE IN Cell. Tel. 10/94 CGE/ 16 Kent, DE (359) 24 10% $180 SBC Communications Frederick, VA (690) 23 10% 170 Madison, VA (691) 25 10% 185 Caroline, VA (692) 17 10% 160 -- ---- 89 $175
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -66- 124 CONTEL CELLULAR INC. SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D)
AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP ---- ------------------------ ------- ------------------------------ -------- ----------- --------- 10/94 James Valley Tel./ N/A McPherson, SC (636) 5 9% N/A Dickey Rural Tel. 10/94 SBC/ 25 Jefferson, NY (559) 262 100% $95 US Cellular 10/94 US Cellular/ 17 Fulton, KY (443) 185 100% $92 PC Cellular et al 09/94 BellSouth/ N/A Washington, AL (312) 118 100% N/A Pro-Max Communications 09/94 CommNet Cellular/ N/A Carbon, MT (531) 4 13% N/A Big Horn Cellular 09/94 CommNet Cellular/ N/A Custer, SD (638) 4 33% N/A Black Hills Cellular 09/94 CommNet Cellular/ N/A Harding, SD (634) 5 13% N/A Grand River Cellular 09/94 CommNet Cellular/ N/A Prairie, MT (532) 2 13% N/A Powder River Cellular 09/94 CommNet Cellular/ N/A Daniels, MT (526) 4 10% N/A Prairie Cellular 09/94 CommNet Cellular/ N/A Sheridan, WY (719) 12 17% N/A Range Telephone 09/94 Contel Cellular/ 18 Jackson, AL (308) 127 100% $140 Crowley Cellular 09/94 McCaw Communications/ 8 Sharp, AR (326) 101 100% $80 MetaComm Cellular
- ---------------------------------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -67- 125 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 09/94 McCaw Communications/ N/A Hood River, OR (607) 68 100% SWAP Western Wireless Skamania, WA (699) 26 100% SWAP --- 94 09/94 US Cellular/ N/A Hood River, OR (607) 8 12% N/A Metroplex Communications Skamania, WA (699) 3 12% N/A --- 11 09/94 US Cellular/ 14 Columbia, NY (564) 110 100% $125 MICEL/Sterling 09/94 US Cellular/ N/A Cherokee, NC (565) 88 50% N/A Stancel 09/94 US Cellular/ N/A Yuma, AZ (321) 23 17% N/A SW Telephone 09/94 Vanguard Cellular/ 51 Union, PA (619) 404 100% $125 Sunshine Cellular 08/94 US Cellular/ 19 Elliot, KY (451) 199 100% $55 Alpha Cellular Powell, KY (452) 150 100% 55 --- --- 349 $55 08/94 US Cellular/ 9 Clay, KY (453) 166 100% $55 Thomas Ward 07/94 Atlantic Cell/ 23 Franklin, NY (560) 232 100% $100 Adirondack Cellular Telephone 07/94 Atlantic Cell/ 19 Franklin, VT (679) 207 100% $90 PC Cellular et al
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -68- 126 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 07/94 GTE/Contel/ N/A Owen, IN (409) 18 8% N/A CommNet Cellular Brown, IN (410) 20 8% N/A Decatur, IN (411) 12 8% N/A --- 50 07/94 McCaw Communications/ N/A Bethel, AK (316) 158 100% N/A Excellence II 07/94 McCaw Communications/ 46 Marion, AR (325) 86 100% $95 Sterling Cellular Cross, AR (328) 117 100% 95 Cleburne, AR (329) 98 100% 95 Pope, AT (330) 112 100% 95 Franklin, AR (331) 66 100% 95 --- --- 479 $95 07/94 NYNEX/ N/A Carroll, NH (549) 215 100% N/A Contel et al 07/94 Palmer Communications/ 85 Hancock, GA (377) 131 100% $135 Sterling Cellular Warren, GA (378) 149 100% 135 Bleckley, GA (380) 145 100% 135 Liberty, GA (382) 202 100% 135 --- --- 627 $135 07/94 Sprint Cellular/ N/A Williams, OH (585) 96 75% N/A US Cellular 07/94 Sterling Cellular/ 1 Mason, WV (701) 25 100% $50 Vanguard Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -69- 127 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 07/94 Western Wireless/ 28 Marshall, KS (431) 137 100% $75 Sterling Cellular Morris, KS (436) 58 100% 75 Franklin, KS (437) 104 100% 75 Bates, MO (512) 76 100% 75 --- --- 375 $75 06/94 PriCellular N/A Purchased company 830 100% N/A Cellular Info. Sys. (6 mkts.) 06/94 PriCellular/ N/A Bayfield, WI (709) 83 100% N/A Cellular Info. Systems 06/94 PriCellular/ N/A Trempealeau, WI (713) 31 100% N/A Cellular Info. Systems 06/94 PriCellular/ N/A Vilas, WI (710) 135 100% N/A Cellular Info. Systems 06/94 US Cellular/ N/A Pacific, WA-6 (698) 90 51% N/A McDaniel Telephone 05/94 Alaska-3 Cell/ 2 Haines, AK-3 (317) 75 100% $25 RJL Cellular 05/94 Bell Atlantic/ N/A Coconino, AZ (319) 230 100% $100 AZNEV Telecom 05/94 Centennial/ 19 Huntington, IN (405) 145 100% $130 MegaCommunications 05/94 General Cellular/ 7 Knox, NE (535) 114 100% $65 National Cellular 05/94 General Cellular/ N/A Boone, NE (537) 143 100% N/A National Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -70- 128 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 05/94 Horizon/ 33 Dawson, GA (372) 276 100% $120 Southern Cellular 05/94 McCaw Communications/ 3 Hubbard, MN-6 (487) 27 11% $100 PriCellular 05/94 McCaw Communications/ 12 Ouachita, AR (335) 188 100% $65 Arkansas-12 Cellular 05/94 No.Washington Partnerships/ N/A Okanogan, WA-2 (694)) 121 100% N/A Delta Cellular 05/94 No. Washington Partnership/ N/A Ferry, WA-3 (695) 50 100% N/A Radiofone 05/94 PriCellular/ 22 Hubbard, MN (487) 242 100 $89 Century Telephone 05/94 Ramcell 5 Cherokee, NC -1 (565) 88 50% $60 Contel Cellular 05/94 Rochester/ 25 LeSueur, MN-10 (491) 227 100% $110 Dowdy Cellular 05/94 Saipan Cellular/ N/A N. Mariana Islands (734) 63 100% N/A RJL Cellular 05/94 Southern Cellular/ N/A Imperial, CA-7 (342) 129 100% N/A Contel Cellular 05/94 Vanguard Cellular/ 7 Washington, ME (466) 83 100% 85 Sterling Cellular et al 05/94 Vanguard Cellular/ N/A Mason, WV (701) 75 100% N/A Sterling Cellular et al
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -71- 129 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 04/94 BellSouth/ 20 Vernon, WI (715) 226 100% $90 Plus Cellular 04/94 CommNet Cellular/ N/A Sheridan, WY (719) 12 17% N/A Golden West Telecom 04/94 Indep. Cellular/ 55 Monroe, IA-3 (414) 89 100% $80 C-TEC Muscatine, IA-4 (415) 156 100% 80 Iowa, IA-6 (417) 155 100% 140 Hardin, IA-11 (422) 108 100% 86 Potter, PA-3 (614) 31 33% 50 Bradford, PA-4 (615) 18 19% 55 Wayne, PA-5 (616) 23 29% 60 --- --- 580 $94 03/94 Bell Atlantic/ 34 Laurens, SC-2 (626) 224 100% $150 Ally Inc. 03/94 Bristol Bay Cell./ N/A Bethel, AK-2 B2 (316) N/A N/A N/A GTE Mobilnet 03/94 Cell. Comm. PR/ 1 St. Croix, VI-2 (731) 50 100% $27 Paradise Cell. 03/94 Centennial/ N/A Jackson, IA-5 (416) 106 100% N/A Iowa East Cell. 03/94 Centennial/ 16 Iberville, LA-6 A1 (459) 160 100% $100 Iberia Cell. Tel.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -72- 130 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 03/94 Centennial/ 23 De Soto, LA-3 (456) 159 100% $100 Midsouth Cell. Caldwell, LA-4 (457) 71 100% 100 --- --- 230 $100 03/94 Centennial/ 15 Claiborne, MS-8 (500) 153 100% $100 Midsouth Cell. 03/94 Central OR Cell./ 7 Crook, OR-6 (611) 172 100% $40 Marco Comm. 03/94 Copper Val. Cell./ N/A Bethel, AK-2 B4 (316) N/A N/A N/A GTE Mobilnet 02/94 Cell. Comm. PR/ 6 St. Thomas, VI-1 (730) 53 100% $106 Boatphone USVI 02/94 Centennial/ 12 Morehouse, LA-2 (455) 116 100% $100 Tri-Coastal Cell. 02/94 Centennial/ N/A Clay, AR-4 (327) 203 100% N/A East AR Cell. 02/94 Centennial/ N/A Morehouse, LA-2 (455) 116 100% N/A Tri-Coastal Cell. 02/94 Peninsula Cell./ N/A Bethel, AK-2 B4 (316) N/A N/A N/A Matanuska-Kenai
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -73- 131 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/94 Centennial/ 38 Beauregard, LA-5 (458) 376 100% $100 Cajun Cellular 01/94 Cellular Inc./ N/A Juab, UT-3 (675) 12 26% N/A Sevier Cell. 01/94 Cellular Inc./ N/A Beaver, UT-4 (676) 21 26% N/A SW Utah Cell. 01/94 Centennial/ N/A Beauregard, LA-5 (458) 376 100% N/A Cajun Cellular 01/94 General Cellular/ N/A Kingsbury, SD-8 (641) 73 100% N/A Greater SD Cell 01/94 General Cellular/ 15 Parmer, TX-3 (654) 137 100% $52 McCaw Comm. Gaines, TX-8 (659) 129 100% 64 --- --- 266 $58 01/94 Litchfield Co. Cel./ N/A Clay, KY-11 (453) 164 100% N/A GTE/Contel 01/94 Litchfield Co. Cel./ N/A Coos, OR-5 (610) 249 100% N/A OR RSA 5 LP 01/94 McCaw Comm./ 7 Parmer, TX-3 (654) 137 100% $52 Parmer Comm. (MHF)
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -74- 132 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/94 McCaw Comm./ 8 Gaines, TX-8 (659) 129 100% $64 Intermart Cell. 01/94 Miscellco Comm./ <1 Edwards, KS-13 (440) 29 100% $15 PC Cellular 01/94 Sterling Cell./ N/A Marion, AR-2 (325) 45 52% N/A Razorback Cell. Cross, AR-5 (328) 61 52% N/A Cleburne, AR-6 (329) 50 52% N/A Pope, AR-7 (330) 57 52% N/A Franklin, AR-8 (331) 34 52% N/A --- 247 12/93 Millry Tel./ N/A Bibb, AL-4 (312) 9 6.4% N/A Pine Belt Tele. Washington, AL-6 (312) 8 6.4% N/A --- 17 12/93 Rochester Tele./ N/A Bibb, AL-4 (312) 26 19% N/A Pine Belt Tele. Washington, AL-6 (312) 22 19% N/A --- 48 12/93 General Cellular/ 8 Gaines, TX-8 (659) 129 100% $64 James, Martin 12/93 Centennial Cellular/ 16 Ashe, NC-3 (567) 156 100% $101 Anderson Group et. al. 12/93 Vanguard/ 12 Bedford, PA-10 A2 (621) 140 100% $85 Horizon
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -75- 133 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 12/93 Cellular Inc./ N/A Kiowa, CO-8 (355) 22 51% N/A Two Butres Cellular 12/93 McCaw Communications/ 43 Fannin, TX-7 (658) 355 100% $120 KO Communications 12/93 MCTA (BLS/ALLTEL)/ N/A Leake, MS-7 B1 (499) 128 100% N/A ALLTEL 12/93 MCTA (BLS/ALLTEL)/ N/A Claiborne, MS-8 B2 (500) 12 100% N/A Cellular Holding 12/93 PriCellular/ N/A Iberville, LA-6 A2 (459) N/A N/A N/A Iberia Cellular Telecommunications 12/93 Radiofone/ N/A Iberville, LA-6 A2 (459) N/A N/A N/A PriCellular 12/93 Triad Cellular/ 2 Juab, UT-3 (675) 49 100% $33 NCP Cellular LP 12/93 US Cellular/ 10 Copiah, MS-9 (501) 119 100% $80 MS-9 Cellular 11/93 General Cellular/ <1 White Pine, NV-5 (547) 14 100% $39 Mecury CelTel 11/93 SW Bell/ 43 Yates, NY-4 (562) 355 100% $120 Pegasus CelTel
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -76- 134 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 11/93 Atlantic Cellular/ 9 Franklin, MA-1 (470) 72 100% $125 Franklin Co. Cellular 11/93 McCaw Communications/ 13 Kings, CA-12 (347) 110 100% $120 Kings Telecommunications 11/93 McCaw Communications/ 2 Roger Mills, OK-5 (600) 58 100% $40 Mobile Telenet 11/93 MCTA (BLS/ALLTEL)/ N/A Yalobusha, MS-4 (496) 34 100% N/A BellSouth 11/93 OR-2 LP (USM)/ N/A Skamania, WA-7 (699) 25 100% N/A Metroplex RSA-7 11/93 Triad Cellular/ N/A Beckham, OK-7 (602) 120 100% N/A Sooner Cellular 11/93 Triad Cellular/ N/A Jackson, OK-8 (603) 94 100% N/A Sooner Cellular 11/93 McCaw Communications/ 17 Kings, CA-12 (347) 110 100% $150 Kings Telecommunications 11/93 Triad Cellular/ 7 Beckham, OK-7 (602) 120 100% $55 Sooner Cellular 11/93 Triad Cellular/ 5 Jackson, OK-8 (603) 94 100% $55 Sooner Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -77- 135 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 11/93 McCaw Communications/ 26 Litchfield, CT-1 (357) N/A N/A N/A CT RSA #1 10/93 McCaw Communications/ 9 Storey, NV-3 (545) 100 100% $85 Walker Partnership 10/93 PriCellular/ N/A Burnett, WI-1 (708) 106 100% N/A CIS Op-2 10/93 Hood River Cellular/ 1 Skamania, WA-7 (699) 25 100% $40 Gilcom Cell LP 10/93 US Cellular/ 13 Walton, FL-10 (369) 104 100% $120 Canton Cellular Corporation 10/93 Contel Cellular/ 14 Cannon, TN-2 (644) 155 100% $90 Nexus LP 10/93 Contel Cellular/ 6 Maury, TN-9 (651) 57 100% $105 Ten Woodland Rd. 10/93 US Cellular/ 38 Glades, FL-2 (361) 217 100% $175 TenTen GP 10/93 US Cellular/ 4 Calhoun, FL-9 (368) 38 100% 105 FL-9 Cellular Corporation 10/93 Horizon Cellular/ 44 Chautauqua, NY-3 (651) 478 100% $92 DiCroce Partnership
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -78- 136 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 09/93 Centennial Cellular/ 18 Randolph, IN-6 (408) 216 100% $85 Florida Metro 09/93 Cellular Inc./ <1 Custer, SD-5 B2 (638) 4 33% $40 Contel 09/93 Cellular Inc./ <1 Haakon, SD-6 B2 (639) 2 114% $40 Contel 09/93 McCaw Communications/ 10 Kittitas, WA-5 (697) N/A N/A N/A WA RSA #5 08/93 Contel Cellular/ 13 Macon, TN-3 (645) 164 51% $80 Macon RSA LP 08/93 US Cellular/ 12 Toombs, GA-11 (381) 146 100% $85 Cone, S.E. 08/93 US Cellular/ 11 Union, KY-2 (444) 124 100% $85 Mo-Tel Cellular 08/93 US West NewV./ N/A Conconino, AZ-2 (319) 56 25% N/A Contel Cellular 08/93 US West NewV./ N/A Navajo, AZ-3 (320) 58 40% N/A Contel Cellular 08/93 US West NewV./ N/A Lemhi, ID-3 (390) 5 33% N/A Contel Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -79- 137 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 08/93 US West NewV./ N/A Okanogan, WA-2 (694) 117 100% N/A Contel/Pacific Telecom 08/93 US West NewV./ N/A Yuma, AZ-4 (321) 33 25% N/A Contel Cellular 08/93 General Cellular/ 4 Adams, NE-9 (541) 81 100% $50 Harms, Daryl 08/93 General Cellular/ 4 Cass, NE-10 (542) 84 100% $50 Harms, Daryl 08/93 LIN/ 9 Jack, TX-6 (657) 81 100% $115 PriCellular 08/93 GMD Partnership/ 12 Pitt, NC-14 (578) 234 100% $50 US Cellular 08/93 US Cellular/ 12 Pitt, NC-14 (578) 234 100% $50 GMD Partnership 08/93 McCaw Communications/ 13 Alpine, CA-3 (338) N/A N/A N/A CA RSA #3 08/93 McCaw Communications/ 28 Grant, OK-3 (598) N/A N/A N/A OK RSA #3 08/93 McCaw Communications/ 34 Newton, TX-17 (668) N/A N/A N/A TX RSA #17
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -80- 138 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 08/93 McCaw Communications/ 50 Ocean, NJ-2 (551) N/A N/A N/A NJ RSA #2 07/93 Bellsouth/ 11 Warren, IN-5 (407) 116 100% $95 BachTel/WK Cell 07/93 US Cellular/ 5 Washington, MO-13 (516) 90 100% $60 Sierra Cellular 07/93 Triad Cellular/ 2 Dallas, TX-1 (652) 50.4 100% $40 N.C.P.T. (in Bankruptcy) 07/93 Metroplex 7/ <1 Skamania, WA-7 (699) 19 75% $7 GTE Mobilnet 07/93 Triad Cellular/ 2 Dallam, TX-1 (652) 50 100% $40 N.C.P.T. (in Bkrtcy) 06/93 McCaw Communications/ 27 Grant, OK-3 (598) 201 100% $135 Stillwater Cellular 06/93 Stanton, John/ 2 Elbert, CO-5 (352) 24 100% $74 Market Member 352 06/93 Highland Cellular/ 5 Tazewell, VA-2 (682) 130 100% $40 JMW Inc. 06/93 InterCel/ N/A Somerset, ME-2 (464) 79 51% N/A Unity Telephone
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -81- 139 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 06/93 InterCel/ N/A Kennebec, ME-3 (465) 222 100% N/A Unity Telephone 06/93 Highland Cellular/ 5 Tabwell, VA-2 (682) 130 100% $40 JMW Inc. 06/93 InterCel/ N/A Somerset, ME-2 (464) 79 51% N/A Unity Telephone 06/93 InterCel/ N/A Kennebec, ME-3 (465) 222 100% N/A Unity Telephone 06/93 McCaw Comm./ 27 Grant, OK-3 (598) 201 100% $135 Stillwater Cell. 06/93 Stanton, John 2 Elbert, CO-5 (352) 24 100% $74 Market Member 352 06/93 LIN/ 31 Newton, TX-17 (668) 232 100% $135 Eastex Cell. LP 06/93 McCaw Comm./ 52 Ocean, NJ-2 (551) 347 75% $150 Midland Comm. 06/93 Poka-Lambro Tele./ N/A Parmer, TX-3 B2 (654) 6 100% N/A TX-3 LP 06/93 Radiofone/ N/A St. James, LA-8 (461) 107 100% N/A PriCellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -82- 140 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 05/93 LIN/McCaw/ 33 Litchfield, CT-1 (357) 181 100% $180 Litchfield Co. Cell 05/93 Texahoma Cell LP/ N/A Beckham, OK-7 B2 (602) 109 100% N/A SW OK Cell. Sys. 05/93 Texahoma Cell LP/ N/A Jackson, OK-8 (603) 94 100% N/A OK RSA #8 LP 05/93 Texahoma Cell LP/ N/A Briscoe, TX-4 B2 (655) 13 100% N/A Texahoma Cell Corp 05/93 Texahoma Cell LP/ N/A Hardeman, TX-5 B1 (656) 43 100% N/A TX RSA #5 (n) LP 05/93 BellSouth/ 8 Marinette, WI-4 (711) 117 100% $72 Mega-Tel Cell. III 05/93 Alltel Corp/ N/A Warren, GA-8 (378) 25 17% N/A Statesboro Tel (Rochester Tel) 05/93 Bell Atlantic/ 20 Gila, AZ-5 (322) 167 100% $121 Chronicle Publishing 05/93 LIN/McCaw/ 29 Litchfield, CT-1 (357) 181 100% $160 Connecticut One Partners 05/93 Triad Cellular/ 1 Lac Qui Parle, MN-8 (489) 67 100% $18 RCW Cell Partnership
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -83- 141 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 05/93 US Cellular/ 22 Newton, IN-1 (403) 206 100% $107 Sunde Cellular 05/93 US Cellular/ 22 Newton, IN-1 (403) 206 100% $107 Sunde Cellular 04/93 HS Comm. Inc./ N/A Lake, TN-1 (643) 60 100% N/A Magnolia Cell. 04/93 General Cellular/ 2 Sully, SD-7 (640) 66 100% $32 PriCellular 04/93 Triad Cellular/ <1 Piute, UT-6 (678) 27 100% $15 Cellcom Ptrs. LP 04/93 Vanguard/ 10 Lebanon, PA-12 (623) 118 100% $85 Hurlebaus, Carl 04/93 US Cellular/ 16 Mercer, IL-3 (396) 199 100% $80 Dial Two 04/93 Taylor Tele. Coop./ N/A Hardeman, TX-5 (656) 10 100% N/A Brazos Tele. Coop. 04/93 Sterling Cellular/ N/A Hancock, GA-7 (377) 95 75% N/A Hetafi, Inc. 03/93 US Cellular/ 16 Meade, KY-3 (445) 295 100% $55 Tsaconas Cell.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -84- 142 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 03/93 GTE/Contel/ 17 Giles, TN-6 (648) 147 100% $115 Mid-Tenn. Cell. 02/93 BellSouth/ 1 Franklin, AL-1 (307) 55 100% $18 GTE/Contel 02/93 Eastern SD/Dakota/ N/A Hanson, SD-9 (642) 15 17% N/A Cellular Inc. 02/93 McCaw Communications/ 7 Alpine, CA-3 (338) 71 54% $94 Sundin/RLW Development 02/93 US Cellular/ 4 De Kalb, MO-4 (507) 73 100% $55 Aegis Cell. 02/93 US Cellular/ 3 Madison, AR-1 (324) 67 100% $40 Fastcom, Inc. 02/93 US Cellular/ 10 Butte, ID-5 (392) 140 100% $74 Independent Cell. Tele. 02/93 Triad Cellular/ 2 Hardeman, TX-5 (656) 77 100% $30 TX 5 Corp./T. Ward 01/93 Triad Cellular/ 5 Pipestone, MN-9 (490) 134 100% $35 Greater MN Cell. 01/93 McCaw Communications/ N/A Kittitas, WA-5 (697) 84 80% N/A Kitcell Group
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -85- 143 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/93 Stanton, John/ 4 Wilkin, MN-5 (486) 199 100% $18 Otter Tail Cellular 01/93 Stanton, John/ 3 Kittson, MN-1 (482) 50 100% $25 Celltel Systems Lake of Woods, MN-2 (483) 60 100% 25 --- --- 110 $25 01/93 US Cellular/ 6 Union, IA-2 (413) 50 100% $35 Radiophone Pierce, WI-5 (712) 90 100% 45 --- --- 140 $41 01/93 US Cellular/ 2 Modoc, CA-2 (337) 41 70% $40 CA-2 Cell. Corp. 01/93 Palmer Communications/ 11 Lee, AL-8 (314) 166 100% $65 Dana Communictions 01/93 WSW Fund/ 18 Various markets 308 74% $58 PriCellular 01/93 Mercury Inc./ 7 Tunica, MS-1 (493) 164 100% $37 MS Cell. Corp. Bolivar, MS-3 (495) 20 13% 24 Yalobusha, MS-4 (496) 16 13% 24 --- --- 200 $35 01/93 Triad Cellular/ <1 Briscoe, TX-4 (655) 42 100% $12 General Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -86- 144 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 12/92 U.S. Cellular/ 19 Worth, GA-14 (384) 387 54% $50 GMD Partnership Jefferson, NY-1 (559) Pitt, NC-14 (578) 12/92 Bell Atlantic/ 15 Anson, NC-5 (569) 269 100% $55 SDK Enterprises Lee, VA-1 (681) 11/92 Horizon Cellular/ 44 Barren, KY-5 (447) 500 100% $87 Danbury Cellular Madison, KY-6 (448) Mason, KY-8 (450) 11/92 General Cellular/ 15 Lincoln, NM-6 (558) 226 100% $65 Cell. Info. Sys. 11/92 Bell Atlantic/ 3 Oconee, SC-1 (625) 59 100% $55 Asset Mgmt. Corp. 10/92 ALLTEL/ 10 Madison, AR-1 (324) 170 51% $60 GTE/Contel Franklin, AR-8 (331) Nowata, OK-4 (599) 10/92 John Stanton/ 2 Divide, ND-1 (580) 104 100% $24 Overland Cell. 10/92 John Stanton/ 1 McKenzie, ND-4 (583) 66 100% $19 Delta Cellular 10/92 US Cellular/ 17 Greene, NC-13 (577) 231 100% $75 RSA Partnership II
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -87- 145 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 10/92 Horizon/ 12 Monongalia, WV-3 (703) 259 100% $45 Mountaineer Mobile 09/92 US Cellular/ 18 Owen, IN-7 (409) 214 100% $85 Cell. of IN 09/92 US Cellular/ 9 Sampson, NC-12 (576) 117 100% $75 First Fayette Cell. 09/92 Century Tel./ 2 Burleson, TX-16 (667) 29 10% $62 San Marco Tel. 09/92 John Stanton/ <1 Deer Lodge, MT-6 (528) 61 100% $21 MT-6 Corp. 08/92 Horizon Cellular/ 10 Crawford, PA-1 (612) 193 100% $52 Nationwide Cell. 07/92 MCP Cellular/ 2 Beaver, UT-4 (676) 78 100% $29 S. Utah Cell. Ptshp. 07/92 General Celluar/ <1 Briscoe, TX-4 (655) 42 100% $10 Mobile Teletalk 07/92 US Cellular/ Sterling Resources 14 Jo Daviess, IL-1 (394) 177 58% $80 07/92 Horizon Cellular/ 18 Spencer, KY-4 (446) 230 100% $78 Carale Cell. Ptnrs.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -88- 146 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 07/92 US Cellular/ 17 Clark, ID-6 (393) 266 100% $65 Mtn. View Cell. 07/92 Sterling Cell./ 5 Marshall, KS-4 (431) 136 100% $35 Stein Cell. Ptnrs. 06/92 General Cell./ <1 Corson, SD-2 (635) 23 100% $15 Calhoun Cellular 06/92 Stanton, John/ 1 Beaver, UT-4 (676) 78 100% $15 Farley, Fred 06/92 Media/Comm. Ptnrs./ 3 Hansford, TX-2 (653) 92 100% $33 Century Tele. 06/92 ALLTEL/ <1 Madison, AR-1 (324) 3 4% $60 Sugar Land Tele. 06/92 ALLTEL/ <1 Marion, AR-2 (325) 3 4% $60 Sugar Land Tele. 06/92 ALLTEL/ <1 Clay, AR-4 (327) 8 4% $60 Sugar Land Tele. 06/92 ALLTEL/ <1 Cross, AR-5 (328) 5 4% $60 Sugar Land Tele. 06/92 ALLTEL/ <1 Cleburne, AR-6 (329) 4 4% $60 Sugar Land Tele.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -89- 147 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 06/92 ALLTEL/ <1 Pope, AR-7 (330) 4 4% $60 Sugar Land Tele. 06/92 ALLTEL/ <1 Garland, AR-10 (333) 6 4% $60 Sugar Land Tele. 06/92 ALLTEL/ 4 Navarro, TX-10 B1-3 (661) 74 25% $60 Sugar Land Tele. 06/92 ALLTEL/ 3 Cherokee, TX-11 B1 (662) 51 18% $60 Sugar Land Tele. 06/92 ALLTEL/ 2 Burleson, TX-16 (667) 30 10% $60 Sugar Land Tele. 06/92 ALLTEL/ 2 Newton, TX-17 (668) 33 14% $60 Sugar Land Tele. 05/92 US West/ 3 Garfield, CO-3 (350) 43 18% $72 Cellular Inc. 05/92 McCaw Cellular/ 5 Elmore, ID-4 (391) 120 100% $40 Chase, Derwood 05/92 Cellular Inc. 2 Ida, IA-9 (420) 63 100% $30 Logitrans Telecomm. 05/92 US Cellular/ 2 Coconino, AZ -2 (319) 36 17% $50 Arizona Telephone
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -90- 148 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 05/92 US Cellular/ 1 Yuma, AZ-4 (321) 31 25% $45 Arizona Telephone 05/92 US Cellular/ 2 Gila, AZ-5 (322) 40 24% $55 Arizona Telephone 04/92 Cellular Inc./ 4 Clark, ID-6 (393) 57 21% $65 Teton Cell. Inc. 04/92 General Cell./ <1 Reeves, TX-13 (664) 31 100% $10 Cellmates LP 04/92 McCaw/ 70 Citrus, FL-4 (363) 399 100% $175 Gen. Comm. Sys. 04/92 General Cellular/ 2 Monona, IA-8 (419) 54 100% $44 Celutel 04/92 John Stanton/ 6 Toole, MT-2 (524) 179 100% $35 Cell. Info. Sys. Beaverhead, MT-8 (534) Custer, SD-5 (638) Haakon, SD-6 (639) 03/92 Sterling Resources/ 21 Jo Daviess, IL-1 305 100% $70 Nancy Wilson 02/92 Palmer Comm./ 6 Marion, GA-9 (379) 114 100% $57 Western Rural
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -91- 149 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 02/92 SW Bell/ 30 Bureau, IL-2 (395) 250 100% $120 Minerich, Inc. 02/92 US Cellular/ 6 Addison, VT-2 (680) 80 74% $71 Block B. Cellular 02/92 US Cellular/ 12 Chesterfield, SC-4 (628) 204 100% $60 Dataphon SC Partnership 02/92 Public Service Cellular/ 2 Marion, GA-9 B1 (379) 18 100% $121 HTC Cellular 02/92 BellSouth/ 11 Door, WI-10 (717) 126 100% $88 Wisconsin 10 Corp. 02/92 BellSouth/ <1 Dawson, GA-2 B2 (372) 2 1% $72 GTE/Contel Jasper, GA-4 B3 (374) 01/92 BellSouth/ 2 Fayette, TN-5 B2 (647) 103 100% $23 Magnolia Cellular 01/92 BellSouth/ 4 Benton, MS-2 (494) 206 90% $20 Magnolia Cellular, et al 01/92 City of Fairbanks/ 2 Wade Hampton, AK-1 (315) 121 100% $19 Hermes Cellular 01/92 US West New Vector/ <1 Saguache, CO-7 (354) 9 20% $59 Pacific Telecom
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -92- 150 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/92 US West New Vector/ 5 Colorado 3,4,6, 90 25% $59 Pacific Telecom (350,351,353) 12/91 U.S. Cellular/ 7 Jefferson, FL-8 (367) 51 100% $130 Hermes Cellular 12/91 Brantley/ 4 Liberty, GA-12 (382) 52 28% $65 Coastal Cellular 12/91 U.S. Cellular/ 1 Schuyler, MO-3 (506) 56 100% $20 Acme Partnerships 12/91 U.S. Cellular/ 15 Whitfield, GA-1 (371) 198 100% $75 Acme Partnerships 12/91 Century Cellular/ 14 Cass, MI-9 (480) 286 100% $49 Cellwave 12/91 Brantley/ 2 Tombs, GA-11 (381) 40 20% $40 Coastal Cellular 12/91 US Cellular/ 5 Somerset, ME-2 (464) 155 100% $35 Maine 2 Inc. 11/91 Pacific Telecom 16 Michigan (1-2), (472-473) 315 100% $50 Upper Peninsula 11/91 City of Fairbanks 4 Wade Hampton, AK-1 (375) 121 100% $50 Hermes Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -93- 151 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 11/91 FL-9 Cellular Corporation/ <1 Calhoun, FL-9 (368) 37 100% $22 Mercury Cellular 11/91 Pacific NW Cell./ <1 Saguache, CO-7 (354) 43 100% $4 Dataphon CO Pship. 11/91 Alpha Cell. Tele./ 2 Powell, KY-10 (452) 148 100% $14 Metro Mobile 11/91 CCI/ 9 Ashtabula, OH-3 (587) 100 100% $85 PacTel 11/91 Anderson Cellular/ 2 Ashe, NC-3 (567) 52 34% $39 Celar Comm. Sys. 11/91 Anderson Cellular/ 6 Claiborne, MS-8 (500) 153 100% $41 CGH Cell. Ptrs. 10/91 Sacramento Valley LP/ 6 Sierra, CA-10 (345) 75 100% $84 GTE/Contel 10/91 Sacramento Valley LP/ 6 Storey, NV-3 (545) 94 100% $65 GTE/Contel & PacTel 10/91 US Cellular/ 11 Tuscarawas, OH-7 (591) 249 100% $45 Plateau Cellular 08/91 TDS/US Cellular/ 21 Coos, OR-5 (610) 252 100% $83 Max-Cell Comm.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -94- 152 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 08/91 Miscellco Comm./ <1 Hodgeman, KS-12 (439) 42 100% $10 Pinnacle Three 07/91 Radiofone/ 1 Plaquemines, LA-9 (462) 26 100% $45 Hyder, Ronald 07/91 US Cellular/ 1 Atchison, MO-1 (504) 44 100% $23 Cell-Ventures 06/91 Cellular Comm./ 14 Mercer, OH-4 (588) 212 100% $66 Marco Cellular 06/91 Vanguard Cell./ 4 Wayne, PA-5 (616) 71 100% $58 CGH Cell. Ptnrs. 06/91 Miscellco Comm./ <1 Wallace, KS-6 (433) 22 100% $10 Eagle Telecom 06/91 John Stanton/ <1 Costilla, CO-9 (356) 30 100% $9 Chesapeake Comcell 05/91 US Cellular/ 11 Bedford, VA-4 (684) 169 100% $65 Ken Tec Group Inc. 05/91 Horizon Cellular/ 23 Lawrence, PA-6 (617) 382 100% $60 Peterson, Raymond 05/91 Danbury Cell./ 6 Barren, KY-5 (447) 153 100% $40 S. Central KY Cell.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -95- 153 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 05/91 Mercury Comm./ 2 Ouachita, AR-12 (335) 192 100% $10 Namaqua LP 05/91 Ameritech/ 3 Kauai, HI-1 (385) 44 100% $65 CyberTel 05/91 Ameritech/ 11 Saline, MO-7 (510) 162 100% $70 CyberTel 05/91 Ameritech/ 10 Callaway, MO-8 (511) 96 100% $108 CyberTel 05/91 Ameritech/ 4 Benton, MO-10 (513) 88 100% $48 CyberTel 05/91 Ameritech/ 8 Perry, MO-18 (521) 114 100% $70 CyberTel 05/91 Ameritech/ 4 Stoddard, MO-19 (522) 205 100% $20 CyberTel 05/91 Ameritech/ 4 St. Thomas, VI-1 (730) 50 100% $80 CyberTel 05/91 Danbury Cell./ 6 Barren, KY-5 (447) 153 100% $40 S. Central KY Cell. 04/91 PacTel/ 12 Chattooga, GA-3 (373) 179 100% $65 Karl Eckel Cell.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -96- 154 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 04/91 PacTel/ 7 Jasper, GA-4 (374) 113 100% $58 Acad-Cell. Ptnrs. 04/91 Century Telephone/ 1 Hansford, TX-2 (653) 98 90% $14 Mobiltalk Partners 04/91 BellSouth/ 63 Columbia, WI-9 (716) 361 100% $175 McCaw Comm. 04/91 Grace, Oliver/ 1 Cladwell, LA-4 (457) 68 100% $20 Macro Cell. Ptr. 04/91 US Cellular/ 10 Edwards, TX-18 (669) 183 100% $55 Northern Comm. 04/91 Contel Cellular/ 25 Fayette, TN-5 (647) 314 100% $80 Pinnacle Three Comm. 04/91 Contel Cellular/ 18 Bledsoe, TN-7 (649) 222 100% $80 Pinnacle Three Comm. 04/91 Contel Cellular/ 11 Macon, TN-3 (645) 146 49% $75 Pinnacle Three Comm. 03/91 Sterling Cell./ 9 Roscommon, MI-6 (477) 151 100% $58 MCI Comm. 03/91 Sterling Cell./ 3 Franklin, KS-10 (437) 112 100% $30 MCI Comm.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -97- 155 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 03/91 Sterling Cell./ 2 Morris, KS-9 (436) 64 100% $25 Personal Mobile Comm. 03/91 Century Tel./ 5 Hubbard, MN-6 (487) 263 100% $20 Cellcall 03/91 ALLTEL/ 7 Missouri RSAs 163 N/A $44 Missouri Tel. 03/91 Sterling Cellular/ 1 Marion, AR-2 (325) 33 37% $20 Gore, Sam T., Jr. 03/91 Sterling Cellular/ 2 Cross, AR-5 (328) 47 37% $39 Cross Comm. Inc. 03/91 Sterling Cellular/ 1 Cleburne, AR-6 (329) 34 37% $39 Air Comm. Cleburne 03/91 Sterling Cellular/ 2 Pope, AR-7 (330) 39 37% $39 Prairie Cellular AR 03/91 Sterling Cellular/ 1 Franklin, AR-8 (331) 23 37% $39 Campbell, Jerry D. 03/91 Metro Mobile/ 11 Newport, RI-1 88 100% $130 Highland Comm. Inc. 03/91 US Cellular/ 19 Northampton, NC-8 (572) 268 100% $70 Rural Telco Inc.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -98- 156 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 03/91 Metro Mobile/ 3 Powell, KY-10 (452) 153 100% $20 Highland Comm. Inc. 03/91 Horizon Cellular/ 19 Frederick, MD-3 (469) 146 100% $130 IFC Cellular Ptrs. 02/91 SW Bell/Comcast/ 5 Kent, DE-1 (359) 28 100% $162 First Cell. LP 02/91 Contel Cellular/ 9 Trimble, KY-7 (449) 171 100% $55 SAR Assoc. 02/91 Horizon Cellular/ 12 Bedford, PA-10 (621) 174 100% $69 Thomas, Paul 02/91 WKBN Bcstg/. 3 Columbiana, OH-11 107 100% $28 EZ Comm. 02/91 Contel Cellular/ 12 Trimble, KY-7 (449) 171 100% $70 SAR Assoc. 01/91 SW Bell/ 10 Mason, IL-5 (398) 102 100% $100 Muths, Sherman 01/91 US Cellular/ 16 Atascose, TX-19 (670) 183 100% $85 JEH Cellular 01/91 US Cellular/ 16 Kennebec, ME-3 (465) 212 100% $75 United Cellular. Assoc.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -99- 157 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/91 US Cellular/ 2 Bath, VA-5 (685) 65 100% $25 Steele-Edge Comm. 01/91 US Cellular/ 2 Buckingham, VA-7 (687) 85 100% $25 Chant LP 01/91 US Cellular/ 2 Dixie, FL-6 (365) 44 100% $48 Olympus TeleData 01/91 Cellular Comm./ 9 Clinton, OH-8 (592) 163 100% $56 Adler, Frederick 01/91 FGI/Sterling/ N/A Bates, MO-9 (512) N/A -- $35 Cell-Tech 01/91 US Cellular/ 12 Chatham, NC-6 (570) 134 100% $90 GSF Cellular 01/91 US Cellular/ 8 Putnam, FL-5 (364) 82 100% $100 LeFleur Cell. Ptnship. 12/90 Atlantic Cell./ 22 Coos, NH-1 (548) 221 100% $100 Skokos, Theodore 12/90 Liberty Cellular/ 5 Elk, KS-15 (442) 174 100% $30 WCC Cellular 12/90 US Cellular/ 27 Cherokee, TX-11 (662) 283 100% $95 Cherokee Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -100- 158 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 12/90 Celltel Systems/ 2 Kittson, MN-1 (482) 52 100% $30 Prairie Cellular MN 12/90 Century Telephone/ 5 Various minorities 102 18% $50 GTE Mobilnet et al. 12/90 MS-6 Cellular/ 2 Montgomery, MS-6 (498) 173 100% $13 Montgomery Cellular 12/90 Century Comm./ 8 Miami, IN-4 (406) 180 100% $47 Intl. Mobile Machines 12/90 SW Bell/ 7 Grant, WV-4 (704) 149 100% $50 Cellular USA Inc. 12/90 Boston Cellular/ 6 Franklin, MA-1 (470) 67 100% $95 Templeton Inc. 12/90 Cellular Inc./ 5 Minority RSAs 173 100% $27 US WEST NewVector 11/90 SW Bell/ 30 Madison, VA-11 (691) 220 100% $135 H.H. White 11/90 SW Bell/ 25 Frederick, VA-10 (690) 212 100% $120 Tri-Coastal Cellular II 11/90 SW Bell/ 18 Caroline, VA-12 (692) 167 100% $110 Legg Mason Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -101- 159 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 11/90 US Cellular/ 180 29 RSA Markets 2,649 100% $68 TDS 11/90 U S WEST/ 23 19% of U S WEST 323 100% $72 U S WEST NewVector NewVector 11/90 Cellular Inc./ 0 Piute, UT-6 (678) 6 20% $18 Contel Cellular 11/90 US Cellular/ 5 Stone, MO-15 (518) 92 100% $50 Sound Cellular Serv. 11/90 US Cellular/ 6 Laclede, MO-16 (519) 87 100% $67 Trinity 11/90 US Cellular/ 1 Shannon, MO-17 (520) 28 100% $36 Cross Valley Cellular 11/90 Atlantic Cellular/ N/A Addison, VT-2 (680) 228 100% N/A Sunrise Communications 11/90 Bachtel Cellular/ 7 Hamblen, TN-4 (646) 121 49% $55 Loe, Larmar 11/90 Miscellco Comm./ 1 Cheyenne, KS-1 (428) 33 100% $25 Chesapeake Comcell 11/90 Mussman, Kyle/ 3 Whitman, WA-8 (700) 117 100% $29 Wilcom Cellular Corp.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -102- 160 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 11/90 General Cellular/ N/A Mineral, NV-4 (546) 22 100% N/A GEM Cellular 10/90 Comcast/ATW Cellular 13 Hunterdon, NJ-1 (550) 104 100% $125 10/90 Sooner Cellular/ 9 Beckham, OK-7 (602) 134 100% $64 Cellcom Corporation 10/90 Price Communications/ 9 Jack, TX-6 (657) 85 100% $105 S. Hineline 10/90 Unnamed/ 9 Beckman, OK-7 (602) 134 100% $64 Cellcom Corporation 09/90 Cybertel/ 4 Stoddard, MO-19 (522) 207 100% $18 Formula 1 Cellular 09/90 Scarpa, John/ 2 San Miguel, CO-6 (353) 61 100% $30 Azeez, Michael 09/90 Liberty Cellular/ N/A Reno, KS-14(a) (441) 178 100% N/A Kansas Cellular Telco. 09/90 Utilities, Inc./ 2 Oxford, ME-1 (463) 78 100% $30 B. Margetich 09/90 SW Bell/ 41 Barnstable, MA-2 (471) 207 100% $200+ Mass 2 Inc.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -103- 161 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 09/90 SW Bell/ 5 Washington, MO-13(a) 83 100% $63 Steelvill Telephone (516) 09/90 Centel Corp./ 8 Amelia, VA-8 (688) 77 100% $105 TG Associates 09/90 Centel Corp./ 10 Greensville, VA-9 (689) 81 100% $125 Cell-Ventures Ltd. 08/90 General Cellular/ N/A Midland, TX # (295) 65 56% SWAP Vanguard Cellular 08/90 General Cellular/ N/A Marshall, SD-4 (637) 70 100% $40 Dacourt Communications 08/90 Palmer Communications/ 12 Ft. Myers, FL (164) 145 49% $80 Minority holders 08/90 Mobile Management Corp./ N/A Gulf of Mexico(a) (306) N/A 100% N/A Roanoke Valley Cell. 08/90 Cybertel/ 4 Benton, MO-10 (513) 84 100% $48 John Street Partnership 08/90 Steamboat Springs Cellular/ 2 Moffat, CO-1 (348) 44 100% $38 National Cellular Network 08/90 General Cellular/ 3 Marshal, SD-4 (637) 70 100% $40 Dacourt Communications
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -104- 162 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 08/90 Independent Cellular/ N/A Collier, FL-1 (360) 163 100% N/A Bauce Cellular 08/90 B. Goodwin/ 5 Pipestone, MN-9 (490) 140 100% $35 R. Steele 08/90 McCaw Communications/ N/A Maui, HI-2 (386) 97 100% SWAP Cellular Information Systems 08/90 Mobil Management Corp./ N/A Adams, IL-4 (397) N/A N/A N/A Roanoke Valley Cellular 08/90 C-Tec/ 12 Muscatine, IA-4 (415) 159 100% $75 Douglas, Jean Ann 08/90 US Cellular/ 14 Humboldt, IA-10 (421) 181 100% $78 Larry Hudson Trustee 08/90 Southwestern Bell/ N/A Brown, KS-5(a) (432) N/A N/A N/A Brown 432 CP, Inc. 08/90 MCI Communications/ N/A Franklin, KS-10 (437) 108 100% N/A Teleconnect 08/90 Quantum Communications Group/ N/A Wilkin, MN-5 (486) 217 100% N/A Calhoun Cellular Partners 08/90 Cellular Information Systems/ 1 Toole, MT-2 (524) 38 100% $25 N. American Rural Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -105- 163 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 08/90 Cellular Upstate NY/ N/A Otsego, NY-5 (563) 382 100% N/A Warren, Carolyn 08/90 US Cellular/ 19 Garvin, OK-9 (604) 209 100% $90 428 Cellular Association 08/90 WKBN Broadcasting/ 34 Lawrence, PA-6 (617) 380 100% $90 Peterson, Raymond W. 08/90 Vanguard Cellular/ 23 Georgetown, SC-5 (629) 232 100% $98 John Street Partners 08/90 WKBN Broadcasting/ 34 Lawrence, PA-6 (617) 380 100% $90 Peterson, Raymond W. 08/90 Vanguard Cellular/ 23 Georgetown, SC-5 (629) 232 100% $98 John Street Ptnrs. 08/90 S. Dakota 4 Cell./ N/A Marshall, SD-4 (637) 70 100% N/A Dacourt Comm. 08/90 Cellular Inc./ N/A Carbon, UT-5(a) (677) 17 20% N/A Carbon RSA LP 07/90 McCaw Cellular/ 24 Clallam, WA-1 (693) 207 $115 Steve Simmons 07/90 TDS/US Cellular 10 Wilson, TX-20 (671) 136 100% $75 Alpha Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -106- 164 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 06/90 ALLTEL/ 18 Lake, TN-1 (643) 307 100% $59 Maxcell Telecom 06/90 General Cellular/ 1 Daniels, MT-4 (526) 45 100% $25 Shadowfax Cellular 06/90 General Cellular/ N/A Casper, WY (299) 65 100% N/A US Cellular Co. LP 06/90 General Cellular/ N/A Hall, NE-7 (539) 88 100% N/A Grand Island Cellular 06/90 Cybertel/ 11 Saline, MO-7 (510) 160 100% $70 Saline Cellular Partners 06/90 Century Communications/ 11 Imperial, CA-7 (342) 114 100% $100 Cellular Information Systems 06/90 McCaw Cellular/ 16 Pacific, WA-6 (698) 160 100% $100 Centralia/Longview 06/90 US Cellular/ 8 Grays Harbor, WA-4 (696) 100 100% $80 Robert Haskins Inc 06/90 General Cellular/ 2 Lander, NV-2 (544) 30 100% $59 SQK Cellular Partners 06/90 General Cellular/ 5 Humboldt, NV-1 (543) 34 100% $53 Nevada One Cellular
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -107- 165 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 06/90 Cellular Communications/ Culebra, PR-7 (729) 1 100% N/A Universal Cellular 06/90 Cybertel N/A St. Thomas, VI-1 (730) 49 100% N/A JPM Cellular 05/90 Cellular Information Systems/ 2 Haakon, SD-6 (639) 41 100% $39 Advanced Mobile Communications 05/90 McCaw Cellular N/A Kittis, WA-5 (6970) N/A Min. N/A Kitchell Group 05/90 Price Communications/ 4 Hardeman, TX-5 (656) 42 51 $95 Thomas Ward 05/90 Undisclosed/ 8 Beckman, OK-7 (602) 135 100% $59 Cellcom Corporation 05/90 C-TEC/ Undisclosed N/A IA-3 92 N/A $75 05/90 C-TEC/ Undisclosed N/A IA-4 157 N/A $87 05/90 US Cellular Corp/ 5 Mitchell, IA-13 70 100% $65 State Communications Partners 05/90 US Cellular Corp/ 5 Audubon, IA-7 (418) 56 100% $90 Stoneman Inv. Partnership
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -108- 166 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 05/90 Vanguard/ N/A Williamsport, PA (251) 59 50% N/A Dawursk 04/90 C-TEC/ 21 Iowa, IA-6 (417) 153 100% $133 Oliver Grace, Jr. 04/90 General Cellular/ 21 Del Norte, CA-1 (336) 191 100% $110 Randolph Cellular 04/90 General Cellular/ 8 Loving, TX-14 (665) 130 100% $65 Telephone Partnership 04/90 General Cellular/ 1 Hudspeth, TX-12 (663) 22 100% $55 Ruth Steele 04/90 McCaw Cellular/ 9 Richland-Kenn, WA (214) 151 100% $75 Mahaffey, Patricia 03/90 N/A 5 Marshall, SD-4 (a) (637) 71 100% $76 Decourt Communications 03/90 Cellular Inc. 19 Iowa, IA-6 (a) (417) 154 100% $125 S. Slope Coop Telecommunications 03/90 Cellular Information Systems/ 8 Vilas, WI-3 (710) 130 100% $65 Coastal Communications Assoc. 03/90 Cellular Information Systems/ 4 McKenzie, ND-4 (583) 78 100% $55 Delta Cellular Partners
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -109- 167 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 03/90 Cybertel/ 6 Washington, MO-13 (516) 83 100% $75 Sierra Cellular 03/90 Cybertel/ N/A Perry, MO-18 (521) 118 100% $75 Millicom Communications 03/90 General Cellular/ 5 Mendocino, CA-9 (344) 132 100% $110 Gardner Enterprises 03/90 General Cellular/ 1 Fergus, MT-7 (529) 28 100% $35 Wisconsin Cellular Group 03/90 General Cellular/ 23 Vernon, WI-8 (715) 226 100% $100 PLUS Cellular Corp. 03/90 McCaw Cellular Communications/ 11 Tehama, CA-8 (343) 86 100% $130 Westcell Services 03/90 McCaw Cellular Communications/ N/A Alexandria, LA (205) N/A N/A N/A Charter, Richard 03/90 N/A N/A SD-4 70 N/A $76 02/90 Centel/ 55 Sante Fe, NM-4 (556) 229 100% $135 John Herklotz San Juan, NM-1 (553) 212 100% 85 Naresh Vashisht Grant, NM-5 (557) 52 100% 75 Sun Comm. Inc. Colfax, NM-2 (554) 24 100% 70 Ronald Hyder --- --- 517 $105
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -110- 168 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/90 Undisclosed/ 9 Hardin, IA-11 (422) 113 100% $81 Cosas Communications 01/90 Cellular Inc./ 13 ID-5 145 100% $91 Sterling Communications 01/90 Cellular Information Systems/ 4 Beaverhead, MT-8 (530) 76 100% $49 Procell System 01/90 Cellular Information Systems/ 10 Burnett, WI-1 (708) 104 100% $95 S&F Partnership 01/90 C-TEC/ 9 IA-11 113 100% $81 Leon Rosenburg 01/90 General Cellular/ 6 Hanson, SD-9 (642) 89 100% $67 Collins & Assoc. 01/90 General Cellular/ 24 Clark, ID-6 (393) 269 100% $90 Mountain View Cellular 01/90 General Cellular/ 7 Divide, ND-1 (580) 116 100% $55 Tellesis Partners 01/90 General Cellular/ N/A NB-6 103 100% N/A Namaqua LP 01/90 Wisconsin Cellular Systems/ 10 WI-6 112 100% $85 USCC
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -111- 169 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 01/90 N/A N/A NV-4 24 N/A $42 12/89 Cybertel/ 9 MO-8 91 100% $100 M3P Corporation 11/89 General Cellular/ 2 Mono, CA-6 (341) 27 100% $56 Fairmont Cellular 11/89 General Cellular/ 16 WI-10 128 100% $123 Undisclosed 10/89 Atlantic Cellular/ 14 El Dorado, CA-11 (346) 119 100% $120 El Dorado Communications 10/89 Cellular Information System/ 16 NM-6 237 100% $65 Clover Cellular 10/89 General Cellular/ 5 WY-2 81 100% $57 Carter E. Page 10/89 General Cellular/ 5 Sheridan,WY-2 (719) 81 100% $57 Carter Page 10/89 McCaw Cellular Communications/ 63 WI-9 356 100% $175 Salem Cellular 09/89 Cellular Information Systems/ 8 Imperial, CA-7 (342) 113 100% $71 RSAC Inc.
