Citizens Utilities Appoints Morgan Stanley Dean Witter as Financial Advisor for Public Services Divestiture.

STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 3, 1999--

Citizens Utilities (NYSE:CZN, CZNPr) announced today that its Board of Directors has appointed the investment banking firm Morgan Stanley Dean Witter as financial advisor for the divestiture of the company's Public Services businesses in gas distribution, electric distribution, water distribution and wastewater treatment.

As previously announced, Citizens Utilities intends to permanently fund $2.3 billion of telephone access line acquisitions with proceeds from the sale of its Public Services businesses. These acquisitions, definitive agreements for which were signed in May and June, will make Citizens among the largest telecommunications companies in the nation, with approximately 1.7 million access lines in 21 states. The acquisitions are expected to close in 2000.

"We believe that the significant recent demand for distribution properties in each of our Public Services business sectors, coupled with the high quality of Citizens' properties, creates an outstanding opportunity to maximize value for our security holders," said Robert J. DeSantis, Citizens' chief financial officer, vice president and treasurer.

"Our strategy is to realize the hidden value of our Public Services properties and use the proceeds to significantly expand our telecommunications business. We expect to sell assets for double-digit multiples of cash flow and use the proceeds to fund assets that we have purchased for single-digit multiples of cash flow --in a business that grows twice as fast as those businesses we are divesting.

"This acquisition and divestiture process should add significant incremental EBITDA with no increase in long-term debt. These transactions will clearly establish Citizens as a pure telecommunications company, focusing its ongoing expansion on a business sector that commands higher public and private market values.

"We are pleased with our selection of Morgan Stanley Dean Witter as our partner in the further development and execution of our divestiture plan."

Citizens Public Services serves approximately 900,000 customers in 10 states. Combined Public Services revenues were approximately $610 million in 1998.

Citizens Utilities provides telecommunications services and public services including gas distribution, electric distribution, water distribution and wastewater treatment services to approximately 1.9 million customers in 22 states. Citizens also owns 83% of Electric Lightwave, Inc. (NASDAQ: ELIX), a facilities-based, integrated communications provider that offers a broad range of services to telecommunications-intensive businesses throughout the United States.

This document contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. These and all forward-looking statements are only predictions or statements of current plans that are constantly under review by the company. All forward-looking statements may differ from actual results because of, but not limited to, changes in the local and overall economy, changes in market conditions for debt and equity securities, the nature and pace of technological changes, the number and effectiveness of competitors in the company's markets, success in overall strategy, weather conditions, changes in legal or regulatory policy, changes in legislation, the company's ability to identify future markets and successfully expand existing ones and the mix of products and services offered in the company's target markets. These important factors should be considered in evaluating any statement contained herein and/or made by the company or on its behalf. The foregoing information should be read in conjunction with the company's filings with the U.S. Securities and Exchange Commission including, but not limited to, reports on Forms 10-K and 10-Q. The company does not intend to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances.