Alaska Communications Systems Reports Strong Third Quarter 2001 Results; Positive Quarterly Cash Flow on Record EBITDA of $33.3 Million.

Business Editors

ANCHORAGE, Alaska--(BUSINESS WIRE)--Oct. 25, 2001

Alaska Communications Systems Group, Inc. ("ACS") (Nasdaq:ALSK) today reported financial results for the third quarter ended September 30, 2001. Revenues for the quarter grew 10.6% to $82.8 million compared to $74.9 million in the same period last year. For the third quarter of 2001, EBITDA increased 42.9% to $33.3 million compared to $23.3 million for the same period last year.

"We are pleased to report that our overall results continued to improve during the quarter," commented Chuck Robinson, Chairman and CEO of ACS. "We experienced sequential revenue growth in our cellular, directory, Internet and interexchange businesses as we continued to compete well in our marketplaces and win additional customers. EBITDA, which was the highest in the Company's history, showed improvement as we continue to seek efficiencies from our local telephone business. In contrast to the economic downturn the rest of the nation seems to be experiencing, the Alaskan economy remains solid and the prospects for future growth are promising."

"While we are pleased with our progress in many areas," Robinson continued, "we are mindful that on a year-to-date basis total local telephone revenues have decreased over the past year. This is a result of a combination of unfair competitive arbitrage opportunities associated with below cost UNE rates, coupled with decade-old retail rates which do not permit us to earn our regulated revenue requirement. We are currently engaged in several actions before the state regulatory commission that address these issues by increasing retail and interconnection rates and allowing us to compete more effectively in our markets."

ACS experienced its second consecutive free cash flow positive quarter, as cash balances increased $3.7 million during the quarter. The Company incurred a net loss of $1.4 million, or $0.04 per share, for the quarter ended September 30, 2001 -- an improvement of $1.4 million or $0.05 per share on a sequential quarter basis. In 2000, ACS reported a third quarter net loss of $10.9 million, or $0.33 per share. Income before amortization of goodwill was $541,000 for the quarter, or $0.02 per share, compared to a $9.0 million net loss, or $0.27 per share in the same period last year.

Kevin P. Hemenway, Senior Vice President and CFO of ACS, stated, "Our EBITDA margin increased to 40.2% from 31.1% last year and 39.2% in the immediately preceding quarter, demonstrating our continued commitment to implementing operating improvements. Going forward we will continue to take the necessary steps to increase our telephone and wireless operating margins while profitably growing our emerging businesses."

Highlights from the Quarter ---------------------------

-- Local telephone:

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

o Access lines for the quarter were 333,166, an increase of 3,111 over the immediately preceding quarter.

o Local network service revenues grew by 6.6% on a sequential quarter basis, reflecting a strong competitive position and improved collection processes.

o Access revenues were flat with the immediately preceding quarter and grew by over $3.2 million from last year. Third quarter 2000 revenues included a $3.6 million reserve for an as yet unresolved dispute regarding interstate access revenues.

o Deregulated and other revenues decreased by $2.1 million from the immediately preceding quarter as customers deferred capital expenditures on large PBX and CPE equipment and a one-time change to the Company's assessment of late fees.

-- Cellular revenues increased to $11.0 million for the third quarter of 2001 from $10.9 million in 2000. Cellular subscribers increased 7.6%, or 5,562, to 78,758 from 73,196 in 2000. Penetration improved to 17.0% compared to 15.9% for 2000.

-- Directory revenues grew 20.0% over the corresponding quarter in 2000 to $8.7 million.

-- Internet revenues grew 38.4% to $3.6 million from $2.6 million in 2000, reflecting increases in DSL customers and the acquisition of MosquitoNet in Fairbanks on July 6th, 2001. With the acquisition of MosquitoNet, ACS is the State's largest provider of paid Internet service. The Company had approximately 6,000 DSL subscribers at September 30, 2001.

-- Interexchange revenues increased 81.3% from $3.0 million in 2000 to $5.4 million in 2001. During the quarter, the Company succeeded in adding approximately 1,300 additional customers for its Easy Choices program and has grown its long distance subscriber base by approximately 70% over last year.

-- Operating expenses before depreciation and amortization decreased from the same period last year, despite a 10.6% increase in revenues. This quarter's expenses included approximately $0.7 million related to the early stages of the Company's rollout of its advanced IP network and service center, and $0.3 million related to MosquitoNet transition services, which are reflected in Internet expense.

ACS' management will host a conference call at 5:00 P.M. Eastern time on Thursday, October 25, 2001 to discuss the third quarter results and the Company's outlook for the remainder of 2001. The Webcast will be available live from the Company's corporate website at www.ACSalaska.com and via replay beginning two hours after the completion of the call. An audio replay of the call will also be available by dialing 320/365-3844 and entering the passcode 605534. The replay will be available until midnight ET on November 1, 2001.

About Alaska Communications Systems, Inc.

ACS is the leading integrated communications provider in Alaska, offering local telephone service, wireless, long distance, data, and Internet services to business and residential customers throughout Alaska. ACS currently serves approximately 333,000 access lines, 79,000 cellular customers, 67,000 long distance customers and 51,000 Internet customers throughout the State. More information can be found on the Company's website at or replay it at a later date by accessing the Company's website at http://www.ACSalaska.com.