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -112- 170 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 09/89 Cellular Information Systems/ 9 CA-7 113 100% $71 RSA Inc. 09/89 General Cellular/ 26 CA-1 191 100% $135 Undisclosed 08/89 Cellular Information Systems/ 10 Miami, HI-2 (386) 93 100% $107 Cone Enterprises 08/89 Cellular Information Systems/ 10 HI-2 93 100% $107 Cone Enterprises 08/89 McCaw Cellular Communications/ N/A UT-1 109 100% SWAP Price Communications 07/89 Century Communications/ 9 Yuma, AZ-4 (321) 114 100% $85(1) Bay Cellular Ltd. 07/89 McCaw Cellular Communications/ 25 Clallam, WA-1 (693) 210 100% $120 Steve Simmons 06/89 Robert Haskins/ 8 WA-4 100 100% $85 USCC 06/89 US Cellular Corporation/ 12 HI-3 119 100% $100 US Cell Inc. 06/89 Vanguard Cellular/ 8 Midland, TX (295) 119 100% $65 Geral Schaefers
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -113- 171 CONTEL CELLULAR INC.
SUMMARY OF SELECTED RSA CELLULAR TRANSACTIONS(1) (CONT'D) AGGREG. OWNERSHIP ESTIMATED VALUE NET POPS AFTER PRICE PER DATE ACQUIROR/SELLER ($MM) GEOGRAPHIC LOCATION (000s) TRANSACTION POP - ----- ------------------------------- ------- --------------------- -------- ----------- --------- 02/89 Cellular Inc./ 9 WY-3 152 100% $60 EZ Communications
- ---------- (1) Source: Wireless Investor and Cellular Investor (Paul Kagan). (2) Wireline interest. -114- 172 APPENDIX TO ELECTRONIC FORMAT DOCUMENT The following tables represent the plotting points used to create the 11 graphs shown in the printed document. Fig. 1 FIGURE 1
Date Contel S&P 400 ---- ------ ------- 12/21/93 100 100 12/22/93 100 100 12/23/93 100 100 12/27/93 99 101 12/28/93 99 101 12/29/93 103 101 12/30/93 100 101 12/31/93 104 101 1/3/94 103 101 1/4/94 102 101 1/5/94 102 101 1/6/94 105 101 1/7/94 114 102 1/10/94 113 103 1/11/94 117 103 1/12/94 116 103 1/13/94 113 102 1/14/94 111 103 1/17/94 113 103 1/18/94 108 103 1/19/94 108 103 1/20/94 107 103 1/21/94 108 103 1/24/94 105 103 1/25/94 106 102 1/26/94 104 102 1/27/94 105 103 1/28/94 108 103 1/31/94 106 104 2/1/94 108 104 2/2/94 111 104 2/3/94 110 104 2/4/94 106 102 2/7/94 106 102 2/8/94 107 102 2/9/94 105 103 2/10/94 103 102 2/11/94 106 102 2/14/94 108 102 2/15/94 112 103 2/16/94 114 103 2/17/94 111 103 2/18/94 111 102 2/22/94 108 103 2/23/94 110 103 2/24/94 108 101 2/25/94 111 102 2/28/94 105 102 3/1/94 106 101 3/2/94 103 101 3/3/94 103 101 3/4/94 105 101 3/7/94 105 102 3/8/94 103 102 3/9/94 101 102 3/10/94 98 102 3/11/94 97 102 3/14/94 95 102 3/15/94 98 102 3/16/94 102 102 3/17/94 101 103 3/18/94 102 103 3/21/94 102 102 3/22/94 102 102 3/23/94 105 102 3/24/94 102 101 3/25/94 105 100 3/28/94 103 100 3/29/94 95 98 3/30/94 92 97 3/31/94 90 97 4/4/94 84 96 4/5/94 92 98 4/6/94 95 98 4/7/94 97 98 4/8/94 100 97 4/11/94 98 98 4/12/94 98 97 4/13/94 98 97 4/14/94 92 97 4/15/94 97 96 4/18/94 95 96 4/19/94 94 95 4/20/94 93 95 4/21/94 93 97 4/22/94 97 97 4/25/94 94 98 4/26/94 97 98 4/28/94 94 97 4/29/94 97 98 5/2/94 95 98 5/3/94 95 98 5/4/94 97 98 5/5/94 99 98 5/6/94 96 97 5/9/94 95 96 5/10/94 97 97 5/11/94 95 96 5/12/94 98 97 5/13/94 97 97 5/16/94 98 97 5/17/94 100 98 5/18/94 105 98 5/19/94 108 99 5/20/94 110 99 5/23/94 100 99 5/24/94 102 99 5/25/94 103 99 5/26/94 102 99 5/27/94 103 99 5/31/94 103 99 6/1/94 103 99 6/2/94 103 99 6/3/94 106 100 6/6/94 103 99 6/7/94 106 99 6/8/94 105 99 6/9/94 105 99 6/10/94 103 99 6/13/94 104 99 6/14/94 106 100 6/15/94 104 100 6/16/94 106 100 6/17/94 106 99 6/20/94 105 99 6/21/94 103 98 6/22/94 103 98 6/23/94 103 97 6/24/94 105 96 6/27/94 100 97 6/28/94 102 97 6/29/94 102 97 6/30/94 105 96 7/1/94 102 97 7/5/94 102 97 7/6/94 102 97 7/7/94 110 97 7/8/94 106 97 7/11/94 107 97 7/12/94 108 97 7/13/94 105 97 7/14/94 104 98 7/15/94 106 99 7/18/94 108 99 7/19/94 108 99 7/20/94 105 98 7/21/94 105 98 7/22/94 110 98 7/25/94 106 99 7/26/94 114 98 7/27/94 116 98 7/28/94 116 99 7/29/94 113 99 8/1/94 113 100 8/2/94 114 100 8/3/94 116 100 8/4/94 121 99 8/5/94 119 99 8/8/94 116 99 8/9/94 122 99 8/10/94 122 100 8/11/94 119 100 8/12/94 117 100 8/15/94 117 100 8/16/94 117 101 8/17/94 116 101 8/18/94 114 101 8/19/94 119 101 8/22/94 116 101 8/23/94 116 101 8/24/94 117 102 8/25/94 114 102 8/26/94 114 104 8/29/94 113 104 8/30/94 115 104 8/31/94 113 104 9/1/94 117 104 9/2/94 114 103 9/6/94 114 103 9/7/94 113 103 9/8/94 149 104 9/9/94 147 103 9/12/94 148 102 9/13/94 148 103 9/14/94 149 103 9/15/94 149 104 9/16/94 152 104 9/19/94 152 104 9/20/94 149 102 9/21/94 149 102 9/22/94 149 102 9/23/94 151 101 9/26/94 150 102 9/27/94 151 102 9/28/94 151 102 9/29/94 149 102 9/30/94 150 102 10/3/94 151 102 10/4/94 151 100 10/5/94 150 100 10/6/94 152 100 10/7/94 149 100 10/10/94 150 101 10/11/94 150 103 10/12/94 151 103 10/13/94 151 103 10/14/94 151 104 10/17/94 151 104 10/18/94 151 103 10/19/94 152 104 10/20/94 152 103 10/21/94 152 103 10/24/94 152 102 10/25/94 153 102 10/26/94 153 103 10/27/94 154 103 10/28/94 153 105 10/31/94 153 105 11/1/94 153 104 11/2/94 153 103 11/3/94 153 104 11/4/94 154 102 11/7/94 153 102 11/8/94 155 103 11/9/94 155 103 11/10/94 157 103 11/11/94 156 103 11/14/94 158 103 11/15/94 157 103 11/16/94 156 104 11/17/94 156 103 11/18/94 155 103 11/21/94 155 102 11/22/94 156 100 11/23/94 155 100 11/25/94 155 100 11/28/94 156 101 11/29/94 155 101 11/30/94 154 101 12/1/94 156 99 12/2/94 154 100 12/5/94 154 100 12/6/94 155 100 12/7/94 153 100 12/8/94 155 98 12/9/94 155 99 12/12/94 155 99 12/13/94 154 99 12/14/94 155 100 12/15/94 156 101 12/16/94 153 101 12/19/94 153 101 12/20/94 155 101 12/21/94 156 102
173 Fig. 2 FIGURE 2
Date Contel Cellular Index S&P 400 ---- ------ -------------- ------- 12/20/91 100 100 100 12/27/91 101 103 105 1/3/92 111 109 109 1/10/92 104 113 108 1/17/92 98 118 109 1/24/92 102 114 108 1/31/92 99 110 106 2/7/92 99 111 107 2/14/92 98 111 108 2/21/92 98 113 107 2/28/92 96 115 108 3/6/92 96 115 106 3/13/92 93 114 106 3/20/92 95 115 107 3/27/92 88 109 105 4/3/92 84 107 105 4/10/92 88 107 106 4/16/92 90 107 109 4/24/92 88 106 106 5/1/92 86 100 107 5/8/92 85 101 108 5/15/92 85 99 106 5/22/92 84 101 107 5/29/92 77 94 108 6/5/92 78 94 107 6/12/92 75 94 106 6/19/92 72 90 104 6/26/92 67 90 104 7/2/92 72 92 106 7/10/92 81 92 107 7/17/92 79 91 107 7/24/92 78 92 106 7/31/92 74 97 109 8/7/92 79 96 108 8/14/92 75 96 108 8/21/92 77 95 107 8/28/92 77 91 107 9/4/92 75 92 108 9/11/92 75 94 109 9/18/92 78 95 110 9/25/92 72 92 107 10/2/92 69 89 105 10/9/92 69 89 103 10/16/92 69 89 106 10/23/92 67 89 107 10/30/92 68 91 108 11/6/92 80 99 107 11/13/92 85 99 109 11/20/92 85 101 110 11/27/92 84 102 111 12/4/92 88 102 111 12/11/92 90 103 111 12/18/92 89 103 113 12/24/92 84 103 112 12/31/92 88 104 111 1/8/93 84 102 110 1/15/93 90 107 111 1/22/93 75 106 111 1/29/93 73 100 112 2/5/93 73 100 114 2/12/93 77 101 113 2/19/93 78 101 109 2/26/93 78 103 112 3/5/93 79 108 113 3/12/93 84 107 113 3/19/93 78 112 114 3/26/93 74 111 113 4/2/93 70 111 111 4/8/93 69 109 110 4/16/93 69 107 112 4/23/93 67 109 109 4/30/93 69 109 111 5/7/93 74 112 112 5/14/93 69 111 111 5/21/93 78 111 113 5/28/93 75 113 114 6/4/93 74 116 114 6/11/93 72 115 113 6/18/93 70 116 112 6/25/93 78 117 112 7/2/93 80 117 111 7/9/93 82 120 112 7/16/93 80 121 111 7/23/93 79 116 111 7/30/93 81 119 111 8/6/93 83 123 111 8/13/93 84 126 111 8/20/93 90 134 114 8/27/93 90 135 114 9/3/93 91 138 114 9/10/93 91 134 114 9/17/93 89 132 113 9/24/93 85 130 113 10/1/93 85 132 114 10/8/93 90 134 114 10/15/93 102 148 117 10/22/93 98 149 116 10/29/93 94 147 117 11/5/93 91 139 116 11/12/93 85 140 118 11/19/93 79 137 118 11/26/93 84 131 118 12/3/93 83 133 118 12/10/93 81 134 118 12/17/93 78 132 118 12/23/93 78 133 118 12/31/93 81 137 118 1/7/94 89 140 120 1/14/94 86 141 121 1/21/94 84 136 121 1/28/94 84 135 122 2/4/94 83 135 120 2/11/94 83 135 120 2/18/94 86 135 120 2/25/94 86 132 120 3/4/94 81 129 119 3/11/94 75 129 120 3/18/94 79 126 121 3/25/94 81 125 118 3/31/94 70 119 114 4/8/94 78 117 115 4/15/94 75 118 114 4/22/94 75 119 114 4/29/94 75 122 115 5/6/94 75 121 115 5/13/94 75 120 114 5/20/94 85 123 116 5/27/94 80 126 117 6/3/94 82 127 117 6/10/94 80 128 117 6/17/94 83 127 117 6/24/94 81 125 113 7/1/94 79 122 114 7/8/94 83 124 115 7/15/94 83 129 116 7/22/94 85 130 116 7/29/94 88 133 117 8/5/94 93 134 117 8/12/94 91 138 118 8/19/94 93 139 119 8/26/94 89 145 122 9/2/94 89 147 121 9/9/94 114 146 121 9/16/94 118 154 122 9/23/94 117 149 119 9/30/94 117 145 120 10/7/94 116 146 118 10/14/94 117 149 122 10/21/94 119 153 121 10/28/94 119 157 123 11/4/94 120 158 120 11/11/94 122 159 121 11/18/94 120 161 121 11/25/94 120 154 118 12/2/94 120 156 118 12/9/94 120 149 116 12/16/94 119 150 119 12/21/94 121 154 120
174 Fig. 3 FIGURE 3
Date Contel GTE S&P 400 ---- ------ --- ------- 8/1/94 76 104 96 8/2/94 77 104 96 8/3/94 78 105 96 8/4/94 81 104 96 8/5/94 80 105 95 8/8/94 78 105 96 8/9/94 82 105 96 8/10/94 82 106 96 8/11/94 80 106 96 8/12/94 79 107 97 8/15/94 79 107 96 8/16/94 79 104 97 8/17/94 78 103 98 8/18/94 77 102 97 8/19/94 80 102 97 8/22/94 78 100 97 8/23/94 78 101 98 8/24/94 79 102 99 8/25/94 77 103 99 8/26/94 77 102 100 8/29/94 76 104 100 8/30/94 77 103 100 8/31/94 76 103 100 9/1/94 79 102 100 9/2/94 77 102 99 9/6/94 77 101 99 9/7/94 76 100 99 9/8/94 100 100 100 9/9/94 98 99 99 9/12/94 99 98 99 9/13/94 99 97 99 9/14/94 100 98 99 9/15/94 100 99 101 9/16/94 102 99 100 9/19/94 102 98 100 9/20/94 100 98 98 9/21/94 100 98 98 9/22/94 100 97 98 9/23/94 101 98 98 9/26/94 101 99 98 9/27/94 101 100 98 9/28/94 101 100 99 9/29/94 100 99 98 9/30/94 101 98 98 10/3/94 101 98 98 10/4/94 101 98 97 10/5/94 101 97 97 10/6/94 102 97 96 10/7/94 100 98 97 10/10/94 101 98 98 10/11/94 101 99 99 10/12/94 101 98 99 10/13/94 101 99 100 10/14/94 101 100 100 10/17/94 101 100 100 10/18/94 101 99 100 10/19/94 102 99 100 10/20/94 102 98 100 10/21/94 102 98 99 10/24/94 102 97 98 10/25/94 102 98 99 10/26/94 102 98 99 10/27/94 103 98 99 10/28/94 103 100 101 10/31/94 103 100 101 11/1/94 103 99 100 11/2/94 103 99 99 11/3/94 103 100 100 11/4/94 103 99 99 11/7/94 103 99 99 11/8/94 104 100 99 11/9/94 104 100 99 11/10/94 105 99 99 11/11/94 105 100 99 11/14/94 106 101 100 11/15/94 105 101 99 11/16/94 105 99 100 11/17/94 105 99 99 11/18/94 104 97 99 11/21/94 104 98 98 11/22/94 104 97 96 11/23/94 104 99 96 11/25/94 104 99 96 11/29/94 104 99 97 11/30/94 103 99 97 12/1/94 104 98 96 12/2/94 103 98 97 12/5/94 103 98 97 12/6/94 104 98 96 12/7/94 103 98 96 12/8/94 104 98 95 12/9/94 104 99 95 12/12/94 104 100 96 12/13/94 103 99 96 12/14/94 104 100 97 12/15/94 104 99 97 12/16/94 103 100 98 12/19/94 103 99 97 12/20/94 104 98 97 12/21/94 104 98 98
175 Fig. 4 FIGURE 4
Date Contel S&P 400 ---- ------ ------- 4/22/88 100 100 4/29/88 96 101 5/6/88 99 99 5/13/88 92 98 5/20/88 88 97 5/27/88 90 97 6/3/88 99 102 6/10/88 112 104 6/17/88 113 103 6/24/88 111 104 7/1/88 108 104 7/8/88 107 103 7/15/88 106 104 7/22/88 104 100 7/29/88 103 104 8/5/88 110 103 8/12/88 102 100 8/19/88 101 99 8/26/88 100 98 9/2/88 100 100 9/9/88 99 101 9/16/88 98 103 9/23/88 106 102 9/30/88 110 103 10/7/88 112 105 10/14/88 116 105 10/21/88 116 108 10/28/88 116 106 11/4/88 122 105 11/11/88 133 102 11/18/88 133 101 11/25/88 131 102 12/2/88 134 103 12/9/88 128 105 12/16/88 137 105 12/23/88 141 106 12/30/88 143 106 1/6/89 143 107 1/13/89 160 109 1/20/89 183 109 1/27/89 187 112 2/3/89 192 114 2/10/89 179 111 2/17/89 187 113 2/24/89 210 109 3/3/89 216 111 3/10/89 219 112 3/17/89 225 112 3/23/89 223 110 3/31/89 228 112 4/7/89 234 113 4/14/89 238 115 4/21/89 251 118 4/28/89 291 118 5/5/89 285 117 5/12/89 278 119 5/19/89 282 122 5/26/89 288 122 6/2/89 297 123 6/9/89 301 123 6/16/89 269 121 6/23/89 304 124 6/30/89 257 120 7/7/89 266 122 7/14/89 251 125 7/21/89 260 127 7/28/89 242 129 8/4/89 245 130 8/11/89 273 130 8/18/89 278 131 8/25/89 278 133 9/1/89 301 134 9/8/89 307 132 9/15/89 316 130 9/22/89 301 131 9/29/89 303 131 10/6/89 303 135 10/13/89 275 125 10/20/89 293 131 10/27/89 254 126 11/3/89 263 127 11/10/89 257 128 11/17/89 254 129 11/24/89 245 130 12/1/89 266 132 12/8/89 281 132 12/15/89 272 132 12/22/89 284 131 12/29/89 301 133 1/5/90 287 133 1/12/90 272 129 1/19/90 257 129 1/26/90 209 124 2/2/90 209 126 2/9/90 221 127 2/16/90 221 127 2/23/90 209 123 3/2/90 231 128 3/9/90 275 129 3/16/90 257 131 3/23/90 233 129 3/30/90 242 130 4/6/90 236 131 4/12/90 227 132 4/20/90 197 129 4/27/90 185 127 5/4/90 173 130 5/11/90 191 135 5/18/90 218 136 5/25/90 227 137 6/1/90 225 140 6/8/90 233 138 6/15/90 233 140 6/22/90 231 138 6/29/90 221 139 7/6/90 218 139 7/13/90 257 144 7/20/90 227 142 7/27/90 209 138 8/3/90 188 134 8/10/90 200 131 8/17/90 188 128 8/24/90 146 122 8/31/90 158 126 9/7/90 164 126 9/14/90 148 124 9/21/90 116 121 9/28/90 139 119 10/5/90 167 121 10/12/90 140 116 10/19/90 161 121 10/26/90 155 118 11/2/90 148 120 11/9/90 152 121 11/16/90 185 123 11/23/90 188 122 11/30/90 203 125 12/7/90 218 127 12/14/90 230 126 12/21/90 224 128 12/28/90 230 127 1/4/91 218 124 1/11/91 203 122 1/18/91 224 129 1/25/91 239 131 2/1/91 239 134 2/8/91 242 140 2/15/91 233 144 2/22/91 239 143 3/1/91 251 145 3/8/91 266 147 3/15/91 278 147 3/22/91 275 144 3/28/91 297 147 4/5/91 272 147 4/12/91 272 149 4/19/91 272 151 4/26/91 275 149 5/3/91 261 149 5/10/91 269 148 5/17/91 254 146 5/24/91 251 149 5/31/91 254 153 6/7/91 254 149 6/14/91 236 150 6/21/91 233 149 6/28/91 230 146 7/5/91 215 147 7/12/91 224 150 7/19/91 224 151 7/26/91 222 150 8/2/91 242 152 8/9/91 233 152 8/16/91 239 151 8/23/91 224 155 8/30/91 233 155 9/6/91 227 153 9/13/91 215 150 9/20/91 212 152 9/27/91 218 151 10/4/91 248 149 10/11/91 239 149 10/18/91 257 153 10/25/91 257 150 11/1/91 254 152 11/8/91 266 153 11/15/91 251 149 11/22/91 254 147 11/29/91 236 146 12/6/91 239 147 12/13/91 236 149 12/20/91 242 151 12/27/91 245 158 1/3/92 269 164 1/10/92 251 162 1/17/92 236 164 1/24/92 246 163 1/31/92 239 160 2/7/92 240 162 2/14/92 236 162 2/21/92 236 162 2/28/92 233 162 3/6/92 233 159 3/13/92 224 159 3/20/92 230 161 3/27/92 212 159 4/3/92 203 158 4/10/92 212 159 4/16/92 218 164 4/24/92 212 160 5/1/92 209 161 5/8/92 206 163 5/15/92 206 160 5/22/92 203 162 5/29/92 185 163 6/5/92 188 162 6/12/92 182 160 6/19/92 173 157 6/26/92 161 157 7/2/92 173 160 7/10/92 197 160 7/17/92 191 161 7/24/92 188 159 7/31/92 179 164 8/7/92 191 162 8/14/92 182 163 8/21/92 185 161 8/28/92 185 161 9/4/92 182 162 9/11/92 182 164 9/18/92 188 165 9/25/92 173 161 10/2/92 167 159 10/9/92 167 156 10/16/92 167 159 10/23/92 161 160 10/30/92 164 162 11/6/92 194 162 11/13/92 206 164 11/20/92 206 165 11/27/92 203 166 12/4/92 212 167 12/11/92 218 168 12/18/92 215 170 12/24/92 203 169 12/31/92 212 168 1/8/93 203 165 1/15/93 218 167 1/22/93 182 167 1/29/93 176 168 2/5/93 176 171 2/12/93 185 169 2/19/93 188 165 2/26/93 188 168 3/5/93 191 169 3/12/93 203 171 3/19/93 188 171 3/26/93 179 169 4/2/93 170 168 4/8/93 167 166 4/16/93 166 168 4/23/93 161 165 4/30/93 167 167 5/7/93 179 168 5/14/93 167 168 5/21/93 188 170 5/28/93 182 172 6/4/93 179 172 6/11/93 173 170 6/18/93 170 169 6/25/93 188 169 7/2/93 194 168 7/9/93 199 168 7/16/93 194 167 7/23/93 191 167 7/30/93 197 167 8/6/93 200 168 8/13/93 203 168 8/20/93 218 171 8/27/93 218 172 9/3/93 221 172 9/10/93 219 171 9/17/93 215 170 9/24/93 206 170 10/1/93 206 172 10/8/93 218 172 10/15/93 248 176 10/22/93 236 175 10/29/93 228 177 11/5/93 221 175 11/12/93 206 178 11/19/93 191 177 11/26/93 203 177 12/3/93 201 177 12/10/93 196 177 12/17/93 188 178 12/23/93 188 178 12/31/93 196 178 1/7/94 215 181 1/14/94 209 182 1/21/94 203 183 1/28/94 203 183 2/4/94 200 181 2/11/94 200 181 2/18/94 209 181 2/25/94 209 180 3/4/94 197 180 3/11/94 182 181 3/18/94 191 183 3/25/94 197 178 3/31/94 170 172 4/8/94 188 172 4/15/94 182 171 4/22/94 182 171 4/29/94 182 173 5/6/94 181 173 5/13/94 182 172 5/20/94 206 175 5/27/94 194 176 6/3/94 199 177 6/10/94 194 176 6/17/94 200 176 6/24/94 197 170 7/1/94 191 171 7/8/94 200 173 7/15/94 200 175 7/22/94 206 174 7/29/94 212 176 8/5/94 224 176 8/12/94 221 178 8/19/94 224 179 8/26/94 215 184 9/2/94 215 183 9/9/94 276 182 9/16/94 285 184 9/23/94 284 180 9/30/94 282 181 10/7/94 281 178 10/14/94 284 184 10/21/94 287 182 10/28/94 288 186 11/4/94 290 181 11/11/94 294 182 11/18/94 291 182 11/25/94 291 177 11/29/94 290 178 12/9/94 291 175 12/16/94 288 180 12/21/94 293 180
176 Fig. 5 FIGURE 5
Date Contel Cellular Index S&P 400 ---- ------ -------------- ------- 12/21/93 100 100 100 12/22/93 100 100 100 12/23/93 100 101 100 12/27/93 99 102 101 12/28/93 99 102 101 12/29/93 103 103 101 12/30/93 100 104 101 12/31/93 104 106 101 1/3/94 103 106 101 1/4/94 102 107 101 1/5/94 102 105 101 1/6/94 105 105 101 1/7/94 114 106 102 1/10/94 113 108 103 1/11/94 117 109 103 1/12/94 116 108 103 1/13/94 113 107 102 1/14/94 111 106 103 1/17/94 113 107 103 1/18/94 108 106 103 1/19/94 108 104 103 1/20/94 107 103 103 1/21/94 108 103 103 1/24/94 105 103 103 1/25/94 106 103 102 1/26/94 104 102 102 1/27/94 105 102 103 1/28/94 108 102 103 1/31/94 106 103 104 2/1/94 108 103 104 2/2/94 111 103 104 2/3/94 110 103 104 2/4/94 106 102 102 2/7/94 106 102 102 2/8/94 107 101 102 2/9/94 105 103 103 2/10/94 103 102 102 2/11/94 106 102 102 2/14/94 108 102 102 2/15/94 112 102 103 2/16/94 114 103 103 2/17/94 111 103 103 2/18/94 111 102 102 2/22/94 108 102 103 2/23/94 110 101 103 2/24/94 108 99 101 2/25/94 111 100 102 2/28/94 105 100 102 3/1/94 106 99 101 3/2/94 103 98 101 3/3/94 103 98 101 3/4/94 105 98 101 3/7/94 105 99 102 3/8/94 103 99 102 3/9/94 101 98 102 3/10/94 98 99 102 3/11/94 97 99 102 3/14/94 95 98 102 3/15/94 98 98 102 3/16/94 102 98 102 3/17/94 101 97 103 3/18/94 102 96 103 3/21/94 102 96 102 3/22/94 102 97 102 3/23/94 105 97 102 3/24/94 102 96 101 3/25/94 105 95 100 3/28/94 103 93 100 3/29/94 95 92 98 3/30/94 92 92 97 3/31/94 90 91 97 4/4/94 84 88 96 4/5/94 92 90 98 4/6/94 95 90 98 4/7/94 97 90 98 4/8/94 100 91 97 4/11/94 98 90 98 4/12/94 98 91 97 4/13/94 98 91 97 4/14/94 92 91 97 4/15/94 97 91 96 4/18/94 95 91 96 4/19/94 94 90 95 4/20/94 93 91 95 4/21/94 93 91 97 4/22/94 97 92 97 4/25/94 94 93 98 4/26/94 97 93 98 4/28/94 94 94 97 4/29/94 97 93 98 5/2/94 95 93 98 5/3/94 95 93 98 5/4/94 97 93 98 5/5/94 99 93 98 5/6/94 96 93 97 5/9/94 95 92 96 5/10/94 97 92 97 5/11/94 95 91 96 5/12/94 98 92 97 5/13/94 97 91 97 5/16/94 98 92 97 5/17/94 100 92 98 5/18/94 105 94 98 5/19/94 108 94 99 5/20/94 110 94 99 5/23/94 100 94 99 5/24/94 102 94 99 5/25/94 103 95 99 5/26/94 102 95 99 5/27/94 103 96 99 5/31/94 103 95 99 6/1/94 103 95 99 6/2/94 103 96 99 6/3/94 106 96 100 6/6/94 103 97 99 6/7/94 106 97 99 6/8/94 105 97 99 6/9/94 105 97 99 6/10/94 103 97 99 6/13/94 104 96 99 6/14/94 106 97 100 6/15/94 104 97 100 6/16/94 106 97 100 6/17/94 106 96 99 6/20/94 105 95 99 6/21/94 103 95 98 6/22/94 103 94 98 6/23/94 103 94 97 6/24/94 105 94 96 6/27/94 100 93 97 6/28/94 102 93 97 6/29/94 102 92 97 6/30/94 105 90 96 7/1/94 102 91 97 7/5/94 102 92 97 7/6/94 102 92 97 7/7/94 110 93 97 7/8/94 106 93 97 7/11/94 107 91 97 7/12/94 108 92 97 7/13/94 105 92 97 7/14/94 104 94 98 7/15/94 106 95 99 7/18/94 108 94 99 7/19/94 108 95 99 7/20/94 105 95 98 7/21/94 105 95 98 7/22/94 110 95 98 7/25/94 106 95 99 7/26/94 114 97 98 7/27/94 116 97 98 7/28/94 116 98 99 7/29/94 113 97 99 8/1/94 113 97 100 8/2/94 114 97 100 8/3/94 116 97 100 8/4/94 121 97 99 8/5/94 119 97 99 8/8/94 116 97 99 8/9/94 122 98 99 8/10/94 122 99 100 8/11/94 119 100 100 8/12/94 117 100 100 8/15/94 117 100 100 8/16/94 117 101 101 8/17/94 116 101 101 8/18/94 114 101 101 8/19/94 119 102 101 8/22/94 116 102 101 8/23/94 116 103 101 8/24/94 117 104 102 8/25/94 114 105 102 8/26/94 114 107 104 8/29/94 113 108 104 8/30/94 115 107 104 8/31/94 113 109 104 9/1/94 117 107 104 9/2/94 114 107 103 9/6/94 114 107 103 9/7/94 113 107 103 9/8/94 149 107 104 9/9/94 147 107 103 9/12/94 148 107 102 9/13/94 148 108 103 9/14/94 149 109 103 9/15/94 149 111 104 9/16/94 152 112 104 9/19/94 152 112 104 9/20/94 149 111 102 9/21/94 149 108 102 9/22/94 149 108 102 9/23/94 151 108 101 9/26/94 150 108 102 9/27/94 151 107 102 9/28/94 151 106 102 9/29/94 149 105 102 9/30/94 150 106 102 10/3/94 151 106 102 10/4/94 151 105 100 10/5/94 150 105 100 10/6/94 152 106 100 10/7/94 149 107 100 10/10/94 150 107 101 10/11/94 150 109 103 10/12/94 151 109 103 10/13/94 151 109 103 10/14/94 151 109 104 10/17/94 151 109 104 10/18/94 151 110 103 10/19/94 152 110 104 10/20/94 152 111 103 10/21/94 152 112 103 10/24/94 152 112 102 10/25/94 153 110 102 10/26/94 153 111 103 10/27/94 154 111 103 10/28/94 153 114 105 10/31/94 153 116 105 11/1/94 153 115 104 11/2/94 153 115 103 11/3/94 153 115 104 11/4/94 154 114 102 11/7/94 153 114 102 11/8/94 155 114 103 11/9/94 155 115 103 11/10/94 157 115 103 11/11/94 156 115 103 11/14/94 158 115 103 11/15/94 157 115 103 11/16/94 156 115 104 11/17/94 156 116 103 11/18/94 155 117 103 11/21/94 155 116 102 11/22/94 156 114 100 11/23/94 155 111 100 11/25/94 155 111 100 11/28/94 156 112 101 11/29/94 155 113 101 11/30/94 154 113 101 12/1/94 156 112 99 12/2/94 154 112 100 12/5/94 154 113 100 12/6/94 155 112 100 12/7/94 153 111 100 12/8/94 155 109 98 12/9/94 155 108 99 12/12/94 155 107 99 12/13/94 154 107 99 12/14/94 155 107 100 12/15/94 156 109 101 12/16/94 153 109 101 12/19/94 153 109 101 12/20/94 155 110 101 12/21/94 156 111 102
177 Fig. 6 FIGURE 6
Date Contel Cell Ind. S&P 400 ---- ------ --------- ------- 5/31/94 100 100 100 6/1/94 100 101 100 6/2/94 100 101 100 6/3/94 102 102 101 6/6/94 100 103 100 6/7/94 103 103 100 6/8/94 102 102 100 6/9/94 102 102 100 6/10/94 100 102 100 6/13/94 101 101 100 6/14/94 102 102 101 6/15/94 101 102 101 6/16/94 103 101 101 6/17/94 103 100 100 6/20/94 102 99 100 6/21/94 100 99 99 6/22/94 100 99 99 6/23/94 100 99 98 6/24/94 102 99 97 6/27/94 97 98 98 6/28/94 98 98 98 6/29/94 98 97 98 6/30/94 102 95 97 7/1/94 98 96 97 7/5/94 98 97 98 7/6/94 99 97 97 7/7/94 106 98 98 7/8/94 103 98 98 7/11/94 104 96 98 7/12/94 105 97 98 7/13/94 102 97 98 7/14/94 101 99 99 7/15/94 103 99 99 7/18/94 105 99 100 7/19/94 105 100 99 7/20/94 102 100 99 7/21/94 102 101 99 7/22/94 106 100 99 7/25/94 103 101 100 7/26/94 111 102 99 7/27/94 112 103 99 7/28/94 112 103 99 7/29/94 109 103 100 8/1/94 109 103 101 8/2/94 111 103 101 8/3/94 112 103 101 8/4/94 117 102 100 8/5/94 115 102 100 8/8/94 112 102 100 8/9/94 118 103 100 8/10/94 118 104 101 8/11/94 115 105 101 8/12/94 114 106 101 8/15/94 114 106 101 8/16/94 114 107 102 8/17/94 112 106 102 8/18/94 111 107 102 8/19/94 115 107 102 8/22/94 112 107 102 8/23/94 112 108 102 8/24/94 114 109 103 8/25/94 111 110 103 8/26/94 111 112 105 8/29/94 109 113 105 8/30/94 112 113 105 8/31/94 109 114 105 9/1/94 114 113 104 9/2/94 111 113 104 9/6/94 111 113 104 9/7/94 109 113 104 9/8/94 145 113 105 9/9/94 142 113 104 9/12/94 143 113 103 9/13/94 143 113 104 9/14/94 145 115 104 9/15/94 145 117 105 9/16/94 147 118 105 9/19/94 147 118 105 9/20/94 145 116 103 9/21/94 145 113 103 9/22/94 145 113 103 9/23/94 146 113 102 9/26/94 145 113 103 9/27/94 146 112 103 9/28/94 146 112 103 9/29/94 145 111 103 9/30/94 145 112 103 10/3/94 146 112 103 10/4/94 146 110 101 10/5/94 145 110 101 10/6/94 147 111 101 10/7/94 145 112 101 10/10/94 145 113 102 10/11/94 145 115 104 10/12/94 146 115 104 10/13/94 146 115 104 10/14/94 146 115 105 10/17/94 146 115 105 10/18/94 146 116 104 10/19/94 148 116 105 10/20/94 148 117 104 10/21/94 148 117 104 10/24/94 147 117 103 10/25/94 148 116 103 10/26/94 148 117 104 10/27/94 149 117 104 10/28/94 148 120 106 10/31/94 148 122 106 11/1/94 148 120 105 11/2/94 148 120 104 11/3/94 148 120 104 11/4/94 149 119 103 11/7/94 148 118 103 11/8/94 150 119 104 11/9/94 150 119 104 11/10/94 152 119 104 11/11/94 152 120 104 11/14/94 153 120 104 11/15/94 152 120 104 11/16/94 152 120 104 11/17/94 152 120 104 11/18/94 150 121 104 11/21/94 150 121 103 11/22/94 151 119 101 11/23/94 150 115 100 11/25/94 150 115 101 11/29/94 150 118 102 11/30/94 150 118 101 12/1/94 151 117 100 12/2/94 149 117 101 12/5/94 149 117 101 12/6/94 150 116 101 12/7/94 148 116 101 12/8/94 150 114 99 12/9/94 150 112 100 12/12/94 150 112 100 12/13/94 150 112 100 12/14/94 150 112 101 12/15/94 151 114 101 12/16/94 148 114 102 12/19/94 148 115 102 12/20/94 150 116 102 12/21/94 151 116 103
178 FIGURE 7
Cellular Date Contel Index S&P 400 ---- ------ -------- ------- 9/7/94 100 100 100 9/8/94 132 101 101 9/9/94 130 100 100 9/12/94 131 100 99 9/13/94 131 100 100 9/14/94 132 102 100 9/15/94 132 104 101 9/16/94 135 104 101 9/19/94 135 104 101 9/20/94 132 103 99 9/21/94 132 101 99 9/22/94 132 101 99 9/23/94 134 101 98 9/26/94 133 100 98 9/27/94 134 100 99 9/28/94 134 99 99 9/29/94 132 98 99 9/30/94 133 100 99 10/3/94 134 100 99 10/4/94 134 98 97 10/5/94 133 98 97 10/6/94 135 99 97 10/7/94 132 99 97 10/10/94 133 100 98 10/11/94 133 102 100 10/12/94 134 102 100 10/13/94 134 103 100 10/14/94 134 103 101 10/17/94 134 102 101 10/18/94 134 103 100 10/19/94 135 103 101 10/20/94 135 103 100 10/21/94 135 104 100 10/24/94 135 104 99 10/25/94 136 103 99 10/26/94 136 104 99 10/27/94 137 104 100 10/28/94 136 106 102 10/31/94 136 108 101 11/1/94 136 107 101 11/2/94 136 107 100 11/3/94 136 106 100 11/4/94 137 106 99 11/7/94 136 105 99 11/8/94 137 106 100 11/9/94 137 106 100 11/10/94 139 106 100 11/11/94 139 106 99 11/14/94 140 106 100 11/15/94 139 106 100 11/16/94 139 107 100 11/17/94 139 107 100 11/18/94 137 108 100 11/21/94 137 107 99 11/22/94 138 106 97 11/23/94 137 102 96 11/25/94 137 102 97 11/28/94 138 103 98 11/29/94 137 104 98 11/30/94 137 104 97 12/1/94 138 104 96 12/2/94 137 104 97 12/5/94 137 104 97 12/6/94 137 103 97 12/7/94 136 103 97 12/8/94 137 101 95 12/9/94 137 100 96 12/12/94 137 100 96 12/13/94 137 99 96 12/14/94 137 100 97 12/15/94 138 101 97 12/16/94 136 101 98 12/19/94 136 102 98 12/20/94 137 103 98 12/21/94 138 103 99
179 Fig. 8 FIGURE 8
Cellular Date Contel GTE S&P 400 Index ---- ------ --- ------- -------- 1/03/94 100 100 100 100 1/04/94 99 99 101 101 1/05/94 99 99 101 99 1/06/94 102 100 101 99 1/07/94 111 100 101 100 1/10/94 109 101 102 101 1/11/94 114 101 102 103 1/12/94 112 101 102 102 1/13/94 110 100 102 101 1/14/94 108 101 102 100 1/17/94 109 99 102 101 1/18/94 105 99 102 100 1/19/94 105 100 102 98 1/20/94 104 100 102 98 1/21/94 105 100 102 99 1/24/94 102 99 102 98 1/25/94 103 98 102 98 1/26/94 101 99 102 97 1/27/94 102 100 102 97 1/28/94 105 99 103 98 1/31/94 103 100 103 99 2/01/94 105 100 103 98 2/02/94 108 99 104 98 2/03/94 106 98 104 98 2/04/94 103 96 101 96 2/07/94 102 96 102 96 2/08/94 104 96 102 96 2/09/94 102 96 102 97 2/10/94 100 95 101 97 2/11/94 103 96 102 96 2/14/94 105 96 102 96 2/15/94 108 95 102 96 2/16/94 111 95 103 98 2/17/94 108 93 102 97 2/18/94 108 92 102 97 2/22/94 105 92 102 97 2/23/94 106 93 102 96 2/24/94 105 97 101 94 2/25/94 108 97 101 95 2/28/94 102 95 101 95 3/01/94 103 95 101 94 3/02/94 100 96 101 93 3/03/94 100 95 100 92 3/04/94 102 94 101 93 3/07/94 102 93 101 94 3/08/94 100 91 101 94 3/09/94 98 93 102 94 3/10/94 95 92 101 94 3/11/94 94 93 101 94 3/14/94 92 92 102 94 3/15/94 95 93 101 94 3/16/94 98 93 102 93 3/17/94 98 93 102 92 3/18/94 98 93 102 91 3/21/94 98 92 102 91 3/22/94 98 92 102 91 3/23/94 102 92 102 92 3/24/94 98 92 101 90 3/25/94 102 91 100 90 3/28/94 100 92 100 89 3/29/94 92 90 98 88 3/30/94 89 89 97 87 3/31/94 88 90 97 86 4/04/94 82 89 95 83 4/05/94 89 89 97 86 4/06/94 92 89 97 86 4/07/94 94 88 98 86 4/08/94 97 87 97 86 4/11/94 95 87 97 86 4/12/94 95 87 97 87 4/13/94 95 87 96 87 4/14/94 89 87 96 88 4/15/94 94 87 96 88 4/18/94 92 87 95 87 4/19/94 91 92 95 87 4/20/94 90 93 94 87 4/21/94 90 96 96 88 4/22/94 94 92 96 88 4/25/94 91 95 97 89 4/26/94 94 95 97 89 4/28/94 91 92 97 91 4/29/94 94 92 97 90 5/02/94 92 92 98 90 5/03/94 92 92 98 90 5/04/94 94 92 98 90 5/05/94 96 91 97 90 5/06/94 93 89 97 89 5/09/94 92 91 96 89 5/10/94 94 92 96 89 5/11/94 92 90 96 88 5/12/94 95 91 96 89 5/13/94 94 92 96 88 5/16/94 95 92 96 89 5/17/94 97 92 97 88 5/18/94 102 95 98 90 5/19/94 105 93 98 90 5/20/94 106 92 98 90 5/23/94 97 91 98 91 5/24/94 98 91 98 90 5/25/94 100 89 99 91 5/26/94 98 90 99 91 5/27/94 100 90 99 92 5/31/94 100 90 99 92 6/01/94 100 90 99 92 6/02/94 100 90 99 93 6/03/94 102 92 99 93 6/06/94 100 93 99 94 6/07/94 103 92 99 94 6/08/94 102 92 98 94 6/09/94 102 92 98 94 6/10/94 100 93 99 94 6/13/94 101 92 99 93 6/14/94 102 92 99 93 6/15/94 101 92 99 93 6/16/94 103 92 99 93 6/17/94 103 92 99 92 6/20/94 102 91 98 91 6/21/94 100 90 97 91 6/22/94 100 90 98 90 6/23/94 100 89 97 91 6/24/94 102 87 95 91 6/27/94 97 88 96 90 6/28/94 98 88 96 89 6/29/94 98 88 96 88 6/30/94 102 90 96 87 7/01/94 98 89 96 88 7/05/94 98 89 96 89 7/06/94 99 89 96 89 7/07/94 106 88 97 90 7/08/94 103 88 97 90 7/11/94 104 87 97 88 7/12/94 105 87 97 89 7/13/94 102 87 97 89 7/14/94 101 88 98 91 7/15/94 103 87 98 91 7/18/94 105 87 98 91 7/19/94 105 89 98 91 7/20/94 102 91 97 92 7/21/94 102 92 98 92 7/22/94 106 91 98 92 7/25/94 103 91 98 93 7/26/94 111 91 98 94 7/27/94 112 91 98 94 7/28/94 112 91 98 94 7/29/94 109 92 99 94 8/01/94 109 93 99 94 8/02/94 111 93 99 94 8/03/94 112 94 99 94 8/04/94 117 93 99 94 8/05/94 115 94 99 93 8/08/94 112 94 99 94 8/09/94 118 94 99 94 8/10/94 118 95 99 95 8/11/94 115 95 99 96 8/12/94 114 96 100 97 8/15/94 114 96 100 97 8/16/94 114 93 100 98 8/17/94 112 92 101 97 8/18/94 111 92 100 98 8/19/94 115 91 101 98 8/22/94 112 90 100 98 8/23/94 112 91 101 99 8/24/94 114 91 102 100 8/25/94 111 92 102 101 8/26/94 111 92 103 102 8/29/94 109 93 103 104 8/30/94 112 92 104 104 8/31/94 109 92 103 105 9/01/94 114 91 103 103 9/02/94 111 91 102 104 9/06/94 111 90 103 104 9/07/94 109 89 103 103 9/08/94 145 89 103 104 9/09/94 142 89 102 103 9/12/94 143 87 102 103 9/13/94 143 87 102 104 9/14/94 145 88 102 105 9/15/94 145 88 104 107 9/16/94 147 88 103 108 9/19/94 147 88 103 108 9/20/94 145 88 102 106 9/21/94 145 87 101 104 9/22/94 145 87 101 104 9/23/94 146 88 101 104 9/26/94 145 88 101 103 9/27/94 146 89 101 103 9/28/94 146 89 102 103 9/29/94 145 88 101 101 9/30/94 145 88 102 103 10/03/94 146 88 101 103 10/04/94 146 87 100 101 10/05/94 145 87 100 101 10/06/94 147 87 99 102 10/07/94 145 88 100 103 10/10/94 145 88 101 103 10/11/94 145 88 102 105 10/12/94 146 88 102 105 10/13/94 146 88 103 106 10/14/94 146 89 103 106 10/17/94 146 89 103 105 10/18/94 146 88 103 106 10/19/94 148 89 103 106 10/20/94 148 88 103 107 10/21/94 148 88 102 108 10/24/94 147 87 102 108 10/25/94 148 88 102 106 10/26/94 148 87 102 107 10/27/94 149 88 103 107 10/28/94 148 90 104 110 10/31/94 148 90 104 111 11/1/94 148 88 103 110 11/2/94 148 89 103 110 11/3/94 148 89 103 110 11/4/94 149 88 102 109 11/7/94 148 89 102 108 11/8/94 150 89 103 109 11/9/94 150 89 103 109 11/10/94 152 89 102 109 11/11/94 152 89 102 109 11/14/94 153 91 103 110 11/15/94 152 90 103 110 11/16/94 152 88 103 110 11/17/94 152 88 103 110 11/18/94 150 87 102 111 11/21/94 150 87 101 111 11/22/94 151 87 99 109 11/23/94 150 88 99 105 11/25/94 150 89 99 106 11/28/94 151 88 100 106 11/29/94 150 89 100 108 11/30/94 150 88 100 108 12/1/94 151 88 99 107 12/2/94 149 88 100 107 12/5/94 149 88 100 107 12/6/94 150 88 100 106 12/7/94 148 87 99 106 12/8/94 150 87 98 104 12/9/94 150 89 98 103 12/12/94 150 89 99 103 12/13/94 150 89 99 102 12/14/94 150 90 100 103 12/15/94 151 88 100 104 12/16/94 148 89 101 105 12/19/94 148 89 101 105 12/20/94 150 88 100 106 12/21/94 151 88 101 107
180 Fig. 9 FIGURE 9
Date AirTouch BCE Mobile S&P 400 Cellular Index ---- -------- ---------- ------- -------------- 1/03/94 100 100 100 100 1/04/94 99 101 101 101 1/05/94 99 102 101 99 1/06/94 101 101 101 99 1/07/94 101 102 101 100 1/10/94 100 102 102 101 1/11/94 100 102 102 103 1/12/94 100 102 102 102 1/13/94 98 100 102 101 1/14/94 100 100 102 100 1/17/94 100 101 102 101 1/18/94 101 101 102 100 1/19/94 101 99 102 98 1/20/94 103 99 102 98 1/21/94 106 98 102 99 1/24/94 103 98 102 98 1/25/94 103 97 102 98 1/26/94 99 96 102 97 1/27/94 98 100 102 97 1/28/94 102 101 103 98 1/31/94 104 101 103 99 2/01/94 104 100 103 98 2/02/94 104 101 104 98 2/03/94 102 100 104 98 2/04/94 97 98 101 96 2/07/94 98 98 102 96 2/08/94 98 99 102 96 2/09/94 98 99 102 97 2/10/94 98 98 101 97 2/11/94 98 96 102 96 2/14/94 98 95 102 96 2/15/94 99 95 102 96 2/16/94 100 96 103 98 2/17/94 99 97 102 97 2/18/94 99 98 102 97 2/22/94 101 96 102 97 2/23/94 100 96 102 96 2/24/94 96 94 101 94 2/25/94 97 94 101 95 2/28/94 97 94 101 95 3/01/94 96 94 101 94 3/02/94 93 94 101 93 3/03/94 89 94 100 92 3/04/94 96 94 101 93 3/07/94 98 94 101 94 3/08/94 99 93 101 94 3/09/94 99 94 102 94 3/10/94 98 94 101 94 3/11/94 99 94 101 94 3/14/94 101 95 102 94 3/15/94 99 95 101 94 3/16/94 98 95 102 93 3/17/94 94 94 102 92 3/18/94 94 92 102 91 3/21/94 92 93 102 91 3/22/94 93 92 102 91 3/23/94 94 93 102 92 3/24/94 90 89 101 90 3/25/94 90 89 100 90 3/28/94 93 89 100 89 3/29/94 90 87 98 88 3/30/94 89 86 97 87 3/31/94 86 86 97 86 4/04/94 84 81 95 83 4/05/94 93 83 97 86 4/06/94 92 82 97 86 4/07/94 89 84 98 86 4/08/94 90 84 97 86 4/11/94 90 82 97 86 4/12/94 93 82 97 87 4/13/94 95 84 96 87 4/14/94 96 84 96 88 4/15/94 97 82 96 88 4/18/94 99 83 95 87 4/19/94 97 83 95 87 4/20/94 93 82 94 87 4/21/94 96 84 96 88 4/22/94 94 86 96 88 4/25/94 95 87 97 89 4/26/94 98 89 97 89 4/28/94 102 88 97 91 4/29/94 102 88 97 90 5/02/94 101 88 98 90 5/03/94 101 88 98 90 5/04/94 102 87 98 90 5/05/94 102 87 97 90 5/06/94 99 87 97 89 5/09/94 96 87 96 89 5/10/94 99 87 96 89 5/11/94 97 86 96 88 5/12/94 100 85 96 89 5/13/94 100 87 96 88 5/16/94 99 86 96 89 5/17/94 99 85 97 88 5/18/94 101 86 98 90 5/19/94 101 86 98 90 5/20/94 102 85 98 90 5/23/94 99 85 98 91 5/24/94 99 85 98 90 5/25/94 96 86 99 91 5/26/94 99 86 99 91 5/27/94 99 88 99 92 5/31/94 101 88 99 92 6/01/94 106 87 99 92 6/02/94 106 87 99 93 6/03/94 106 88 99 93 6/06/94 109 89 99 94 6/07/94 106 89 99 94 6/08/94 106 87 98 94 6/09/94 106 87 98 94 6/10/94 104 87 99 94 6/13/94 104 86 99 93 6/14/94 103 86 99 93 6/15/94 102 85 99 93 6/16/94 102 86 99 93 6/17/94 99 85 99 92 6/20/94 99 82 98 91 6/21/94 98 83 97 91 6/22/94 101 83 98 90 6/23/94 100 84 97 91 6/24/94 99 83 95 91 6/27/94 102 84 96 90 6/28/94 101 84 96 89 6/29/94 98 83 96 88 6/30/94 97 83 96 87 7/01/94 99 83 96 88 7/05/94 98 84 96 89 7/06/94 99 84 96 89 7/07/94 101 83 97 90 7/08/94 102 83 97 90 7/11/94 99 83 97 88 7/12/94 100 84 97 89 7/13/94 102 84 97 89 7/14/94 103 84 98 91 7/15/94 102 84 98 91 7/18/94 103 85 98 91 7/19/94 104 85 98 91 7/20/94 104 85 97 92 7/21/94 107 86 98 92 7/22/94 107 86 98 92 7/25/94 107 86 98 93 7/26/94 109 86 98 94 7/27/94 107 85 98 94 7/28/94 107 86 98 94 7/29/94 107 85 99 94 8/01/94 108 84 99 94 8/02/94 109 85 99 94 8/03/94 108 85 99 94 8/04/94 105 85 99 94 8/05/94 103 84 99 93 8/08/94 104 85 99 94 8/09/94 104 85 99 94 8/10/94 106 86 99 95 8/11/94 106 85 99 96 8/12/94 110 86 100 97 8/15/94 112 85 100 97 8/16/94 110 87 100 98 8/17/94 109 87 101 97 8/18/94 109 87 100 98 8/19/94 110 87 101 98 8/22/94 107 87 100 98 8/23/94 109 88 101 99 8/24/94 110 90 102 100 8/25/94 110 90 102 101 8/26/94 112 90 103 102 8/29/94 116 90 103 104 8/30/94 118 89 104 104 8/31/94 116 89 103 105 9/01/94 115 90 103 103 9/02/94 117 90 102 104 9/06/94 118 91 103 104 9/07/94 116 90 103 103 9/08/94 120 90 103 104 9/09/94 116 90 102 103 9/12/94 116 90 102 103 9/13/94 114 91 102 104 9/14/94 118 91 102 105 9/15/94 120 91 104 107 9/16/94 118 93 103 108 9/19/94 118 93 103 108 9/20/94 115 92 102 106 9/21/94 115 91 101 104 9/22/94 115 90 101 104 9/23/94 114 91 101 104 9/26/94 113 91 101 103 9/27/94 115 91 101 103 9/28/94 119 92 102 103 9/29/94 116 91 101 101 9/30/94 118 92 102 103 10/03/94 118 92 101 103 10/04/94 115 92 100 101 10/05/94 113 92 100 101 10/06/94 115 92 99 102 10/07/94 113 92 100 103 10/10/94 114 92 101 103 10/11/94 120 93 102 105 10/12/94 120 93 102 105 10/13/94 123 94 103 106 10/14/94 121 94 103 106 10/17/94 120 94 103 105 10/18/94 119 94 103 106 10/19/94 121 94 103 106 10/20/94 119 94 103 107 10/21/94 120 95 102 108 10/24/94 118 95 102 108 10/25/94 120 96 102 106 10/26/94 120 97 102 107 10/27/94 121 98 103 107 10/28/94 124 98 104 110 10/31/94 123 99 104 111 11/1/94 121 99 103 110 11/2/94 120 99 103 110 11/3/94 118 100 103 110 11/4/94 115 99 102 109 11/7/94 115 99 102 108 11/8/94 115 99 103 109 11/9/94 115 101 103 109 11/10/94 116 100 102 109 11/11/94 116 100 102 109 11/14/94 116 101 103 110 11/15/94 116 102 103 110 11/16/94 117 101 103 110 11/17/94 116 103 103 110 11/18/94 114 102 102 111 11/21/94 114 102 101 111 11/22/94 114 106 99 109 11/23/94 109 104 99 105 11/25/94 109 103 99 106 11/28/94 110 103 100 106 11/29/94 112 102 100 108 11/30/94 112 103 100 108 12/1/94 112 102 99 107 12/2/94 111 102 100 107 12/5/94 112 102 100 107 12/6/94 110 103 100 106 12/7/94 111 102 99 106 12/8/94 109 101 98 104 12/9/94 108 99 98 103 12/12/94 111 100 99 103 12/13/94 112 100 99 102 12/14/94 112 99 100 103 12/15/94 115 99 100 104 12/16/94 115 100 101 105 12/19/94 118 100 101 105 12/20/94 117 101 100 106 12/21/94 117 100 101 107
181 Fig. 10 FIGURE 10
Date Commnet Centennial S&P 400 Cellular Index ---- ------- ---------- ------- -------------- 1/03/94 100 100 100 100 1/04/94 102 99 101 101 1/05/94 101 96 101 99 1/06/94 99 92 101 99 1/07/94 101 96 101 100 1/10/94 105 98 102 101 1/11/94 110 98 102 103 1/12/94 112 97 102 102 1/13/94 113 94 102 101 1/14/94 113 92 102 100 1/17/94 113 95 102 101 1/18/94 113 93 102 100 1/19/94 114 92 102 98 1/20/94 112 95 102 98 1/21/94 114 95 102 99 1/24/94 112 92 102 98 1/25/94 114 92 102 98 1/26/94 109 92 102 97 1/27/94 112 93 102 97 1/28/94 111 95 103 98 1/31/94 112 95 103 99 2/01/94 114 95 103 98 2/02/94 112 94 104 98 2/03/94 110 94 104 98 2/04/94 107 92 101 96 2/07/94 105 91 102 96 2/08/94 105 88 102 96 2/09/94 108 91 102 97 2/10/94 106 91 101 97 2/11/94 105 88 102 96 2/14/94 105 89 102 96 2/15/94 105 87 102 96 2/16/94 106 91 103 98 2/17/94 106 91 102 97 2/18/94 105 88 102 97 2/22/94 105 92 102 97 2/23/94 105 88 102 96 2/24/94 105 86 101 94 2/25/94 105 89 101 95 2/28/94 106 90 101 95 3/01/94 105 87 101 94 3/02/94 102 89 101 93 3/03/94 102 87 100 92 3/04/94 101 91 101 93 3/07/94 101 92 101 94 3/08/94 103 94 101 94 3/09/94 101 95 102 94 3/10/94 101 98 101 94 3/11/94 103 97 101 94 3/14/94 99 92 102 94 3/15/94 99 92 101 94 3/16/94 99 94 102 93 3/17/94 99 93 102 92 3/18/94 97 91 102 91 3/21/94 97 91 102 91 3/22/94 99 94 102 91 3/23/94 98 90 102 92 3/24/94 96 93 101 90 3/25/94 97 91 100 90 3/28/94 95 88 100 89 3/29/94 95 88 98 88 3/30/94 95 86 97 87 3/31/94 91 87 97 86 4/04/94 89 85 95 83 4/05/94 92 86 97 86 4/06/94 92 90 97 86 4/07/94 92 91 98 86 4/08/94 85 96 97 86 4/11/94 86 93 97 86 4/12/94 85 95 97 87 4/13/94 84 96 96 87 4/14/94 87 96 96 88 4/15/94 90 93 96 88 4/18/94 88 93 95 87 4/19/94 88 93 95 87 4/20/94 86 96 94 87 4/21/94 87 96 96 88 4/22/94 86 95 96 88 4/25/94 85 95 97 89 4/26/94 86 93 97 89 4/28/94 85 91 97 91 4/29/94 86 90 97 90 5/02/94 85 88 98 90 5/03/94 85 88 98 90 5/04/94 88 88 98 90 5/05/94 89 88 97 90 5/06/94 89 88 97 89 5/09/94 84 90 96 89 5/10/94 86 88 96 89 5/11/94 84 86 96 88 5/12/94 86 88 96 89 5/13/94 84 85 96 88 5/16/94 84 87 96 89 5/17/94 83 85 97 88 5/18/94 87 87 98 90 5/19/94 89 87 98 90 5/20/94 89 87 98 90 5/23/94 91 88 98 91 5/24/94 93 87 98 90 5/25/94 94 88 99 91 5/26/94 92 90 99 91 5/27/94 93 90 99 92 5/31/94 93 88 99 92 6/01/94 93 88 99 92 6/02/94 96 88 99 93 6/03/94 96 89 99 93 6/06/94 93 90 99 94 6/07/94 93 88 99 94 6/08/94 93 91 98 94 6/09/94 92 91 98 94 6/10/94 93 88 99 94 6/13/94 93 88 99 93 6/14/94 94 88 99 93 6/15/94 96 88 99 93 6/16/94 97 87 99 93 6/17/94 97 87 99 92 6/20/94 96 85 98 91 6/21/94 95 83 97 91 6/22/94 95 83 98 90 6/23/94 97 80 97 91 6/24/94 96 82 95 91 6/27/94 94 81 96 90 6/28/94 94 80 96 89 6/29/94 94 83 96 88 6/30/94 97 74 96 87 7/01/94 97 76 96 88 7/05/94 97 75 96 89 7/06/94 97 76 96 89 7/07/94 97 81 97 90 7/08/94 100 78 97 90 7/11/94 101 71 97 88 7/12/94 103 73 97 89 7/13/94 104 65 97 89 7/14/94 105 69 98 91 7/15/94 107 67 98 91 7/18/94 105 64 98 91 7/19/94 105 65 98 91 7/20/94 107 65 97 92 7/21/94 105 67 98 92 7/22/94 105 67 98 92 7/25/94 109 66 98 93 7/26/94 107 70 98 94 7/27/94 109 70 98 94 7/28/94 110 70 98 94 7/29/94 112 69 99 94 8/01/94 112 69 99 94 8/02/94 114 69 99 94 8/03/94 115 69 99 94 8/04/94 111 67 99 94 8/05/94 110 66 99 93 8/08/94 108 64 99 94 8/09/94 109 65 99 94 8/10/94 114 65 99 95 8/11/94 119 66 99 96 8/12/94 119 67 100 97 8/15/94 118 69 100 97 8/16/94 116 73 100 98 8/17/94 115 71 101 97 8/18/94 115 71 100 98 8/19/94 116 71 101 98 8/22/94 116 73 100 98 8/23/94 118 76 101 99 8/24/94 116 74 102 100 8/25/94 122 75 102 101 8/26/94 121 78 103 102 8/29/94 120 78 103 104 8/30/94 125 75 104 104 8/31/94 132 78 103 105 9/01/94 132 77 103 103 9/02/94 131 76 102 104 9/06/94 130 77 103 104 9/07/94 126 78 103 103 9/08/94 131 75 103 104 9/09/94 128 75 102 103 9/12/94 128 75 102 103 9/13/94 129 75 102 104 9/14/94 137 76 102 105 9/15/94 139 78 104 107 9/16/94 137 78 103 108 9/19/94 136 78 103 108 9/20/94 128 78 102 106 9/21/94 122 75 101 104 9/22/94 122 74 101 104 9/23/94 124 72 101 104 9/26/94 123 72 101 103 9/27/94 122 75 101 103 9/28/94 121 73 102 103 9/29/94 118 76 101 101 9/30/94 123 76 102 103 10/03/94 125 75 101 103 10/04/94 120 74 100 101 10/05/94 123 73 100 101 10/06/94 128 74 99 102 10/07/94 131 74 100 103 10/10/94 131 75 101 103 10/11/94 139 76 102 105 10/12/94 136 76 102 105 10/13/94 136 77 103 106 10/14/94 134 78 103 106 10/17/94 136 75 103 105 10/18/94 136 78 103 106 10/19/94 134 75 103 106 10/20/94 141 76 103 107 10/21/94 145 78 102 108 10/24/94 142 75 102 108 10/25/94 136 75 102 106 10/26/94 139 76 102 107 10/27/94 140 75 103 107 10/28/94 149 76 104 110 10/31/94 153 77 104 111 11/1/94 153 75 103 110 11/2/94 153 77 103 110 11/3/94 156 74 103 110 11/4/94 151 74 102 109 11/7/94 146 75 102 108 11/8/94 149 75 103 109 11/9/94 149 74 103 109 11/10/94 148 73 102 109 11/11/94 147 75 102 109 11/14/94 147 76 103 110 11/15/94 147 76 103 110 11/16/94 146 75 103 110 11/17/94 146 76 103 110 11/18/94 155 77 102 111 11/21/94 157 77 101 111 11/22/94 155 72 99 109 11/23/94 147 71 99 105 11/25/94 147 71 99 106 11/28/94 149 70 100 106 11/29/94 158 73 100 108 11/30/94 157 73 100 108 12/1/94 156 71 99 107 12/2/94 157 71 100 107 12/5/94 155 73 100 107 12/6/94 155 71 100 106 12/7/94 157 73 99 106 12/8/94 155 71 98 104 12/9/94 145 70 98 103 12/12/94 141 71 99 103 12/13/94 142 68 99 102 12/14/94 147 71 100 103 12/15/94 148 71 100 104 12/16/94 149 71 101 105 12/19/94 151 70 101 105 12/20/94 155 69 100 106 12/21/94 152 69 101 107
182 Fig. 11 FIGURE 11
