Fitch Ratings Affs ALLTEL's 'A/F1' Debt Rtgs; Rtg Outlook Stable.

Business Editors

CHICAGO--(BUSINESS WIRE)--Aug. 1, 2002

Fitch Ratings has affirmed the long-term and short-term debt ratings of ALLTEL Corporation (ALLTEL) at 'A' and 'F1', respectively, and removed the ratings from Rating Watch Negative. This is in recognition of ALLTEL closing on the Verizon wireline and the CenturyTel wireless acquisitions. The Rating Outlook is Stable.

ALLTEL's ratings reflect its strong focus as a leading rural telecom operator with solid margins and stable cash flows particularly from the rural wireline markets. The ratings also recognize the risks associated with ALLTEL's increased leverage resulting from its acquisitions in an increasingly competitive telecommunications environment, which has been impacted by a slowing economy.

Pro forma debt-to-EBITDA at the time of closing is expected in the range of 1.7 times (x) - 1.8x, taking into account a significant level of equity consideration for the May 2002 $1.4 billion equity unit offering. Actual net debt-to-trailing 12-month EBITDA at the end of the second quarter was approximately 1.2x. The transactions are valued at approximately $3.5 billion, and ALLTEL had approximately $3 billion in cash at the end of the second quarter 2002. Fitch expects the additional funding requirements for the transactions of approximately $400-$500 million to be met in the commercial paper market. Fitch anticipates the credit protection measures to improve to historical ranges, absent an acquisition, over the next 12-18 months as ALLTEL utilizes its free cash flow and operating synergies to reduce debt by $500 million to $750 million by the end of 2003. Management also provided capital spending guidance of $1.3 billion to $1.4 billion for 2002, which was less than initial expectations and consistent with ALLTEL's prudent management of capital requirements versus its peers.

ALLTEL benefits from limited competition in its rural incumbent local exchange carrier (ILEC) markets along with good geographical diversity and favorable customer demographics, which have shielded the company from some of the issues experienced by the urban based regional Bell operating companies (RBOCs) in this current environment. Access line growth year over year was essentially flat with 5,200 lines added, for a total of 2.61 million lines. Sequentially, lines were down by 10,000, owing primarily to the impact of the discontinued CLEC operations. These results compare to the low single digit declines experienced by the RBOCs. Further benefits include less stringent regulation of the rural operators and a business mix more dependent on residential customers, which provides for a more stable customer segment. The RBOCs, which have a greater emphasis on business lines, have been more impacted by stronger competition in the urban cores by CLEC and cable operators, technology substitution and the slowing economy.