Statements contained in this press release that are not historical fact are "forward-looking statements" that involve a number of known and unknown risks or uncertainties. Additional factors, which may affect actual results, are contained in the Company's filings with the SEC. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

SCHEDULE 1

               ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
          (Unaudited, in Thousands, Except per Share Amounts)

                             Three Months Ended     Nine Months Ended
                               September 30           September 30
                             2001       2000        2001       2000

Operating revenues:
       Local telephone    $ 53,860   $ 50,819    $ 163,018  $ 167,966
       Cellular             11,041     10,947       30,734     29,657
       Directory             8,705      7,255       24,857     21,584
       Internet              3,584      2,590        9,898      5,247
       Interexchange         5,395      2,976       16,557      8,513
       Other                   235        279          733        853
                         ---------  ---------    ---------  ---------
          Total operating
           revenues         82,820     74,866      245,797    233,820

Operating expenses:
       Local telephone      29,259     34,166       88,582    103,288
       Cellular              5,951      5,913       17,501     17,684
       Directory             3,616      3,404       10,478     10,199
       Internet              4,583      3,672       11,592      7,788
       Interexchange         6,678      4,187       23,043     12,774
       Other                   470        342        1,429      1,031
       Unusual charges          --      2,083           --      2,083
       Depreciation and
        amortization        20,054     17,773       59,292     52,464
                         ---------  ---------    ---------  ---------

          Total operating
           expenses         70,611     71,540      211,917    207,311
                         ---------  ---------    ---------  ---------

Operating income            12,209      3,326       33,880     26,509

Other income (expense):
       Interest expense    (14,677)   (16,417)     (45,945)   (48,253)
       Interest income
        and other            1,021      2,195        2,777      5,033
       Equity in earnings
        (loss) of investments   --         --           69       (153)
                                --         --          ---      -----
          Total other
           expense         (13,656)   (14,222)     (43,099)   (43,373)
                         ---------  ---------    ---------  ---------

Loss before income taxes    (1,447)   (10,896)      (9,219)   (16,864)

Income tax benefit              48         20          147        154
                         ---------  ---------    ---------  ---------

Net loss                  $ (1,399) $ (10,876)    $ (9,072) $ (16,710)
                         =========  =========    =========  =========

Net loss per share -
 basic and diluted        $  (0.04) $   (0.33)    $  (0.29) $   (0.51)
                         =========  =========    =========  =========

Weighted average shares
 outstanding                31,550     32,927       31,497     32,806
                         =========  =========    =========  =========

EBITDA                    $ 33,284  $  23,294     $ 96,018  $  83,853
                         =========  =========    =========  =========


Note: Certain reclassifications have been made to the 2000 data to
conform with the current presentation.


SCHEDULE 2

               ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
               CONDENSED CONSOLIDATED BALANCE SHEET DATA
                       (Unaudited, in Thousands)

                                    September 30,       December 31,
                                        2001                2000

Cash and cash equivalents            $ 34,731            $ 61,896
Restricted cash                         6,890                  --
Property, plant and equipment, net    483,907             460,735
Total assets                          903,935             908,285
Long-term debt                        611,397             614,004
Stockholders' equity                  193,634             215,380


SCHEDULE 3

               ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
                 SCHEDULE OF LOCAL TELEPHONE REVENUES
                       (Unaudited, in Thousands)


                                Three Months Ended  Nine Months Ended
                                   September 30        September 30
                                  2001      2000      2001      2000

Local telephone revenues:
      Local network service    $ 24,388  $ 22,679  $ 70,530  $ 70,298
      Network access revenue     24,993    21,779    76,258    79,835
      Deregulated and other       4,479     6,361    16,230    17,833
                               --------  --------  --------  --------

           Local telephone
            revenues           $ 53,860  $ 50,819  $163,018  $167,966
                               ========  ========  ========  ========

SCHEDULE 4

               ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
                       KEY OPERATING STATISTICS

                                         As of September 30,
                                       2001              2000

 Local telephone:
        Retail access lines           266,040           274,458
        Wholesale access lines         20,858            18,110
        UNE loops                      46,268            36,420
                                      -------           -------
        Total access lines            333,166           328,988
        Average access lines for
         the quarter                  331,611           329,604
        Annual growth rate                1.3%              1.9%


 Cellular:
        Covered population            462,057           460,802

        Ending subscribers             78,758            73,196
        Average subscribers for
         the quarter                   78,666            73,395
        Annual growth rate                7.6%              3.3%

        Penetration                      17.0%             15.9%
        Quarterly minutes of
         use (000's)                   45,272            35,614

        Quarterly average revenue
         per Unit                     $ 46.78           $ 49.72


 Long Distance:
        Long distance subscribers      67,211            39,734
        Quarterly minutes of
         use (000's)                   49,387            18,772

 Internet:
        Internet subscribers           50,500            43,785

Note:  Third quarter 2000 access line counts have been reduced by
       3,034 from previously reported amounts to reflect corrections
       in counting of certain service offerings.