Date Rogers Cantel U.S. Cellular Vanguard S&P 400 Cellular Index ---- ------------- ------------- -------- ------- -------------- 1/03/94 100 100 100 100 100 1/04/94 101 100 103 101 101 1/05/94 104 96 99 101 99 1/06/94 108 95 100 101 99 1/07/94 108 93 104 101 100 1/10/94 110 92 107 102 101 1/11/94 110 94 110 102 103 1/12/94 108 93 108 102 102 1/13/94 107 92 108 102 101 1/14/94 106 91 108 102 100 1/17/94 106 90 108 102 101 1/18/94 105 89 107 102 100 1/19/94 99 89 103 102 98 1/20/94 100 86 104 102 98 1/21/94 101 84 105 102 99 1/24/94 100 86 104 102 98 1/25/94 100 85 103 102 98 1/26/94 100 82 107 102 97 1/27/94 99 80 108 102 97 1/28/94 98 80 109 103 98 1/31/94 99 83 106 103 99 2/01/94 98 81 107 103 98 2/02/94 100 80 106 104 98 2/03/94 100 81 110 104 98 2/04/94 100 81 110 101 96 2/07/94 100 81 111 102 96 2/08/94 100 81 111 102 96 2/09/94 106 80 110 102 97 2/10/94 106 81 108 101 97 2/11/94 108 80 107 102 96 2/14/94 108 81 107 102 96 2/15/94 108 82 108 102 96 2/16/94 109 84 108 103 98 2/17/94 108 84 105 102 97 2/18/94 106 83 104 102 97 2/22/94 104 84 104 102 97 2/23/94 104 83 102 102 96 2/24/94 104 80 99 101 94 2/25/94 103 80 103 101 95 2/28/94 104 80 104 101 95 3/01/94 102 80 105 101 94 3/02/94 101 79 100 101 93 3/03/94 101 79 97 100 92 3/04/94 101 79 97 101 93 3/07/94 100 79 102 101 94 3/08/94 99 78 102 101 94 3/09/94 99 78 101 102 94 3/10/94 100 77 101 101 94 3/11/94 100 76 100 101 94 3/14/94 100 77 100 102 94 3/15/94 100 79 98 101 94 3/16/94 101 78 96 102 93 3/17/94 100 77 97 102 92 3/18/94 100 77 96 102 91 3/21/94 99 76 96 102 91 3/22/94 99 76 95 102 91 3/23/94 99 77 101 102 92 3/24/94 96 77 101 101 90 3/25/94 96 77 101 100 90 3/28/94 95 76 95 100 89 3/29/94 93 75 94 98 88 3/30/94 94 73 96 97 87 3/31/94 91 73 97 97 86 4/04/94 88 71 95 95 83 4/05/94 88 72 98 97 86 4/06/94 85 74 98 97 86 4/07/94 87 71 98 98 86 4/08/94 87 74 99 97 86 4/11/94 86 74 101 97 86 4/12/94 85 76 100 97 87 4/13/94 85 75 101 96 87 4/14/94 84 74 102 96 88 4/15/94 84 74 106 96 88 4/18/94 84 74 104 95 87 4/19/94 82 74 104 95 87 4/20/94 83 74 103 94 87 4/21/94 84 74 103 96 88 4/22/94 86 74 103 96 88 4/25/94 87 76 104 97 89 4/26/94 88 72 108 97 89 4/28/94 91 75 112 97 91 4/29/94 91 73 110 97 90 5/02/94 90 73 112 98 90 5/03/94 88 75 113 98 90 5/04/94 88 74 113 98 90 5/05/94 88 75 113 97 90 5/06/94 87 74 110 97 89 5/09/94 88 74 110 96 89 5/10/94 86 75 111 96 89 5/11/94 84 75 110 96 88 5/12/94 86 75 112 96 89 5/13/94 85 75 111 96 88 5/16/94 87 76 111 96 89 5/17/94 88 77 112 97 88 5/18/94 88 78 115 98 90 5/19/94 89 78 114 98 90 5/20/94 90 79 112 98 90 5/23/94 90 79 112 98 91 5/24/94 90 78 111 98 90 5/25/94 91 79 114 99 91 5/26/94 93 80 110 99 91 5/27/94 94 80 109 99 92 5/31/94 94 79 108 99 92 6/01/94 93 80 107 99 92 6/02/94 93 80 109 99 93 6/03/94 93 80 113 99 93 6/06/94 93 82 113 99 94 6/07/94 93 83 115 99 94 6/08/94 94 81 115 98 94 6/09/94 94 83 114 98 94 6/10/94 94 85 113 99 94 6/13/94 94 83 112 99 93 6/14/94 93 83 114 99 93 6/15/94 92 83 115 99 93 6/16/94 92 83 115 99 93 6/17/94 89 82 115 99 92 6/20/94 88 81 115 98 91 6/21/94 88 81 117 97 91 6/22/94 88 80 115 98 90 6/23/94 88 79 118 97 91 6/24/94 89 80 116 95 91 6/27/94 88 78 117 96 90 6/28/94 88 78 113 96 89 6/29/94 89 75 108 96 88 6/30/94 90 71 110 96 87 7/01/94 91 72 111 96 88 7/05/94 91 75 114 96 89 7/06/94 92 71 116 96 89 7/07/94 92 71 120 97 90 7/08/94 92 69 120 97 90 7/11/94 93 66 120 97 88 7/12/94 93 69 118 97 89 7/13/94 96 70 119 97 89 7/14/94 99 74 118 98 91 7/15/94 99 74 120 98 91 7/18/94 99 74 122 98 91 7/19/94 99 74 123 98 91 7/20/94 98 76 121 97 92 7/21/94 98 76 122 98 92 7/22/94 97 76 120 98 92 7/25/94 98 76 120 98 93 7/26/94 97 79 124 98 94 7/27/94 97 80 126 98 94 7/28/94 96 80 128 98 94 7/29/94 96 80 126 99 94 8/01/94 95 80 126 99 94 8/02/94 96 81 122 99 94 8/03/94 95 82 120 99 94 8/04/94 95 83 123 99 94 8/05/94 96 84 125 99 93 8/08/94 97 84 126 99 94 8/09/94 100 84 126 99 94 8/10/94 101 83 127 99 95 8/11/94 102 82 128 99 96 8/12/94 102 83 130 100 97 8/15/94 102 83 127 100 97 8/16/94 102 83 129 100 98 8/17/94 104 82 131 101 97 8/18/94 104 83 132 100 98 8/19/94 106 83 131 101 98 8/22/94 107 83 131 100 98 8/23/94 108 83 129 101 99 8/24/94 108 86 129 102 100 8/25/94 107 86 131 102 101 8/26/94 108 88 137 103 102 8/29/94 107 89 145 103 104 8/30/94 107 90 141 104 104 8/31/94 109 89 141 103 105 9/01/94 106 87 136 103 103 9/02/94 106 89 136 102 104 9/06/94 106 89 137 103 104 9/07/94 104 88 139 103 103 9/08/94 103 90 138 103 104 9/09/94 104 91 136 102 103 9/12/94 103 92 137 102 103 9/13/94 105 91 137 102 104 9/14/94 106 93 138 102 105 9/15/94 107 92 146 104 107 9/16/94 112 94 144 103 108 9/19/94 112 95 143 103 108 9/20/94 113 94 141 102 106 9/21/94 111 91 139 101 104 9/22/94 111 91 141 101 104 9/23/94 111 91 141 101 104 9/26/94 111 90 141 101 103 9/27/94 111 89 132 101 103 9/28/94 109 88 132 102 103 9/29/94 107 88 128 101 101 9/30/94 107 87 132 102 103 10/03/94 108 87 134 101 103 10/04/94 106 88 127 100 101 10/05/94 106 89 127 100 101 10/06/94 106 89 126 99 102 10/07/94 106 89 131 100 103 10/10/94 107 89 132 101 103 10/11/94 107 88 133 102 105 10/12/94 107 90 136 102 105 10/13/94 106 90 137 103 106 10/14/94 105 91 137 103 106 10/17/94 104 91 138 103 105 10/18/94 104 93 137 103 106 10/19/94 105 95 138 103 106 10/20/94 105 94 138 103 107 10/21/94 106 93 139 102 108 10/24/94 114 92 139 102 108 10/25/94 112 91 134 102 106 10/26/94 111 91 134 102 107 10/27/94 112 91 133 103 107 10/28/94 112 94 136 104 110 10/31/94 113 94 146 104 111 11/1/94 115 93 140 103 110 11/2/94 115 93 136 103 110 11/3/94 115 92 136 103 110 11/4/94 117 92 136 102 109 11/7/94 117 91 137 102 108 11/8/94 117 91 140 103 109 11/9/94 116 92 140 103 109 11/10/94 116 93 142 102 109 11/11/94 115 93 142 102 109 11/14/94 114 93 142 103 110 11/15/94 116 91 142 103 110 11/16/94 116 94 143 103 110 11/17/94 116 94 142 103 110 11/18/94 116 94 142 102 111 11/21/94 114 94 141 101 111 11/22/94 111 91 136 99 109 11/23/94 105 88 134 99 105 11/25/94 107 89 134 99 106 11/28/94 110 89 133 100 106 11/29/94 110 89 132 100 108 11/30/94 109 89 133 100 108 12/1/94 110 89 131 99 107 12/2/94 109 88 134 100 107 12/5/94 108 89 135 100 107 12/6/94 108 89 132 100 106 12/7/94 107 89 123 99 106 12/8/94 104 88 123 98 104 12/9/94 101 88 128 98 103 12/12/94 101 88 128 99 103 12/13/94 100 87 126 99 102 12/14/94 101 86 127 100 103 12/15/94 105 87 127 100 104 12/16/94 105 89 124 101 105 12/19/94 105 90 123 101 105 12/20/94 106 91 124 100 106 12/21/94 106 95 126 101 107
EX-99.C2 3 LETTER AGREEMENT 1 FORM OF AGREEMENT WITH OPTIONHOLDERS February , 1995 To the Holders of Stock Options Issued Pursuant to the 1987 Key Employee Stock Plan of Contel Cellular Inc. As you know, Contel Corporation ("Contel"), a subsidiary of GTE, intends to acquire all of the outstanding shares of Class A Common Stock of Contel Cellular Inc. ("CCI") for $25.50 per share in cash. The transaction will be structured as a merger (the "Merger") of a Contel subsidiary into CCI. CCI will be the surviving corporation. On the effective date of the Merger (the "Effective Date"), the holders of currently outstanding shares of Class A Common Stock will be entitled to receive $25.50 per share in cash, and the outstanding shares of Class A Common Stock of CCI will be cancelled. After the Merger, there will no longer be a public market for the Class A Common Stock, and that stock will cease to be quoted on the Nasdaq National Market. When the Merger occurs, the surviving corporation will file to terminate the registration of the Class A Common Stock under the Securities Exchange Act of 1934. Once the registration of the Class A Common Stock is terminated, the surviving corporation will no longer be required to file reports with the Securities and Exchange Commission or to solicit proxies. You have been granted non-qualified options to purchase shares of Class A Common Stock of CCI pursuant to the terms of the 1987 Key Employee Stock Plan of Contel Cellular Inc. (the "Plan"). (The number of options you hold and their exercise prices are set forth on the attached Schedule 1.) In connection with the Merger, CCI offers to make a cash payment to you for the surrender of all (but not less than all) of the options you hold, other than those options which have ceased to be exercisable prior to the date of the Merger (the "Options"). The offer is conditioned upon consummation of the Merger. For each Option you surrender, whether or not your interest in the Option is vested, you will receive an amount in cash (the "Option Consideration") equal to $25.50, less the exercise price for the Option. If you agree to surrender your Options based on the terms of this offer, CCI will pay you the Option Consideration for each Option you hold, whether or not that Option is currently vested. You will receive the Option Consideration promptly after the Effective Date. If the Merger is not consummated within 6 months of the date of this letter, this letter agreement shall be null and void. The Option Consideration will be taxable to you as ordinary income; reported on your Form W-2 in the year the consideration is paid to you; and subject to applicable federal and state payroll tax withholding. This is the same tax treatment you would receive if you exercised the Options. The Option Consideration will not be considered compensation under any company pension or benefit plan. By executing this letter in the space indicated below, you hereby agree that upon the effectiveness of the Merger and payment of the Option Consideration for all of your Options (less all applicable taxes required to be withheld), and without any further action by CCI, you or any other person, all rights under (i) all Options and any related SARs (as defined in the Plan), and (ii) the Plan and all Stock Option Agreements and Stock Appreciation Rights Agreements entered into between you and CCI thereunder, shall be terminated. You further agree to execute any additional documents that may be requested to evidence such termination. C-2-1 2 By executing this letter, you acknowledge and agree that you have received and had the opportunity to review the Information Statement on Schedule 14C relating to the Merger. You should be aware that if you do not surrender your Options, in accordance with the terms of the Plan and existing Stock Options Agreements, if your employment with CCI terminates, any unvested Options will be forfeited and the period during which your Options can be exercised will be limited. If you are transferred to another GTE subsidiary, that will be considered to be a termination under the Plan. If you are under age 55 at the time of your employment with CCI terminates, you will have 90 days to exercise any vested Options. If you are age 55 or older at that time, you will have one year to exercise any vested options. If any Options have not been surrendered under the terms of this letter on the Effective Date or terminated in accordance with the terms of the Plan, the committee administering the Plan has authority under Article X of the Plan to adjust the terms of such Options. The committee could decide to adjust the terms of such Options to provide that, upon the Effective Date, each remaining Option entitles the holder thereof to receive, upon exercise of the Option, a cash payment equal to the payment to be made to holders of shares of Class A Common Stock of CCI pursuant to the Merger less the exercise price of the Option. The committee has decided not to make any adjustment to the terms of the Options. Thus, the Options will continue to entitle the holder to acquire Class A Common Stock of CCI. However, that stock will not be listed for trading on any exchange, nor will it be registered under the securities laws. Accordingly, such stock will not be transferable, unless an exemption from registration is available, and it is not expected that there will be any regular market for such stock. To surrender your Options in exchange for the Option Consideration, you must sign this letter in the space indicated below and return the executed copy to the following address no later than , 1995. If you have any questions about this offer, please contact Jae Early. Contel Cellular Inc. 245 Parimeter Center Parkway Atlanta, GA 30346 (404) 804-3443 Very truly yours, Acknowledged and Agreed Name: ______________________ Date: ______________________ C-2-2 EX-99.D1 4 PRELIMINARY INFORMATION STATEMENT ON SCHEDULE 14C 1 INFORMATION STATEMENT ------------------------ CONCERNING THE MERGER OF CONTEL CELLULAR ACQUISITION CORPORATION, A SUBSIDIARY OF CONTEL CORPORATION, WITH AND INTO CONTEL CELLULAR INC., AT A PRICE OF $25.50 PER CLASS A SHARE ------------------------ WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. ------------------------ This Information Statement is being furnished to the holders of outstanding shares of the Class A Common Stock (the "Class A Stockholders") of Contel Cellular Inc., a Delaware corporation (the "Company"), as of the Record Date (as defined below) in connection with the proposed merger (the "Merger") of Contel Cellular Acquisition Corporation, a Delaware corporation ("CCI Acquisition"), with and into the Company. The Company will be the corporation that survives the Merger (the "Surviving Corporation"). The Merger will be effected pursuant to an Agreement and Plan of Merger dated as of December 27, 1994, as amended (the "Merger Agreement"), among the Company, GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware corporation in liquidation and a wholly owned subsidiary of GTE ("Contel"), and CCI Acquisition, which is a wholly owned subsidiary of Contel. In the Merger, (i) each outstanding share of the Class A Common Stock, par value $1.00 per share, of the Company (a "Class A Share") (other than Class A Shares as to which appraisal rights have been properly exercised under the General Corporation Law of the State of Delaware (the "DGCL")) will be converted into the right to receive $25.50 in cash, without interest, subject to applicable back-up withholding taxes (the "Merger Consideration"), (ii) each Class A Share held by the Company and each outstanding share of the common stock of CCI Acquisition will be cancelled, and no payment will be made with respect thereto and (iii) each outstanding share of the Class B Common Stock, par value $1.00 per share, of the Company (a "Class B Share") will be converted into one newly issued share of the Class B common stock of the Surviving Corporation. After the effective date of the Merger, the Class A Shares will cease to be quoted on the Nasdaq National Market. YOU ARE URGED TO REVIEW THIS INFORMATION STATEMENT CAREFULLY TO DECIDE WHETHER TO ACCEPT THE MERGER CONSIDERATION OR TO EXERCISE APPRAISAL RIGHTS PURSUANT TO THE DGCL. IF YOU WISH TO ACCEPT THE MERGER CONSIDERATION, PLEASE COMPLETE, EXECUTE AND SEND THE ENCLOSED LETTER OF TRANSMITTAL, TOGETHER WITH CERTIFICATES REPRESENTING YOUR CLASS A SHARES, TO CHEMICAL BANK, AS DISBURSING AGENT FOR THE MERGER (THE "DISBURSING AGENT"), IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH IN THE LETTER OF TRANSMITTAL. IF YOU WISH TO EXERCISE APPRAISAL RIGHTS PURSUANT TO THE DGCL, YOU MUST, WITHIN 20 DAYS OF THE DATE OF THIS INFORMATION STATEMENT, DELIVER TO THE COMPANY A WRITTEN DEMAND FOR A JUDICIAL APPRAISAL OF THE FAIR VALUE OF YOUR CLASS A SHARES AND OTHERWISE COMPLY WITH THE APPLICABLE PROVISIONS OF THE DGCL. SEE "DISSENTERS' RIGHTS OF APPRAISAL" AND THE TEXT OF SECTION 262 OF THE DGCL ATTACHED AS EXHIBIT D TO THIS INFORMATION STATEMENT. The record date for stockholders entitled to notice of or entitled to give consent to the Merger was February , 1995 (the "Record Date"). As of the Record Date there were issued and outstanding 9,970,953 Class A Shares and 90,000,000 Class B Shares. Each Class A Share is entitled to one vote per share and each Class B Share is entitled to five votes per share. On the Record Date, Contel owned 90,000,000 Class B Shares, which accounted for approximately 98% of the combined voting power of the outstanding Class A Shares and Class B Shares. Pursuant to the DGCL, Contel, as the owner of more than 50% of the combined voting power of the Class A Shares and Class B Shares, approved the Merger by written consent on February , 1995. Other than such written consent, no further action by the stockholders of the Company is necessary to approve or consummate the Merger and no such approval will be sought. The Company will not hold a meeting of the stockholders of the Company in connection with the Merger. The Merger will be consummated on March , 1995. This Information Statement is being mailed on or about February , 1995 to Class A Stockholders of record on the Record Date, and constitutes the notice of appraisal rights required by Section 262 of the DGCL and the notice of corporate action without meeting required by Section 228(d) of the DGCL. The principal executive offices of the Company are located at 245 Perimeter Center Parkway, Atlanta, Georgia 30346 and its telephone number is (404) 804-3400. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE DISBURSING AGENT FOR THE MERGER IS: CHEMICAL BANK The date of this Information Statement is February , 1995 2 TABLE OF CONTENTS
PAGE ----- SUMMARY.............................................................................. 4 SPECIAL FACTORS...................................................................... 10 Introduction; The Merger........................................................... 10 Background of the Merger........................................................... 10 Determination of the Special Committee; Fairness of the Merger..................... 11 Opinion of Financial Advisor to the Special Committee.............................. 12 Opinions of Financial Advisors to GTE.............................................. 16 Written Consent; Purpose of the Merger; Plans for the Company...................... 21 Regulatory Requirements............................................................ 22 Merger Consideration............................................................... 22 Accounting Treatment of the Merger................................................. 22 Certain Federal Income Tax Consequences of the Merger.............................. 22 Certain Effects of the Merger...................................................... 23 THE MERGER AGREEMENT................................................................. 24 General............................................................................ 24 Designation of Directors; Certificate of Incorporation and By-laws................. 24 Representations and Warranties..................................................... 24 Indemnification and Other Covenants................................................ 24 Conditions to the Merger........................................................... 25 Termination........................................................................ 25 Amendment.......................................................................... 25 Extension; Waiver.................................................................. 25 PAYMENT OF THE MERGER CONSIDERATION.................................................. 26 DISSENTERS' RIGHTS OF APPRAISAL...................................................... 27 MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY..................................................................... 29 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY.................................. 30 PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY................................. 31 BUSINESS OF THE COMPANY.............................................................. 33 Overview........................................................................... 33 Cellular Interests................................................................. 33 The Cellular Telephone Industry.................................................... 36 The Company's Cellular Operations.................................................. 37 Non-Controlled Systems............................................................. 41 International Interests............................................................ 41 Competition........................................................................ 41 Regulation......................................................................... 42 RELATED PARTY TRANSACTIONS........................................................... 43 Arrangements and Transactions with Contel and GTE.................................. 43 Payments to Optionholders.......................................................... 45 Relationship between GTE Director and PaineWebber.................................. 45 Transition Arrangements............................................................ 45 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................................................... 47 Certain Beneficial Owners.......................................................... 47 Directors and Executive Officers of the Company.................................... 48 Directors and Executive Officers of GTE, Contel and CCI Acquisition................ 49 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 50
2 3
PAGE ----- EXHIBIT A -- AGREEMENT AND PLAN OF MERGER........................................... A-1 EXHIBIT B -- OPINION OF LAZARD FRERES & CO.......................................... B-1 EXHIBIT C-1 -- OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED...................................................... C-1-1 EXHIBIT C-2 -- OPINION OF PAINEWEBBER INCORPORATED................................... C-2-1 EXHIBIT D -- DELAWARE GENERAL CORPORATION LAW SECTION 262........................... D-1 EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC........................................................... E-1 EXHIBIT F -- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS............................... F-1
3 4 SUMMARY The following is a summary of certain information contained elsewhere in this Information Statement. This Summary does not purport to be complete and is qualified in its entirety by the more detailed information contained elsewhere in this Information Statement and the Exhibits hereto. Unless defined in this Summary, capitalized terms used herein have the meanings ascribed to them elsewhere in this Information Statement. STOCKHOLDERS ARE URGED TO READ THIS INFORMATION STATEMENT AND THE EXHIBITS HERETO IN THEIR ENTIRETY IN ORDER TO DECIDE WHETHER TO ACCEPT THE MERGER CONSIDERATION OR TO EXERCISE APPRAISAL RIGHTS PURSUANT TO THE DGCL. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. SPECIAL FACTORS Introduction; The Merger. This Information Statement is being furnished to the holders of outstanding shares of the Class A Common Stock (the "Class A Stockholders") of Contel Cellular Inc., a Delaware corporation (the "Company"), in connection with the proposed merger (the "Merger") of Contel Cellular Acquisition Corporation, a Delaware corporation ("CCI Acquisition"), with and into the Company. The Company will be the corporation that survives the Merger (the "Surviving Corporation"). The Merger will be effected pursuant to an Agreement and Plan of Merger dated as of December 27, 1994, as amended (the "Merger Agreement"), among the Company, GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware corporation in liquidation and a wholly owned subsidiary of GTE ("Contel"), and CCI Acquisition, which is a wholly owned subsidiary of Contel. Certain additional information relating to GTE, Contel, CCI Acquisition and the Company and each of their respective directors and executive officers is included in Exhibit E to this Information Statement. In the Merger, (i) each outstanding share of the Class A Common Stock of the Company, par value $1.00 per share (each a "Class A Share") (other than Class A Shares as to which appraisal rights have been properly exercised under the DGCL), will be converted into the right to receive $25.50 in cash, without interest, subject to back-up withholding taxes (the "Merger Consideration"), (ii) each Class A Share held by the Company and each outstanding share of the common stock of CCI Acquisition will be cancelled, and no payment will be made with respect thereto and (iii) each outstanding share of the Class B Common Stock of the Company, par value $1.00 per share (each a "Class B Share"), will be converted into one newly issued share of the Class B common stock of the Surviving Corporation. The Merger is subject to the satisfaction of certain conditions. See "THE MERGER AGREEMENT -- Conditions to the Merger". Assuming the satisfaction of such conditions, the Merger will be consummated on March , 1995. Background of the Merger. GTE, through its wholly-owned subsidiary Contel, owns all of the outstanding Class B Shares of the Company, which constitute 90% of the Company's outstanding common stock and approximately 98% of the combined voting power of the capital stock of the Company. The outstanding Class A Shares, which constitute 10% of the Company's outstanding common stock and approximately 2% of the combined voting power of the capital stock of the Company, are held by the public. GTE believes that the cellular communications businesses conducted by the Company and another wholly owned subsidiary of GTE, GTE Mobilnet Incorporated ("GTE Mobilnet"), can be conducted more effectively by consolidating the operations and acquiring the outstanding minority interest in the Company. GTE's decision is based on its belief that such consolidation will permit GTE to implement a unified marketing strategy for its cellular operations, provide increased flexibility in pursuing future opportunities, generate efficiencies in the combined cellular communications business and eliminate the complexities of operating two cellular businesses with overlapping but not identical ownership. GTE believes that the most efficient way to effect the acquisition of the shares held by the public and to provide Class A Stockholders with cash for their Class A Shares is through the merger of a wholly-owned subsidiary of Contel into the Company. Nine of the Company's twelve directors are currently executive officers or directors of GTE or the Company. Accordingly, the Board of Directors of the Company (the "Board") appointed a special committee of the three independent directors (the "Special Committee") to negotiate the Merger on behalf of Class A Stockholders and make a recommendation to the Board of Directors in connection with the transaction. 4 5 Record Date; No Action Required by Class A Stockholders to Consummate the Merger. The Record Date for stockholders entitled to notice of or entitled to give consent to the Merger was February , 1995. As of the Record Date, there were issued and outstanding 9,970,953 Class A Shares, each of which has one vote per share, and 90,000,000 Class B Shares, each of which has five votes per share. On the Record Date, Contel owned 90,000,000 Class B Shares, which accounted for approximately 98% of the combined voting power of the outstanding Class A Shares and Class B Shares. Pursuant to the DGCL, Contel, as holder of record of more than 50% of the combined voting power of the Class A and Class B Shares, approved the Merger by written consent on February , 1995. Under the DGCL, no action on the part of any other stockholder of the Company is necessary to authorize or to consummate the Merger. The Company will not hold a meeting of stockholders in connection with the Merger. Determination of the Special Committee and the Board. On December 27, 1994, the Special Committee concluded that the offer price of $25.50 per Class A Share was fair to the Class A Stockholders and recommended that the Board of Directors approve the Merger and the Merger Agreement. Based on the recommendation of the Special Committee, the Board unanimously approved the Merger and the Merger Agreement. For a discussion of the factors the Special Committee considered in reaching its decision, see "SPECIAL FACTORS -- Determination of the Special Committee; Fairness of the Merger". Opinion of Financial Advisor to the Special Committee. At the December 22 Special Committee Meeting, Lazard Freres & Co. ("Lazard Freres"), financial advisor to the Special Committee, informed the Special Committee that it would be prepared to deliver a written opinion to the effect that the proposed price of $25.50 per outstanding Class A Share to be received by the Class A Stockholders in the Merger would be fair to such holders from a financial point of view. Subsequently, on December 30, 1994, Lazard Freres delivered its written opinion to the Special Committee that, as of such date, the consideration to be received by the holders of the outstanding Class A Shares in the Merger is fair to such holders from a financial point of view. A copy of such written opinion, setting forth the assumptions made, matters considered and the review undertaken, is attached to this Information Statement as Exhibit B. Class A Stockholders are urged to read this opinion in its entirety. No limitations were imposed by the Special Committee upon Lazard Freres with respect to the investigation made or the procedures followed by Lazard Freres in rendering its opinion. For a discussion of the matters Lazard Freres considered in reaching its opinion, see "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special Committee". Opinions of Financial Advisors to GTE. GTE retained Merrill Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated (the "GTE Financial Advisors") in connection with the transaction. The GTE Financial Advisors assisted GTE in its negotiations with the Special Committee and Lazard Freres. In connection with the transaction, the GTE Financial Advisors rendered opinions to GTE to the effect that the price to be paid for the Class A Shares in the Merger is fair to GTE from a financial point of view. A copy of the fairness opinions of the GTE Financial Advisors setting forth the assumptions made, matters considered and review undertaken, are attached to this information statement as Exhibits C-1 and C-2 and incorporated herein by reference. For a discussion of the matters the GTE Financial Advisors considered in reaching their respective opinions, see "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE". PAYMENT OF THE MERGER CONSIDERATION CCI Acquisition will make available to Chemical Bank, as disbursing agent in connection with the Merger (the "Disbursing Agent"), the aggregate amount of cash to be paid in respect of the Class A Shares pursuant to the Merger. In order to receive the Merger Consideration, Class A Stockholders must send their certificates representing Class A Shares to the Disbursing Agent along with a Letter of Transmittal. All certificates so surrendered will be cancelled. A Letter of Transmittal setting forth the procedures for surrendering to the Disbursing Agent certificates representing Class A Shares in exchange for cash is enclosed with this Information Statement. Upon surrender of a certificate representing Class A Shares together with a duly executed Letter of Transmittal, the Class A Stockholder will receive in exchange for each Class A Share $25.50 in cash, without 5 6 interest, subject to applicable back-up withholding taxes. Any cash held by the Disbursing Agent that remains unclaimed by stockholders for 180 days after the effective time of the Merger will be paid out to the Surviving Corporation. After that time, Class A Stockholders may look only to the Surviving Corporation for payment of the Merger Consideration without interest and subject to applicable abandoned property, escheat and other similar laws. ALL QUESTIONS AND REQUESTS FOR INFORMATION RELATING TO THE PROCEDURE FOR PAYMENT OF THE MERGER CONSIDERATION FOR THE CLASS A SHARES SHOULD BE DIRECTED TO THE DISBURSING AGENT. SEE "PAYMENT OF THE MERGER CONSIDERATION". DISSENTERS' RIGHTS OF APPRAISAL By following the procedures prescribed by the DGCL, Class A Stockholders have the right to dissent from the Merger and to receive cash equal to the fair value of their Class A Shares as determined pursuant to appraisal proceedings in the Delaware courts. A WRITTEN DEMAND FOR APPRAISAL OF CLASS A SHARES MUST BE DELIVERED TO THE GENERAL COUNSEL OF THE COMPANY WITHIN 20 DAYS AFTER THE DATE OF THIS INFORMATION STATEMENT. Because of the complexity of the procedures for exercising the right to dissent, the Company believes that Class A Stockholders who consider exercising such right should seek the advice of counsel. Failure to take any step in connection with the exercise of dissenters' right of appraisal may result in the termination or waiver of such rights. See "DISSENTERS' RIGHTS OF APPRAISAL" and Exhibit D. MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY The Class A Shares are publicly traded in the over the counter market and quoted on the Nasdaq National Market under the symbol "CCXLA". There is no established trading market for the Class B Shares. The Company has not paid any dividends on its Class A Shares or Class B Shares and does not anticipate that it will do so in the foreseeable future. The following table indicates the high and low sales prices for the Class A Shares during the designated periods:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ------- ------- ------- ------- 1994 High.......................... $ 18.75 $ 17.25 $ 24.00 $ 25.25 Low........................... 14.00 13.00 16.00 23.50 1993 High.......................... $ 18.63 $ 16.25 $ 18.75 $ 22.00 Low........................... 13.25 13.50 15.50 15.00 1992 High.......................... $ 23.25 $ 18.50 $ 16.50 $ 19.00 Low........................... 17.25 13.00 13.50 13.25
On September 7, 1994, the last full day of trading prior to the announcement of GTE's intention to acquire the Class A Shares, the high, low and closing sales prices per Class A Share quoted on the Nasdaq National Market were $18.25, $17.75 and $17.75, respectively. BUSINESS OF THE COMPANY The Company, through its subsidiaries and through partnerships, provides or participates in the provision of cellular telephone service in various metropolitan statistical areas ("MSAs") and rural service areas ("RSAs") throughout the United States. As of December 31, 1994, the Company had interests in cellular telephone systems in the United States representing approximately 23.9 million "POPs". ("POPs" refer to the population of a market area multiplied by the Company's percentage ownership in the cellular system serving that market). 6 7 The Company's 23.9 million POPs include cellular systems which the Company controls or manages and cellular systems operated by partnerships in which the Company is not the controlling partner. As of December 31, 1994, approximately 19.5 million of the Company's 23.9 million POPs were located in 59 MSAs. The Company owned a controlling interest in and/or managed cellular systems servicing 32 of these 59 MSAs (representing approximately 69% of the Company's MSA POPs). The Company owned a non-controlling interest in cellular systems servicing the remaining 27 MSAs. The remaining 4.4 million of the Company's 23.9 million POPs were located in 52 RSAs. As of December 31, 1994, the Company owned controlling interests in entities licensed to provide cellular service in 24 RSAs, owned non-controlling interests in and managed 10 RSA markets and held non-controlling interests in 18 RSAs. Most of the Company's RSA POPs are in areas adjacent to MSAs currently served by the Company. See "BUSINESS OF THE COMPANY". RELATED PARTY TRANSACTIONS The Company, Contel and GTE have a number of financial, operating and other arrangements believed to be of mutual benefit. Those arrangements include, without limitation, a Third Restated Competition Agreement dated March 14, 1991 among Contel, GTE and the Company (the "Competition Agreement") which, among other things, allocates cellular business opportunities among GTE's cellular businesses and a Services Agreement dated May 1, 1991, as amended, between GTE Mobile Communications Service Corporation ("GTE Mobile") and the Company (the "Services Agreement"). The terms of these arrangements have been established by Contel and GTE in consultation with the Company but are not the result of arms-length negotiations. See "RELATED PARTY TRANSACTIONS -- Arrangements and Transactions with Contel and GTE". 7 8 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, ------------------------------------------------------------ ------------------------ 1989 1990 1991 1992 1993 1993 1994 -------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) INCOME STATEMENT DATA: Revenues and sales.................... $ 65,519 $ 167,178 $ 235,107 $ 286,999 $ 374,014 $ 265,262 $ 405,069 Operating income (loss)(1)........................... (14,682) (38,143) (68,577) (50,113) (28,305) (12,536) 35,262 Loss from consolidated operations..... (12,328) (158,865) (223,726) (196,347) (188,011) (136,253) (101,794) Equity in earnings of unconsolidated partnerships........................ 17,539 19,069 15,687 29,027 37,351 27,864 48,510 Gains on sales of partnership interests........................... -- -- 18,387 60,806 48,023 8,326 76,348 Net income (loss) before cumulative effect of change in accounting principles.......................... 2,621 (102,794) (118,900) (73,061) (74,918) (70,382) 6,360 Cumulative effect of change in accounting principles(2)............ -- -- -- (2,080) (241) -- -- Net income (loss)..................... 2,621 (102,794) (118,900) (75,141) (75,159) (70,382) 6,360 Net income (loss) per share before cumulative effect of change in accounting principles............... 0.03 (1.03) (1.19) (0.73) (0.75) (0.70) 0.06 Net income (loss) per share............................... 0.03 (1.03) (1.19) (0.75) (0.75) (0.70) 0.06 Weighted average shares outstanding (in thousands)...................... 99,983 99,931 99,942 99,947 99,949 99,949 99,951 OTHER OPERATING DATA: Capital expenditures.................. 31,871 70,841 107,792 183,504 130,042 81,377 139,345 Ending subscribers.................... 50,050 155,285 236,282 327,645 521,226 434,338 672,560
AS OF AS OF DECEMBER 31, SEPTEMBER 30, ------------------------------------------------------------ ------------------------ 1989 1990 1991 1992 1993 1993 1994 -------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) BALANCE SHEET DATA: Total assets.......................... $207,186 $1,665,395 $1,870,669 $1,930,469 $2,052,984 $1,979,987 $2,175,701 Long-term obligations: Notes payable -- affiliates........................ -- 1,540,000 1,735,034 1,814,327 1,901,726 1,906,191 2,011,613 Other............................... 14,280 14,280 42,280 36,280 36,792 30,280 30,792 Stockholders' equity (deficit)........................... 130,166 27,525 (91,085) (166,084) (241,221) (236,444) (234,820) Book value per share.................. 1.30 0.28 (0.91) (1.66) (2.41) (2.37) (2.35)
- --------------- (1) The operating loss in 1991 includes approximately $12 million of integration costs associated with the merger of Contel with a wholly owned subsidiary of GTE. (2) In 1993, the Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." In 1992, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and No. 109, "Accounting for Income Taxes." Earnings were not adequate to cover fixed charges in 1991, 1992, 1993 or for the nine months ended September 30, 1993 and 1994. The amount of such deficiency was $203 million, $128 million and $129 million for the years ended December 31, 1991, 1992 and 1993, respectively, and $126 million and $6 million for the nine months ended September 30, 1993 and 1994, respectively. 8 9 PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY The Company does not, as a matter of course, publicly disclose projections as to future revenues or earnings. As part of its normal planning process, the Company has prepared certain five year projected financial data for internal purposes. Additionally, the Company prepared ten year projected financial data which was based on an earlier version of the five year projected financial data. Differences between the ten and the five year projected data are attributable to the inclusion or exclusion of certain acquisitions which occurred subsequent to the preparation of the ten year projected data. These five year and ten year financial projections have been included in this Information Statement because such projections were made available to the Special Committee, its financial advisor and the GTE Financial Advisors. See "PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY". There can be no assurance that the projections will be realized and actual results may vary materially from the projections. 9 10 SPECIAL FACTORS INTRODUCTION; THE MERGER This Information Statement is being furnished to the holders of outstanding shares of the Class A Common Stock (the "Class A Stockholders") of Contel Cellular Inc., a Delaware corporation (the "Company"), in connection with the proposed merger (the "Merger") of Contel Cellular Acquisition Corporation, a Delaware corporation ("CCI Acquisition"), with and into the Company. The Company will be the corporation that survives the Merger (the "Surviving Corporation"). The Merger will be effected pursuant to an Agreement and Plan of Merger dated as of December 27, 1994, as amended (the "Merger Agreement"), among the Company, GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware corporation in liquidation and a wholly owned subsidiary of GTE ("Contel"), and CCI Acquisition, which is a wholly owned subsidiary of Contel. Certain additional information relating to GTE, Contel, CCI Acquisition and the Company and each of their respective directors and executive officers is included in Exhibit E to this Information Statement. In the Merger, (i) each outstanding Class A Share (other than Class A Shares as to which appraisal rights have been properly exercised under the DGCL) will be converted into the right to receive $25.50 in cash, without interest, subject to backup withholding (the "Merger Consideration"), (ii) each Class A Share held by the Company and each outstanding share of the common stock of CCI Acquisition will be cancelled, and no payment will be made with respect thereto and (iii) each outstanding Class B Share will be converted into one newly issued share of the Class B common stock of the Surviving Corporation. The Merger is subject to the satisfaction of certain conditions. See "THE MERGER AGREEMENT -- Conditions to the Merger". Assuming the satisfaction of such conditions, the Merger will be consummated on March , 1995. BACKGROUND OF THE MERGER The outstanding stock of the Company consists of 9,970,953 Class A Shares, which represent approximately 2% of the voting power of the combined capital stock of the Company, and 90,000,000 Class B Shares, which represent approximately 98% of the voting power of the combined capital stock of the Company. GTE, through its wholly owned subsidiary Contel, owns all of the outstanding Class B Shares. The outstanding Class A Shares are held by the public and trade in the over the counter market with prices quoted on the NASDAQ National Market under the symbol "CCXLA". The Company was originally formed as a wholly owned subsidiary of Contel. In April 1988, a portion of the Company's stock was sold to the public in a public offering. In March 1991, a wholly owned subsidiary of GTE merged into Contel and Contel became a wholly-owned subsidiary of GTE. As a result of this merger, the Company became an indirectly held subsidiary of GTE. GTE also provided and continues to provide cellular mobile services through another wholly-owned subsidiary, GTE Mobilnet. Since the date of that merger, the concept of acquiring the publicly held shares of the Company was discussed from time to time on a limited and confidential basis but no decision was made to proceed. In early 1994, GTE began seriously to consider acquiring the publicly held shares of the Company. In early August 1994, GTE management concluded that it would be advisable to proceed to acquire the publicly held shares of the Company. GTE's decision was based on its belief that eliminating the minority interest and consolidating its cellular mobile services businesses would permit GTE to implement a unified marketing strategy for its cellular operations, provide increased flexibility in pursuing future opportunities, generate efficiencies in the combined cellular communications business and eliminate the complexities of operating two cellular businesses with overlapping but not identical ownership. GTE met with its legal and financial advisors to discuss structuring the transaction. GTE decided that the most efficient way to effect the acquisition of the public minority would be through a merger of a wholly owned subsidiary of Contel into the Company. On September 8, 1994, the Board of Directors of GTE approved the proposal to acquire the Class A Shares for $22.50 per share and also authorized negotiations with 10 11 the Company. On the same date, GTE notified the Board of Directors of the Company of its proposal to acquire the Class A Shares for $22.50 per Class A Share, or approximately $224 million. Following the public announcement on September 8, 1994, four class action lawsuits were brought on behalf of the Class A Stockholders of the Company alleging that the announced purchase price of $22.50 per Class A Share was inadequate. Counsel for GTE, Contel and CCI Acquisition subsequently began discussions with plaintiffs' counsel regarding the stockholder lawsuits and invited plaintiffs' counsel to review financial information and meet with the Special Committee and its financial advisors. On December 23, 1994 a tentative settlement agreement was reached with plaintiffs, subject to confirmatory discovery. The tentative settlement approved an increased price of $25.50 per Class A Share and the payment of certain plaintiffs' counsel fees. Nine of the Company's twelve directors are currently executive officers or directors of GTE or the Company. Accordingly, the Board of Directors of the Company at a meeting on September 9, 1994 appointed the three independent directors to a special committee (the "Special Committee") to review the fairness of and negotiate the material terms of the proposed Merger on behalf of the Class A Stockholders. Members of the Special Committee each received a fee of $35,000 and the Chairman of the Special Committee received a fee of $45,000. The Special Committee met for the first time on September 17, 1994 and authorized the retention of Cahill Gordon & Reindel ("Cahill") as legal counsel to the Special Committee. On September 17 and September 22, 1994, the Special Committee interviewed seven investment banking firms for possible engagement as a financial advisor to the Special Committee in its evaluation of the proposed Merger. On September 22, 1994, the Special Committee retained Lazard Freres & Co. ("Lazard Freres") as its financial advisor. Lazard Freres has not had any material relationship with GTE or any of its subsidiaries including the Company. Between September 28 and December 22, 1994, the Special Committee and Lazard Freres held thirteen meetings either in person or by telephone conference call to discuss the proposed Merger. Beginning on October 17, 1994, the Special Committee (acting through Lazard Freres) entered into negotiations with GTE's financial advisors, Merrill Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated (individually, "Merrill Lynch" and "PaineWebber", respectively, and, collectively, the "GTE Financial Advisors") relating to the proposed price to be paid in the Merger, which process continued for several weeks. During the course of such negotiations in October 1994, the GTE Financial Advisors furnished to GTE's management and to Lazard Freres a preliminary draft of their background analysis. A final version of such preliminary draft background analysis was never furnished to GTE or Lazard Freres by the GTE Financial Advisors. The GTE Financial Advisors based their fairness opinions to GTE on the analyses described below in "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE". In November 1994, GTE indicated that it might be willing to increase its offer to $25.00 per Class A Share. As a result of continued negotiations between Lazard Freres and the GTE Financial Advisors, and negotiations with counsel for certain stockholders who brought suit against the Company and certain of its affiliates in connection with the proposed transaction, the price per Class A Share proposed to be given in the Merger was increased by GTE to $25.50. DETERMINATION OF THE SPECIAL COMMITTEE; FAIRNESS OF THE MERGER At a meeting on December 22, 1994 (the "December 22 Special Committee Meeting"), Lazard Freres informed the Special Committee that it would be prepared to deliver a written opinion to the effect that the proposed price of $25.50 per Class A Share to be received by the holders of the Class A Shares (other than GTE, Contel or any of their affiliates) in the Merger would be fair to such holders from a financial point of view. Subsequently, on December 30, 1994, Lazard Freres delivered its written opinion to the Special Committee that, as of such date, the consideration to be received by the holders of the Class A Shares (other than GTE, Contel or any of their affiliates) in the Merger is fair to such holders from a financial point of view. On December 22, 1994 the Special Committee reviewed a draft of the Merger Agreement, pursuant to which (i) each outstanding Class A Share (other than Class A Shares as to which appraisal rights have been properly exercised under the DGCL) would be converted into the right to receive the Merger Consideration, (ii) each Class A Share held by the Company and each outstanding share of the common stock of CCI 11 12 Acquisition would be cancelled, and no payment would be made with respect thereto and (iii) each outstanding Class B Share would be converted into one newly issued share of the Class B common stock of the Surviving Corporation. At a meeting held on December 27, 1994, the Special Committee unanimously recommended to the Board of Directors of the Company that it approve the Merger at a price of $25.50 per Class A Share. Based on the recommendation of the Special Committee, the Company's Board of Directors unanimously approved the Merger at a price of $25.50 per Class A Share and the Merger Agreement. In determining to recommend to the Board of Directors of the Company that it approve the Merger and the Merger Agreement, the Special Committee considered a number of factors, including but not limited to: (a) the terms and conditions of the Merger, including the $25.50 per Class A Share cash consideration offered to Class A Stockholders; (b) the Company's historical and recent financial condition, results of operations, business, assets and liabilities and the Special Committee's and management's evaluation of the Company's business, properties and future prospects; (c) that the price of $25.50 per Class A Share represents (i) a premium of 43.7% over the closing sales price of the Class A Shares on the Nasdaq National Market on September 7, 1994 the last trading day prior to the public announcement of the proposed Merger, (ii) a premium of 37.8% over the closing sales price of the Class A Shares on the Nasdaq National Market one week prior to September 8, 1994, and (iii) a premium of 39.7% over the closing sales price of the Class A Shares on the Nasdaq National Market one month prior to September 8, 1994; (d) that the sales price of the Class A Shares on the Nasdaq National Market had not exceeded the price of $25.50 per Class A Share since October 10, 1989; (e) presentations by Lazard Freres regarding the financial condition, results of operations, business and prospects of the Company, including the possible dislocation and competitive uncertainty that could result from major changes in the cellular communication industry; (f) presentations by Lazard Freres regarding the industry in which the Company operates and the financial, operating and stock price history of the Company in comparison to certain companies operating in the Company's industry, including the Company's competitors; (g) statements by Lazard Freres at the December 22 Special Committee Meeting that it would be prepared to deliver a written opinion to the effect that the price of $25.50 per Class A Share was fair to the Class A Stockholders (other than GTE, Contel or any of their affiliates) from a financial point of view, which written opinion dated December 30, 1994 was in fact delivered by Lazard Freres; and (h) the Special Committee's belief that GTE would not increase the price above $25.50 per Class A Share. In view of the variety and nature of the factors considered by the Special Committee, the Special Committee did not attempt to assign relative weights to the specific factors considered in reaching its determination, except that the Special Committee placed particular emphasis on the opinion of Lazard Freres and the fact that the price of $25.50 per Class A Share represented a substantial premium over the price at which the Class A Shares had recently and historically traded. OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE General. Lazard Freres delivered its written opinion to the Special Committee that, as of December 30, 1994, the consideration to be received by the holders of the outstanding Class A Shares in the Merger is fair to such holders from a financial point of view. The full text of the written opinion of Lazard Freres, dated December 30, 1994, which sets forth the assumptions made, matters considered and the review undertaken with regard to such opinion, is attached to this Information Statement as Exhibit B. Lazard Freres' opinion was delivered for the benefit of the Special Committee and is not on behalf of, and is not intended to confer rights or remedies upon any stockholders of 12 13 the Company, GTE, or any other person. The summary of the opinion of Lazard Freres set forth below is qualified in its entirety by reference to the full text of the opinion. Class A Stockholders are urged to read this opinion in its entirety. Additional copies of such opinion are available for inspection and copying at the principal executive offices of GTE during regular business hours and are also available upon request directed to GTE Corporation, One Stamford Forum, Stamford, CT 06904, Attention: Ronald J. Tuccillo, Assistant Secretary. In rendering its opinion, Lazard Freres, among other things, (i) reviewed the terms and conditions of a draft of the Merger Agreement (the "Draft Merger Agreement"); (ii) analyzed certain historical business and financial information relating to the Company, including the Annual Report to Stockholders and Annual Reports on Form 10-K of the Company for each of the fiscal years ended December 31, 1991 through 1993, and Quarterly Reports on Form 10-Q of the Company for the quarters ended March 31, June 30 and September 30, 1994; (iii) reviewed certain financial forecasts and other data provided by the Company relating to the Company; (iv) held discussions with members of the senior managements of the Company and GTE with respect to the businesses and prospects of the Company and its strategic objectives; (v) reviewed public information with respect to certain other companies in lines of business Lazard Freres believes to be generally comparable to the businesses of the Company; (vi) reviewed the financial terms of certain recent business combinations involving companies in lines of businesses Lazard Freres believes to be generally comparable to those of the Company, and in other industries generally; (vii) reviewed the financial terms of certain recent business combinations Lazard Freres believes to be comparable in certain respects to the proposed Merger; (viii) reviewed the historical stock prices and trading volumes of the Class A Shares; and (ix) conducted such other financial studies, analyses and investigations as Lazard Freres deemed appropriate. In arriving at its opinion and making its presentation to the Special Committee at the December 22 Special Committee Meeting, Lazard Freres was advised that the Company and an affiliate of GTE propose to exchange certain cellular assets owned by each of them for certain cellular assets owned by a publicly-held company (the "Cellular Exchange"). Lazard Freres received a copy of a letter dated December 19, 1994 from GTE's Senior Vice President - Finance addressed to the GTE Financial Advisors regarding the Cellular Exchange to the effect that it is an exchange of equivalent assets and, accordingly, is value neutral to the Company. Lazard Freres has neither received nor reviewed any other information regarding the Cellular Exchange, including any financial projections or any other non-public financial information prepared by GTE or the Company. With the consent of the Special Committee, Lazard Freres has assumed that the Cellular Exchange involves the exchange of assets with substantially equivalent value and, accordingly, will have an immaterial effect, if any, on the Company. Further, although Lazard Freres was not informed of the fact, GTE and the Company estimated that the Cellular Exchange, if consummated, would involve not more than approximately 4.5% of the Company's total POPs. For purposes of its opinion, Lazard Freres, with the Special Committee's concurrence, has ascribed no value to the Company's rights under either (i) the Competition Agreement or (ii) the Services Agreement. In rendering its opinion, Lazard Freres did not review this Information Statement or any similar document that may be prepared for use in connection with the proposed Merger. In addition, Lazard Freres was not asked by the Special Committee to solicit third party indications of interest in acquiring all or any part of the Company, nor did Lazard Freres seek any such offers. In connection with its review, Lazard Freres relied upon the accuracy and completeness of the financial and other information concerning the Company received by Lazard Freres and did not assume any responsibility for any independent verification of such information or any independent valuation or appraisal of any of the assets of the Company. With respect to the financial forecasts provided to it by the Company, Lazard Freres assumed that such financial forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of management of the Company as to the future financial performance of the Company. Lazard Freres assumed no responsibility for and expressed no view as to such forecasts or the assumptions upon which they were based. Lazard Freres' opinion was based on economic, monetary, market and other conditions as in effect on, and information made available to it as of, the date of the opinion. 13 14 In rendering its opinion, Lazard Freres assumed that the Merger Agreement entered into among the parties thereto would be identical in all material respects to the Draft Merger Agreement, and that the Merger would be consummated on the terms described in the Draft Merger Agreement, without any waiver of any material terms or conditions by the Company. Lazard Freres also assumed that obtaining the necessary regulatory approvals for the Merger would not have an adverse effect on the Company. In arriving at its opinion and making its presentation at the December 22 Special Committee Meeting, Lazard Freres considered and discussed certain financial analyses and other factors. In connection with its presentation, Lazard Freres presented the Special Committee with a summary of its analyses (the "Lazard Freres Report"). The following is a brief summary of the analyses performed by Lazard Freres in connection with rendering its opinion and discussed with the Special Committee at the December 22 Special Committee Meeting. In reviewing the background of GTE's initial offer to acquire the Class A Shares at $22.50 per share (the "GTE Initial Offer") and GTE's revised offer of $25.50 per share (the "GTE Revised Offer"), Lazard Freres noted the GTE Initial Offer implied a value for the Company's approximately 23.9 million POPs of approximately $194 of market capitalization per net POP, $181 of cellular asset value per net POP (which excludes the value of the Company's non-cellular assets), and $156 of cellular license value per net POP (which excludes the value of the Company's non-cellular assets and the value of the Company's cellular net property, plant and equipment). Lazard Freres explained that the GTE Initial Offer also represented a 26.8% premium over the closing price per share of the Class A Shares on September 7, 1994, one day prior to GTE's announcement of the GTE Initial Offer, on which date the closing price per share of the Class A Shares was $17.75. In addition, Lazard Freres noted that the Revised GTE Offer recommended by the Special Committee implied a value of approximately $207 of market capitalization per net POP, $193 of cellular asset value per net POP, and $169 of cellular license value per net POP; the GTE Revised Offer also represented a 43.7% premium over the closing price per share of the Class A Shares one day prior to GTE's announcement of the GTE Initial Offer, and a 13.3% increase over the GTE Initial Offer. Lazard Freres explained that in arriving at its opinion, Lazard Freres performed a number of financial analyses, including: (i) a private market transaction analysis, in which Lazard Freres reviewed publicly available information on twenty-six private market sale transactions announced since July 1993, involving cellular operations in MSAs; (ii) a comparable public company analysis, in which Lazard Freres reviewed certain financial, operating, and stock market trading information of selected publicly traded companies engaged primarily in the cellular business; and (iii) a discounted cash flow analysis, in which Lazard Freres estimated the present value of the future cash flows that the management of the Company expects its businesses to generate. The material portions of the foregoing analyses (which are all of the material valuation methodologies performed by Lazard Freres) are summarized below. Private Market Transaction Analysis. Lazard Freres reviewed publicly available information on twenty-six private market sale transactions that were announced and consummated since July 1993, involving cellular operations in MSAs (the "Comparable Transactions"). Using regression analysis, private market value for cellular properties in the Comparable Transactions were estimated as a function of MSA ranking (e.g., New York City, as the largest MSA, ranked number 1). These results were then applied to the Company's MSA net POPs, with adjustments made to the resulting valuations depending upon (i) how expected population growth in each such MSA compared to the average population growth expected for the United States, as a whole; (ii) how median household income in each such MSA compared to median household income for the United States, as a whole; (iii) how average commuting time for each such MSA compared to average commuting time for the United States, as a whole; and (iv) whether each such MSA was contiguous to other MSAs or RSAs serviced by the Company. Implied private market values for the Company's non-controlled MSA net POPs were also estimated utilizing a comparable public company analysis, in which Lazard Freres analyzed for selected publicly traded companies in the cellular communications business (the "Comparable Companies") the stock prices, market capitalizations, cellular asset values, and publicly available estimates of projected operating cash flows for 1994 through 1996. This analysis showed 14 15 an average ratio of market capitalization to projected cash flow in 1994 for the Comparable Companies of 23.9. Applying this multiple to the projected 1994 operating cash flow of the Company's non-controlled MSA net POPs provided by management, the implied value of such non-controlled MSA net POPs was estimated at $341 per POP. The Comparable Companies reviewed by Lazard Freres in this analysis included AirTouch Communications Inc., BCE Mobile Communications, Inc., Centennial Cellular Corp., Rogers Cantel Mobile Communications, Inc., United States Cellular Corporation, and Vanguard Cellular Systems, Inc. Implied private market valuations for the Company's net MSA POPs were then calculated for the Company's approximately 12.9 million controlled MSA net POPs (estimated at $211 per MSA net POP) and the Company's approximately 5.9 million non-controlled MSA net POPs (estimated ranging from $280 per MSA net POP utilizing the regression analysis referred to above to $341 per MSA net POP utilizing the comparable public company analysis referred to above). After adding (i) an assumed value of $130 per net POP for each of the Company's approximately 3.3 million controlled and clustered RSA net POPs (where "clustered RSA POPs" refers to the POPs serviced by the Company in RSAs that are contiguous to other MSAs or RSAs serviced by the Company), (ii) an assumed value of $105 per net POP for each of the Company's approximately 0.5 million controlled and non-clustered RSA net POPs (where "non-clustered RSA net POPs" refers to the POPs that are not clustered RSA net POPs), (iii) an assumed value of $77 per net POP for each of the Company's approximately 1.2 million non-controlled RSA net POPs, (iv) an implied value of $300 million for the Company's wireless data business, estimated utilizing a discounted cash flow analysis described below, and (v) assumed value of $30 million for the Company's international assets, and subtracting net debt, Lazard Freres arrived at estimated ranges of value for the common equity of the Company, including the Class A Shares. Utilizing this methodology, the implied full private market valuation of the Class A Shares was estimated at between $32.36 and $36.00 per share. Comparable Public Company Analysis. Lazard Freres compared certain publicly available financial data of selected publicly traded companies in the cellular communications business with the historical financial performance of the Company. Lazard Freres analyzed on a per net POP basis for each of the Company and such selected publicly traded companies, among other things, the market values, market capitalizations, cellular asset values and cellular license values. This analysis showed that the cellular asset values per net POP for such publicly traded companies ranged from an estimated low of $117 to an estimated high of $194, which compared to an implied value in the GTE Revised Offer of approximately $193 of cellular asset value per net POP. The publicly traded companies reviewed by Lazard Freres in this analysis included the Comparable Companies, Commnet Cellular, Inc. and PriCellular Corp. Utilizing this methodology, the implied value of the Class A Shares was estimated at between $23.29 and $25.68 per share, compared to $25.50 in the GTE Revised Offer. Discounted Cash Flow Analysis. Lazard Freres performed a discounted cash flow analysis of the Company based upon estimates of financial performance of the Company provided by management. Utilizing these projections, Lazard Freres discounted to the present (i) the projected stream of the Company's unlevered cash flows for its cellular business through the year 2004, and (ii) the projected terminal value of the Company's cellular business at such year based upon a range of multiples of cash flow in year 2004. Lazard applied several discount rates (ranging from 11% to 13%) and multiples of cash flow in year 2004 (ranging from 12.0 to 14.0). Similarly, for the Company's wireless data business, Lazard Freres discounted to the present projected streams of the Company's cash flows for its wireless data business and arrived at an estimated valuation by applying several discount rates (ranging from 12.0% to 16.0%) and multiples of cash flow in year 2004 (ranging from 13.5 to 15.5). After adding an assumed value of $30 million for the Company's international assets and subtracting net debt, Lazard Freres arrived at estimated ranges of value for the common equity of the Company, including the Class A Shares. Utilizing this methodology, the implied value of the Class A Shares was estimated at between $19.99 and $28.60 per share, compared to $25.50 in the GTE Revised Offer. In arriving at its written opinion and in presenting the Lazard Freres Report to the Special Committee, Lazard Freres performed various financial analyses, portions of which are summarized above. The summary set forth above does not purport to be a complete description of Lazard Freres' analyses. Lazard Freres 15 16 believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all such analyses, could create an incomplete view of the process underlying its analyses set forth in the opinion and the Lazard Freres Report. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. With regard to the private market transaction analysis and the comparable public company analyses summarized above, Lazard Freres selected comparable public companies on the basis of various factors, including the size of the public company and similarity of the line of business; however, no public company utilized as a comparison is identical to the Company. Accordingly, an analysis of the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the comparable companies and other factors that could affect the acquisition or public trading value of the comparable companies to which the Company is being compared. In performing its analyses, Lazard Freres made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. The analyses performed by Lazard Freres are not necessarily indicative of actual past or future results or values, which may be significantly more or less than such estimates. Additionally, analyses relating to the values of businesses do not purport to be appraisals or to reflect the price at which such companies may actually be sold, and such estimates are inherently subject to uncertainty. Lazard Freres regularly engages in the valuation of businesses and their securities in connection with mergers and acquisitions and for other purposes. The Special Committee selected Lazard Freres to act as its financial advisor on the basis of Lazard Freres' qualifications, expertise and reputation in investment banking, in general, and mergers and acquisitions, specifically. The Company has paid Lazard Freres a retainer fee of $250,000 and an additional fee of $500,000 upon delivery of its written opinion. The Company has also agreed to reimburse Lazard Freres for its out-of-pocket expenses, including reasonable fees and disbursements of counsel, and to indemnify Lazard Freres and its partners, employees, agents, affiliates and controlling persons against certain liabilities under the federal securities laws, relating to or arising out of its engagement. OPINIONS OF FINANCIAL ADVISORS TO GTE GTE was assisted in its negotiations with the Special Committee and Lazard Freres by its financial advisors, Merrill Lynch and PaineWebber. Merrill Lynch and PaineWebber regularly value businesses and their securities and provide advice in connection with merger and acquisition transactions. Merrill Lynch and PaineWebber previously served as financial advisors to GTE in connection with the merger of a wholly-owned subsidiary of GTE with and into Contel. As part of the agreements with Merrill Lynch and PaineWebber with respect to that transaction, GTE agreed to retain Merrill Lynch and PaineWebber as financial advisors in connection with any related restructuring. Based upon that agreement and the expertise of both Merrill Lynch and PaineWebber in evaluating transactions similar to the Merger, GTE decided to retain Merrill Lynch and PaineWebber as its financial advisors in connection with the Merger. PaineWebber has provided investment banking and other services to GTE from time to time, including serving as underwriter in connection with the issuance of GTE's debt and equity financings. During the last two years, PaineWebber has earned compensation with respect to all such services, other than fees in connection with the Merger, of approximately $5.0 million. In the future, GTE may retain PaineWebber from time to time for similar services. In the ordinary course of its business, PaineWebber actively trades debt and equity securities of GTE for its own account and the accounts of its customers, and PaineWebber therefore may, from time to time, hold a long or short position in such securities. A director of GTE is engaged as a consultant to PaineWebber. See "RELATED PARTY TRANSACTIONS -- Relationship between GTE Director and PaineWebber". Merrill Lynch has also provided investment banking and other services to GTE from time to time, including serving as a dealer in connection with the issuance of GTE's commercial paper and as an underwriter in connection with its issuance of its debt and equity financings. During the last two years, Merrill Lynch has earned compensation with respect to all such services, other than fees in connection with the Merger, of approximately $7.4 million. Merrill Lynch is presently providing GTE with financial and strategic 16 17 advice in connection with matters other than the Merger, for which it is receiving customary compensation. In the future, GTE may retain Merrill Lynch from time to time for similar services. In the ordinary course of its business, Merrill Lynch actively trades debt and equity securities of GTE for its own account and the accounts of its customers, and Merrill Lynch therefore may, from time to time, hold a long or short position in such securities. In connection with the transaction, the GTE Financial Advisors rendered opinions to GTE to the effect that the price to be paid for the Class A Shares in the Merger is fair to GTE from a financial point of view. A copy of the fairness opinions of the GTE Financial Advisors are attached to this Information Statement as Exhibits C-1 and C-2. Additional copies of such opinions are available for inspection and copying at the principal executive offices of GTE during regular business hours and are also available upon request directed to GTE, One Stamford Forum, Stamford, CT 06904, Attention: Ronald J. Tuccillo, Assistant Secretary. Shareholders are cautioned that the opinions of the GTE Financial Advisors were prepared solely for the benefit of GTE, to provide GTE advice regarding the fairness of the price of $25.50 per Class A Share to GTE from a financial point of view. The GTE Financial Advisors were not engaged to evaluate the fairness of the transaction or the price to Class A Stockholders. The GTE Financial Advisors believe that their analyses must be considered as a whole and that selecting portions of their analyses and of the factors considered by them without considering all factors and analyses, could create an incomplete view of the processes underlying their analyses and opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analyses or summary descriptions. In rendering their opinions, the GTE Financial Advisors did not make or seek to obtain appraisals of the Company's assets in connection with their analyses of the valuation of the Company and did not determine the amount of consideration to be paid in the Merger. In addition, the GTE Financial Advisors were not requested to and did not solicit third parties who might be interested in acquiring all or any part of the Company. In their respective analyses, the GTE Financial Advisors made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the Company's control. Any estimates of value contained therein are not necessarily indicative of actual values, which may be significantly more or less favorable than as set forth therein. Estimates of values of companies do not purport to be appraisals or necessarily reflect the prices at which companies may actually be sold. Because such estimates are inherently subject to uncertainty, none of the Company, GTE or the GTE Financial Advisors or any other person assumes responsibility for their accuracy. In arriving at their opinions, the GTE Financial Advisors (a) reviewed the Company's Annual Reports, Forms 10-K and related financial information for the five fiscal years ended December 31, 1993 and the Company's Forms 10-Q and the related unaudited financial information for the quarterly periods ending March 31, June 30, and September 30, 1994; (b) reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of the Company, furnished to them by the Company; (c) conducted discussions with members of senior management of the Company concerning its businesses and prospects; (d) reviewed the historical market prices and trading activity for the Class A Shares and compared them with that of certain publicly traded companies which they deemed to be reasonably similar to the Company; (e) compared the results of operations of the Company with that of certain companies which they deemed to be reasonably similar to the Company; (f) compared the proposed financial terms of the transactions contemplated by the Merger Agreement with the financial terms of certain other mergers and acquisitions which they deemed to be relevant; (g) considered the pro forma effect of the Merger on GTE's capitalization ratios, earnings and cash flow; (h) considered a discounted cash flow analysis on future cash flows that management of the Company expects the Company to generate; (i) reviewed a draft of the Merger Agreement; and (j) reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as they deemed necessary, including their assessments of general economic, market and monetary conditions. The GTE Financial Advisors will each receive an aggregate fee of $500,000 in connection with the transaction. A retention fee of $50,000 each was paid at the time the GTE Financial Advisors were retained 17 18 and a fee of $450,000 each will be paid at the time of the Merger. In addition, GTE has agreed to reimburse the GTE Financial Advisors for all of their reasonable out-of-pocket expenses, including but not limited to, legal fees and travel expenses. GTE also agreed to indemnify and hold harmless the GTE Financial Advisors against certain liabilities, including liabilities under the federal securities laws or arising out of or in connection with their rendering of services. In preparing their opinions, the GTE Financial Advisors relied on the accuracy and completeness of all information supplied or otherwise made available to them by the Company, and the GTE Financial Advisors have not assumed any responsibility to independently verify such information. With respect to the financial forecasts furnished by the Company, the GTE Financial Advisors assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of the Company's management as to the expected future performance of the Company. The opinions of the GTE Financial Advisors do not address the relative merits of the Merger and any other transactions or business strategies discussed by the Board of Directors of GTE as alternatives to the Merger or the decision of the Board of Directors of GTE to proceed with the Merger. In rendering their opinions, the GTE Financial Advisors were not engaged to act as an agent or fiduciary of GTE's equity holders or any other third party. Summary of PaineWebber's Opinion to the Board of GTE Corporation The following paragraphs summarize the material financial and comparative analyses performed by PaineWebber in arriving at the PaineWebber opinion. The following does not purport to be a complete description of the analyses performed, or the matters considered by PaineWebber in arriving at the PaineWebber opinion. PaineWebber delivered its December 1994 Opinion Letter (the "PaineWebber Opinion Letter") to the Board of Directors of GTE at a meeting held on December 27, 1994. The PaineWebber Opinion Letter relied on the valuation methods described below to determine a range of values for the Company. Discounted Cash Flow Analysis. PaineWebber prepared and reviewed the results of an unlevered discounted cash flow analysis of the Company based on certain operating and financial assumptions. The assumptions were based on two sets of financial projections provided to PaineWebber by the management of the Company: a five year strategic plan and a ten year projection. The purpose of the discounted cash flow analysis was to determine the present value of each of the Company's unlevered after-tax free cash flows over the projected periods. To calculate the value of a business using a discounted cash flow analysis, the projected cash flows for each year together with the estimated value of the business in the final year of the projected period ("Terminal Value") are discounted to the present using various assumed discount rates. PaineWebber estimated the Terminal Value for the Company in two components. First, PaineWebber applied an earnings before interest, taxes, depreciation and amortization ("EBITDA") multiple to the Company's EBITDA, before minority interest and equity in unconsolidated affiliates, in the final year of the projected period. PaineWebber then applied a price/earnings multiple ("P/E multiple") to the net tax-affected amount of minority interests and equity in earnings of unconsolidated affiliates (discounted by 30% to reflect a minority interest). PaineWebber then added the value of the Company's 10% interest in licenses in the states of Sonora and Sinaloa, Mexico, calculated as $48 per POP for the Company's approximately 0.4 million POPs. The sum of these components derived the implied total market capitalization of the Company at December 31, 1994. PaineWebber then subtracted the Company's estimated net debt at December 31, 1994 of $2,114.5 million and divided by the number of shares outstanding at December 31, 1994 of 100.0 million to determine the implied equity value per Class A Share. PaineWebber considered exit EBITDA multiples ranging from 10.5x to 12.5x for both sets of projections and exit P/E multiples ranging from 18.0x to 22.0x for the five year projections and 16.0x to 20.0x for the ten year projections. For the purposes of determining the appropriate discount rate to be applied in the discounted cash flow analyses, PaineWebber considered weighted average costs of capital ranging from 13.0% to 15.0% to discount all values from December 31, 1994 to January 1, 1995 and 10.0% to 12.0% to discount all values from December 31, 2004 to January 1, 2000. 18 19 This analysis resulted in a range of equity values per share for the Class A Shares of between $19.56 to $30.46 using the five year projections and $14.53 to $25.45 using the ten year projections. PaineWebber noted that the per share price of $25.50 fell within the range implied by the five year projections. Due to the inherently less certain nature of the ten year projections, and the fact that the Company had advised PaineWebber that it had not prepared the ten year projections as part of its normal planning process, PaineWebber relied more heavily on the analysis derived from the five year projections. Comparable Transactions Analysis. PaineWebber reviewed several publicly announced merger and acquisition transactions in the cellular communications industry, together with information regarding certain transactions that GTE furnished to PaineWebber. Using detailed information regarding MSA market rank of the target's POPs in these transactions, PaineWebber developed a range of assumed private market values for the various MSA markets. PaineWebber also developed valuation assumptions for RSA POPs. PaineWebber then applied these per POP valuation ranges to the Company's POPs. PaineWebber applied a range of discounts between 0% and 30% to the Company's non-controlled POPs. This methodology resulted in a range of values per Class A Share of $12.75 to $30.30. PaineWebber noted that the per share price of $25.50 fell within this range. Comparable Public Companies Analysis. PaineWebber compared selected historical stock and earnings data and financial ratios for the Company to the corresponding data and ratios of certain publicly-traded companies which PaineWebber deemed to be comparable to the Company. For the purposes of the PaineWebber Opinion Letter, the set of companies which PaineWebber deemed comparable to the Company was comprised of Airtouch Communications Inc., Cellular Communications, Inc., Cellular Communications of Puerto Rico, Inc., Centennial Cellular Corporation, Commnet Cellular, Inc., InterCel Inc., LIN Broadcasting Corporation, United States Cellular Corporation and Vanguard Cellular Systems, Inc. (the "Comparable Group"). This analysis resulted in a range of market capitalization of cellular assets (defined as total market capitalization, less minority interests, less estimated public market value of non-cellular assets) per POP of $330 to $111 with a median of $170 and a range of market capitalization of MSA cellular assets (defined as market capitalization of cellular assets less the value of RSA cellular assets at $90 per RSA POP) per POP from $451 to $133 with a median of $206. PaineWebber noted that the proposed price of $25.50 implied a market capitalization of cellular assets per POP for the Company of $198 and a market capitalization of MSA cellular assets per POP of $224. Minority Buy Out Analysis. PaineWebber examined selected minority buy out transactions not limited to the cellular communications industry on the basis of percentage change from initial offer price to final offer price and percentage premium of the offer price to the trading price per share at six months prior to announcement, one month prior to announcement, one day prior to announcement, one day after announcement, the latest twelve months ("LTM") high and the LTM low. This analysis resulted in average premiums of 11.7% (percent change from initial offer price to final offer price) and 39.8%, 43.3%, 31.5%, 10.9%, 1.8% and 85.4%, respectively and resulted in median premiums of 4.6% (percent change from initial offer price to final offer price) and 33.3%, 33.3%, 20.4%, 7.4%, 2.2% and 58.9%, respectively. PaineWebber examined the premiums paid in the most recent minority buy out in the cellular communications industry, U.S. West, Inc.'s purchase of U.S. West New Vector Group, Inc. on November 12, 1990, which resulted in premiums of 22.2% (percent change from initial offer price to final offer price) and 47.9%, 74.3%, 44.3%, 28.0%, 2.9% and 122.8%, respectively. PaineWebber noted that the per share price of $25.50 implied premiums to the trading price per share of the Class A Shares of 13.3% (percent change from initial offer price to final offer price) and 56.9%, 39.7%, 43.7%, 10.3%, 6.3% and 96.2%, respectively. Historical Market Valuation and Ownership Analysis. PaineWebber reviewed the daily performance of the intra-day and closing market prices per share and trading volumes of the Class A Shares from April 21, 1988 to December 2, 1994. This analysis was utilized to provide historical background for the manner in which the public trading market had valued the Class A Shares since their initial public offering. PaineWebber also reviewed the volume of the Class A Shares which traded and the prices at which the Class A Shares traded for the period January 1, 1994 to December 5, 1994 and since the announcement of the Merger on September 8, 19 20 1994 to December 5, 1994. The implied premiums to the market price of the Class A Shares at specified intervals is set forth above in "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE -- Summary of PaineWebber's Opinion to the Board of GTE Corporation -- Minority Buy Out Analysis". Summary of Merrill Lynch's Opinion to the Board of GTE Corporation The following paragraphs summarize the material financial and comparative analyses performed by Merrill Lynch in arriving at the Merrill Lynch Opinion. The following does not purport to be a complete description of the analyses performed, or the matters considered by Merrill Lynch in arriving at the Merrill Lynch Opinion. Merrill Lynch delivered its December 1994 Opinion Letter (the "Merrill Opinion Letter") to the Board of Directors of GTE at a meeting held on December 27, 1994. The Merrill Opinion Letter relied primarily upon two valuation methods to determine a range of values for the Company: a discounted cash flow analysis and a private market transaction analysis. In addition, the Merrill Opinion Letter relied upon analysis of comparable public companies, premiums paid in similar transactions, pro forma merger consequences, and historical market valuation and ownership. Discounted Cash Flow Analysis. Merrill Lynch performed a discounted cash flow analysis based upon forecasts provided by the Company's management. The Company's management provided Merrill Lynch with two sets of financial forecasts: a 5-year strategic plan projection and a 10-year projection. Due to the inherently less certain nature of the 10-year projections, and the fact that the Company had advised Merrill Lynch that it had not prepared the 10-year projections as part of its normal planning process, Merrill Lynch relied more heavily on the analysis derived from the five-year projections. The following assumptions were made in the discounted cash flow analysis: (1) a range of discount rates from 12.0% to 14.0% was used to discount all values from December 31, 1999 to January 1, 1995 and in the case of the 10-year discounted cash flow analysis, a range of discounted rates from 10.0% to 12.0% was used to discount all values from December 31, 2004 to January 1, 2000; and (2) a range of EBITDA exit multiples from 10.0x to 12.0x was used to determine the terminal value using the EBITDA exit methodology. Merrill Lynch discounted to present value the projected five-year and ten-year streams of free cash flow, the year 1999 terminal value and the year 2004 terminal value based upon the ranges of discount rates and EBITDA multiples described above. Total enterprise value was adjusted for the Company's minority interest obligations and unconsolidated equity investments. Based on the exit multiple methodology, a P/E multiple of 16.0x to 20.0x was applied to the net amount of the minority interest obligations and the tax-affected equity income in unconsolidated subsidiaries (discounted 30% for the minority position) in the terminal year. Total enterprise value was also adjusted upward by $20 million to reflect the Company's interests in Mexico. Utilizing the 5-year projections Merrill Lynch arrived at a range of values per Class A Share of approximately $19.63-$30.90 per share, and utilizing the 10-year projections Merrill Lynch arrived at a range of values per Class A Share of approximately $14.93-$25.97 per share. Private Market Transaction Analysis. Merrill Lynch reviewed several publicly announced merger and acquisition transactions in the cellular communications industry, together with information regarding certain private transactions that GTE furnished to Merrill Lynch. Using detailed information regarding MSA market rank and the target's POPs in these transactions, Merrill Lynch developed a range of assumed private market values for the various MSA markets. Merrill Lynch also developed valuation assumptions for RSA POPs. Merrill Lynch then applied these per POP valuation ranges to the Company's POPs. Merrill Lynch applied a range of discounts between 0% and 30% to the Company's non-controlled POPs to reflect reduced value based on absence of control. This methodology resulted in a range of values per Class A Share of $12.76 to $30.31 per share. Comparable Public Companies Analysis. Merrill Lynch compared selected historical stock and earnings data and financial ratios for the Company to the corresponding data and ratios of certain publicly-traded companies which Merrill Lynch deemed to be comparable to the Company. For the purposes of the Merrill Opinion Letter, the set of companies which Merrill Lynch deemed comparable to the Company was the Comparable Group. 20 21 This analysis resulted in a range of market capitalization of cellular assets (defined as total market capitalization, less minority interests, less estimated public market value of non-cellular assets) per POP of $331 to $115 with a median of $169 and a range of market capitalization of MSA cellular assets (defined as market capitalization of cellular assets, less value of RSA assets at $90 per POP) per POP from $343 to $133 with a median of $215. Merrill Lynch noted that the price of $25.50 per Class A Share implied a market capitalization of cellular assets per POP for the Company of $198 and a market capitalization of MSA cellular assets per POP of $224. Premiums Paid in Selected Minority Buy Outs. Merrill Lynch examined selected minority buy out transactions not limited to the cellular communications industry on the basis of percentage change from initial offer price to the final offer price and percentage premium of the offer price to the trading price per share at six months prior to announcement, one month prior to announcement, one day prior to announcement, one day after announcement, the LTM high and the LTM low. This analysis resulted in average premiums of 11.7% (% change from initial offer price to final offer price) and 39.8%, 43.3%, 31.5%, 10.9%, 1.8% and 85.4%, respectively, and resulted in median premiums of 4.6% (% change from initial offer price to final offer price) and 33.3%, 33.3%, 20.4%, 7.4%, 2.2%, and 58.9%, respectively. Merrill Lynch examined the premiums paid in the most recent minority buy out in the cellular communications industry, U.S. West, Inc's purchase of U.S. West New Vector Group, Inc. on November 12, 1990, which resulted in premiums of 22.2% (% change from initial offer price to final offer price) and 47.9%, 74.3%, 44.3%, 28.0%, 2.9% and 122.8%, respectively. Merrill Lynch noted that the price of $25.50 per Class A Share implied premiums to the trading price per share of the Class A Shares of 13.3% (% change from initial offer price to final offer price) and 56.9%, 39.7%, 43.7%, 10.3%, 6.3% and 96.2%, respectively. Pro Forma Merger Consequences. Merrill Lynch examined the potential impact of the Merger on the financial results and capitalization of GTE and found it to be immaterial. Historical Market Valuation and Ownership Analysis. Merrill Lynch reviewed the daily performance of the intra-day and closing market prices per share and trading volumes of the Class A Shares from April 21, 1988 to December 2, 1994. This analysis was utilized to provide historical background for the manner in which the public trading market had valued the Class A Shares since their initial public offering. Merrill Lynch also reviewed the volume of the Class A Shares which traded and the prices at which the Class A Shares traded for the period January 1, 1994 to December 5, 1994 and since the announcement of the Merger on September 8, 1994 to December 5, 1994. The implied premiums to the market price of the Class A Shares at specified intervals is set forth above in "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE -- Summary of Merrill Lynch's Opinion to the Board of GTE Corporation -- Premiums Paid in Selected Minority Buy Outs". WRITTEN CONSENT; PURPOSE OF THE MERGER; PLANS FOR THE COMPANY The Record Date for stockholders entitled to notice of or entitled to give consent to the Merger was February , 1995. As of the Record Date there were issued and outstanding 9,970,953 Class A Shares and 90,000,000 Class B Shares. Each Class A Share is entitled to one vote per share and each Class B Share is entitled to five votes per share. On the Record Date, Contel owned 90,000,000 Class B Shares, which accounted for approximately 98% of the combined voting power of the outstanding Class A and Class B Shares. Pursuant to the DGCL, Contel, as holder of record of more than 50% of the combined voting power of the Class A and Class B Shares, approved the Merger by written consent on February , 1995. Consequently, no action on the part of any other stockholder of the Company is necessary to authorize or to consummate the Merger and no meeting of stockholders of the Company will be held in connection with the Merger. The Merger will enable GTE, through its wholly-owned subsidiary Contel, to acquire the entire equity interest in the Company and permit GTE to implement a unified marketing strategy for its cellular operations, provide increased flexibility to pursue future opportunities, generate efficiencies in the combined cellular communications business and eliminate complexities raised by operating two cellular businesses with overlapping but not identical ownership. The acquisition of the entire equity interest in the Company has been structured as a merger in order to provide a prompt and orderly transfer of the minority interest in the 21 22 Company from the Class A Stockholders to Contel and GTE, and to provide the Class A Stockholders with cash in exchange for their Class A Shares. From time to time, GTE has attempted to align its legal entities and simplify its corporate structure. As part of this process, Contel adopted a plan of liquidation in January 1993 and continues to wind up its affairs. GTE also plans to consolidate the operations of the Company and GTE Mobilnet over time. A merger transition team has been formed to develop plans for the consolidation. The purpose of the consolidation will be to provide operating efficiencies, reduce the overhead of GTE's cellular properties, maximize marketing advantage of a single brand identity and enhance GTE's ability to compete in the cellular communications market by providing increased flexibility to pursue joint ventures and other combinations and new business opportunities. The merger transition team has recommended that certain functions be centralized in Atlanta and that area operations focus on tactical operational issues, network planning, construction/maintenance, revenue goals and sales activities. The merger transition team is continuing to examine both the nature of GTE's cellular communications business and the structure of the cellular communications market. REGULATORY REQUIREMENTS The Merger will require notice filings in a number of states, but the approval of regulatory authorities will not be required in any jurisdiction. MERGER CONSIDERATION The aggregate consideration to be paid to Class A Stockholders in connection with the Merger is approximately $254 million. The acquisition of the minority interest in the Company will be financed through equity contributions from GTE. GTE will make an equity contribution to Contel and Contel will in turn make an equity contribution to CCI Acquisition. GTE initially will finance such equity contributions through the issuance of short term debt. The short term debt is expected to be issued with terms comparable to those pursuant to which GTE periodically issues short term debt in the ordinary course of its business. ACCOUNTING TREATMENT OF THE MERGER The purchase method of accounting will be used to account for the Merger. After the Merger, GTE, through its ownership of Contel, will increase its interest in the Company from 90% to 100%. Because the Company's accumulated losses exceed the amount attributable to the 10% minority ownership interest, GTE currently is required to record 100% of the net book value and net income or net loss of the Company in its financial statements. Accordingly, the Merger will not alter GTE's present interest in such net book value or net income or loss of the Company. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER The receipt of cash for Class A Shares purchased pursuant to the Merger will be a taxable transaction for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and may also be a taxable transaction under applicable state, local, foreign or other tax laws. Generally, a Class A Stockholder will recognize a gain or loss equal to the difference between such holder's basis in the Class A Shares held by such holder and the amount of cash received in exchange therefor pursuant to the Merger. The gain or loss will be treated as a capital gain or loss if the Class A Shares are held as capital assets. The gain or loss will be considered to be a long-term capital gain or loss if, on the date the stockholder receives cash for the Class A Shares, those shares have been held by such stockholder for more than one year. For 1995, the maximum federal income tax rate for individuals on net long-term capital gains is 28%, and the maximum individual marginal tax rate on net short-term capital gains and on ordinary income is 39.6%. The maximum federal income tax rate for corporations is 35% on all capital gains and ordinary income. If a Class A Stockholder recognizes a capital loss as a result of receiving cash for the Class A Shares pursuant to 22 23 the Merger, such loss will only be deductible to the extent of other capital gains, plus, in the case of an individual Class A Stockholder, $3,000 per year. The federal income tax consequences described in the preceding paragraph may not apply to (i) Class A Shares acquired upon exercise of incentive stock options, non-qualified stock options, or otherwise as compensation, (ii) certain tax-exempt stockholders, (iii) stockholders that are subject to special tax provisions, such as banks and insurance companies and (iv) certain nonresident aliens and foreign corporations. THE DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING LAW AS OF THE DATE OF THIS INFORMATION STATEMENT. EACH CLASS A STOCKHOLDER IS URGED TO CONSULT HIS OR HER TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE MERGER (INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS). CERTAIN EFFECTS OF THE MERGER The Company is currently subject to the informational filing requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and is required to file reports and other information with the Securities and Exchange Commission (the "Commission") relating to its business, financial statements and other matters. As a result of the Merger, there will cease to be any public market for the Class A Shares, and after the Effective Time (as defined below), the Class A Shares will cease to be quoted on the Nasdaq National Market. When the Merger occurs, the Surviving Corporation is expected to file with the Commission a Certification and Notice of Termination of Registration of the Class A Shares under the Exchange Act (the "Certification"). Upon filing of the Certification, the Surviving Corporation will no longer be required to file reports and other information under the Exchange Act. Once the Certification has been filed, the Exchange Act (including the proxy solicitation provisions of Section 14(a), the periodic reporting requirements of Section 13 and the short swing trading provisions of Section 16(b)) will no longer apply to the Surviving Corporation. Additionally, upon the termination of the registration of the Class A Shares, the shares will no longer constitute "margin securities" under the regulations of the Board of Governors of the Federal Reserve System. 23 24 THE MERGER AGREEMENT The following summary of the Merger Agreement is qualified in its entirety by reference to the provisions of the Merger Agreement, the full text of which is attached hereto as Exhibit A and incorporated by reference herein. GENERAL CCI Acquisition is a wholly-owned subsidiary of Contel formed for the purpose of the Merger. Contel, a wholly owned subsidiary of GTE, has adopted a plan of liquidation. The Merger Agreement provides, upon the terms and subject to the conditions set forth therein, that CCI Acquisition will be merged with and into the Company and that the Company will be the Surviving Corporation. Pursuant to the Merger, (i) each Class A Share outstanding immediately prior to the time of the filing of a certificate of merger with the Secretary of State of the State of Delaware (the "Effective Time"), other than any Class A Shares as to which appraisal rights have been properly exercised under the DGCL, will be converted into the right to receive the Merger Consideration, (ii) each Class A Share held by the Company and each share of common stock of CCI Acquisition outstanding immediately prior to the Effective Time will be cancelled, and no payment will be made with respect thereto and (iii) each outstanding Class B Share will be converted into one newly issued share of the Class B common stock of the Surviving Corporation. DESIGNATION OF DIRECTORS; CERTIFICATE OF INCORPORATION AND BY-LAWS The Merger Agreement provides that the directors of the Company at the Effective Time will be the directors of the Surviving Corporation and will hold office from the Effective Time until their respective successors are duly elected or appointed and qualified in the manner provided in the certificate of incorporation and by-laws of the Surviving Corporation. The certificate of incorporation and by-laws of the Company shall be the certificate of incorporation and by-laws of the Surviving Corporation. REPRESENTATIONS AND WARRANTIES The Merger Agreement contains standard representations and warranties on the part of GTE, Contel, CCI Acquisition and the Company relating to, among other things, due organization and qualification and authority to enter into and perform the respective obligations of the parties under the Merger Agreement. In addition, CCI Acquisition represents in the Merger Agreement that it has not engaged in any business activities other than those related to the acquisition of the Company. INDEMNIFICATION AND OTHER COVENANTS Pursuant to the Merger Agreement, the Company has agreed that it will indemnify and hold harmless, and, after the Effective Time, the Surviving Corporation and GTE will indemnify and hold harmless, each present and former director and officer of the Company (each an "Indemnified Party") against any losses, claims, damages, liabilities, costs, expenses, judgments and amounts paid in settlement arising out of or pertaining to any action or omission occurring prior to the Effective Time (including without limitation, any actions or omissions which arise out of or relate to the transactions contemplated by the Merger Agreement) to the full extent permitted under the DGCL, provided that any determination required to be made with respect to whether an Indemnified Party's conduct complied with the standards set forth in the DGCL shall be made in accordance with the DGCL. GTE has agreed to maintain in place the current policy of insurance covering officers and directors of the Company (or an equivalent policy) for a period of three years after the Effective Time. The Company also covenants that, from the date of the Merger Agreement to the Effective Time, the Company will conduct its business in the ordinary course. The Company and CCI Acquisition each covenant that, promptly after the execution of the Merger Agreement, they will cooperate in the preparation of all materials necessary to be filed with the Commission in connection with the Merger. Additionally, each of the parties to the Merger Agreement agrees to use its 24 25 commercially reasonable efforts to take all action and to do all things necessary to consummate the transactions contemplated by the Merger Agreement, including using commercially reasonable efforts to (i) obtain all necessary contractual waivers and consents, (ii) obtain all necessary consents and authorizations as are required to be obtained under any federal, state or foreign law or regulations, (iii) defend all lawsuits or other legal proceedings challenging the Merger Agreement or the consummation of the transactions contemplated thereby, (iv) lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated by the Merger Agreement and (v) effect all registrations and filings necessary to consummate the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Contel agreed to execute a written consent as majority stockholder of the Company approving the Merger and the Merger Agreement. CONDITIONS TO THE MERGER The respective obligations of CCI Acquisition, the Company, Contel and GTE to effect the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: (i) the Merger Agreement and the transactions contemplated by the Merger Agreement shall have been approved by any necessary vote of the stockholders of the Company and CCI Acquisition in accordance with applicable law and the terms of the Merger Agreement; (ii) no statute, rule, regulation, executive order, decree or injunction (preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any federal or state court of competent jurisdiction in the United States or other governmental authority which prohibits the consummation of the Merger remains in effect after GTE, CCI Acquisition and the Company shall have used all commercially reasonable efforts to lift any injunction; (iii) no consents of or filings with any governmental entity shall be required for consummation of the Merger which have not been obtained or filed and (iv) the Special Committee shall not have modified or rescinded its recommendation with respect to the Merger. TERMINATION The Merger Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time, notwithstanding approval thereof by the stockholders of the Company: (i) by mutual written consent of each of the Company and CCI Acquisition, (ii) by the Company or CCI Acquisition if any court of competent jurisdiction in the United States or other United States governmental body has issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the Merger and such order, decree, judgment, injunction, ruling or other action has become final and nonappealable or (iii) by the Company or CCI Acquisition if the Merger does not occur within 120 days of the date of the Merger Agreement unless such delay is caused by regulatory review of required filings. AMENDMENT The Merger Agreement provides that any provision of the Merger Agreement may be amended by action taken by the Company and CCI Acquisition at any time prior to the Effective Time, provided that following approval of the Merger Agreement by the stockholders of the Company or CCI Acquisition any amendment of the Merger Agreement will be subject to compliance with Section 251(d) of the DGCL. The prior approval of a majority of the members of the Special Committee shall also be required in connection with any amendment or modification of the Merger Agreement by or on behalf of the Company. The Merger Agreement may not be amended, modified or supplemented except by an instrument in writing signed on behalf of the party against whom enforcement is sought. EXTENSION; WAIVER The Merger Agreement provides that at any time prior to the Effective Time, the Company, CCI Acquisition, GTE and Contel may (i) extend the time for the performance of any of the obligations or other acts of the other parties, (ii) waive any inaccuracies in the representations and warranties of the other parties contained therein or in any document, certificate or writing delivered pursuant to the Merger Agreement or (iii) waive compliance by the other parties with any of the agreements or conditions contained in the Merger 25 26 Agreement other than those relating to indemnification. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in writing and signed on behalf of such party, and, in the case of an extension or waiver by the Company, if such extension or waiver has been approved by a majority of the members of the Special Committee. PAYMENT OF THE MERGER CONSIDERATION In order to receive $25.50 per Class A Share (less any applicable withholding taxes) (the "Merger Consideration"), Class A Stockholders must complete and return certificates representing their Class A Shares with the Letter of Transmittal that is being mailed to the Class A Stockholders with this Information Statement. These documents were mailed to the Class A Stockholders beginning on March , 1995. After the Merger has been consummated, the Disbursing Agent will issue payment of the Merger Consideration when it receives a holder's Class A Shares and a validly completed Letter of Transmittal for those shares. Class A Stockholders should not send their Class A Shares without a completed Letter of Transmittal. Class A Stockholders who wish to exercise appraisal rights must not surrender their certificates representing Class A Shares pursuant to the Letter of Transmittal and must comply with the provisions of Section 262 of the DGCL. See "DISSENTERS' RIGHTS OF APPRAISAL". When a Class A Stockholder properly surrenders certificates for Class A Shares to the Disbursing Agent, those shares will be canceled and the Class A Stockholder will receive the Merger Consideration. No interest will be paid with respect to the Merger Consideration. Class A Stockholders who wish to receive the Merger Consideration promptly after the Merger should send their Class A Shares along with a properly completed and executed Letter of Transmittal to the Disbursing Agent as soon as possible. If the Merger is not consummated within 120 days of the date of this Information Statement, the Disbursing Agent will return all certificates representing Class A Shares to the Class A Stockholders. Any Class A Stockholder who has lost certificates representing their Class A Shares should make arrangements (which may include the posting of a bond or other satisfactory indemnification) to replace lost certificates. These arrangements should be made with the Disbursing Agent, which is also the transfer agent for the Class A Shares. The method of delivery of all required documents is at the option and risk of the Class A Stockholder. If a Class A Stockholder elects to mail certificates representing Class A Shares, the Company recommends properly insuring such certificates and sending them by registered mail with return receipt requested. Under Federal Income Tax Backup and Withholding Rules, unless an exception applies under applicable laws and regulations, the Disbursing Agent will be required to withhold and remit to the United States Treasury 31% of the cash payment for Class A Shares made to a stockholder, a dissenting stockholder or any other payee pursuant to the Merger, unless such stockholder or other payee provides his taxpayer identification number (employer identification number or social security number) and certifies that such number is correct. THEREFORE, EACH CLASS A STOCKHOLDER SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM, AND IF APPLICABLE, EACH PAYEE SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL, IN ORDER TO PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP WITHHOLDING. FOREIGN STOCKHOLDERS MAY BE REQUIRED TO SUBMIT A FORM W-8 AND A FURTHER CERTIFICATION IN ORDER TO AVOID BACKUP WITHHOLDING. All questions as to the form of all documents and the validity, form and acceptance of any certificates representing Class A Shares for payment will be determined by the Disbursing Agent and the Company, whose determination will be final and binding. ALL QUESTIONS AND REQUESTS FOR INFORMATION RELATING TO THE PROCEDURE FOR PAYMENT OF THE MERGER CONSIDERATION FOR THE CLASS A SHARES SHOULD BE DIRECTED TO THE DISBURSING AGENT -- CHEMICAL BANK, REORGANIZATION DEPARTMENT, P.O. BOX 396, BOWLING GREEN STATION, NEW YORK, NY 10274. 26 27 DISSENTERS' RIGHTS OF APPRAISAL Under Section 262 of the DGCL ("Section 262"), Class A Stockholders who do not wish to accept the Merger Consideration have the right to seek appraisal of the fair value of their Class A Shares in the Delaware Court of Chancery. Section 262 is set forth in its entirely as Exhibit D to this Information Statement and incorporated by reference herein. The following discussion is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Exhibit D. This discussion and Exhibit D should be reviewed carefully by any holder who wishes to exercise statutory appraisal rights or who wishes to preserve the right to do so, as failure to comply with the procedures set forth therein will result in the loss of appraisal rights. Moreover, because of the complexity of the procedures for exercising the right to dissent and seek appraisal rights, the Company believes that Class A Stockholders who consider exercising such rights should seek the advice of counsel. CLASS A STOCKHOLDERS WHO DESIRE TO EXERCISE THEIR APPRAISAL RIGHTS MUST NOT SURRENDER THEIR CERTIFICATES REPRESENTING CLASS A SHARES PURSUANT TO THE LETTER OF TRANSMITTAL AND MUST SATISFY ALL THE CONDITIONS SET FORTH IN THE FOLLOWING PARAGRAPHS. In order to exercise appraisal rights, a holder must deliver a written demand for appraisal of Class A Shares to the General Counsel of the Company within 20 days after the date of this Information Statement. The address of the General Counsel of the Company is Contel Cellular Inc., 245 Perimeter Center Parkway, Atlanta, Georgia 30346, Attention: General Counsel. The telephone number of the General Counsel is (404) 804-3400. A demand for appraisal must be executed by or for the Class A Stockholder of record, fully and correctly, as such Class A Stockholder's name appears on the certificate or certificates evidencing such stockholder's Class A Shares. If the Class A Shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, such demand must be executed by the fiduciary. If the Class A Shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, such demand must be executed by all record owners. An authorized agent, including an agent for two or more record owners, may execute the demand for appraisal for a Class A Stockholder of record; however, the agent must identify the record owner and expressly disclose the fact that, in exercising the demand, such person is acting as agent for the owner. A record owner, such as a broker, who holds Class A Shares as a nominee for others, may exercise appraisal rights with respect to the Class A Shares held for all or less than all beneficial owners of Class A Shares as to which such person is the record owner. In such case the written demand must set forth the number of Class A Shares covered by such demand. Where the number of Class A Shares is not expressly stated, the demand will be presumed to cover all Class A Shares outstanding in the name of such record owner. Beneficial owners who are not record owners and who intend to exercise appraisal rights should instruct their record owners to comply strictly with the statutory requirements with respect to the exercise of appraisal rights. Within 10 days after the Effective Time, the Surviving Corporation will notify each Class A Stockholder who has complied with Section 262 of the date the Merger has become effective. From and after the Effective Time, dissenters may not vote their Class A Shares or receive distributions on such Class A Shares declared after the Effective Time. Within 120 days after the Effective Time, but not thereafter, either the Surviving Corporation or any Class A Stockholder entitled to appraisal rights under Section 262 (who has notified the Company as described above within 20 days after the date of this Information Statement) may file a petition in the Delaware Court of Chancery demanding a determination of the value of the Class A Shares of all Class A Stockholders entitled to appraisal, provided that during the first 60 days after the Effective Time any Class A Stockholder has the right to withdraw his demand for appraisal and accept the cash payment of the Merger Consideration provided for in the Merger Agreement. Within such 120 day period, any dissenting shareholder who has perfected his or her rights may, by written request to the Surviving Corporation, obtain a list of the aggregate number of holders of Class A Shares for which appraisal demands have been received. Such list must be delivered by the Surviving Corporation to the requesting Stockholder within 10 days of the date on which the request is received by the Surviving Corporation or the expiration of the period for delivery of demands under Section 262(d) of the DGCL, whichever is later. 27 28 Within 20 days after the service upon the Surviving Corporation of a copy of a petition filed in the Delaware Court of Chancery demanding an appraisal, the Surviving Corporation is obligated to file in the office of the Register in Chancery a verified list of all Class A Stockholders who have demanded appraisal and have not reached agreement as to the value of their Class A Shares with the Surviving Corporation or withdrawn the demand for appraisal of their Class A Shares. After notice to such Class A Stockholders, the Court of Chancery is empowered to conduct a hearing upon the petition of any such Class A Stockholder. The court shall then determine those Class A Stockholders entitled to appraisal and appraise the fair value of the Class A Shares held by them, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest to be paid, if any, upon the amount determined to be the fair value. In determining fair value, the Court of Chancery is to take into account all relevant factors. In Weinberger v. UOP Inc., et al., decided February 1, 1983, the Delaware Supreme Court discussed the considerations that could be considered in determining fair value in an appraisal proceeding, stating the "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered and that "fair price obviously requires consideration of all relevant factors involving the value of a company". The Delaware Supreme Court stated that in making this determination of fair value the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which could be ascertained as of the date of the merger which throw any light on future prospects of the corporation. Section 262 provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the merger". In Weinberger, the Delaware Supreme Court construed Section 262 to mean that "elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered". Class A Stockholders considering seeking appraisal should bear in mind that the fair value of their Class A Shares determined under Section 262 could be more than, the same as or less than the consideration they are to receive pursuant to the Merger Agreement if they do not seek appraisal of their Class A Shares, and that an opinion of an investment banking firm as to fairness is not an opinion as to fair value under Section 262. Costs of the appraisal proceeding may be taxed upon the parties thereto by the court as the court deems equitable in the circumstances. Upon application of a dissenting stockholder, the Delaware Court of Chancery may order that all or a portion of the expenses incurred by any dissenting Class A Stockholder in connection with the appraisal proceeding, including without limitation reasonable attorney's fees and the fees and expenses of experts, be charged pro rata against the value of all Class A Shares entitled to appraisal. If a Class A Stockholder does not file a petition for an appraisal within 120 days after the Effective Time, then the right of such Class A Stockholder to an appraisal shall cease. In addition, if any Class A Stockholder shall deliver to the Surviving Corporation a written withdrawal of such holder's demand for an appraisal and an acceptance of the Merger Consideration, either within 60 days after the Effective Time or thereafter with the written approval of the Surviving Corporation, then the right of such Class A Stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery shall be dismissed as to any Class A Stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. 28 29 MARKET PRICES AND DIVIDENDS ON THE COMMON STOCK OF THE COMPANY The Class A Shares are publicly traded in the over the counter market and quoted on the Nasdaq National Market under the symbol "CCXLA". There is no established trading market for the Class B Shares. As of February , 1995, the Company had 390 Class A Stockholders of record. The Company has not paid any cash dividends on the Class A Shares or Class B Shares, and it is not anticipated that the Company will pay any cash dividends in the foreseeable future. The following table indicates the high and low sales prices for the Class A Shares during the designated periods:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ------- ------- ------ -------- 1994 High.............................. $ 18.75 $ 17.25 $24.00 $ 25.25 Low............................... 14.00 13.00 16.00 23.50 1993 High.............................. $ 18.63 $ 16.25 $18.75 $ 22.00 Low............................... 13.25 13.50 15.50 15.00 1992 High.............................. $ 23.25 $ 18.50 $16.50 $ 19.00 Low............................... 17.25 13.00 13.50 13.25
On September 7, 1994, the last full day of trading prior to the announcement of GTE's intention to acquire the Class A Shares, the high, low and closing sales prices per Class A Share on the Nasdaq National Market were $18.25, $17.75 and $17.75, respectively. 29 30 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY The selected consolidated financial data presented below as of December 31, 1989-1993 and for each of the years then ended have been derived from the consolidated financial statements of the Company which have been audited (except for the number of subscribers) by Arthur Andersen LLP, independent certified public accountants. See the "REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS" attached as Exhibit F to this Information Statement. The selected consolidated financial data as of September 30, 1993 and 1994 and for the nine-month periods then ended have been derived from the unaudited consolidated financial statements of the Company. The consolidated financial statements as of December 31, 1993 and 1992, and for each of the years in the three-year period ended December 31, 1993, have been incorporated by reference into this Information Statement. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE". This financial information should be read in conjunction with such financial statements and notes thereto.
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, ------------------------------------------------------------ ----------------------- 1989 1990 1991 1992 1993 1993 1994 -------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) INCOME STATEMENT DATA: Revenues and sales................... $ 65,519 $ 167,178 $ 235,107 $ 286,999 $ 374,014 $ 265,262 $ 405,069 Operating income (loss)(1)........... (14,682) (38,143) (68,577) (50,113) (28,305) (12,536) 35,262 Loss from consolidated operations.... (12,328) (158,865) (223,726) (196,347) (188,011) (136,253) (101,794) Equity in earnings of unconsolidated partnerships....................... 17,539 19,069 15,687 29,027 37,351 27,864 48,510 Gains on sales of partnership interests.......................... -- -- 18,387 60,806 48,023 8,326 76,348 Net income (loss) before cumulative effect of change in accounting principles......................... 2,621 (102,794) (118,900) (73,061) (74,918) (70,382) 6,360 Cumulative effect of change in accounting principles(2)........... -- -- -- (2,080) (241) -- -- Net income (loss).................... 2,621 (102,794) (118,900) (75,141) (75,159) (70,382) 6,360 Net income (loss) per share before cumulative effect of change in accounting principles.............. 0.03 (1.03) (1.19) (0.73) (0.75) (0.70) 0.06 Net income (loss) per share.......... 0.03 (1.03) (1.19) (0.75) (0.75) (0.70) 0.06 Weighted average shares outstanding (in thousands)..................... 99,983 99,931 99,942 99,947 99,949 99,949 99,951 OTHER OPERATING DATA: Capital expenditures................. 31,871 70,841 107,792 183,504 130,042 81,377 139,345 Ending subscribers................... 50,050 155,285 236,282 327,645 521,226 434,338 672,560
AS OF AS OF DECEMBER 31, SEPTEMBER 30, ------------------------------------------------------------ ----------------------- 1989 1990 1991 1992 1993 1993 1994 -------- ---------- ---------- ---------- ---------- ---------- ---------- (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) BALANCE SHEET DATA: Total assets......................... $207,186 $1,665,395 $1,870,669 $1,930,469 $2,052,984 $1,979,987 $2,175,701 Long-term obligations Notes payable -- affiliates........ -- 1,540,000 1,735,034 1,814,327 1,901,726 1,906,191 2,011,613 Other.............................. 14,280 14,280 42,280 36,280 36,792 30,280 30,792 Stockholders' equity (deficit)....... 130,166 27,525 (91,085) (166,084) (241,221) (236,444) (234,820) Book value per share................. 1.30 0.28 (0.91) (1.66) (2.41) (2.37) (2.35)
- --------------- (1) The operating loss in 1991 includes approximately $12 million of integration costs associated with the merger of Contel with a wholly owned subsidiary of GTE. (2) In 1993, the Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." In 1992, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and No. 109, "Accounting for Income Taxes." Earnings were not adequate to cover fixed charges in 1991, 1992, 1993 or for the nine months ended September 30, 1993 and 1994. The amount of such deficiency was $203 million, $128 million and $129 million for the years ended December 31, 1991, 1992 and 1993, respectively, and $126 million and $6 million for the nine months ended September 30, 1993 and 1994, respectively. 30 31 PROJECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY(1) The Company does not, as a matter of course, publicly disclose projections as to future revenues or earnings. The following five year projections for the period 1995-1999 were prepared by management for internal planning purposes. These five year projections are included in this Information Statement because such projections were made available to the Special Committee, its financial advisor, GTE and the GTE Financial Advisors. These projections, while presented with numerical specificity, are based upon a variety of estimates and assumptions. Such estimates and assumptions, some of which are described below, involve judgments with respect to, among other things, future economic and competitive conditions, the ability of the Company to continue operations, and future business decisions. These judgments, though considered reasonable by the Company at the time, may not be realized, and are inherently subject to significant business, economic and competitive uncertainties, many of which are beyond the control of the Company. There can be no assurance that the results of operations set forth in such projections will be realized. Actual results may vary materially from those shown. In light of the uncertainties inherent in projections of any kind, the inclusion of projections herein should not be regarded as a representation by the Company or any other person that the projections will be achieved. The Company's independent auditors have not examined or compiled the projections presented herein and accordingly, assume no responsibility for them. Class A Stockholders are cautioned not to place undue reliance on these projections. Management has not and does not intend to update or otherwise revise the projections to reflect changing circumstances existing after the preparation of the projections included herein or to reflect the occurrence of unanticipated events that may have occurred. The significant assumptions underlying these projections are described in the footnotes following the projections. The projections provided to the Special Committee, its financial advisor and the GTE Financial Advisors were based on forecasted results for 1994 since actual 1994 results were not available at the time.
YEARS ENDED DECEMBER 31,(1) ------------------------------------------ 1995 1996 1997 1998 1999 ------ ------ ------ ------ ------ (DOLLAR AMOUNTS IN MILLIONS) INCOME STATEMENT DATA: Service revenues(2)................................... $ 679 $ 831 $ 984 $1,140 $1,282 Depreciation and amortization(3)(4)................... 152 181 201 215 228 Operating income...................................... 116 186 263 325 431 Net income (loss)(5).................................. (36) (1) 40 81 153 OTHER OPERATING DATA: Capital expenditures(3)............................... 298 220 158 135 145 Operating cash flow................................... 268 367 464 540 659
31 32
AS OF DECEMBER 31,(1) ------------------------------------------ 1995 1996 1997 1998 1999 ------ ------ ------ ------ ------ (DOLLAR AMOUNTS IN MILLIONS) BALANCE SHEET DATA: Total assets.......................................... $2,541 $2,614 $2,602 $2,548 $2,488 Long-term liabilities(6).............................. 2,135 2,183 2,233 2,185 1,983 Stockholders' deficit(7).............................. (289) (290) (250) (169) (16)
- --------------- (1) Basis of presentation: The five year projections do not include the effect of the proposed Merger. The five year projections include the effect of the 1994 acquisitions of 100% of the cellular system serving the Huntsville, Alabama MSA and Alabama RSA 2, a controlling interest in a company with interim operating authority to provide cellular service in Alabama RSA 1 and the acquisition of a controlling interest in California RSA 4. Prior to preparation of these five year projections, ten year projections were prepared that did not include the effects of the acquisitions referred to above. These ten year projections were prepared outside of the Company's normal planning process and therefore, in addition to being inherently less certain, they received less management review than the five year projections. The ten year projections, as presented below, were made available to the Special Committee, its financial advisor and the GTE Financial Advisors. Both the ten year and five year projections include the effect of the proposed sales in 1994 of certain properties to NYNEX Mobile Communications Company, including the Company's cellular interests in the MSAs of Binghamton and Elmira, New York, and New York RSA 3. These sales are expected to close sometime in 1995. Additionally, the California RSA 4 acquisition is not expected to close until sometime in 1995.
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------------------ 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (DOLLAR AMOUNTS IN MILLIONS) INCOME STATEMENT DATA: Service revenues......... $ 656 $ 799 $ 945 $1,092 $1,228 $1,270 $1,287 $1,285 $1,315 $1,347 Depreciation and amortization........... 148 176 196 210 223 233 248 270 294 315 Operating income......... 103 182 257 316 421 432 425 411 408 404 Net income (loss)........ (37) 4 43 83 154 181 198 215 239 266 OTHER OPERATING DATA: Capital expenditures..... 298 214 156 134 143 123 135 127 126 100 Operating cash flow...... 251 358 453 526 644 665 673 681 702 719
(2) Service revenues: Service revenues include airtime, access, roaming, long-distance and other service revenues, but do not include revenues for the sale or rental of cellular equipment. The projections generally assume that service revenues will increase over prior years due to increasing volumes; however, revenue per subscriber will continue to decline as an increasing number of casual users are added to the base and as new entrants in the wireless communication market compete for subscribers. (3) Capital expenditures/depreciation: The projections assume that increased capital will be required to provide high quality, portable network coverage, to accommodate volume and provide for economies of scale. (4) Amortization: The five year projections include the amortization of intangibles related to the acquisitions described in Note 1 above. (5) Net income: The projections assume a federal income tax rate of 35% for all periods presented. (6) Long term liabilities: The projections assume increases in long-term debt between 1995 and 1997 reflecting the expected increase in required capital as described in Note 3. Thereafter, the projections assume that operating cash flow will be sufficient to satisfy operating requirements and capital expenditures and enable the Company to gradually repay outstanding debt. (7) Stockholders' deficit: Stockholders' deficit includes the par value of the Class A Shares and Class B Shares, additional paid-in capital, the cost of the Class A treasury stock and the accumulated deficit all as of December 31, 1993, adjusted for the projected net results for the year ended December 31, 1994 and for each of the years included in the above projections. 32 33 BUSINESS OF THE COMPANY OVERVIEW The Company, through its subsidiaries and through partnerships, provides or participates in the provision of cellular telephone service in various metropolitan statistical areas ("MSAs") and rural service areas ("RSAs") throughout the United States. As of December 31, 1994, the Company had interests in cellular telephone systems in the United States representing approximately 23.9 million "POPs". ("POPs" refer to the population of a market area multiplied by the Company's percentage ownership in the cellular system serving that market). The Company's 23.9 million POPs include cellular systems which the Company controls or manages and cellular systems operated by partnerships in which the Company is not the controlling partner. As of December 31, 1994, approximately 19.5 million of the Company's 23.9 million POPs were located in 59 MSAs. The Company owned a controlling interest in and managed cellular systems servicing 32 of these 59 MSAs (representing approximately 69% of the Company's MSA POPs). The Company owned a non-controlling interest in cellular systems servicing the remaining 27 MSAs. The remaining 4.4 million of the Company's 23.9 million POPs were located in 52 RSAs. As of December 31, 1994, the Company owned controlling interests in entities licensed to provide cellular service in 24 RSAs, owned non-controlling interests in and managed 10 RSA markets and held non-controlling interests in 18 RSAs. Most of the Company's RSA POPs are in areas adjacent to MSAs currently served by the Company. CELLULAR INTERESTS The Company's controlled MSA interests, non-controlled MSA interests, controlled RSA interests, managed RSA interests and non-controlled RSA interests, are set forth below.
COMPANY COMPANY PERCENTAGE 1994 ESTIMATED POPULATION MARKET MSA RANK OWNERSHIP POPULATION(1) EQUIVALENTS - ------------------------------------------- -------- ---------- -------------- ----------- CONTROLLED MSA INTERESTS Memphis, TN................................ 36 100.00% 1,030,496 1,030,496 Louisville, KY............................. 37 100.00% 931,413 931,413 Birmingham, AL............................. 41 100.00% 904,436 904,436 Norfolk, VA................................ 43 95.01% 1,020,794 969,856 Nashville, TN.............................. 46 100.00% 1,051,872 1,051,872 Richmond, VA............................... 59 95.01% 797,942 758,125 Fresno, CA................................. 74 92.00% 735,494 676,654 Knoxville, TN.............................. 79 94.12% 544,045 512,055 El Paso, TX................................ 81 100.00% 652,655 652,655 Mobile, AL................................. 83 100.00% 510,599 510,599 Johnson City, TN........................... 85 100.00% 452,809 452,809 Chattanooga, TN............................ 88 100.00% 451,120 451,120 Bakersfield, CA............................ 97 92.00% 618,209 568,752 Davenport, IA.............................. 98 100.00% 362,249 362,249 Newport News, VA........................... 104 95.01% 474,518 450,840 Huntsville, AL............................. 115 100.00% 393,160 393,160 Lexington, KY.............................. 116 100.00% 367,623 367,623 Evansville, IN............................. 119 88.87% 318,396 282,959 Binghamton, NY............................. 122 41.00% 309,418 126,861 Pensacola, FL.............................. 127 100.00% 374,969 374,969 Rockford, IL............................... 131 59.00% 301,026 177,605 Visalia, CA................................ 150 92.00% 347,899 320,067 Roanoke, VA................................ 157 40.00% 239,829 95,932
33 34
COMPANY COMPANY PERCENTAGE 1994 ESTIMATED POPULATION MARKET MSA RANK OWNERSHIP POPULATION(1) EQUIVALENTS - ------------------------------------------- -------- ---------- -------------- ----------- Clarksville, TN............................ 209 100.00% 172,410 172,410 Tuscaloosa, AL............................. 222 80.40% 161,333 129,705 Florence, AL............................... 226 91.09% 138,073 125,771 Petersburg, VA............................. 235 95.01% 130,585 124,069 Anniston, AL............................... 249 100.00% 116,063 116,063 Gadsden, AL................................ 272 90.00% 101,153 91,038 Elmira, NY................................. 284 100.00% 95,612 95,612 Las Cruces, NM............................. 285 100.00% 153,838 153,838 Owensboro, KY.............................. 293 88.87% 89,993 79,977 -------------- ----------- 32 TOTAL CONTROLLED MSAs.................................. 14,350,031 13,511,590 =========== ========= NON-CONTROLLED MSA INTERESTS Los Angeles, CA............................ 2 11.20% 14,718,542 1,648,477 San Francisco, CA.......................... 7 11.25% 3,832,050 431,106 Washington, DC............................. 8 35.27% 3,783,479 1,334,433 Houston, TX................................ 10 4.40% 3,897,637 171,496 Minneapolis, MN............................ 15 30.00% 2,569,391 770,817 San Jose, CA............................... 27 11.25% 1,541,573 173,427 San Antonio, TX............................ 33 30.00% 1,382,982 414,895 Sacramento, CA............................. 35 0.98% 1,479,697 14,501 Jacksonville, FL........................... 51 14.24% 1,003,832 142,946 Greenville, SC............................. 67 10.83% 667,011 72,237 Oxnard, CA................................. 73 11.20% 697,369 78,105 Austin, TX................................. 75 3.00% 874,277 26,228 Albuquerque, NM............................ 86 49.00% 590,335 289,264 Beaumont, TX............................... 101 4.40% 384,136 16,902 Stockton, CA............................... 107 0.98% 517,135 5,068 Vallejo, CA................................ 111 11.25% 489,096 55,023 Santa Rosa, CA............................. 123 11.25% 411,058 46,244 Santa Barbara, CA.......................... 124 39.00% 378,431 147,588 Salinas, CA................................ 126 11.25% 372,027 41,853 Modesto, CA................................ 142 0.98% 415,482 4,072 Galveston, TX.............................. 170 4.40% 237,243 10,439 Reno, NV................................... 171 0.98% 279,735 2,741 Santa Cruz, CA............................. 174 11.25% 230,417 25,922 Chico, CA.................................. 215 0.98% 197,623 1,937 Anderson, SC............................... 227 10.83% 146,845 15,903 Redding, CA................................ 254 0.98% 167,321 1,640 Yuba City, CA.............................. 274 0.98% 135,636 1,329 -------------- ----------- 27 TOTAL NON-CONTROLLED MSAs.............................. 41,400,360 5,944,593 =========== ========= 59 TOTAL MSAs............................................. 55,750,391 19,456,183 =========== =========
34 35
COMPANY COMPANY PERCENTAGE 1994 ESTIMATED POPULATION MARKET OWNERSHIP POPULATION(1) EQUIVALENTS - ------------------------------------------------------- ---------- -------------- ----------- CONTROLLED RSA INTERESTS Alabama 2.............................................. 100.00% 127,611 127,611 California 6........................................... 100.00% 28,183 28,183 California 9........................................... 100.00% 140,612 140,612 Kentucky 2............................................. 100.00% 127,813 127,813 Kentucky 7............................................. 100.00% 166,424 166,424 Tennessee 1............................................ 100.00% 297,449 297,449 Tennessee 2............................................ 100.00% 159,071 159,071 Tennessee 3............................................ 100.00% 329,746 329,746 Tennessee 5............................................ 100.00% 336,480 336,480 Tennessee 6............................................ 100.00% 156,906 156,906 Tennessee 7............................................ 100.00% 248,005 248,005 Tennessee 9............................................ 100.00% 67,581 67,581 Virginia 7............................................. 100.00% 38,853 38,853 Virginia 8............................................. 95.01% 84,513 80,296 Virginia 9............................................. 95.01% 87,028 82,685 Virginia 11............................................ 95.01% 111,650 106,079 Virginia 12............................................ 95.01% 33,536 31,863 California 12.......................................... 92.00% 110,515 101,674 Illinois 1............................................. 91.50% 316,168 289,294 Virginia 5............................................. 77.00% 63,347 48,777 Texas 10............................................... 75.00% 29,489 22,117 New Mexico 6-I......................................... 71.43% 60,988 43,564 Virginia 3............................................. 51.00% 183,153 93,408 Virginia 4............................................. 51.00% 66,772 34,054 -------------- ----------- 24 TOTAL CONTROLLED RSAs................................. 3,371,893 3,158,545 =========== ========= MANAGED, NON-CONTROLLED RSA INTERESTS Kentucky 1............................................. 50.00% 187,079 93,540 New Mexico 3........................................... 50.00% 78,980 39,490 New Mexico 5........................................... 43.00% 56,850 24,446 Iowa 4................................................. 38.10% 155,924 59,407 Indiana 7.............................................. 38.09% 220,819 84,119 Indiana 8.............................................. 38.09% 252,283 96,105 Indiana 9.............................................. 38.09% 142,859 54,421 New York 3............................................. 22.50% 492,406 110,791 California 4........................................... 20.83% 338,983 70,610 Iowa 5................................................. 14.29% 108,063 15,442 -------------- ----------- 10 TOTAL MANAGED RSAs.................................... 2,034,246 648,371 =========== =========
35 36
COMPANY COMPANY PERCENTAGE 1994 ESTIMATED POPULATION MARKET OWNERSHIP POPULATION(1) EQUIVALENTS - ------------------------------------------------------- ---------- -------------- ----------- NON-CONTROLLED RSA INTERESTS New Mexico 1........................................... 44.44% 251,919 111,953 Illinois 8............................................. 41.13% 331,629 136,399 Illinois 9............................................. 41.13% 152,791 62,843 Illinois 2............................................. 40.00% 145,844 58,338 California 5........................................... 39.00% 218,249 85,117 California 3........................................... 27.73% 143,187 39,706 California 1........................................... 16.67% 212,401 35,407 New Mexico 6-II........................................ 12.50% 123,267 15,408 Illinois 3............................................. 11.77% 204,375 24,055 Virginia 6............................................. 10.00% 213,307 21,331 Minnesota 1............................................ 6.60% 51,014 3,367 Minnesota 2............................................ 6.60% 62,994 4,158 Minnesota 3............................................ 6.60% 57,315 3,783 Minnesota 5............................................ 6.60% 203,906 13,458 Minnesota 6............................................ 6.60% 244,817 16,158 Virginia 10............................................ 1.00% 231,404 2,314 Pennsylvania 3......................................... 0.10% 95,755 96 Pennsylvania 4......................................... 0.10% 97,172 97 -------------- ----------- 18 TOTAL NON-CONTROLLED RSAs............................. 3,041,346 633,988 =========== ========= 52 TOTAL RSAs............................................ 8,447,485 4,440,904 =========== ========= 111 TOTAL MSAs and RSAs.................................. 64,197,876 23,897,087 =========== =========
- --------------- (1) Population figures are derived from the 1994 Donnelly marketing population estimates for counties comprising FCC defined MSAs and RSAs. POP figures discussed in "SPECIAL FACTORS -- Opinion of Financial Advisor to the Special Committee" and "SPECIAL FACTORS -- Opinions of Financial Advisors to GTE" are based on 1993 population estimates which differ, although not materially in the aggregate, from the figures set forth in the table above. THE CELLULAR TELEPHONE INDUSTRY Background. In 1983, the Federal Communications Commission (the "FCC") issued the first license to provide cellular telephone service in the United States. Since that time, cellular telephone service has become available to all 305 MSAs and 428 RSAs and is available to most of the population of the United States. Cellular telephone service was developed as a response to the shortcomings of conventional mobile telephone systems. By providing high quality, high capacity communication to and from vehicle-mounted telephones ("mobiles") and hand-held radio telephones ("portables"), the cellular telephone industry has grown at a very rapid pace and, as of year-end 1994, exceeded 22 million subscribers. In 1994, the cellular telephone industry recorded an overall growth rate of approximately 37%. Technology. Cellular telephone service achieves its high quality and capacity capability by dividing the radio spectrum allocated to it by the FCC into smaller groups or "sets" of frequencies and re-using those frequencies many times in geographically distant parts of the network. Each set of frequencies is allocated to a specific geographic area called a "cell." Adjacent cells must use a different set of frequencies to avoid cell-to-cell frequency interference. Cells which are sufficiently distant from one another may use the same frequencies because the radio signals naturally decay over distance until they reach a low enough level that does not cause interference. Therefore, by use of frequency planning techniques, the radio spectrum allocated to a cellular 36 37 provider can be re-used many times in various parts of the system to achieve high overall call capacities and very low call interference rates. The cells in a system are connected to a computer-controlled switch called a mobile telephone switching office ("MTSO"). The MTSO monitors all calls to all cell sites within the system and routes them to their intended destinations. Once a call request is received, it is directed to the cell site where the signal strength is greatest, and is then continuously monitored for quality signal strength. If the signal strength begins to decline as a vehicle travels through the radio coverage area of one cell, the MTSO recognizes the cell which is getting weaker in signal strength and which is the next cell in the path of the vehicle where signal strength is increasing. At the appropriate point in time, the MTSO instructs the new cell to take over the call and the original cell to release the call. This allows an in-process call to achieve a cell-to-cell handoff with no interruption in the conversation. The MTSO is capable of achieving this handoff as many times as necessary for each call. Today's cellular systems utilize digital switching equipment, digital connections between the switch and the cells, and analog radio frequency ("RF") technology between the cells and the mobile units. The analog RF technology is limited because a finite number of channels can be used at any one cell within a system without causing system problems. The capacity of the system can be increased in areas with heavy call traffic by either cell splitting or cell sectoring. Cell splitting involves constructing numerous cells to serve the coverage area of the original cell. If a large cell is split into four smaller cells, the total channels available within the original coverage area is increased up to four times. Cell sectoring is accomplished by replacing a cell's omni-directional antennas with either three or six directional antennas. This allows for different sets of channels to be used in each sector. The advantage of this method is that capacity can be increased in the cell without increasing system interference and that the same frequency sets can be reused at closer spacing. The cellular telephone industry is moving toward implementing digital RF technology in existing cellular systems. Two technologies are currently under consideration by major cellular providers -- Time Division Multiple Access ("TDMA") and Code Division Multiple Access ("CDMA"). Either technology will offer a considerable capacity increase over today's technology. Market Structure. Historically, FCC regulations provided that licenses would be granted to two cellular service providers in each MSA and RSA; a wireline licensee and a non-wireline licensee. Each of the two licensees has 25 MHz of radio spectrum allocated to it, and each further subdivides this spectrum into 415 two-way channels. Each license is granted for a period of ten years and is subject to renewal at the end of that period. FCC rules require all cellular system operators to provide, on a nondiscriminatory basis, cellular service to resellers who may purchase blocks of numbers at a wholesale rate and resell such service to the public. The FCC is in the process of auctioning additional licenses for the provision of personal communications services in the 1.8 GHz to 1.99 GHz frequency band. These auctions will not be completed until later this year and will result in new licensees in each of the Company's service areas. No licenses have been awarded as of February , 1995. THE COMPANY'S CELLULAR OPERATIONS General. The Company, or partnerships which the Company controls or manages, provides cellular service in 32 MSAs and 34 RSAs ("Company Controlled Systems" or "Company Controlled Markets"). Company Controlled Systems represent approximately 72% of the Company's total POPs. The information provided below with respect to the Company's cellular operations applies only to the Company Controlled Systems because these are the only systems whose operations the Company controls. The Company's non-controlled cellular interests are described below in "BUSINESS OF THE COMPANY -- Non-Controlled Systems". The Company obtained the right to provide cellular service in the Company Controlled Markets either (i) as the result of the FCC's licensing process, or (ii) through an acquisition program. Since the Company was an affiliate of a wireline telephone company, it had the right to apply for the wireline cellular license in any 37 38 area served by its landline affiliate. As a result of this licensing process, the Company is the wireline licensee in 43 Company Controlled Markets (approximately 8.7 million POPs). As a result of its acquisition program, the Company is the non-wireline licensee in 23 Company Controlled Markets (approximately 8.6 million POPs). In acquiring and developing these cellular telephone systems, the Company has utilized a strategy of focusing on coastal and sun belt areas where the Company believes the demographics and business climate are favorable to the development of cellular systems. In addition, the Company has attempted to develop cellular systems in regional clusters of significant size. The cellular telephone systems originally licensed to the Company as part of the FCC licensing process for MSAs and RSAs are generally located in 5 geographic areas: Virginia, California, the Midwest, Texas/New Mexico, and the Gulf of Mexico. The cellular telephone systems acquired by the Company are located in Tennessee, Alabama and Kentucky. Acquisitions and Divestitures. To further its strategy of acquiring and developing large regional clusters in economically strong areas, the Company has developed and followed a program of selling certain properties which are not strategically located and purchasing certain other properties which are strategic. In January 1994, the Company purchased 100% of the cellular system serving Tennessee RSA 2 and the remaining 51% interest in Tennessee RSA 3. In December 1994, the Company announced that it had completed the purchase of 100% of the cellular system serving the Huntsville, Alabama MSA and Alabama RSA 2 as well as an 80% controlling interest in an entity that has interim operating authority to provide service in Alabama RSA 1. Also, during the third quarter of 1994, the Company executed a definitive agreement to purchase an additional 29.2% interest in California RSA 4. The California purchase is subject to certain regulatory approvals. During 1994, the Company also completed the sales of certain properties, as part of the definitive agreement reached with NYNEX Mobile Communications Company ("NYNEX") in December of 1993 (the "NYNEX Agreement"). To date, the Company has completed the sale of its 60% interest in the cellular system serving the Manchester, New Hampshire MSA, 36.6% interest in New Hampshire RSA 2, 100% interest in the Burlington, Vermont MSA, 83.3% interest in Vermont RSAs 1 and 2 and 25% interest in New York RSA 2. The NYNEX Agreement also provides for the sale of the Company's cellular interests in the MSAs of Binghamton and Elmira, New York, New York RSA 3, Pennsylvania RSA 3 and Pennsylvania RSA 4. The completion of the sale of these properties is subject to final regulatory approval. Additional sales completed during 1994 include 100% of Oregon RSA 5, 100% of Kentucky RSA 11, 100% of California RSA 7, 33.3% of Alabama RSA 1, 50% of North Carolina RSA 1, 7.1% of Iowa RSA 1, 16.7% of Iowa RSA 8, 5.6% of Iowa RSA 14, 33.3% of South Dakota RSA 5 and 14.3% of South Dakota RSA 6. The transactions described above have resulted or will result when completed in a net decrease in the Company's POPs of approximately 0.9 million. Operations Partnerships. A substantial number of the Company's cellular systems in MSAs are owned by limited partnerships in which the Company is a general partner ("MSA Partnerships"). Most of these partnerships are governed by partnership agreements with similar terms, including, among other things, customary provisions concerning capital contributions, sharing of profits and losses, and dissolution and termination of the partnership. Most of these partnership agreements vest complete operational control of the partnership with the general partner. The general partner typically has the power to manage, supervise and conduct the affairs of the partnership, make all decisions appropriate in connection with the business purposes of the partnership, and incur obligations and execute agreements on behalf of the partnership. The general partner also may make decisions regarding the timing and amount of cash contributions and distributions, and the nature, timing and extent of construction, without the consent of the other partners. The Company owns more than fifty percent (50%) of almost all of the MSA Partnerships. 38 39 A substantial number of the Company's cellular systems in RSAs are also owned by limited or general partnerships in which the Company is either the general or managing partner (the "RSA Partnerships"). These partnerships are governed by partnership agreements with varying terms and provisions. In many of these partnerships, the noncontrolling partners have the right to vote on major issues such as the annual budget and system design. In addition, in certain of these partnerships, the partners have the right to build, under certain circumstances, independent cells in areas of the RSA not served by the partnership. Finally, in a few of these partnerships, the Company's management position is for a limited term (similar to a management contract) and the other partners in the partnership have the right to change managers, with or without cause. The Company owns less than fifty percent (50%) of many of the RSA Partnerships. The partnership agreements for both the MSA Partnerships and RSA Partnerships generally contain provisions granting all partners a right of first refusal in the event a partner desires to transfer a partnership interest. This restriction on transfer can make these partnership interests difficult to sell to a third party. Provision of Services by GTE Personal Communications Services. During 1993, the Company maintained a headquarters staff and two regional staffs which provided strategic as well as day-to-day operational support to the Company's operations in its 66 Company Controlled Markets. In 1994, the Company implemented a new organizational structure pursuant to which the two regional staffs were replaced with eight area staffs which are located in the Company's eight clusters of MSAs and RSAs. These eight areas are Virginia, Tennessee, Kentucky, Alabama, the Midwest, Texas/New Mexico, the Gulf of Mexico and California. The purpose of this reorganization was to move essential, customer impacting resources closer to the marketplace to enhance the Company's competitive advantage and position the Company for future growth. The Company also receives general and administrative as well as functional support from GTE Personal Communications Services ("GTE PCS"), a division of GTE. Pursuant to the Services Agreement, GTE PCS provides finance, accounting, tax, human resources, legal, regulatory and information management services to the Company. The Services Agreement provides that the Company is allocated a portion of GTE PCS expenses based on a two-step process. The first step is the designation of GTE PCS expenses as cellular or non-cellular. The second step is the allocation of cellular expenses between the Company and GTE Mobilnet (a GTE subsidiary also engaged in the cellular communications business) based on a cost-causative allocation methodology. Under this methodology, pools of costs are allocated to operating units based on one of several factors. The factors were developed and applied to cost categories in an effort to allocate the cost to areas in proportion to the use and benefit of the cost. Under this Services Agreement, the Company was allocated approximately 34% of GTE PCS's cellular expenses for the twelve months ended December 31, 1994. See "RELATED PARTY TRANSACTIONS -- Arrangements and Transactions with Contel and GTE". Construction and Maintenance. The construction and maintenance of cellular systems is capital intensive. Although all of the Company's MSA and RSA systems were operational in 1994, the Company continually adds cells to increase coverage, provide additional capacity and improve the quality of these systems. In 1994, the Company completed construction of 153 new cells in Company Controlled Systems. In addition the Company completed a replacement program for most of its older technology cell site equipment. The newer technology equipment provides higher quality and increased flexibility in providing analog services, as well as positions a platform that supports deployment of future digital technologies. Total capital expenditures related to Company Controlled Systems were approximately $253 million in 1994 and are anticipated to be approximately $315 million in 1995. Marketing General. The Company markets its cellular telephone services through several distribution channels, including independent agents, its direct sales force and retail outlets. Agents are independent contractors who solicit customers on a commission basis exclusively for the Company. The Company's agents are diverse in size and type of business. Most are agents for the Company within a limited geographic area, while a few agents sell the Company's cellular service regionally or nationally. Some of the Company's agents sell cellular products and services exclusively, while others sell a variety of products (such as radio and electronics 39 40 equipment). Finally, some of the Company's agents are small shops, while others are large retail stores. The Company's agents generally receive a commission payment for each cellular subscriber they add to the Company's systems. The Company's direct sales force is made up of sales people who are employees of the Company and are compensated on an incentive basis. These employees earn a portion of their compensation as a guaranteed salary and receive additional payments for each subscriber added. These employees are required to meet certain quotas set by the Company. Another distribution channel utilized by the Company is retail outlets, including kiosks and retail stores. The retail outlets are staffed by salaried employees, part-time employees and temporary employees who receive a base salary and incentive compensation for each unit sold. Finally, the Company is constantly attempting to develop new distribution channels, including telemarketing, co-promotions with various other industry leaders and door-to-door sales. National Industry Alliance. During the past several years, cellular providers have been forming industry alliances to market cellular service nationwide. Many cellular providers holding non-wireline licenses have become Cellular One(R) franchisees. Many cellular providers holding wireline licenses have joined a consortium to market under the brand name, MobiLink(R). Because the Company holds both wireline and non-wireline licenses, it participates in both of these alliances. The Company has executed franchise agreements with the Cellular One Group for each of its non-wireline markets pursuant to which the Company obtained the right to market its services under the Cellular One name. In return, the Company is obligated to meet certain standards for service and customer satisfaction. The Company is also obligated to pay an annual license fee equal to $.02 per POP and an annual marketing fee of up to $.05 per POP in each market where the Company uses this name. The Company has also executed agreements with B-Side Carriers L.P. for its wireline properties to be MobiLink providers. MobiLink service: (i) allows people to more easily make and receive calls using standardized dialing codes in major metropolitan areas, (ii) provides 24-hour customer service, (iii) provides service centers for repairs and loaner phones and (iv) provides an extensive customer satisfaction guarantee. The cost of being a MobiLink provider is equal to $.065 per POP per year for each market where the Company has chosen to be a MobiLink provider. GTE Mobile is an equity owner in B-Side Carriers L.P. See "RELATED PARTY TRANSACTIONS -- Equity Ownership in B-Side Carriers L.P." Subscribers Total Number. The Company had 789,580 subscribers at December 31, 1994, an increase of 51.5% over its subscribers at December 31, 1993. The Company's subscribers at December 31, 1994 were distributed as follows: 33% in Tennessee, 21% in Virginia and 46% in all other markets combined. Cost of Acquisition. The sales and marketing costs of obtaining new subscribers are substantial. The Company not only has to pay for advertising, but also incurs a direct expense for most new subscribers, either in the form of a commission payment to an agent or a salary/incentive payment to a direct sales person. In addition, the Company periodically runs promotions which discount the cost of cellular telephone equipment, or provide some amount of initial access or airtime free to new subscribers. Each of these promotions results in costs to the Company. Although the Company has continued to lower the cost of acquisition per subscriber, it remains one of the Company's single largest expenses. Churn. A factor common throughout the cellular industry is that many subscribers either completely discontinue cellular service or switch from one cellular provider to another. In 1994, this monthly turnover or "churn" in the Company's subscribers averaged 2.7% of all subscribers per month. Subscriber Revenue. The Company charges its subscribers for access to its systems, for minutes of use and for enhanced services, such as voice mail and Mr. RescueSM. A subscriber may purchase each of these services separately for a set price or may purchase any number of rate plans which bundle these services in different ways. For example, a high usage subscriber may purchase a pre-determined number of minutes of use per month for a set fee rather than pay a fixed amount per minute. Similarly, a user who purchases cellular 40 41 service for security reasons may choose a plan with a low monthly access fee but higher per minute usage fees. Rates charged by the Company and the number and type of rate plans vary from market to market. The average monthly revenue the Company receives per subscriber has been declining over the last several years. The Company believes that this industry trend is caused in part by an increase in the number of casual and security cellular users. The Company expects this trend to continue in 1995 and future years. Roaming Roamers. The Company also provides cellular service to cellular users who are customers of other carriers but who are visiting and wish to use their cellular phone in the Company's service area ("roamers"). When roamers enter the Company's service area and attempt to use their cellular phones, the Company, through participation in an industry clearinghouse, establishes the identity and validity of the roamer and provides cellular service. The Company then bills the roamer's home cellular carrier for the service. Likewise, subscribers of the Company use their cellular phones in areas outside the Company's service areas. Roaming Revenue. The charges applicable to roamers are determined by agreements between the Company and other carriers in the industry and vary among markets and carriers. Roaming revenue has increased over the last several years and for the year ending December 31, 1994 represented approximately 18.6% of the Company's total service revenues. This increase is a result of the higher number of cellular subscribers nationwide and the Company's larger service areas due to an increasing number of cell sites. The Company believes that roaming will become more frequent in future years due to advances in intelligent networking which will simplify roaming procedures and make roaming transparent to the roamer. Roamer Fraud. Roamer fraud remains a cellular industry problem. Roamer fraud occurs when cellular telephone equipment is programmed to conceal the true identity and location of the user. While the Company and the industry have implemented an extensive fraud control process, they have not been able to eliminate fraud altogether. Employees At December 31, 1994, the Company had 2,387 employees. Of these, 230 were employed in the Company's headquarters offices in Atlanta and the remaining 2,157 were employed throughout the Company's Controlled Markets. NON-CONTROLLED SYSTEMS The Company participates as a non-controlling general or limited partner in 27 MSAs and 18 RSAs. These interests represent approximately 28% of the Company's total POPs and are typically limited partnership interests in partnerships providing cellular service to the larger MSAs, such as Los Angeles, San Francisco, Washington D.C., Minneapolis and Houston. The partnership agreements which govern these partnerships are similar to those described under the heading, "BUSINESS OF THE COMPANY -- Operations -- Partnerships". Since these partnership agreements vest the power to manage, supervise and conduct the affairs of the partnership with someone other than the Company, there can be no assurance that decisions made by these partnerships would be the same as those made by the Company under similar circumstances. INTERNATIONAL INTERESTS The Company owns a 10% interest in a corporation which provides cellular service in the Sonora and Sinaloa regions of Mexico. The Company currently receives services related to international ventures from GTE PCS. COMPETITION The cellular telephone industry is part of the much broader telecommunications industry. Direct competition is in the form of the other cellular licensee in any given market. Competition between the two 41 42 cellular licensees is principally on the basis of service quality, price and coverage area. In addition to the direct cellular competitor in each market, there will also be competition from newly emerging Enhanced Specialized Mobile Radio ("ESMR") operators who generally provide dispatch and other private radio systems. With new digital technology it may be possible for ESMR operators to provide services in the future that may be difficult to distinguish from traditional cellular service. In 1993 the FCC announced that it would license additional frequencies in the 1.8 GHz to 1.99 GHz frequency band to enable up to six additional wireless competitors to enter each market. These new licenses consist of two licenses in each of 51 large, often multi-state, geographical areas known as Major Trading Areas ("MTAs") and four licenses in each of 492 smaller geographical areas known as Basic Trading Areas ("BTAs"). Auctions for such licenses began in 1994 and will continue in 1995. As of February , 1995, no licenses were awarded under this process. The service offerings under the additional frequencies will be similar in nature to cellular service and will offer direct competition once established. REGULATION General. The FCC regulates the licensing, construction, operation, sale and acquisition of cellular carriers as well as interconnection arrangements between cellular carriers. In addition, certain aspects of cellular system operation, also may be subject to public utility regulation in the state in which service is provided. Changes in federal or state regulation of the Company's and its competitors' activities, such as increased rate regulation or deregulation of interconnection arrangements, could adversely affect the Company's results. A brief summary of federal and applicable state regulation of cellular service is set forth below. Federal Regulation. The FCC initially authorized cellular telephone service in 1981 by allocating 40 MHz of spectrum for two competing cellular systems in each market. A 20 MHz block of spectrum was given to each carrier. Due to cellular's rapid growth, the FCC allocated to each carrier an additional 5 MHz of spectrum in 1986. The initial cellular licenses granted by the FCC expire ten years from their date of issuance and are renewable upon application to, and approval by, the FCC. The FCC has established the criteria under which existing licensees may have their cellular licenses renewed. Basically, a comparative preference will be given to any current cellular licensee who can prove that it substantially used its spectrum for its intended purpose, complied with applicable FCC rules, and did not engage in substantial relevant misconduct. This preference will be the most important factor to be considered by the FCC during its hearing on each license renewal request in comparing the current licensee's application with any competing applications. Failure to comply with FCC rules can be raised as an issue during the license renewal proceedings and could result in termination of the license. The first of the Company's cellular licenses came up for renewal in October 1994. The Company filed renewal applications for its licenses in Mobile, Alabama, El Paso, Texas and Richmond and Norfork, Virginia in August 1994. No entity filed competing applications or oppositions to any of those renewal applications. The remainder of the Company's licenses will expire over the next several years. The Company expects to file renewal applications for such licenses upon their expiration. The FCC is currently in the process of auctioning additional licenses in the 1.8 GHz to 1.99 GHz range for the provision of personal communications services. Existing cellular companies are eligible to bid at auction for new licenses. Existing cellular companies may bid for an MTA license where they have no current substantial cellular holdings and one BTA license in all BTA's, including areas where they are currently the cellular provider. A subsidiary of GTE is bidding for licenses. No licenses have been awarded as of February , 1995. In addition to regulating cellular service, the FCC also regulates point-to-point microwave facilities which are often utilized by cellular providers to link base stations to each other and to the MTSO. The Company holds certain microwave licenses for these purposes. Such licenses, which are issued for a ten year period, were all renewed by the Company in 1991 for an additional ten year period. The FCC has issued 42 43 regulations pursuant to which a significant portion of the Company's microwave licenses may have to be relocated to a higher spectrum at the request of a party receiving a license to use such spectrum for a new technology. The regulations currently provide that incumbent microwave licensees will be reimbursed for expenses associated with this relocation by the new licensee. State Regulation. In 1981, the FCC preempted the states from exercising jurisdiction in the areas of cellular technical standards and market structure. Under the Communications Act of 1934, as amended, however, certain aspects of the economic regulation of common carriers were reserved to the states. The states had exclusive jurisdiction with respect to charges, classifications, practices and service or facilities for or in connection with intrastate communications. Although many states have deregulated cellular service, some still require the filing of tariffs and operational reports pursuant to statutes governing public utilities. In August 1994, certain provisions of the Omnibus Budget Reconciliation Act of 1993 (the "Omnibus Act") became effective. These provisions prohibited the states from continuing to exercise jurisdiction over rates and entry into the wireless telecommunications business. The Omnibus Act did, however, provide that states could file a petition with the FCC to continue rate jurisdiction. Only two states in which the Company provides service, California and New York, filed to continue such regulation. All states may continue to regulate other aspects of cellular service not preempted by federal law, although it is unclear at this time the extent to which the other states will continue to do so. RELATED PARTY TRANSACTIONS ARRANGEMENTS AND TRANSACTIONS WITH CONTEL AND GTE General. The Company was initially formed as a wholly owned subsidiary of Contel. In April 1988, a portion of the common stock of the Company was sold to the public in a public offering. In March 1991, a wholly-owned subsidiary of GTE merged with and into Contel (the "Contel Merger"), and Contel became a wholly owned subsidiary of GTE. As a result of this Merger, the Company became an indirectly held subsidiary of GTE. GTE also provided and continues to provide cellular communications services through another subsidiary, GTE Mobilnet. From time to time, GTE has attempted to align its legal entities and simplify its corporate structure. As part of this process, Contel adopted a Plan of Liquidation on January 7, 1993, pursuant to which Contel is in the process of winding up its affairs and plans to complete its liquidation no later than December 31, 1995. GTE, through Contel, currently owns all of the Company's Class B Shares, which constitute approximately 90% of the Company's outstanding capital stock. As a result of the disproportionate voting rights between Class A Shares and Class B Shares (one vote for each Class A Share compared with five votes for each Class B Share), GTE controls approximately 98% of the combined voting power of both classes of the Company's capital stock. The Class B Shares are convertible at any time into Class A Shares on a one to one basis. Nine of the directors of the Company are currently executive officers or directors of GTE or the Company. Based on its current ownership of greater than 50% of the capital stock of the Company, GTE has the ability, without the approval of the Class A Stockholders, to effect the Merger. The Company, Contel and GTE have a number of financial, operating and other arrangements and have engaged in certain transactions believed to be of mutual benefit. The terms of these arrangements have been established by Contel and GTE in consultation with the Company but are not the result of arms-length negotiations. The following is a summary of the principal arrangements and transactions among the Company, Contel and GTE. Taxes. The Company and GTE have a tax sharing arrangement under which the Company and its subsidiaries are included in the consolidated federal income tax returns and in certain state income and franchise tax returns of GTE. Tax payments, if applicable, are made by the Company to GTE on a quarterly basis using methods prescribed by GTE. When the Company and its subsidiaries generate a federal tax loss or excess credits (credits exceeding tax liability), the Company is reimbursed by GTE on a quarterly basis based on the actual loss or credit which may be utilized in the consolidated GTE federal tax returns. 43 44 With respect to states permitting unitary or combined tax filings, GTE includes the Company and its subsidiaries in its unitary or combined tax filing. The Company pays to GTE an amount equal to the state income or franchise tax that would have been payable by the Company or its subsidiaries if a separate tax return had been filed. Financing and Cash Management. During 1994, the Company relied on GTE for its short-term and long-term cash needs. The Company's long term cash needs are mainly the result of its acquisition in February 1990 of the cellular telephone properties previously owned by McCaw Cellular Communications, Inc. in Kentucky, Alabama and Tennessee (the "Southeast Properties") for approximately $1.3 billion and subsequent borrowings to pay interest on such amount. The $1.3 billion was originally funded by a loan from Contel Capital Corporation, which at that time was a wholly owned subsidiary of Contel, which became due in July, 1991. This original loan was replaced in 1991 with (i) a $700 million loan from GTE to the Company bearing interest at 10.47% and maturing on March 1, 1998, (ii) a $150 million loan from GTE Finance Corporation ("GTE Finance"), a wholly owned subsidiary of GTE, bearing interest at 9.22% and maturing on February 15, 1993 (subsequently refinanced as set forth below), and (iii) a variable rate note from GTE bearing interest at one and one-half percentage points above GTE's external cost of borrowing these funds. The interest rate on the notes described in (i) and (ii) above include an additional one and one-half percentage point of interest in excess of the interest paid by GTE for these funds. During 1992, the Company began a program of converting a portion of its variable rate debt, including a portion of the debt incurred in connection with the acquisition of the Southeast Properties, to fixed rate debt. As a result of this program, the Company entered into the following loans in 1992, 1993 and 1994: (i) a $150 million loan from GTE Finance to the Company bearing interest at 8.38% and maturing on September 25, 1997, (ii) a $150 million loan from GTE Finance to the Company bearing interest at 8.97% and maturing on September 27, 1999, (iii) a $200 million loan from GTE to the Company bearing interest at 8.56% and maturing on December 31, 1996, (iv) a $200 million loan from GTE to the Company bearing interest at 8.08% and maturing on December 31, 1995, (v) a $150 million loan from GTE Finance to the Company bearing interest at 7.71% and maturing on February 25, 1997 and (vi) a $75 million loan from GTE Finance to the Company bearing interest at 9.90% and maturing on August 17, 2000. The interest rates on these loans were comparable to United States Treasury rates plus 3% per annum at the time such loans were entered into and are the rates which GTE believes approximate the interest rates the Company could have obtained in the marketplace from nonaffiliated lenders. These rates exceed the interest paid by GTE for these funds. As of December 31, 1994, the Company has borrowed approximately $1.63 billion from GTE and GTE Finance in fixed rate debt. The Company fulfills its immediate cash needs with an intercompany note from GTE (the "ICN"). The amount borrowed and the rate of interest on the ICN fluctuate daily. As of December 31, 1994 the amount of the ICN was approximately $495 million. During 1994, the interest rate on the ICN was the daily Prime Rate quoted in The Wall Street Journal plus .75%, which is the interest rate which GTE believes approximates the interest rate the Company could have obtained in the marketplace from non-affiliated lenders and exceeds the interest paid by GTE for these funds. During 1994, the Company also received cash management services from GTE. Trademark License Agreement. The Company and Contel have entered into an agreement under which the Company has been granted a non-exclusive, non-transferrable license and right to use the trademark, service mark and design "CONTEL CELLULAR". This grant may be terminated at the sole discretion of Contel and will automatically terminate if Contel no longer owns a majority of the outstanding common stock of the Company. General Services. During 1994, the Company received numerous services, both primary and supplemental, from GTE PCS pursuant to the Services Agreement between the Company and GTE Mobile. These services were also provided to GTE's wholly owned cellular subsidiary, GTE Mobilnet, and included accounting, finance, marketing, human resources, legal, regulatory, governmental relations, international, engineering, network design and maintenance services. In exchange for these services, the Company reimbursed GTE PCS for its expenses in accordance with a cost causative allocation formula which allocated 44 45 pools of costs to operating units based on one of several factors. These factors were developed and applied to cost categories in an effort to allocate expenses to operating units in proportion to the use and benefit of the underlying cost. Under this Services Agreement, the Company paid GTE PCS approximately $49.8 million in 1994, which was approximately 34% of all of the expenses of GTE PCS. Insurance. The Company and its officers, directors and employees are insured under a master contract negotiated by GTE with a private insurance carrier. The premium due the insurance carrier under this master policy is allocated among all GTE subsidiaries based on the loss history, total payroll and total number of vehicles owned by each subsidiary. The premium is paid directly to the private insurance carrier by each subsidiary. Competition. The Company, Contel and GTE have entered into the Competition Agreement pursuant to which Contel and GTE have agreed that they will not engage in the cellular business except in accordance with the terms of the Competition Agreement. Under the Competition Agreement, GTE Mobilnet may continue to engage in the cellular business. However, the Company has a right of first refusal with respect to future acquisitions by GTE of cellular businesses except for (i) acquisitions of minority interests in cellular properties held by GTE Mobilnet and (ii) acquisitions contemplated at the time of the Contel Merger which were specifically listed in the Competition Agreement. After the Merger is effective, the Competition Agreement will be terminated. Equity Ownership in B-Side Carriers L.P. GTE Mobile, an affiliate of GTE, is an equity owner in B-Side Carriers L.P., a consortium of cellular providers who market under the brand name MobiLink(R). The Company has an agreement with B-Side Carriers L.P. to market its wireline properties as MobiLink providers. See "BUSINESS OF THE COMPANY -- The Company's Cellular Operations -- Marketing". Government Systems Contract. In 1994 the Company entered into an agreement with GTE Government Systems Corporation ("GTE Systems") pursuant to which GTE Systems will construct not less than 40 cell sites for the Company in 1994 and 50 cell sites in 1995. The cost to be charged the Company in 1994 will consist of (i) an administrative fixed fee of $3.1 million, (ii) reimbursement of materials and equipment estimated to be $7.8 million and (iii) reimbursement of external labor costs estimated to be $3.0 million. Contract pricing in 1995 will be agreed upon by the parties. PAYMENTS TO OPTIONHOLDERS Certain officers and employees of the Company are participants under the 1987 Key Employee Stock Plan of the Company (the "Option Plan"). In connection with the Merger, the Company has offered to make cash payments to those holders of options to purchase Class A Shares issued pursuant to the Option Plan who agree to surrender all of their options. Each optionholder who agrees to surrender all of his or her options will receive a cash payment for each option cancelled, whether or not currently vested (so long as the exercise period has not lapsed), equal to $25.50 multiplied by the number of Class A Shares subject to such options, less the exercise price for such option. RELATIONSHIP BETWEEN GTE DIRECTOR AND PAINEWEBBER Mr. Richard W. Jones is a director of GTE and is also engaged as a consultant to PaineWebber, one of GTE's financial advisors in connection with the Merger. He receives a fixed annual fee from PaineWebber for his services. TRANSITION ARRANGEMENTS In order to provide a degree of continuity during the merger transition process GTE has entered into a Transition Bonus Agreement with two executives, Dennis L. Whipple, President and Chief Executive Officer of the Company, and Theodore J. Carrier, Treasurer and Chief Financial Officer of the Company. If Mr. Whipple agrees to remain with GTE from the date of the Merger until December 31, 1995 or such earlier date as the parties may determine, he will be eligible for a transition bonus equal to 100% of the sum of his final GTE annual base rate of pay and the average of his GTE Executive Incentive Plan ("EIP") awards for 45 46 the 1993 and 1994 plan years. If Mr. Carrier agrees to remain with GTE through December 31, 1995, he will be eligible for a transition bonus equal to 100% of the sum of his final GTE annual base rate of pay and the average of his EIP awards for the 1992, 1993, and 1994 plan years. In addition, Mr. Whipple will receive an initial bonus of $20,000. In 1995, Mr. Whipple will participate in the 1994-1995 and 1994-1996 GTE Long-Term Incentive Plan performance bonus cycles and the 1995-1997 cycle. If Mr. Whipple remains on the payroll to the end of the agreed upon period then, in lieu of an award for the 1995-1997 award cycle, he will receive an equivalent cash award prorated to December 31, 1995. Any executive officer whose employment is involuntarily terminated will receive an enhanced retirement benefit paid out of GTE's qualified pension assets pursuant to the terms of the GTE's Involuntary Separation Plan ("ISEP"). ISEP provides for a benefit based on length of service and/or grade level and the benefit will not exceed 120% of one year's salary. Mr. Whipple's and Mr. Carrier's ISEP benefits also include a non-qualified benefit attributable to their EIP award for the three previous years. 46 47 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT CERTAIN BENEFICIAL OWNERS The following table contains certain information regarding the only persons known to the Company as of February 15, 1994 to be beneficial owners of more than 5% of any class of the Company's voting securities:
AMOUNT OF NAME AND ADDRESS OF BENEFICIAL PERCENTAGE TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS ----------------------------- ----------------------------- ---------- ---------- Class A Common Stock......... The Capital Group, Inc. 794,000(2) 7.98% 333 South Hope Street Los Angeles, CA 90071(1) Class A Common Stock......... College Retirement Equities 519,200(4) 5.22% Fund 730 Third Avenue New York, NY 10017(3) Class B Common Stock......... GTE Corporation 90,000,000(6) 100% One Stamford Forum Stamford, CT 06904(5)
- --------------- (1) This information was obtained from Amendment No. 3 to a Schedule 13G filed with the SEC on February 10, 1994 by The Capital Group, Inc. ("Capital") on behalf of itself and Capital Research and Management Company ("Capital Research"). Amendment No. 3 to the Schedule 13G discloses that Capital and Capital Research are located at the same address. (2) Amendment No. 3 to the Schedule 13G filed by Capital and Capital Research discloses that Capital and Capital Research share dispositive power over these shares. (3) This information was obtained from Amendment No. 1 to a Schedule 13G filed with the SEC on February 15, 1994 by College Retirement Equities Fund ("CREF"). (4) Amendment No. 1 to the Schedule 13G filed by CREF discloses that CREF exercises sole voting power and sole dispositive power over these shares. (5) GTE acquired beneficial ownership of these shares as a result of the merger of a subsidiary of GTE into Contel. Contel remains the holder of record of these shares. The address of Contel is One Stamford Forum, Stamford, Connecticut 06904. (6) GTE, through Contel, exercises sole voting power and sole dispositive power over these shares. 47 48 DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The number of Class A Shares owned by each director and executive officer of the Company as of January 31, 1995 is set forth in the table below. Unless otherwise indicated, all persons shown in the table have sole voting and investment power with respect to the shares shown.
NUMBER OF SHARES OF CLASS A COMMON STOCK NUMBER OF SHARES OF BENEFICIALLY GTE COMMON STOCK NAME OF DIRECTOR OWNED(1) BENEFICIALLY OWNED(2) ------------------------------------------------ ----------------- --------------------- Leo Jaffe....................................... 2,000 0 James L. Johnson................................ 0 721,885(3)(4) Robert E. LaBlanc............................... 4,000 0 Charles R. Lee.................................. 0 634,045(3)(4) Michael T. Masin................................ 0 75,199(3)(5) Russell E. Palmer............................... 0 1,800(6) Terry S. Parker................................. 0 188,359(3)(4)(7) Irwin Schneiderman.............................. 0 0 Nicholas L. Trivisonno.......................... 0 181,762(3)(4) James W. Walter................................. 0 11,800(8) Dennis L. Whipple............................... 18,650(9) 9,724(3)(4) Charles Wohlstetter............................. 0 232,455
NUMBER OF SHARES OF CLASS A COMMON STOCK NUMBER OF SHARES OF BENEFICIALLY GTE COMMON STOCK NAME OF EXECUTIVE OFFICER OWNED(1) BENEFICIALLY OWNED(2) ---------------------------------------------- -------------------- --------------------- Dennis L. Whipple............................. 18,650(9) 9,724(3)(4) Randall L. Crouse............................. 3,100(9) 5,505(4) Pamela F. Lopez............................... 1,700(9) 2,585(4) Laura E. Binion............................... 1,700(9) 1,905(3)(4) Theodore J. Carrier........................... 15,000(9) 216(4) All directors and officers as a group (the "Executive Group").......................... 46,150(9) 2,114,809(3)(4)
- --------------- (1) Each of these amounts, and all of them in the aggregate, represented less than 1% of the outstanding Class A Shares as of January 31, 1995. Each director and executive officer is expected to accept the Merger Consideration and not exercise appraisal rights. (2) Each of these amounts, and all of them in the aggregate, represented less than 1% of the outstanding shares of GTE Common Stock as of January 31, 1995. (3) Included in the number of shares beneficially owned by Messrs. Johnson, Lee, Masin, Parker, Trivisonno and Whipple and Ms. Binion and the Executive Group are: 633,300; 571,999; 72,599; 169,099; 170,233; 5,300; 816; and 1,648,978 shares, respectively, which such persons have the right to acquire within 60 days pursuant to stock options. (4) This amount includes shares acquired through participation in GTE's Consolidated Employee Stock Ownership Plan and/or Savings Plan. (5) In addition to the shares of GTE Common Stock shown above, Mr. Masin owns 10,088, GTE Common Stock Units, which are payable in cash under the Deferred Compensation Plan and Phantom Stock Plan for Nonemployee Members of the Board of Directors of GTE Corporation (the "Deferred Compensation Plan"). Mr. Masin was a non-employee director of GTE prior to joining GTE as Vice Chairman in 1993. (6) In addition to the shares of GTE Common Stock shown above, Mr. Palmer owns 994 GTE Common Stock Units, which are payable in cash under the Deferred Compensation Plan. (7) This amount includes 68 shares of GTE Common Stock held by a member of Mr. Parker's family. 48 49 (8) In addition to the shares of GTE Common Stock shown above, Mr. Walter owns 120,816 GTE Common Stock Units, which are payable in cash under the Deferred Compensation Plan. (9) Included in the number of shares beneficially owned by Messrs. Whipple, Crouse and Carrier and Ms. Lopez and Ms. Binion and the Executive Group are 18,650, 3,100, 15,000, 1,700, 1,700 and 40,150 shares, respectively, which such persons have the right to acquire upon the exercise of certain stock options. Pursuant to an offer made by the Company in connection with the Merger, such options, whether or not currently vested, may be surrendered for a cash payment equal to $25.50 times the number of shares issuable upon exercise thereof, less the exercise price applicable thereto. See "RELATED PARTY TRANSACTIONS -- Payments to Optionholders". DIRECTORS AND EXECUTIVE OFFICERS OF GTE, CONTEL AND CCI ACQUISITION As set forth in Exhibit E, certain directors and executive officers of the Company are also directors or executive officers of GTE, Contel or CCI Acquisition. With the exception of the ownership of Class A Shares by certain of such persons set forth in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Directors and Executive Officers of the Company", no director or executive officer of GTE, Contel or CCI Acquisition owns any Class A Shares. 49 50 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents which have been filed by the Company with the Securities and Exchange Commission, as noted below, are incorporated by reference into this Information Statement: (a) Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (as amended by Form 10-K/A filed January 25, 1995); (b) Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 1994, June 30, 1994 and September 30, 1994; and (c) Proxy Statement dated April 29, 1994. The File Number for all of the above referenced documents is Commission File No. 0-16714. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, and prior to the date the written consent is used to effect the Merger, shall be deemed to be incorporated by reference into this Information Statement. Any statement contained herein or in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Information Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of this Information Statement, except as so modified or superseded. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Information Statement is delivered, upon written or oral request of such person and by first class mail or other equally prompt means within one business day of receipt of such request, a copy of any and all of the information that has been incorporated by reference in this Information Statement (not including exhibits to such information unless such exhibits are specifically incorporated by reference into such information). Such requests for information should be directed to Contel Cellular Inc., 245 Perimeter Parkway, Atlanta, Georgia 30346, Attention: General Counsel. The telephone number of the General Counsel is (404) 804-3400. By Order of the Board of Directors /s/ JAY M. ROSEN Secretary Atlanta, Georgia February , 1995 50 51 INDEX TO EXHIBITS
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBIT PAGE - ---------------- ------------------------------------------------------------------ ------------ EXHIBIT A -- AGREEMENT AND PLAN OF MERGER, AS AMENDED.......................... A-1 EXHIBIT B -- OPINION OF LAZARD FRERES & CO..................................... B-1 EXHIBIT C-1 -- OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED..... C-1-1 EXHIBIT C-2 -- OPINION OF PAINEWEBBER INCORPORATED............................... C-2-1 EXHIBIT D -- DELAWARE GENERAL CORPORATION LAW SECTION 262...................... D-1 EXHIBIT E -- DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC...................................................... E-1 EXHIBIT F -- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.......................... F-1
52 EXHIBIT A AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER dated as of December 27, 1994 (the "Agreement") among GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware corporation and a wholly-owned subsidiary of GTE ("Contel"), Contel Cellular Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Contel, and Contel Cellular Inc., a Delaware corporation (the "Company"). R E C I T A L S WHEREAS, Contel has adopted a plan of liquidation; WHEREAS, GTE, through its wholly-owned subsidiary, Contel, is presently the beneficial owner of all of the outstanding shares of Class B Common Stock of the Company (as defined below); WHEREAS, Contel desires to acquire beneficial ownership of the remaining equity interest in the Company (the "Acquisition"), and has caused Purchaser to be formed to accomplish such purpose; WHEREAS, Contel and Purchaser intend to accomplish the Acquisition through a merger of Purchaser with and into the Company (the "Merger"), upon the terms and subject to the conditions set forth herein; and WHEREAS, the respective Boards of Directors of Purchaser and the Company and the Special Committee appointed by the Board of Directors of the Company to consider the Acquisition have approved the Merger upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINED TERMS The following terms used in this Agreement shall have the following meanings: "Acquisition" has the meaning set forth in the recitals hereto. "Actions" has the meaning set forth in Section 6.2 hereof. "Certificates" has the meaning set forth in Section 3.2(b) hereof. "Class A Common Stock" means the Class A Common Stock of the Company, par value $1.00 per share. "Class B Common Stock" means the Class B Common Stock of the Company, par value $1.00 per share. "Commission" means the Securities and Exchange Commission and/or any other governmental entity which administers either the Securities Act or the Exchange Act. "Common Stock" means the Class A Common Stock and Class B Common Stock. "Company" has the meaning set forth in the preamble hereto. "Constituent Corporations" has the meaning set forth in Section 2.1 hereof. "Contel" has the meaning set forth in the preamble hereto. "Depositary" has the meaning set forth in Section 3.2 hereof. "DGCL" means the Delaware General Corporation Law. "Dissenting Shares" has the meaning set forth in Section 3.1 hereof. "Effective Time" has the meaning set forth in Section 2.2 hereof. A-1 53 "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "GTE" has the meaning set forth in the preamble hereto. "Indemnified Parties" has the meaning set forth in Section 6.2 hereof. "Indemnitor" has the meaning set forth in Section 6.2 hereof. "Information Statement" means the information statement on Form 14C relating to the Merger, as amended or supplemented, to be prepared and circulated as contemplated by Section 6.3 hereof. "Merger" has the meaning set forth in the recitals hereto. "Merger Consideration" has the meaning set forth in Section 2.4 hereof. "Permitted Investments" has the meaning set forth in Section 3.2 hereof. "Purchaser" has the meaning set forth in the preamble hereto. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Stockholder Materials" has the meaning set forth in Section 6.3 hereof. "Surviving Corporation" has the meaning set forth in Section 2.1 hereof. "Transaction Statement" means the transaction statement on Form 13e-3 relating to the Merger, as amended or supplemented, to be prepared and circulated as provided in Section 6.3 hereof. ARTICLE II THE MERGER SECTION 2.1 The Merger. Upon the terms and subject to the conditions hereof, and in accordance with the applicable provisions of the DGCL, Purchaser shall be merged with and into the Company. The Company shall continue as the surviving corporation (the "Surviving Corporation") in the Merger and the separate corporate existence of Purchaser shall cease (Purchaser and the Company are sometimes referred to herein as the "Constituent Corporations"). From and after the Effective Time, the Surviving Corporation shall possess all of the rights, privileges, immunities and franchises, and shall be responsible and liable for all of the liabilities and obligations, of each of the Constituent Corporations, all as set forth in Section 259 of the DGCL. SECTION 2.2 Effective Time. The Merger shall be consummated by filing with the Secretary of State of Delaware a Certificate of Merger executed in accordance with the relevant provisions of the DGCL. The Merger shall become effective at the time of filing with the Secretary of State of Delaware of a Certificate of Merger. The date and time when the Merger shall become effective is herein referred to as the "Effective Time." SECTION 2.3 Closing. Upon the terms and subject to the conditions hereof, as soon as practicable after the execution of the written consents of shareholders contemplated by Sections 6.3(b) and (c) hereof, the Company and Purchaser shall file the Certificate of Merger in accordance with Section 2.2 hereof, and the Company and Purchaser shall take all such other and further actions as may be required by law to make the Merger effective. SECTION 2.4 Conversion of Shares of Common Stock. (a) Each share of Class A Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares, if any, and shares of Class A Common Stock held by the Company, Purchaser, Contel or GTE) shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and shall cease to exist and shall be converted into the right to receive cash in the amount of $25.50 in accordance with Section 3.2 hereof. The A-2 54 consideration to be paid in respect of each share of Class A Common Stock in accordance with the foregoing is hereinafter referred to as the "Merger Consideration." (b) Each share of Class A Common Stock held by the Company, Purchaser, Contel or GTE immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and cease to exist, without any conversion thereof and without any Merger Consideration being paid with respect thereto. (c) Each share of Class B Common Stock issued and outstanding immediately prior to the Effective Time shall by virtue of the Merger, and without any action on the part of the holder thereof, be converted into one newly issued share of the Class B Common Stock of the Surviving Corporation. SECTION 2.5 Cancellation of Purchaser Capital Stock. Each share of common stock of Purchaser issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger, and without any action on the part of the holder thereof, be cancelled and cease to exist, without any conversion thereof and without any Merger Consideration being paid with respect thereto. SECTION 2.6 Certificate of Incorporation. The Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, until thereafter amended. SECTION 2.7 By-Laws. The By-Laws of the Company, as in effect immediately prior to the Effective Time, shall be the By-Laws of the Surviving Corporation, until thereafter amended. SECTION 2.8 Directors. The directors of the Company at the Effective Time shall be the directors of the Surviving Corporation and shall hold office from the Effective Time until their respective successors are duly elected or appointed and qualified in the manner provided in the Certificate of Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided by law. SECTION 2.9 Officers. The officers of the Company at the Effective Time shall be the initial officers of the Surviving Corporation, all such officers to hold office from the Effective Time until their respective successors are duly elected or appointed and qualified in the manner provided in the Certificate of Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided by law. SECTION 2.10 Further Assistance. If at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or thing are necessary, desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, its right, title or interest in, to or under any of the rights, properties or assets of the Constituent Corporations acquired or to be acquired as a result of the Merger, or (ii) otherwise to carry out the purposes of this Agreement, the Surviving Corporation and its proper officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of the Constituent Corporations, all such deeds, bills of sale, assignments and assurances and do, in the name and on behalf of the Constituent Corporations, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, properties or assets of the Constituent Corporations acquired or to be acquired as a result of the Merger and otherwise to carry out the purposes of this Agreement. ARTICLE III DISSENTING SHARES; EXCHANGE AND PAYMENT FOR SHARES SECTION 3.1 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, shares of Class A Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by a stockholder who has the right (to the extent such right is available by law) to demand and receive payment of the fair value of such holder's stock pursuant to Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into the right to receive the Merger Consideration provided for in Section 2.4(a) of this Agreement (unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost such right under the DGCL, as the case may be), but the holder thereof shall A-3 55 only be entitled to such rights as are granted by Delaware law. If such holder shall have so failed to perfect or shall have effectively withdrawn or lost such right, such holder's shares of Class A Common Stock shall thereupon be deemed to have been converted at the Effective Time into the right to receive the Merger Consideration without any interest thereon. If the holder of any shares of Class A Common Stock shall become entitled to receive payment for such shares pursuant to Section 262 of the DGCL, such payment shall be made by the Surviving Corporation. SECTION 3.2 Payment for Shares. Prior to the Effective Time, Purchaser shall or, in the event Purchaser shall fail to do so, GTE shall: (a) designate a bank or trust company to act as Depositary in the Merger (the "Depositary") and Purchaser or GTE shall enter into a mutually acceptable agreement with the Depositary pursuant to which, after the Effective Time, the Depositary will distribute the Merger Consideration on a timely basis and (b) according to the terms of the agreement with Depositary, deposit or cause to be deposited with the Depositary cash in the aggregate amount required with respect to the conversion of shares of Class A Common Stock at the Effective Time pursuant to Section 2.4(a) hereof. Pending distribution of the cash deposited with the Depositary, Purchaser may from time to time direct the Depositary to invest such cash, provided that such investments (i) shall be (A) obligations of (or guaranteed by) the United States of America or its agencies or instrumentalities, (B) commercial paper obligations receiving the highest rating from either Moody's Investors Services, Inc. or Standard & Poor's Corporation, (C) certificates of deposit, bank repurchase agreements or bankers acceptances on interest bearing accounts of commercial banks with capital exceeding $250 million (collectively, "Permitted Investments") or (D) money market funds that are required by their most current prospectus to have at least 80% of their assets invested in Permitted Investments and (ii) shall have maturities that will not prevent or delay payments to be made pursuant to this section. (b) As soon as practicable after the Effective Time, the Depositary shall be instructed to mail to each record holder (other than any holder of Dissenting Shares, the Company, Purchaser, Contel and GTE) of a certificate or certificates that immediately prior to the Effective Time represented shares of Class A Common Stock (the "Certificates") a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss shall pass, only upon proper delivery of the Certificates to the Depositary) and instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender to the Depositary of a Certificate, together with such letter of transmittal duly executed and completed in accordance with the instructions thereon, the holder of such Certificate shall be entitled to receive in exchange therefor consideration equal to the number of shares of Class A Common Stock represented by such Certificate multiplied by the Merger Consideration and such Certificate shall forthwith be cancelled. No interest will be paid or accrued on the Merger Consideration. All distributions to holders of Certificates shall be subject to any applicable income tax withholding. If the Merger Consideration is to be distributed to a person other than the person in whose name the Certificate surrendered is registered, it shall be a condition of such distribution that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer (including signature guarantees if required by Purchaser) and that the person requesting such distribution shall pay any transfer or other taxes required by reason of such distribution to a person other than the registered holder of the Certificate surrendered or, in the alternative, establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. After one hundred and eighty (180) days following the Effective Time, the Surviving Corporation shall be entitled to require the Depositary to deliver to it any cash (including any interest received with respect thereto) that it has made available to the Depositary and that has not been disbursed to holders of Certificates, and thereafter such holders shall be entitled to look to the Surviving Corporation only as general creditors thereof with respect to the cash payable upon due surrender of their Certificates. The Surviving Corporation shall pay all charges and expenses, including those of the Depositary, in connection with the distribution of the Merger Consideration for shares of Class A Common Stock. Until surrendered in accordance with the provisions of this Section 3.2, each Certificate (other than Certificates representing Dissenting Shares or shares of Class A Stock held by the Company, Purchaser, Contel or GTE) shall represent for all purposes the right to receive consideration equal to the Merger Consideration multiplied by the number of shares of Class A Common Stock evidenced by such A-4 56 Certificate. From and after the Effective Time, holders of Certificates immediately prior to the Merger shall have no right to vote or to receive any dividends or other distributions with respect to any shares of Class A Common Stock that were theretofore represented by such Certificates, other than any dividends or other distributions payable to holders of record as of a date prior to the Effective Time, and shall have no other rights in respect thereof other than as provided herein or by law. (c) From and after the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of the shares of Class A Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation, other than Certificates in respect of Dissenting Shares, the rights to which have been perfected or not withdrawn or lost under the DGCL, they shall be cancelled and exchanged for Merger Consideration as provided in this Article III. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Purchaser, Contel and GTE as follows: SECTION 4.1 Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has the requisite corporate power to carry on its business as now conducted. SECTION 4.2 Authority Relative to this Agreement. The Company has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company, and no other corporate proceeding on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby (other than the approval of stockholders of the Company required to consummate the Merger). This Agreement has been duly executed and delivered by the Company and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally or by general equitable principles. ARTICLE V REPRESENTATIONS AND WARRANTIES OF CONTEL, GTE AND PURCHASER SECTION 5.1 Representations and Warranties of Purchaser Purchaser represents and warrants to the Company as follows: (a) Organization and Qualification. It is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite corporate power to carry on its business as now conducted. (b) Authority Relative to this Agreement. It has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by it and the consummation by it of the transactions contemplated hereby have been duly authorized by its Board of Directors, and no other corporate proceeding on its part is necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby (other than the approval of its stockholders required to consummate the Merger). This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally or by general equitable principles. A-5 57 (c) No Prior Activities. It has not incurred, nor will it incur, directly or through any subsidiary, any liabilities or obligations, except those incurred in connection with its organization or with the negotiation of this Agreement and the consummation of the transactions contemplated hereby, including the Merger. Except as set forth in the previous sentence, it has not engaged, directly or through any subsidiary, in any business activities of any type or kind whatsoever, or entered into any agreements or arrangements with any person or entity. SECTION 5.2 Representations and Warranties of GTE and Contel. Contel and GTE each represents and warrants to the Company as follows: (a) Organization and Qualification. It is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite corporate power to carry on its business as now conducted. (b) Authority Relative to this Agreement. It has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by it and the consummation by it of the transactions contemplated hereby have been duly authorized by its Board of Directors, and no other corporate proceeding on its part is necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally or by general equitable principles. ARTICLE VI COVENANTS SECTION 6.1 Conduct of Business of the Company. Except as otherwise expressly provided in this Agreement, from the date of this Agreement to the Effective Time, the Company will conduct its business in the ordinary course. SECTION 6.2 Indemnification, Etc. The Company shall indemnify and hold harmless, and, after the Effective Time, the Surviving Corporation and GTE (the Company, the Surviving Corporation and GTE, for the purpose of this Section 6.2 being the "Indemnitor") will indemnify and hold harmless, each present and former director and officer of the Company (the "Indemnified Parties") against any losses, claims, damages, liabilities, costs, expenses, judgments and amounts paid in settlement in connection with any claim, action, suit, proceeding or investigation (collectively, "Actions") arising out of or pertaining to any action or omission occurring prior to the Effective Time (including without limitation, any Actions which arise out of or relate to the transactions contemplated by this Agreement) to the full extent permitted under the DGCL (and the Indemnitor will advance reasonable expenses to each such person to the full extent so permitted); provided, however, that any determination required to be made with respect to whether an Indemnified Party's conduct complied with the standards set forth in the DGCL shall be made in accordance with the DGCL, and the Indemnitor shall pay the reasonable fees and expenses incurred in connection with such determination. If any such Action is brought against any Indemnified Party (whether arising before or after the Effective Time), (a) the Indemnified Parties may retain counsel reasonably satisfactory to them and the Indemnitor, (b) the Indemnitor shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received, and (c) the Indemnitor and the Indemnified Parties will cooperate in the vigorous defense of any such matter, provided, that the Indemnitor shall not be liable for any such settlement effected without its written consent, which consent, however, shall not be unreasonably withheld. Any Indemnified Party wishing to claim indemnification under this Section 6.2, upon learning of any such Action shall notify the Indemnitor thereof and shall deliver to the Indemnitor an undertaking to repay any amounts advanced pursuant hereto when and if a court of competent jurisdiction shall ultimately determine, after exhaustion of all avenues of appeal, that such Indemnified Party was not entitled to indemnification under this Section. The Indemnified Parties as a group may retain only one law firm in each jurisdiction to represent A-6 58 them with respect to any such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. GTE and Purchaser agree to cause to be maintained in effect the present policy of directors' and officers' liability insurance (or an equivalent policy) covering those persons who are currently covered by such policy for three years from the Effective Time. This Section 6.2 shall survive consummation of the Merger. SECTION 6.3 Stockholders' Approval; SEC Filings. (a) Subject to the terms and conditions contained herein, this Agreement and the transactions contemplated hereby shall be submitted by the Company and Purchaser to their respective stockholders for approval. Promptly after the execution of this Agreement, the Company and Purchaser shall together, or pursuant to an allocation of responsibility to be agreed upon between them, (i) use their best efforts to obtain all information required to be included in the Information Statement, the Transaction Statement and related materials (the "Stockholder Materials"), (ii) prepare and file with the Commission the Stockholder Materials, (iii) use all reasonable efforts to have the Stockholder Materials cleared by the Commission as promptly as practicable, and (iv) promptly following clearance by the Commission, mail the Stockholders Materials to shareholders of the Company. Purchaser and the Company also shall take any action required to be taken under state blue sky or securities laws or the rules and regulations of any securities exchanges or markets on which their securities are listed for trading in connection with transactions contemplated hereby including the Merger. The Information Statement and the Transaction Statement shall, when first mailed to the stockholders of the Company and as amended or supplemented thereafter, comply as to form in all material respects with all applicable requirements of federal securities laws. Purchaser and the Company shall each furnish to the other and their counsel all such information as may be required to prepare the Stockholders Materials. All such information provided and to be provided by Purchaser and the Company respectively, for use in the Stockholder Materials shall, on the date the Information Statement or Transaction Statement is first mailed to the Company's stockholders and as amended or supplemented thereafter, be true and correct in all material respects and shall not omit to state any material fact necessary in order to make such information in light of the circumstances in which it was given not misleading, and the Company and the Purchaser each agree to correct any information provided by it for use in the Information Statement or Transaction Statement which shall have become false or misleading in any material respect. (b) Subject to the terms and conditions set forth in the next sentence, GTE, the Company and Contel agree that Contel shall execute a written consent as majority shareholder of the Company approving this Agreement and the Merger. Such consent shall be executed by Contel only after the passage of any waiting periods, following the mailing of the Stockholders' Materials to the stockholders of the Company, required for compliance with the Securities Act, the Exchange Act, the DGCL and any other laws, rules or regulations applicable to Company. (c) Contel shall also execute a written consent as majority shareholder of Purchaser approving this Agreement and the Merger. Such consent shall be executed concurrently with the execution of the consent referred to in paragraph (b). Section 6.4 Consents. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, and to cooperate with each other in connection with the foregoing, including using commercially reasonable efforts to (i) obtain all necessary waivers, consents and approvals from other parties to loan agreements, leases and other contracts, (ii) obtain all necessary consents, approvals and authorizations as are required to be obtained under any federal, state or foreign law or regulations, (iii) defend all lawsuits or other legal proceedings challenging this Agreement or the consummation of the transactions contemplated hereby, (iv) lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, and (v) effect all registrations and filings necessary to consummate the transactions contemplated hereby. A-7 59 ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER The respective obligations of each party to effect the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) This Agreement and the transactions contemplated hereby shall have been approved by any necessary vote of the stockholders of the Company and Purchaser in accordance with applicable law and Sections 6.3(b) and (c); (b) No statute, rule, regulation, executive order, decree or injunction (preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any federal or state court of competent jurisdiction in the United States or other governmental authority which prohibits the consummation of the Merger and remains in effect after GTE, the Company and Purchaser shall have used all commercially reasonable efforts to lift any injunction; (c) No consents of or filings with any governmental entity shall be required for consummation of the Merger which have not been obtained or filed; and (d) The Special Committee of the Board of Directors of the Company shall not have modified or rescinded its recommendation with respect to the Merger. ARTICLE VIII TERMINATION; AMENDMENT; WAIVER SECTION 8.1 Termination. This Agreement may be terminated and the Merger contemplated hereby may be abandoned at any time notwithstanding approval thereof by the stockholders of the Company, but prior to the Effective Time: (a) by mutual written consent of each of Purchaser and the Company; or (b) by Purchaser or the Company if any court of competent jurisdiction in the United States or other United States governmental body shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and non-appealable; or (c) by Purchaser or the Company if the Merger does not occur within 120 days of the date of this Agreement unless the Merger shall not have occurred primarily as the result of a delay occasioned by review of filings by regulatory agencies. SECTION 8.2 Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, without liability on the part of any party or its directors, officers, stockholders or partners. SECTION 8.3 Amendment. This Agreement may be amended by action taken by Purchaser and the Company at any time, provided that following approval of this agreement by the shareholders of Company or Purchaser any amendment of this Agreement shall be subject to compliance with Section 251(d) of the DGCL. The prior approval of a majority of the members of the Special Committee shall be required in connection with any amendment or modification by or on behalf of the Company. This Agreement may not be amended, modified or supplemented except by an instrument in writing signed on behalf of the party against whom enforcement is sought. SECTION 8.4 Extension; Waiver. At any time prior to the Effective Time, the parties may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing delivered pursuant hereto or (iii) waive compliance with any of the agreements or conditions contained herein, except as otherwise provided by law and except that the provisions of Section 6.2 hereof shall not be waived. A-8 60 Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing on behalf of such party, and, in the case of an extension or waiver by the Company, if such extension or waiver has been approved by a majority of the members of the Special Committee. ARTICLE IX MISCELLANEOUS SECTION 9.1 Survival of Representations, Warranties and Agreements. The representations, warranties and agreements made herein shall not survive beyond the Effective Time, except for the agreements set forth in Sections 2.10, 3.1, 3.2 and 6.2. SECTION 9.2 Entire Agreement; Assignment. This Agreement (a) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties or any of them with respect to the subject matter hereof, and (b) shall not be assigned by operation of law or otherwise; provided that Purchaser may assign its rights and obligations to any wholly owned, direct or indirect subsidiary, but no such assignment shall relieve Purchaser of its obligations hereunder if such assignor does not perform such obligations. SECTION 9.3 Validity. The validity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. SECTION 9.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by cable, telegram or telex, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or at such other addresses as shall be specified by the parties by like notice. (i) if to the Purchaser, to: Marianne Drost, Secretary CCI Acquisition Corporation One Stamford Forum Stamford, CT 06904 with a copy to: Jeffrey Rosen O'Melveny & Myers 555 Thirteenth Street, N.W. Suite 500 West Washington, DC 20004 (ii) if to the Company, to: Marianne Drost Contel Cellular Inc. c/o GTE Corporation One Stamford Forum Stamford, CT 06904 with a copy to: W. Leslie Duffy Cahill Gordon & Reindel 80 Pine Street New York, NY 10005 A-9 61 (iii) if to Contel, to: Marianne Drost, Secretary Contel Corporation One Stamford Forum Stamford, CT 06904 (iv) if to GTE, to: Marianne Drost, Secretary GTE Corporation One Stamford Forum Stamford, CT 06904 SECTION 9.5 Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof. SECTION 9.6 Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. SECTION 9.7 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, except as expressly provided in Section 6.2 (which is intended to be for the benefit of the persons referred to therein and may be enforced by such persons). SECTION 9.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. SECTION 9.9 Expenses. All costs and expenses incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such expenses. SECTION 9.10 Specific Performance. The parties hereto agree that if for any reason any party hereto shall have failed to perform its obligations under this Agreement, then any other party hereto seeking to enforce this Agreement against such non-performing party shall be entitled to specific performance and injunctive and other equitable relief, and the parties hereto further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief. This provision is without prejudice to any other rights that any party hereto may have against any other party hereto for any failure to perform its obligations under this Agreement. A-10 62 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the day and year first above written. CONTEL CELLULAR INC. By: /s/ DENNIS WHIPPLE -------------------------------------- Title: President CONTEL CELLULAR ACQUISITION CORPORATION By: /s/ MARIANNE DROST -------------------------------------- Title: Secretary CONTEL CORPORATION By: /s/ MARIANNE DROST -------------------------------------- Title: Secretary GTE CORPORATION By: /s/ JAMES MURPHY -------------------------------------- Title: Vice President and Treasurer A-11 63 FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER First Amendment to the Agreement and Plan of Merger dated as of January 27, 1995 (the "First Amendment") among GTE Corporation, a New York corporation ("GTE"), Contel Corporation, a Delaware corporation and a wholly-owned subsidiary of GTE ("Contel"), Contel Cellular Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Contel, and Contel Cellular Inc., a Delaware corporation (the "Company"). RECITALS WHEREAS, GTE, Contel, Purchaser and the Company have entered into an Agreement and Plan of Merger dated as of December 27, 1994 (the "Agreement"); WHEREAS, GTE, Contel, Purchaser and the Company desire to amend the Agreement as set forth herein. NOW, THEREFORE, the parties hereto agree as follows: Section 1. Definitions. All capitalized terms used herein shall have the meaning ascribed to them in the Agreement. Section 2. Amendment of Section 2.3. Section 2.3 of the Agreement is hereby amended in its entirety to read as follows: Upon the terms and subject to the conditions hereof, as soon as practicable after the execution of the written consents of shareholders contemplated by Sections 6.3(b) and (c) hereof and after the passage of waiting periods required for compliance with the Securities Act, the Exchange Act, the DGCL and any other rules or regulations applicable to the Company, the Company and Purchaser shall file the Certificate of Merger in accordance with Section 2.2 hereof, and the Company and Purchaser shall take all such other and further actions as may be required by law to make the Merger effective. Section 3. Amendment of Section 6.3(b). Section 6.3(b) of the Agreement is hereby amended in its entirety to read as follows: (b) GTE, the Company and Contel agree that Contel shall execute a written consent as majority shareholder of the Company approving this Agreement and the Merger as soon as practicable after the execution of this Agreement. The Agreement, as amended hereby, shall remain in full force and effect and shall constitute the agreement of the parties. A-12 64 IN WITNESS WHEREOF, each of the parties has caused this First Amendment to be executed on its behalf by its officers thereunto duly authorized, all as of the day and year first above written. CONTEL CELLULAR INC. By: /s/ DENNIS WHIPPLE -------------------------------------- Title: President CONTEL CELLULAR ACQUISITION CORPORATION By: /s/ MARIANNE DROST -------------------------------------- Title: Secretary CONTEL CORPORATION By: /s/ MARIANNE DROST -------------------------------------- Title: Secretary GTE CORPORATION By: /s/ JAMES MURPHY -------------------------------------- Title: Vice President and Treasurer By: /s/ MARIANNE DROST -------------------------------------- Title: Secretary A-13 65 EXHIBIT B OPINION OF LAZARD FRERES & CO. [LAZARD FRERES & CO. LETTERHEAD] December 30, 1994 Special Committee of the Board of Directors Contel Cellular Inc. c/o Contel Corporation 375 Park Avenue, 24th Floor New York, NY 10152 Dear Members of the Special Committee: You have requested our opinion as to the fairness, from a financial point of view, to the holders of the Class A Common Stock, par value $1.00 per share (the "Common Stock") of Contel Cellular Inc. ("CCI"), other than GTE Corporation ("GTE"), Contel Corporation ("Contel") and their affiliates, of the consideration to be received by such holders in the proposed merger (the "Merger") of CCI and a subsidiary of Contel. We understand that the Merger is to be effected pursuant to an Agreement and Plan of Merger, to be entered into among GTE, Contel, a subsidiary of Contel, and CCI, a draft of which, dated December 29, 1994, has been furnished to us (the "Merger Agreement"). The terms of the Merger Agreement provide, among other things, that each share of Common Stock (other than any shares of Common Stock held by stockholders who properly exercise and perfect stockholder appraisal rights, if any, under the General Corporation Law of the State of Delaware, and any shares held by CCI, GTE, Contel or such subsidiary of Contel all of which shall be canceled), will be converted into the right to receive cash in the amount of $25.50. We understand that GTE beneficially owns all of the issued and outstanding shares of Class B Common Stock, par value $1.00 per share, of CCI, which represents approximately ninety percent (90%) of the issued and outstanding equity of CCI. In connection with this opinion, we have, among other things: (i) reviewed the terms and conditions of the Merger Agreement; (ii) analyzed certain historical business and financial information relating to CCI, including the Annual Reports to Stockholders and Annual Reports on Form 10-K of CCI for each of the fiscal years ended December 31, 1991 through 1993, and Quarterly Reports on Form 10-Q of CCI for the quarters ended March 31, June 30, and September 30, 1994; (iii) reviewed certain financial forecasts and other data provided to us by CCI relating to CCI; (iv) held discussions with members of the senior managements of CCI and GTE with respect to the businesses and prospects of CCI and its strategic objectives; (v) reviewed public information with respect to certain other companies in lines of businesses we believe to be generally comparable to the businesses of CCI; (vi) reviewed the financial terms of certain recent business combinations involving companies in lines of businesses we believe to be generally comparable to CCI, and in other industries generally; (vii) reviewed the financial terms of certain recent business combinations we believe to be comparable in certain respects to the proposed Merger; (viii) reviewed the historical stock prices and trading volumes of the Common Stock; and (ix) conducted such other financial studies, analyses and investigations as we deemed appropriate. B-1 66 We understand that CCI and an affiliate of GTE propose to exchange certain cellular assets owned by each of them for certain cellular assets owned by a publicly-held company (the "Cellular Exchange"). We have received a copy of a letter dated December 19, 1994 from GTE's Senior Vice President -- Finance addressed to GTE's financial advisors, Merrill Lynch & Co. and PaineWebber Incorporated, regarding the Cellular Exchange to the effect that it is an exchange of equivalent assets and, accordingly, is value neutral to CCI. We have neither received nor reviewed any other information regarding the Cellular Exchange, including any financial projections or any other non-public financial information prepared by GTE or CCI. With your consent, we have assumed that the Cellular Exchange involves the exchange of assets with substantially equivalent value and, accordingly, will have an immaterial effect, if any, on CCI. For purposes of this opinion, with your concurrence, we have ascribed no value to CCI's rights under either (i) that certain Third Restated Competition Agreement dated March 14, 1991, among Contel, GTE and CCI, or (ii) that certain Services Agreement dated May 1, 1991, as amended, by and between GTE Mobile Communications Service Corporation and CCI. We have not reviewed any proxy or information statement or similar document that may be prepared for use in connection with the proposed Merger. In addition, we were not asked by the Special Committee (the "Special Committee") of the Board of Directors of CCI to solicit third party indications of interest in acquiring all or any part of CCI, nor did we seek any such offers. We have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed any responsibility for any independent verification of such information or any independent valuation or appraisal of any of the assets of CCI. With respect to financial forecasts, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of management of CCI as to the future financial performance of CCI. We assume no responsibility and express no view as to such forecasts or the assumptions on which they are based. Further, our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. In rendering our opinion, we have assumed that the actual Agreement and Plan of Merger entered into among the parties thereto will be identical in all material respects to the Merger Agreement, that the Merger will be consummated on the terms described in the Merger Agreement, without any waiver of any material terms or conditions by CCI and that obtaining the necessary regulatory approvals for the Merger will not have an adverse effect on CCI. Lazard Freres & Co. has acted as financial advisor to the Special Committee in connection with the proposed Merger and will receive a fee for our services, a substantial portion of which is payable upon rendering this opinion. Our engagement and the opinion expressed herein is solely for the benefit of the Special Committee and is not on behalf of, and is not intended to confer rights or remedies upon, GTE, any stockholders of CCI or GTE, or any other person. It is understood that this letter may not be disclosed or otherwise referred to without our prior consent, except as may otherwise be required by law or a court of competent jurisdiction. Based on and subject to the foregoing, we are of the opinion that the consideration to be received by the holders of the Common Stock (other than GTE, Contel or any of their affiliates) is fair to such holders from a financial point of view. Very truly yours, LAZARD FRERES & CO. B-2 67 EXHIBIT C-1 OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED [MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED LETTERHEAD] December 27, 1994 Board of Directors GTE Corporation One Stamford Forum Stamford, CT 06904 Attention: J. Michael Kelly Gentlemen: Contel Corporation, a Delaware corporation ("Contel") and a wholly-owned subsidiary of GTE Corporation (the "Company"), CCI Acquisition Company, a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Contel, and Contel Cellular Inc., a Delaware corporation (the "Subject Company"), propose to enter into an Agreement and Plan of Merger (the "Agreement") pursuant to which the Purchaser will be merged into the Subject Company in a transaction (the "Merger") in which each share of the Subject Company's Class A Common Stock, par value $1.00 per share (the "Shares"), will be converted into the right to receive $25.50 in cash per Share. You have asked us whether, in our opinion, the proposed cash consideration to be paid for the Shares pursuant to the Merger is fair to the Company from a financial point of view. In arriving at the opinion set forth below, we have, among other things: (1) Reviewed the Subject Company's Annual Reports, Forms 10-K and related financial information for the five fiscal years ended December 31, 1993 and the Subject Company's Forms 10-Q and the related unaudited financial information for the quarterly periods ending March 31, 1994, June 30, 1994 and September 30, 1994; (2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of the Subject Company, furnished to us by the Subject Company; (3) Conducted discussions with members of senior management of the Subject Company concerning its businesses and prospects; (4) Reviewed the historical market prices and trading activity for the Shares and compared them with that of certain publicly traded companies which we deemed to be reasonably similar to the Subject Company; (5) Compared the results of operations of the Subject Company with that of certain companies which we deemed to be reasonably similar to the Subject Company; (6) Compared the proposed financial terms of the transactions contemplated by the Agreement with the financial terms of certain other mergers and acquisitions which we deemed to be relevant; (7) Considered the pro forma effect of the Merger on the Company's capitalization ratios, earnings and cash flow; (8) Considered a discounted cash flow analysis based on future cash flows that management of the Subject Company expects the Subject Company to generate; (9) Reviewed a draft of the Agreement dated December 20, 1994; and C-1-1 68 (10) Reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions. In preparing our opinion, we have relied on the accuracy and completeness of all information supplied or otherwise made available to us by the Subject Company, and we have not assumed any responsibility to independently verify such information or undertaken an independent appraisal of the assets of the Subject Company. With respect to the financial forecasts furnished by the Subject Company, we have assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of the Subject Company's management as to the expected future financial performance of the Subject Company. This opinion does not address the relative merits of the Merger and any other transactions or business strategies discussed by the Board of Directors of the Company as alternatives to the Merger or the decision of the Board of Directors of the Company to proceed with the Merger. In rendering this opinion, we have not been engaged to act as an agent or fiduciary of the Company's equity holders or any other third party. We have, in the past, provided financial advisory services to the Subject Company and have received fees for the meeting of such services. On the basis of, and subject to the foregoing, we are of the opinion that the proposed cash consideration to be paid pursuant to the Merger is fair to the Company from a financial point of view. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ ALAIN LEBEC Managing Director Investment Banking Group C-1-2 69 EXHIBIT C-2 OPINION OF PAINEWEBBER INCORPORATED [PAINEWEBBER LETTERHEAD] December 27, 1994 [PAINEWEBBER LOGO] Board of Directors GTE Corporation One Stamford Forum Stamford, CT 06904 Attention: J. Michael Kelly Gentlemen: Contel Corporation, a Delaware corporation ("Contel") and a wholly-owned subsidiary of GTE Corporation (the "Company"), CCI Acquisition Company, a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Contel, and Contel Cellular Inc,. a Delaware corporation (the "Subject Company"), propose to enter into an Agreement and Plan of Merger (the "Agreement") pursuant to which the Purchaser will be merged into the Subject Company in a transaction (the "Merger") in which each share of the Subject Company's Class A Common Stock, par value $1.00 per share (the "Shares"), will be converted into the right to receive $25.50 in cash per Share. You have asked us whether, in our opinion, the proposed cash consideration to be paid for the Shares pursuant to the Merger is fair to the Company from a financial point of view. In arriving at the opinion set forth below, we have, among other things: (1) Reviewed the Subject Company's Annual Reports, Forms 10-K and related financial information for the five fiscal years ended December 31, 1993 and the Subject Company's Forms 10-Q and the related unaudited financial information for the quarterly periods ending March 31, 1994, June 30, 1994, and September 30, 1994; (2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of the Subject Company; (3) Conducted discussions with members of senior management of the Subject Company concerning its businesses and prospects; (4) Reviewed the historical market prices and trading activity for the Shares and compared them with that of certain publicly traded companies which we deemed to be reasonably similar to the Subject Company; (5) Compared the results of operations of the Subject Company with that of certain companies which we deemed to be reasonably similar to the Subject Company; (6) Compared the proposed financial terms of the transactions contemplated by the Agreement with the financial terms of certain other mergers and acquisitions which we deemed to be relevant; (7) Considered the pro forma effect of the Merger on the Company's capitalization ratios, earnings and cash flow; (8) Considered a discounted cash flow analysis based on future cash flows that management of the Subject Company expects the Subject Company to generate; (9) Reviewed a draft of the Agreement dated December 20, 1994; and C-2-1 70 (10) Reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions. In preparing our opinion, we have relied on the accuracy and completeness of all information supplied or otherwise made available to us by the Subject Company, and we have not assumed any responsibility to independently verify such information or undertaken an independent appraisal of the assets of the Subject Company. With respect to the financial forecasts furnished by the Subject Company, we have assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of the Subject Company's management as to the expected future performance of the Subject Company. This opinion does not address the relative merits of the Merger and any other transactions or business strategies discussed by the Board of Directors of the Company as alternatives to the Merger or the decision of the Board of Directors of the Company to proceed with the Merger. In rendering this opinion, we have not been engaged to act as an agent or fiduciary of the Company's equity holders or any other third party. We have, in the past, provided financial advisory services to the Company and have received fees for the rendering of such services. On the basis of, and subject to the foregoing, we are of the opinion that the proposed cash consideration to be paid pursuant to the Merger is fair to the Company from a financial point of view. Very truly yours, PAINEWEBBER INCORPORATED C-2-2 71 EXHIBIT D DELAWARE GENERAL CORPORATION LAW SECTION 262 SEC. 262. APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to sec.228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of his shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of a corporation, which stock is deposited with the depository. (b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to sec.251, 252, 254, 257, 258 or 263 of this title: (1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the holders of the surviving corporation as provided in subsection (f) of sec.251 of this title. (2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to sec.sec.251, 252, 254, 257, 258 and 263 of this title to accept for such stock anything except: a. shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. (3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under sec.253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. (c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable. D-1 72 (d) Appraisal rights shall be perfected as follows: (1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsections (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of his shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or (2) If the merger or consolidation was approved pursuant to sec.228 or 253 of this title, the surviving or resulting corporation, either before the effective date of the merger or consolidation or within 10 days thereafter, shall notify each of the stockholders entitled to appraisal rights of the effective date of the merger or consolidation and that appraisal rights are available for any or all of the shares of the constituent corporation, and shall include in such notice a copy of this section. The notice shall be sent by certified or registered mail, return receipt requested, addressed to the stockholder at his address as it appears on the records of the corporation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of the notice, demand in writing from the surviving or resulting corporation the appraisal of his share. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares. (e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after his written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later. (f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by D-2 73 publications shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. (g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such directions, the Court may dismiss the proceedings as to such stockholder. (h) After determining the stockholders, entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted his certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that he is not entitled to appraisal rights under this section. (i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. (j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of the shares entitled to an appraisal. (k) From and after the effective date of the merger or consolidation, no stockholder who has demanded his appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of his demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of the Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. (l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. D-3 74 EXHIBIT E DIRECTORS AND EXECUTIVE OFFICERS OF GTE CORPORATION, CONTEL CORPORATION, CONTEL CELLULAR ACQUISITION CORPORATION AND CONTEL CELLULAR INC. 1. Directors and Executive Officers of GTE Corporation. The following table sets forth the name, business address, present principal occupation and the other material occupations, positions, offices or employments for the past five years (if applicable) of each director and executive officer of GTE Corporation, a New York corporation ("GTE"). Each director and executive officer of GTE is a citizen of the United States. GTE, through its subsidiaries, provides local telephone service, cellular mobile telephone service, directories, and other telecommunications related products and services. GTE also has subsidiaries which offer financial and related services primarily to GTE operating companies. The address of GTE's principal executive offices is One Stamford Forum, Stamford, Connecticut 06904.
PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- GTE -- DIRECTORS Edwin L. Artzt..................... Chairman of the Board and Not applicable The Procter & Gamble Company Chief Executive Officer of The One Procter & Gamble Plaza Procter & Gamble Company Cincinnati, OH 45202-3315 James R. Barker.................... Chairman of the Interlake Not applicable Mormac Marine Group, Inc. Steamship Co.; Vice Chairman Three Landmark Square of Mormac Marine Group, Inc.; Stamford, CT 06901 Vice Chairman of Moran Towing Company Edward H. Budd..................... Chairman of the Board of the Chairman of Travelers The Travelers Insurance Companies Executive Committee and Insurance Group, Inc. One Tower Square Director of The Travelers from January 1994 to Hartford, CT 06138-1100 Insurance Group, Inc. September 1994. Chairman of The Travelers, Inc. since 1982 Kent B. Foster..................... Vice Chairman of GTE and Not applicable GTE Service Corporation President of GTE Telephone 600 Hidden Ridge, HQE04J17 Operations Group Irving, TX 75308 James L. Johnson................... Chairman Emeritus of GTE since Chairman and Chief GTE 1992 Executive of GTE since 600 Hidden Ridge 1988 Irving, TX 75038 Richard W. Jones................... Business Consultant, Not applicable Business Consultant PaineWebber Incorporated PaineWebber Incorporated 725 S. Figueroa Street Suite 4100 Los Angeles, CA 90017 James L. Ketelsen.................. Retired Chairman of Tenneco Chairman and Chief Tenneco Inc. Inc. since 1992 Executive Officer of Tenneco Building Tenneco Inc. since 1978 1010 Milam Street Houston, TX 77002 Charles R. Lee..................... Chairman and Chief Executive President and Chief GTE Officer of GTE since 1992 Operating Officer of GTE One Stamford Forum since 1989 Stamford, CT 06904
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PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- Michael T. Masin................... Vice Chairman of GTE since Managing Partner of the GTE 1993 New York office of the One Stamford Forum law firm of O'Melveny & Stamford, CT 06904 Myers and a partner with that firm since 1977 Sandra O. Moose.................... Senior Vice President and Not applicable The Boston Consulting Group, Inc. Chair of the East Coast as 135 E. 57th Street well as New York Office New York, NY 10022 Administrator and Director of The Boston Consulting Group, Inc. Russell E. Palmer.................. Chairman and Chief Executive Dean, The Wharton School, The Palmer Group Officer of The Palmer Group University of 3600 Market Street since 1990 Pennsylvania from 1983 Philadelphia, PA 19104 until 1990 Howard Sloan....................... Private Investor Not applicable 375 Park Avenue New York, NY 10152 Robert D. Storey................... Partner with the Cleveland law Partner with the Thompson, Hine & Flory firm of Thompson, Hine & Flory Cleveland law firm of 1100 National City Bank Bldg. since 1993 McDonald, Hopkins, Burke 629 Euclid Avenue & Haber Co., L.P.A. since Cleveland, OH 44114 1971 James W. Walter.................... Chairman of Walter Industries, Not applicable Walter Industries, Inc. Inc. 1500 N. Dale Mabry Highway Tampa, FL 33607 Charles Wohlstetter................ Vice Chairman of GTE since Chairman of the Board of GTE 1991 Contel Corporation since 375 Park Avenue 1960 New York, NY 10152 GTE -- EXECUTIVE OFFICERS Charles R. Lee..................... See prior entry See prior entry GTE One Stamford Forum Stanford, CT 06904 Charles Wohlstetter................ See prior entry See prior entry GTE 375 Park Avenue New York, NY 10152 Kent B. Foster..................... See prior entry See prior entry GTE 600 Hidden Ridge Irving, TX 75308 Michael T. Masin................... See prior entry See prior entry GTE One Stamford Forum Stanford, CT 06904 Nicholas L. Trivisonno............. Executive Vice President - Senior Vice President - GTE Strategic Planning and Group Finance since 1989 One Stamford Forum President of GTE since 1993 Stamford, CT 06904
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PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- William P. Barr.................... Senior Vice President and Partner in the Washington GTE General Counsel of GTE since D.C. office of the law One Stamford Forum 1994 firm of Shaw, Pittman, Stamford, CT 06904 Potts & Trowbridge since 1993; Attorney General of the United States from 1991 to 1993; previously Deputy Attorney General of the United States Bruce Carswell..................... Senior Vice President - Human Not applicable GTE Resources and Administration One Stamford Forum of GTE Stamford, CT 06904 J. Michael Kelly................... Senior Vice Vice President and GTE President - Finance of GTE Controller of GTE since One Stamford Forum since 1994 December 1991; Vice Stamford, CT 06904 President - Finance and Business Development for GTE Telecommunications Products and Services Group since 1991; Vice President and Controller for Contel Corporation since 1990 Terry S. Parker(1)................. Senior Vice President of GTE President - GTE GTE since 1993 and President of Telecommunications 245 Perimeter Center Parkway Personal Communications Products and Services Atlanta, GA 30346 Services of GTE Service Group since 1990 Corporation since 1993 Jeffrey S. Rubin................... Senior Vice Executive Vice President GTE President - Corporate Planning and Chief Financial One Stamford Forum and Development of GTE since Officer of NYNEX Stamford, CT 06904 1994 Corporation which he joined in 1990 as Vice President Finance John P.Z. Kent..................... Vice President - Taxes of GTE Not applicable GTE One Stamford Forum Stamford, CT 06904 James Murphy....................... Vice President and Treasurer Not applicable GTE of GTE One Stamford Forum Stamford, CT 06904 G. Bruce Redditt................... Vice President - Public Vice President - Public GTE Affairs and Communications of Affairs for the Telephone One Stamford Forum GTE since 1994 Operations Group of GTE Stamford, CT 06904 Service Corporation since 1991, previously Vice President - Corporate Communications for Contel Corporation Samuel F. Shawhan, Jr.............. Vice President - Government Not applicable GTE Affairs of GTE 1850 M Street, N.W. Washington, D.C. 20036
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PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- William D. Wilson.................. Vice President and Controller Area Vice President - GTE of GTE since 1994 General Manager for the One Stamford Forum East Area of the Stamford, CT 06904 Telephone Operations Group of GTE Service Corporation since 1993; previously Vice President - Business Planning for the Telephone Operations Group of GTE Service Corporation Marianne Drost..................... Secretary of GTE Not applicable GTE One Stamford Forum Stamford, CT 06904
2. Directors and Executive Officers of Contel Corporation. The following table sets forth the name, business address, present principal occupation and the other material occupations, positions, offices or employments for the past five years (if applicable) of each director and executive officer of Contel Corporation, a Delaware corporation ("Contel"). Each director and executive officer of Contel is a citizen of the United States. Contel, through its subsidiaries, provides telecommunications products and services. The address of Contel's principal executive offices is One Stamford Forum, Stamford, Connecticut 06904. CONTEL CORPORATION -- DIRECTORS Bruce Carswell..................... See prior entry See prior entry Contel Corporation One Stamford Forum Stamford, CT 06904 Charles R. Lee..................... See prior entry See prior entry Contel Corporation One Stamford Forum Stamford, CT 06904 Nicholas L. Trivisonno............. See prior entry See prior entry Contel Corporation One Stamford Forum Stamford, CT 06904 CONTEL CORPORATION -- EXECUTIVE OFFICERS J. Michael Kelly................... See prior entry See prior entry President Contel Corporation One Stamford Forum Stamford, CT 06904 James Murphy....................... See prior entry See prior entry Vice President and Treasurer Contel Corporation One Stamford Forum Stamford, CT 06904 Marianne Drost..................... See prior entry See prior entry Secretary Contel Corporation One Stamford Forum Stamford, CT 06904
3. Directors and Executive Officers of Contel Cellular Acquisition Corporation. The following table sets forth the name, business address, present principal occupation and the other material occupations, positions, offices or employments for the past five years (if applicable) of each director and executive officer of Contel Cellular Acquisition Corporation, a Delaware corporation ("CCI Acquisition"). Each director and executive E-4 78 officer is a citizen of the United States. CCI Acquisition was incorporated in December 1994 for the purpose of acquiring the Company and has not engaged in any business activities other than those relating to the Merger. The address of CCI Acquisition's principal executive office is One Stamford Forum, Stamford, Connecticut 06904.
PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- CCI ACQUISITION -- DIRECTORS J. Michael Kelly................... See prior entry See prior entry CCI Acquisition One Stamford Forum Stamford, CT 06904 James Murphy....................... See prior entry See prior entry CCI Acquisition One Stamford Forum Stamford, CT 06904 Marianne Drost..................... See prior entry See prior entry CCI Acquisition One Stamford Forum Stamford, CT 06904
CCI ACQUISITION -- EXECUTIVE OFFICERS J. Michael Kelly................... See prior entry See prior entry President CCI Acquisition One Stamford Forum Stamford, CT 06904 James Murphy....................... See prior entry See prior entry Vice President and Treasurer CCI Acquisition One Stamford Forum Stamford, CT 06904 Marianne Drost..................... See prior entry See prior entry Secretary CCI Acquisition One Stamford Forum Stamford, CT 06904
4. Directors and Executive Officers of Contel Cellular Inc. The following table sets forth the name, business address, present principal occupation and the other material occupations, positions, offices or employments (if applicable) for the past five years of each director and executive officer of Contel Cellular Inc., a Delaware corporation (the "Company"). Each director and executive officer of the Company is a citizen of the United States. The Company, through its subsidiaries and through partnerships, provides or participates in the provision of cellular telephone service in various areas throughout the United States. The address of the Company's principal executive offices is 245 Perimeter Center Parkway, Atlanta, Georgia 30346. COMPANY -- DIRECTORS
PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- Leo Jaffe.......................... Chairman Emeritus of Columbia Not applicable 425 East 58th Street Pictures, Inc. New York, NY 10022 James L. Johnson................... See prior entry See prior entry GTE 600 Hidden Ridge Irving, TX 75038
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PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- Robert LaBlanc..................... President of Robert E. LaBlanc Not applicable 323 Highland Avenue Associates, Inc. Ridgewood, NJ 07450 Charles R. Lee..................... See prior entry See prior entry GTE One Stamford Forum Stamford, CT 06904 Michael T. Masin................... See prior entry See prior entry GTE One Stamford Forum Stamford, CT 06904 Russell E. Palmer.................. See prior entry See prior entry The Palmer Group 3600 Market Street Philadelphia, PA 19104 Terry S. Parker(1)................. See prior entry See prior entry GTE Telecommunications Products & Services 245 Perimeter Center Parkway Atlanta, GA 30346 Irwin Schneiderman................. Senior Counsel of the law firm Not applicable Cahill Gordon & Reindel of Cahill Gordon & Reindel 80 Pine Street New York, NY 10005 Nicholas L. Trivisonno............. See prior entry See prior entry GTE One Stamford Forum Stamford, CT 06904 James W. Walter.................... See prior entry See prior entry Walter Industries Inc. 1500 N. Dale Mabry Highway Tampa, FL 33607 Dennis L. Whipple.................. President and Chief Executive Vice Contel Cellular Inc. Officer of the Company since President - Marketing and 245 Perimeter Center Parkway 1991 Business Planning for GTE Atlanta, GA 30346 Mobile from April 1990 to March 1991; previously General Manager - Florida of GTE Mobilnet Charles Wohlstetter................ See prior entry See prior entry GTE 375 Park Avenue New York, NY 10152-0192 COMPANY -- EXECUTIVE OFFICERS Terry S. Parker(1)................. See prior entry See prior entry Chairman Contel Cellular Inc. 245 Perimeter Center Parkway Atlanta, GA 30346 Dennis L. Whipple.................. See prior entry See prior entry President and Chief Executive Officer Contel Cellular Inc. 245 Perimeter Center Parkway Atlanta, GA 30346
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PREVIOUS MATERIAL NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OCCUPATIONS - ----------------------------------- ------------------------------ ------------------------- Theodore J. Carrier................ Treasurer and Chief Financial Controller of the Company Treasurer and Chief Financial Officer of the Company since Officer 1991 Contel Cellular Inc. 245 Perimeter Center Parkway Atlanta, GA 30346 Pamela F. Lopez.................... Vice President - Marketing of Marketing and Vice President - Marketing the Company since 1993 Distribution Manager of Contel Cellular Inc. the Company's National 245 Perimeter Center Parkway Region since 1991; Atlanta, GA 30346 previously Regional Agent Manager in the Company's Virginia operation Randall L. Crouse.................. Vice President - Network Director - Technology Vice President - Network Operations Operations of the Company Projects for GTE Mobile Contel Cellular Inc. since 1993 from 1991 to 1993; 245 Perimeter Center Parkway previously Director - Atlanta, GA 30346 Advanced Technology Planning for GTE Mobile John P.Z. Kent..................... See prior entry See prior entry Vice President - Taxes Contel Cellular Inc. One Stamford Forum Stamford, CT 06904 Jay M. Rosen....................... Vice President, Government Vice President and Secretary Affairs and General Counsel, Associate General Contel Cellular Inc. Telecommunications Products Counsel - GTE Electrical One Stamford Forum and Services Group of GTE Products and Governmental Stamford, CT 06904 Service Corporation since 1991 Systems Group Laura E. Binion.................... General Counsel and Assistant Corporate Counsel of General Counsel and Assistant Secretary of the Company since Contel Secretary 1991 Contel Cellular Inc. 245 Perimeter Center Parkway Atlanta, GA 30346
- --------------- (1) Mr. Parker will retire from his positions with GTE and its subsidiaries effective March 1, 1995. E-7 81 EXHIBIT F REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Contel Cellular Inc.: We have audited the consolidated balance sheets of CONTEL CELLULAR INC. (a Delaware corporation and majority owned subsidiary of GTE Corporation) AND SUBSIDIARIES as of December 31, 1993 and 1992 and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain unconsolidated partnerships as described in Note 4 to the financial statements. The investment in these partnerships is reflected in the accompanying balance sheets using the equity method of accounting and represented $82,140,000 and $62,543,000 (or 4% and 3% respectively) of total consolidated assets at December 31, 1993 and 1992, respectively. The equity in their earnings is included in the statements of operations and represented $28,024,000, $20,070,000, and $16,570,000 for the years ended December 31, 1993, 1992, and 1991, respectively. The summarized financial information contained in Note 4 to the consolidated financial statements includes financial information for the aforementioned partnerships. The financial statements of these unconsolidated partnerships were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these unconsolidated partnerships, is based solely on the reports of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Contel Cellular Inc. and subsidiaries as of December 31, 1993 and 1992 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. A report of other auditors referred to above indicates that the Los Angeles SMSA Limited Partnership is involved in litigation with several agents as discussed in Note 4 and Note 14 and with cellular subscribers as discussed in Note 8 and Note 14, the outcome of which cannot presently be determined. Accordingly, no provision for any liability that may result upon adjudication has been made in the accompanying financial statements. F-1 82 As discussed in Note 14, the cellular partnership in San Francisco, California, of which the Company holds a non-controlling interest, is involved in litigation with a class of cellular subscribers, the outcome of which cannot presently be determined. Accordingly, no provision for any liability that may result upon adjudication has been made in the accompanying financial statements. As discussed in Note 3 to the financial statements, effective January 1, 1992, the Company changed its method of accounting for postretirement benefits other than pensions. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Atlanta, Georgia March 25, 1994 (except with respect to the matters discussed in Note 14, as to which the date is January 25, 1995) F-2 EX-99.D2 5 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL To Accompany Certificates Representing Shares of Class A Common Stock of CONTEL CELLULAR INC. Pursuant to the Merger Agreement Dated as of December 27, 1994 Among Contel Cellular Inc., Contel Cellular Acquisition Corporation, Contel Corporation and GTE Corporation Disbursing Agent: Chemical Bank
If by Mail: If by Overnight Mail Express: If by Hand: ---------- ---------------------------- ---------- Chemical Bank Chemical Bank Chemical Bank Reorganization Department Reorganization Department Reorganization Department P.O. Box 396 85 Challenger Rd. 120 Broadway Bowling Green Station Overpeck Centre 13th Floor New York, NY 10274 Ridgefield Park, NJ 07660 New York, NY
Delivery of this Letter of Transmittal to an address other than as set forth above will not constitute a valid delivery. DESCRIPTION OF COMMON STOCK ENCLOSED
- ---------------------------------------------------------------------------------------------------------- Name(s) and Address(es) of Registered Holder(s) of Class A Common Stock, $1.00 par value per share Certificate(s) Enclosed (Please fill in) (Attach additional list if necessary) - ---------------------------------------------------------------------------------------------------------- Certificate Number of Number(s) Shares --------------------------------- --------------------------------- --------------------------------- --------------------------------- --------------------------------- Total Shares - ----------------------------------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Gentlemen: Pursuant to the Merger Agreement dated as of December 27, 1994 (the "Merger Agreement"), providing for the merger (the "Merger") of Contel Cellular Acquisition Corporation ("CCI Acquisition") with and into Contel Cellular Inc. 2 (the "Company"), the undersigned surrenders the enclosed certificate(s) which, prior to the Merger, represented shares of Class A common stock of the Company, $1.00 par value (the "Shares"), to be exchanged for cash in the amount of $25.50, without interest, for each such Share. The undersigned has received a copy of the Information Statement dated February ___, 1995. The undersigned hereby represents and warrants that (i) the undersigned is the exclusive owner of the Shares represented by the enclosed certificates and is entitled to all rights evidenced thereby and (ii) such Shares are free and clear of all liens, claims and encumbrances. All authority conferred or agreed to be conferred in this Letter of Transmittal shall be binding upon the undersigned and the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive the death or incapacity of, the undersigned. Submission of the certificates for Shares listed above is subject to the terms, conditions and limitations set forth in the Merger Agreement and in the instructions herein contained. In accordance with the Merger Agreement, please deliver in compliance with the instructions below a check in an amount determined by multiplying $25.50 times the number of Shares submitted herewith as payment for such Shares. Unless otherwise indicated under Special Payment Instructions, please issue the check in the name of the undersigned. Unless otherwise indicated under Special Delivery Instructions, please mail the check to the person to whom it is issued at the address shown above or, if the Special Payment Instructions are completed, at the address there indicated. 3 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 4, 5 and 6) (See Instructions 1, 4, 5 and 6) To be completed ONLY if the check is to be issued To be completed ONLY if the check is to be sent in the name of someone other than the undersigned. to a name or address other than that of the party to which it is to be issued. Issue check to: Mail check to: Name . . . . . . . . . . . . . . . . . . . . . . . Name . . . . . . . . . . . . . . . . . . . . . (PLEASE PRINT) (PLEASE PRINT) Address . . . . . . . . . . . . . . . . . . . . . Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (TAX ID. OR SOCIAL SECURITY NO.) (TAX ID. OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9) (SEE SUBSTITUTE FORM W-9)
STOCKHOLDER(S) SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (SIGNATURE(S) OF REGISTERED HOLDER(S)) Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . , 19 . . . . . (Must be signed by the registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information and see Instruction 4.) Name(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (PLEASE PRINT) Capacity (full title) . . . . . . . . . . . . . . . . . . . . . . . . . . Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (INCLUDE ZIP CODE) Area Code and Telephone Number . . . . . . . . . . . . . . . . . . . . . . Tax Identification or Social Security No. . . . . . . . . . . . . . . . . . . . . . . . . . . . COMPLETE SUBSTITUTE FORM W-9 GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 4) Authorized Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Name of Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (PLEASE PRINT) Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (INCLUDE ZIP CODE) Area Code and Telephone Number . . . . . . . . . . . . . . . . . . . . . . Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . , 19 . . . . . 4 INSTRUCTIONS 1. Guarantee of Signatures. Signatures on all Letters of Transmittal must be guaranteed by a financial institution that is a member of a Securities Transfer Association approved medallion program such as STAMP, SEMP or MSP (an "Eligible Institution"), except in cases where Shares are surrendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 4. 2. Delivery of Letter of Transmittal and Certificates. This Letter of Transmittal, properly completed and duly executed, together with the certificate(s) for Shares described should be delivered to the address set forth on the face hereof. A return envelope addressed to the Disbursing Agent is enclosed for convenience. THE METHOD OF DELIVERY OF CERTIFICATE(S) FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE OWNER, BUT IF SENT BY MAIL, IT IS RECOMMENDED THAT THEY BE SENT BY REGISTERED MAIL WITH RETURN RECEIPT REQUEST. 3. Inadequate Space. If the space provided is inadequate, the certificate numbers and the number of Shares should be listed on a separate schedule to be attached hereto. 4. Signatures on Letter of Transmittal, Stock Powers and Endorsements. When this Letter of Transmittal is signed by the registered owner(s) of the certificate(s) listed and surrendered hereby, no endorsements of certificates or separate stock powers are required. If the certificate(s) surrendered hereby is (are) owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any surrendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by a person other than the registered owner of the certificate(s) listed, such certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by trustees, executors, administrators, guardians, attorneys- in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence, satisfactory to the Disbursing Agent, of their authority must be submitted. 5. Stock Transfer Taxes. If payment for Shares is to be made to any person other than the registered holder, or if surrendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person 5 will be deducted from the payment for such Shares if satisfactory evidence of the payment of such taxes, or exemption therefrom, is not submitted. Except as provided in this Instruction 5, it will not be necessary for transfer tax stamps to be affixed to the certificates listed in this Letter of Transmittal. 6. Special Payment and Delivery Instructions. Indicate the name and address to which payment for the Shares is to be sent if different from the name and address of the person(s) signing this Letter of Transmittal. 7. Return of Certificate(s) for Shares. If the Merger is not consummated within 120 days from the date of the Information Statement, the Disbursing Agent will return all certificates for Shares to stockholders. The Company's stockholders may request that the Disbursing Agent return the certificates for Shares to them at any time before the Merger is consummated. 8. Substitute Form W-9. The shareholder is required to provide the Disbursing Agent with a correct taxpayer identification number on Substitute form W-9. Failure to provide the information on the form may subject the tendering shareholder to 31% Federal income tax withholding on any payments due to such shareholder. A stockholder may write "Applied For" in the space provided in Part I of Substitute Form W-9 and may sign the Certificate of Awaiting Taxpayer Identification Number if the stockholder has not been issued a taxpayer identification number and has applied for a number or intends to apply for a number in the near future. If the stockholder writes "Applied For" and signs such Certificate and the Disbursing Agent is not provided with a taxpayer identification number within 60 days, the Disbursing Agent will withhold 31% of any payments due to the stockholders thereafter until a taxpayer identification number is provided to the Disbursing Agent. 9. Additional Copies. Additional copies of this Letter of Transmittal and of the Information Statement may be obtained from the Disbursing Agent at the address listed on the face hereof. 10. Lost or Destroyed Certificates. Any stockholder of the Company who has lost certificates of Shares should make arrangements (which may include the posting of a bond or other satisfactory indemnification) to replace lost certificates for Shares. Such arrangements should be made with the Disbursing Agent which is also the transfer agent for the Shares. All questions as to the validity, form and eligibility of any surrender of certificates hereunder will be determined by the Disbursing Agent and the Company and such determination shall be final and binding. The Disbursing Agent and the Company reserve the right to waive any irregularities or defects in the surrender of any certificates. A surrender will not be deemed to have been made until all irregularities have been cured or waived. 6 IMPORTANT TAX INFORMATION Under the Federal income tax law, a stockholder whose Shares are surrendered for payment is required to provide the Disbursing Agent with such stockholder's correct taxpayer identification number on Substitute Form W-9 below. If such stockholder is an individual, the taxpayer identification number is such stockholder's social security number. If the Disbursing Agent is not provided with the correct taxpayer identification number, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder may be subject to backup withholding. Exempt stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that stockholder must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Disbursing Agent. See the enclosed Guidelines for Certification of taxpayer identification number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Disbursing Agent is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares surrendered pursuant to the Merger, the stockholder is required to notify the Disbursing Agent of his correct taxpayer identification number by completing the form below certifying that the taxpayer identification number provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a taxpayer identification number) and that the stockholder is not subject to backup withholding either because he has not been notified by the IRS that he is subject to backup withholding or because the IRS has notified him that he is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DISBURSING AGENT The taxpayer identification number that must be provided is that of the registered holder(s) of the Shares or of the last transferee appearing on the transfers attached to or endorsed on the Shares (or, if the check is made payable to another person(s) as provided in Instruction 6, then of such persons(s)). The taxpayer identification number is the social security number or employer identification number of such registered holder(s) or of such last transferee. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of taxpayer identification number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder or other payee has not been issued a taxpayer identification number, but has applied for a taxpayer identification number, or intends to apply for one in the near future, such holder should write "Applied For" in the space provided for the taxpayer identification number in Part I of the Substitute Form W-9, sign and date the Substitute Form W-9 and sign the Certificate of Payee Awaiting taxpayer identification number. If "Applied For" is written in Part I and the Disbursing Agent is not provided with a taxpayer identification number within sixty (60) days, the Disbursing Agent will withhold 31% of all payments to such 7 stockholder until a taxpayer identification number is provided to the Disbursing Agent. If the tendering stockholder or other payee furnishes the Disbursing Agent with his taxpayer identification number within sixty (60) days of the date of the Substitute Form W-9, the Disbursing Agent shall remit such amounts retained during such period to such holder. If, however, the tendering stockholder or other payee has not provided the Disbursing Agent with his taxpayer identification number within the sixty (60) day period, the Disbursing Agent shall remit such previously retained amounts to the Internal Revenue Service as backup withholding. For additional guidance, see the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 8 PAYER'S NAME: CHEMICAL BANK SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number THE RIGHT AND CERTIFY BY SIGNING AND DATING or Employer BELOW. Identification Number Form W-9 -------------------------------- Department of the Treasury Part 2 -- Certification -- Under penalties of perjury, I certify that: Internal Revenue Service (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. PAYER'S REQUEST FOR TAXPAYER Certification Instructions - You must cross out item (2) above if you have IDENTIFICATION NUMBER ("TIN") been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item(2). SIGN HERE Part 3 -- ----> SIGNATURE........................................ Awaiting TIN / / DATE......................................., 1995
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a tax identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld, but that such amounts will be refunded to me if I then provide a Taxpayer Identification Number within sixty (60) days of the date of this Certificate. Signature............................ Date........................., 1995 9 The Information Agent for the Merger is: Chemical Bank Reorganization Department P.O. Box 396 Bowling Green Station New York, NY 10274 or CALL TOLL-FREE 1-800-758-4655 10 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. - ----------------------------------------------------- ----------------------------------------------------- GIVE THE GIVE THE EMPLOYER FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF -- NUMBER OF -- - ----------------------------------------------------- ----------------------------------------------------- 1. An individual's account The individual 9. A valid trust, estate, or The legal entity pension trust (Do not furnish the 2. Two or more individuals The actual owner of identifying number (joint account) the account or, if of the personal combined funds, representative or any one of the trustee unless the individuals(1) legal entity itself is not designated 3. Husband and wife (joint The actual owner of in the account account) the account or, if title.)(5) joint funds, either person(1) 10. Corporate account The corporation 4. Custodian account of a minor The minor(2) 11. Religious, charitable, or The organization (Uniform Gift to Minors Act) educational organization account 5. Adult and minor (joint The adult or, if account) the minor is the 12. Partnership account held in The partnership only contributor, the name of the business the minor(1) 13. Association, club, or other The organization tax- 6. Account in the name of The ward, minor, exempt organization guardian or committee for a or incompetent designated ward, minor, or person(3) 14. A broker or registered The broker or incompetent person nominee nominee 7. a. The usual revocable The grantor- 15. Account with the Department The public entity savings trust account trustee(1) of Agriculture in the name of (grantor is also trustee) a public entity (such as a b. So-called trust account The actual owner(1) State or local government, that is not a legal or valid school district, or prison) trust under State law that receives agricultural program payments 8. Sole proprietorship account The owner(4) _______________________________________________________ ________________________________________________
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 11 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under section 501(a), or an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency, or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under section 584(a). - - An exempt charitable remainder trust, or a nonexempt trust described in section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - - Payments described in section 6049(b)(5) to non-resident aliens. - - Payments on tax-free covenant bonds under section 1451. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1984, payers must generally withhold 20% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500 (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.D3 6 FORM OF NOTICE OF CLASS ACTION 1 FORM OF NOTICE OF CLASS ACTION IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------------------------------- In re: CONTEL CELLULAR INC. Civil Action No. 13726 SHAREHOLDERS LITIGATION - ---------------------------------------------------------------------
NOTICE OF PENDENCY OF CLASS ACTIONS, CLASS ACTION DETERMINATION, PROPOSED SETTLEMENT, SETTLEMENT HEARING AND RIGHT TO APPEAR TO: ALL RECORD AND BENEFICIAL OWNERS OF CLASS A COMMON STOCK ("CLASS A STOCK") OF CONTEL CELLULAR INC. ("CONTEL") AT ANY TIME FROM SEPTEMBER 8, 1994 AND THEIR SUCCESSORS IN INTEREST OR TRANSFEREES AND ASSIGNS, IMMEDIATE AND REMOTE, EXCLUDING ANY SUCH OWNERS WHO VALIDLY REQUEST AN APPRAISAL OF THEIR CLASS A STOCK. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THE CLASS ACTION AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS. AN ESSENTIAL ELEMENT OF THIS SETTLEMENT IS A MERGER. THE $25.50 PER SHARE PRICE PROVIDED BY THE MERGER WILL BE PAID ONLY TO THOSE MEMBERS OF THE CLASS WHO OWN CLASS A STOCK AT THE TIME OF THE MERGER. YOU NEED NOT FILE A PROOF OF CLAIM IN ORDER TO RECEIVE THE $25.50 PER SHARE AMOUNT. IF THE COURT APPROVES THE PROPOSED SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE FAIRNESS, REASONABLENESS, OR ADEQUACY OF THE PROPOSED SETTLEMENT AND FROM PURSUING THE SETTLED CLAIMS. IF YOU ARE NOT THE BENEFICIAL HOLDER OF CLASS A STOCK BUT HOLD CLASS A STOCK FOR A BENEFICIAL HOLDER, PLEASE TRANSMIT THIS NOTICE TO SUCH BENEFICIAL HOLDER. ADDITIONAL COPIES OF THIS NOTICE WILL BE MADE AVAILABLE TO YOU FOR THIS PURPOSE UPON REQUEST DIRECTED TO ***. This notice is given pursuant to Rule 23 of the Court of Chancery of the State of Delaware, in and for New Castle County (the "Court"), and pursuant to an Order of the Court, to notify you of the pendency of these lawsuits, the proposed settlement of these lawsuits, and the Court's certification of a class of Contel common stockholders, and to give you notice of a hearing (the "Hearing") to be held by the Court at * * * a.m. on * * *, 1995, and of your rights, among other things, to participate in the Hearing. The Hearing will be held to determine whether the proposed settlement should be approved by the Court as fair, reasonable and adequate, and in the best interests of the Class as defined below, and whether final judgment should be entered thereon, and to consider the applications by plaintiffs' counsel for attorneys' fees and reimbursement of expenses. D-3-1 2 BACKGROUND On or about September 8, 1994, defendant GTE Corporation ("GTE") and defendant Contel both announced that GTE had proposed to acquire all outstanding Contel Class A Stock held by the public, consisting entirely of approximately 10 million shares of Class A Stock, for $22.50 cash per share. GTE owns the remaining 90 percent of outstanding Contel common shares, consisting entirely of Contel Class B common stock ("Class B Stock"). Under the terms of the proposal, GTE subsidiary would merge into Contel. The Class B Stock would be converted into shares of the merged entity. (GTE owns no Class A Stock.) The proposed merger would not require a vote by the holders of Class A Stock or the shareholders of GTE. Following the announcement, four separate lawsuits were commenced in this Court alleging that the purchase price of $22.50 per share was grossly inadequate and constituted a breach of the defendants' fiduciary duties to Contel public shareholders (the "Actions"). The Actions were brought by plaintiffs Airmont Plaza Associates, Arnel Gonzalez, Blimy Itzkowitz, and Paul Gambal ("Plaintiffs"). The complaints asserted claims on behalf of a Class consisting of all public common stockholders of Contel as of September 8, 1994. Nine of Contel's twelve directors are executive officers or directors of GTE or Contel, causing a conflict of interest. Accordingly, at a meeting of Contel's Board of Directors on September 9, 1994, the Board appointed the three outside Contel directors who are not officers or directors of GTE or Contel (Irwin Schneiderman, Leo Jaffe, and Robert E. LaBlanc) to a Special Committee to review the fairness of and negotiate the terms of the proposed merger. The Special Committee retained Cahill Gordon & Reindel ("Cahill Gordon") as legal counsel to the Special Committee and Lazard Freres & Co. ("Lazard Freres") as its financial advisor. On November 16, 1994, the Court entered an Order consolidating the Actions for all purposes and designating the law firms of Abbey & Ellis, Bernstein Liebhard & Lifshitz, and Wolf Popper Ross Wolf & Jones as Plaintiffs' Co-Lead Counsel. Plaintiffs' counsel retained an expert adviser and obtained initial documentary discovery, including documents produced by Lazard Freres. Thereafter, counsel for GTE and Contel Cellular Acquisition Corporation (which was formed solely to effect the proposed merger) began discussions and negotiations with Plaintiffs' counsel regarding the resolution of the Actions. While negotiations were ongoing, Plaintiffs' counsel met with the Special Committee and Lazard Freres to discuss valuations. The Special Committee had numerous meetings with Lazard Freres and Cahill Gordon and negotiated with GTE, during a period of two months commencing October 17, 1994. Following negotiations with Plaintiffs' counsel, and with the Special Committee (through Lazard Freres), GTE agreed, in December 1994, to raise the offer for the proposed merger to $25.50 per share. On December 23, 1994, GTE and Contel reached an agreement in principle with Plaintiffs' counsel to settle the Actions, subject to additional discovery. The settlement was based on the increased price of $25.50 per share of Class A Stock and the payment by defendants of certain attorneys' fees and expenses to Plaintiffs' counsel as hereinafter described. Following the settlement agreement in principle, and the completion of additional documentary and deposition discovery, Plaintiffs and defendants executed a Stipulation of settlement (the "Stipulation") containing the terms and conditions as set forth in more detail below. THE SETTLEMENT As described above, the settlement increases the consideration offered in the proposed merger from $22.50 per share of Class A Stock to $25.50 per share. GTE, Contel, and the Special Committee have acknowledged the litigation efforts and negotiations by Plaintiffs' counsel were significant factors in prompting GTE to consider the possibility of improving its original $22.50 per share offer and in arriving at the improved price of $25.50 per share. Prior to and after institution of the suit, Plaintiffs' counsel made a thorough investigation of the law and facts relating to the class claims. Plaintiffs' counsel reviewed documents produced by the defendants which D-3-2 3 related to the proposed merger; thoroughly reviewed the public filings of GTE and Contel filed in connection with the proposed merger; interviewed and took depositions of several representatives of Contel, GTE and their respective financial advisers; and retained an expert adviser who met with the Special Committee and discussed valuations of the proposed merger with Lazard Freres. Plaintiffs' counsel also studied the legal principles applicable to Plaintiffs' claims and have conducted discussions and arms' length negotiations with GTE, Contel, and the Special Committee with a view to settling the issues in dispute and achieving the best possible settlement consistent with the interest of the Contel public shareholders. Having engaged in such investigations and negotiations and having considered the events and agreements described herein, Plaintiffs and Plaintiff's counsel have concluded that the outcome of the action would be uncertain and that, by reason of the substantial benefits obtained as a result of the settlement, the terms and conditions of such settlement are fair, reasonable and adequate to the Contel public shareholders. Plaintiffs and Plaintiffs' counsel have agreed to settle the actions according to the terms and provisions of the Stipulation after considering: (i) the substantial benefits to be obtained by the public shareholders of Contel as a result of the settlement; (ii) the attendant risks of litigation; (iii) the probability of success on the merits of Plaintiffs' claims, including the uncertainty relating to the proof of those allegations; (iv) the desirability of settling the actions; (v) Plaintiffs' and Plaintiffs' counsel's conclusions that the settlement is fair, reasonable and adequate. The defendants have denied and continue to deny all claims of wrongdoing made in the Actions. Nonetheless, the defendants consider it desirable that the Actions be settled in the manner and on the terms and conditions set forth in the Stipulation, thereby putting to rest all claims which have been or might have been asserted by any parties arising out of the matters alleged in the Actions or set forth in the Stipulation, and avoiding further expense, inconvenience, distraction, and diversion of management of GTE and Contel, which would be caused by further litigation. CLASS ACTION DETERMINATION The Court has ordered that, for purposes of the settlement only, the Actions shall be maintained as a class action, pursuant to Court of Chancery Rules 23(b)(1) and (b)(2), on behalf of a Class consisting of all holders of Class A Stock from September 8, 1994 and their successors in interest and/or transferees and assigns, immediate and remote, excluding any such holders who validly request an appraisal of their Class A Stock and excluding the defendants and their families and affiliates. Inquiries or comments about the settlement may be directed to the attention of Liaison Counsel to the Class representatives as follows: Norman M. Monhait, Esq. Rosenthal, Monhait, Gross & Goddess, P.A. Suite 214 First Federal Plaza P.O. Box 1070 Wilmington, Delaware 19899-1070 (302) 656-4433 Please do not contact the Court of Chancery or Register in Chancery regarding any questions or comments you may have. THE TERMS OF THE SETTLEMENT The principal terms, conditions and other matters that are part of the settlement are summarized here. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the Stipulation, which is on file with the Court of Chancery. The parties have agreed to the following terms and conditions: In furtherance of the merger of Contel and GTE, GTE shall pay $25.50 cash per outstanding share of Class A Stock. A GTE subsidiary will merge into Contel. The Class A Stock will be cancelled, and each D-3-3 4 outstanding share of Class B Stock will be converted into shares of Class B Stock of the merged entity. The merger will not require a vote by the holders of Contel Class A Stock or by GTE shareholders. GTE (not the Class) will bear the Plaintiffs' attorneys' fees and expenses incurred in prosecuting and settling the Actions up to the amount of $525,000, as approved by the Court. If the settlement is approved by the Court, the Actions will be dismissed on the merits with respect to all defendants and with prejudice as against Plaintiffs and all holders of Class A Stock, and that the settlement is in full compromise, settlement and discharge of all claims, whether or not presently known, which have been asserted by Plaintiffs or which might have been asserted by Plaintiffs or by Contel shareholders in this Court or any other forum against any of the defendants arising from or in any way relating to the events or transactions alleged in the Complaint or set forth in the Stipulation. APPLICATION FOR ATTORNEYS' FEES AND EXPENSES If the settlement is approved, Plaintiffs' counsel will, at the Hearing or thereafter, apply to the Court for an aggregate award of attorneys' fees and expenses (including expert fees and expenses) not to exceed $525,000. GTE has agreed to bear such fees and expenses, and defendants have agreed not to oppose such application. Subject to the terms and conditions and on the date set forth in the Stipulation, GTE will pay all such attorneys' fees and expenses the Court awards to the Plaintiff (subject to the maximum amount set forth above). RIGHT TO APPEAR At the Hearing, any holder of Class A Stock who objects to the Stipulation, the settlement, the judgment to be entered with respect thereto, or the award of attorneys' fees and expenses to Plaintiff's counsel, or who otherwise wishes to be heard, may appear in person or by his attorney at the Hearing and present any evidence or argument that may be proper and relevant; provided, however, that no person other than the Plaintiffs and defendants in the Action shall be heard, and no paper, briefs, pleadings or other documents submitted by any such person shall be received and considered by the Court (unless the Court in its discretion shall thereafter otherwise direct, upon application of such person for good cause shown), unless no later than fourteen days prior to the Hearing (i) a notice of intention to appear, (ii) a statement listing all such person's holdings of securities of Contel and the date(s) of acquisition thereof, (iii) a statement of such person's objections to any matter before the Court, and (iv) the grounds therefore, the reasons for such person desiring to appear and to be heard, as well as all documents or writings which such person desires the Court to consider shall be filed with the Register in Chancery and, on or before such filing, shall be sent to or served upon each of the following counsel of record: Norman M. Monhait, Esq. Rosenthal, Monhait, Gross & Goddess, P.A. First Federal Plaza P.O. Box 1070 Wilmington, DE 19899 Attorneys for Plaintiffs R. Franklyn Balotti, Esq. Richards Layton & Finger 1 Rodney Square Wilmington, DE 19899 Attorneys for Defendants Unless the Court otherwise directs, no stockholder of Contel will be entitled to contest the approval of the Stipulation, the settlement, the judgment to be entered thereon, or the award of attorneys' fees and expenses to Plaintiff's counsel, or otherwise to be heard, except by serving and filing written objections as described above. D-3-4 5 Any person who fails to object in the manner prescribed above will be deemed to have waived such objection and will be forever barred from raising such objection. SCOPE OF THIS NOTICE The foregoing description of the Hearing, the Actions, the activities leading to the settlement, the terms of the settlement, and other matters described herein, does not purport to be comprehensive. Accordingly, holders of Class A Stock are referred to the documents filed with the Court, including the Stipulation, pleadings, briefs, and other papers, all of which may be examined during regular business hours of each business day at the Office of the Register in Chancery, Daniel L. Herrmann Courthouse, Eleventh and Kings Streets, Wilmington, Delaware 19801. ------------------------------------ Register in Chancery Dated: February , 1995 D-3-5 -----END PRIVACY-ENHANCED MESSAGE-----